Order: 2014-8-19

Served: August 27, 2014

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 27th day of August, 2014

Essential Air Service at

MUSCLE SHOALS, ALABAMA

GREENVILLE, MISSISSIPPI

TUPELO, MISSISSIPPI

DOCKET DOT-OST-2000-7856

DOCKET DOT-OST-2008-0209

DOCKET DOT-OST-2009-0305

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

ORDER SELECTING AIR CARRIER AND DEFERRING ACTION

Summary

By this Order, the Department is 1) selecting SeaPort Airlines, Inc. (SeaPort), to provide 

Essential Air Service (EAS) at Tupelo, Mississippi, using 9-passenger Cessna Grand 

Caravan (Cessna) aircraft with 18 nonstop round trips per week to Nashville International 

Airport (BNA) and 12 nonstop round trips per week to Memphis International Airport

(MEM). The annual subsidy is $2,506,436, for a two-year term from October 1, 2014, 

through September 30, 2016;

1 and 2) deferring action at Muscle Shoals, Alabama, and 

Greenville, Mississippi, until further Order from the Department.

Background

By Order 2012-5-17 (May 22, 2012) the Department selected Silver Airways (Silver) at 

Tupelo to provide 18 nonstop round trips per week to Hartsfield-Jackson Atlanta 

International Airport (ATL) using 34-passenger Saab 340 aircraft for an annual subsidy of 

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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$3,522,398.2

 On April 9, 2014, Silver filed a 90-day notice of its intention to terminate 

scheduled air service at Tupelo. As a result of this notification, the Department issued 

Order 2014-4-24 prohibiting Silver from terminating service and requesting proposals from 

air carriers interested in providing EAS at the community for a new term.3

 In response to 

that Order, four air carriers submitted proposals: Aerodynamics, Inc. (ADI), Multi-Aero, 

Inc. d/b/a Air Choice One (Air Choice One), SeaPort, and Sun Air Express, LLC d/b/a Sun 

Air International (Sun Air).

Each air carrier’s proposal and the community’s comments may be accessed online at 

www.regulations.gov by entering each community’s respective Docket number in the 

search block.

Special discussion about Muscle Shoals and Greenville

The FAA Modernization and Reform Act of 2012 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. The legislation exempts locations in 

Alaska and Hawaii and communities that are more than 175 driving miles from the nearest 

large or medium hub airport.

4 The Secretary also has the authority to waive the 10-

enplanement standard, on an annual basis, if the community can demonstrate that the 

reason the location averages fewer than 10 enplanements per day is due to a temporary 

decline in enplanements.5

Order 2014-4-26, issued on April 24, 2014, found that Greenville was within 175 miles of 

Memphis, a medium hub, and Muscle Shoals was within 175 miles of Nashville, both 

averaged fewer than 10 enplanements per day in fiscal year 2013 and, thus, both 

communities’ EAS eligibility was tentatively terminated by that Order. That tentative 

decision was made final by Order 2014-6-6, issued June 24, 2014, which also described the 

waiver process and announced our intention not to terminate EAS subsidy during the 

processing of any waiver petitions. Both Muscle Shoals and Greenville filed their waiver 

petitions on July 23, 2014, and their long-term status in the EAS program will not be 

known until the waiver process has concluded. Therefore, we will defer action on Muscle 

Shoals and Greenville. Any proposal that packages Muscle Shoals or Greenville will not 

be considered.

Proposal of ADI

ADI submitted a proposal to serve Tupelo (as well as Laurel/Hattiesburg and Meridian) as

an inseparable, “all-or-nothing” package – meaning that their proposal to provide EAS is 

on the condition that they are awarded the EAS contract for all three communities. ADI 

 2 By Order 2012-5-17, the Department also selected Silver to provide EAS at Muscle Shoals, Greenville, and 

Laurel/Hattiesburg. See Order 2014-7-12 regarding EAS at Laurel/Hattiesburg. 3 Silver also filed notice to terminate service at Muscle Shoals and Greenville, and Order 2014-4-24 

prohibited Silver from terminating service at those communities as well. 4 49 U.S.C. § 41731(c) & (d). 5 49 U.S.C. § 41731(e).
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proposed to provide Tupelo with 12 nonstop round trips per week to Atlanta using 50-

passenger Embraer-145 aircraft (EMB145) for an annual subsidy of $3,831,108.6

 

Proposal of Air Choice One

Air Choice One submitted proposals that were combined packages and stand-alone 

options. The combined packages included Muscle Shoals and Greenville; however, since 

action at those two communities is being deferred at this time, we will only address the 

stand-alone options at Tupelo.

