Order: 2012-11-35

Served: November 30, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 30th of November, 2012

Essential Air Service at

FORT LEONARD WOOD, MISSOURI

Under 49 U.S.C. § 41731 et seq.

 Docket DOT-OST-1996-1167

ORDER RESELECTING CARRIER

Summary

By this Order, the Department is reselecting Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air) 

to provide Essential Air Service (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-cargo 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 daily nonstop round trips to Lambert-St. Louis 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 

carrying heavy loads of military equipment and supplies. Due to the operational limitations of 

the Cessna 402, Cape Air operates accompanying cargo-only 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. 

Proposals

In response to that Order, we received proposals 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 Air

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 currently the case, Cape Air would also operate accompanying cargoonly service to accommodate passenger luggage demand, when needed. Passenger service 

would be operated for an annual subsidy of $1,499,141 for a two-year 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 $1,406,653 per year, regardless of the length of contract.2

Air 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 passenger Piper Navajo aircraft. The first option would provide four daily (28 weekly) 

nonstop round trips at an annual subsidy of $2,376,761 for two years, or $2,352,993 per year for 

a four-year term. The second service option would provide 30 weekly nonstop round trips to 

STL. The carrier would provide four daily round trips as with the first service option, but would 

integrate two additional weekly round trips into the schedule after reviewing passenger demand. 

For this service option, Air Choice One would require an annual subsidy of $2,565,157 for a two 

year contract, or $2,539,505 per year for a four-year contract.

The complete proposals of both carriers may be accessed online at: http://www.regulations.gov/ 

by entering DOT-OST-1996-1167 in the search box.

Community Comments

On August 31, 2012, we requested community comments 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 Waynesville 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 recommend Cape Air as the best balance between value and service for 

our community.”

We also received a letter from the Waynesville-St. Robert Regional Airport Joint Advisory

Board unanimously recommending the proposal of Cape Air. The letter states: 

“[W]e are currently 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 needing 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 for 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) 

“enthusiastically 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 “truly impressed by [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 twoyear period beginning January 1, 2013. The annual subsidy rates will be set at $1,499,141 for 

passenger flights, with up to an additional $1,406,653 for all-cargo flights, to be operated only 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) whether 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 Waynesville, MO. With respect to service reliability, Cape Air has been serving the 

market since December 2010. In that time, it has nearly 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 capabilities with all legacy carriers at STL plus low-cost carriers jetBlue and 

Frontier. Additionally, 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 Systems (GDS) and online travel 

agencies, Cape Air’s full GDS integration, its partnership with United Airlines and codeshare 

with American, clearly give it the advantage. 

Additionally, the Department of the Army 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 proactively waive that 

requirement in order for the Department to award an EAS contract to a carrier using singleengine 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 would provide no operational 

advantage over the Cessna 402 proposed by Cape Air. 

Therefore, we will reselect Cape Air to continue providing EAS at Fort Leonard Wood for a new 

two-year period beginning January 1, 2013. We are mindful of the concerns expressed by the 

Department of the Army and will therefore not select Cape Air’s four-year contract option, 

thereby allowing us to revisit the issue in two years. 

We shall make this selection 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 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 subject to the 

Department’s 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. d/b/a Cape Air to provide Essential Air Service at Fort 

Leonard Wood, Missouri for the two-year 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 Essential Air Service 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 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 date 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 any 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 Essential Air Service at Fort 

Leonard Wood, Missouri;

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

6. We will serve copies of this Order on the mayors of Waynesville and Saint Robert, Missouri, 

personnel at Fort Leonard Wood, the airport manager of Waynesville-St. 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.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

Hyannis Air Service, Inc. d/b/a Cape Air

Proposal to serve Fort Leonard Wood
Appendix C

Hyannis Air Service, Inc. d/b/a Cape Air

Essential Air Service to be Provided at Fort Leonard Wood, Missouri

Effective Period: January 1, 2013 through December 31, 2014.

Scheduled Service: 28 weekly nonstop round trips to St. Louis.

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: $5292 (passenger); $5673 (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 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 March 31, 2013. The Government’s 

obligation for performance under this order beyond March 31, 2013, 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 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 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 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 $529 per flight.

5 Maximum annual compensation of $1,406,653 divided by 52 weeks.