Order: 2014-6-4

Served: June 6, 2014

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6th day of June, 2014

Essential Air Service at

BAR HARBOR, MAINE

PRESQUE ISLE/HOULTON, MAINE

PLATTSBURGH, NEW YORK

DOCKET DOT-OST-2011-0185

DOCKET DOT-OST-2000-8012

DOCKET DOT-OST-2003-14783

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

ORDER RE-SELECTING AIR CARRIER

Summary

By this Order, the Department is re-selecting Peninsula Airways, Inc. (PenAir), to provide 

Essential Air Service (EAS) at Presque Isle, Maine, and Plattsburgh, New York, using 30-

33-passenger Saab 340 aircraft to Boston Logan International Airport (Boston) for the twoyear term from July 1, 2014, through June 30, 2016. At Presque Isle, PenAir will provide 

19 weekly nonstop round trips for an annual subsidy of $4,710,683; at Plattsburgh, PenAir 

will provide 12 weekly nonstop round trips for an annual subsidy of $2,714,074. Also by 

this Order, the Department will rely on PenAir to provide subsidy-free EAS at Bar Harbor, 

Maine, for another two-year period from July 1, 2014, through June 30, 2016, during the 

High Season,

1 complementing year-round subsidized service by Hyannis Air Service, Inc. 

d/b/a Cape Air.2

Background

By Order 2012-3-2 (March 2, 2012), the Department selected PenAir to provide EAS at 

Presque Isle and Plattsburgh to Boston using Saab 340 aircraft, for a two-year period 

beginning when PenAir inaugurated service at both communities through the 24th month 

 1 Approximately one week before Memorial Day to approximately one week after Labor Day.

2 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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thereafter.3 At Presque Isle, PenAir provides 19 weekly round trips for a current annual 

subsidy rate of $3,892,174; at Plattsburgh, PenAir provides 12 weekly round trips for a 

current annual subsidy of $2,470,834.4

As the end of the contract was approaching, we issued Order 2014-1-21 (January 31, 2014) 

requesting proposals from air carriers interested in providing EAS at the communities for a 

new term. In response to that Order, PenAir, the incumbent air carrier, was the only airline 

to submit a proposal.

PenAir’s complete proposal and the communities’ comments may be accessed online at 

www.regulations.gov by entering each community’s respective Docket number in the 

search block.

Proposal of PenAir

PenAir submitted proposals to serve both Presque Isle and Plattsburgh from Boston for a 

two-year term using 30-33 passenger Saab 340 aircraft. The proposals are an inseparable, 

all-or-nothing package. 

At Presque Isle, PenAir proposed two options. Option 1 is status-quo service for an annual 

subsidy of $4,710,683. Option 2 is for status-quo service but with a specific schedule that 

would provide Presque Isle with an early morning departure to Boston and a late evening 

arrival to Presque Isle.5 The annual subsidy request for Option 2 is $5,180,456. 

At Plattsburgh, PenAir proposed to provide status-quo service for an annual subsidy of 

$2,714,074.

At Bar Harbor, Pen Air proposed to continue offering 14 weekly nonstop round trips on a 

subsidy-free basis during the High Season, from around the Memorial Day holiday 

weekend to Labor Day.

Community Comments

On March 12, 2014, the Department solicited comments from the communities regarding 

this air carrier selection case. Mr. Scott Wardwell, Airport Director at Northern Maine 

Regional Airport, submitted comments on behalf of the Airport Advisory Committee and 

Presque Isle City Council supporting PenAir’s Option 2. Mr. Wardwell states that 

PenAir’s Option 2 “seeks to address the significant decline in boardings,” as well as 

address complaints by the local business community that stem from PenAir’s shorter 

operational day. Mr. Wardwell states that it is imperative for Presque Isle business 

travelers to have an early morning departure out of Presque Isle and a late evening arrival 

into Presque Isle. 

 3 PenAir commenced service at both communities on June 14, 2012 and, therefore, the contract expiration 

date is June 30, 2014.

