Great Lakes Airlines SuspensionOrder 2001-8-12
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
Issued by the Department of Transportation
on the 10th day of August, 2001
45-day notice filed by
GREAT LAKES AVIATION, LTD.
of intent to suspend service at Dubuque,
Iowa,
under 49 U.S.C. 41717(I~)
SerVed: August 15, 2001
Docket OST-01-10131
ORDER ALLOWING SUSPENSION OF SERVICE
Background
On July 11, 2001, Great Lakes Aviation, Ltd., filed a 45-day notice of intent to
suspend its scheduled service between Dubuque, Iowa, and Chicago O'Hare
International Airport as o£August 25, 2001. Great Lakes filed its notice
pursuant to 49 U.S.C. 41717(g). Under that provision, as it applies here, a
carrier providing service between a small hub or nonhub airport and O'Hare
on or before April 5, 2000, by virtue of having been granted exemptions from
the High Density Rule may not suspend that service unless it files a 45-day
notice under 49 U.S.C. 41719 and the Department "determines that the
carder suffered excessive losses, including substantial losses on operations
on that route during the calendar quarters immediately preceding
submission of the notice."l
1 The Department granted slot exemptions to Great Lakes for the purpose of
providing Dubuque-O'Hare service by' Order 97-1-7, January 13, 1997. Dubuque is
classified as a nonhub airport by the Federal Aviation Administration's Airport
Activity Statistics of Certificated Route Carriers, since it accounts for less than 0.05 percent of
all U.S. enplanements. More recently, however, the Department granted exemptions to all
carriers wishing to provide service between small hubs and nonhubs and O'Hare with aircraft of less
than 71 passenger seats; see Order 2000-4-14, April 14, 2000, which implemented
49 U.S.C. 41717(b). Section 41717 was enacted by the Wendell H. Ford Aviation
Investment and Reform Act for the 21st Century, P.L. 106-t81, which was signed
into law on April 5, 2000.
-2-
which opec.res four nonstop round trips each weekday and seven each weekend to
Minneapolis/St. Paul with 33-seat Saab 340 turboprop aizcraft.2
No objections to Great Lakes' notice have been received.
Decision
After careful consideration, we will allow Great Lakes to suspend its service at Dubuque as
proposed. Great Lakes has provided the Department with data regarding its recent results for
both its system generally and its Dubuque-O'Hare operation specifically. With respect to
system-wide results, Great Lakes has submitted data as published in its Annual Report as well
as in its Form 10-K Report filed with the Securities and Exchange Commission showing that
the carrier experienced a net loss in calendar year 2000 of about $8.2 million on operating
expenses (excluding interest expense) of $132.6 million, after having registered net incomes of
$2.7 million in both 1998 and 1999. On the Dubuque-O'Hare route specifically, Great Lakes
has ~ubmitted monthly data for the 12 months ended June 30, 2001. The carrier shows an
operating loss on the route for every month during the period, with a 12-month operating loss
of about $670,000 on revenues of $2,212,000 and expenses of $2,882,000.
There are two standards in the statute: "excessive", which, from the context, we interpret to
mean system-wide losses; and "substantial", which, also from the context, we interpret to refer
to losses in the specific city-pair market. Although no timeframe is provided for the system-
wide losses, the city-pair market losses are to be determined on the basis of at least two of the
calendar quarters preceding the one in which the notice is submitted.
Since neither "excessive" nor "substantial" are del'reed in the statute, we have looked
elsewhere for a sense of the ranges of loss that Congress intended. We note that Congress has
indicated what a desirable minimum profit is for commuter carriers providing subsidized
service under the essential air service program: 5 percent of operating expenses
(49 LI.S.C. 41734(d)(1).) Over the four most recent calendar quarters, Great Lakes' losses in
the Dubuque-O'Hare market have represented 23 percent of expenses. Those losses are of a
magnitude 4.6 times as great as what is deemed a reasonable profit in commuter operations,
and we fred them to be substantial. In addition, Great Lakes' system-wide net loss represents
6.2 percent of operating expenses, and we find this level of system-wide loss to be excessive.
We will ~erefore allow Great Lakes to suspend its service at Dubuque.
However, before Great Lakes suspends service, we expect it to contact all passengers who hold
reservations for flights that will be suspended, to inform them of the suspension and the
availability of other service at Dubuque, and to assist them in arranging alternate transportation.
2 See the Appendix for a map. Of Northwest Airlink's service, two round trips each weekday and four
each weekend are nonstop, while the others are operated via Waterloo, Iowa.
