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 2nd day of December, 2013

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 this Order, 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 combined 

annual subsidy of $11,950,426.1 Cape Air will commence full EAS at all five of the above 

communities beginning December 10, 2013, thereby establishing an end date for this 

contract of December 31, 2015. The subsidy 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.
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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 

operations at all five of the above communities through the end of the 24th 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 sale. 

 

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 1.25a(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, and 

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 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 air carrier may forfeit its compensation for any claim 

that is not supported under the terms of this Order;

3. Docket DOT-OST-1997-2605 will remain open pending further Department action; and
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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 Point, Montana, the airport 

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

Havre City-County Airport, Sidney-Richland Municipal Airport, Wolf 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.gov
 Appendix 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 Daily Round Trips per weekday (Five Daily for Sidney) 

95.0% 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: December 10, 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 95 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: $1,4381

Glasgow: $1,4452

Wolf Point: $1,5153

Weekly Compensation 

Ceiling:

Havre: $40,2644

Glasgow: $40,4605

Wolf Point: $42,4206

 1

 $2,036,254 divided by 1,416 annual departures: (28 flights per week x .97) = 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

 28 flights per week multiplied by $1,438 per flight. 5

 28 flights per week multiplied by $1,445 per flight. 6

 28 flights 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 10, 2013, through December 31, 2015

Schedule Service: Sidney: 35 nonstop round trips each week to Billings7

Glendive: 14 nonstop round trips per week to Billings8

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 95 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: Sidney: $1,0679

Glendive: $1,37310

Weekly Compensation 

Ceiling:

Sidney: $74,69011

Glendive: $38,44412

 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 .97 completion ) = 1,067

10 $1,944,467 divided by 1,416 annual departures (28 flights per week x .97 completion) = 1,373

11 70 flights per week multiplied by $1,067 per flight. 12 28 flights per week multiplied by $1,373 per flight.
Appendix C

Note:

The air 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 air 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 air 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 air 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 air carrier to provide service on these routes. The air 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 amounts 

or at the stipulated service levels, the air 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 air 

carrier do not constitute a total or partial reduction or cessation of payment.

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.

Funds may not be available for performance under this Order beyond January 15, 2014. The

Government's obligation for performance under this Order beyond January 15, 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 

January 15, 2014, until funds are made available to the Department for performance. If

sufficient funds are not made available for performance beyond January 15, 2014, the

Department will provide notice in writing to the air 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 

provided in July must be filed by October 31; August claims must be submitted by 

November 30, and so on.