Order: 2010

- 3

- 27

Served: March 2 5 , 2010



### UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 2 2 n d of March , 2010

Essential Air S ervice at

P LATTSBURGH, NEW YORK SARANAC LAKE/LAKE PLACID, NEW YORK

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

- OST

- 2003

- 14783
Docket DOT

- OST

- 2000

- 8025

ORDER SELECTING CARRIERS AND ESTABLISHING SUBSIDY RATES

Summary By this order, the Department is selecting: (a) Colgan Air, Inc. (Colgan Air), operating as US Airways Express, to provide subsidized essential air service (EAS) at Plattsburgh, New York, utilizing 34

- seat Saab 340 aircraft, for a two

- year term beginning when the carrier inaugurates full service, at an annual subsidy rate of $2,117,101; and (b) Hyannis Air Service, Inc., d/b/a Cape Air (Cape Air), to provide subsidized EAS at Saranac Lake/Lake Placid, New York, for a

four

- year term beginning March 1, 2010, with 9

- seat Cessna 402s, at an annual subsidy rate of
$ 1,366,538 1 . (See Appendix A for a map.)

Backg round By Order 2008

- 1

- 12, January 16, 2008, the Department selected Cape Air to provide subsidized EAS at Plattsburgh and Saranac Lake/Lake Placid through February 28, 2010. Under that order, Cape Air provides each community with three daily nonstop round trips to Boston with 9

- seat Cessna 402 aircraft at annual subsidy rates of $1,379,257 for Plattsburgh, and $1,431,875 for

Saranac Lake/Lake Placid.

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

-

In anticipation of the end of the rate term, the De partment issued Order 2009

- 9

- 9 on September 15, 2010, soliciting proposals to provide efficient EAS, with or without subsidy support if necessary, at Plattsburgh and Saranac Lake/Lake Placid.

Based on historical service levels, we stated in Order 2009

- 9

- 9 that we would entertain proposals

that were consistent with what the communities were currently receiv ing (three daily round trips

with nine

- seat aircraft). We noted that EAS at the communiti es calls for service with 15

- seat aircraft; however, during the current two

- year contract, the communities approved the service

with nine

- seat aircraft and the service has been highly successful. Carriers were encouraged to propose more than one service o ption if they chose and were not limited to those requirements if they envisioned other, potentially more attractive possibilities

-- different hubs or longer

- term contracts, for example

-- with subsidy requirements that remained competitive. In response to
Order 2009

- 9

- 9, we received proposals from Cape Air, Colgan Air and Charter Air Transport, Inc. (Charter Air) for service at both communities.

Plattsburgh supported Colgan; however

, Colgan’s only proposal was an inseparable package also proposing serv ice at Saranac Lake/Lake Placid, which supported Cape Air. In order t o accede to each community's wishes, the Department issued a request for a second round of proposals by

Order 2009

- 12

- 24, on December 28, 2009, while keeping all the original EAS service options on the table for consideration. Specifically, we requested stand

- alone Plattsburgh proposals. As expected, we received several addition proposals for Plattsburgh but no new proposals for

Saranac Lake/Lake Placid.

Proposals In response to Orders 2009

- 9

- 9 and Order 2009

- 12

- 24, the Department received proposals from the three carriers identified above. The service options proposed by each carrier in response to both rounds of requests for proposals are summarized below. C opies of the proposals, a dditional information, and the community comments that have been submitted may also be accessed online through the Federal Docket Management System at: http://www.regulations.gov, by doing a simple search on Dockets DOT

- OST

- 2003

- 14783 (Plattsburgh) or DOT

- OST

- 2000

- 8025 (Saranac Lake/Lake Placid).

Cape Air As summarized in the table below, Cape Air submitted proposals with various service options, all utilizing 9

- passenger seat Cessna 402 aircraft, with service to Boston Logan. Cape Air also

expects to pro vide enhanced seamless connectivity to JetBlue Airways, Inc. service at Boston Logan towards the end of the first quarter of 2010. JetBlue submitted a letter affirming Cape

A ir’s statement in this regard.

