Order 2013

- 12

- 1

Served: December 2, 2013



### 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 o f December , 20 1 3

Essential Air Service at

GLASGOW, MONTANA

GLENDIVE, MONTANA

HAVRE, MONTANA

SIDNEY, MONTANA

WOLF POINT, MONTANA Docket DOT

- OST

- 1997

- 2605

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

ORDER

Summary

By th is O rder, the Department establishes a start date for Hyannis Air Service, Inc., D/B/A

Cape Air (“Cape Air”)

, to provide Essential Air Service ( “ EAS ” ) with 9

- passenger Cessna

402 aircraft at Glasgow, Glendive, Havre, Sidney, and Wolf Point

, Montana

, at a c o mbined

annual subsidy of $ 11,950,426. 1 Cape Air will commence full EAS at all five of the above

communities beginning Dec ember 1 0 , 2013, thereby establishing an end date for this

contract of December 31, 2015

. The subsi dy and level of service for each community

under this contract is as follows:

Community Subsidy Round trips Per Day

Glasgow $ 2,046,800 2

Glendive $ 1,944,467 2

Havre $ 2,036,254 2

Sidney $3 ,777,579 5

Wolf Point $ 2,145,326 2

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

-

Background

By Order 2013

- 9

- 4, issued on September 5, 2013, the Department selected Cape Air to

provide EAS with 9

- passenger Cessna 402 aircraft at Glasgow, Glendive, Havre, Sidney,

and Wolf Point, Montana, for a two

- year period beginning when Cape Air begins full EAS

o perations at all five of the above communities through the end of the 24 th month

thereafter

. By letter dated September 18, 2013, Cape Air informed the Department that it

will commence full EAS at all five of the above communities by December 10, 2013.

Additionally, Cape Air’s flights for service in Montana are currently available for s ale.

The complete public file for EAS at each of the above Montana communities may be

accessed online through the Federal Dockets Management System (“FDMS”) at:

http://www.regulations.gov by entering “DOT

- OST

- 1997

- 2605” in the “SEARCH for:

Rules, Comments, Adjudications or Supporting Documents:” field.

This Order is issued under authority delegated in 49 CFR Part 1. 25 a( b ).

ACCORDINGLY,

1. The Department establishes a contract start date of December 10, 2013, through

December 31, 2015, for Hyannis Air Service, Inc., D/B/A Cape Air

, to provide full

Essential Air Service at Glasgow, Glendive, Havre, Sidney, and Wolf Point, Montana

, a nd

establishes the subsidy rate as detailed in Appendix B ;

2

. We direct 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 and

examination by representatives of the Department. Such d ocumentation 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 ai r carrier may forfeit its compensation for any claim

that is not supported under the terms of this Order ;

3

. D ocket DOT

- OST

- 1997

- 2605 will remain open pending further Department action ; and- 3

-

4

. We will serve copies of this Order on Great Lakes Aviation , Ltd., Boutique Air, Inc., the

mayors of Glasgow, Glendive, Havre, Sidney, and Wolf Poin t, Montana, the airport

managers at Wokal Field/Glasgow International Airport, Dawson Community Airport,

Havre City

- County Airport, Sid ney

- Richland Municipal Airport, W olf Point International

Airport ; and the members of the Montana Essential Air Service Task Force

.

Persons entitled to petition the Department for review of this Order under the Department’s

Aviation Economic Regulations, 14 CFR Part 385.31(a), must file such petitions within

seven (7) days after the date of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not

preclude its effectiveness.

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available at

http://www.regulations.govAppendix A



## Hyannis Air Service, Inc., D/B/A Cape Air

Annual Compensation Requirements for Essential Air Service at

Glasgow, Glendive, Havre, Sidney, and Wolf Point, Montana

Two D aily R ound T rips per weekday (Five Daily for Sidney)

