Order: 2015-3-1 

Served: March 3, 2015 

 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 March, 2015 

Essential Air Service at 

 

 JACKSON, TENNESSEE DOT-OST-2000-7857 

 

under 49 U.S.C. § 41731 et seq. 

ORDER SELECTING CARRIER ESTABLISHING SUBSIDY RATES 

AND TEMPORARILY EXTENDING SERVICE OBLIGATION 

Summary 

By this Order, the Department is selecting Multi-Aero, Inc. d/b/a Air Choice One (Air 

Choice One) to provide Essential Air Service (EAS) at Jackson, Tennessee, for the twoyear period from June 1, 2015, through May 31, 2017. Air Choice One will provide 18 

nonstop round trips per week to Lambert – St. Louis International Airport (St. Louis), using 

9-seat Cessna Grand Caravan aircraft, at an annual subsidy rate of $2,072,293.1

Additionally by this Order, the Department is extending the service period for SeaPort 

Airlines, Inc. (SeaPort) to provide EAS operations at Jackson, from March 1, 2015, until 

Air Choice One commences full EAS at the community, but no later than June 30, 2015. 

SeaPort will continue to provide Jackson with 12 nonstop round trips per week to Nashville 

International Airport and six nonstop round trips per week to Memphis International 

Airport2

 using nine-seat Cessna Grand Caravan aircraft at an annual subsidy rate of 

$1,584,275.3

 

1

 Such 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. 3

 Subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. 
- 2 - 

Background 

By Order 2011-12-15, issued on December 22, 2011, the Department selected SeaPort to 

provide subsidized EAS at Jackson with nine-seat Cessna Grand Caravan aircraft for a oneyear period through the end of the 12th month thereafter, at an annual subsidy rate of 

$1,149,703. SeaPort inaugurated service at Jackson on January 22, 2012, thus making the 

original expiration date of service January 31, 2013. By Order 2013-2-23, issued on 

February 25, 2013, the Department extended SeaPort’s contract at Jackson for an additional 

year, from February 1, 2013, through January 31, 2014, at a subsidy rate of $1,115,210, as 

described in SeaPort’s original proposal to serve Jackson, which was submitted to the 

Department in October of 2011.4 Subsequently, by Order 2014-1-23, issued on 

January 31, 2014, the Department extended SeaPort’s service contract through 

September 30, 2014, at the same subsidy rate of $1,115,210, and by Order 2014-10-2, 

issued on October 9, 2014, the Department further extended SeaPort’s contract through 

February 28, 2015. 

By notice dated September 30, 2014, SeaPort requested a compensation adjustment for 

providing EAS at Jackson. In that notice, SeaPort explained that the cost of providing air 

service at Jackson had escalated since SeaPort’s original proposal submitted to the 

Department in 2011. SeaPort identified several reasons for the escalating costs at Jackson, 

including the absence of Transportation Security Administration (TSA), which requires 

SeaPort to deplane passengers at the Fixed Base Operator at the Nashville International 

Airport, resulting in increased expenses associated with ground handling and shuttle bus 

services to transport passengers to the main concourse. SeaPort requested an adjustment to 

set the annual subsidy rate at $1,687,696, and by Order 2015-1-4, issued on 

January 5, 2015, the Department granted SeaPort’s request. The period of increased 

subsidy runs October 1, 2014, through February 28, 2015. 

By Order 2014-10-21, issued on October 24, 2014, the Department requested proposals 

from air carriers interested in providing EAS at Jackson for a new term, with or without 

subsidy support. In response, SeaPort and Air Choice One submitted proposals for 

consideration. 

Those proposals, as well as the complete public file for EAS at Jackson, may be accessed 

online through the Federal Dockets Management System at: http://www.regulations.gov by 

entering “DOT-OST-2000-7857” in the “SEARCH for: Rules, Comments, Adjudications 

or Supporting Documents:” field. 

Proposal of SeaPort 

SeaPort proposed to continue providing 12 nonstop round trips per week to Nashville and 

6 nonstop round trips per week to Memphis, using 9-seat Cessna Grand Caravan aircraft, at 

an annual subsidy request of $1,584,275. 

 

4

 See Order 2013-2-23 for a full discussion. At one time, Jackson’s eligibility was uncertain because of a 

new statutory requirement that would have made EAS communities ineligible if they were within 90 miles of 

the nearest large or medium hub, which would have affected Jackson. That statute was subsequently 

repealed. 
- 3 - 

Proposal of Air Choice One 

Air Choice One proposed to provide 18 nonstop round trips per week to St. Louis, using 9-

seat Cessna Grand Caravan aircraft, at an annual subsidy request of $2,072,293. 

