Order 2010

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- 5

Served: June 2, 2010



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 2 nd day of June , 20 10

Essential Air Service at

PRESQUE ISLE, MAINE Docket DOT

- OST

- 200 0

- 8012

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



### ORDER SELECTING CARRIER

Summary By this order, the Department is selecting Colgan Air Inc., operating as US Airways Express (Colgan), to provide essential air service (EAS) at Presque Isle, Maine

, for an annual subsidy of $2,812,853 f or the two

- year period from June 1, 2010 to May 31, 20 1 2

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Background By Order 2008

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- 53, the Depart ment selected Colgan to provide the community 19 weekl y nonstop round trips to Boston at an annual subsidy of $2,643,588, for the two

- year period

from June 1, 2008, through May 31, 2010. As the end of the con tract was approaching, we

issued Order 2010

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- 3 , March 3, 2010

, requesting proposals to serve Presque Isle for a

new, two

- year term. In response, we received propos a ls from Colgan, Charter Air Transport (Charter Air) , and Sovereign Air (Sovereign)

.

Each carrier’s complete proposal may be accessed online at http://www.regulations.gov/ by entering DOT

- OST

- 2000

- 8012 in the search block.

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

funds.- 2

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Proposal of Char ter Air

Charter Air proposed one service option using 30

- seat Embraer EMB

- 120 aircraft operating two nonstop round trips, six days a week, over a Presque Isle

- Boston routing for an annual subsidy of $2,737,133.

Proposal of Colgan Colgan proposed one service option that would continue to provide three nonstop round trips each weekday and two nonstop round trips on Saturday and Sun day (19 a week), over a Presque Isle

- Boston routing for an annual subsidy of $2,812,853 using 34

- seat Saab 340

aircraft. Colgan did make clear, however, that under Instrument Flights Rules (IFR)

, due to the length of haul and flight time, and Federal Aviation Administration ( FAA ) approved passenger and baggage weights, the actual number of seats available for sale is fewer than 34. Due to these conditions, Colgan states that on the Boston to Presque Isle leg the aircraft is limited to 28 passengers, and from Presque Isle to Boston the aircraft is limited to 31 passengers. (The difference in seat availability by direction is due to the proximity

of alte rnate airports to Boston compared to Presque I sle. ) Therefore, Colgan believes its proposal of three round trips a day is required to meet the community’s guaranteed 67 seats per day in each direction.

Proposal of Sovereign Sovereign Air proposed two service options over a Presque Isle

- Boston routing. Option 1 would offer four daily nonstop round trips using 19

- seat Jetstream 32 aircraft for an annual subsidy of $2,082,548. Option 2 would offer five daily nonstop round tri ps using 12

- seat
Beechcraft 350 King Air aircraft for an annual subsidy of $1,8 67,936. Option 2, however,

d oes not meet the 15

- seat requirement i n the EAS governing statutes (see 49 USC §41732 (b)(3) )

.

Community Comments

On March 31 , 2010 , we requested c ommunity comments regarding the carrier selection at Presque Isle

. In a letter dated April 21 , 2010, James Bennett

, Presque Isle City Manager

, stated that it was the recommendation of the Presque Isle City Council that Colgan be

awarded the EAS contract f or the next two years. Mr. Bennett stated the princi pal reasons for Colgan’s selection were : 1) its proposal of 19 flights per week, includin g Saturday service; 2) the carrier’s significant experience in providing scheduled air service to the Presque Isle commun ity; and 3) it was the only proposal to have a code share wit h a major carrier, in this case, US Airways.

Decision After carefully reviewing each carrier’s proposal and taking into account community feedback, we have decided to select Colgan’s prop osal of three Presque Isle

- Boston nonstop round trips each week day and two nonstop round trips on Saturday and Sunday (19 a week) for an annual subsidy of $ 2,812,853 . We find that the service and subsidy levels are reasonable, and will meet the community’ s EAS needs.

