Order 2013-4-6

Served: April 12, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

 Issued by the Department of Transportation

on the 12th day of April, 2013

ORDER REQUESTING PROPOSALS

Summary

By this Order, the Department is requesting proposals from carriers interested in providing 

Essential Air Service (EAS) at El Dorado/Camden (El Dorado), Harrison, and/or Hot Springs, 

Arkansas, with or without subsidy, for a new term. Proposals are due May 16, 2013. (See 

Appendix A for a map.)

Background

By Order 2011-11-21, November 17, 2011, the Department re-selected SeaPort Airlines, Inc. 

(SeaPort) to provide subsidized EAS at the three Arkansas communities, at a combined annual 

subsidy rate of $5,990,780 ($2,436,074 for El Dorado, $2,080,318 for Harrison, and $1,474,388 

for Hot Springs) for the two-year period from November 1, 2011, through October 31, 2013.

1

SeaPort provides the three communities with 18 round trips per week using nine-seat Pilatus PC12 aircraft.

2

 SeaPort provides El Dorado with service to Dallas Love Field (DAL) and Memphis 

International Airport (MEM), Harrison with service to Kansas City International (MCI) and 

MEM, and Hot Springs with service to DAL and MEM.

Recent Legislative Changes

The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 (Public 

Law No: 112-95) amended 49 U.S.C. § 41731(a)(1)(B) to change the definition of “eligible 

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

2 According to published schedules, in addition to the 18 weekly round trips we selected it to provide, SeaPort 

provides Harrison with an additional six round trip flights per week on an unsubsidized basis.

Essential Air Service at

EL DORADO/CAMDEN, ARKANSAS

HARRISON, ARKANSAS

HOT SPRINGS, ARKANSAS

Under 49 U.S.C. 41731 et seq.

 Docket DOT-OST-1997-2935
- 2 -

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.4 In this case, all three communities 

are more than 175 driving miles from the nearest large or medium airport, and, thus, are exempt 

from the 10-enplanement a day threshold.

5

In addition, Public Law 112-27, signed into law on August 5, 2011, amended the definition of 

“eligible place” for the purpose of receiving EAS. Among other things, the amendment 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, regardless of the community’s distance from the 

nearest hub airport.

6

 Currently, none of the three communities’ subsidy per passenger exceeds

the $1,000 limit.

Special discussion concerning Hot Springs

The Department is prohibited from subsidizing air service at a community where the subsidy per 

passenger exceeds $200, unless the community is more than 210 highway miles from the nearest 

large or medium hub airport.7 Hot Springs is 198 miles from Memphis International Airport and 

based on CY2012 data (January 1, 2012, through December 31, 2012), 4,749 passengers were 

enplaned and deplaned at Hot Springs. The annual subsidy amount for Hot Springs is 

$1,474,388. Therefore, the subsidy per passenger at Hot Springs is $310. Rather than terminate 

the community’s eligibility, at this stage, the Department will solicit proposals for EAS and 

evaluate all proposals submitted before either committing to a new rate term or making a final 

determination on Hot Springs’ continuing eligibility to receive EAS in light of its current subsidy 

per passenger being above the $200 ceiling. Before proposals are due, we expect the community 

to work aggressively with all potential applicants to mitigate some of the risks that the air 

carriers may face in an attempt to lower their subsidy levels. We also expect air carriers to detail 

in their proposals how they will work with the community in lowering the subsidy per passenger 

below the $200 cap.

Request for Proposals

As the end of the current rate term approaches, we are here requesting proposals from carriers 

interested in providing service at El Dorado, Harrison, and/or Hot Springs, with or without 

subsidy, for a new rate term. Carriers should file their proposals no later than May 16, 2013. 

After that date, our staff will docket the proposals, thereby making them public, and direct each 

carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly 

 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. See 49 U.S.C. § 41731(e). 4 See 49 U.S.C. § 41731(c) and (d) 5 All three communities are farther than 175 driving miles from Memphis International Airport, the nearest 

applicable large or medium hub (El Dorado/Camden-237 miles, Harrison-244 miles, and Hot Springs-198 miles). 6 Communities in Alaska and Hawaii are exempt.