Community Comments 

By letter dated November 25, 2014, the Department requested community comments 

regarding this EAS selection case to be submitted no later than January 7, 2015. By letter 

dated December 22, 2014, Mr. Tim Wilson, Chairman of the Jackson-Madison County 

Airport Authority, provided support for Air Choice One. In that letter, Mr. Wilson stated 

that the Airport Authority reached this conclusion after performing an audit of SeaPort’s 

performance of providing EAS at Jackson and determined that, “over the last 12 months, 

SeaPort’s completion rate has been 78%.” That letter also stated that SeaPort has 

experienced maintenance and reliability issues, which resulted in cancelled flights and 

diminished passenger confidence. The Airport Authority takes the position that, “a change 

in the destination city and the air carrier will encourage passengers to use air service from 

McKellar-Spies Regional Airport.” 

By letter dated December 22, 2014, the Honorable Jerry Gist, Mayor of the City of 

Jackson, provided support for the Airport Authority’s decision to recommend Air Choice 

One to provide EAS at Jackson. In that letter, Mayor Gist explained that, “business 

leaders, plant managers and the public citizens have helped determine which of the two 

proposals would best serve the needs of the community.” Mayor Gist explained that the 

current hub destination to Nashville and Memphis has been underutilized and that a change 

in hub destination would serve the community well. 

By letter dated December 22, 2014, Mr. Kyle Spurgeon, informed the Department that “the 

Executive Committee of the Board of Directors of the Jackson Chamber voted 

unanimously on December 16, 2014, to support Jackson-Madison County Airport 

Authority in their choice of the proposal submitted by Air Choice One to provide Essential 

Air Service to Jackson, TN.” That letter further explained that after meeting with 

representatives of the community, no one voiced support of air service continuing to 

Nashville and Memphis. 

By letter dated December 23, 2014, the Honorable Jimmy Harris, Mayor of Madison 

County, provided support for Air Choice One’s proposal. Mayor Harris explained that the 

previous EAS providers have performed less than optimally at Jackson because of service 

to Memphis and Nashville, as well as, “their dismal customer service and their lack of 

promotion in our community.” Mayor Harris further stated that, “Air Choice One will 

bring better service to our community.” 

In addition to the above, the Department received 19 letters of support from concerned 

citizens. Of which, 18 supported Air Choice One’s proposal to serve Jackson; one citizen 

provided support for SeaPort. 
- 4 - 

Decision 

In selecting an air carrier to provide subsidized EAS not in Alaska, 49 U.S.C. 

§ 41733(c)(1) directs the Department to consider five factors: (1) service reliability; (2) 

contractual and marketing arrangements with a larger air carrier at the hub; (3) interline 

arrangements with a larger air carrier at the hub (4) community views, giving substantial 

weight to the views of the elected officials representing the users of the service; and (5) 

whether the air carrier has included a plan in its proposal to market the service. In addition, 

the Consolidated Appropriations Act, 2012, Public Law 112-55, and continued by the 

Consolidated and Further Continuing Appropriations Act, 2015, Public Law No. 113-235, 

provides that when selecting a carrier to provide EAS, the Department may consider the 

relative subsidy requirements, thus codifying a factor that we have considered since the 

inception of the program.. 

Both of the proposals included a marketing component to promote their respective air 

service at the community. SeaPort has interline e-ticketing and baggage agreements in 

place with Alaska Airlines and Hawaiian Airlines; however, neither of these larger air 

carriers have a presence at Nashville or Memphis. The Department notes that Air Choice 

One’s proposal requires more subsidy than SeaPort’s proposal; however, Air Choice One is 

proposing service to a more distant hub, one that is strongly supported by the community, 

but which increases the expenses associated with providing this service at Jackson. The 

community has expressed its displeasure with SeaPort’s service reliability, and is not 

supportive of the hub destinations to Nashville or Memphis. As described above in the 

Department’s statutory selection criteria, the Department is directed to give substantial 

weight to the views of elected officials. Air Choice One received full community support 

and proposed to provide the community with air service to a new hub destination- St. 

Louis. 

Air Choice One has a proven record of providing reliable EAS at other markets around the 

country, thus satisfying the service reliability criterion, and the air carrier’s service package 

will allow passengers to connect to air service provided by a variety of full service, lowfare/cost, and international carriers at St. Louis. 

