Order: 2 014

- 12

- 15

Served: December 23 , 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23rd day of December

, 2 0 1 4



### ORDER REVISING SUBSIDY

Summary By th is O rder, the Department is revising the Essential Air Service (EAS) annual subsidy rate for

Multi

- Aero Inc. d/b/a Air Choice One (Air Choice One)

, at Mason City, Iowa

, from February 23

, 2015

, through October 3 1 , 2016

, from an annual subs idy of $4,290,533 to $3,715,953

. 1

Background By Order 2014

- 8

- 16 (August 18, 2014), the Department selected Air Choice One to serve Mason City to Chicago O’Hare International Airport (Chicago) , for 24 weekly round trips

, for the period from November 1, 2014 to October 31, 2016. Air Choice One began service at Mason City on November 17, 2014. At that time, the Department did not know the long

- term status of the eligibility of Fort Dodge in the EAS program bec ause of the recent change in eligibility criteria contained in the FAA Modernization and Reform Act of 2012, Pub. L. 112

- 95. As a result, the Department selected Air Choice One’s proposal to serve only Mason City, as opposed to a more efficient, two

- city package. The carrier announced that it will begin service to Fort Dodge on February 23, 2015. Once Fort Dodge’s eligibility was affirmed, the Department selected Air Choice One to serve Fort Dodge to St. Louis by Order 2014

- 10

- 21 (October 24, 2014 )

. 2

1 Such s ubsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.

2 Order 2014

- 6

- 6 (June 24, 20 14), terminated EAS eligibility and established waiver procedures at Fort Dodge. In that Order, the Department communicated the FAA Modernization and Reform Act of 2012, Pub. L. 112

- 95, amended 49 U.S.C. 41731(a)(1)(B) to change the definition of “eligible place” for Essential Air Service (EAS). The amendment states that to be an “eligible place,” a community must maintain an aver age of 10 enplanements per Essential Air Service at

MASON CITY, IOWA FORT DODGE, IOWA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2001

- 10684

DOCKET DOT

- OST

- 2001

- 106822

As a result, the Department was able to re visit Air Choice One’s combined proposal

, which

inclu ded Mason City and Fort Dodge. By selecting the combined community proposal, confirmed with Air Choice One, the Department is now able to revise Mason City’s an nual subsidy rate that was set in Order 2014

- 8

- 16. Air Choice One’s standalone annual subsidy requirement at Fort Dodge is $3,644,109 and Mason City’s is $4,290,533, for a total at the two
communities of $7,934,642. By selecting the combined city option with an annual subsidy requirement of $7,431,905, the Department realized an incremental savings of $502,737 annually ($7,431,905 vs. $7,934,602).

Legislative Changes That May Affect Future EAS Eligibility

As mentioned above, Public Law No. 112

- 95 amended 49 U.S.C. § 41731(a)(1)(B) to change the definition of “eligible place” for the purpose of receiving EAS. The amendment states that to be eligible, a community must maintain an average of 10 enplanements or more per service day, as

determi ned by the Secretary, during the most recent fiscal year beginning after September 30,

2012. 3 The legislation exempts locations in Alaska and Hawaii and communities that are more than 175 driving miles from the nearest large or medium hub airport. Additi onally, the Department of Transportation and Related Agencies Appropriations Act, 2000, prohibits the Department from subsidizing EAS to communities located within the 48 contiguous States receiving per passenger subsidy amounts exceeding $200, unless the communities are located more than 210 miles from the nearest large or medium hub airport. As Mason City is within 175 miles of a large or medium hub airport, Minneapolis/St. Paul International Airport (MSP) and

, thus

, is also within 210 miles of a large o r medium hub, the communities must meet the 10

- enplanement

- a

- day threshold and not exceed the $200 subsidy per passenger cap for EAS to continue, barring a waiver from the Secretary. 4

Air Choice One and the community should also be aware that the Department wil l continue to

monitor eligibility to receive EAS in light of these new requirements throughout the life of the

