Order: 2011-3-28

Served: March 22, 2011

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22nd day of March, 2011

Essential Air Service at

MAYAGUEZ, PUERTO RICO DOCKET DOT-OST-2004-19622

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

ORDER RE-SELECTING CARRIER

Summary

By this order, the Department is re-selecting Hyannis Air Service Inc., operating as Cape 

Air (Cape Air), to provide essential air service (EAS) using 9-seat Cessna 402 aircraft at 

Mayaguez, Puerto Rico, for the five-year period beginning May 1, 2011, through 

April 30, 2016, for an annual subsidy of $1,198,824.

1

Background

By Order 2009-3-1, March 3, 2009, the Department selected Cape Air to continue 

providing EAS at Mayaguez and Ponce from May 1, 2009, through April 30, 2011. That 

order established annual subsidy rates of $980,980 and $740,416 at Mayaguez and Ponce, 

respectively, for service consisting of four daily nonstop round trips to San Juan, with 9-

seat Cessna 402 aircraft.

As the end of the contract was approaching, we issued Order 2010-12-31, 

December 23, 2010, requesting proposals to serve only Mayaguez for a new term. In 

response to our request, three airlines submitted proposals: Air Sunshine, Inc. 

 

1

Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated 

funds.
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(Air Sunshine), Cape Air, and Seaborne Virgin Islands, Inc., (Seaborne). Because Ponce 

also receives subsidy-free jet service on a daily basis – one round trip to Orlando and one 

round trip to New York – provided by JetBlue, using 150-seat Airbus A320 aircraft, we 

decided not seek proposals for EAS replacement service.

2

Each carrier’s complete proposal and community comments may be accessed online at 

http://www.regulations.gov/ by entering Docket number DOT-OST-2004-19622 in the 

search block. 

Proposal of Air Sunshine

Air Sunshine proposed four nonstop round trips a day (28 round trips a week) to San Juan

using 9-seat Cessna 402 Caravan aircraft for an annual subsidy of $980,000.

Proposal of Cape Air

Cape Air proposed four nonstop round trips a day (28 round trips a week) to San Juan 

using 9-seat Cessna 402 aircraft for an annual subsidy of $1,228,923 for a two-year 

contract, or an annual subsidy of $1,198,824 for a five-year contract.

Proposal of Seaborne

Seaborne proposed two daily nonstop round trips (14 round trips a week) to San Juan using 

19-seat de Havilland DHC-6-300 aircraft for an annual subsidy of $855,532.

Community Comments

On January 24, 2011, we requested community comments regarding this carrier-selection 

case, and, in response, we received two letters, both supporting Cape Air’s proposal. José 

Guillermo Rodriguez, Mayor of Mayaguez, strongly recommended that the Department reselect Cape Air, and requested the airline’s five-year option, stating the airline “has been 

efficient and acceptable to our community”, and Arnaldo Deleo, General Manager for Luiz 

Munoz Marin International and Regional Airports, also wrote in support of Cape Air’s 

proposal, pointing out that Cape Air has successfully served the community since 2005 and 

that it provides an important air link between Mayaguez and San Juan.

Decision

After carefully reviewing each carrier’s proposal and taking into account community

feedback, we have decided to select Cape Air’s five-year proposal of four Mayaguez-San 

Juan nonstop round trips a day (28 a week) for an annual subsidy of $1,198,824. We base

our decision on the four carrier-selection criteria contained in 49 U.S.C. §41733(c): 1) the 

demonstrated reliability providing scheduled air service; 2) the contractual and marketing 

arrangements with a larger carrier to ensure service beyond a hub airport; 3) interline 

agreements with a larger carrier; and 4) support by the community’s elected officials for 

the applicant’s proposal. 

 

2

The community has filed a Petition for Review of that decision and we are handling that in a separate 

proceeding in the Ponce Docket, DOT-OST-1999-6592.
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Cape Air’s proposal meets all four statutory criteria. Cape Air is a well-established 

scheduled air carrier serving communities throughout the U.S., and, in the case of 

Mayaguez, has provided the community reliable air service for several years. Cape Air has 

a code share with Continental Airlines and, therefore, can provide its passengers 

connections beyond the San Juan hub to the national air transportation network with 

relative ease. Cape Air, through its code share with Continental Airlines, has interline 

agreements with most major air carriers, enabling passengers to reach their destination with 

one reservation, ticket, and baggage check-in. Lastly, the community, in particular, the 

elected officials, overwhelming supports Cape Air’s proposal. Neither Air Sunshine nor 

Seaborne received any community support, and in the case of Seaborne, the airline 

currently does not have any interline agreements with a larger airline, which we note above 

is a requirement for selection to provide EAS. Finally, as between Cape Air’s two-year or 

five-year option, the community supports Cape Air’s five-year proposal, and it offers some 

subsidy savings to the Department, so we will select the five-year option. 

We shall make this selection of Cape Air at Mayaguez contingent upon the Department’s 

receiving properly executed certifications from the carriers that they are 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) requires that we find an air carrier fit, willing, and able to provide 

reliable service before we may subsidize it to provide essential air service. 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 findings. We therefore conclude that the carriers remain 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. to provide essential air service at Mayaguez, Puerto 

Rico, and establish an annual subsidy rate of $1,198,824, as described in Appendix C; 

2. We direct Hyannis Air Service, Inc. 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 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;

3. We find that Hyannis Air Service, Inc. continues to be fit, willing and able to operate as 

a commuter carrier, and capable of providing reliable essential air service at Mayaguez;
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4. This docket will remain open pending further Department action; and

5. We will serve copies of this order on the Mayor of Mayaguez, Air Sunshine, Inc., 

Hyannis Air Service, Inc., and Seaborne Virgin Islands, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
Appendix A

AREA MAP

 
Appendix B
 Appendix C

Hyannis Air Service, Inc.

Essential Air Service to be Provided at Mayaguez, Puerto Rico

Effective Period: May 1, 2011 through April 30, 2016

Scheduled Service: 28 weekly nonstop round trips between Mayaguez and San Juan

Aircraft: 9-seat Cessna 402

Rate per Eligible Flight: $423;

1

Weekly Ceiling: $23,6882

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 the 

carrier do not constitute a total or partial reduction or cessation of payment.

Funds are not currently available for performance under this order beyond March 18, 2011. The Department’s 

obligation for performance under this order beyond March 18, 2011, 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 18, 2011, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond March 18, 2011, the 

Department will provide notice in writing to the carrier.

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.

All claims for payment must be submitted within 60 days of the last day of service provided under this order.

 

1 Annual compensation of $1,198,824 divided by 2,832 annual departures (8 flights a day x 365 days a year x 97 

percent completion).

2

56 arrivals and departures per week multiplied by $423 per flight.