Order 2014-2-19

Served: February 25, 2014

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25th day of February, 2014

ORDER RESELECTING CARRIER

Summary

By this Order, we are reselecting Hyannis Air Service, Inc., d/b/a Cape Air (Cape Air), to 

provide subsidized Essential Air Service (EAS) at Saranac Lake/Lake Placid, New York,

with twin-engine, 9-passenger Cessna 402 aircraft, for the four-year period from 

March 1, 2014, through February 28, 2018, at an annual subsidy rate of $1,832,064.1 See 

Appendix A for a map.

Background

By Order 2010-3-27, March 25, 2010, the Department reselected Cape Air to provide 

subsidized EAS at Saranac Lake/Lake Placid for the period from March 1, 2010, through 

February 28, 2014. Under that Order, Cape Air provides the community with three daily (21 

weekly) nonstop round trips to Boston’s Logan International Airport (BOS) with twinengine, nine-passenger Cessna 402 aircraft for an annual subsidy of $1,366,538. 

In anticipation of the end of the current rate term, the Department issued Order 2013-9-21,

September 30, 2013, soliciting proposals to provide EAS, with subsidy support if necessary, 

at Saranac Lake/Lake Placid. In response to our solicitation we received one proposal from 

Cape Air, the incumbent.

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

Essential Air Service at:

SARANAC LAKE/LAKE PLACID, NEW 

YORK

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

DOT-OST-2000-8025
- 2 -

Proposals

The proposal is briefly summarized below. A full copy of the proposal and all public 

comments received can be accessed at www.regulations.gov by searching for docket 

DOT-OST-2000-8025.

Cape Air

Cape Air’s proposal consists of two service options, each offered as either a two or four-year 

contract. All service would be provided with twin-engine, nine-passenger Cessna 402 

aircraft. Cape Air’s Option A would continue to provide the community’s current level of 

service, namely three daily (21 weekly) nonstop round trips to BOS. This option would 

require an annual subsidy of $1,891,456 (two years) or $1,832,064 (four years). Cape Air’s 

Option B would also provide three daily nonstop round trips to BOS, but would also include 

one daily nonstop round trip to the New York City area via the Westchester County Airport 

(HPN). This service option would require an annual subsidy of $2,662,802 (two years) or 

$2,579,190 (four years).

Community Comments

On November 1, 2013, we requested community comments on Cape Air’s proposal. We 

received comments from U.S. Congressman Bill Owens, New York State Senator Elizabeth 

O’C. Little, as well as several local individuals, businesses and other institutions. All of the 

comments received were supportive of Cape Air’s past service at the community and urged 

us to consider choosing Option B to include service to HPN. The community also provided a 

list of over 200 local citizens who had signed an online petition to support the expanded 

service.

Decision

As Cape Air was the only carrier to submit a proposal in this carrier-selection case, the

decision to reselect them is straight forward. However, the decision as to which of Cape 

Air’s two service options to select is more complicated.

The community made it quite clear in their comments that they support Cape Air’s Option B

(expanded service to HPN). While we place significant weight on the comments of the 

community, it is not our only consideration.2 It is also highly important that we consider our 

fiduciary responsibilities. The purpose of the EAS program is to provide a safety-net level of 

air service to connect communities to the national air transportation system that otherwise 

would not have air service. Cape Air’s Option A for status-quo service fully meets the 

community’s EAS needs. Based on the most recent 12-months of data available (July 1, 

2012-June 30, 2013), Saranac Lake/Lake Placid generated 5,490 outbound passengers, or 

 2 When selecting a carrier, 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 the hub; (3) interline arrangements with a larger 

carrier at the hub; (4) community views, giving substantial weight to the views of the elected officials 

representing the users, and; (5) whether the carrier has included a plan to market its services to the community. 

In addition, the Consolidated and Further Continuing Appropriations Act, 2012, Public Law No. 112-55, and 

continued by the Full-Year Continuing Appropriations Act, 2013, Public Law No. 113-6, and Continuing 

Appropriations Act, 2014, Public Law No. 113-46, 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.
- 3 -

about 15 passengers per day. Cape’s Air’s existing service providing 27 seats per day more 

than adequately meets the community’s EAS needs.

While the community supports the additional service to HPN, Cape Air’s Option B four-year 

proposal is $747,126 more than the Option A four-year proposal. We cannot reasonably 

justify providing Federal subsidy to support increased service to a community that already 

has sufficient air service connecting it to the national air transportation system. Therefore, 

we will select Cape Air’s Option A for Boston-only service. 

Regarding whether to select the two or four-year contract option, the community was silent 

on which option they would prefer. Given that it requires slightly less annual subsidy than 

the two-year option, we will select the four-year contract at an annual subsidy of $1,832,064. 

However, if the community informs us that they want only a two-year contract, we will 

honor that request.

In addition, given that the community supported service to HPN, we will allow Cape Air, if it 

so chooses, to substitute one or more flights to HPN for the same annual subsidy, with the 

community’s concurrence. The carrier is also free to operate additional unsubsidized 

services if it chooses.

We shall make this selection of Cape Air at Saranac Lake/Lake Placid contingent upon the 

Department’s 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.3

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. Cape Air

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

to our attention that would cause us to question the carrier's fitness at this time. We have 

contacted the Federal Aviation Administration, and it has raised no concerns that would 

negatively affect our fitness finding. We therefore conclude that the carrier remains fit to 

conduct the operations proposed here.

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

ACCORDINGLY,

1. We reselect Hyannis Air Service, Inc., d/b/a Cape Air to provide Essential Air Service at 

Saranac Lake/Lake Placid, NY, at the service levels and subsidy rates as described in 

Appendix C, for the period from March 1, 2014, through February 28, 2018;

2. We direct 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 and 

 3 The certifications are available on the Web at http://www.dot.gov/policy/aviation-policy/small-communityrural-air-service/essential-air-service. 
- 4 -

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 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;

3. We find that Hyannis Air Service, Inc., d/b/a Cape Air continues to be fit, willing and able 

to operate as a certificated air carrier and capable of providing reliable Essential Air Service

at Saranac Lake/Lake Placid, NY;

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

5. We will serve copies of this Order on the mayors of Saranac Lake and Lake Placid, 

New York, the town supervisor of Harrietstown, New York, the airport manager of 

Adirondack Regional Airport, and Hyannis Air Service, Inc., d/b/a Cape Air.

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/
Appendix A

SARANAC LAKE/LAKE PLACID, NEW YORK

REGIONAL MAP
APPENDIX B
APPENDIX C

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

Essential Air Service to be Provided at Saranac Lake/Lake Placid, New York

DOT-OST-2000-8025

Effective Period: March 1, 2014, through February 28, 2018

Scheduled Service: 21 weekly nonstop round trips to Boston Logan International (BOS).

Aircraft type: Cessna 402 (9 passenger seats).

Annual compensation: $1,832,0641

Subsidy Rate per Flight: $8652

Weekly Ceiling: $36,3303

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 complete, 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.

Funds may not be available for performance under this Order beyond March 18, 2014. The Government’s 

obligation for performance under this Order beyond March 18, 2014, 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 18, 2014, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond March 18, 2014, the 

Department will provide notice in writing to the carrier.

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.

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 See Appendix B.

2 $1,832,064 annual compensation divided by 2,118 annual flights (42 weekly flights x 52 weeks x 97% 

completion factor).

3 $865 per flight x 42 weekly flights.