Or der: 20 11

- 1 1

- 21

Served : November 17 , 20 11



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17 th of November , 20 11

Essential Air S ervice at

EL DORADO/CAMDEN, ARKANSAS HARRISON, ARKANSAS HOT SPRINGS, ARKANSAS

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

- OST

- 1997

- 2935

Docket DOT

- OST

- 1997

- 2935

Docket DOT

- OST

- 1997

- 2935

ORDER RE

- S ELECTING CARRIER

Summary By this order

, the Department is re

- s electing S eaPort Airlines , Inc. ( SeaPort ) to provide

subsidized essential air service ( EAS ) at El Dorado/Camden (El Dorado) , Harrison, and Hot Springs, Arkansas, 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 Sea P ort will continue to provide these three

communities with 18 round trips per week using nine

- seat Pilatus PC

- 12 aircraft

.

Background In anticipation of the end of SeaPort’s current contract on October 31, 2011, the Department

issued Order 2011

- 4

- 15 on Apr il 15, 2011. Because the proposals did not address the high per

passenger subsidy at Hot Springs and Jonesboro, the Department issued 2011

- 6

- 25 on June 27, 2011, re

- soliciting proposals from all interested air carriers. Proposals were also solicited for Jonesboro, but we will deal with that community separately. In response to th e Order, SeaPort

and Multi

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

1 Subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2

-

SeaPort, the incumbent carrier, submitted proposals for El Dorado, Harrison, and Hot Springs, utilizing 9

- passenger Pilatus PC

- 12 aircraft. SeaPort’s proposals are summarized in the table

below:

# round trips Annual
per week Subsidy Aircraft

El Dorado 12-DAL & 6-MEM 2,436,074 $ Pilatus PC-12

Harrison 12-MEM & 6 MCI 2,080,318 $ Pilatus PC-12

Hot Springs (option 1) 12-DAL & 6 MEM 2,116,435 $ Pilatus PC-12

Hot Springs (option 2) 12 - DAL (1 nonstop &) 1,474,388 $ Pilatus PC-12
1 one-stop)

6 - MEM

Air Choice One proposes service using 9

- passenger Cessna Grand Caravan aircraft (summarized below).

# round trips Annual
per week/Hub Subsidy Aircraft

El Dorado and 18 -DFW 4,321,925 $ Caravan
Hot Springs

Harrison 18 - STL 1,759,777 $ Caravan

Copies of both carriers ’ proposals may also be accessed online through the Federal Docket Management System (FDMS) at: http://www.regulations.gov/ by entering DOT

- OST

- 1997

- 2935.

Communi ty Comments

On September 9 , we requested community comment s regarding the carrier selection at the se three Arkansas communities

.

El Dorado

We received a letter from Frank Hash , the Mayor of the City of El Dorado. He states

, “SeaPort has demonstrated on numerous occasions its desire to be a true partner with El Dorado,” by working closely with the airport commission to increase enplanements, by providing on

- time and friendly service. Mayor Hash cites positive comments by its citizens about the service and increased enplanements. Further, he states that the community wants access to Dallas Love

Field , rather th an Dallas/Fort Worth [Air Choice One’s proposal], so that passengers can connect- 3

-

to Southwest Airlines flights. The community also wants to continue supporting SeaPort’s flights to Memphis.

Harrison The Department received a letter from Jeff Crocket, the Mayor of Harrison, stating that the City of Harrison supports SeaPort. He states that SeaPort has inc reased enplanements by 77% in one year and that SeaPort’s flights to Memphis and Kansas City have supported their business and

leisure travelers.

We also received a letter from the Airport Manager at Boone County Regional Airport. She states “[t]he Boone County Airport Administrative Board is unanimous in their decision to [recommend] SeaPort to remain as our Essential Air Service carrier.” She cites SeaPort’s involvement in meeting the community’s travel needs and minimal cancellations. Further, she

sa ys that Air Choice One would not be a good fit for the community, because service to St. Louis

does not meet the needs for local businesses. In addition , the airport has not received one complaint about SeaPort’s service in the last two years.

