Order: 20 1 5

- 1

- 12

Served: January 13 , 201 5



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 13 th of January , 201 5

Essential Air Service at

F ORT LEONARD WOOD

, MISSOURI

Under 49 U.S.C. § 41731 et seq

. Docket DOT

- OST

- 1996

- 1167

ORDER RE SELECTING CARRIER

Summary By this O rder

, the Department is re s electing Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air) to provide E ssential A ir S ervice (EAS) at Fort Leonard Wood

, Missouri, for the four

- year period beginning January 1, 201 5 , through December 31, 2018, at an annual subsidy of $1,631,476 in the first year

. An additional $ 1, 197, 682 in annual subsidy may be paid in the first year if freighter flights are used to transport luggage to/from Fort Leonard Wood , for a maximum total

first

- year subsidy of $2,829,158

. 1

, 2

Background By Order 201 2

- 11

- 35

, November 30 , 201 2 , the Department re selected Cape Air to provide EAS

at Fort Leonard Wood for the two

- year period from January 1, 2013, through December 31,

201 4

. Under that Order t he carrier operates four daily nonstop round trips to Lambert

- St. Louis International Airport (STL) , with 9

- passenger Cessna 402 aircraft. Fort Leonard Wood experiences a significant number of passengers deploying to or returning from active duty military service, many of whom are carrying heavy loads of military equipment and supplies. Due to the ope rational limitations of the Cessna 402, Cape Air operates freighter service when

necessary. In anticipation of the expiration of that contract, the Department issued Order 201 4

- 7

- 9, July 1, 2014, soliciting proposals from carriers interested in providing EAS at Fort Leonard Wood for a new contract period beginning January 1, 2015

.

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

2 Annual subsidy amounts (passenger and freighter flights) will increase 4% per year through the life of the contract. See Appendix B for Cape Air’s full proposal and Appendix C for the payout calculations

.Proposal s In response to that O rder, the Department received proposals from two carriers: Cape Air, the incumbent, and Multi

- Aero, Inc. d/b/a Air Choice One (Air Choice One). The proposals are

summarized below. The complete proposals of both carriers, along will all public comments, may be accessed online at : http://www.regulations.gov by entering DOT

- OST

- 1996

- 1167 in the

searc h box

.

Cape Air Cape Air proposes to maintain its existing service level at Fort Leonard Wood. Cape Air would provide four daily (28 weekly) nonstop round trips to STL, utilizing twin

- engine, nine passenger Cessna 402 aircraft. As is currently the case, Cape Air would also operate freighter service to accommodate passenge r luggage demand, when needed. Passenger service would be operated

for a first

- year annual subsidy of $1, 687,484 for a two

- year contract, or $1, 631,476 in the first year of a four

- year contract. Freighter service would be used only on an as

- needed basis and its subsidy would be capped at $1, 197,682 in the first year , regardless of the length of contract. 3

Air Choice One Air Choice One proposed to provide 28

- weekly nonstop r ound trips to STL. Service would be provided on nine

- passenger, single

- engine Cessna Grand Caravan aircraft, for a two

- year term. Air Choice One would require an annual subsidy of $2,177,417.

Community Comments On August 28, 2014 and September 5, 2014, the Department received comments from the mayors of Saint Robert, MO, and Waynesville, MO, respectively. Both mayors expressed support for Cape Air and recommended that it be reselected for a four

- year term.

Additionally, on September 18, 2014, the Dep artment received comments from Ms. Darlene Battle, Installation Transportation Officer at Fort Leonard Wood. Ms. Battle states that Fort Leonard Wood also recommends the reselection of Cape Air, stating that “Cape Air has continued to maintain quality ser vice and have increased ridership immensely... Their on

- time

and success rates far exceed typical airlines standards and professes encouragement with confidence in meeting our traveling needs to and from the St. Louis Lambert Airport.”

Other Comments

I n a letter to the Department dated August 1 3 , 201 4

, American Airlines (American) states that it “enthusiastically supports” Cape Air’s proposal to serve Fort Leonard Wood with the American codeshare which allows Fort Leonard Wood customers to seamlessly book t ravel on American’s

worldwide network.

Decision When selecting a carrier to provide EAS, 49 U.S.C. §41733(c)(1) directs us to consider five factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at

3 Subsidy requests for both passenger and freighter service are subject to an annual 4% increase through the life of

the contract. Freighter flights are capped at 70% usage.the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; and (5) the carrier’s plan to market its service to the community

. In addition, the Continuing Appropriations Act, 2014, Public Law No. 113

- 46, provides that when selecting a c arrier to provide EAS, the Department may consider the relative subsidy requirements , thus codifying a factor that the Department ha s considered sin ce the inception of the program.