Level of Service/ Service Options Annual Subsidy Requirements

Two

- Year Contract Four

- Year Contract

Plattsburgh Saranac Lake/

Lake Placid Plattsburgh Saranac Lake/

Lake Placid 1st Round of Proposals (in response to Order 2009

- 9

- 9)
3 daily round trips (year round) $1.3 29 M $1.3 88 M $1.3 09 M $1.3 67 M

4 daily round trips (June

– September) 3 daily round trips (October

– May) $1.459M $1.52 1 M $1. 437 M $1. 497 M- 3

-

Level of Service/ Service Options Annual Subsidy Requirements

Two

- Year Contract Four

- Year Contract

Plattsburgh Saranac Lake/

Lake Placid Plattsburgh Saranac Lake/

Lake Placid 2nd Round of Proposals (in response to Order 2009

- 12

- 24)
3 daily round trips (year round) $1.334M 4 daily round trips (June

– September) 3 daily round trips (October

– May) $1.463M

In response to Order 2009

- 9

- 9, Cape Air also proposed additional service between Plattsburgh and Albany; however, this is above and beyond the level of service requested and therefore will not be considered by the Department.

Charter Air In response to Order 2009

- 9

- 9, Charter Air submitted five service options, utilizing either 19

- or 30

- seat aircraft. Subsequently (and in response to Order 2009

- 12

- 24), the carrier revised its annual subsidy requirements for two of its originally proposed service options. The table below summarizes the carrier’s service options (submitted in response to both rounds of requests for proposals) to be considered by the Department. 2

Service Option Level of service Weekly Round Trips Aircraft Type (Passenger Seats) Hub
Served Annual Subsidy Requirement Package Bid Service Options

– Plattsburgh and Saranac Lake/Lake Placid

1 Combination of one

stop and nonstops 12 at each community Embraer EMB

- 120ER (30) Boston $1.498M at each community ($2.997 for both

communities) Options Proposed At **Each** Community

2 Nonstop 12 Jetstream 3200 (19) New York (JFK) $1.891M ($3.783 for both

communities)

3 Nonstop 12 Embraer EMB

- 120ER (30) New York (JFK) $2.330M ($4.660 for both

communities)

4 Nonstop 12 Jetstream 3200 (19) Boston $1.662M ($3.325 for both

communities)

5 Nonstop 12 Embraer EMB

- 120ER (30) Boston $1.868M ($3.735 for both

communities)

Colgan Air In response to Order 2009

- 9

- 9, Colgan Air, operating as a US Airways code

- share partner,

submitted an inseparable (due to aircraft routing) package bid to provide EAS at both communities, utilizing 34

- passenger Saab 340 aircraft. Plattsburgh and Saranac L ake would each receive 19 round trips each week operated as a combination of one

- stop and nonstop service

2 All of Charter Air’s options proposing to serve JFK would require that Charter Air obtain the requisite landing rights from the Federal Aviation Administration.- 4

-

to Boston Logan. The combined (for both communities) annual subsidy requirement for the first year would be $3,203,554 and $ 3,130,895 for the second year.

In response to Order 2009

- 12

- 24, the carrier , operating as US Airways Express, submitted a bid to provide EAS at Plattsburgh only, utilizing 34

- passenger Saab 340 aircraft. Plattsburgh would receive 12 nonstop round trips each week to Boston Logan. The annual subsidy requirement would be $2,117,101. Colgan Air also proposed to operate an additional round trip each weekday and on Sunday or 18 round

- trips per week for a six

- month trial period, to stimulate traffic and market its service. The Department would neither subsidize nor require the third round trip , and we will not consider its promise as a decisional criterion.

