Order: 20 1 2
- 11
- 35 Served: November 30 , 201 2


### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION **OFFICE OF THE SECRETARY WASHINGTON, D.C.**  Issued b y the Department of Transportation on the 30 th of November, 2012
Essential Air Service at **F ORT LEONA**  **RD WOOD ,**  **MISSOURI** Under 49 U.S.C. § 41731 et seq . **Docket DOT -**  **OST -**  **1996 -**  **1167**

**ORDER RE**  **SELECTING CA RRIER**  **Summary** By this O rder , the Department is re s electing Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air) to provide E ssential A ir S ervice (EAS) at Fort Leonard Wood , Missouri, for an annual subsidy of $ 1, 499,141 , for the two - year period beginning January 1, 2013
. An additional $ 1,406,653 in annual subsidy

may be incurred when all
- c argo flights are used to transport luggage to/from Fort Leonard Wood. 1 **Background** By Order 2010
- 9
- 9, September 8, 2010, the Department selected Cape Air to provide EAS at Fort Leonard Wood for the two - year period ending December 31, 2012. The carrier operates four dail y nonstop round trips to Lambert
- St. L ouis International Airport (STL) , with 9
- passenger Cessna 402 aircraft. Fort Leonard Wood experiences a significant number of passengers deploying to or returning from active duty military service, many

of whom are carryi ng heavy

loads of military

equipment and supplies. Due to the operational limitations of the Cessna 402, Cape Air operates accompan yi ng cargo - onl y service when necessary
. In anticipation of the expiration of that contract, we issued Order 2012
- 7
- 19 (July 17, 2012) soliciting proposals for carriers interested in providing EAS at Fort Leonard Wood for a new contract period. **Proposal s**  In response to that O rder, we received prop osals from two carriers: Cape Air, the incumbent, and Multi
- Aero, Inc. d/b/a Air Choice One (Air Choice One). The proposals are summarized below. 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.**Cape A ir** 

Cape Air proposes to maintain its existing service level at Fort Leonard Wood. Cape Air would provide four daily

(28 weekly) nonstop round trips to STL , utilizing twin
- engine, nine passenger Cessna 402 aircraft. As is currentl y the case, Cape Air would also operate accompanyi ng cargo only service to accommodate passenge r luggage demand, whe n needed. Passenger service would be operated for an annual subsidy of $1,499,141 for a two

- ye ar contract, or $1,449,385 per year for a four
- year contract. Cargo service would be used only on an as - needed basis and its subsidy would be capped at $1,406,6 53 per ye ar, regardless of the length of contract. 2 **Ai r Choice One**  Air Choice One proposed two service options for Fort Leonard Wood. Both would provide service to STL on either single
- engine, nine passenger Cessna Grand Caravan or a twin
- engine eight pa ssenger Piper Navajo aircraft. The first option would provide four daily (28 weekl y) nonstop round trips at an annual subsidy of $2,376,761 for two years, or $2,352,993 per year for a four
- ye ar term. The second service option would provide 30 weekly nons top round trips to STL . The carrier would provide four daily round trips as with the first service option, but would integrate two additional weekl y round trips into the schedule after reviewing passenger demand. For this service option, Air Choice One w ould require an annual subsidy of $2,565,157 for a two ye ar contract, or $2,539,505 per year for a four
- year contract. The complete proposal s of both carriers may be accessed online at : http://www.regulations.gov/ by entering DOT
- OST
- 1996
- 1167 in th e search box
. **Community Comments** On August 31, 2012 , we requested co mmunity co mment s regarding the carrier selection at Fort Leonard Wood
. A summary of the comments received follows. We received a joint letter from the mayors of the cities of Way nesville and Saint Robert (the civilian sponsors of the joint
- use facility at Fort Leonard Wood) stating “[t]he cities are extremely pleased with the performance of Cape Air which has resulted in a growing passenger service in this area. We recommen d Cape Air as the best balance between value and service for our community .” We also received a letter from the Way nesville
- St. Robert Regional Airport Joint Advisory Board unanimously

recommending the proposal of Cape Air. The letter states: “[W]e are currentl y pleased with the service that Cape Air provides to our communities and their conspicuous eagerness to be involved with community functions. The have been able to steadily increase ridership through an aggressive marketing model and a willingness to address the unique opportunities posed by operating at a Joint Use airfield.”

