Or der: 20 11

- 12

- 17

Served : December 22 , 20 11



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22 nd of December , 20 11

Essential Air S ervice at

BURLINGTON, IOWA

DECATUR

, ILLINOIS

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

- O ST

- 2001

- 8731

DOT

- OST

- 2006

- 23929

ORDER RE

- SELECTING CARRIER

Summary By this order

, the Department is re

- s electing Multi

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

One ) to provide essential air service (EAS) at Burlington, Iowa, and Decatur, Illinois , at a
combined annual subsidy rate of $ 4,727,307 ($1,976,872 for Burlington and $2,750,435 for Decatur), for a one

- year period from February 1, 2012, through Janu ary 31, 2013. This may be

extended for an additional three year s through January 31, 201 6 , if Air Choice One fully implements an electronic ticketing and baggage agreement with a major airline that operates a hub at Chicago O’Hare International Airport ( “ Chicago O’Hare ” ) and/or Lambert

- St. Louis International Airport ( “ St. Louis ” )

. 1

Background By Order 2009

- 10

- 13, October 22, 2009, Multi

- Aero, Inc. d/b/a Air Choice One (Air Choice One) was selected to serve Burlington and Decatur, for a two

- year period. At Burlington, service was to consist of 24 weekly nonstop round trips (12 nonstops per week to Chicago O’Hare and 12 to St. Louis). At Decatur, service was to consist of 36 weekly nonstop round trips (18 nonstops per week to Chicago O’Hare and 18 to St. Louis). All service was to be operated with

9

- seat Cessna Grand Caravan aircraft. The Department directed Air Choice One to inaugurate

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2

-

service from Decatur to St. Louis on or before December 15, 2009, and to Chicago O’Hare by January 15, 2010. If Air Ch oice One did not inaugurate service at Decatur by those dates, we had selected Hyannis Air Service, Inc. d/b/a Cape Air as a backup carrier to provide service at

Decatur. Air Choice One inaugurated service at Decatur on December 15, 2009, to St. Louis and on January 15, 2010, to Chicago O’Hare. The carrier inaugurated service to Burlington on January 15, 2010. This made the expiration date of the contract for both communities January 31, 2012.

In anticipation of the end of the current contract with Air Choice One on January 31, 2012, the Department issued Order 2011

- 9

- 9

, September 14, 2011 , to solicit proposals from all interested air carriers to provide EAS at Burlington and Decatur, for a new term . I n response to that order, we received proposals from Air Choice One, the incumbent, and Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air).

Proposal s Below is a chart summarizing the proposals of both carriers at Burlington and Decatur. Opt ions 2, 3, 4, 5, and 6 for Burlington propose more service for Burlington than the Department solicited in its request for proposals , and in Air Choice One’s combined Burlington

- Decatur proposal, t he 36 weekly round trips proposed for Burlington is more service than the Department solicited in its request for proposal s. Air Choice One proposes its service with 9

- passenger Cessna Grand Caravan aircraft. Cape Air proposes to use 9

- passenger Cessna 402 aircraft.

Both carriers’ complete proposals may be accessed online at http://www.regulations.gov/ by entering DOT

- OS T

- 2001

- 8731 or DOT

- OST

- 2006

- 23929 in the “Enter Keyword or ID” field.

BURLINGTON
2-year 4-year
Weekly r/ts & Hub annual subsidy annual subsidy

Air Choice One
Option 1 12 STL & 12 ORD $1,976,872 $1,917,566
Option 2 12 STL & 18 ORD $2,492,613 $2,417,835
Option 3 18 STL & 18 ORD $2,779,519 $2,696,133
Option 4 30 STL $2,207,850 $2,141,615
Option 5 30 ORD $2,624,354 $2,545,623
Option 6 36 ORD $2,853,990 $2,768,370

Cape Air
One proposed option 24 STL $1,395,035 $1,360,891- 3

-

DECATUR
2-year 4-year
Weekly r/ts & Hub annual subsidy annual subsidy

Air Choice One
Option 1 18 STL & 18 ORD $2,750,435 $2,667,922
Option 2 12 STL & 24 ORD $2,778,904 $2,695,537
Option 3 36 STL $2,228,174 $2,219,529
Option 4 36 ORD $2,854,864 $2,769,218

Cape Air
One proposed option 36 STL $1,529,333 $1,491,902

BURLINGTON & DECATUR COMBINED
2-year 4-year

Air Choice One Weekly r/ts & Hub annual subsidy annual subsidy
18 STL & 18 ORD (for each community) $5,220,901 $5,168,692

Community Comments

On October 17 , 20 11 , we requested community comment s regarding the carrier selection at Burlington and Decatur

.

