### Order: 2014

- 10

- 2

Served October 9, 2014



## UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 9 th 

### day of October , 201 4

ORDER TEMPORARILY EXTENDING CURRENT SUBSIDY

Summary By this O rder, the Department is extending the service period for SeaPort Airlines, Inc. (“SeaPort”) to provide Essential Air Service ( “ EAS ” ) operations at Jackson, Tennessee, from

October 1 , 2014, until further Departmental a ction , but no later than February 28 , 201 5

. SeaPort will continue to provide Jackson with 12 nonstop round trips per week to Nashville International Airport and six nonstop round trips per week to Memphis Inter national Airport 1 

### using nine

- seat Cessna Grand Caravan aircraft at an annual subsidy rate of $1,115,210. 2



### Background By Order 2011

- 12

- 15, issued on December 22, 2011, the Department selected SeaPort to provide subsidized EAS at Jackson with nine

- seat C essna Grand Caravan aircraft for a one

- year period through the end of the 12 th 

### month thereafter , at an annual subsidy rate of $1,149,703. SeaPort inaugurated service at Jackson on January 22, 2012, thus making the original expiration date January 31, 2013

. By Order 2013

- 2

- 23, issued on February 25, 2013, the Department

extended SeaPort’s contract at Jackson for an additional year, from February 1, 2013, through January 31, 2014 , at a subsidy rate of $1,115,210, as described in SeaPort’s original proposal to
serve Jackson , which was submitted to the Department in October of 2011. Additionally, by

Order 2014

- 1

- 23, issued on January 31, 2014, the Department extended SeaPort’s service obligation until September 30, 2014 , at the same subsidy rate of $1,115,210

.

The complete public file for EAS at Jackson may be accessed online through the Federal Dockets Management System at: http://www.regulations.gov by entering “DOT

- OST

- 2000

- 7857” in the “SEARCH for: Rules, Comme nts, Adjudications or Supporting Documents:” field.

1 SeaPort currently provides six additional round trips per week to Memphis on a subsidy

- free basis.

2 Subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. 

### Essential Air Service at

JACKSON, TENNESSEE

Under 49 U.S.C. § 41731 et seq

. DOT

- OST

- 200 0

- 7857

### 2

Legislative Changes The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 (Public

Law No: 112

- 95) amended 49 U.S.C. § 41731(a)(1)(B) to change the definition of “eligible plac e” for the purpose of receiving EAS. The amendment states that to be eligible, a

c ommunity must maintain an average of 10 enplanements or more per service day, as determined by the Secretary, during the most recent fiscal yea r beginning after September 30

, 2012. T he legislation exempts locations in Alaska and Hawaii and communities that are more than 175 driving miles from the nearest large

- or medium

- hub airport. As

Jackson is located 86 miles from Memphis International Airport, which is a medium

- hub

ai rport, it must meet the 10

- enplanement

- a

- day threshold for EAS to continue after FY2013 or otherwise face termination of its eligibility to receive EAS, barring a waiver from the Secretary.

By Order 2014

- 4

- 26, issued on April 24, 2014 , t he Department iss ued a show

- cause Order directing interested parties to submit objections to the Department’s tentative findings that Jackson enplaned fewer than 10 passengers per day

. In response to that Order, the Department received objections from the community, but n one of those objections dispute d our findings that Jackson enplaned fewer than 10 passengers per day during FY 2013

.

Therefore, b y Order 2014

- 6

- 6, issued on June 24, 2014, the Department made final its tentative

decision in Order 2014

- 4

- 26, thereby termin ating the EAS eligibility of Jackson. On August 24, 2014, the McKellar Sipes Regional Airport submitted an application for a waiver on behalf of the community of Jackson.

By Order 2014

- 9

- 21, issued on September 26, 2014, the Department gra n ted the waiv er petition submitted on behalf of Jackson. That Order states that Jackson’s compliance with 49 U.S.C. 41731(a)(1)(B) will be re

- assessed based on Fiscal Year 2015 data (October 1, 2014, through September 30, 2015). T o ensure that Jackson does not suffer from a service hiatu s, we must
extend SeaPort ’ s current contract from October 1, 2014, until further Departmental action, but

no later than February 28

, 2015

. Because SeaPort has been serving Jackson nearly three years, since January 2012, and with sever al extensions to its rate, the Department will issue a new request for proposals for service at Jackson. As stated in Order 2014

- 9

- 21 , the Department plans to issue the request for proposals as soon as possible.