2 The cap is premised on Cape Air need ing to operate the all
- cargo flights to accompany no more than 85% of their passenger operations. Historically, it has only been needed approximately 70% of the time.The Department also received a letter from the Chief of the Transportation Division at Fort

Leonard Wood. The letter states: “Although there was comparable information fo r the companies that submitted proposals, based on our review of the proposals and hearing proposals submitted by Air Choice One and Cape Air, Ft Leonard Wood recommends the proposal submitted by

Air Choice One for an initial 2 year period, with the option to extend to 4 years ... Air Choice One has larger, more comfortable and newer aircraft, along with offering lower basic prices.” **Other Comments**  In a letter to the Department dated August 15 , 2012, American Airlines (American) “enthusiasticall y supports” Cape Air’s proposal to serve Fort Leonard Wood , noting American’s full codeshare agreement with Cape Air which allows Fort Leonard Wood customers to seamlessly

book travel on American’s worldwide network. We also received an email from the Fort Leonard Wood Airport Manager, Gary Chick. His note states that he has was initially skeptical of the capabilities of Cape Air’s Cessna 402s but he has been “trul y impressed b y [Cape Air’s] reliable service” and that “[t]hey provide a more diversified flight schedule for travelers and have increased ridership over the past two years.” **Decision** After careful consideration, including the comments of local officials and potential users of the air service, the Department has decided to select Cape Air to continue providing EAS between Fort Leonard Wood and STL , in accordance with its proposal summarized above, for the two
ye ar period beginning January 1, 2013
. The annual subsidy rates will be set at $ 1,499,141 for passeng er flights, with up to an additional $1,406,653 for all

- cargo flights, to be operated onl y as needed. When selecting a carrier to provide subsidized EAS , 49 U.S.C. § 41733(c)(1) directs us to consider five 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; (4) community

views giving substantial weight to the views of the elected officials representing the users of the service; and (5) wh ether the air carrier has included a plan in its proposal to market its services to the community
. In a situation such as this where we are presented with divergent community

views, we must look to the other statutory criteria to be decisional. Both carriers included marketing plans for their service including support for community events and organizations. However, Cape Air has taken the additional step of opening a city ticket office in Way

nesville, MO. With respect to service reliability , Ca pe Air has been serving the market since December 2010. In that time, it has nearl y doubled passenger traffic on the route and operated at a completion factor in excess of 98.5% . Additionally , many of the comments received praised Cape Air’s service and reliability and Cape Air has demonstrated reliability at other communities it serves under the EAS program.Regarding contractual, marketing, and interline agreements with a larger carrier at the hub, Cape