9 5 .0% Completion Factor

Havre Glasgow Wolf Point Sidney Glendive

Daily Round Trips 2 2 2 5 2

Departures (net of completion) 1,416 1,416 1,416 3,541 1,416

Pax/Dpt 2.7 2.7 2.7 4.5 2.7

Load Factor 30% 30% 30% 50% 30%

fare (net) 42 $ 42 $ 42 $ 42 $ 42 $

Pax Rev 160,597 $ 160,597 $ 160,597 $ 669,155 $ 160,597 $

Fuel 522,247 $ 528,952 $ 575,884 $ 1,424,808 $ 475,316 $

Maintenance 384,895 $ 388,593 $ 414,482 $ 1,022,725 $ 359,005 $

Pilots 264,675 $ 264,675 $ 264,675 $ 301,651 $ 264,675 $

Ownership 129,425 $ 131,174 $ 143,417 $ 355,026 $ 117,182 $

Stations 416,449 $ 414,315 $ 422,851 $ 596,336 $ 414,315 $

Landing Fees 6,384 $ 6,384 $ 6,384 $ 15,614 $ 6,384 $

Marketing 45,333 $ 45,333 $ 45,333 $ 61,594 $ 45,333 $

General & Admin/Other 317,600 $ 317,600 $ 317,600 $ 446,643 $ 317,600 $

Operating Expense 2,087,009 $ 2,097,027 $ 2,190,627 $ 4,224,397 $ 1,999,811 $

Return of 5% 109,843 $ 110,370 $ 115,296 $ 222,337 $ 105,253 $

Economic Expense 2,196,851 $ 2,207,397 $ 2,305,923 $ 4,446,734 $ 2,105,064 $

Passenger Revenue 160,597 $ 160,597 $ 160,597 $ 669,155 $ 160,597 $

Profit (2,036,254) $ (2,046,800) $ (2,145,326) $ (3,777,579) $ (1,944,467) $

Subsidy Required 2,036,254 $ 2,046,800 $ 2,145,326 $ 3,777,579 $ 1,944,467 $

per Departure 1,438 $ 1,445 $ 1,515 $ 1,067 $ 1,373 $

Per Passenger 533 $ 535 $ 561 $ 237 $ 509 $Appendix B

Page 1 of 2

Hyannis Air Service, Inc., D/B/A Cape Air Essential Air Service

to be Provided at Havre, Glasgow and Wolf Point, Montana

Effective Period : Decemb er 1 0 , 2013, through December 31 , 2015

Schedule Service: Havre: 14 nonstop round trips per week to Billings

Glasgow: 14 nonstop round trips per week to Billings

Wolf Point: 14 nonstop round trips per week to Billings

Intermediate Stop and

Upline Service: No service to any intermediate or upline points are contemplated

under the terms of the air carrier's proposal; accordingly, no such

service may be provided on subsidized flights without prior

Department approval

.

Aircraft Type: Cessna 402 (9 passenger seats)

Timing of Flights: Flights must be well

- timed and well

- spaced in order to ensure full

compensation

.

Annual Compensation: Havre : $2, 036,254

Glasgow : $ 2,046,800

Wolf Point : $ 2,145,326

This rate assumes an annual completion factor of 9 5 percent. A

compensation ceiling is to be applied per calendar week such that

service above that ceiling in one week cannot make up for service

shortfalls in another week.

Subsidy Rate per Flight: Havre : $ 1,438 1

Glasgow : $ 1,445 2

Wolf Point : $ 1,515 3

Weekly Compensation

Ceiling: Havre : $ 40,264 4

Glasgow : $ 40,460 5

Wolf Point : $ 42,420 6

1 $2 ,036,254 divided by 1,416 annual departures: ( 2 8 flights per week x .9 7) = 1,438

. 2 $ 2,046,800 divided by 1,416 annual departures = 1,445

. 3 $2, 145,326 divided by 1,416 annual departures = 1,515

. 4 2 8 flights per week multiplied by $1, 438 per flight.

5 28 flights per week multiplied by $1, 445 per flight.

6 28 fligh ts per week multiplied by $1,515 per flight.Appendix B

Page 2 of 2

Hyannis Air Service, Inc., D/B/A Cape Air Essential Air Service

to be Provided at Sidney and Glendive, Montana

Effective Period : December 1 0 , 2013, through December 31 , 2015

Schedule Service: Sidney : 3 5 nonstop round trips each week to Billings 7

Glendive : 14 nonstop round trips per week to Billings 8

Intermediate Stop and

Upline Service: No service to any intermediate or upline points are contemplated

under the terms of the air carrier's proposal; accordingly, no such

service may be provided on subsidized flights without prior

Department approval

.

Aircraft Type: Cessna 402 (9 passenger seats)

Timing of Flights: Flights must be well

- timed and well

- spaced in order to ensure full

compensation

.

