Order: 2010-10-17

 Served: October 22, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22nd 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 its subsidized essential air service (EAS) at Augusta/Waterville and Bar Harbor,

Maine, for the period from November 1, 2010, until the replacement carrier, Hyannis Air 

Service, Inc., operating as Cape Air (Cape Air) inaugurates full EAS at Augusta/Waterville.

Background

In Order 2008-9-7, September 5, 2008, the Department selected Colgan Air to serve 

Augusta/Waterville and Bar Harbor for the period from November 1, 2008, through October 31, 

2010.

By Order 2010-9-28, 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 2010-9-28 

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, currently 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 -

Decision

Consistent with established program policy, we typically 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 Bar Harbor stand-alone option. Since Colgan Air’s Augusta/Waterville 

proposal was 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/Waterville 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 set the hold-in rate of compensation for Colgan Air, Inc. for essential 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 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 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. This docket will remain open 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 this document is available online at www.regulations.gov
Appendix A

Colgan Air, Inc. (Proposal for Augusta/Waterville and Bar Harbor)
Appendix B

Colgan Air, Inc.

Essential Air Service to be provided at Augusta/Waterville and Bar Harbor, Maine

Effective Period: November 1, 2010, until Hyannis Air Service, Inc. inaugurates service.

Scheduled Service: 19 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 Flight1: $1,158

Weekly Ceiling per Community2: $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 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 December 3, 2010. The Government’s 

obligation for performance under this order beyond December 3, 2010, 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, 2010, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond December 3, 2010, 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 $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 multiplied by $1,158 per flight.