Community Comments By letters dated November 5 and 13, 2009, and email correspondence sent January 15, 2010, the Department solicited the views of the civic officials, airport managers at the respective

communities

, and the New York State Department of Transportation (NYDOT) as to which carriers’ proposal they would prefer. We advised both communities to note that the aircraft type proposed by Cape Air does not meet the 15

- seat standard require d by our governing statutes (49 U.S.C. 4 1732(b)(3) ) and that we would not select C ape Air’s proposal unless we received written support for such a selection from the community involved. We received comments from each community, summarized below . NYDOT did not endors e a specific carrier.

At Plattsburgh, the Clinton County Council , whi ch represents Plattsburgh and several other

towns, endorse s the selection of Colgan Air. The Council states that it bases its recommendation after evaluating service reliability, fares, size of aircraft, frequency of service, connectivity at Boston, and c ode

- share relationships. The Council also specifically states that it is not willing to waive the community’s right to 15

- seat or larger aircraft. In contrast, the Mayor Kasprazak of Plattsburgh strongly endorses the reselection of Cape Air, noting that Cape Air: has more than doubled passenger levels in less than two years; has received a letter of support from its partner JetBlue Airlines; has reduced its passenger fares; and is co

- located with JetBlue, a low

- fare airline that serves 13 of Plattsburgh’ s 15 top destinations.

At Saranac Lake/Lake Placid

, Mr. Larry Miller, the Supervisor of the Town of Harrietstown

, where the airport is located

, strongly supports the re

- selection of Cape Air. Supervisor Miller cites Cape A ir’s exemplary customer service, community support and excellent track record . In

addition , he af firmed the community’s willingness “to waive our right to the 15 passenger seat or more standard required by 49 U.S.C. 41732(b)(3) and (b)(6).”

Decision After carefully reviewing all of the facts in this case, including the co mments submitted by the

elected officials at each community, the Department has decided to select Colgan Air to provide

EAS at Plattsburgh, and Cape Air to serve Saranac Lake/Lake Placid

.

Regarding the proposal of Charter Air, there was not support from either community, and the carrier does not have the requisite operating authority from either the Federal Aviation

A dministration or the D epartment of T ransportation to operate its proposed service. Moreover,- 5

-

only one of its five service options would offer any significant subsidy savings. Thus, the

decision comes down to selecting between Colgan and Cape Air

.

The decision for these communities cannot be compartmentalized, as the decision for one necessarily affects the other. In narrowing the field of options, we must first eliminate Cape Air’s proposal to serve Plattsburgh because the community has affirmatively not waived its right

to 15

- seat or larger aircraft. While t he Mayor fully s upports Cape Air, the County Council supports Colgan. O ur governing statute s, specifically 49 U.S.C. 41732(b)(3)(B), guarantee that Plattsburgh receive service with 15

- seat or larger aircraft , “unless the affected community agrees with the Secretary in wr iting to the use of smaller aircraft to provide service to the place. ” We

have not received such a statement; in fact, we have received an affirmative declination to accept

smaller than 15

- seat aircraft from the Count y Council.

That leaves two combinations on the table for selection. The first is to select Colgan’s original option to serve both Plattsburgh and Saranac Lake/Lake Placid with three round trips a day to

Boston with 34

- seat Saab aircraft for $3,203,554 and $ 3,130,895 for the second year. The

second combination would be to select Cape Air to serve Saranac Lake/Lake Placid with three round trips a day to Boston with nine

- sea t Cessnas for $ 1,366,538 and Colgan to serve Plattsburgh with two round trips a day with Saab 34 0 aircraft for $ 2,117,101 (a total of $3,483,639).

Although the difference in subsidy is significant

-- about $280,000

-- we n ote that it is really spread over two communities, or $140,000 per community . Given that, we will defer to the

communities’ wish es. Colgan Air’s proposal to provide Plattsburgh with 12 nonstop round trips each week to Boston Logan , utilizing 34

- passenger Saab 340 aircraft , with an annual subsidy requirement of $2,117,101, meets all of the statutory carrier

- selection criteria. The carrier has a long history of providing reliable EAS. Its code

- share agreement with US Airways at Boston Logan provides the community with online connections to the n ational air transportation system. The majority of Plattsburgh’s civic officials suppor t Colgan Air and we find both the service and subsidy levels to be reasonable. In addition, this option will provide Plattsburgh with all nonstop service, whereas its original proposal linked with Saranac Lake/Lake Placid would have been a

mix of nonstop and one

- stop service.

