Report Prepared by: Rhett Williams, Airport Manager, Merced Yosemite Regional Airport and Frank Quintero, Deputy City Manager
Title
SUBJECT: Consideration of the Merced Regional Airport Authority Recommendation for the Skywest Charter - Option 1, Contour Airlines - Option 2, and Advanced Air - Option 3 as the Airline Carrier to Serve the Merced Yosemite Regional Airport Under the Essential Air Service and Make a Recommendation to the U.S. Department of Transportation
REPORT IN BRIEF
Considers the Merced Regional Airport Authority's recommendation to the U.S. Department of Transportation regarding a selection of an Essential Air Service carrier provider for the Merced Yosemite Regional Airport.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Regional Airport Authority's recommendation for air carrier service to the U.S. Department of Transportation concerning the selection of an Essential Air Service provider by priority as follows:
Option 1. Recommend to the US Department of Transportation that SkyWest Charter with service to Los Angeles International Airport and Harry Reid International Airport (Las Vegas) serve the City of Merced as the Essential Air Service provider (subject to US DOT waiver approval); and,
Option 2. Recommend to the US Department of Transportation that Contour Airlines with Service to Los Angeles International Airport and Harry Reid International Airport (Las Vegas) serve the City of Merced as the Essential Air Service provider (subject to US DOT waiver approval); and,
Option 3. Recommend to the US Department of Transportation that Advanced Airlines with service to Hawthorne Airport and Harry Reid International Airport (Las Vegas) serve the City of Merced as the Essential Air Service provider.
B. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve as recommended by the Merced Regional Airport Authority, or;
2. Provide and Approve a different recommendation to the U.S. Department of Transportation (specify in motion,) or,
3. Take no action
AUTHORITY
Charter of the City of Merced, Section 200, et. seq.
CITY COUNCIL PRIORITIES
As adopted in the Fiscal Year 2025-2026 Budget.
DISCUSSION
The US Department of Transportation's (USDOT) Essential Air Service (EAS) program was created in response to passing of the Airline Deregulation Act of 1978 to address concerns for continued air carrier service to rural areas of the United States. The City of Merced has participated in the EAS program since 1982. The EAS program provides an operating subsidy to the air carrier serving the Merced market through a contract between the US Department of Transportation and the selected air carrier. The EAS contract period is usually two to four years with the current contract expiring during 4Q 2025.
Essential Air Service carriers from the past include Scenic Air, Great Lakes Airlines, and Boutique Air. Hawthorne-based Advanced Air currently serves the Merced Yosemite Regional Airport as the Essential Air Service carrier under contract with the US Department of Transportation.
New Proposals Requested: On May 10, 2025, the United States Department of Transportation (DOT) issued an "Order Requesting Proposals" requesting proposals from air carriers interested in providing EAS for the Merced Yosemite Regional Airport starting January 1, 2026 (ATTACHMENT 1). By July 11, 2025, the DOT received four proposals which were forwarded to City staff. Proposals were received from Contour Airlines, Advanced Air, SkyWest Airlines, and Boutique Air (ATTACHMENTS 2 - 6.)
Airport Authority EAS Subcommittee Review: The EAS Subcommittee met on August 5, 2025, to review the submitted EAS proposals. Subcommittee discussion focused on schedule, flights to major hubs, interlining, frequency, increasing enplanements, marketing, and reliability. Subsequently, the EAS Subcommittee spent the afternoon of August 12, 2025, virtually meeting and interviewing the proposers. All proposing airlines participated.
Subcommittee members included Sabrina Abong, Shahid Sohail, and Dalvina Johnson. Also participating on the Subcommittee were Airport staff Rhett Williams and Karen Baker. Deputy City Manager Frank Quintero and Economic Development Associate Amanda Williams served in an advisory capacity.
The process to review the proposals consisted of the following steps:
A) Review of the EAS proposals by the Ad Hoc Subcommittee
B) Subcommittee panel interviews with the EAS proposers
C) Subcommittee recommendation presented to the Regional Airport Authority
D) Regional Airport Authority provides a recommendation to the City Council
E) City Council provides a recommendation to the US Department of Transportation
The final decision (order) on which airlines is selected to provide EAS Service to the City of Merced is made by the US Department of Transportation.
The Subcommittee voted to recommend to the Regional Airport Authority that two options be presented for consideration:
* Option 1, Skywest Charter, with flights to Los Angeles International Airport and Harry Reid (Las Vegas) International Airport for a total of 12 round trips per week on a 30 seat CRJ200; and,
* Option 2, Contour Airlines, with 7 round trips per week to Los Angeles International Airport on a 30 seat Regional Jet and 5 round trips to Las Vegas on a 30 seat Regional Jet.
Regional Airport Authority Special Meeting: The Regional Airport Authority met on September 3, 2025, to discuss and consider the dual option recommendation from the Subcommittee. Staff reviewed the proposal review process, and that the Subcommittee has online interviews with all four proposers.
