Order: 2015

- 1

- 1

Served: January 6, 201 5



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6 th day of January

, 20 1 5

Essential Air Service at

OGDENSBURG , NEW YORK DOT

- OST

- 1997

- 2842

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



### ORDER RE

- SELECTING AIR CARRIER

Summary By this Order

, the Department is re

- selecting Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air) to provide E ssential Air Service (E AS ) at Ogdensburg , New York ( Ogdensburg ) to Boston Logan International Airport (BOS) via Albany International Airport (ALB) using 9

- passenger Cessna 402 aircraft for the four

- year term from April 1, 2015, through March 30

, 201 9 . The ann ual subsidy rates a re as follows: 1

Year Annual Subsidy

1 $2,419,820

2 $2,516,612

3 $2,617,277

4 $2,721,968

1 Such subsidy is calcu lated and distributed on a fiscal year basis, subject to the availability of funds.- 2

-

Background By Order 2011

- 1

- 6 (January 7, 2011 ), the Department re

- selected Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air), to provide EAS at Ogdensburg for a four

- year period beginning when Cape Air inaugurated its new service pattern, which offered through service to BOS (via ALB) until the 48 th month thereafter. 2 Cape Air provides Ogdensburg with 3 daily round trips (21 per week) to ALB, with continuing service to BOS, using 9

- passenger Cessna 402 aircraft for an annual subsi dy of $1,708,911.

As the end of the contract w as appro aching, the Department issued Order 2014

- 10

- 5 ( October 9

, 2014) requesting proposals from air carriers interested in providing EAS at Ogdensburg for a new contract term. In res ponse to that Order, two air carriers su bmitted proposals: Boutique Air and Cape Air

.

Each air carrier’s complete proposal and community comments may be accessed online at www.regulations.gov by entering Docket number DOT

- OST

- 1997

- 2842 in the search

block.

Proposal of Boutique Air Boutique Air submitted a proposal with two options, both using single

- engine 9

- passenger Pilatus PC

- 12 aircraft. Option 1 proposes 18 weekly nonstop round trips to BOS for an annual subsidy of $2,948,861. O ption 2 proposes 12 weekly nonstop round trips to BOS

and 12 weekly nonstop round trips to ALB (24 round trips total) for an annual subsidy of $3,610,182.

Proposal of Cape Air Cape Air submitted two

- year and four

- year options to serve Ogdensburg from BOS via

ALB using 9

- pass enger Cessna 402 aircraft . Cape Air proposes to maintain i ts current
service l evel, with three daily one

- stop round trips (21 per week) to BOS

. With regard to its annual subsidy request, Cape Air states in its bid that

, in order to align revenue with operating costs over time, the airline has incorporated a 4 percent increase in annual subsidy for each year of the EAS contract. Cape Air’s proposed subsidy is summarized

below:

2 Cape Air began its new service pattern at Ogdensburg , with through service to BOS on March 8, 2011, thereby making the contract expiration date March 31, 201 5

.- 3

-

Ogdensburg proposed annual subsidy 3

Two

- Year Reselection Annual Subsidy

Year 1 $ 2,476,279

Year 2 $ 2,575,330

Four

- Year Reselection

Year 1 $ 2, 419,820

Year 2 $ 2

, 516,612

Year 3 $ 2,617,277

Year 4 $ 2,721,968

Community Comments

On October 28

, 2014, the Department reque ste d comments from Ogdensburg regarding

this EAS air carrier

- selection case. In response, The Honorable William D. Nelson, Mayor of Ogdensburg, submitted comments on behalf of the community , supporting Cape Air’s proposal to provide EAS for a nother four

- year term. In his l etter, Mayor Nelson wrote

,

“ The City Council voted unanimously to endorse Cape Air as the provider of choice and believe they have provided the best proposal for Essential Air Service for Ogdensburg and North Country.” Mayor Nelson also added, “Cape Air h as provided exceptional service to the community as our EAS provider over the past six years, with high customer satisfaction, exceptional on

- time flight ratings, increased ridership, and tremendous community involvement. Because of this proven track reco rd, the Council supports and encourages the USDOT to consider a four

- year contract for EAS service with Cape Air.”