At Saranac Lake/Lake Placid, the community has affirmatively waived its right to minimum aircraft requirements and strongly supports the re

- select ion of Cape Air. The community has argued that a longer contract

- term (four y ears) and four round trips a day during its peak tourist

season in a well

- timed manner would provide the best service to its residents and tourist s . The community is also confident that Cape Air’s e nhance d relationship with JetBlue Airways, Inc. will help increase enplanements at Saranac Lake/Lake Placid. Further, based on the increase in enplanement s since Cape Air inaugurated service at the community, the use of 9

- passenger Cessna 402 equipment may ensure a more effective utilization of aircraft and may provide a better balance between the demand for air service and the supply of aircraft seats at Saranac

Lake/Lake Placid than would service with larger aircraft . Despite the extension in the term of a

four

- year contract, when compared to a two

- year optio n, the slight annual cost saving is noteworthy, especially given the recent trends of higher costs in providing air service and the volatility in fuel prices. Regarding the community’s desire for increased service during the- 6

-

summer season, we note (as we did in our November 5, 2009 letter soliciting community views) that the additional service is above and beyond the level of service requested. We also point out that the EAS program typically provides a “safety

- net” level of service, and not all the servi ce the community may desire. In deferring to each communities carrier of choice at an increased cost, we find the additional cost associated with increased service during the summer season at

Saranac Lake/Lake Placid is not warranted.

Based on the above, we select Cape Air’s service option to provide Saranac Lake/Lake Placid with three daily round trips to Boston Logan for an annual subsidy rate of $1, 366

, 538

.

The Department shall make this selection at both communities contingent upon the Department’s

r eceiving properly executed certifications from Colgan Air and Cape Air that they are in compliance with the Department’s regulations regarding drug

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

Carrier Transition As a final matter, we expect Cape Air and Colgan Air to work together to make a smooth transition at Plattsburgh . In that regard, before Cape Air suspends its service at Plattsburgh, we expect it to contact all passengers holding reservations for travel after the final date of service, to inform them of the change in service, and to assist them in arranging alterna te transportation or

to provide a refund of the ticket price, without penalty, if requested. In this regard, Cape Air’s current contract expires on February 28. Colgan did not commence service on March 1, and a s a result, we will compensate Cape Air at t he subsidy rate contained in its two

- year proposal for Plattsburgh from March 1 , until Colgan inaugurates full EAS at Plattsburgh

.

Carrier Fitness

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit, willing and able to provide reliable service before we may compensate it for essential air service. Cape Air is subject to the Department’s continuing fitness monitoring, and no information has c ome to our attention that would cause us to question the carriers’ 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 Ca pe A ir remain s fit to conduct the operations proposed

here. Colgan A ir also remains is subject to the Department’s continuing fitness monitoring and there is no basis to alter that fitness finding at this time. We have also contacted the Federal Aviation Administration, and it has presented no facts that would negatively affect our fitness finding. 3 We

therefore find that there is no basis to alter that fitness finding at this time.

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

ACCORDINGLY,

1. 

### We select Colgan Air, Inc., d/b/a US Airways Express, to provide essential air service at Plattsburgh, New York, and establish the subs idy rates, as described in Appendix C, for the two

year period, beginning when the carrier inaugurates full EAS at the communities;

3 The National Transportation Safety Board (“NTSB”) has issued a preliminary report on an accident of a Colgan Air on February 12, 2009, near Buffalo. NY. Should the NTSB investigation final report reveal findings adverse to the air carrier, we would reassess the air carrier’s fitness in light of those findings.- 7

-

2. 