Hot Spring s The Department received a letter from Ruth Carney, Mayor of Hot Springs. She states that th e City of Hot Springs , the Hot Springs Memorial Airport Committee, the Hot Springs Chamber of Commerce, the Hot Springs Advertising & Promotion Commission, all “wholeheartedly” support
SeaPort as their selection. She says that the City believes SeaPort “will best serve our community based on our experiences and their proven track record of providing [EAS] to Hot Springs during the past twenty

- two (22) months.”

Decision

We have decided to select SeaPort to continue to serve El Dorado, Harrison, and Hot Springs. All three communities support SeaPort 2 and SeaPort requires less subsidy than Air Choice One for El Dorado and Hot Springs. In addition, Harrison stated that service to St. Louis, as proposed by Air Choice One

, does not meet their needs. While Air Choice One’s proposal for Harrison requires less subsidy than SeaPort ’s proposal , when viewed as all three communities together, SeaPort’s proposal (using the lower

- priced option for Hot Springs) requires a lower annual subsidy than Air Choice One’s proposal ($5.99 million vs. Air Choice One’s $6.08 million). Finally, we note that enplanements have incr e ased dramatically under SeaPort’s service

.

Nonetheless, we remained concerned about the subsidy per passenger at Hot Springs. There has

been an increase in enplanements at Hot Springs since SeaPort initiated an alternate serv ice

pattern on July 15, 2011 , changing two of its three Memphis flights to Dallas Love Field. 3 However, the community is subject to the $200 per subsidy per passenger cap, therefore, we will

examine traffic levels after 12 months of continued service and take appropriate action if the per

2 By endorsing SeaPort, the three communities effectively waive their right to 15

- seat aircraft, which we consider only in effect for the two

- year term after SeaPort inaugurates service.

3 The Department approved the al ternate service pattern in Order 2010

- 6

- 7, June 3, 2010.- 4

-

passenger subsidy levels exceed $200. 4 For this reason, we are selecting Option #2 for Hot Springs at the lower annual subsidy of $1,474,388 vs. Option #1 at 2,116,435. We expect the community and the carrier to work ag gressively to increase traffic at Hot Springs to lower the per passenger subsidy and avoid termination of subsidized EAS

.

We shall make this selection at El Dorado/Camden, Harrison, and Hot Springs contingent upon the Department’s receiving properly executed certifications from SeaPort that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activit ies.

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

. SeaPort is sub j ect to the Department’s continuing fitness require ments, 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 SeaPort Airlines, Inc. , to provide essential air service at El Dorado/Camden, Harrison, and Hot Springs, Arkansas ;

2 . We set the final rate of compensation for SeaPort Airlines, Inc.

, for the provision of essential

air service at El Dorado/Camden, Harrison, and Hot Springs, Arkansas, as described in Appendix C ;

3

. We direct SeaPort Airlines, 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 repr esentatives 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;

4

. We find that SeaPort Airlines, Inc.

, continue s to be fit, willing and able to operate as a

commuter carrier and capable of providing reliable essent ial air service at El Dorado/Camden, Harrison, and Hot Springs, Arkansas ;

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

4 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 o f Transportation and Related Agencies Appropriations Act of 2000.- 5

-

6 . We will serve copies of this order on the Mayor s of El Dorado, Camden, Harrison, and Hot Springs, and the Airport Manager s of South Arkansas Regional Airport at Goodwin Field ( El

Dorado/Camden )

, Boone County Regional Airport ( Harrison )

, and H ot Springs Memorial Field Airport , SeaPort Airlines

, Inc.

