Order 2012-9-27

Served: September 28, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 28th day of September, 2012

ORDER SELECTING CARRIER AND ESTABLISHING SUBSIDY RATES

Summary

By this Order, the Department is selecting SeaPort Airlines, Inc. (SeaPort), to provide subsidized 

Essential Air Service (EAS) at Athens, Georgia, at annual subsidies of $1,553,093 from 

October 1, 2012 through September 30, 2013; and $1,630,410 from October 1, 2013 through 

September 30, 2014.1

Background

By Order 2010-10-5 (October 7, 2010), the Department selected Pacific Wings, L.L.C. dba 

Georgia Skies (Pacific Wings) to provide EAS at Athens, Georgia, for the two-year period 

ending September 30, 2012. Under that contract, Pacific Wings provides two nonstop round 

trips a day (12 a week) with 9-seat Cessna Caravan aircraft for an annual subsidy of $1,051,386. 

In anticipation of that contract’s expiration, we issued Order 2012-7-15 (July 13, 2012) soliciting 

proposals from carriers interested in providing EAS at Athens for a new contract period. In 

response to our request, we received proposals from four carriers: Sovereign Air, Inc. 

(Sovereign), Sun Air Express dba Sun Air International (Sun Air), Multi-Aero, Inc. dba Air 

Choice One (Air Choice One), and SeaPort. The proposals are summarized below.

Carrier Proposals

We received proposals from four carriers as noted above. The full proposals can be accessed 

online at www.regulations.gov under docket DOT-OST-2002-11348. Due to the large response, 

we have summarized the proposals in table form below:

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

Essential Air Service at

ATHENS, GEORGIA

Under 49 U.S.C. § 41731 et seq.

DOCKET DOT-OST-2002-11348
2

Carrier

Annual 

Subsidy Hub Round Trips Per Week Aircraft

Sovereign $1,102,170 ATL 14 nonstop Jetstream 31/32 (19 seats)

Sun Air $1,480,975 ATL 22 nonstop Piper Chieftain (9 seats)

SeaPort-Option 1 $1,553,093 1/ BNA 12 nonstop Cessna Grand Caravan (9 seats)

$1,630,410 2/ BNA 12 nonstop Cessna Grand Caravan (9 seats)

SeaPort-Option 2 $1,616,887 1/ CLT/BNA 12 nonstop to CLT, 6 nonstop to BNA Cessna Grand Caravan (9 seats)

$1,697,420 2/ CLT/BNA 12 nonstop to CLT, 6 nonstop to BNA Cessna Grand Caravan (9 seats)

Air Choice One $1,896,856 3/ ATL 18 nonstop Caravan/Navajo (9 seats)

1/ First year rate.

2/ Second year rate.

3/ Two-year rate. $1,877,887 per year for a four year contract.

Community Comments

In response to our request for comments, we received a response from Mayor Nancy Denson of 

Athens-Clarke County. The community recognizes that passenger levels have dropped 

significantly in recent years, placing them in jeopardy of losing subsidized service due to new 

statutory requirements.2 After considering each of the proposals received, the community 

supports SeaPort’s second service option, consisting of twelve weekly round trips to Charlotte 

and six weekly round trips to Nashville. The Mayor states:

[T]he Airport Authority recommended, and I concur, that SeaPort Airlines be 

awarded the EAS contract for Option #2, Athens/Charlotte and Athens/Nashville. 

This is the most prudent choice for meeting both the air travel needs of this 

community and providing the opportunity to meet future EAS passenger 

requirements.

Decision

In narrowing the field of options, we first turned to Sovereign. Sovereign did not receive 

community support, nor does it have the requisite operating authority from either the Department 

or the Federal Aviation Administration. Thus, we will not consider Sovereign’s proposal further.

Sun Air proposed serving Athens with 22 weekly nonstop round trips to Atlanta. However, their 

proposal states that their bid is contingent upon them being awarded the upcoming EAS contract 

at Macon, GA, as well as “confirmation of effective interline e-ticketing with Delta Air Lines.” 

While Sun Air was successful in their bid for the Macon EAS contract, to date, neither the 

Department nor the community has received notice that it has reached an agreement with Delta 

Airlines. Therefore, we will not move forward with consideration of Sun Air’s proposal.

We next examined the proposal of Air Choice One with service to Atlanta. The community did 

not support this service option. Additionally, the subsidy required by Air Choice One is the 

 2 Section 421 of the FAA Modernization and Reform Act of 2012 (Public Law No. 112-95) requires communities 

within 175 driving miles of a large or medium hub airport to maintain an average of ten passenger enplanements per 

service day during the most recent fiscal year beginning after September 30, 2012, in order to retain eligibility for 

subsidized EAS, unless they receive a waiver from the Secretary. Communities in Alaska and Hawaii are exempt.
3

highest of all of the proposals received. Based on these factors, we will not select Air Choice 

One. 

This leaves us with the two service proposals from SeaPort. Both options would be operated 

with single-engine nine passenger Cessna Grand Caravan aircraft. The first option would 

provide twelve weekly nonstop round trips to Nashville for an annual subsidy of $1,553,093 in 

the first year and $1,630,410 in the second year. The second option would provide twelve 

weekly nonstop round trips to Charlotte and six weekly nonstop roundtrips to Nashville. For this 

service option, SeaPort would require a first-year subsidy of $1,616,887, and a second year 

subsidy of $1,697,420.