7 Congress first established the $200 ceiling under P.L. 101-164 for fiscal year 1990, and reestablished it in fiscal 

years 1994-1999. The ceiling was made permanent by P.L. 106-69, the Department of Transportation and Related 

Agencies Appropriations Act of 2000.
- 3 -

afterwards, we will provide a summary of the proposals to the communities and ask them to 

submit their final comments. We will give full consideration to all proposals that are timely 

filed.8

Interested carriers should prepare their proposals with every expectation that their initial 

proposals will represent their final and only proposals. However, we retain the discretion to 

negotiate proposals with carriers when we deem it desirable; in such cases, of course, we will 

give all applicants the same opportunity. We also retain the discretion to reject outright all 

unreasonable or unrealistic proposals and re-solicit a new round of proposals. However, 

negotiation or rejection are only occasional exceptions to the rule.

We are here providing interested carriers with some basic information to serve as guidance when 

they prepare their proposals, but we will not prescribe a precise format for their proposals. We 

expect proposals to adequately describe the service being proposed and the annual amount of 

subsidy being requested. The applicants can make their own judgments as to the level of detail 

they wish to present; however, they might want to include proposed schedules as well as 

supporting data for their subsidy requests, such as projected block hours, revenues and expenses. 

We strongly encourage clear, well-documented proposals that will facilitate their evaluation by 

the affected communities and the Department.9

With respect to the three Arkansas communities at issue here, we expect proposals consistent 

with what the communities are currently receiving, with continued service to a suitable hub 

airport that offers numerous connecting opportunities to the national air transportation system. 

Communities and air carriers are encouraged to work together in advance of the due date for 

proposals to design a service pattern that is desirable to the community and meets the operational 

needs of the airline interested in submitting a proposal. In addition, carriers should be very clear 

as to whether a specific community’s proposal is on a stand-alone basis, or whether it is part of a 

larger, inseparable package with other communities. As discussed above, all proposals for 

service to Hot Springs should explicitly acknowledge the ceiling and address what steps will be 

taken to reduce the per passenger subsidy to $200 or below. Proposals that do not address the 

issue may be rejected outright.

We encourage proposals that meet these requirements in an efficient manner. Carriers are also 

welcome to propose more than one service option, if they choose; they need not limit themselves 

to those requirements if they envision other, potentially more attractive service possibilities –

 8 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide EAS

without subsidy and we determine that service can be reliably provided without such compensation, we typically do 

not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s subsidy-free service as 

proposed.

9 In selecting a carrier to provide subsidized EAS, 49 U.S.C. § 41733(c) (1) directs us to consider four 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; and (4) community views. In addition, the Consolidated 

Appropriations Act, 2008, Public Law 110-161, provides that when selecting a carrier to provide EAS, the 

Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since 

the inception of the program. Interested carriers should also be aware that our general provisions governing 

Essential Air Service will be included in the selection Order as part of our authorization of subsidy for the selected 

service. Appendix C of this Order contains those general provisions.
- 4 -

different hubs or length of service terms, for example -- with subsidy requirements that remain 

competitive.

Service and Traffic History

For the 12-month period ended December 31, 2012, the most recent period for which traffic data are 

available, El Dorado averaged 9.6 enplanements per day, Harrison 16.9, and Hot Springs 7.6.

