Order: 2010
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- 17 Served : October 22, 2010


### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued b y the Department of Transportation on the 22 nd of October , 2010 Essential Air Service at AUGUSTA/WATERVILLE, MAINE BAR HARBOR, MAINE Under 49 U.S.C. 41731 et seq . Docket DOT - OST - 1997 - 2784

ORDER ESTABLISHING TEMPORARY RATE Summary By this order , the Department is establishing a temporary subsidy rate for Colgan Air, Inc
. ( Colgan Air) for it s subsidized essential air service (EAS) at Augusta/Waterville and Bar Harbor , Maine, for the period from November 1, 2010, until the rep lacement carrier, Hyannis Air Service, Inc., operating as Cape Air (Cape Air) inaugurates full EAS at Augusta/Waterville
. Background In Order 2008
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- 7 , September 5, 2008 , the Department selected Colgan Air to serve Augusta/Waterville and Bar Harbor fo r the period from November 1, 2008, through October 31 , 2010
. By Order 2010
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- 28 , September 28 , 2010 , the Department reselected Colgan to serve Bar Harbor but selected Cape Air to replace Colgan at Augusta/Waterville. As a result, Order 2010
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- 28 established separate rates for Colgan to serve Bar Harbor and Cape Air to serve Augusta/Waterville , effective November 1, the end of Colgan’s current contract. However , Cape Air , the replacement carrier at Augusta/Waterville, currentl y plans to inaugurate service on or about December 1, 2010. Therefore, we need to establish a rate for Colgan to serve Augusta/Waterville from November 1 until Cape Air starts service there.- 2
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Decision Consistent with established program policy , we t ypically use a carrier’s prospective proposal that was submitted during the competitive bid process to establish a bridge rate until the new carrier inaugurates service. Colgan submitted both an Augusta/Waterville
- Bar Harbor combination option, as well as a B ar H arbor stand
- alone option. Since Colgan Air’s Augusta/Waterville proposal w as tagged with Bar Harbor, the rate in the Bar Harbor stand
- alone proposal will not come into effect until Cape Air inaugurates service at Augusta/Waterville, on or about December 1 , 2010. After reviewing Colgan Air’s proposed rate for combination Augusta/Waterville
- Bar Harbor service , we have concluded that it appears reasonable for the service at issue. We will therefore establish it as the final rate for Colgan at Augusta/Water vi lle and Bar Harbor for the period from November 1, 2010, until Cape Air inaugurates service , which is scheduled for December 1
. This order is issued under authority delegated in 49 CFR 1.56a(f). ACCORDINGLY, 1. We se t the hold
- in rate of compen sation for Colgan Air, Inc. for essenti al air service at Augusta/Waterville and Bar Harbor , Maine, as described in Appendix B ; 2
. We direct Colgan Air, Inc. to retain all books, records, and other source and summary documentation to support claims for paym ent, and to preserve and maintain such documentation in a manner that readil y permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven ye ars 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; 3
. Th is docket will remain op en until further order of the Department; and 4 . We will serve copies of this order on the City and Airport Managers of Augusta/Waterville, and Bar Harbor ; and Hyannis Air Service, Inc. and Colgan Air Inc. By :

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of th is document is available online at www.regulations.govAppendix A Colgan Air , Inc. (Proposal for Augusta/Waterville and Bar Harbor)Appendix B Colgan A ir, Inc. Essential Air Service to be p rovided at Augusta/Waterville and Bar Harbor, Maine Effective Period : November 1, 2010, until Hyannis Air Service, Inc. inaugurates service
. Scheduled Service : 1 9 round trips each week with a mix of nonstops and one
- stop service over an Augusta/Waterville
- Bar Harbor
- Boston routing, or Bar Harbor
- Augusta/Waterville
- Boston routing Aircraft : Saab 340 , 34 seats Rate per Eligible Flight 1 : $1,158 Weekly Ceilin g per Community 2 : $ 44,004 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 f

ull 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 th ese 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 De partment 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 complete ly , 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 carrie r 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 w riting 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, regulatio ns, or amendments thereto shall not operate to controvert the foregoing paragraph. Funds are not currently available for performance under this order beyond December 3 , 20 10. The Government’s obligation for performance under this order beyond December 3 , 20 10 , is subject to 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 December 3 , 20 10 , until funds are made available to the Department for performance. If funds are not made available for performance beyond Decem ber 3 , 20 10 , the Department will provide notice in w riting to the carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $4,439,041, divided by 3,833 annual departures (38 weekly flights x 2 communities x 52 weeks x 97 percent completion). 2 38 arrivals and departures per week mul tiplied by $ 1,158 per flight.