Order: 2010-10-7

 Served: October 8, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 8th day of October, 2010

Essential Air Service at

MASSENA, OGDENSBURG AND

WATERTOWN, NEW YORK

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

DOCKET DOT-OST-1997-2842

ORDER RESOLICITING CARRIER PROPOSALS

Summary

By this order, the Department is resoliciting proposals, with or without subsidy, from carriers 

interested in providing essential air service (EAS) at any or all of the above-captioned 

communities. Proposals are due by October 27. (See Appendix A for map.)

Background

By Order 2008-3-15, March 14, 2008, the Department selected Hyannis Air Service, Inc. d/b/a 

Cape Air (Cape Air) to provide EAS at the three communities for the two-year period through 

September 30, 2010. That order established a total annual subsidy rate of $3,879,863 for service 

consisting of 21 nonstop round trips per week between each community and Albany County 

Airport, with 9-seat Cessna 402 aircraft.

By Order 2010-5-32, May 28, 2010, the Department requested proposals for a new two-year 

period beginning October 1, 2010. In response to that order, we received proposals from the 

incumbent, Cape Air, Gulfstream International Airlines, Inc. (Gulfstream), and Charter Air 

Transport, Inc. (Charter Air).

Proposals

Cape Air proposed three service options, each with an associated two-year and four-year subsidy 

rate.1

 1 Cape Air proposed two- and four-year subsidy rates for each service option, offering a 3% savings for the longer 

term period.

 Under Option 1, Cape air proposed to provide each community with 21 nonstop round 

trips per week to Albany at the two-year and four-year combined annual subsidy rates of 
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$4,562,619 and $4,425,741, respectively. Option 2 is for the same service as Option 1, but for 

only Massena and Ogdensburg for two-year and four-year annual rates of $3,134,907 and 

$3,040,861, respectively. Option 3 is the same as Option 1 except that three of the nine daily 

round trips (morning, mid-day and evening) would continue to/from Boston for two-year and 

four-year subsidy rates of $4,880,040 and $4,733,639, respectively.

Charter Air proposed two options. Option 1, which includes several sub-options, proposes 12 

nonstop and one-stop round trips to New York’s JFK airport (provided the carrier could obtain 

slots at the airport) with 30-seat Embraer EMB-120 aircraft. This Option is a two-city only 

option, which would leave one community without service. Specifically, Option 1.1 proposes 

Ogdensburg/Watertown service at $2,847,311 annually; Option 1.2 proposes 

Massena/Ogdensburg service at $2,759,171 annually; and Option 1.3 proposes 

Massena/Watertown service at $2,985,816 annually. Option 2 would provide each community 

with 12 round trips a week to JFK. All of Massena’s service would be one-stop; all of 

Watertown’s would be nonstop; and Ogdensburg’s service would consist of a mix of nonstop and 

one-stop. All service would be provided with 30-seat Embraer EMB-120 aircraft at a combined 

annual subsidy rate of $4,568,040.

Gulfstream proposed a three-city, all-or-nothing package to provide each community with 12 

nonstop round trips per week to Boston with 19-seat Beech 1900D aircraft at an annual 

combined subsidy rate of $7,583,211. Currently operating as Continental Connection, the carrier 

proposed to operate this service as Gulfstream Airlines, i.e., without a code-share.

Community and State Comments

We received a large number of comments in response to the carriers’ proposals, both from 

community officials and from the general public.

The City of Ogdensburg and the Ogdensburg Bridge and Port Authority strongly support Cape 

Air, in fact for the carrier’s proposed four-year option. The City of Watertown endorses 

Gulfstream, while the majority of individual responses support Cape Air. At Massena, the Town 

Council voted to support Gulfstream, although not unanimously, while stating that the 

community has no complaints against Cape Air’s service. A majority of the Town Council and 

some individuals said that they prefer the larger aircraft proposed by Gulfstream.

Decision

We try to accede to community views when practical and within budget but, given the way the 

proposals are packaged, that is not possible in this case. First, Charter Air Transport has received 

no community support and its 3-city package requires more subsidy than Cape Air’s. Cape Air’s 

proposal requires at least a two-city minimum and is supported by only Ogdensburg. 

Gulfstream’s proposal is a three-city, all-or-nothing package, is not supported by Ogdensburg, 

and requires an additional $2.5 million over the combination proposed by Cape Air. Since 

community support is split between carriers, we cannot, therefore, accede to the preferences of 

each community. Thus, we have decided to rebid the case in an effort to obtain proposals that 

would satisfy the needs of all three communities at subsidy levels that are competitive.

Request for Proposals

We are again requesting proposals from carriers interested in providing service at Massena, 

Ogdensburg and Watertown, with or without subsidy support, for the two-year period. Carriers 
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should file their proposals no later than October 27. After that date, our staff will docket 

proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on 

the civic parties and other applicants. Shortly afterwards, we will provide a summary of the 

proposals to community officials and ask them to submit their final comments. We will give full 

consideration to all proposals filed in a timely manner.2

Interested carriers should prepare their proposals with every expectation that their initial 

proposals will also be their final and only proposals. We retain the discretion to negotiate 

proposals with carriers when we deem it desirable. We also retain the discretion to reject 

outright all unreasonable or unrealistic proposals and solicit a new round of proposals.