Decatur

In a letter dated November 19, the airport director at Decatur Airport stated that it recommends

Air Choice One’s O ption 1 (18 nonstop round trips to Chicago O’Hare and 18 nonstop round trips to St. Louis, its current level of service, for a four

- year term. ) He states Air Choice One’s option 1 is preferred for several reasons, including the extensive use of the current service to Chicago O’Hare and community support of Air Choice One’s current service. He states that Cape Air’s code

- sh ar e agreement with American Airlines is attractive, but Cape Air would not offer service to Chicago O’Hare.

Burlington We received letters from Southeast Iowa Regional Airport, the Mayors of Burlington and West Burlington, and the Greater Burlington Parternship. The Board Chairman at Southeast Iowa Regional Airport states that Air Choice One’s O ption #2 (1 8 nonstop round trips to Chicago O’Hare and 1 2 nonstop round trips to St. Louis ) is the best way
for the community to attain its goal of 10,000 enp lanements [in a year]. Air Choice One’s option #1 (the current level of service), will serve is its preferred alternate option.
The Board also favors a four

- year contract

, and it expects Air Choice One will be in a better position to secure interline tic keting and baggage agreements. They also state
that they have received a grant from the Iowa Department of Transportation to promote the air service in order to assist with lowering its subsidy below the $200 per passenger cap. The Mayor s of Burlington a nd West Burlington both support Air Choice One and state that the major factor is Air Choice One’s service to Chicago O’Hare. This is also a- 4

-

major reason for the support for Air Choice One from the Greater Burlington Parternship.

Decision Since inaugurat ing service at Burlington and Decatur in 2009 and 2010, respectively, Air Choice

One has gradually increased traffic at each community and the most recent data (year

- end ed September 30, 2011), shows 12,461 passengers to/from Burlington and 12,427 at Decatu r , a significant increase above the traffic that the previous carrier generated, albeit at a higher subsidy

rate. While we acknowledge that Cape Air requires less subsidy, b oth communities strongly support Air Choice One, particularly its service to Chica go O’Hare. We also note that Air Choice One proposed a slightly lower subsidy amount tha n the current rate, which is to be commended in this continued challenging cost environment. Nonetheless, we remain concerned that the carrier has not yet implemented an electronic ticketing and baggage agreement with a major carrier, although it tells us it has made significant progress, though some roadblocks remain. Therefore, with increased passenger traffic and strong support from both communities,

and lower subs idy rate s than the current contract, we will select Air Choice One to serve both

communities for a one

- year period at Option #1 for both communities, the current level of service. For Burlington, 12 weekly nonstop round trips to St. Louis and 18 weekly nonstop round trips to Chicago O’Hare, at an annual subsidy of $1,976,872. For Decatur, 18 nonstop round trips to S t. Louis and 18 nonstop round trips to Chicago O’Hare at an annual subsidy of $2,750,435.

This selection may be extended an additional three year s at both communities , if Air Choice One fully implements an electronic ticketing and baggage agreement with a major airline with a hub operation at Chicago O’Hare and/or St. Louis , by January 31, 2013

. We are selecting Air Choice One to provide the current level of service. Burlington prefers an additional 6 weekly nonstop round trips to Chicago O’Hare statin g that it would help the airport reach its goal of 10,000

passengers. However, t he purpose of the EAS program is to provide a link for eligible communities to the national air transportation system, which the current level of service provides, not to assi st airports in securing higher funds levels for infrastructure improvements from the FAA, which the 10,000 enplanements would provide. We find that both the service and subsidy levels are reasonable for the service provided.

We also recognize that both c ommunities supported Air Choice One’s proposals for a four

- year term. When a carrier proposes a four

- year rate term, the community supports it

, the carrier provides reliable service, we find the rate to be reasonable for the service provided

, and it offer s some longer

- term savings to the Department, we have generally been inclined to select it. We

are also inclined to do so in this case. However, because we are initially selecting Air Choice

One to serve a one

- year term, with a possible extension of thre e additional years, subject to its implementation of an electronic ticketing and baggage agreement as described above, we will compensate Air Choice One at its two

- year rate for the first year, then

, if extended, compensate them for the remaining three yea rs at its four

- year rate, recognizing Air Choice One’s increased

costs for not being select ed outright for its four

- year rate.

We shall make th ese selections at Burlington and Decatur contingent upon the Department’s receiving properly executed certifications from Air Choice One that it is in compliance with the- 5

-

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) requires that we find an air carrier fit, willing, and able to provide reliable service before we may subsidize it to provide essential air service

. Air Choice One is sub j ect 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 fi tness 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 1.56a(f).