### We select Hyannis Air Service, Inc., d/b/a Cape Air, to provide essential air service at Saranac Lake/Lake Placid, New York, and establish the subsidy rates, as described in Appendix C, for the four

- year period from March 1, 2010 , through February 28, 2014;

3. We set a short

- term subsidy rate for Cape Air’s provision of EAS at Plattsburgh beginning

March 1, 2010, as desc ribed in Appendix C, until Colgan Air begin s full EAS;

4. The Department directs Colgan Air, Inc., d/b/a US Airways Express and 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 d ocumentation 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 carriers may forfeit their compensation for any claim that is not supported under the terms of this order;

5. We find that Hyannis Air Service, Inc., d/b/a Cape Air, continue s to be fit, willing and able to

operate as a commuter air carrier and capable of providing reliable essential air service at
Sara nac Lake/Lake Placid, New York;

6. We find that Colgan Air, Inc., d/b/a US Airways Express, continues to be fit, willing and able

to operate as a certificated air carrier and capable of providing reliable essential air service Plattsburgh and Saranac Lake/Lake Placid, New York; and

7. These Dockets will remain open until further order of the department; and

8

. Docket Operations will serve copies of this order on the parties listed in Appendix 

### D.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the Internet at http://www.regulations.govAppendix A



## AREA MAPAppendix B Page 1 of 3

Colgan Air, Inc., d/ b/ a US Airw ays Express
Provision of Essential Air Service at Plattsburgh, New York Calculation of Compensation R equirementAppendix B Page 2 of 3

Hyannis Air Service, Inc., d/b/a Cape Air
Provision of Essential Air Service at Saranac Lake/Lake Placid

, New York Calculation of Compensation Requirement

Daily RTs 3 Stage (naut. Miles) 185 Seats per Dpt. 9 Annual Scheduled Departures 2,189 Completion Rate 97% Annual Actual Departures 2,123

PDEW 13.2 Passengers/Departure 4.4
Load Factor 49% Annual Passengers 9,363 Avg. Net Fare $74.93 Passenger Revenue $701,595

Fue l $747,742

Maintenance $558,385

Pilots $196,080 Ownership $ 47,711
Stations $177,102 Landing Fees $67,675 Marketing $41

, 040
General & Admin./Other $128

, 992 Operating expense $1,964

, 727

Return of 5% $103 ,4 07 Economic Expense ($2,068,133 ) Passenger Revenue $701,595

Profit ($1,366,538 )

Subsidy Required

Annual $1, 366

, 538 Per Departure $644 Per Passenge r $146Appendix B Page 3 of 3

Hyannis Air Service, Inc., d/b/a Cape Air
Provision of Essential Air Service at Plattsburgh

, New York Calculation of Compensation Requirement

Daily RTs 3 Stage (naut. Miles) 1 77 Seats per Dpt. 9
Annual Scheduled Departures 2, 189 Completion Rate 97% Annual Actual Departures 2, 123

PDEW 15.4 Passengers/Departure 5.1
Load Factor 57 % Annual Passengers 10,892 Avg. Net Fare $ 65.00 Passenger Revenue $7 07

, 960

Fue l $ 7 36,595
Maintenance $ 5 49,998
Pilots $ 193

, 344 Ownership $ 52,019
Stations $ 1 54,067 Landing Fees $ 6 6,016 Marketing $ 44,746
General & Admin./Other $14 3,324 Operating expense $ 1,9 40,110

Return of 5% $1 0 2,111 Economic Expense ($2,042,222 ) Passenger Revenue $ 70 7,960
Profit ($1,334,262 )

Subsidy Required

Annual $1, 3 34,262 Per Departure $6 28 Per Passenge r $1 23Appendix C Page 1 of 3

Colgan Air, Inc.

, d/ b/ a US Airw ays Express
Essential Air Service to be Provided at Plattsburgh, New York

Effective Period : Beginning with the start of full EAS through the end

of the 24 th month thereafter.