The Department shall make this selection of Air Choice One at Jackson contingent upon 

receiving properly executed certifications from the air carrier that it is in compliance with 

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

well as the regulations concerning lobbying activities.5 

Note Regarding Eligibility

In Order 2014-9-21, the Department granted Jackson a waiver from the 10-enplanement 

requirement.6 This waiver runs through September 30, 2015, where traffic will again be 

measured for compliance (for Fiscal Year 2015) with the requirement that communities 

within 175 miles of the nearest large- or medium-hub airport maintain an average of 10 

 

5 The certifications are internet accessible at: http://www.dot.gov/policy/aviation-policy/small-communityrural-air-service/essential-air-service. 6

 U.S.C. § 41731(a)(1)(B). 
- 5 - 

enplanements per service day or more during the most recent fiscal year. Although the 

Department is selecting Air Choice One for a two-year period, Jackson must maintain an 

average of at least 10 enplanements per service day for the period from October 1, 2014, 

through September 30, 2015. See Order 2014-9-21 for a complete discussion. 

Further, Jackson is subject to the $200 per passenger statutory limit7 because it is fewer 

than 210 miles from the nearest large- or medium-hub airport, Memphis International 

Airport. In addition, the Department wishes to remind Air Choice One and Jackson about 

the recently enacted law that established a new subsidy cap of $1,000 per passenger, 

regardless of distance from hub airports.8 The Department expects both the community and 

air carrier to work cooperatively to ensure subsidy rates remain in compliance with both the 

$200 and $1,000 subsidy per passenger caps to remain eligible for the EAS program.9

Service Transition 

The Department expects SeaPort and Air Choice One to work together to make a smooth 

transition at Jackson, with SeaPort ending service on one day and Air Choice One 

inaugurating service the next day. In that regard, before SeaPort suspends its service, it 

must notify any passengers holding reservations for travel after the suspension date, assist 

those passengers in making alternate air transportation arrangements, or provide a refund of 

the ticket price, without penalty, if requested. 

The Department extends SeaPort’s service period from March 1, 2015, until Air Choice 

One commences full EAS at Jackson, but no later than June 30, 2015. We anticipate Air 

Choice One to begin service at Jackson by July 1, 2015. However, if Air Choice One 

begins service later than that date, SeaPort must continue to provide service until Air 

Choice One begins service. Consistent with past practice, we will set this contract 

extension at an annual subsidy of $1,584,275, as described in SeaPort’s most recent 

proposal to serve Jackson, dated November 24, 2014, and further detailed in Appendix B of 

this Order. 

 

7 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. 8

 See 49 U.S.C. § 41731(a)(1)(C). 9

 On May 1, 2014, a Notice of Proposed Enforcement Policy on the $200 per passenger subsidy cap was 

published in the Federal Register (Volume 79, Issue 84). After a 60-day public comment period and review, 

the Department issued a final notice of enforcement policy on the $200 cap in October 2014. All 

communities in the 48 contiguous States within 210 miles of the nearest large- or medium-hub airport 

receiving subsidized air service under the EAS program have until September 30, 2015, based on data from 

October 1, 2014, through September 30, 2015, to ensure compliance with the $200 subsidy cap or face 

termination of subsidy eligibility. 
- 6 - 

Air Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require the Department to find an air carrier fit, willing, 

and able to provide reliable service before it can provide subsidized EAS. Air Choice One 

is subject to the Department’s continuing fitness requirements, and no information has 

come to the Department’s attention that would bring into question the air carrier's fitness at 

this time. The Department’s staff has contacted the Federal Aviation Administration, and it 

has raised no concerns that would negatively affect the Department’s fitness findings. The 

Department therefore concludes that Air Choice One is reliable and remains fit to conduct 

the operations proposed here. 

This Order is issued under authority delegated in 49 CFR Part 1.25a(b). 

