Or der: 20 11

- 1 2

- 14

Served : Decem ber 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

JONESBORO

, ARKANSAS

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

- OST

- 1997

- 2935

ORDER S ELECTING CARRIER

Summary By this order

, the Department is s electing Multi

- Aero, Inc. d/b/a Air Choice One (Air Choice One) to provide subsidized essential air service (EAS) at Jonesboro

, Arkansas

, for a one

- year period

. 1 The one

- year period will begin when Air Choice One inaugurates full EAS and will run through the end of the 12 th month thereafter. Th e selection of Air Choice One will provide

Jonesboro with 18 nonstop round trips per week to Lambert St. Louis International Airport using

9

- passenger Cessna Grand Caravan aircraft at an annual subsidy rate of $1,717,781

.

Background In anticipation of the end of SeaPort’s current contract on October 31, 2011, the Department

issued Order 2011

- 4

- 15 on April 15, 2011 , requesting proposals for a new contract period

. Because the proposals did not address the hi gh per

- passenger subsidy at Hot Springs and Jonesboro, the Department issued 2011

- 6

- 25 on June 27, 2011, re

- soliciting proposals fr om all

interested air carriers. In response to th e Order, SeaPort Airlines, Inc. (SeaPort), the incumbent,

and Air Choice One submitted proposals.

Proposals Air Choice One proposes three nonstop round trips each weekday and weekend (18 per week) to

Lambert

- St. Louis International Airport, using nine

- passenger Cessna Grand Caravan for an annual subsidy of $1,717,781.

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

-

SeaPort initially proposed service of 12 weekly nonstop round trips to St. Louis and 6 weekly nonstop round trips to Memphis, for an annual subsidy of $1,509,850, but withdrew its proposal

on October 19.

Copies of each p roposal may be accessed online at http://www.regulations.gov by entering

DOT

- OST

- 1997

- 2935 in the “ Enter Keyword or ID ” section.

Discussion

Since Order 2011

- 6

- 25 was issued, Public Law 112

- 27, signed into law on A ugust 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 iss ue 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 prepar ing a Notice of Proposed Rulemaking regarding the new provisions under 49 U.S.C. § 41731, as

amended. Jonesboro’s long

- term eligibility may be affected by this amendment.

Community Comments

On October 24 , we requested community comment s regarding the carrier selection at Jonesboro

. We notified the community that

, b ased on existing law and the proposed rulemaking discussed above, the Department was prepared to select Air Choice One, the only carrier proposing service,

to serve Jonesboro for a one

- year ter m. We also stated that any s ubsequent s ervice that may be subsidized will be determined once the rulemaking process has been c ompleted and the continuing eligibility of the community is decided . We received comments from the Jonesboro Municipal Airport C ommission and the Mayor of Jonesboro. Philip Steed, Manager of Jonesboro Municipal Airport, states that Jonesboro has been in the EAS program for many years and has had many different ca rriers and destinations and the community is currently experiencing g rowth and “having an airline service enables Jonesboro to attract and keep industries.” Mr. Steed also states, “[we] are prepared to graciously accept Air Choice One as a replacement to our current carrier [for a one year contract].” We also received a l etter from Harold Perrin, Mayor of Jonesboro. He states, “[t]he City of Jonesboro would accept the offer of

Air Choice One.”

Decision The community supports the selection of Air Choice One, the only proposal available for

Jonesboro. Jonesboro’s status in the EAS program may be affected by the new eligibility

criteria , as discussed above. In order to give enough time for completing the rulemaking process and determining the status of Jonesboro’s eligibility in the EAS program, we will select A ir

Choice One for a one

- year period, rather than a typical two

- year period. 2 After the rulemaking

2 For communities that fall within the 90

- mile provision, we typically would continue to compensate the incumbent carrier until the community’s eligibility is determined. In this case, however, the incumbent carrier, SeaPort, has withdrawn its proposal.- 3

-

process, when Jonesboro’s eligibility status is determined

, the Department will take further

action on Jonesboro’s service. The selection of Air Choice One will provi de Jonesboro with three nonstop round trips to St. Louis each weekday and weekend (18 total per week).

