Order 2012-8-9

Served: August 3, 2012

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 3rd day of August, 2012

ORDER SELECTING CARRIER AND SETTING FINAL SUBSIDY RATES

Summary

By this Order, we are selecting Sun Air Express, LLC d/b/a Sun Air International (Sun Air), 

to provide subsidized Essential Air Service (EAS) with nine-passenger twin-engine Piper 

Chieftain aircraft at Hagerstown, Maryland, and Lancaster, Pennsylvania, through 

September 30, 2015.1 The annual subsidy rate for Hagerstown will be set at $1,785,638, and 

$2,504,174 for Lancaster, or a combined total of $4,289,812. See Appendix A for a map.

Background

On February 14, 2012, the President signed the FAA Modernization and Reform Act of 

2012, (P. L. 112-95). This law, among other things, extended both communities’ eligibility

for subsidized EAS through September 30, 2015.

By Order 2012-2-13, February 17, 2012, the Department extended the contract of Hyannis 

Air Service, Inc. d/b/a Cape Air (Cape Air) to provide subsidized EAS at Hagerstown and 

Lancaster until further notice and requested proposals from carriers interested in providing 

EAS at Hagerstown and/or Lancaster, through September 30, 2015, with or without subsidy. 

Proposals were due on March 15, 2012; however, no proposals were submitted. On 

March 23, 2012, by Order 2012-3-16, the Department requested proposals for EAS at either 

or both communities for a second time.

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

funds.

Essential Air Service at:

HAGERSTOWN, MARYLAND

LANCASTER, PENNSYLVANIA

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

 DOT-OST-2006-25228

 DOT-OST-2002-11450
- 2 -

Based on historical service levels and the statutory limitations described above, in order to 

attract as broad an array of proposals as possible, we stated in the Request for Proposals that 

we would entertain proposals for two round trips a day (12 a week) to Washington, 

Pittsburgh, New York, or any other large or medium hub airport offering numerous 

connections to the national air transportation system, utilizing 19-seat or larger aircraft. If 

8/9-seat aircraft were proposed, we expected four or five round trips a day (24 or 30 a week) 

to maintain the current level of service.2 Carriers were encouraged to propose more than one 

service option if they chose and were not limited to those requirements if they envisioned 

other, potentially more attractive possibilities – different hubs, for example – with subsidy 

requirements that remain competitive.

Proposals

The entire public docket, including the proposals for EAS at the two communities, may be 

accessed online through the Federal Docket Management System at: 

http://www.regulations.gov, by entering “DOT-OST-2006-25228” (Hagerstown) or “DOTOST-2002-11450” (Lancaster) in the “SEARCH for: Rules, Comments, Adjudications or 

Supporting Documents:” field.

Sun Air was the only carrier to submit a proposal for service at either community. It would 

utilize nine-passenger twin-engine Piper Chieftain aircraft with service to either 

Baltimore/Washington International Thurgood Marshall Airport (BWI) or Washington 

Dulles International Airport (IAD). At Hagerstown, the carrier would provide 24 nonstop 

round trips a week to BWI for an annual subsidy requirement of $1,724,486, or to IAD for 

$1,785,638. At Lancaster, the carrier proposed to provide 30 nonstop round trips a week to 

BWI for an annual subsidy rate of $2,350,403, or to IAD for $2,504,174.

Community Comments

On May 4, 2012, the Department sent letters to the airport managers of both communities

summarizing Sun Air’s proposal and requesting their comments on the carrier-selection 

decision.

In response, the Department received community comments from both airport directors.

Lancaster’s Airport Director stated that the airport was “pleased with the service outlined in 

Sun Air’s proposal.” However, the airport was concerned that there was no mention of any 

marketing commitments contained in the carrier’s proposal. The Lancaster Airport Authority 

endorsed Option 2, which would provide service to IAD.

The Hagerstown Airport Director stated that the EAS contract “should be awarded to Sun Air 

with service to IAD to commence as soon as possible.” The Airport Director also noted that 

Sun Air has addressed its concerns and looks forward to working together to establish the 

new service at the airport.

 2 Previously, most EAS communities were entitled to service with 15-seat or larger aircraft. However, for 

FY 2012, Congress revoked the minimum requirement that basic EAS include service with at least 15-seat or 

larger aircraft. See Consolidated and Further Continuing Appropriations Act, P.L. 112-55, November 18, 2011. 