Scheduled Service : 12 nonstop round trips to Boston eac h week

Aircraft : Saab 340, 34 seats Rate per Eligible Flight: $1,728 1 Weekly Ceiling : $41,472 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, 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 sch edule 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 applicab le 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 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 Department does make payments in the stipulated amounts or at the stipul ated 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 September 30 , 20 10

. The Department’s obligation for performance under this order bey ond September 30 , 20 10 , is subject to the availability of appropriated funds from which payment f or 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 , 20 10 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30 , 20 10 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 fore going 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 $2,117 ,101, divided by 1,2 11 annual departures ( 24 flights per week x 52 weeks x

97% completion)

. 2 24 arrivals and departures per week multiplied by $ 1,728 per flight.Appendix C Page 2 of 3

Hyannis Air Service, Inc. d/ b/ a Cape Air
Essential Air Service to be Provided at Saranac Lake/ Lake Placid, New York

Effecti ve Period : March 1, 2010, through February 28, 2014.

Scheduled Service : 18 nonstop round trips to Boston each week

Aircraft : Cessna 402, 9 seats Rate per Eligible Flight: $6 43 3 Weekly Ceiling : $27, 006 4

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 can cellations, 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

pe riod 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 b e 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 fo r 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 na tional 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 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 suc h 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 September 30, 2010. The Department’s obligation for performance under this order beyond September 30, 2010 , is subject to the availability of appropriated funds from which payment f or 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, 2010 , until funds are made available to the Department for performance. If funds are not made availa ble for performance beyond September 30, 2010 , 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.

3 Annual compensation of $1,366,538 , divided by 2,124 annual departures (6 daily flights x 36 5 days x

97% completion)

. 4 42 arrivals and departures per week multiplied by $ 654 per flight.Appendix C Page 3 of 3

Hyannis Air Se rvice, Inc. d/ b/ a Cape Air Essential Air Service to be Provided at Plattsburgh, New York

Effective Period : March 1, 2010, until Colgan inaugurates full EAS.

Scheduled Service : 18 nonstop round trips to Boston each week

Aircraft : Cessna 402, 9 seats Rate per Eligible Flight: $628 5 Weekly Ceiling : $26,376 6

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 explanati on 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 con formance 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 rou tes. 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 Departmen t 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 Department does make payments in the stipulated amounts or at the stipulated service levels, the carrier may cea se 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 constitut e a total or partial reduction or cessation of payment.

Funds are not currently available for performance under this order beyond September 30, 2010. The Department’s obligation for performance under this order beyond September 30, 2010 , 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, 2010 , until funds are made available to

th e Department for performance. If funds are not made available for performance beyond September 30, 2010 , the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and D epartment 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 d ay of service provided under this order.

5 Annual compensation of $1,334,262 , divided by 2,124 annual departures (6 daily flights x 365 days x

97% completion)

. 6 42 arrivals and departures per week multiplied by $ 628 per flight.Appendix D

SERVICE LIST

Mr. Andrew Bonney Hyannis Air Service

660 Barnstable Road Hyannis, Massachusetts 02601

Mr. George Casey

Senior

– Vice President Colgan Air, Inc.

Nonconnah Blvd/ Memphis, Tennessee 38132

Mr. Seth Edelman Director, Aviation Bureau New York State Dept. of Transportation Office of Integrated Modal Services, Aviation Bureau 50 Wolf Road, POD 54 Albany, New York 12232

Mr. Ross Dubarry Airport Manager Adirondack Regional Airport 96 Airport Road Saranac Lake, New York 12983

The Honorable Donald Kaspizak Mayor of Plattsburgh 41 City Hall Place Plattsburgh, New York 12901

Mr. Rodney Brown

Interim Airport Manager Plattsburgh International Airport 42 Airport Lane, Suite 201 Plattsburgh, NewYork 12903

Mr. Larry Miller Supervisor

Town of Harrietstown

39 Main Street Saranac Lake, New York 12983

Mr. Michael E. Zurlo County Administrator Clinton County Government Cen ter 137 Margaret Street, Suite 208 Plattsburgh, New York 12901