4 Under the same order, the Department selected carriers to provide service to Bar Harbor, Maine.

5 As of May 23, 2014, the community has flights departing to Boston at 7:30am, 11:30am, and 3:40pm, with 

flights arriving from Boston around 10:50am, 3:10pm and 7:30pm.
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Mr. Christopher D. Kreig, Airport Manager at Plattsburgh International Airport, submitted 

a letter on behalf of Clinton County supporting for PenAir’s Plattsburgh proposal. Mr. 

Kreig noted, “PenAir’s service has been well received and I have received multiple 

compliments on their professionalism and customer service.” Mr. Kreig also added that 

PenAir had become a strong partner with the community.

On behalf of the Hancock County-Bar Harbor Airport, Airport Manager Bradley C. 

Madeira submitted comments supporting the proposal of PenAir. Mr. Madeira states, “It is 

critically important for our tourism market and for our community that the service PenAir 

provides continues, as this community relies on their seasonal service to Boston, and for 

making connections to Boston’s large network of U.S. and foreign destinations.”

Decision

The decision at Plattsburgh is clear. PenAir is the only air carrier to submit a proposal and 

the community supports it. We find the service and subsidy levels are reasonable, and will 

meet the community’s air service needs. 

At Presque Isle, PenAir was the only carrier to submit a proposal, but we are faced with 

two options. While the community supports PenAir’s Option 2 with a specific schedule, it 

is $469,773 more than PenAir’s Option 1 proposal, and would be $1,288,282 more than 

the current annual subsidy. Even the Option 1 proposal will see an $818,509 increase over 

the current annual subsidy. As described earlier, the Airport Director at Northern Maine 

Regional Airport stated the community’s desire for a specific schedule, an earlier departure 

and a return arrival later in the evening than PenAir currently offers in order to address the 

“significant” decline in boardings. However, PenAir’s option 2 does not forecast any 

additional passengers or revenue over Option 1, yet would increase the cost to the 

Department by $469,773 annually. We note that while traffic is down when comparing the 

period from April 1, 2013, to March 31, 2014, with that of the previous carrier which 

offered the specific schedule that the community prefers (April 1, 2011, to 

March 31, 2012), the difference is 4,435 total passengers for the year, or only about 7 

enplanements per day.6

 While PenAir’s option 1 may not provide an optimal schedule for 

all potential and existing users, it certainly is attracting a significant number of passengers. 

If the carrier believes that a schedule change with an earlier morning departure would 

generate additional profits, the carrier is free to do so during the contract period. We 

encourage the carrier and community to work together to optimize a schedule.

While we place strong emphasis on the community feedback, EAS statutes do not 

guarantee a desired level of service but rather a safety-net level of service to connect the 

community to the national air transportation system. We cannot reasonably justify 

providing additional Federal subsidy for a more desirable service schedule to a community 

that already has sufficient air service connecting it to the national air transportation system. 

Furthermore, it is not the practice of the Department to dictate to the EAS carrier the type 

of schedule they are to provide, other than to direct flights be “well-timed and wellspaced” to ensure compensation, and that they are in compliance of the minimum basic 

 6 See Appendix A.
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Essential Air Service as described in 49 U.S.C. § 41732 (b)(2). Presque Isle will continue 

to have three weekday and four weekend departures, with an originating departure with 

service to a large hub airport with over 500 daily departures, providing excellent access to 

the national air transportation system. Therefore, we will select PenAir’s Option 1 for the 

new, two-year term.

This decision is contingent upon the Department’s receiving properly executed 

certifications from the air carrier that they are in compliance with the Department’s 

regulations regarding drug-free workplaces and nondiscrimination, as well as the 

regulations concerning lobbying activities.7

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 EAS. PenAir is subject to 

the Department’s continuing fitness requirements, and no information has come to our 

attention that would cause us to question the air carrier’s fitness at this time. We have 

contacted the Federal Aviation Administration, and it has raised no concerns that would 

negatively affect our fitness findings. We therefore conclude that PenAir is reliable and fit 

to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. We select Peninsula Airways, Inc. to provide Essential Air Service at Presque Isle, 

Maine, and Plattsburgh, New York, and establish the annual subsidy rate as described in 

Appendix D;

