Order 2010
- 10
- 12 Served: October 19 , 20 10 

### UNITED STA

TES OF A MERICA DEPA RTMENT OF TRA NSPORTA TION OFFICE OF THE SECRETA RY WASHINGTON, D.C. Is sued by the Department of Transportation on the 19 th day

of October, 2010

ORDER SELECTING CA RRIER AN D ESTA BLISHING SUBSIDY RA TE S Summary By this order, the Department is select ing Hy annis Air Service, Inc . d/b/a Cape Air ( Cape Air ) , to continu e provid ing subsidized essential air service (EAS) at Lebanon, NH/White River Junction, VT (Lebanon) , for the four
- ye ar period beginning December 1, 20 10 , through November 30, 2014, at the annual subsidy rate of 2, 347 , 744
. 1 (See Appendix A for a map of th e service area
. ) Background Lebanon is guaranteed to receive at least a minimum level of air service under the EAS program by

virtue of the fact that it appeared on a certificated carrier’s Civil Aeronautics Board
- issued certificate on October 24, 1978, the date the Airline Deregulation Act of 1978 was signed into law. (See 49 U.S.C. 417 3 1
- 41744 for the EAS program’s governing statutes.) By Order 2008
- 7
- 27 , July 2 5 , 2008, the Department selected Cape Air to provide EAS at the community for the two
- ye ar p eriod through November 3 0 , 2010. That order established an annual subsidy

rate of $ 2 , 245 , 669 for service consisting of six daily nonstop round trips (42 round trips per week) between Lebanon and Boston International Airport, with 9
- seat Cessna 402 aircraf

t . On February 5, 2010, Cape Air requested permission to alter L ebanon’s service pattern by

eliminating two of its six daily nonstop round trips to Boston and replacing them with two daily

nonstop round trips to Westchester County Airport in White Plains, New York. By Order 2010
- 2
- 21, with the full support of the community , the Department granted Cape Air’s request.

1 Such su bsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds. Essential Air Service at LEBA NON, NH /WHITE RIVER JCT., VT Under 49 U.S.C. 41731 et seq . DOCKET DOT - OST - 2003 - 148222

Inanticipation of the end of the rate term, the Department issued Order 20 10
- 8
- 3 , August 2 , 20 10 , requesting proposals from carriers intere sted in providing replacement service at Lebanon , with subsidy

support if necessary , for a new rate term beginning December 1, 2010
. Carrier Proposal s Inresponse to our request, Cape Air (the incumbent) was the only carrier to submit a proposal
. The car rier proposes to continue to provide its current level of service, consisting of four nonstop round trips per day to Boston L ogan International Airport, and two nonstop round trips per day to Westchester County

Airport in White Plains, New York, with 9
- seat Cessna 402 aircraft. The carrier offers two
- ye ar and four
- ye ar subsidy rates of $2,434,435 and $2,347,744, respectively
. Community

Comments Inresponse to our request, we received a letter from Richard Dy ment, the Manager of Lebanon Airport
. Inhis le tter, Mr. Dy ment included minutes from the City Council meeting where the community

voted unanimously

to (1) support Cape Air’s 4
- ye ar service option, and (2) waive its right to receive EAS with 15
- seat or larger aircraft. Decision After careful consideration of the carrier ’ s proposal , as well as the community ’s comments , w e have decided to select Cape Air to continue to provide EAS at Lebanon , as proposed, for the four
- ye ar period through Nov ember 30, 201 4
. We find that the proposed service and subsidy l evels are reasonable. We note that EAS at L ebanon calls for service with 15
- seat aircraft. However, as noted earlier, the community

has waived its right to receive service with 15
- seat or larger aircraft , in essence approv ing the service with nine
- seat a ircraft. We shall make this selection contingent upon the Department’s 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 governing 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 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).3

