Order 2010-3-20

Served: March 16, 2010

 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Issued by the Department of Transportation

on the 16th day of March, 2010

ORDER EXTENDING ESSENTIAL AIR SERVICE ELIGIBILITY

Summary

By this order, the Department is extending the current subsidy contract of Cape Air to provide 

subsidized essential air service (EAS) at Hagerstown, Maryland, and Lancaster, Pennsylvania, 

through September 30, 2010.1

Background

By Order 2008-12-33, the Department selected Cape Air to provide subsidized EAS at both 

communities through September 30, 2009. Service consists of four nonstop round trips per day 

at Hagerstown at the annual subsidy rate of $1,203,167, and five nonstop round trips per day at 

Lancaster at the annual subsidy rate of $1,372,474, with all service being provided to BaltimoreWashington International Airport with 9-seat Cessna 402 aircraft.

Over the last several years, both communities have been in and out of the EAS program because 

they did not meet statutory eligibility standards, i.e., they are within 70 driving miles of a large 

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.

Essential Air Service at

HAGERSTOWN, MARYLAND 

LANCASTER, PENNSYLVANIA 

Under 49 U.S.C. 41731 et seq.

 

 

 DOCKET DOT-OST-2006-25228 

 DOCKET DOT-OST-2002-11450 
2

hub -- Washington Dulles International for Hagerstown and Philadelphia International for 

Lancaster.2

Section 409 of Vision 100 (Public Law 108-176, Vision 100 – Century of Aviation 

Reauthorization Act of 2003) entitled communities that lost subsidy eligibility during the twoyear period ending on the date of enactment, December 12, 2003, to petition the Department to 

review the mileage determination. The law directed the Secretary of Transportation to consult 

with the Governors of the States or the Governors’ designees, and to consider their certification 

as to the “most commonly used route” between the community and the nearest large or medium 

hub airport. If a community was reinstated, its eligibility was renewed effective through 

September 30, 2007, the end of the then-current Federal Aviation Administration 

Reauthorization. The Department reinstated the communities’ subsidy eligibility under the 

“most commonly used route” statute through September 30, 2007, at which time we allowed the 

incumbent carriers to suspend service.

On February 28, 2008, the President signed into law the Airport and Airway Extension Act of 

2008 (P.L. 110-190), reinstating the “most commonly used route” standard in measuring distance 

from EAS communities to hub airports, through September 30, 2008.

On September 30, 2008, the President signed into law the Federal Aviation Administration 

Extension Act of 2008, Part II (P.L. 110-330), once again reinstating the “most commonly used 

route” standard, thereby guaranteeing the communities’ eligibility for subsidized EAS, this time 

through September 30, 2009. The Department issued an order requesting proposals and by 

Order 2008-12-33, the Department selected Cape Air to provide service to the communities, 

through September 30, 2009.

In August 2009, as the communities’ eligibility was coming to an end, Congress was considering 

a number of aviation bills, some of which would have extended these communities’ eligibility. 

Therefore, by Order 2009-8-16, the Department found that good cause existed to extend the 

subsidy eligibility of these communities through March 31, 2010, based on a statutory provision 

that gave the Department the discretion to continue to authorize subsidy beyond September 30. 

(See Order 2009-8-16 for a complete discussion.) Section 205 of P.L. 106-181 states that the 

Secretary may authorize subsidy for EAS communities located within 70 highway miles of a hub 

airport, if the most commonly used highway route between the community and the airport 

exceeds 70 miles.

Recent Developments

On September 23, 2009, the President signed into law the Fiscal Year 2010 Federal Aviation 

Administration Extension Act (P.L. 111-69). Among other things, that law re-imposed the “most 

commonly used route” standard, thereby once again guaranteeing the communities’ eligibility for 

subsidized EAS, this time through September 30, 2010.

 2 Congress first established these eligibility standards under P.L. 101-164 for fiscal year 1990, and reestablished 

them in fiscal years 1994-1999. Subsequently, the standards were made permanent by P. L. 106-69, The Department 

of Transportation and Related Agencies Act of 2000.
3

Decision

Congress has now guaranteed Hagerstown and Lancaster subsidized EAS through September 30, 

2010. Cape Air’s current contract expires on March 31, 2010. Therefore, we must take action to 

ensure the continued, uninterrupted air service for these communities. Our options are to extend 

Cape Air’s contract or issue a Request for Proposals for a new two-year contract. Cape Air 

inaugurated service at both communities in March 2009, so it will have been in place for only a 

year when its contract expires this March 31, well short of the typical two-year contract. 

Moreover, as a practical matter, there is not sufficient time to issue a request for proposals, 

process a carrier-selection case, and have a new carrier in place much prior to September 30.

We will hereby extend the contract of Cape Air for the provision of EAS at Hagerstown and 

Lancaster through September 30, 2010.

This Order is issued under the authority delegated in 49 CFR Section 1.56a(f).

ACCORDINGLY,

1. The Department extends the contract of Hyannis Air Service, Inc. d/b/a Cape Air., for the 

provision of EAS at Hagerstown, Maryland, and Lancaster, Pennsylvania, first established by 

Order 2008-12-33 and as set forth in Appendix B, through September 30, 2010;

2. Dockets DOT-OST-2006-25228 and DOT-OST-2002-11450 will remain open until further 

order of the Department; and

3. The Department will serve a copy of this order on the mayors and airport managers of 

Hagerstown and Lancaster, and Hyannis Air Service, Inc. d/b/a Cape Air.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov
Appendix A

AREA MAP
Appendix B

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

HAGERSTOWN, MARYLAND AND LANCASTER, PENNSYLVANIA
Appendix C

Page 1 of 3

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

HAGERSTOWN, MARYLAND

Effective period: April 1, 2010, through September 30, 2010.

Service: 28 nonstop round trips per week to Baltimore-Washington International 

Airport

Intermediate stops and 

upline service: No upline service is permitted without prior Department approval.

Aircraft type: Cessna 402 (9 seats)

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,203,167

Subsidy Rate Per

Arrival/Departure: $4261

Weekly Compensation 

Ceiling: 2 $23,8563 

___________________________

1

 Annual compensation of $1,203,167 divided by 2,825 annual arrivals and departures, assuming a 97% 

completion factor. (56 flights per week x 52 weeks x 97% completion = 2,825)

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $426 multiplied by 56 eligible arrivals and departures.
Appendix C

Page 2 of 3

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

LANCASTER, PENNSYLVANIA

Effective period: April 1, 2010, through September 30, 2010. 

Service: 35 nonstop round trips per week to Baltimore-Washington International 

Airport

Intermediate stops and 

upline service: No upline service is permitted without prior Department approval.

Aircraft type: Cessna 402 (9 seats)

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,372,474

Subsidy Rate Per

Arrival/Departure: $3891

Weekly Compensation 

Ceiling: 2 $27,2303 

___________________________

1

 Annual compensation of $1,372,474 divided by 3,531 annual arrivals and departures, assuming a 97%

completion factor. (70 flights per week x 52 weeks x 97% completion = 3,531)

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $389 multiplied by 70 eligible arrivals and departures.
Appendix C

Page 3 of 3

General Terms and Conditions for Essential Air Service

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 plans 

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 these rates, it must first notify the Office of 

Aviation Analysis in writing and receive written approval from the Department to be ensured 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 stipulated 

amounts or at the stipulated 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 

Department and carrier 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.

Funds are not currently available for performance under this order beyond September 30, 2010. 

The Government's obligation for performance under this order beyond September 30, 2010, 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, 2010, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond 

September 30, 2010, the carrier will receive notice in writing by the Department.

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

under this order.