ACCORDINGLY,

1. We select Multi

- Aero, Inc. d/b/a Air Choice One , to provide essential air service at Burlington, Iowa, and Decatur, Illinois ;

2 . We set the final rate of compensation for Multi

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

, for the provision of essential air service at Burlington, Iowa, and Decatur, Illinois , as d escribed in Appendix B ;

3 . We direct 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 pe rmits 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;

4 . We find that Multi

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

, continue s to be fit, willing and able to

operate as a co mmuter carrier and capable of providing reliable essential air service at Burlington, Iowa, and Decatur, Illinois ;

5 . Th ese docket s will remain open until further order of the Department; and- 6

-

6

. We will serve copies of this order on the mayors of Burlington, Iowa, and Decatur, Illinois, and the airport managers of Southeast Iowa Regional Airport (Burlington) and Decatur Airport, Hyannis Air Service, Inc. d/b/a/ Cape Air, and Multi

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

By:

SUSAN L. KURLAND Assistant Secretary for

for Aviation and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.govAppendix A



## AREA MAP

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## ompletion RateAppendix B Page 1 of 2

Multi

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

Essential Air Service to be Provided at Burlington, Iowa

Effective Period : February 1, 2012 , through January 31, 2013 . It may be extended

, at the Department’s discretion, an additional three years, through January 31, 2016 , if the carrier implements an electronic ticketing and baggage agreement with a major carrier with a hub operation at Chicago O’Hare and/or St. Louis , by January 31, 2013

. Scheduled Service : 1 2 weekly nonstop r ound trips to Chicago O’Hare and 12 weekly nonstop round trips to Lambert

- St. Louis International Airport Intermediate stops and u pline service : Nonstop service only.

Aircraft : Cessna Grand Caravan

, 9 seats Rate per Eligible Flight: $ 808 (year 1); $784 (years 2

- 4

, if extended) 1
Weekly Ceilin g : $ 38,784 (year 1); $37,632 (years 2

- 4, if extended) 2

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 significan t elements of the required service, without prior approval. The carrier understands that an aircraft take

- off and landing at

its s cheduled 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 addit ion, 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 w ill not be compensated. In determining whether subsidy paymen t 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 un ilaterally, 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 sti pulated 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 mutu ally agreed to in writing by the Department and carrier do not constitute a total or partial reduction or cessation of payment.

Funds are not currently available for performance under this order beyond September 30, 2012

. The Department’s obligation for performance under this order beyond September 30, 2012 , is subject to the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department for any payment

m ay arise for performance under this order beyond September 30, 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , 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 must be submitted within 60 days of the last day of service provided under this order.

1 Year 1 a nnual compensation of $1,976,872 , divided by 2,446 annual departures (48 weekly departures x 52 weeks x 98 percent completion)

. Year s 2

- 4 annual compensation (if extended) of $1,917,566, divided by 2,446 annual departures (48 weekly departures x 52 weeks x 98 percent completion).

2 48 arrivals a nd departures per week multiplied by $ 808 per flight (year 1) and $784 (years 2

- 4, if extended)

.Appendix B Page 2 of 2

Multi

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

Essential Air Service to be Provided at Decatur, Illinois

Effective Period : February 1, 2012 , through January 31, 2013. It may be extended

, at the Department’s discretion, an additional three years, through January 31, 2016, if the carrier implements an electronic ticketing and baggage agreement with a major carrier with a hub operation at Chicago O’Hare and/or St. Louis , by January 31, 2013

. Scheduled Service : 1 8 weekly nonstop r ound trips to Chicago O’Hare and 18 weekly nonstop round trips to Lambert

- St . Louis International Airport

. Intermediate stops and u pline service : Nonstop service only.

Aircraft : Cessna Grand Caravan

, 9 seats Rate per Eligible Flight: $ 750 (year 1); $727 (years 2

- 4, if extended 1
Weekly Ceilin g : $ 54,000 (year 1); $52,344 (years 2

- 4

, if extended) 2

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 s ignificant 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 flig ht 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 pe riod, 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 wr iting 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 goal s 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 locat ion 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 are not currently available for performance under this order beyond September 30, 2012

. The Department’s obligation for performance under this order beyond September 30, 2012 , is subject to the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department for any payment may arise for performance under this order beyond September 30, 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incorporate by reference, releva nt 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 must be submitted within 60 d ays of the last day of service provided under this order.

1 Year 1 a nnual compensation of $2,750,435 , divided by 3,669 annual departures (72 weekly departures x 52 weeks x 98 percent completion)

. Year s 2 through 4 (i f extended) annual compensation of $2,667,922, divided by 3,669 (72 weekly departures x 52 weeks x 98 percent completion).

2 72 arrivals and departures per week multiplied by $ 750 per flight (year 1) and $727 (years 2

- 4, if extended)

.