Air has interline capabiliti es with all legacy carriers at STL plus low
- cost carriers jetBlue and Frontier. Additionall y, it has a full codeshare arrangement with American Airlines and its flights are also available directly through United Airlines’ website
. While Air Choice One has taken steps to improve its visibility in the Global Distribution Sy stems (GDS) and online travel agencies, Cape Air’s full GDS integration, its partnership with United Airlines and codeshare with American, clearl y gi ve it the advantage. Additionally , the Department of the Arm y supports Air Choice One based on the larger , but single
- engine, aircraft (Cessna Grand Caravan) proposed
. 49 U
. S
. C
. § 41732 (b)(5) entitles EAS communities to service with twin
- engine aircraft. The community must proactivel y waiv e that requirement in order for the Department to award an EAS contract to a carrier using single
engine equipment . The community has not done so in this case. While Air Choice One also provides the option of utilizing a twin
- engine Piper Navajo, it woul d provide no operational advantage over the Cessna 402 proposed b y Cape Air. Therefore, we will reselect Cape Air to continue providing EAS at Fort Leonard Wood for a new two - ye ar period beginning January 1, 2013. We are mindful of the concerns expresse d by the Department of the Arm y and will therefore not select Cape Air’s four
- year contract option, thereb y allowing us to revisit the issue in two years. We shall make th is selection contingent upon the Department’s receiving properl y 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 concerning lobbying activities. **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
. Cape Air is sub j ect to the Department’s continuing fitness requirements, and no information has come to our attention that w ould 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 remain s fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f). **AC CORDINGLY,**  1. We select Hyannis Air Service, Inc. d/b/a Cape Air to provide Es sential Air Se rvice at Fort Leonard Wood, Missouri for the two - ye ar period beginning January 1, 2013 ; 2 . We set the final rate of compensation for Hyannis Air Service, Inc. d/b/a Cape Air for the provision of E ssential A ir S ervice at Fort Leonard Wood, Missouri, as described in Appendix C;3 . We direct Hyannis Air Service, Inc. d/b/a Cape Air to retain all books, records, and other

source and summary

documentation to support claims for pay ment, 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 from the dat e of service of the 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 an y claim that is not supported under the terms of this order; 4 . We find that Hyannis Air Service, Inc. d/b/a Cape Air continues to be fit, willing and able to operate as a commuter carrier and capable of providing reliable E ssential A ir S ervice at Fort Leonard Wood, Missouri; 5
. Th is docke t will remain open until further o rder of the Department; and 6
. We will serve copies of this O rder on the mayors of Way nesville and S aint Robert, Missouri, personnel at Fort Leonard Wood, the airport manager of Way nesville
- S t. Robert Regional Airport, Hyannis Air Service, Inc. d/b/a Cape Air, and Multi
- Aero, Inc. d/b/a Air Choice One. By :

**SUSAN L.**  **KURLAND** Assistant Secretary for Aviation and International Affairs
(SEAL) An electronic version of this document is available on the Internet at http://www.regulations.govAppendix A



## AREA MAP

This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Appendix B
Hyannis Air Service, Inc. d/b/a Cape Air Proposal to serve Fort Leonard WoodAppendix C **Hyannis Air Service, Inc. d/b/a Cape Air Essential Air Service to be Provided**  **at Fo**  **rt Leonard Wood ,**  **Missouri** Effective Period : January 1, 2013 through December 31, 201 4
. Scheduled Service : 28 weekl y nonstop round trips to St. L ouis
. Aircraft : Cessna 402 , 9 passenger seats or all
- cargo . Annual Subsidy : $1,499,141 (passenger) and $1,406,653 (as needed all

- cargo operations). 1 Rate per Eligible Flight: $ 5 29 2 (passenger); $ 567 3 ( all
- cargo
– as needed)
. Weekly Ceiling : $ 29,624 (passenger) 4 ; $ 27,051 ( all
- cargo )
. 5 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 fo r 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 signif icant 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 Analys is 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 complete ly , terminates or reduces payments for service or changes service re quirements 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 spec ific 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, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph. Funds are not currently available for performance under this order beyond March 31, 2013
. The Government’s obligation for performance under this order beyond March 31, 2013 , is subject to the availability of approp riated 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 March 31, 2013 , until funds are made available to the Department for performance. If funds are not made available for performance beyond March 31, 2013 , 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 See carrier proposal, Appendix B. 2 Annual compensation of $1, 499,141 divided by 2, 832 annual departures ( 365 service days x 8 departures per day x 97% completion factor). 3 Maximum annual compensation of $1,406,653 divided by maximum operations of 2,482. 4 56 flights per week multiplied by $5 29 per flight. 5 Maximum annual compensation of $1,406,653 divided by 52 weeks.