Decision

W e will extend SeaPort’s servic e period until f urther Departmental action , but no later than February 28 , 2015

. Consistent with past practice, w e will set this contract extension at an annual subsidy of $1,115,210, as described in SeaPort’s origin al proposal dated September 30, 2011, a nd further detailed in Appendix B of this Order.

This Order is issued under authority delegated in 49 CFR Part 1. 25 a( b ).

ACCORDINGLY,

1. The Department requires SeaPort Airlines, Inc., to continue to provide E ssential A ir S ervice

at Jackson, Tennessee , until further Departmental action , but no later than February 28 , 2015 ;

2

. We set the rate of compensation for SeaPort Airlines, Inc., for the provision of E ssential A ir

S ervice at Jackson, Tennessee, as described in Appendix B ;

### 3

3. The Departme nt direct s SeaPort Airlines, 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 its audit and examination by represen tatives of the Department. Such documentation shall be retained for seven years from the issuance date

of this Order or until the Department indicates that the records may be destroyed, whichever comes first. Copies of flight logs for aircraft sold or di sposed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this O rder;

4

. Docket DOT

- OST

- 200 0

- 7857 will remain open until further order of the Department; and

5

. The Depart ment will ser ve a copy of this O rder on the m ayor of Jackson, the airport

manager of McKellar

- Sipes Regional Airport

, SeaPort Airlines, Inc

. , and the service list of this

Docket.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEA L)

An electronic version of this document is available on line at www.regulations.gov

### Appendix A

O p e ra t i ng P ro j e c t i o n s

A v

e r ag e S e ct o r Leng t h ( s m ) Y e a r 1

111 Y e a r 2

111

S c hedu l e d D epa r t u r e s 1

, 87 2 1

, 87 2

S c hedu l e d B l o c k H ou r s 1

, 487

. 2 1

, 487

. 2

P r o j e c t e d C o m p l e t i o n F a c t o r 98

. 0 % 98

. 0 %

P r o j e c t e d C o m p l e t e d D epa r t u r e s 1

, 83 5 1

, 83 5

P r o j e c t e d C o m p l e t e d B l o c k H ou r s 1

, 457

. 5 1

, 457

. 5

Pass e n g e r P ro j e c t i o n s

P r o j e c t e d P a s s enge r s 5

, 89 9 6

, 48 9

P r o j e c t e d A v e r ag e F a r e $64

. 6 2 $65

. 9 2

R e v enu e P a ss enge r M il e s (R P M s ) 654

, 78 9 720

, 26 8

A v

a il ab l e S ea t M il e s ( AS M s ) 1

, 832

, 72 5 1

, 8 32

, 72 5

P r o j e c t e d Loa d F a c t o r 35

. 7 % 39

. 3 % 

### SeaPort Airlines, Inc. Option #2 6 Weekly Roundtrips: Jackson, TN

– Memphis, TN 12 Weekly Roundtrips: Jackson, TN

– Nashv ille, TN

F i na n c i a l P ro j e c t i o n s

R e v enue s

P a ss enge r T i c k e t R e v enue s $381

, 22 0 $427

, 72 9

A n c i l l a r y R e v enue s $ 9

, 18 8 $10

, 3 4 0

T

o t a l $390

, 40 8 $438

, 06 9

E x pen s e s

F li gh t O pe r a t i o n s $247

, 76 8 $250

, 53 7

A i r c r a f t O w ne r s h i p / Lea s e $164

, 64 0 $164

, 64 0

F ue l & O i l $405

, 31 9 $419

, 50 5

T

r a ff i c S e r v i c i n g $163

, 31 8 $169

, 91 2

I n s u r an c e $29

, 14 9 $29

, 73 2

M a i n t enan c e $240

, 48 0 $245

, 29 0

S ub

- T o t a l

- D i r e c t $1

, 250

, 67 4 $1

, 279

, 61 5

I nd i r e c t $216

, 09 9 $199

, 69 8

T

o t a l E x p e n s e s $1

, 466

, 77 3 $1

, 479

, 31 3

P r o j e c t e d O pe r a t i n g P r o f i t / ( L o ss ) ( $1

, 07 6

, 36 5 ) ( $ 1

, 041

, 244 )