After careful consideration of the proposals and the comments of local o fficials, the Department

has decided to re select Cape Air

. Cape Air has been providing reliable EAS at Fort Leonard Wood for almost four years. It has received the unanimous support of both the military installation and the surrounding communities and the Department find s its proposed service level and subsidy request to be reasonable. Therefore, the Department will reselect Cape Air to continue providing EAS between Fort Leonard Wood and STL , in accordance with its propos al

, for the four

- year period f rom January 1, 201 5, through December 31, 201 8

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T he Department shall make th is selection contingent upon the Department’s 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 activities.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carri er fit, willing, and able to provide reliable service before the Department may subsidize it to provide EAS

. Cape

Air is sub j ect to the Department’s continuing fitness requirements, and no information has come

to the Department ’s attention that would cause us to question the carrier's fitness at this time.

T he Department has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding. T he Department therefore concl ude s that the

carrier remain s fit to conduct the operations proposed here.

This order is issued under a uthority delegated in 49 CFR 1.25 a( b ).

ACCORDINGLY,

1. The Department re select s Hyannis Air Service, Inc. d/b/a Cape Air to provide Es sential Air

Se rvice at Fort Leonard Wood, Missouri for the four

- year period beginning January 1, 201 5, through December 31, 2018 ;

2

. The Department set s the final rate s of compensation for Hyannis Air Service, Inc. d/b/a Cape

Air for the provision of E ssential A ir S er vice at Fort Leonard Wood, Missouri, as described in Appendix C;

3

. 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

an d 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 dat e of service of the Order or until the Department indicates tha t the records may be

4 Subsidized f reighter flights are subject to the same record keeping and auditing requirements as passenger flights.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;

4

. The Department find s that Hyannis Air Service, Inc. d/b/a Cape Air continues to be fit, willing and able to operate as a commuter carrier and capable of providing reliable E ssential A ir

S ervice at Fort Leonard Wood, Missouri;

5

. Th is docke t will remain open until further o rder of the Department; and

6

. The Department will serve copies of this O rder on the mayors of Waynesville and Saint Robert, Missouri, personnel at Fort Leonard Wood, the airport manager of Waynesville

- S t. Robert Regional Airport, Hyannis Air Service, Inc. d/b/a Cape Air, and Multi

- Aero, Inc. d/b/a

Air Choice One.

By:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version o f this document is available

online at http://www.regulations.govAppendix A



## AREA MAP

This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder,

Sabre Airline Solutions®.Appendix B

Hyannis Air Service, Inc. d/b/a Cape Air

Proposal to serve Fort Leonard WoodAppendix C Page 1 of 2

Hyannis Air Service, Inc. d/b/a Cape Air

Essential Air Service to be Provided at Fort Leonard Wood

, Missouri

Effective Period : January 1, 2015 through December 31, 201 8

. Scheduled Service : 28 weekly nonstop round trips to St. Louis

. Aircraft : Cessna 402

- 9 passenger seats or freighter

.

Annual Subsidy: 1 Passenger Freighter
January 1, 2015

- December 31, 2015: $1,631,476 $1,197,682
January 1, 2016

- December 31, 2016: $1,696,735 $1,245,590
January 1, 2017

- December 31, 2017: $1,764,605 $1,295,413
January 1, 2018

- December 31, 2018: $1,835,189 $1,347,230

Rate per Flight: 2

January 1, 2015

- December 31, 2015: $578 $591
January 1, 2016

- December 31, 2016: $601 $614
January 1, 2017

- December 31, 2017: $625 $639
January 1, 2018

- December 31, 2018: $650 $664

Weekly Ceiling: 3

January 1, 2015

- December 31, 2015: $32,345 $23,032
January 1, 2016

- December 31, 2016: $33,639 $23,954
January 1, 2017

- December 31, 2017: $34,984 $24,912
January 1, 2018

- December 31, 2018: $36,384 $25,908

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 com pleted, 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 i ts 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 complete, terminates or reduces payments for service or changes service requirements at a specific location prov ided 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

1 See Appendix B.

2 Annual subsidy divided by annual flights (28 flights per week x 2 directions x 52 weeks x 97% completion factor = 2,825).

3 56 weekly flights multiplied by rate per flight.Appendix C Page 2 of 2

to provide service to that specific location without regard to any re quirement 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 contrac ts 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 perfo rmance under this Order beyond January 14, 2015 . The Government’s obligation for performance under this Order beyond January 14, 2015 , is subject to the availability of funds from which payment for services can be mad e. No legal liability on the part of the Government for any payment may arise for perform ance under this Order beyond January 14, 2015 , until funds are made available to the Department for performance. If sufficient funds are not made available for perform ance beyond January 14, 2015 , 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 e xample, claims for service provided in July must be filed by October 31st; August claims must be submitted by November 30th, and so on.