Order: 2013-2-23

 Served: February 25, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25th of February, 2013

Essential Air Service at

JACKSON, TENNESSEE

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

 Docket DOT-OST-2000-7857

ORDER EXTENDING SERVICE PERIOD

Summary

By this Order, the Department is extending the service period for SeaPort Airlines, Inc. (SeaPort)

to provide subsidized Essential Air Service (EAS) at Jackson, Tennessee, for a one-year period, 

from February 1, 2013, through January 31, 2014.1 SeaPort will continue to provide Jackson

with 12 nonstop round trips per week to Nashville International Airport and 6 nonstop round 

trips per week to Memphis International Airport2 using 9-passenger Cessna Grand Caravan

aircraft at an annual subsidy rate of $1,115,210.

Background

By Order 2011-12-15 (December 22, 2011), the Department selected SeaPort to provide 12 

nonstop round trips per week from Jackson to Nashville and 6 nonstop round trips per week from 

Jackson to Memphis using a 9-passenger Cessna Grand Caravan, for 12 months beginning when 

the carrier inaugurated service, for an annual subsidy rate of $1,149,703. SeaPort inaugurated 

service at Jackson on January 22, 2012, thus setting an expiration date of January 31, 2013.

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

place” for the purpose of receiving EAS. See 49 U.S.C. § 41731. That amendment stated that to 

be eligible, a community must be located not less than 90 miles from the nearest medium or large 

hub airport and must have had an average subsidy per passenger of less than $1,000, regardless 

of isolation, during the most recent fiscal year, as determined by the Secretary of Transportation.

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

2 SeaPort currently provides six additional round trips per week to Memphis on a subsidy-free basis.
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Section 41731, as amended, also granted the Secretary the authority to issue a waiver of the 90-

mile criterion if the Secretary determines that the “geographic characteristics of the location 

result in undue difficulty in accessing the nearest medium or large hub airport.” 49 U.S.C. § 

41731(d). At the time when that amendment was in effect, the Department was deciding on a 

long-term carrier selection at Jackson. Because Jackson is only about 86 miles from Memphis 

International Airport (MEM), a medium hub, Jackson’s eligibility to received subsidized EAS 

was affected by the amendment. 

Subsequently, Public Law 112-95, signed into law February 14, 2012, made amendments to the 

EAS statute, including the removal of the 90 mile restriction, but not the $1,000 per passenger 

cap. At the time, the Department was preparing a Notice of Proposed Rulemaking regarding the 

new waiver provisions under 49 U.S.C. § 41731, and Jackson could have been affected. As a 

result, SeaPort was selected to serve Jackson for only a one-year period, rather than a typical 

two-year period.

Legislative Changes Which May Affect Future EAS Eligibility at Jackson

The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 (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, 2012.3 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. Jackson must meet the

10-enplanement-a-day threshold for EAS to continue after FY2013 or otherwise face termination 

of its eligibility to receive EAS, barring a waiver from the Secretary. 

In the most recent fiscal year for which data are available, FY2012 (October 2011-September 

2012), Jackson generated a total of 2,449 passengers (inbound and outbound), or an average of 

3.9 enplanements per day.4 The community and carrier will need to attract enough passengers to 

meet the 10 enplanements per day statutory requirement in order for Jackson to remain eligible 

to continue receiving EAS after FY2013. The Department will continue to monitor Jackson’s 

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

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

enplanements remain below an average of 10 per day during FY2013. 

Decision

Because Jackson’s continued eligibility is in flux, we will extend SeaPort’s service period for an 

additional 12 months, through January 31, 2014. We will set the rate for this second year, at an 

annual subsidy of $1,115,210, as described in SeaPort’s original proposal of a year ago.

5

 3 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. See 49 U.S.C. § 41731(e). A detailed explanation of the temporary decline would have to be 

submitted to the Department with relevant supporting documents.

4 Source: Bureau of Transportation Statistics; Form 41, Schedule T-100. Daily averages are based on one-half of the 

O&D passengers, divided by 313 service days (314 during leap years).

5 See Appendix C. SeaPort’s full proposal may be accessed at www.regulations.gov using “DOT-OST-2000-7857” 

in the search field.
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In light of the eligibility criteria that Jackson must meet to maintain its subsidized air service, we 

strongly urge SeaPort and the community to maximize use of the service awarded under this 

Order to the greatest extent possible to avoid termination from the EAS program.6

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

ACCORDINGLY,

1. We select SeaPort Airlines, Inc., to provide Essential Air Service at Jackson, Tennessee; for 

additional 12 months, through January 31, 2014;

2. We set the final rate of compensation for SeaPort Airlines, Inc., for the provision of essential 

air service at Jackson, Tennessee, as described in Appendix D;

3. The Department directs 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 when EAS begins 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;

4. This docket will remain open until further order of the Department; and

5. We will serve copies of this Order on the Mayor of Jackson, the Executive Director of 

Jackson-Madison County Airport Authority, and SeaPort Airlines, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov

