Order: 2011-12-15

 Served: December 22, 2011

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22nd day of December, 2011

Essential Air Service at

JACKSON, TENNESSEE

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

 Docket DOT-OST-2000-7857

ORDER SELECTING CARRIER

Summary

By this order, the Department is selecting SeaPort Airlines, Inc. (SeaPort) to provide 

subsidized essential air service (EAS) at Jackson, Tennessee, for a one-year period.1 The 

one-year period will begin when SeaPort inaugurates full EAS and will run through the end 

of the 12th month thereafter. This selection of SeaPort will provide Jackson with 12

nonstop round trips per week to Nashville International Airport (“Nashville”) and 6 nonstop 

round trips per week to Memphis International Airport (“Memphis”) using 9-passenger 

Cessna Grand Caravan aircraft at an annual subsidy rate of $1,149,703.

Background

By Order 2009-6-17 (June 22, 2009), the Department selected Pacific Wings to provide 18 nonstop 

round trips per week from Jackson to Nashville using a 9-passenger Cessna Grand Caravan, for 24 

months beginning when the carrier inaugurated service, for an annual subsidy rate of $1,225,628. 

Pacific Wings inaugurated service at Jackson on August 31, 2009. The current contract expired on 

August 31, 2011. Pacific Wings operates the service under the brand name Tennessee Skies.

Before Pacific Wings inaugurated service at Jackson, the community experienced an extended 

service hiatus. The previous carrier, Big Sky Airlines, ceased operations at Jackson on January 6, 

2008. Great Lakes Aviation, Ltd. (Great Lakes) was selected to serve Jackson by Order 2008-2-1 

(February 6, 2008), but Great Lakes never began service. Thus, Jackson was without scheduled air 

service from January 7, 2008, until August 31, 2009.

 1 Subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.
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In anticipation of the expiration of Pacific Wings’ contract on August 31, 2011, the Department 

issued Order 2011-1-19 (January 21, 2011), soliciting proposals on or before March 16, 2011, from 

carriers interested in providing service at Jackson. On March 15, 2011, prior to the due date for 

proposals, Pacific Wings notified the Department of its intention to provide subsidy-free service at 

Jackson, effective September 1, 2011, the end of its current contract. As a result, the Department 

notified the community and ceased the carrier-selection process.

On June 30, 2011, Pacific Wings filed with the Department a 90-day notice of its intent to terminate 

service at Jackson, as well as Owensboro, Kentucky,2 effective September 30, 2011. Pacific Wings 

stated that despite many attempts, it had been “unable to procure counter or gate space at [Nashville 

International Airport] on reasonable terms.” The carrier stated that these “barriers to access 

continue to impede and frustrate our service delivery efforts.”

In response to Pacific Wings’ 90-day notice to suspend service, the Department issued 

Order 2011-8-27, August 31, 2011, prohibiting Pacific Wings from terminating subsidized service 

for 30 days beyond the end of its 90-day notice period, and requesting long-term proposals from 

carriers interested in providing EAS at Jackson. Proposals were due September 30.

Discussion

Order 2011-8-27 explained that 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. The 

amendment states 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. Section 41731, as amended, also grants 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). The Department is currently preparing a Notice of Proposed 

Rulemaking regarding the new waiver provisions under 49 U.S.C. § 41731, as amended. 

Jonesboro’s long-term eligibility may be affected by this amendment.

Proposals

In response to that Order, we received proposals from Multi-Aero, Inc. d/b/a Air Choice One (Air 

Choice One), and SeaPort Airlines, Inc. (SeaPort).

Copies of each proposal may be accessed online at http://www.regulations.gov by entering DOTOST-2000-7857 in the “Enter Keyword or ID” section.

Air Choice One proposed two options, each operating with 9-passenger Cessna Grand Caravan 

aircraft. Option 1 is three nonstop round trips each weekday and weekend (18 per week) to 

Lambert-St. Louis International Airport, for an annual subsidy of $1,810,690. Option 2 is three 

nonstop round trips each weekday and weekend (18 per week) to Nashville International Airport for 

an annual subsidy of $1,741,701.

