ORDER 2001-9-17

SERVED: SEPTEMBER 28, 2001

UNITED STATES OF AMERICA
[LOGO] DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.

Issued by the Department of Transportation
on the 25TH DAY OF SEPTEMBER, 2001

ORDER APPROVING ALTERNATE SERVICE PATTERN
AND REVISING SUBSIDY PAYOUT

BACKGROUND
Under Orders 99-12-28, December 29, 1999, and 2000-12-21, December 22, 2000, the
Department has authorized Big Sky Transportation Co., d/b/a Big Sky Airlines, to
provide subsidized essential air service at Harrison, Arkansas, for the two-year
period ending November 30, 2001, by operating two and a half round trips to
Dallas/Ft. Worth and one and a half round trips to St. Louis each weekday and
weekend with 19-seat Fairchild Metro III or Metro 23 aircraft. Big Sky provides
Harrison's service over routes that also serve Hot Springs, Arkansas, whose
service to Dallas/Ft. Worth is subsidized, and Mountain Home, Arkansas, whose
service is not subsidized. Subsidy for the routes is currently $2,251,181
annually.(1)

CARRIER PROPOSAL
By letter dated September 18, 2001, Big Sky now requests that it be allowed to
implement a modified service pattern providing Harrison with a full three round
trips each weekday and weekend via Hot Springs to Dallas/Ft. Worth in lieu of
any service to St. Louis, beginning October 1, at the current subsidy rate.
Since Big Sky would no longer be operating any service to/from St. Louis, Hot
Springs' service would be limited to its designated hub of Dallas/Ft. Worth and
Mountain Home would lose service entirely.(2)

COMMUNITY COMMENTS
By letter dated September l8, 2001, the Harrison Chamber of Commerce, with the
concurrence of the Mayor, expressed its support for Big Sky's proposal.

- --------------------------------
(1) See Appendix A for a map.
(2) In essence, Big Sky's current St. Louis-Mountain Home-Harrison-Hot
Springs-Dallas/Ft. Worth route would be modified to Harrison-Hot
Springs-Dallas/Ft. Worth. Since Mountain Home is not an essential air service
point, it has no guarantee of service.

-2-

DECISION
We will approve the alternative service pattern proposed by Big Sky, which has
the Harrison community's support, effective October 1 through November 30, 2001,
the end of the current rate term. As we previously discussed in Order 2000-12-
21, Big Sky's service to St. Louis service is little used by the Harrison
community, averaging less than one passenger per flight on 19-seat aircraft. We
expect that the community will be better served by three round trips a day to
Dallas/Ft. Worth. Concomitant with our approval, we will adjust Big Sky's
subsidy payout (subsidy per arrival and departure) to ensure that the carrier
receives the same total subsidy under the modified service pattern as under the
present one.

We recognize that Hot Springs and Mountain Home have been incidental
beneficiaries of Harrison's service to St. Louis, and that the elimination of
that route will affect those two communities. However, Hot Springs is guaranteed
service to Dallas/Ft. Worth only,(3) and it will continue to receive the three
round trips each weekday and weekend to Dallas/Ft. Worth that we have been
supporting. On the other hand, Mountain Home is not an essential air service
point as defined by 49 U.S.C. 4173l(a), and thus not guaranteed service at all.
Consequently, we may not spend program funding to pay subsidy for Big Sky or any
other carrier to maintain scheduled service at Mountain Home.(4)

This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,
1. We approve the alternate service pattern of Big Sky Transportation Co., d/b/a
Big Sky Airlines, to provide essential air service at Harrison and Hot Springs,
Arkansas, as described in Appendix B, effective October 1 through November
30, 200l;

2. We revise the final rate of compensation for Big Sky Transportation Co.,
d/b/a Big Sky Airlines, for the provision of essential air service at Harrison
and Hot Springs, Arkansas, from October 1 through November 30, 2001, as follows:
for each month during which essential air service is provided, the amount of
compensation shall be subject to the weekly ceiling set forth in Appendix B, and
shall be determined by multiplying the subsidy-eligible arrivals and departures
completed during the month by $630.94;(5)

- --------------------------------
(3) See Order 93-10-27, October 15, 1993.
(4) We first broached the prospect of Harrison's exchanging its service to St.
Louis for increased service to Dallas/Ft. Worth in Order 2000-12-21. In June
2001, the Department sent a letter to the Mayor of Harrison again raising that
prospect, who responded positively. Courtesy copies of the Department's letter
were also sent to the Mayors of Hot Springs and Mountain Home, neither of whom
responded. See the correspondence in Docket OST-1997-2935.
(5) See Appendix B for the calculation of this rate, which assumes the use of
the aircraft designated. If the carrier reports a significant number of aircraft
substitutions, revision of this rate may be required.