We are here providing interested carriers with some basic information to serve as guidance when 

they prepare their proposals, but we will not prescribe a precise format for their proposals. We 

expect proposals to adequately describe the service being proposed and the annual amount of 

subsidy being requested. The applicants can make their own judgments as to the level of detail 

they wish to present; however, they might want to include proposed schedules as well as 

supporting data for their subsidy requests, such as projected block hours, revenues and expenses. 

We strongly encourage clear, well-documented proposals that will facilitate their evaluation by 

the affected community and the Department.3

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order 

to assist carriers in developing traffic and revenue projections for their proposals, we have 

summarized historical passengers in Appendix B. Specifically for these three communities, we 

expect proposals that are consistent with what the communities currently receive (three daily 

round trips with nine-seat aircraft). We note that EAS at the communities calls for service with 

15-seat aircraft. However, during the current two-year contract, the communities approved the 

service with nine-seat aircraft. For carriers proposing 15-seat or larger aircraft, we expect 

proposals for two round trips a day (12 per week). If the proposed service contemplates serving 

two communities on the same flights with 15-seat aircraft, then proposals should reflect three 

round trips a day (18 per week). Service should be to Albany, Boston, New York or any hub that 

offers access to the national air transportation system. Carriers are also welcome to propose 

more than one option, if they choose; they need not limit themselves to those requirements if 

they envision other, potentially more attractive service possibilities -- different hubs, for example 

-- with subsidy requirements that remain competitive. The communities and air carriers are 

encouraged to work together in advance of the due date for proposals to craft a service pattern 

that is desirable to the communities and meets the operational needs of the airline interested in 

submitting a proposal.

 2 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide 

essential air service without subsidy and we determine that service can be reliably provided without such 

compensation, we do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s subsidyfree service as proposed.

3 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c)(1) directs us to consider four 

factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; 

(3) interline arrangements with a larger carrier at the hub; and (4) community views. In addition, the Consolidated 

Appropriations Act, 2008, Public Law 110-161, provides that when selecting a carrier to provide EAS, the 

Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since 

the inception of the program. Interested carriers should also be aware that our general provisions governing EAS 

will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C 

of this order contains those general provisions.
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New Filing Procedures

Carrier proposals should be submitted to the Department with all materials merged into a single 

document. In addition, because the document will be published on Regulations.gov, each page 

should be formatted to be viewed online.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces and nondiscrimination.4 Consequently, all carriers receiving 

Federal subsidy to support essential air service must certify that they are in compliance with 

Department regulations regarding drug-free workplaces and nondiscrimination, and those 

carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they 

are in compliance with the regulations governing lobbying activities. All carriers that plan to 

submit proposals involving subsidy should submit the required certifications along with their 

proposals. Interested carriers requiring more detailed information regarding these requirements, 

as well as copies of the certifications, should contact the Office of Aviation Analysis at 

(202) 366-5903. The Department is prohibited from paying subsidy to carriers that do not 

submit these documents.5

Community and State Comments

Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, 

we will provide a summary of the proposals to the civic parties and ask them to submit their final 

comments shortly after October 27, the due date for carrier proposals.

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

ACCORDINGLY,

1. We request that carriers interested in providing essential air service at Massena, Ogdensburg,

and Watertown, New York, submit their proposals, with or without subsidy requests, no later 

than October 27, 2010. The proposals should be emailed to: EAS@dot.gov with the title 

“Proposal to Provide Essential Air Service at Massena, Ogdensburg and Watertown, New York, 

Docket DOT-OST-1997-2842”;6

2. Docket DOT-OST-1997-2842 will remain open until further order of the Department; and

 4 The regulations applicable to these areas are: (1) 49 CFR Part 20 – New restrictions on lobbying; (2) 49 CFR 

Part 21 – Nondiscrimination in federally-assisted programs of the Department of Transportation – Effectuation of 

title VI of the Civil Rights Act of 1964; 49 CFR Part 27 – Nondiscrimination on the basis of disability in programs 

and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382 – Nondiscrimination 

on the basis of disability in air travel; and (3) 49 CFR Part 29 – Government-wide debarment and suspension (nonprocurement) and government-wide requirements for drug-free workplace (grants).

5 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

6 Questions regarding filings in response to this order should be directed to Renée Williams at 202-366-1058, or via 

email at renee.williams@dot.gov. Parties may call 202-366-5903 to confirm receipt of their EAS proposals.
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3. The Department will serve a copy of this order on the mayors and airport managers of 

Massena, Ogdensburg, and Watertown, Hyannis Air Service, Inc. d/b/a Cape Air, and the parties 

listed in Appendix D.

