## Or der: 20 1 3

- 2

- 23

Served : February 25 , 20 1 3



## UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25 th 

## of February , 20 1 3

Essential Air S ervice at

JACKSON, TENNESSEE

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

- OST

- 2000

- 7857

ORDER EXTENDING SERVICE PERIOD

Summary By this O rder

, the Department is extending the service period for SeaPort Airlines, Inc. ( SeaPort ) to provide subsidized E ssential A ir S ervice (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 1 2 nonstop round trips per week to Nashville International Airport and 6 nonstop round trips per week to Memphis International Airport 2 

## using 9

- passenger Cessna Grand Caravan aircraft at an annual subsidy rate of $1,1 15,210

.

Background By Order 20 11

- 12

- 15 ( December 22, 2011 ) , the Department selected SeaPort to provide 1 2 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 wh en the carrier inaugurated service, for a n annual subsidy rate of $1, 149,703

. SeaPort inaugurated

service at Jackson on January 22, 2012, thus setting an expiration date of January 31, 20 13

.

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. Th at amendment state d that to be eligible, a community must be located not less than 90 miles from the near est 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 trip s per week to Memphis on a subsidy

- free basis.

## - 2

-

Section 41731, as amended, also grant ed 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 subsi dized 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, t he De partment was preparing a Notice of Proposed Rulemaking regarding the

new waiver provisions under 49 U.S.C. § 41731, a nd 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 “e ligible 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 4 9 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

- h alf 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.

## - 3

-

In light of the eli gibility 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 S ervice 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 S eaPort 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 d ocumentation 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

. Th is docket will remain open until further order of the Department; and

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

Jac kson

- 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 J ackson. 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 Appropriatio ns 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

- 1 00

.

## Appendix C

S ea P o r t A i r li n es , I n c

. O p t i o n # 2

6 W eek l y R ound t r i p s : Jacks on , T N

- M e m ph i s , T N

1 2 W eek l y R ound t r i p s : Jacks on , T N

- N as h v ill e , T N

pOp e r a t i n g P r o j e c t i on s

A v

e r ag e S e c t o r Leng t h ( s m ) Y e a r 1

111 Y e a r 2

111

S c hedu l e d D epa r t u r e s 1

, 87 2 1

, 87 2

S c hedu l e d B l o c k H ou r s 1

, 487

. 2 1

, 487

. 2

P r o j e c t e d C o m p l e t i o n F a c t o r 98

. 0 % 98

. 0 %

P r o j e c t e d C o m p l e t e d D epa r t u r e s 1

, 83 5 1

, 83 5

P r o j e c t e d C o m p l e t e d B l o c k H ou r s 1

, 457

. 5 1

, 457

. 5

Pass e ng e r P r o j e c t i on s

P r o j e c t e d P a ss enge r s 5

, 89 9 6

, 48 9

P r o j e c t e d A v e r ag e F a r e $64

. 6 2 $65

. 9 2

R e v enu e P a ss enge r M il e s (R P M s ) 654

, 78 9 720

, 26 8

A v

a il ab l e S ea t M il e s ( AS M s ) 1

, 832

, 72 5 1

, 832

, 72 5

P r o j e c t e d Loa d F a c t o r 35

. 7 % 39

. 3 %

F i n a n c i a l P r o j e c t i on s

R e v enue s

P a ss enge r T i ck e t R e v enue s $381

, 22 0 $427

, 72 9

A n c ill a r y R e v enue s $9

, 18 8 $10

, 34 0

T

o t a l $390

, 40 8 $438

, 06 9

E x pen s e s

F li gh t O pe r a t i on s $247

, 76 8 $250

, 53 7

A i r c r a f t O w ne r s h i p / Lea s e $164

, 64 0 $164

, 64 0

F ue l & O i l $405

, 31 9 $419

, 50 5

T

r a ff i c S e r v i c i n g $163

, 31 8 $169

, 91 2

I n s u r an c e $29

, 14 9 $29

, 73 2

M a i n t enan c e $240

, 48 0 $245

, 29 0

S ub

- T o t a l

- D i r e c t $1

, 250

, 67 4 $1

, 279

, 61 5

I nd i r e c t $216

, 09 9 $199

, 69 8

T

o t a l E x pen s e s $1

, 466

, 77 3 $1

, 479

, 31 3

P r o j e c t e d O pe r a t i n g P r o f i t/ ( Lo ss ) ( $1

, 076

, 365 ) ( $1

, 041

, 244 )

S ub s i d y C a l c u l a t i on s
O pe r a t i n g Lo s s $1

, 076

, 36 5 $1

, 041

, 24 4

E c ono m i c R e t u r n @ 5 % $73

, 33 9 $73

, 96 6

R e qu i r e d S ub s i d y $1

, 149

, 70 3 $1

, 115

, 21 0

**% C**  **h g**  **i n**  **S ub**  **s i**  **d**

**y R**  **e qu**  **e s**  **t D**  **u r**  **i n**  **g Y**  **ea r**  **T w** 

**o**
**- 3** 

**. 0**  **%**

S ub s i d y pe r D epa r t u r e $626

. 6 9 $607

. 8 9

S ub s i d y pe r P a ss enge r 

### $194

. 9 0 $171

. 8 6

## 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 Air port
Aircraft : Cessna Grand Caravan

, 9 seats Rate per Eligible Flight 1 

## : $ 6 08 Weekly Ceilin g 2 

## : $ 2 1,888

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 flig ht; 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 thes e 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 provi de 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 di sallowed, 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 ly , termi nates 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 le vels, 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 sta tutes, 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 fund s 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 da y of service provided under this Order

.

1 

### Annual compensation of $ 1

, 115

, 21 0 , divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 percent completion).

2 

### 36 flights per week multiplied by $ 6 08 per flight.