Annual Compensation: Sidney : $ 3,777,579

Glendive : $ 1,944,467

This rate assumes an annual completion factor of 9 5 percent. A

compensation ceiling is to be applied per calendar week su ch that

service above that ceiling in one week cannot make up for service

shortfalls in another week.

Subsidy Rate per Flight: Sidney : $ 1,06 7 9

Glendive : $ 1,373 10

Weekly Compensation

Ceiling: Sidney : $ 74,690 11

Glendive : $ 38,444 12

7 For clarification, Sidney is to receive 35 round trips per week, not 34 as indicated by Order 2013

- 9

- 4.

8 For clarification, Glendive is to receive 14 round trips per week, not 13 as indicated by Order 2013

- 9

- 4.

9 $3,777,579 divided by 3,541 annual departures (70 flights per week x .9 7 completion ) = 1,06 7

10 $ 1,944,467 divided by 1,416 annual departures (28 flights per week x .9 7 completion ) = 1,373

11 70 flights per week multiplied by $1,06 7 per flight.

12 2 8 flights per week multiplie d by $1,373 per flight.Appendix C

Note:

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not

op era te in c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding the s er vi c e

pl a ns outlin e d in the Order a nd a n y oth e r s i g ni f i c a nt e l e m e nts of the re qui re d s er vi ce , without

p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

- o f f a nd l a nding a t its s c h e du l e d

d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion suppo r ting subsi d y e li g i b ili t y f o r

a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts

a r e c onsid ere d e l i g ible f or su b si d y

. I n a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its

f li g hts in f ull c on f o r m a n c e with the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e

subsi d y c l a im f or t he p er iod in qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond

the s c ope o f the Order du r ing the a ppli ca ble p e r iod of th e se ra t e s, it must f i r st noti f y the O ff i c e of

Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be e nsu re d o f

f ull c omp e ns a tion. S hould c i rc umst a n ce s w ar r a n t , the D e p ar tm e nt m a y l o c a te a nd s e l e c t a

re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r must c ompl e te a ll

f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of t r a f f ic will not be

c omp e ns a t e d. I n d e t er m i ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting f l i ght should be a djust e d

or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to whi c h the g o a ls of the p r og ra m a r e m e t

a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion s y s t e m p r ovid e d to the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y

, e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s p a y m e nts f or

s e r vi c e or c h a ng e s s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n,

a t the e nd of the p e r iod f or whi c h the D e p ar tm e nt d o e s m a ke p a y m e nts in the stipul a t e d a mounts

or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y cea se to p r ovide s er v i c e t o th a t sp ec i f ic

lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion. Those a djustm e nts in the

l e v e ls of subsi d y a nd/or s er vi c e th a t ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt a nd air

ca r r i e r do not c on s titute a tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o rpo r a te b y r ef e re n c e

, r e l e v a nt st a t ut e s a nd D e p ar tm e nt

r e g ul a tions, a s th e y m a y be a m e nd e d fr om time to tim e . How e v er

, a n y su c h st a tut e s, r e g ul a tions,

or a m e ndm e nts th ere to sh a ll not op era te to c ont r o v er t the f o r e g oi n g p ar a g r a ph.

F unds may not be a v a il a ble f or p erf o r m a n c e und e r this Order b e y ond January 15, 2014 . The

Gov er n m e nt ' s obli g a tion f or p erf o r m a n c e und e r this Order b e y o n d January 15, 2014 , is subj ec t

to the a v a il a bili t y of f unds f r o m whi c h p a y m e nt f or s e r vi ce s c a n be m a d e . No l e g a l li a bili t y on

the p a r t of the Go v er nm e nt f or a n y p a y m e nt m a y a r ise f or p erf o r m a n c e und e r th i s Order b e y ond

January 15, 2014 , until f unds ar e m a de a v a i l a ble to the D e p a r tm e nt f or p erf o r m a n c e

. I f

sufficient f u n ds ar e not m a de a v a il a ble f o r p e r f o r m a n c e b e y ond January 15, 2014 , the

D e p a r tm e nt will p r ovide noti c e in w r iting to the air c arr i er

.

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

provided in July must be filed by Octob er 31; August claim s must be submitted by

November 30, and so on.