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  Order 2008-5-23

  Served: May 22, 2008
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**UNITED STATES OF AMERICA**

**DEPARTMENT OF TRANSPORTATION**

**OFFICE OF THE SECRETARY**

**WASHINGTON, D.C.**

Issued by the Department of Transportation

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  on the 19^th^ day of May, 2008

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+---------------------------------------------+------------------------+
| Essential air service at                    | > **Docket             |
|                                             | > OST-2000-8012**      |
| > **PRESQUE ISLE/HOULTON, MAINE**           |                        |
|                                             |                        |
| under 49 U.S.C. 41731 *et seq.*             |                        |
+---------------------------------------------+------------------------+

**ORDER RESELECTING CARRIER**

## Summary

By this order, the Department is reselecting Colgan Air, Inc., operating
as US Airways Express (Colgan), to provide subsidized essential air
service (EAS) at Presque Isle/Houlton, Maine, at an annual subsidy rate
of \$2,643,588, for the two-year period of May 15, 2008, through May 31,
2010. (See Appendix A for a map).

## Background

Colgan was most recently selected to provide EAS at Presque Isle/Houlton
from November 1, 2006, through October 31, 2008, by Order 2006-8-24,
August 25, 2006. On March 28, 2008, Colgan filed a 90-day notice with
the Department of its intent to terminate its subsidized service at
Presque Isle/Houlton effective June 28, 2008. Colgan said it "has
determined that it cannot continue to operate this service economically,
without an increase in subsidy due to the unprecedented increase in fuel
costs."

In response, the Department issued Order 2008-4-14 on April 8, 2008,
soliciting proposals to provide efficient EAS, with subsidy support if
necessary, at Presque Isle/Houlton, for a new two-year period.

**Proposal of Colgan Air**

Colgan, the incumbent, was the only carrier to submit a proposal. Under
its proposal, the Presque Isle community would receive 19 weekly nonstop
round trips to Boston with Saab 340 aircraft, for an annual subsidy rate
of \$2,643,588. Colgan would also continue to operate under its
code-share agreement with US Airways. Colgan's complete proposal may be
accessed online through the Department's Dockets Management System at:
http://www.regulations.gov/ by doing a "search," on DOT-OST-2000-8012.

**Community Comments**

We contacted the community via Scott Wardwell, the airport manager at
Northern Maine Regional Airport. He stated that the community is pleased
with Colgan's service and fully supports its proposal to continue to
serve the Presque Isle area.

**Decision**

Colgan has served the Presque Isle community for many years and
continues to provide them with reliable essential air service.
Historically, Colgan has provided service at Presque Isle with Saab 340
aircraft, featuring increased seating capacity, even though the
Department was subsidizing Colgan for the smaller Beech 1900 aircraft.
Colgan is planning to retire its fleet of Beech 1900 aircraft by the end
of 2008. We find that both the service and subsidy levels are
reasonable. Therefore, we will reselect Colgan Air, Inc. operating under
its code-share agreement with US Airways, for an additional two-year
period, from May 15, 2008, through May 31, 2010, to provide 19 weekly
nonstop round trips to Boston Logan International Airport with Saab 340
aircraft.

**Carrier Fitness**

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit,
willing, and able to provide reliable service before we may subsidize it
to provide essential air service. Colgan Air, Inc. has remained under
the Department\'s continuing fitness program, and no information has
come to our attention that would cause us to question the carrier\'s
fitness at this time. The Federal Aviation Administration states that it
knows of no reasons to question Colgan's fitness. We therefore conclude
that the carriers remain fit to conduct the operations proposed here.

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

## ACCORDINGLY,

1\. The Department reselects Colgan Air, Inc. to provide essential air
service at Presque Isle/Houlton, Maine as described in Appendix B, from
May 15, 2008, through May 31, 2010;

2\. The Department sets the final rate of compensation for Colgan Air,
Inc. for the provision of essential air service at Presque Isle/Houlton,
Maine as described in Appendix B, payable as follows: for each calendar
month during which essential air service is provided, the amount of
compensation shall be subject to the weekly ceilings set forth in
Appendix C, and shall be determined by multiplying the subsidy-eligible
flights completed during the month[^1] by \$1,328.44[^2].

3\. The Department directs Colgan Air, Inc. 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 the 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,
whichever is earlier. 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;

4\. We find that Colgan Air, Inc. continues to be fit, willing and able
to operate as a certificated air carrier and capable of providing
reliable essential air service at Presque Isle/Houlton, Maine;

5\. This docket will remain open until further order of the Department;
and

6\. Docket Operations will serve copies of this order on community
officials and airport managers of Presque Isle/Houlton, and Colgan Air,
Inc.

By:

> **MICHAEL W. REYNOLDS**
>
> Acting Assistant Secretary for Aviation
>
> and International Affairs

(SEAL)

*An electronic version of this document is available on the World Wide
Web at*

*http://www.regulations.gov*

**AREA MAP**

![](media/image2.png){width="6.497916666666667in"
height="6.215972222222222in"}

![](media/image3.wmf){width="6.3875in" height="7.790972222222222in"}

Colgan Air, Inc. d/b/a US Airways Express

Essential Air Service To Be Provided at Presque Isle/Houlton, Maine

+----------------------+-----------------------------------------------+
| [Effective           | May 15, 2008, through May 31, 2010.           |
| Period]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Scheduled           | 19 nonstop round trips to Boston each week.   |
| S                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Aircraft            | Saab 340 (30-34 passenger seats).             |
| type:]{.underline}   |                                               |
+----------------------+-----------------------------------------------+
| [Timing of           | Flights must be well-timed and well-spaced in |
| f                    | order to ensure full compensation.            |
| lights:]{.underline} |                                               |
+----------------------+-----------------------------------------------+
| [Annual              | \$2,643,588.                                  |
| compen               |                                               |
| sation:]{.underline} | This rate assumes an annual completion factor |
|                      | of 100 percent. A compensation ceiling is to  |
|                      | be applied per calendar week such that        |
|                      | service above that ceiling in one week cannot |
|                      | make up for service shortfalls in another     |
|                      | week.                                         |
+----------------------+-----------------------------------------------+
| [Subsidy Rate per    | \$1,328.44[^3]                                |
| Flight]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Weekly Compensation | \$50,480.72[^4]                               |
| C                    |                                               |
| eiling:]{.underline} |                                               |
+----------------------+-----------------------------------------------+

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 this 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 these rates, 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 the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2008. The Government\'s obligation for performance
under this Order beyond September 30, 2008, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2008, until funds are made available to the Department for performance.
If funds are not made available for performance beyond
September 30, 2008, the carrier will receive notice in writing by the
Department.

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.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

[^1]: Subsidy-eligible departures are defined as each arrival from and
    departure to the hub from the essential air service community.

[^2]: See Appendix C for calculations.

[^3]: \$2,643,588 divided by 1,990 annual departures.

[^4]: 38 arrivals and departures per week multiplied by \$1,328.44 per
    flight