AC CORDINGLY, 1. The Department selects Hy annis Air Se rvice, Inc . d/b/a Cape Air , to continue to provide EAS at Lebanon, NH/White River Junction, VT , and establishes an annual subsidy rate of $ 2 , 347 , 744 , as detailed in Appendix B , for the four
- ye ar period beginning December 1, 20 10 ; 2
. We set the final rate of compensation for Cape Air , for the provision of essential air service at Lebanon , pay able as follows: for each month during which EAS is provided, the amount of compensation shall be subject to the weekly ceiling set forth in Appendix C and shall be de termined by

multiplying the subsidy
- eligible arrivals and departures completed during the month by $ 554 ; 2 3 . The Department finds that Cape Air continues to be fit, willing and able to operate as a commuter air carrier and capable of providing reliable E AS at Lebanon ; 4 . We direct Cape Air to retain all books, records, and other source and summary documentation to support claims for pay ment, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by rep resentatives of the Department. Such documentation shall be retained for seven years or until the Department indicates that the records may be destroy ed, 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; 5 . Docket DOT
- OST
- 200 3
- 14822 will remain open until further order of the Department; and 6 . The Department will serve a copy of this order on the m ay or and airport manager of Lebanon, and Cape Air. By :

SUSA N L. KURLA ND Assistant Secretary for Aviation and International Affairs (SEAL ) An electronic version of this document is available on line at ww w.regulations.gov

2 See Appendix C for the calculation of this rate, which assumes the use of the aircraft designated. If the carrier reports a significant numbe r of aircraft substitutions, a revision of this rate may be required.

### Appendix A 

## Area Map

### Appendix B HYANNI S AI R SERVI CE, I NC. d/b/a CAPE AI R ANNUAL COMPENSATI ON REQUI REMENT FOR ESSENTIAL AIR SERVICE AT

LEBANON, NH/WHI TE RI VER JUNCTI ON, VT

### Appendix C Page 1 of 2 HYANNI S AI R SERVI CE, I NC. d/ b/a CAPE AI R ANNUAL COMPENSATI ON REQUI REMENT FOR ESSENTIAL AIR SERVICE AT

LEBANON, NH/WHI TE RI VER JUNCTI ON, VT Effective period: December 1, 20 10 , through Nov ember 3 0 , 201 4 Service: 4 non stop round trips per day to Boston L ogan Int’l Airport 2 nonstop round trips per day to Westchester Co. Airport (White Plains, NY) Aircraft ty

pe: Cessna 402 aircraft (9 seats) Timing of flights: No upline or intermediate service is permitted without prior Department approval. Flights must be well
- timed and well
sp aced in order to ensure full compensation. Annual compensation: $ 2,347,744 Subsidy Rate Per Arrival/Departure: $ 554 1 Weekly Compensation Ceiling: 2 $ 46 , 536 3

___________________________ 1 Annual compensation of $ 2 , 347 , 744 divided b y 4 , 237 annual arrivals and departures calculated as follows: 84 flights x 52 week s x 9 7 % completion = 4 , 237
. 2 This rate assumes an annual completion factor of 9 7 percent. A compensation ceiling is to be applied per calendar week such that service abov e that ceiling in one week cannot make up for service shortfalls in another week. 3 Subsidy rate per arrival/departure of $ 554 multiplied by 84 eligible arrivals and departures.

### Appendix C Page 2 of 2 General Terms and Conditions for Essential A ir Serv ice 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 element s 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 be en completed, such as certain weather cancellations, only completed flights are considered eligible for subsidy
. Inaddition, 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 Analy sis 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. Indetermining whether subsidy pay ment for a deviating flight should be adjusted or disallowed, the Department will consider the extent to which the goals of the program a re met and the extent of access to the national air transportation sy stem provided to the community
. If the Department unilaterally , either partially or completely , terminates or reduces pay ments for service or changes service requirements at a specific l ocation provided for under this order, then, at the end of the period for which the Department does make pay ments 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 pay ment. Sub sidy 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 foregoi ng paragraph. Funds are not currently

available for performance under this solicitation beyond December 3, 2010
. The Department’s obligation for performance under this solicitation beyond December 3, 2010 , is contingent upon the availability of appropriated funds from which pay ment for services can be made. No legal liability on the part of the Government for any pay ment may arise for performance under this order beyond December 3, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond December 3, 2010 , the carrier will receive notice in writing by the Department. All claims for pay

ment must be submitted within 60 day s of the last day of service provided under this order.