, 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 at http://www.regulations.govAppendix A



## AREA MAP

This map is provided by Planet Profitability Forecasting System and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Appendix B Page 1 of 3

S e a P ort Ai r l i n e s
, I n c

. E l D ora d o/C a m d e n, A R

2 RT E LD

- D A L + 1 RT E L D

- M E M

18 W e e k l y R o u n d T r i ps (3 x 6 / d a y w e e k )

Dep a r tu r es 1, 8 2 5

Bl o c k Ho u r s 2, 0 6 2.5

P r o j e c ted A n n u a l P a ss e n g ers 5, 5 0 0

R E V E N U E S

O p e r at i ng R e v e n u e $ 4 2 5 ,4 1 0

O th e r R e v e n ue $ 4, 6 8 0

T O T A L R ev e n u e $ 4 3 0 ,0 9 0

E X P E N S E S

D i r e c t

Insuran c e $ 7 3

, 2 6 9

Fu el / O i l $ 8 6 0, 4 1 3

F l y i ng O p e r a t i o n s $ 7 6 5, 3 6 3

M a i nt e n a n c e $ 5 7 5, 6 8 9

T ot a l D i r e c t $ 2

, 2 7 4

, 7 3 4

T ot a l I n d i r e c t $ 4 5 4, 9 4 7

T O T A L E x p e n s es $ 2

, 7 2 9

, 6 8 1

O p e r at i ng L o s s ( $ 2 ,2 9 9, 5 9 0 )

Ret u r n ( 5 %) $ 1 3 6

, 4 84

A n nual Com p en s ati o n R e qui r ement $ 2

, 4 3 6

, 0 7 4Appendix B Page 2 of 3

S e a P ort Ai r l i n e s
, I n c

. Har r i s o n
, A R

2 RT HR O

- M E M + 1 RT HR O

- MCI

18 W e e k l y R o u n d T r i ps ( 3 x 6 / d a y w e e k )

Dep a r tu r es 1, 8 2 5

Bl o c k Ho u r s 1, 9 0 4.3

P r o j e c ted A n n u a l P a ss e n g ers 7, 0 0 0

R E V E N U E S

O p e r at i ng R e v e n u e $ 5 9 5 ,7 9 1

O th e r R e v e n ue $ 6, 5 5 4

T O T A L R ev e n u e $ 6 0 2 ,3 4 5

E X P E N S E S

D i r e c t

Insuran c e $ 6 7

, 6 5 0

Fu el / O i l $ 7 9 4, 4 2 3

F l y i ng O p e r a t i o n s $ 7 3 5, 4 8 9

M a i nt e n a n c e $ 5 3 1, 5 3 6

T ot a l D i r e c t $ 2, 1 2 9

, 0 9 8

T ot a l I n d i r e c t $ 4 2 5, 8 1 9

T O T A L E x p e n s es $ 2, 1 2 9

, 0 9 8

O p e r at i ng L o s s ( $ 1, 9 5 2, 5 72)

Ret u r n ( 5 %) $ 1 2 7

, 7 46

A n nual Com p en s ati o n R e qui r ement $ 2, 0 8 0

, 3 1 8Appendix B Page 3 of 3

S e a P ort Ai r l i n e s
, I n c

. Hot S pri n g s
, A r k a n s as

1x H OT

- DA L + 1x HO T

- E L D

- DA L + 1x H O T

- M E M

18 W e e k l y R o u n d T r i ps (3 x 6/ d a y w e e k )

Dep a r tu r es 1, 8 2 5

Bl o c k Ho u r s 1, 5 4 5.3

P r o j e c ted A n n u a l P a ss e n g ers 6, 2 0 0

R E V E N U E S

O p e r at i ng R e v e n u e $ 7 4 0 ,4 2 5

O th e r R e v e n ue $ 8

, 1 45

T O T A L R ev e n u e $ 7 4 8 ,5 7 0

E X P E N S E S

D i r e c t

Insuran c e $ 5 4

, 8 9 8

Fu el / O i l $ 6 4 4, 6 7 6

F l y i ng O p e r a t i o n s $ 6 3 3, 3 3 6

M a i nt e n a n c e $ 4 3 1, 3 4 2

T ot a l D i r e c t $ 2

, 7 6 4

, 2 5 2

T ot a l I n d i r e c t $ 3 5 2, 8 5 1

T O T A L E x p e n s es $ 2

, 1 1 7

, 1 0 3

O p e r at i ng L o s s ( $ 1 ,3 6 8, 5 3 3 )

Ret u r n ( 5 %) $ 1 0 5

, 8 55

A n nual Com p en s ati o n R e qui r ement $ 1

, 4 7 4

, 3 8 8Appendix C Page 1 of 3

SeaPort Airlines , Inc.