ACCORDINGLY, 

1. The Department selects Multi-Aero, Inc. d/b/a Air Choice One to provide Essential Air 

Service at Jackson, Tennessee, at the service levels and subsidy rate as described in 

Appendix A, for the period from June 1, 2015, through May 31, 2017; 

2. The Department sets an interim rate for SeaPort Airlines, Inc. to provide Essential Air 

Service at Jackson, Tennessee, at the service levels and subsidy rate as described in 

Appendix B, for the period from March 1, 2015, until Air Choice One commences full 

EAS at the community; 

3. SeaPort Airlines, Inc. may suspend service at Jackson, Tennessee provided that (A) 

Multi-Aero, Inc. d/b/a Air Choice One is prepared to inaugurate full Essential Air Service 

the day after the final day of service provided by SeaPort Airlines, Inc.; and (B) SeaPort 

Airlines, Inc. has satisfied the conditions described in the paragraph titled “Service 

Transition” in this Order; 

4. The Department directs Multi-Aero, Inc. d/b/a Air Choice One 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; 

5. The Department finds Multi-Aero, Inc. d/b/a Air Choice One fit, willing and able to 

operate as a commuter air carrier, and capable of providing reliable Essential Air Service at 

Jackson, Tennessee; 

 
- 7 - 

6. This docket will remain open pending further Department action; and 

7. The Department will serve a copy of this Order on the Mayors of Jackson and Madison 

County, the Airport Manager of McKellar-Sipes Regional Airport, the Chairman of 

Jackson-Madison County Airport Authority, Multi-Aero, Inc. d/b/a Air Choice, and 

SeaPort Airlines, Inc. 

By: 

 

 BRANDON M. BELFORD 

 Deputy Assistant Secretary for 

 Aviation and International Affairs 

(SEAL) 

An electronic version of this document is available at 

 http://www.regulations.gov 
Appendix A 

Page 1 of 2 

Air Choice One 

Annual Compensation Requirements for Essential Air Service at Jackson, Tennessee 

18 Round Trips per Week to Lambert St. Louis International Airport 

98.0% Completion Factor 

# Passengers: 9,100

Average Fare: $49

Departures: 1,840

Block Hours: 1,988

Revenue Passenger Miles: 2,102,100

Available Seat Miles: 3,390,267

Operation Revenues

MKL-STL Revenue 445,900 $ 

Other Revenues 4,459 $ 

Total Operating Revenues 450,359 $ 

Direct Operating Expenses

Flying Operations 315,744 $ 

Fuel and Oil 535,331 $ 

Maintenance 447,227 $ 

Aircraft Leases 425,000 $ 

Total Direct 1,723,302 $ 

Marketing 50,000 $ 

Indirect 629,224 $ 

Total Operating Expenses 2,402,526 $ 

Operating Loss 1,952,167 $ 

Profit Element (5% total Oper. Exp.) 120,126 $ 

Compensation Required 2,072,293 $ 

Compensation per Pax 228 $ 

Compensation per Departure 1,126 $ 
 Appendix A 

 Page 2 of 2 

 

Multi-Aero, Inc. d/b/a Air Choice One

Essential Air Service to be provided at Jackson, Tennessee 

Effective Period: June 1, 2015, through May 31, 2017 

Scheduled Service: 18 nonstop round trips each week to St. Louis 

Aircraft: 9-Seat Cessna Caravan 

Rate per Eligible Flight: $1,1261 

Weekly Ceiling: $40,5362

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 takeoff 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 February 14, 2015. The Government’s 

obligation for performance under this Order beyond February 14, 2015, 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 February 14, 2015, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond February 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 example, claims for service provided in July must be filed by 

October 31st; August claims must be submitted by November 30th, and so on.

 

1

 Annual compensation of $2,072,293 divided by 1,840 annual departures (313 service days x 6 flights per service x 

98 percent completion). 

2 36 flights per week multiplied by $1,126 per flight. 
Appendix B 

Page 1 of 2 
 Appendix B 

 Page 2 of 2 

 

SeaPort Airlines, Inc.

Essential Air Service to be provided at Jackson, Tennessee 

Effective Period: from March 1, 2015, until Air Choice One commences full EAS at the 

community, but no later than June 30, 20151

Scheduled Service: 12 nonstop round trips each week to Nashville and 6 nonstop round trips 

each week to Memphis 

Aircraft: 9-Seat Cessna Caravan 

Rate per Eligible Flight: $8552 

Weekly Ceiling: $30,7803

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 February 14, 2015. The Government’s obligation 

for performance under this Order beyond February 14, 2015, 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 February 14, 2015, until funds are made available to the Department for performance. If sufficient 

funds are not made available for performance beyond February 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 example, claims for service provided in July must be filed by October 31st

; 

August claims must be submitted by November 30th, and so on. 

 

1 If Air Choice One will not inaugurate service by July 1, 2015, The Department requires SeaPort to continue service 

until Air Choice One begins full EAS. 

2 Annual compensation of $1,584,275 divided by 1,853 annual departures (36 weekly departures x 52 weeks x 99 percent 

completion). 

3 36 flights per week multiplied by $855 per flight.