 6 In addition, the Department is prohibited from subsidizing air service at a community where the subsidy per 

passenger exceeds $200, unless the community is more than 210 highway miles from the nearest large or medium 

hub airport, which is not the case with Jackson. Congress first established the $200 ceiling under P.L. 101-164 for 

fiscal year 1990, and reestablished it in fiscal years 1994-1999. The ceiling was made permanent by P.L. 106-69, 

the Department of Transportation and Related Agencies Appropriations Act of 2000.
Appendix A

AREA MAP

This map is provided by Planet Profitability Forecasting System and is being used with express permission of the 

copyright holder, Sabre Airline Solutions®.
Appendix B

Jackson, TN (MKL)

Passenger traffic

Year Month Uniquecarriername Inbound pax Outbound pax Total

2011 1 Pacific Wings Airlines 101 127 228

2011 2 Pacific Wings Airlines 55 67 122

2011 3 Pacific Wings Airlines 58 74 132

2011 4 Pacific Wings Airlines 36 42 78

2011 5 Pacific Wings Airlines 38 42 80

2011 6 Pacific Wings Airlines 22 18 40

2011 7 Pacific Wings Airlines 14 31 45

2011 8 Pacific Wings Airlines 23 20 43

2011 9 Pacific Wings Airlines 18 18 36

2011 10 Pacific Wings Airlines 22 26 48

2011 11 Pacific Wings Airlines 11 10 21

2011 12 Pacific Wings Airlines 8 9 17

2012 1 Pacific Wings Airlines 6 6 12

2012 1 SeaPort Airlines, Inc. 18 32 50

2012 2 SeaPort Airlines, Inc. 66 112 178

2012 3 SeaPort Airlines, Inc. 81 96 177

2012 4 SeaPort Airlines, Inc. 110 150 260

2012 5 SeaPort Airlines, Inc. 140 187 327

2012 6 SeaPort Airlines, Inc. 100 140 240

2012 7 SeaPort Airlines, Inc. 149 197 346

2012 8 SeaPort Airlines, Inc. 183 216 399

2012 9 SeaPort Airlines, Inc. 169 205 374

2012 10 SeaPort Airlines, Inc. 167 219 386

--FY2012 traffic (10/1/2011-9/30/2012) – 2,449 passengers

--Last 12 months of traffic (11/1/2011-10/31/2012- 2,787 passengers

--Annualized traffic (first year of SeaPort’s service) – 3,552 passengers

Source: USDOT Bureau of Transportation Statistics, TranStats Intermodal Database, Schedule T-100.
Appendix C

SeaPort Airlines, Inc.

Option #2

6 Weekly Roundtrips: Jackson,TN - Memphis,TN

12 Weekly Roundtrips: Jackson,TN - Nashville,TN

pOperating Projections

Average Sector Length (sm)

 Year 1 

111

 Year 2 

111

Scheduled Departures 1,872 1,872

Scheduled Block Hours 1,487.2 1,487.2

Projected Completion Factor 98.0% 98.0%

Projected Completed Departures 1,835 1,835

Projected Completed Block Hours 1,457.5 1,457.5

Passenger Projections

Projected Passengers

5,899 6,489

Projected Average Fare $64.62 $65.92

Revenue Passenger Miles (RPMs) 654,789 720,268

Available Seat Miles (ASMs) 1,832,725 1,832,725

Projected Load Factor 35.7% 39.3%

Financial Projections

Revenues

Passenger Ticket Revenues $381,220 $427,729

Ancillary Revenues $9,188 $10,340

Total $390,408 $438,069

Expenses

Flight Operations $247,768 $250,537

Aircraft Ownership/Lease $164,640 $164,640

Fuel & Oil $405,319 $419,505

Traffic Servicing $163,318 $169,912

Insurance $29,149 $29,732

Maintenance $240,480 $245,290

Sub-Total - Direct $1,250,674 $1,279,615

Indirect $216,099 $199,698

Total Expenses $1,466,773 $1,479,313

Projected Operating Profit/(Loss) ($1,076,365) ($1,041,244)

Subsidy Calculations

Operating Loss $1,076,365 $1,041,244

Economic Return @ 5% $73,339 $73,966

Required Subsidy $1,149,703 $1,115,210

% Chg in Subsidy Request During Year Two -3.0%

Subsidy per Departure $626.69 $607.89

Subsidy per Passenger $194.90 $171.86
Appendix D

SeaPort Airlines, Inc.

Essential Air Service to be Provided at Jackson, Tennessee

Effective Period: February 1, 2013, through January 31, 2014

Scheduled Service: 12 nonstop round trips per week to Nashville International Airport and 

6 nonstop round trips per week to Memphis International Airport

Aircraft: Cessna Grand Caravan, 9 seats

Rate per Eligible Flight1: $608

Weekly Ceiling2: $21,888

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 may not be available for performance under this Order beyond March 27, 2013. The Government’s 

obligation for performance under this Order beyond March 27, 2013, 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 March 27, 2013, until funds are made available to the Department for 

performance. If funds are not made available for performance beyond March 27, 2013, 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.

 1 Annual compensation of $1,115,210, divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 

percent completion).

2 36 flights per week multiplied by $608 per flight.