Order: 2014

- 1 1

- 6

Served: November 7

, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 7th day of November 20 1 4

Essential Air Service at

LEBANON, NEW HAMPSHIRE/

WHITE RIVER JUNCTION, VERMONT DOT

- OST

- 2003

- 14822

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 Lebanon, New Hampshire/White

River Junction, Vermont (Lebanon) to Boston Logan Inter national Airport (BOS) and

Westchester County Airport in White Plains, New York (White Plains) using 9

- passenger

Cessna 402 aircraft for the four

- year term from December 1, 2014, through

November 30

, 201 8. The annual subsidy rates are as follows: 1

Year Lebanon

- Boston

Annual Subsidy Lebanon

- White

Plains Annual

Subsidy Total Annual

Subsidy

1 $1,719,211 $1,253,507 $2,972,718

2 $1,787,979 $1,303,648 $3,091,627

3 $1,859,499 $1,355,793 $3,215,292

4 $1,933,879 $1,410,025 $3,343,904

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

-

Background

By Order 2010

- 10

- 12 (October 19, 2010), the Department re

- selected Cape Air to provide

EAS at Lebanon for the four

- year term from December 1, 2010 to November 30, 2014

. Under that O rder, Cape Air provides Lebanon with four daily nonstop round trips (28 per

week) to BOS and two daily nonstop round trips (14 per week) to HPN using Cessna 402

aircraft for a total annual subsidy of $2,347,744.

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

- 5

- 11

(May 22

, 2014) requesting proposals from air carriers interested in providing EAS at

Lebanon for a new contract term. In res ponse to that Order, only the incumbent carrier,

Cape Air, submitted a proposal.

Cape Air’s complete proposal and community comments may be accessed online at

www.regulations.gov by entering Docket number DOT

- OST

- 2003

- 14822 in the search

block.

Proposal of Cape Air

Cape Air submitted two

- year and four

- year options to serve Lebanon from BOS and HPN

using 9

- pass enger Cessna 402 aircraft . Cape Air proposes to maintain i ts current service

level, with four daily nonstop round trips (28 per week) to BOS and 2 daily nonstop round

trips (14 per week) to HPN. With regard to its annual subsidy request, Cap e 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:

Lebanon proposed annua l subsidy

Two

- Year Reselection LEB

- BOS Annual Subsidy LEB

- HPN Annual

Subsidy

Year 1 $1759,989 $1,283,173

Year 2 $1,945,545 $1,334,500

Four

- Year Reselection

Year 1 $1,719,211 $1,253,507

Year 2 $1,787,979 $1,303,648

Year 3 $1, 859,499 $1,355,793

Year 4 $1,933,879 $1,410,025

Community Comments

On July 1

, 2014, the Department reque ste d comments from Lebanon regarding this EAS

air carrier

- selection case. In response, the Lebanon City Council submitted meeting

minutes dated July16, 2014, supporting Cape Air’s proposal to provide EAS for a four

year term.- 3

-

Decision

Cape Air was the only airline to submit a proposal for Lebanon’s EAS case and the

community made it clear they support the airline’s option for a four

- year term. Given that

the four

- yea r option affords th e Department some savings over the two

- year option, the

decision to re

- select Cape Air for a new, four

- year term is clear

. The Department find s the

proposed service and subsidy levels to be reasonable.

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 activitie s. 2

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carrier 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 question 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 Lebanon, New Hampshire/White River Junction, Vermont

, and

establish 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 a nd

examination by representatives of the Department. Such documentation 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 log s for aircraft sold or

disposed of must be retained. The carrier s may forfeit their compensation for any claim

that is not supported under the terms of this Order ;

2 The certifications are available online under “Reports and Publications” at

http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- ai r

- service/essential

- air

- service- 4

-

3

. The Department f i nd s that Hyannis Air Service, Inc. d/b/a Cape Air is fit, willing a nd

able to operate as a commuter air carrie r

, and capable of providing reliable Essential Air

S ervice at Lebanon, New Hampshire/White River Junction, Vermont ;

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 mayors of Lebanon, New

Hampshire, and White River Junction, Vermont; the airport manager of Lebanon

Municipal Airport ; the Vermont Department of Transportation; 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 Lebanon, New HampshireAppendix 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 Lebanon, New Hampshire

DOT

- OST

- 2003

- 14822

Contract Term : December 1, 2014

, through November 30

, 2018

Hubs : Boston Logan International Airport (BOS)

Westchester County Airport (HPN)

Aircraft : 9

- passenger Cessna 402

Scheduled Service : 28 nonstop round trips per week to BOS

14 nonstop round trips per week to HPN

Annual Subsidy:

Effective Period BOS HPN

December 1, 2014

– November 30, 2015 $1,719,211 $1,253,507

December 1, 2015

– November 30, 2016 $1,787,979 $1,303,648

December 1

, 2016

– November 30, 2017 $1,859,499 $1,355,793

December 1, 2017

– November 30, 2018 $1,933,879 $1,410,025

Rate per Flight:

Effective Period BOS 1 HPN 2

December 1, 2014

– November 30, 2015 $609 $888

December 1, 2015

– November 30, 2016 $633 $923

December 1, 2016

– November 30, 2017 $658 $960

December 1, 2017

– November 30, 2018 $685 $999

Weekly Ceiling:

Effective Period BOS 3 HPN 4

December 1, 2014

– November 30, 2015 $34,104 $24,864

December 1, 2015

– November 30, 2016 $35,448 $25,844

December 1, 2016

– November 30, 2017 $36,848 $26,880

December 1, 2017

– November 30, 2018 $38,360 $27,972

1 Annual compensation divided by 2,825 annual departures (56 weekly departures x 52 weeks x 97 percent

completion)

2 Annual compensation divided by 1,412 annual departures (28 weekly departures x 52 weeks x 97 percent

comple tion)

3 56 weekly departures multiplied by rate per flight

4 28 weekly departures multiplied by rate per flightAppendix C

Page 2 of 2

General Terms and Conditions for Essential Air Service

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 unders tands 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 fl ights 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 car rier 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 c ompensated. 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 syste m 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 fo r which the department 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

regulat ions, 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 pe rformance under this O rder beyond December 11, 2014

. The

Government’s obligat ion for performance under this O rder beyond December 11, 2014

, 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 per formance u nder this order beyond December 11, 2014

, until funds are made available to the Department for performance. If sufficient funds are not made

available for performance beyond December 11, 2014 , 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

last 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 cl aims must be submitted by

November 30, and so on.