S u b s i d y C a l c u l a t i o n s
O pe r a t i n g L o s s $1

, 07 6

, 3 6 5 $1

, 04 1

, 24 4

E c ono m i c R e t u r n @ 5 % $7 3

, 3 3 9 $73

, 9 6 6

R e qu i re d S ub s i d y $1

, 149

, 70 3 $1

, 115

, 21 0

S ub s i d y pe r D epa r t u r e $626

. 6 9 $607

. 8 9

S ub s i d y pe r P a ss enge r $ 19 4

. 9 0 $ 17 1

. 8 6

### Appendix B

S e a P o r t Ai r li n e s, I n c. E ss e n t ial Air S er vi c e t o b e P rovided at J a c k so n , T e nn e ss ee

E ffec tive Pe r iod : October 1 , 2014 , until February 28 , 2015

S c h e dul ed S er vi ce : 12 n o nstop r ound t r ips p e r w ee k to N a shville I n t er n a ti o n a l Ai r po r t a nd 6 nonstop r ound t r ips p e r w ee k to M e mphis I nt er n a tion a l Ai rpo r t
Ai rcr a f t : C e ssna G r a nd C ara v a n, 9 s ea ts

R a te p er El i g ible F l i g h t 1 

### : $608

W ee k l y C e ilin g 2 

### : $21,888

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not op era te in c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding the s er vi c e pl a ns outlin e d in the Order a nd a n y oth e r

s i g ni f i c a nt e l e m e nts of the re qui re d s er vi ce , without p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

o f

f a nd l a nding a t its s c h e du l e d d e s tin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion suppo r ting subsi d y

e li g i b ili t y f o r a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts a r e

c onsid ere d e l i g ible f or su b si d y

. I n a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its f li g hts in f ull

c on f o r m a n c e with the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e subsi d y c l a im f or t he p er iod in

qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond the s c ope o f t he Order du r ing the a ppli ca ble

p e r iod of th e se ra t e s, it must f i r st noti f y the O ff i c e of Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be e nsu re d o f f ull c omp e ns a tion. S hould c i rc umst a n ce s w ar r a n t , the D e p ar tm e nt m a y l o c a te a nd

s e l e c t a re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r must c ompl e te a ll f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of t r a f f ic will not be c omp e ns a t e d. I n d e t er mi ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting f l i ght should be a djust e d or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to
whi c h the g o a ls of the p r og ra m a r e m e t a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion s y s t e m p r ovid e d to

the c ommuni t y

.

I f the D e p ar tm e n t unil a t e ra l l y , e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s p a y m e nts f or s e r vi c e or c h a ng e s

s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n, a t the e nd of the p e r iod f or whi c h the

D e p ar tm e nt d o e s m a ke p a y m e nts in t he stipul a t e d a mounts or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y

cea se to p r ovide s er v i c e t o th a t sp ec i f ic lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion.

Those a djustm e nts in the l e v e ls of subsi d y a nd/or s er vi c e th a t ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt

a nd air ca r r i e r do not c on s titute a tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

Funds may not be available for performance under this Order beyond September 30 , 2014

. The Government’s obligati on for performance under this Order beyond September 30 , 2014 , is subject to the availability of 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 , 2014 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30

, 2014 , the Department will provide notice in writing to the carrier.

S ubsi d y c on t r a c ts ar e su b j ec t to, a nd in c o r po r a te b y r ef e re n c e
, r e l e v a nt st a t ut e s a nd D e p ar tm e nt r e g ul a tions, a s th e y

m a y be a m e nd e d fr om time to tim e . How e v er
, a n y su c h st a tut e s, r e g ul a tions, or a m e ndm e nts th ere to sh a ll not

op era te to c ont r o v er t the f o r e g oi n g p ar a g r a ph.

All claims for payment, including any amended claims, must be submitted within 9 0 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October

31 st ; August claim s must be submitted by November 30 th , and so on.

1 Annual compensation of $1,115,210, divided by 1,83 5 annual departures (36 weekly departures x 52 weeks x 98 percent completion).

2 36 flights per week multiplied by $608 per flight.