Decision After carefully reviewing each air carrier’s proposal and taking into account community feedback, the Department has decided to r e

- select Cape Air for another four

- year term. We base our decision on the five factors 49 U.S.C. § 41733(c)(1) directs us to consider: 1) service reliability; 2) contractual and marketing arrangements with a larger carrier at the hub; 3) interline agreeme nts with a larger carrier at the hub; 4) community views, giving substantial weight to the views of the elected officials representing the users; 5) whether the carrier has included a plan in its proposal to market its service to the community.

First, Cape Air has a proven record of providing reliable EAS at Ogdensburg , as well as several EAS communities. In addition, Cape Air’s service to BOS , a large hub airport, coupled with its established interline ticketing and baggage agreements with most major U.S. airlines, will provide customers with seamless connections to the national air transportation system. Furthermore, Cape Air has community support, a key carrier

sel ection criterion and included annual marketing expenses in its proposal , sample s of print

advertisements for its service , and Cape Air opened a ticket office in Ogdensburg to provide greater community awareness and ticket sales to the public

. Lastly, Cape Air’s total subsidy request for a four

- year contract offers the Department som e savings vs. the

3 See Appe ndix B- 4

-

carrier’s two

- year contract and is significantly less expensive than that of Boutique Air ’s proposed subsidy.

The Department shall make this selection contingent upon its receiving properly executed

certifications from Cape Air that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. 4

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air ca rrier fit, willing, and able to provide reliable service before the Department may subsidize it to provide EAS

. Cape Air is subject to the Department’s continuing fitness requirements, and

no information has come to our attention that would cause us to qu estion the air carrier’s

fitness at this time. The Department has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness findin gs. The Department therefore conclude s that Cape Air is reliable and fit to conduct the operations proposed here.

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

. 25a(b)

.

ACCORDINGLY,

1. The Department re

- select s Hyannis Air Service, Inc. d/b/a Cape Air to provide

Essential Air S ervice at Ogdensburg

, New York

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

2

. The Department direct s Hyannis Air Service, Inc. d/b/a Cape Air 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 d ocumentation shall be retained for seven years from the service date of this Order 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 ca rrier s may forfeit their compensation for any claim that is not supported under the terms of this Order ;

3

. The Department f i nd s that Hyannis Air Service, Inc. d/b/a Cape Air is fit, willing and able to operate as a commuter air carrie r
, and capable of p roviding reliable Essential Air

S ervice at Ogdensburg , New York ;

4 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/essential

- air

- service- 5

-

4

. Th is docket will remain open pending further Department action ; and

5

. The Department will serve a copy of this O rder on the Mayor and Town Supervisor of Ogdensburg , New York ; the Airport M anager of Ogdensburg International Airport ; the Executive Director of Ogdensburg Bridge and Port Authority; Boutique Air, and Hyannis Air Service, Inc. d/b/a Cape Air.

B y:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is ava ilable at www.regulations.govAppendix A



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B Page 1 of 2



### Es sential Air Service at Ogdensburg , New YorkAppendix B Page 2 of 2Appendix C Page 1 of 2

Hyannis Air Service, Inc. d/b/a Cape Air

Essential Air Service to be provided at Ogdensburg, New York

DOT

- OST

- 1997

- 2842

Contract Term : April 1, 2015, through March 30, 2019

Hub : Boston Logan International Airport (BOS) via Albany International Airport (ALB)

Scheduled Service : 21 one

- stop round trips per week to BOS

Aircraft : 9

- passenger Cessna 402

Compensation Schedule :

Effective Period Annual Subsidy Rate per Flight 1 Weekly Ceiling 2

April 1, 2015

– March 30, 2016 $2,419,820 $1,142 $47,964 April 1, 2016

– March 30, 2017 $2,516,612 $1,188 $49,896 April 1, 2017

– March 30, 2018 $2,617,277 $1,235 $51,870 April 1, 2018

– March 30, 2019 $2,721,968 $1,28 5 $53,9 70

1 Annual compensation divided by 2,119 annual departures (42 weekly departures x 52 weeks x 97 percent completion)

2 42 weekly departures multiplied by rate p er flightAppendix C Page 2 of 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 stipulations of the rate Order, inclu ding 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; abs ent 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 fli ghts 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 servic e 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 e nd of the period for which the D epartment 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 und er this order beyond January 14, 2015 , until funds are made available to the Department for pe rformance. If sufficient funds are not made available

fo r 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

las t 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.