We base o ur decision to choose Colgan on the four carrier

- selection criteria contained in

49 U.S.C. § 41733 (c ) : 1) the demonstrated reliability in providing scheduled air servic e; 2)- 3

-

the contractual and marketing arrangements with a larger carr ier to ensure service beyond a hub airport; 3) interline agreements with a larger carrier; and 4) support by the community’s elected officials for the applicant’s proposal. Colgan’s proposal me e t s all

four statutory criteria. Colgan is an established scheduled air carrier serving communities throughout the U.S.

, and

, in the case of Presque Isle, has provided the community reliable

air serv ice for several years. Colgan has a code share with US Airw ays and

, therefore, can provide its passengers connections beyond the Boston hub to the national air transportation

netw ork with relative ease. Colgan, through its code share with US Airways, has interline agreements with most major air carriers, enabling passengers to reach their destination with one reservation, ticket

, and baggage check

- in. Lastly, the community, in particular the elected officials, overwhelmingly support s Colgan’s proposal

.

Neither Charter Air ’s nor Sover eign’s proposals me e t s a ny of the above statutory crit eria,

and

, in the case of Sovereign , the carrier currently does not have the requisite operating authority from either the FAA or the Department of Transportation ’s Economic Fitness

Division to operate its proposed service.

Col gan has stated that its aircraft are consistently weight limited to 28 or 31 seats (depending on direction ) , under IFR conditions, such that two round trips a day would not be sufficient to meet Presque Isle’s EAS determination of 67 seats a day. We there fore find that Colgan’s proposal does not exceed the program guidelines of 67 seats per day in

each direction.

Therefore, based on all of the above, we will select Colgan to provide EAS at Presque Isle

for a new two

- year term at its proposed service and subsidy levels.

We shall make this selection of Colgan contingent upon the Department’s receiving properly executed certifications from the carrier that it is in compliance with the Department’s regulations regarding drug

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

Carrier Fitness

49 U.S.C. 41737(b) requires that we find an air carrier fit, willi ng, and able to provide reliable service before we may subsidize it to provide essential air service

. Colgan is subj ect to the Department’s continuing fitness requirements, and no information has come to our attention that would cause us to question the c arrier'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 he re.

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

ACCORDINGLY,

1. We select Colgan Air Inc.

, to provide essential air service at Presque Isle ; Maine;- 4

-

2. We set the final rate of compensation for $ 2,812,853 for the provision of essential air

service at Presque Isle

, Maine, as described in Appendix C;

3. We direct Colgan Air Inc. to retain all books, records, and other source and summary documentation to support claims for payment, and to preserve and maint ain 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 or until the Department indicates that the records may be destroyed, whichever com es 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 f i nd that Colgan Air Inc. continues to be fit, willing and able to operate as a certificated carrier and capable of providing reliable essential air service at Presque Isle,

Maine ;

5 . Docket 2000

- 8012 will remain open pending further Department action ; and

6. We will serve cop i es of this order on the City and Airport Manager s of Presque Isle

, Colgan Air Inc ., Charter Air Transport, and Sovereign Air.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is ava ilable on the World Wide Web at http://www.regulations.govAppendix A



## AREA MAPAppendix BAppendix C

Colgan Air Inc.

Essential Air Service to be Provided at Presque Isle, Maine

Effective Period : J une 1, 2010 through May 31, 2012

Scheduled Service : 1 9 weekly nonstop round trips between Presque Isle and Boston

Aircraft : Saab 340 aircraft Rate per Eligible Flight: $ 1,467 1
Weekly Ceiling : $ 55,746 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 t he 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 i n 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 m ust 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 ly , terminates or redu ces 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 car rier 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 the

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 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 a vailable to the 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 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 day s of the last day of service provided under this order.

1 Annual compensation of $2,812,85 3 divided by 1917 annual departures (38 weekly departures x 52 weeks x 97 percent completion)

. 2 38 arrivals and departures per week multiplied by $1,467 per flight

.