During the RAA Special Meeting, testimony was provided by representatives from Advanced Air and Contour Airlines. Advanced Airlines currently provided EAS service with flights from Merced Yosemite Regional Airport to Hawthorne Municipal Airport (Los Angeles) and Merced Yosemite Regional Airport to Harry Reid International Airport (Las Vegas.) Prior to the RAA Special Meeting, staff received over 300 letters of support for Advanced Air.
Charter Air Service: During the RAA Special Meeting, discussion was raised about carriers (Skywest Charter and Contour Airlines) proposing charter air service which is a form of Alternate Essential Air Service.
Traditional Essential Air Service pays a subsidy to the selected air carrier to provided round trips to a major hub airport. Under the Alternate Essential Air program, the community forgoes their traditional EAS for prescribed amount of time in exchange for receiving a grant to spend in a variety of ways that might better suit the host airport's needs. In other words, Alternate EAS allows communities to design their own service, fly to different destinations seasonally, or offer less frequent services. Furthermore, Alternate EAS gives the grant directly to the host airport who then makes payment to the carrier. Traditional EAS requires carriers to provide a minimum level of scheduled service, typically daily flights to a major hub(s). Payments to the carriers and schedule tracking coordinated between the carrier and US Department of Transportation.
Skywest Charter and Contour Airlines submitted proposals as charter carriers, a form of Alternate Essential Air Service. Both carriers are willing to provide service to the Merced Yosemite Regional Airport under the traditional Essential Air Service program. Since the Skywest and Contour proposed as charter carriers, the City of Merced would have to request a waiver to the Department of Transportation Secretary.
EAS communities may submit waiver requests from certain EAS requirements to the Department for consideration. Waiver requests may be submitted with an air carrier's proposal or during the community comment period, after proposals are received. 49 U.S.C. ? 41732(c) states: "Notwithstanding section 41733(e), upon request by an eligible place, the Secretary may waive, in whole or in part, subsections (a) and (b) of this section or subsections (a) through (c) of section 41734. A waiver issued under this subsection shall remain in effect for a limited period of time, as determined by the Secretary."
The waiver stipulates that the City of Merced is waiving its right to scheduled service under 49 U.S.C. ? 41732(b)(1)(A) which reads, "?41732 Basic Essential Air Service, (b) Minimum Requirements - Basic essential air service shall include at least the following:, (1) (A) for a place not in Alaska, 2 daily round trips 6 days a week, with no more than one intermediate stop on each flight."
"Generally speaking, a waiver request to the U.S. Department of Transportation would read as follows: The City of Merced requests a waiver in order for our EAS contract award to [insert airline name] to be via conventional EAS regulations, and request that the Secretary waive 49 USC 41732(a), which states that basic EAS is scheduled air transportation. The proposal submitted by [insert airline name] is for public charter service, not scheduled air transportation as defined by the U.S. Department of Transportation's regulations. If the Secretary grants this waiver, we request that it be limited to the duration of this EAS contract."
Examples of requests of waivers being granted by the DOT include (2002-12802) for Carlsbad, New Mexico and Fort Leonard Wood, Missouri DOT (1996-1176).
Alternate Essential Air Service requires additional coordination, record keeping, and financial management by City Airport staff, it is essential that the waiver be secured to allow the proposers to operate under the traditional Essential Air Service rules and regulations.
Advanced Air's proposal is for the traditional Essential Air Service program and does not require securing waiver approval from the US Department of Transportation.
Community Consideration: The RAA discussion also included the following:
* Merced is a growing community with unique needs.
* It is a goal that the selected carrier provides services that keep residents flying from Merced instead of driving to larger airports, ensuring local economic benefit and increasing enplanements.
* The carrier develops a marketing strategy promoting their service from the Merced Yosemite Regional Airport.
RAA Action: The RAA was grateful to receive proposals from the four carriers and acknowledged the public comments via email that were garnered by Advanced Air (ATTACHMENT 7.) They agreed to add Advanced Air as an option, with service from Merced to Hawthorne Municipal Airport and Merced to Harry Reid (Las Vegas) Internation Airport to the following recommendation to the Merced City Council:
The RAA unanimously recommended that City Council recommend to the U.S. Department of Transportation the following provide Essential Air Service to the City of Merced in the following priority:
Option 1, Skywest Charter, Merced to Los Angeles International Airport and Merced to Harry Reid Internation Airport (subject to waiver approval); and
Option 2, Contour Airlines, Merced to Los Angeles International Airport and Merced to Harry Reid International Airport (subject to waiver approval); and
Option 3, Advanced Airlines, Merced to Hawthorne Municipal Airport and Merced to Harry Reid International Airport.
IMPACT ON CITY RESOUCES
No appropriation of funds is needed at this time.
ATTACHMENTS
1. EAS RFP Issued by the DOT
2. Advanced Air EAS Proposal
3. Boutique EAS Proposal
4. Contour EAS Proposal
5. SkyWest Airlines EAS Proposal
6. SkyWest Charter EAS Proposal
7. Public Comments - Advanced Air
8. EAS Presentation