Order: 2014-12-15

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, 2014

ORDER REVISING SUBSIDY

Summary

By this Order, 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 31, 2016, from an annual subsidy 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 because 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 subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. 2 Order 2014-6-6 (June 24, 2014), 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 average 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-2001-10682
2

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

included 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 annual 

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 

determined 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. Additionally, 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 or 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 will 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 receiving EAS if 

enplanements are below 10 per day during FY2014 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 City 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 averages 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 temporary 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 passenger subsidy 

cap in the Federal Register (76 FR 60951)). It outlined the Department’s policy 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 establishes the annual subsidy rate as described in Appendix B;

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

3. The Department will serve a copy of this Order on the Mayors of Fort Dodge and Mason 

City, Iowa, the airport managers of Fort Dodge Regional Airport, Mason City Municipal Airport, 

and Multi-Aero, Inc. d/b/a Air Choice One.

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A
Appendix 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: $1,5301

Weekly Ceiling: $73,4402

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 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. 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 service levels, the carrier 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, regulations, 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 available 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 submitted 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 Annual 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.