SeaPort proposes three options, all using 9-passenger Cessna Caravan aircraft. Option 1 is three 

nonstop round trips each weekday and weekend (18 per week) to Memphis International Airport 

 2 See Orders 2011-8-6 and 2011-10-14 for information regarding Owensboro.
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(Memphis) for an annual subsidy of $947,818 (first year) and $925,603 (second year). Option 2 is 

two nonstop round trips each weekday and weekend (12 per week) to Nashville and one nonstop 

round trip each weekday and weekend (6 per week) to Memphis for an annual subsidy of 

$1,149,703 (first year) and $1,115,210 (second year). Option 3 is two nonstop round trips each 

weekday and weekend (12 per week) to Memphis and one nonstop round trip each weekday and 

weekend (6 per week) to Nashville for an annual subsidy of $1,034,164 (first year) and $1,006,387 

(second year).

Community Comments

On October 18, we requested community comments regarding the carrier selection at 

Jackson. We received a letter from the Jackson-Madison County Airport Authority, 

recommending Seaport Airlines be chosen as the carrier at Jackson. The Airport Authority 

believes that option #2 (12 weekly nonstops to Nashville and 6 weekly nonstop round trips 

to Memphis) gives Jackson more opportunity to lower the subsidy per passenger by 

allowing two hub choices for travelers, Delta Airlines at Memphis and Southwest Airlines at 

Nashville.

Decision

After reviewing each carrier’s proposal and taking into account community feedback, we have 

decided to select SeaPort’s proposal (option 2) of 12 weekly nonstop round trips to Nashville and 6 

weekly nonstop round trips to Memphis.

Both of Air Choice One’s proposals require greater annual subsidy than any of SeaPort’s proposals, 

and the carrier did not receive any community support. The community affirmatively supports 

SeaPort’s Option 2 for 12 weekly nonstop round trips to Nashville and 6 weekly nonstop round trips 

to Memphis. Although it requires greater annual subsidy than the carrier’s Option 1 or Option 3, we 

have decided to select the community’s recommendation (Option 2). This will allow the 

community an opportunity to build ridership during the one-year period of this contract by 

maintaining the majority of the community’s flights to Nashville while additionally providing 

service to Memphis.

The community remains subject to the $200 per passenger subsidy cap3 and the $1,000 per 

passenger subsidy cap (see Discussion section, above). We will monitor the per passenger subsidy 

toward the end of the 12-month period and the NPRM process to determine the community’s 

eligibility status.

We shall make this selection at Jackson contingent upon the Department’s receiving properly 

executed certifications from SeaPort that it is in compliance with the Department’s regulations 

regarding drug-free workplaces and nondiscrimination, as well as the regulations concerning 

lobbying activities.

Carrier Fitness

 3 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.
- 4 -

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. SeaPort 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 1.56a(f).

ACCORDINGLY,

1. We select SeaPort Airlines, Inc., to provide essential air service at Jackson, Tennessee;

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 C;

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. We find that SeaPort Airlines, Inc., continues to be fit, willing and able to operate as a commuter

carrier and capable of providing reliable essential air service at Jackson, Tennessee; 

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

6. We will serve copies of this order on the Mayor of Jackson and the Executive Director of 

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

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 C

SeaPort Airlines, Inc.

Essential Air Service to be Provided at Jackson, Tennessee

Effective Period: One year beginning when SeaPort inaugurates full EAS through the end of the 

12th month thereafter

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: $627

Weekly Ceiling2: $22,572

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 are not currently available for performance under this order beyond September 30, 2012. The Government’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 Government 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.

All claims for payment must be submitted within 60 days of the last day of service provided under this order.

 1 Annual compensation of $1,149,703, divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 

percent completion).

2 36 flights per week multiplied by $627 per flight.