3. We rely on Peninsula Airways, Inc. to provide Essential Air Service with 14 weekly 

nonstop round trips on a subsidy-free basis during High Season at Bar Harbor, Maine, in 

conjunction with Hyannis Air Service, Inc., d/b/a Cape Air; 

2. We direct Peninsula Airways, 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 

representatives of the Department. Such documentation shall be retained for seven years 

from the service 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 disposed of 

must be retained. The carrier may forfeit its compensation for any claim that is not 

supported under the terms of this Order;

 7 The certifications are available online under “Reports and Publications” at 

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service
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3. We find that Peninsula Airways, Inc. is fit, willing and able to operate as a commuter air 

carrier, and capable of providing reliable Essential Air Service at Bar Harbor and Presque 

Maine, and Plattsburgh, New York;

4. These dockets will remain open pending further Department action; and

5. The Department will serve a copy of this Order on the City Manager of Presque Isle,

Maine; the County Administrator for Clinton County, New York; the Airport Director at 

Northern Maine Regional Airport; the Airport Manager at Plattsburgh International 

Airport; Peninsula Airways, Inc. 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 at

www.regulations.gov
Appendix A

Passenger Traffic

Presque Isle, ME (PQI)

Stn Year Quarter Uniquecarriername Orig pax Dest Pax Total

PQI 2011 2 Colgan Air 3,272 3,659 6,931

PQI 2011 3 Colgan Air 4,133 4,038 8,171

PQI 2011 4 Colgan Air 3,529 3,413 6,942

PQI 2012 1 Colgan Air 3,168 2,944 6,112

28,156

PQI 2012 2 Colgan Air 2,760 2,924 5,684

PQI 2012 2 Peninsula Airways Inc. 580 735 1,315

PQI 2012 3 Peninsula Airways Inc. 3,286 3,208 6,494

PQI 2012 4 Peninsula Airways Inc. 2,364 2,273 4,637

PQI 2013 1 Peninsula Airways Inc. 2,333 2,209 4,542

22,672

PQI 2013 2 Peninsula Airways Inc. 2,596 2,848 5,444

PQI 2013 3 Peninsula Airways Inc. 3,593 3,584 7,177

PQI 2013 4 Peninsula Airways Inc. 2,904 2,781 5,685

PQI 2014 1 Peninsula Airways Inc. 2,809 2,606 5,415

23,721
Appendix B

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.

 
 Appendix C

PenAir Proposal for EAS at Presque Isle, Maine, and Plattsburgh, New York

 
Appendix D

Page 1 of 2

Peninsula Airways, Inc.

Essential Air Service to be Provided at Presque Isle, Maine

DOT-OST-2000-8012

Annual Subsidy: $4,710,683

Effective Period: July 1, 2014, through June 30, 2016

Scheduled Service: 19 weekly nonstop round trips to Boston

Aircraft: 30-33 passenger Saab 340

Rate per Eligible Flight: $2,4571

Weekly Ceiling: $93,3662

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 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 this rate, 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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 may not be available for performance under this Order beyond September 30, 2014. The Government’s obligation 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.

All claims for payment, including any amended claims, must be submitted within 90 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; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $4,710,683 divided by 1,917 annual departures (38 weekly departures x 52 weeks x 97

percent completion). 2 38 arrivals and departures per week multiplied by $2,457 per flight.
 Appendix D

Page 2 of 2

Peninsula Airways, Inc.

Essential Air Service to be Provided at Plattsburgh, New York

DOT-OST-2003-14783

Annual Subsidy: $2,714,074

Effective Period: July 1, 2014, through June 30, 2016

Scheduled Service: 12 weekly nonstop round trips to Boston

Aircraft: 30-33 passenger Saab 340

Rate per Eligible Flight: $2,2411

Weekly Ceiling: $53,7842

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 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 this rate, 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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 may not be available for performance under this Order beyond September 30, 2014. The Government’s obligation 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.

All claims for payment, including any amended claims, must be submitted within 90 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; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $2,714,074 divided by 1,211 annual departures (24 weekly departures x 52 weeks x 97 

percent completion). 2 24 arrivals and departures per week multiplied by $2,241 per flight.