Key Lime Air takes EAS contract at Pierre and Watertown, SD

Key Lime Air, through its Denver Air Connection (Denver Centennial) brand, has snatched a two-year contract away from SkyWest Airlines (OO, St. George Municipal) for the provision of Essential Air Services (EAS) at Pierre and Watertown, SD, according to a regulatory notice by the US Department of Transportation (DOT).

Using 50-seat E145s, from June 1, 2021, to May 31, 2023, DAC will provide 12 weekly round trips to Denver International. At Watertown, it will provide six weekly rotations to Chicago O'Hare and six weekly round trips to Denver. At both communities, the combined first-year annual subsidy will be USD4.7 million and the second-year annual subsidy will be USD4.8 million. DAC is to spend USD20,000 annually to market its service.

The DOT ordered the current EAS provider SkyWest to continue to provide the service until DAC takes over. SkyWest holds the current two-year contract, valid until April 30, 2021, by which it provides 12 weekly return flights from each community to Denver at a combined annual subsidy of USD6.8 million (USD3.6 million for Pierre and USD3.2 million for Watertown). The DOT subsequently approved an alternate service pattern for Watertown, authorising SkyWest to operate from Watertown to Chicago, in addition to Denver, starting September 1, 2019, with no change in annual subsidy or weekly round trips.

Both communities supported SkyWest’s proposal. The City of Pierre cited its larger fleet capacity and crew base, as well as its favourable service at Pierre which had contributed to commercial air service growth.

The Watertown Airport Board recommended SkyWest because of its good track record, having stepped in to service Watertown Regional Airport after ADI Aerodynamics (Pontiac Oakland County International) abruptly terminated its flights in 2019. This had followed the exit of Great Lakes Airlines (Cheyenne) in 2015, which had left the community without any air service.

“With the quality service provided by SkyWest as United Express, traffic at Watertown Regional Airport has increased significantly,” it vouched.

The DOT acknowledged the communities' preference for SkyWest but pointed out that a SkyWest contract would cost it USD7.7 million more than DAC’s combined Pierre and Watertown option (USD9.5 million for DAC versus USD17.3 million for SkyWest over two years).

"The Department cannot reasonably justify such a substantial increase in annual subsidy when DAC will connect the communities to the national air transportation system at a far lower cost," it explained.

Boutique Air (4B, San Francisco) also applied for the new contract but withdrew its unsubsidised proposals on February 1.