10 We 

note that traffic at all three communities has increased significantly since SeaPort inaugurated 

service in late 2009 and the community and the carrier’s efforts should be commended. In order to 

assist carriers in making their traffic and revenue forecasts, we have included historical traffic data in 

Appendix B.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces, and nondiscrimination.11 Consequently, all carriers receiving 

Federal subsidy for EAS must certify that they are in compliance with Department regulations 

regarding drug-free workplaces and nondiscrimination, and those carriers whose subsidies 

exceed $100,000 over the life of the rate term must also certify that they are in compliance with

the regulations governing lobbying activities. Because the Department is prohibited from paying 

subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals 

involving subsidy should be aware that the selected carrier will be required to complete the 

required certifications. Interested carriers requiring more detailed information regarding these 

requirements should contact the Office of Aviation Analysis at (202) 366-5903.12

Community and State Comments

The communities and state are welcome to submit comments on the proposals at any time. As 

noted earlier, however, we will provide a summary of the proposals to the civic parties and ask 

them to submit their final comments shortly after May 16, 2013, the due date for proposals.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re-delegated to the 

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that carriers interested in providing Essential Air Service at El Dorado/Camden, 

Harrison, and/or Hot Springs, Arkansas, submit their proposals, with or without subsidy, no later 

 10 See Appendix B for historical traffic data. Enplanements represent one-half of total origin-and-destination traffic, 

and average enplanements per day are based on 313 days per service year. 11 The regulations applicable to these areas are: (1) 49 CFR Part 20 -- New restrictions on lobbying; 

(2) 49 CFR Part 21 -- Nondiscrimination in federally-assisted programs of the Department of Transportation --

Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27 --Nondiscrimination on the basis of 

disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382 -

- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29 -- Government-wide debarment 

and suspension (non-procurement) and government-wide requirements for drug-free workplace (grants).

12 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviationpolicy/small-community-rural-air-service/essential-air-service

.
- 5 -

than May 16, 2013. The proposals should be e-mailed to EAS@dot.gov, with the title “Proposal 

to Provide EAS at El Dorado, Harrison, and/or Hot Springs)”;13

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

3. We will serve copies of this Order on the mayors of El Dorado, Camden, Harrison, and Hot 

Springs, and the airport managers of South Arkansas Regional Airport/Goodwin Field (El 

Dorado/Camden), Boone County Regional Airport (Harrison), and Hot Springs Memorial Field 

Airport, and the service list for this docket.

Persons entitled to petition the Department for review of this Order under the Department’s 

Regulations, 14 CFR Part 385.31(a), must file such petitions within seven (7) days after the date 

of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not 

preclude its effectiveness.

By:

TODD M. HOMAN

 Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document at http://www.regulations.gov

 13 Questions regarding filings in response to this Order may be directed via e-mail to Kevin Schlemmer at 

kevin.schlemmer@dot.gov or via phone at (202) 366-3176.
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

Traffic History*

Year Airport Air Carrier Enplaned pax Deplaned pax Totals

2010 ELD SeaPort Airlines, Inc. 1,220 1,274 2,494

2011 ELD SeaPort Airlines, Inc. 1,848 1,772 3,620

2012 ELD SeaPort Airlines, Inc. 3,059 2,949 6,008

Year Stn Air Carrier Enplaned pax Deplaned pax Totals

2010 HOT SeaPort Airlines, Inc. 780 775 1,555

2011 HOT SeaPort Airlines, Inc. 1,738 1,804 3,542

2012 HOT SeaPort Airlines, Inc. 2,438 2,311 4,749

Year Stn Air Carrier Enplaned pax Deplaned pax Totals

2010 HRO SeaPort Airlines, Inc. 1,775 1,728 3,503

2011 HRO SeaPort Airlines, Inc. 3,013 2,934 5,947

2012 HRO SeaPort Airlines, Inc. 5,347 5,243 10,590

ELD=El Dorado/Camden; HOT=Hot Springs; HRO=Harrison

*Source – T-100 Market Report, Passengers in Scheduled Passenger Service.
Appendix C

Example of General Terms and Conditions for Essential Air Service

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 may not be available for performance under this solicitation beyond [DATE]. The 

Government’s obligation for performance under this solicitation beyond [DATE], is 

contingent upon 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 [DATE], until funds are made available to the 

Department for performance. If funds are not made available for performance beyond 

[DATE], the carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of the last day of service 

provided under this Order.