The chart below summarizes the main components of the airline’s stand-alone options for 

Tupelo.

Options

Annual 

Subsidy 

(2-year 

contract, 

subsidy 

for years 

1 & 2)

Annual 

Subsidy 

(4-year 

contract, 

subsidy 

for years 

3 &4) Aircraft Seats Stops

Weekly 

Frequency Hub

T1 $2,902,207 $2,873,185

Cessna 

Caravan 

or Piper 

Navajo 8/9 0 30 MEM

T2 $3,536,182 $3,500,820

Cessna 

Caravan 

or Piper 

Navajo 8/9 0 12/18

BNA/

MEM

T3 $3,302,882 $3,269,853

Cessna 

Caravan 

or Piper 

Navajo 8/9 0 36 MEM

T4 $3,906,312 $3,867,249

Cessna 

Caravan 

or Piper 

Navajo 8/9 0 18/18

BNA/

MEM

Proposal of SeaPort

SeaPort proposed to provide 18 nonstop round trips per week to BNA and 12 nonstop 

round trips per week to MEM (36 round trips per week in total) using 9-passenger Cessna

aircraft for an annual subsidy of $2,506,436.

 6 Laurel/Hattiesburg and Meridian supported a proposal from ExpressJet Airlines, Inc. (ExpressJet) and by 

Order 2014-7-12 the Department selected ExpressJet to provide EAS at both communities. Since ADI’s 

proposal was contingent on being selected at all three communities, it was eliminated from consideration in 

this air carrier selection case.
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Proposal of Sun Air

Sun Air proposed 31 nonstop round trips per week to MEM using 8-passenger Piper 

Chieftain aircraft for an annual subsidy $2,871,083.

Community Comments

On June 3, 2014, the Department solicited comments from Tupelo regarding this air carrier 

selection case. We received a letter from Mr. Fred Cook, Chair of the Tupelo Airport 

Authority, supporting SeaPort’s proposal. Mr. Cook stated that SeaPort’s low subsidy 

request, high level of frequency to two hubs, and the community’s confidence the airline 

will generate traffic surpassing 10 enplanements per day and keep the subsidy per 

passenger below $200, as the primary reasons for the community’s support for the air 

carrier’s proposal over the competing bids.

Decision

After carefully reviewing each airline’s proposal and the community’s comments, the 

Department has decided to select SeaPort to provide EAS at Tupelo. In addition to the 

community supporting SeaPort’s proposal, the airline’s subsidy request was less than the 

competing air carrier bids, and is approximately $1M less than the annual subsidy the 

Department currently pays to the incumbent carrier. SeaPort also provides reliable service 

at several communities in the EAS program.

This decision is contingent upon the Department’s receiving properly executed 

certifications from the air carrier that they are in compliance with the Department’s 

regulations regarding drug-free workplaces and nondiscrimination, as well as the 

regulations concerning lobbying activities.7

Legislative Changes That May Affect Future EAS Eligibility

As mentioned above, 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, 2012.8 The legislation exempts locations 

in Alaska and Hawaii and communities that are more than 175 driving miles from the 

nearest large or medium hub airport. Additionally, the Department of Transportation and 

Related Agencies Appropriations Act, 2000, prohibits the Department from subsidizing 

EAS to communities located within the 48 contiguous States receiving per passenger 

subsidy amounts exceeding $200, unless the communities are located more than 210 miles 

from the nearest large or medium hub airport. As Tupelo is within 175 miles of a large or 

medium hub airport (MEM) and, thus, is also within 210 miles of a large or medium hub

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

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service 8 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 and to waive the $200 subsidy-per-passenger limit. See 49 U.S.C. 