Order 2001-8-12
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
Issued by the Department of Transportation
on the 10th day of August, 2001
45-day notice filed by
GREAT LAKES AVIATION, LTD.
of intent to suspend service at Dubuque,
Iowa,
under 49 U.S.C. 41717(g)
Served: August 15, 2001
Docket OST-01-10131
ORDER ALLOWING SUSPENSION OF SERVICE
Background
On July 11,2001, Great Lakes Aviation, Ltd., filed a 45-day notice of intent to
suspend its scheduled service between Dubuque, Iowa, and Chicago O'Hare
International Airport as of August 25, 2001. Great Lakes filed its notice
pursuant to 49 U.S.C. 41717(g). Under that provision, as it applies here, a
carder providing service between a small hub or nonhub airport and O'Hare
on or before April 5, 2000, by virtue of having been granted exemptions from
the High Density Rule may not suspend that service unless it files a 45-day
notice under 49 U.S.C. 41719 and the Department "determines that the
carder suffered excessive losses, including substantial losses on operations
on that route during the calendar quarters immediately preceding
submission of the notice." 1
CD
1 The Department granted slot exemptions to Great Lakes for the purpose of
providing Dubuque-O'Hare service by Order 97-1-7, January 13, 1997. Dubuque is
classified as a nonhub airport by the Federal Aviation Administration's Airport
Activity Statistics of Certificated Route Carriers, since it accounts for less than 0.05 percent of
all U.S. enplanements. More recently, however, the Department granted exemptions to all
carriers wisking to provide service between small hubs and nonhubs and O'Hare with aircraft of less
than 71 passenger seats; see Order 2000-4-14, April 14, 2000, which implemented
49 U.S.C. 41717(b). Section 41717 was enacted by the Wendell H. Ford Aviation
Invaslment and Reform Act for the 21 st Century, P.L. 106-1 g 1, which was sigued
into law on April 5, 2000.
-2-
which opem.tes four nonstop round trips each weekday and seven each weekend to
Minneapolis/St. Patti with 33-seat Saab 340 turboprop aircraft.2
No objections to Great Lakes' notice have been received.
Decision
After careful consideration, we will allow Great Lakes to suspend its service at Dubuque as
proposed. Great Lakes has provided the Department with data regarding its recent results for
both its system generally and its Dubuque-O'Hare operation specifically. With respect to
system-wide results, Great Lakes has submitted data as published in its Annual Report as well
as in its Form 10-K Report fried with the Securities and Exchange Commi.qsion showing that
the carrier experienced a net loss in calendar year 2000 of about $8.2 million on operating
expenses (excluding interest expense) of $132.6 million, after having registered net incomes of
$2.7 million in both 1998 and 1999. On the Dubuque-O'Hare route specifically, Great Lakes
has ~ubmitted monthly data for the 12 months ended June 30, 2001. The carrier shows an
operating loss on the route for every month during the period, with a 12-month operating loss
of about $670,000 on revenues of $2,212,000 and expenses of $2,882,000.
There are two standards in the statute: "excessive", which, from the context, we interpret to
mean system-wide losses; and "substantial", which, also from the context, we interpret to refer
to losses in the specific city-pair market. Although no timeframe is provided for the system-
wide losses, the city-pair market losses are to be determined on the basis of at least two of the
calendar quarters preceding the one in which the notice is sulxnitted.
Since neither "excessive" nor "substantial" are defined in the statute, we have looked
elsewhere for a sense of the ranges of loss that Congress intended. We note that Congress has
indicated what a desirable minimum profit is for commuter carders providing subsidized
service under the essential air service program: 5 percent of operating expenses
(49 U.S.C. 41734(d)(1).) Over the four most recent calendar quarters, Great Lakes' losses in
the Dubuque-O'Hare market have represented 23 percent of expenses. Those losses are of a
magnitude 4.6 times as great as what is deemed a reasonable profit in comnmter operations,
and we find them to be substantial. In addition, Great Lakes' system-wide net loss represents
6.2 percent of operating expenses, and we f'md this level of system-wide loss to be excessive.
We will therefore allow Great Lakes to suspend its service at Dubuque.
However, before Great Lakes suspends service, we expect it to contact all passengers who hold
reservations for flights that will be suspended, to inform them of the suspension and the
availability of other service at Dubuque, and to assist them in arranging alternate transpormtion~
2 See the Appendix for a map. Of Northwest Airlink's service, two round trips each weekday and four
each weekend are nonstop, while the others are operated via Waterloo, Iowa.
-3-
This order is issued under authority delegated in 49 CFR 1.56a(f).
ACCORDINGLY,
1. We allow Great Lakes Aviation, Ltd., to suspend its scheduled air service at Dubuque. lowa.
as of Auga~st 25, 2001; and
2. We will serve copies of this order on the mayor and airport manager of Dubuque. Iowa.
Great Lakes Aviation, Ltd., American Eagle Airlines, Inc., and Mesaba Aviation. Inc.. d/b/a
Northwest Aiflink.
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
DUBUQUE, IOWA,
AND THE SURROUNDING REGION
Minneapolis/
iSt Paul ·
Waterloo
Dubuque
Chicago