Communities are still entitled to service with twin-engine aircraft.
- 3 -

Decision on Carrier Selection

After careful consideration, including the comments of local officials, the Department has 

decided to select Sun Air to provide EAS at both communities, in accordance with its 

proposal. At Hagerstown, the carrier would provide 24 nonstop round trips a week to IAD 

for an annual subsidy rate of $1,785,638. At Lancaster, the carrier proposed to provide 30 

nonstop round trips a week to IAD for an annual subsidy rate of $2,504,174.

The carrier-selection decision is straightforward. Sun Air was the only carrier to submit a 

proposal and the communities endorse its’ IAD proposal. We find that both the service and 

subsidy levels proposed by Sun Air to be reasonable. We shall make our selection of Sun Air 

contingent upon its receiving final operating authority the Federal Aviation Administration.

The Department shall also make this selection at both communities contingent upon the 

Department’s receiving properly executed certifications from Sun Air that it is in compliance 

with the Department’s regulations regarding drug-free workplaces and nondiscrimination, as 

well as the regulations governing lobbying activities.

Carrier Transition

We expect Cape Air and Sun Air to work together to make a smooth transition at these 

communities. In that regard, before Cape Air suspends its service it must notify any 

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 essential air service. The 

Department recently found Sun Air fit to conduct scheduled passenger operations as a 

commuter carrier by Order 2012-6-11, June 18, 2012. We therefore conclude that the carrier 

is reliable and fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We select Sun Air Express, LLC d/b/a Sun Air International to provide Essential Air 

Service at Hagerstown, Maryland, and Lancaster, Pennsylvania, contingent upon its receiving 

full operating authority from both the Department and Federal Aviation Administration. We 

establish the subsidy rates, as described in Appendix C, for the period when the carrier 

inaugurates full service at both communities, through September 30, 2015;

2. The Department directs Sun Air Express, LLC d/b/a Sun Air International 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 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 
- 4 -

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 will continue to require Hyannis Air Service, Inc. d/b/a Cape Air to provide Essential 

Air Service at these two communities, as described in Appendix D of Order 2012-2-13, until 

Sun Air Express, LLC d/b/a Sun Air International inaugurates full service at both 

communities;

4. These Dockets will remain open until further Order of the Department; and

5. Docket Operations will serve copies of this Order on the parties listed in Appendix D.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at:

http://www.regulations.gov/
Appendix A

AREA MAP
Appendix B

Sun Air Express, LLC d/b/a Sun Air International

Provision of Essential Air Service at

Hagerstown, Maryland and Lancaster, Pennsylvania

Calculation of Compensation Requirement
Appendix C

Page 1 of 2

Sun Air Express, LLC d/b/a Sun Air International

Provision of Essential Air Service at

Hagerstown, Maryland and Lancaster, Pennsylvania

Summary of Service To Be Provided

Effective Period: When the carrier inaugurates full service at both communities, through 

September 30, 2015.

Scheduled Service: Hagerstown, MD: 24 nonstop round trips a week to WashingtonDulles International Airport

Lancaster, PA: 30 nonstop round trips a week to WashingtonDulles International Airport

Intermediate stops and upline 

service: 

No service to any intermediate point is contemplated under the 

terms of the carrier’s proposal; accordingly, no such service may 

be provided on subsidized flights without prior Department 

approval.

Aircraft type: Nine passenger twin-engine Piper Chieftain

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: Hagerstown, MD: $1,785,638

Lancaster, PA: $2,504,174

This rate assumes an annual completion factor of 98 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: Hagerstown, MD: $7301

Lancaster, PA: $8192

Weekly Compensation 

Ceiling:

Hagerstown, MD: $35,0403

Lancaster, PA: $49,1404

 1 $1,785,638 divided by 2,446 annual departures: 48 flights x 52 weeks x .98 (completion factor) = 2,446.

2 $2,504,174 divided by 3,058 annual departures: 60 flights x 52 weeks x .98 (completion factor) = 3,058.

3 48 flights per week multiplied by $730 per flight

4 60 flights per week multiplied by $819 per flight
Appendix C

Page 2 of 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 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 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 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 amounts 

or at the stipulated service levels, the 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 

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 are not currently available for performance under this Order beyond September 30, 2012. 

The Department’s obligation for performance under this Order beyond September 30, 2012, 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, 2012, until funds are made available to the Department 

for performance. If funds are not made available for performance beyond September 30, 2012, 

the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided 

under this Order.
Appendix D

SERVICE LIST

Cape Air, Andrew W. Bonney

Hagerstown Regional Airport, Phillip G. Ridenour, C.M.

Hagerstown Regional Airport, Greg Larsen

Lancaster Airport, David Eberly, Jr.

Lancaster Airport, Kim Huber

Sun Air International, Thomas L. Cooper