When selecting a carrier, 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, 2008,3 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. Although the subsidy requirements for both

SeaPort’s first and second service options are similar, we cannot justify the additional expense of 

subsidizing service to a second hub. The core objective of the EAS program is to connect 

smaller communities to the national transportation system, and SeaPort’s two round trips a day to 

Nashville fully meet that objective. In addition, that capacity level will easily accommodate 

Athens’s current passenger levels that are averaging about three enplanements a day. 

Nonetheless, we note that SeaPort asked for only a modest subsidy increase to include additional 

service to Charlotte six days a week, meaning that the carrier projects that the service could 

operate at nearly break-even levels. Given that, and the community’s support for that service, we 

encourage the community to work diligently with the carrier to mitigate some of the risks of 

providing the additional round trip.

Therefore, after taking all of the above into careful consideration, we have decided to select

SeaPort and their first service option to provide EAS at Athens for a new two-year period 

beginning October 1, 2012. We find that the proposed service fully meets the needs of the 

community and best meets the statutory criteria.

We shall make this selection 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 governing lobbying 

activities.

Recent Legislative Changes Which May Affect Future EAS Eligibility

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 

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, 2012.4 The 

 3 Public Law 110-161.

4 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

legislation exempts locations in Alaska and Hawaii and communities that are more than 175 

driving miles from the nearest large or medium hub airport. As Athens is only about 72 miles 

from the Atlanta airport, the community must meet the 10-enplanement-a-day threshold for EAS 

to continue after FY2013, barring a waiver from the Secretary.

In the most recent fiscal year for which data are available, FY2011 (October 2010-September 

2011), Pacific Wings generated a total of 2,839 passengers (inbound and outbound), or an 

average of 4.5 enplanements per day.5 SeaPort and Athens must attract additional passengers, 

thus increasing enplanements to meet the 10 enplanements per day statutory requirement in order 

for them to remain eligible to continue receiving EAS after FY2013. 

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.

SeaPort and Athens should also be aware that the Department will continue to monitor Athens’ 

eligibility to receive EAS in light of these new requirements throughout the life of this contract. 

The Department may cancel this contract if enplanements remain below 10 per day during 

FY2013.

Furthermore, Athens is subject to the $200 per passenger cap and should maximize traffic to 

avoid possible termination from receiving subsidized EAS.6 The Department fully expects that 

Athens and Silver will work together to ensure that the subsidy per passenger is below $200.

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 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.

Service Transition

We expect Pacific Wings and SeaPort to work together to make a smooth transition at Athens. In 

that regard, before Pacific Wings suspends their service they must notify any passengers holding 

reservations for travel after the suspension date, assist those passengers in making alternate air 

transportation arrangements, or provide a refund of the ticket price, without penalty, if requested.

This Order is issued under authority delegated in 49 CFR Part 1.56a(f).

 5 Source: Bureau of Transportation Statistics; Form 41, Schedule T-100. Daily averages are based on one-half of the 

O&D passengers, divided by 313 service days (314 during leap years).

6 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. The Department is prohibited from paying subsidy for EAS at any community 

where the per-passenger rate exceeds $200, unless the community is greater than 210 miles from the nearest large or 

medium hub.
5

ACCORDINGLY,

1. The Department selects SeaPort Airlines, Inc. to provide EAS at Athens, Georgia, and 

establishes the subsidy rate, as detailed in Appendix C, for the two-year period beginning 

October 1, 2012;

2. The Department finds that SeaPort Airlines, Inc. continues to be fit, willing and able to 

operate as a commuter air carrier and capable of providing reliable EAS at Athens, Georgia;

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 representatives of the Department. 

Such documentation shall be retained for seven years from the issuance 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 carrier may forfeit its 

compensation for any claim that is not supported under the terms of this Order;

4. Docket DOT-OST-2002-11348 will remain open until further order of the Department; and

5. The Department will serve a copy of this Order on the mayor and airport manager of Athens,

Pacific Wings, SeaPort, Air Choice One, Sovereign, and Sun Air.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov
Appendix A

Area Map
Appendix B
Appendix C

SeaPort Airlines, Inc. Essential Air Service to be Provided to 

Athens, Georgia, Docket: DOT-OST-2002-11348

Effective Period: October 1, 2012, through September 30, 2014.

Scheduled Service: 12 weekly nonstop round trips to Nashville.

Aircraft: Single-Engine Piston – Cessna Grand Caravan.

Year 1 Year 2

Annual Subsidy:1 $1,553,093 $1,630,410

Annual Flights:2 1,236 1,236

Rate per Flight:3 $1,257 $1,320

Weekly Ceiling:4 $30,157 $31,680

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 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 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 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.

 1 See Appendix B.

2 12 round trips per week x two directions x 52 weeks = 1,248. Applying a 99% completion factor results in 1,236.

3 Annual subsidy divided by annual flights.

4 Rate per flight x 12 weekly round trips x two directions.
Appendix C

Funds are not currently available for performance under this order beyond September 30, 2012. 

The Government’s obligation for performance under this order beyond September 30, 2012, 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 September 30, 2012, until funds are made available to the Department 

for performance. If funds are not made available for performance beyond September 30, 2012, 

the Department will provide notice in writing to the carrier. 

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

under this order.