Order: 2012-7-25

 Served: July 23, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23rd of July, 2012

Essential Air Service at

KIRKSVILLE, MISSOURI

under 49 U.S.C. §41731 et seq.

Docket DOT-OST-1997-2515

ORDER RE-SELECTING CARRIER

Summary

By this Order, the Department is re-selecting Hyannis Air Service, Inc. dba Cape Air (“Cape 

Air”) to provide Essential Air Service (EAS) at Kirksville, Missouri, at an annual subsidy rate of

$1,649,248, for a four-year term, from October 1, 2012, through September 30, 2016.1

Background

By Order 2010-6-6, June 3, 2010, the Department selected Cape Air to provide 21 weekly 

nonstop round trips on Cessna 402 aircraft from Kirksville to Lambert-St. Louis International 

Airport (“St. Louis”), for the two-year period beginning when the carrier inaugurated service 

through the end of the 24th month thereafter, at an annual subsidy of $1,422,110. Cape Air 

inaugurated service to Kirksville on September 17, 2010, making the expiration date

September 30, 2012. 

In anticipation of the end of Cape Air’s current contract, the Department issued Order 2012-5-10, 

May 9, 2012, to solicit proposals from all interested air carriers to provide service at Kirksville, 

and several other communities.

Proposals

In response to the request for proposals, we received a proposal from one carrier, Cape Air. 

Cape Air’s complete proposal may be accessed online at http://www.regulations.gov/ entering 

“DOT-OST-1997-2515” in the “SEARCH” field.

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

On June 8, 2012, we requested community comments regarding the carrier selection at 

Kirksville. 

We received a June 27, 2012, letter from the Mayor of Kirksville. He states that “City Council is 

recommending Cape Air continue services at Kirksville Regional Airport with nine-seat service.”

Decision

The decision here is straightforward. Cape Air, the incumbent, was the only carrier to submit a 

proposal, and the community supports Cape Air to continue serving the community.

The selection of Cape Air satisfies all four factors the Department is directed to consider.1 Cape 

Air is a well-established carrier, providing a significant amount of subsidized EAS throughout 

the country. When Cape Air was selected to serve Kirksville in 2010, the community had 1,877

enplanements and deplanements in CY2009.2 Cape Air dramatically increased passenger traffic 

at Kirksville, by over 500% in CY2011, when the community had 9,952 enplanements and 

deplanements. Cape Air’s commitment to the community through extensive marketing and 

advertising efforts, attractive pricing and schedule options, its American Airlines code share at 

St. Louis, and availability of its flights and connecting flights on other major airlines through 

computerized reservations systems and online travel agencies, have contributed to its success at 

Kirksville. 

Cape Air proposed a four-year rate for its Kirksville service. The Department has selected Cape 

Air, as well as other carriers, to provide service for four years or longer at more than a dozen 

communities. When the community supports a proposal that exceeds the typical two-year period

and, we find that the proposed rate will provide the Department a higher level of certainty 

against future rate increases, we are inclined to select a longer-term rate, which we will do here. 

We also find that the subsidy levels are reasonable for the service levels to be provided.

Based on all of the above, we will select Cape Air to provide status-quo service of three daily 

round trips (21 per week) from Kirksville to St. Louis, for four years, from October 1, 2012, 

through September 30, 2016, at an annual subsidy rate of $1,649,248.

We shall make Cape Air’s selection at Kirksville contingent upon the Department’s receiving 

properly executed certifications from Cape Air that it is in compliance with the Department’s 

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

governing lobbying activities.

Carrier Fitness

49 U.S.C. §41737(b) requires that we find an air carrier fit, willing, and able to provide reliable 

service before we may subsidize it to provide EAS. Cape Air is subject to the Department’s 

 1 In selecting a carrier to provide subsidized EAS, 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.

2 See Order 2012-5-10
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continuing fitness requirements, and no information has come to our attention that would cause 

us to question the 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 finding. 

We therefore conclude that the carrier remains fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We select Hyannis Air Service, Inc. dba Cape Air to provide Essential Air Service at 

Kirksville, Missouri;

2. We set the final rate of compensation for Hyannis Air Service, Inc. dba Cape Air, for the 

provision of Essential Air Service at Kirksville, Missouri, as described in Appendix C;

3. We direct Hyannis Air Service, Inc. dba Cape Air 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 when EAS begins

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;

4. We find that Hyannis Air Service, Inc. dba Cape Air continues to be fit, willing and able to 

operate as a certificated carrier and capable of providing reliable Essential Air Service at 

Kirksville, Missouri; 

5. This docket will remain open until further order of the Department; and

6. We will serve copies of this Order on the Mayor of Kirksville, the manager at Kirksville

Regional Airport, and Hyannis Air Service, Inc. dba Cape Air.

By:

SUSAN L. KURLAND

Assistant Secretary

for Aviation and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.gov
Appendix A

AREA MAP

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the copyright holder, 

Sabre Airline Solutions®.
Appendix B

Proposal of Hyannis Air Service, Inc. dba Cape Air
Appendix C

Hyannis Air Service, Inc. dba Cape Air

Essential Air Service to be Provided at Kirksville, Missouri

Effective Period: October 1, 2012, through September 30, 2016

Scheduled Service: Three nonstop round trip each day (21 per week) to Lambert-St. Louis

International Airport

Aircraft: Cessna 402, 9 seats

Rate per Eligible Flight: $7761

Weekly Ceiling: $32,5922

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 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, 2012. The Government’s 

obligation for performance under this Order beyond September 30, 2012, 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 September 30, 2012, until funds are made 

available to the Department for performance. If funds are not made available for performance beyond September 

30, 2012, the Department will provide notice in writing 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 $1,648,249, divided by 2,124 annual departures (6 flights per day x 365 service days x 97 

percent completion). 2 42 flights per week multiplied by $776 per flight.