Essential Air Service to be Provided at El Dorado/Camden, Arkansas

Effective Period : November 1, 2011, through October 31, 2013

Scheduled Service : 1 2 nonstop round trips each week t o Dallas Love Field and 6 nonstop round trips each week to Memphis International Airport

Aircraft : Pilatus PC

- 12

, 9 seats Rate per Eligible Flight 1 : $ 1, 335 Weekly Ceilin g 2 : $ 4 8,060

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 subsi dy 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 o rder 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 o f 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 m ust 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 complete, terminates or reduces payments for service or cha nges 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 servi ce 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 partia l reduction or cessation of payment.

Funds are not currently available for performance under this order beyond November 18, 2011

. The Department’s obligation for performance under this order beyond November 18, 2011 , is subject to the availability of app ropriated funds from which payment for services can be made. No legal liability on the part of the Department for any payment may arise for performance under this order beyond November 18, 2011 , until funds are made available to the Department for perform ance. If funds are not made available for performance beyond November 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 $2,436,074 , divided by 1,825 annual departures (36 weekly departures x 52 weeks x 97.5 percent completion)

. 2 36 arrivals and departures per week multiplied by $ 1,3 35 per flight

.Appendix C Page 2 of 3

SeaPort Airlines, Inc.

Essential Air Service to be Provided at Harrison, Arkansas

Effective Period : November 1, 2011, through October 31, 2013

Scheduled Service : 1 2 nonstop round trips each week to Memphis International Airport and 6 nonstop round trips each week to Kansas City International Airport

Aircraft : Pilatus PC

- 12 , 9 seats Rate per Eligible Flight 1 : $ 1,140 Weekly Ceilin g 2 : $ 41,040

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, withou t 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 wea ther 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 fo r 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 Departm ent 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 p oints 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 t o the national air transportation system provided to the community.

If the Department unilaterally, either partially or complete, terminates or reduces payments for service or changes service requirements at a specific location provided for under this ord er, 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.

Funds are not currently available for performance under this order beyond November 18, 2011

. The Department’s obligation for performance under this order beyond November 18, 2011 , is subject to the availability of appropriated funds from which payment for services can be made. No legal liabi lity on the part of the Department for any payment may arise for performance under this order beyond November 18, 2011 , until funds are made available to the Department for performance. If funds are not made available for performance beyond November 18, 2 011 , 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, regula tions, 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 $2,080,318 , divided by 1,825 annual departures (36 weekly departures x 52 weeks x 97.5 percent completion)

. 2 36 arrivals and departures per week multiplied by $ 1,140 per flight

.Appendix C Page 3 of 3

SeaPort Airlines, Inc.

Essential Air Service to be Provided at Hot Springs, Arkansas

Effective Period : November 1, 2011, through October 31, 2013

Scheduled Service : 6 nonstop round trips and 6 one

- stop round trips each week to Dallas Lo ve Field and 6 nonstop round trips each week to Memphis International Airport

Aircraft : Pilatus PC

- 12 , 9 seats Rate per Eligible Flight 1 : $ 808 Weekly Ceilin g 2 : $ 2 9,088

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

ai rcraft 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 consid ered 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 contemplate s 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 circu mstances 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 complete, 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 Depa rtment 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.

Funds are not currently available for performance under this order beyond November 18, 2011

. The Department’s obligation for performance under this order beyond November 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 Department for any

payment ma y arise for performance under this order beyond November 18, 2011 , until funds are made available to the Department for performance. If funds are not made available for performance beyond November 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 con trovert 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 $1,474,388

, divided by 1,825 annual departures (36 weekly departures x 52 weeks x 97.5 percent completion)

. 2 36 arrivals and departures per week multiplied by $ 808 per flight

.