§41731(e).
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(MEM), the community must meet the 10-enplanement-a-day threshold and not exceed the 

$200 subsidy per passenger cap for EAS to continue, barring a waiver from the Secretary.9

Public Law 112-27, signed into law on August 5, 2011, further amended the definition of 

“eligible place” for the purpose of receiving EAS.10 The amendment, among other things, 

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, as determined by the Secretary of 

Transportation.

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

eligibility to receive EAS in light of these requirements throughout the life of the EAS

contract. The Department may cancel a contract for any community receiving EAS if 

enplanements are below 10 per day during FY2014 and any subsequent fiscal year. 

The Department highly encourages SeaPort and Tupelo to work together to remain in 

compliance with the statute.

Service Transition

We expect Silver and SeaPort to work together to make a smooth transition at both 

communities. In that regard, before Silver suspends its service, we expect it to notify all 

passengers holding reservations for travel after the suspension date, to assist those 

passengers in making alternate air transportation arrangements, or to provide a refund of 

the ticket price, without penalty, if requested. 

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 subsidize it to provide EAS. 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 air 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 findings. We therefore conclude that SeaPort is reliable and fit 

to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

 9 On May 1, 2014, a Notice of Proposed Enforcement Policy on the $200 per passenger subsidy cap was 

published in the Federal Register (Volume 79, Issue 84). It outlined the Department’s proposed policy on 

this issue, which would use traffic data from October 1, 2014, through September 30, 2015, to measure 

compliance. The Department has solicited public comments on the policy and the comment period closed 

June 30, 2014. Refer to www.regulations.gov and search “DOT-OST-2014-0061” for more information. 10 See 49 U.S.C. § 41731.
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ACCORDINGLY,

1. We select SeaPort Airlines, Inc. to provide Essential Air Service at Tupelo, Mississippi,

and establish the annual subsidy rates as described in Appendix C;

2. 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 service 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;

3. We find that SeaPort Airlines, Inc., is fit, willing and able to operate as a certificated air 

carrier, and capable of providing reliable Essential Air Service at Tupelo, Mississippi;

4. These dockets will remain open pending further Department action; and

5. The Department will serve a copy of this Order on the mayors of Muscle Shoals, 

Alabama, and Greenville and Tupelo, Mississippi; the airport managers of Mid-Delta 

Regional Airport (Greenville), Tupelo Regional Airport, and Northwest Alabama Regional 

Airport (Muscle Shoals), Aerodynamics, Inc., SeaPort Airlines, Inc.; and Sun Air Express, 

LLC d/b/a Sun Air International.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

www.regulations.gov
Appendix A

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.

 
 Appendix B

SeaPort Proposal for EAS at Tupelo, MS

 
Appendix C

SeaPort Airlines, Inc.

Essential Air Service to be Provided at Tupelo, Mississippi

DOT-OST-2009-0305

Annual Subsidy: $2,506,436

Effective Period: October 1, 2014, through September 30, 2016

Scheduled Service: 

• 18 nonstop round trips per week to Nashville International Airport (BNA)

• 12 nonstop round trips per week to Memphis International Airport (MEM)

Aircraft: 9-passenger Cessna Grand Caravan

Rate per Eligible Flight: $8111

Weekly Ceiling: $48,6602

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 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 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.

Funds may not be available for performance under this Order beyond September 30, 2014. The Government’s obligation for 

performance under this Order beyond September 30, 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 performance under this 

order beyond September 30, 2014, until funds are made available to the Department for performance. If sufficient funds are 

not made available for performance beyond September 30, 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 claims must be submitted by November 30, and so on.

 1 Annual compensation of $2,506,436 divided by 3,089 annual departures (60 weekly departures x 52 weeks x 99

percent completion). 2 60 arrivals and departures per week multiplied by $811 per flight.