-3-

3. The rate established in ordering paragraph 2 above is in lieu of, not in
addition to, that established by Order 99-12-28;

4. We direct Big Sky Transportation Co., d/b/a Big Sky Airlines, to retain all
books, records, and other source and summary documentation to support claims for
payment, and to preserve and maintain such documentation in a manner that
readily permits its audit and examination by representatives of the Department.
Such documentation shall be retained for seven years or until the Department
indicates that the records may be destroyed. Copies of flight logs for aircraft
sold or disposed of must be retained. The carrier may forfeit its compensation
for any claim that is not supported under the terms of this order; and

5. We will serve copies of this order on the mayor and airport manager of
Harrison, Arkansas, and Big Sky Transportation Co., d/b/a Big Sky Airlines.

By:

SUSAN MCDERMOTT
Deputy Assistant Secretary for Aviation
and International Affairs

(SEAL)

An electronic version of this document is available
on the World Wide Web at http://dms.dot.gov

APPENDIX A

HARRISON, ARKANSAS,
AND THE SURROUNDING REGION

[MAP]

APPENDIX B
Page 1 of 2

BIG SKY TRANSPORTATION CO., d/b/a BIG SKY AIRLINES
ESSENTIAL AIR SERVICE AT HARRISON AND HOT SPRINGS, ARKANSAS

EFFECTIVE PERIOD October 1 through November 30, 200l

- ---------------------------------------------------------------------------------------------------------
SERVICE 18 Harrison-Hot Springs-Dallas/Ft. Worth round trips each
week

- ---------------------------------------------------------------------------------------------------------
AIRCRAFT TYPE Fairchild Metro III or Metro 23 (19 seats)

- ---------------------------------------------------------------------------------------------------------
TIMING OF FLIGHTS Flights must be well-timed and well-spaced to ensure full
compensation

- ---------------------------------------------------------------------------------------------------------
SUBSIDY RATE PER
ARRIVAL/DEPARTURE $630.94 1/
- ---------------------------------------------------------------------------------------------------------
COMPENSATION CEILING
EACH WEEK $45,427.68 2/
- ---------------------------------------------------------------------------------------------------------

- --------------------------------
1/ Annual compensation of $2,251,181 divided by 3,568 annual arrivals and
departures at a 95 percent completion factor, calculated as follows: 12 dpts x
313 service days x .95 = 3,568.

2/ Subsidy rate per arrival/departure of $630.94 multiplied by 72
subsidy-eligible arrivals and departures each week.

APPENDIX B
Page 2 of 2

NOTE

The carrier understands that it may forfeit its compensation for any flights
that it does not operate in conformance with the terms and stipulations of the
rate order, including the service plan outlined in the order and any other
significant elements of the required service, without prior approval. The
carrier understands that an aircraft take-off and landing at its scheduled
destination constitutes a completed flight; absent an explanation supporting
subsidy eligibility for a flight that has not been completed, such as certain
weather cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its flights in
full conformance with the order for a significant period, it may jeopardize its
entire subsidy claim for the period in question. If the carrier contemplates any
such changes beyond the scope of the order during the applicable period of this
rate, it must first notify the Office of Aviation Analysis in writing and
receive written approval from the Department to be assured of full compensation.
Should circumstances warrant, the Department may locate and select a replacement
carrier to provide service on these routes. The carrier must complete all
flights that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment for a
deviating flight should be adjusted or disallowed, the Department will consider
the extent to which the goals of the program are met and the extent of access to
the national air transportation system provided to the community.

If the Department unilaterally, either partially or completely, terminates or
reduces payments for service or changes service requirements at a specific
location provided for under this order, then, at the end of the period for which
the Department does make payments in the agreed amounts or at the agreed service
levels, the carrier may cease to provide service to that specific location
without regard to any requirement for notice of such cessation. Those
adjustments in the levels of subsidy and/or service that are mutually agreed to
in writing by the parties to this order do not constitute a total or partial
reduction or cessation of payment.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to time.
However, any such statutes, regulations, or amendments thereto shall not operate
to controvert the foregoing paragraph.