In its proposal, Air Choice One projects 4,7 00 passengers. During the most recent 12 months for

which data are available (September 1, 2010, through Au gust 31, 2011), SeaPort, the current carrier, enplaned and deplaned a total of 1,748 passengers. We expect Air Choice One and the community to aggressively promote the service, as Air Choice One’s passenger projections are

270 % above the current traffic. The community remains subject to the $200 per passenger
subsidy cap 3 and the $1000 per passenger subsidy cap (see Discussion section, above). We will monitor the per passenger subsidy at the end of the 12 month period and take appropriate action,

includi ng termination of eligibility for subsidized servic e , if required

.

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

executed certifications from Air Choice One 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 Transition We expect SeaPort and Air Choice One to coordinate a smooth tra nsition in service at Jonesboro, including setting a date to switch services from SeaPort to Air Choice One. We expect SeaPort to contact all passengers holding reservations for travel after that date, to notify them of the suspension of service, and to s ecure alternate air transportation for such passengers or to provide a full refund of the ticket price, without penalty, if requested. We will compensate SeaPort at its current subsidy rates, set in Order 2009

- 6

- 25, issued June 26, 2009, and finalized in

Order 2009

- 7

- 8, July 9, 2009, for its service until Air Choice One inaugurates full EAS. Also, see Appendix C, page 2, of this Order.

Carrier Fitness

49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable

serv ice 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 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 Multi

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

, to provide essential air service at

Jonesboro

, Arkansas ;

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

-

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 Jonesboro

, Arkansas

, as described in Appendix C ;

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 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 de stroyed, 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 commuter carrier and capable of providing reliable essential air service at Jonesboro

, Arkansas ;

5. We will extend the subsidy rate per flight and weekly compensation set for SeaPort A irlines

in Order 2009

- 7

- 8, July 9, 2009, for its service until Air Choice One inaugurates full EAS ;

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

7 . We will serve copies of this order on the Mayor of Jonesboro, the Airport Manager of Jonesboro Municipal Airport, SeaPort Airlines, Inc. and Multi

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

.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.govAppendix 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 BAppendix C Page 1 of 2

Multi

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

Essential Air Service to be Provided at Jonesboro
, Arkansas

Effective Period : One year (12 months) beginning when Air Choice One inaugurates full EAS through the end of the 12 th month thereafter

Scheduled Service : 3 nonstop round trips each weekday (Monday through Friday) and 3 nonstop round trips each weekend ( 1 8 total round trips per week) t o Lambert

- St. Louis International Airport

Aircraft : Cessna Grand Caravan

, 9 seats Rate per Eligible Flight 1 : $ 936 Weekly Ceilin g 2 : $ 33,696

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 land ing 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 subsid y. 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 beyon d 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 De partment 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

su bsidy 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 D epartment unilaterally, either partially or complete ly , 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 payme nts 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 Governmen t’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 Annua l compensation of $1,717,781 , divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 percent completion).

2 36 flights per week multiplied by $ 936 per flight.Appendix C Page 2 of 2

SeaPort Airlines

Essential Air Service to be Provided at Jonesboro, Arkansas

Effective Period : November 1, 2011, until Air Choice One inaugurates full EAS.

Scheduled Service : 18 weekly nonstop round trips to Memphis International Airport . Some service may be substituted with service to Kansas City International Airport, as outlined in Order

2011

- 1

- 5, January 7, 2011

Aircraft : Pilatus PC

- 12, 9 seats Rate per Eligible Flight 1 : $43 4 Weekly Ceilin g 2 : $ 15,6 24

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 destin ation 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 car rier 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 du ring 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

sel ect 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 deviati ng 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, eit her 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 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 Annual compensation of $799,992 , divided by 1,844 annual departures (36 weekl y departures x 52 weeks x 98.5 percent completion)

. 2 36 arrivals and departures per week multiplied by $ 434.