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

Historical O&D Traffic and Average Daily Enplanements1

Massena, NY

Average Daily

O&D Traffic Enplanements2

2007 3,420 1.5

2008 1,793 2.9

2009 6,402 10.2

Ogdensburg, NY

Average Daily

O&D Traffic Enplanements2

2007 4,784 7.6

2008 1,166 1.9

2009 3,976 6.4

Watertown, NY

Average Daily

O&D Traffic Enplanements2

2007 18,232 29.1

2008 1,217 1.9

2009 4,832 7.7

________________________________ 1 Source: Bureau of Transportation Statistics; TranStats Form 41, Schedule T-100. 2 Daily averages are based on one-half of the O&D passengers, divided by 313 service days (314 during 

leap years).

NOTE: Due to Big Sky’s shutdown, the communities were without service for most of 2008.
Appendix C

Example of 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 solicitation beyond [DATE]. The 

Department’s obligation for performance under this solicitation beyond [DATE], 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 [DATE], until funds are made available to the Department for performance. If 

funds are not made available for performance beyond [DATE], 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.
Appendix D

Scheduled Air Carriers, Contiguous US and Puerto Rico

Air Greco/Wings Air

Air Sunshine, Inc.

Air Sunshine, Mirmohammad Adili

Air Wisconsin, Annette Daly 

Air Wisconsin, Jim Rankin

Airline Associates, Bill Mishk

Alaska Airlines, Jeff Cole

Alaska Airlines, Sandy Sinick

Allegiant Air, Brian Davis

American Airlines, Carl Nelson

American Eagle, Jeffrey Hartz

Bemidji Aviation, Cori Rude 

Bemidji Aviation, Arlen Rinkenberger

Cape Air, Andrew Bonney 

Cape Air, Dan Wolf 

Cape Air, J.Flaherty

Colgan Air, Kevin Scott

Colgan Air, Mike Colgan 

CommutAir, Andy Price

CommutAir, Joel Raymond

Consultant, Robert Silverberg

Continental, Bruce Keiner

Continental, Dan Weiss

Continental, Lorry Halloway

Delta, Anthony Canitano

Delta, Dan Shuman

Delta, Jeff Morgan 

Delta, Joe Esposito 

Delta, Karen Zachary 

Delta, Kristal Murphy

Delta, Sascha Vanderbellen

DHS, Bill Ragan

DHS, David Bernier

Era Aviation, Mike Lenorman

Executive Airlines, Kate Soled

Frontier Flying, Bob Hajducovich

GemAir/Salmon Air, Dan Schroeder

GemAir/Salmon Air, JoAnn Wolters

Great Lakes, Chuck Howell

Great Lakes, Doug Voss 

Great Lakes, Greg Stephens

Gulfstream, Dave Hackett

Gulfstream, Mickey Bowman

Gulfstream, T. Cooper 

Horizon Air, Dan Russo

Horizon Air, Jennifer Thompson

Horizon Air, Mike McQueen

Horizon, Jeff Cole

ICEPR, Luis Irizarry

Intrepid Interntl Air, Rick Eyk

Island Air Charters, Linda House

Jet Air, Daniel Wolford

Kenmore Air, Tim Brooks 

Mesa Air, Michael Lotz 

Mesaba, John Spanjers

Mesaba, Max Shemesh 

Midwest Airlines, Greg Aretakis

MN Aviation, Jose Maldonado 

Multi Aero, Darnea

Multi Aero, Shane Storz

Northwest Airlines, Aaron Murray

Northwest, Tim McDonald 

NYDC, Henok Araya

OST, Brian Swanson

OST, Dennis DeVany

OST, Kevin Adams

OST, Kevin Schlemmer

OST, Michael Martin

OST, Renee Williams

Pacific Wings, Greg Kahlstorf

PenAir, Danny Seybert

PenAir, Scott Bloomquist

Pinnacle Airlines, Joe Williams 

Pinnacle Airlines, Phil Reed

Planemasters, Inc., John Kessler

Planemasters, Inc., Paul Berliner

Planemasters, Inc., Todd DeSimone

Public Charters, Jim Gallagher

Scenic, Mary Schneider

Scenic, Mitzi Daines

SeaPort/Wings of Alaska, Jim Day 

SeaPort/Wings of Alaska, Nate Vallier

Seaport/Wings of Alaska, Rob McKinney

Shuttle America, Jerry Balsano 

SkyWest, Eric Christensen

SkyWest, Michael Thompson

SkyWest, Steve Hart

Sovereign Air, Bob Karns

Sovereign Air, Lois R. Barton

Tradewind, Eric Zipkin 

Trans States, Fred Oxley

Trans States, Gerry Wigmore

United, Alicia Gabriel

United, James Starnes

US Airways, Benjamin Slocum

US Airways, Howard Kass

US Airways, Jason Reisinger

Warbelows Air Ventures, Art Warbelow