EAS contract. The Department may cancel a contract for any community rece iving EAS if enplanements are below 10 per day during FY2 014 and any subsequent fiscal year

. Public Law 112

- 95, signed into law on February 14, 2012, further amended the definition of “eligible place” for the purpose of receiving EAS. 5 The amendment, among other things, states that to be eligible, a community must have had an average subsidy per passenger of less than $1,000 during the most recent fiscal year, as determined by the Secretary of Transportation. The Department will monitor the average daily enplanements and subsidy per passenger rate at

Mason C ity and Fort Dodge during the upcoming contract. The Department highly encourages

service day or more, as determined by the Secretary, during the most recent fiscal year beginning after September 30, 2012. This requirement does not apply to locations in Alaska and Hawaii or communities that are

more than 175 driving miles from the nearest large or medium hub airport. The Secretary also may waive, on an annual basis, the 10 enplanement requirement for a community if that community demonstrates to the Secretary’s satisfaction that the reason the location averag es fewer than 10 enplanements per day is due to a temporary decline in enplanements. On September 26, 2014, the Department issued Order 2014

- 9

- 21, granting Fort Dodge a waiver from the 10 enplanement per day requirement.

3 The Secretary also has authority to waive the 10 passenger requirement, on an annual basis, if the community can demonstrate that the reason the location averages fewer than 10 passengers per day is due to a tem porary decline in enplanements and to waive the $200 subsidy

- per

- passenger limit

. See 49 U.S.C. §41731(e).

4 On October 2 , 2014, the Department published a Notice of Enforcement Policy on the $200 per pas senger subsidy

cap in the Feder al Register (76 FR 60951) ). It out lined the Department’s p olicy on this issue, which will use traffic data from October 1, 2014, through September 30, 2015, to measure compliance.3
Air Choice One, Mason City , and Fort Dodge to work together to remain in compliance with the

statute.

This Order is issued under authority delegated in 49 CFR Part 1

. 25a(b)

.

ACCORDINGLY,

1. The Department revises the subsidy rates for Multi

- Aero Inc. d/b/a Air Choice One for EAS at Mason City, Iowa

, and establish es the annual subsidy rate as described in Appendix B ;

2. These docket s will remain open pending further Department action ; and

3

. The Department will serve a copy of this O rder on the Mayor s of Fort Dodge and Mason City, Iowa, the airport manager s of Fort Dodge Regional Airport

, Mason City Municipal Airport,

and Multi

- Aero, Inc. d/b/a Air Choice On e.

B y:

TODD M. HOMAN

Director Office of Aviation Analysis (SEAL)

An electronic version of this document is ava ilable at http://www.regulations.govAppendix AAppendix B

Multi

- Aero Inc. d/b/a Air Choice One Essential Air Service to be provided at Mason City, Iowa

Docket DOT

- OST

- 2001

- 10684

Effective Period : February 23, 2015 , through October 31, 2016

Scheduled Service : 24 weekly nonstop round trips to Chicago (ORD)

Aircraft : 9

- passenger Cessna Grand Caravan or 8

- passenger Piper Navajo Rate per Eligible Flight: $ 1, 530 1 Weekly Ceiling : $ 73,440 2

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulation s 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 constitut es 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 s chedule 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 applic able period of this rate, 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. I n 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 service levels, the ca rrier may cease to provide service to that specific location without regards 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 contract 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, regul ations, or amendments thereto shall not operate to controvert the foregoing paragraph.

Funds may not be available for performance under this order beyond January 14 , 2015

. The Government’s obligation for performance under this order beyond January 14 , 2015 , is subject to the availability of 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 January 14 , 2015 , until funds are made avai lable to the Department for performance. If sufficient funds are not made available for performance beyond January 14 , 2015 , the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be sub mitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by

October 31; August claims must be submitted by November 30, and so on.

1 A nnual compensation of $3,715,953 divided by the 2,429 annual departures (8 flights per day x 313 days x 97 percent completion).

2 48 arrivals and departures per week multiplied by $ 1,530 per flight

.