Order: 2013-8-3

Served:August 8, 2013

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 8th day of August, 2013

Essential Air Service at

RUTLAND, VERMONT DOCKET DOT-OST-2005-21681

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

ORDER RE-SELECTING AIR CARRIER

Summary

By this Order, the Department is re-selecting Hyannis Air Service, Inc. d/b/a Cape Air 

(Cape Air) to provide Essential Air Service (EAS) at Rutland, Vermont, for an annual 

subsidy of $1,360,481.

1

 Cape Air will provide three daily (21 a week) nonstop round trips 

to Boston Logan International Airport (Boston) using 9-passenger Cessna 402 aircraft for a 

four-year term beginning November 1, 2013, through October 31, 2017.

Background

By Order 2009-8-11, issued on August 18, 2009, the Department re-selected Cape Air, to 

provide EAS at Rutland for a four-year term ending October 31, 2013. Under that Order, 

Cape Air provides three daily (21 a week) nonstop round trips to Boston with nine-seat 

Cessna 402 aircraft for an annual subsidy rate of $797,141.

As the end of the contract was approaching, we issued Order 2013-5-7, issued on 

May 7, 2013, requesting proposals from air carriers interested in providing EAS at the 

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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community for a new term. In response to that Order, we received only one proposal from 

the incumbent, Cape Air.

The airline’s complete proposal and the community’s comments may be accessed online at 

www.regulations.gov by entering DOT-OST-2005-21681 in the search block. 

Proposal of Cape Air

Cape Air submitted two options, both using 9-passenger Cessna 402 aircraft. Option A

proposes status-quo service of three daily (21 a week) nonstop round trips to Boston for an 

annual subsidy of $1,404,585 for a two-year term, or an annual subsidy of $1,360,481 for a 

four-year term. Option B proposes the existing service to Boston plus an additional 

nonstop round trip (28 a week) to Westchester County Airport (White Plains) for an annual 

subsidy of $2,005,144 for a two-year term, or an annual subsidy of $1,942,183 for a fouryear term.

Community Comments

The Honorable Christopher D. Louras, Mayor of Rutland, submitted comments on 

July 5, 2013, and expressed “unqualified support” for Cape Air’s Option B proposal. In 

his letter Mayor Louras states “air service as provided by Cape Air has been the most 

direct, timely, and consistent transportation alternative afforded to residents, 

businesspeople, and visitors to the southern Vermont region. The City (to use admittedly 

strong language) is insistent that DOT give due consideration to Rutland’s needs and 

award Cape Air the 4-year EAS contract with proposed Option B...”. 

Decision

Since Cape Air was the only airline to submit a proposal for Rutland’s EAS case, the 

decision to re-select them is fairly straight forward. However, the decision as to which of 

Cape Air’s two proposals to choose is more complicated and requires us to look at several

factors.

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

Option B for a four-year term. While we place significant weight on the comments of the 

community, it is not our only consideration. 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 calendar year 2012, the total traffic 

enplaning and deplaning at Rutland was 11,756 passengers, with average enplanements of 

19 passengers a day. Cape’s Air’s existing service providing 27 seats per day each way

more than adequately meets the community’s EAS needs.

While the community supports the additional service to White Plains, Cape Air’s Option B 

four-year proposal is $581,702 more than the Option A four-year proposal, and would be 

$1,145,042 higher than the current annual subsidy. Even the Option A status-quo service 

will see a $563,340 increase over the current annual subsidy. We cannot reasonably justify 

providing Federal subsidy to provide increased service to a community that already has 
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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 the four-year or twoyear proposal issue, the community supported the four-year option, albeit with the 

inclusion of the White Plains service, and it requires slightly less annual subsidy than the 

two-year option, so we will select it at an annual subsidy of $1,360,481. However, if the 

community decides that they want only a two-year term, we will honor that request. 

In addition, given that the community supported service to White Plains, we will allow 

Cape Air, if it so chooses, to substitute one or more flights to White Plains for the same 

annual subsidy, with the community’s concurrence.

We shall make this selection of Cape Air at Rutland 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.2

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 EAS. Cape Air is subject to 

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

attention that would cause us to questions the air 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 findings. We therefore conclude that Cape Air is reliable and 

fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 125a(b).

ACCORDINGLY,

1. We re-select Hyannis Air Service, Inc. d/b/a Cape Air to provide Essential Air Service 

at Rutland, Vermont, and establish the annual subsidy rate as described in Appendix C;

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 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 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 is fit, willing and able to operate 

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

Rutland, Vermont;

 2 The certifications are available on the Web at http://ostpxweb.dot.gov/aviation/index.html.
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4. This docket will remain open pending further Department action; and

5. We will serve copies of this Order on the Mayor, Vermont Department of 

Transportation, and Airport Manager of Rutland, Vermont 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

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.

 
 Appendix B

Cape Air Proposal for EAS at Rutland

 
 Appendix C

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

Essential Air Service to be Provided at Rutland, Vermont

Effective Period: November 1, 2013, through October 31, 2017

Scheduled Service: Three daily nonstop round trips (21 a week) to Boston

Aircraft: 9-passenger Cessna 402 aircraft

Rate per Eligible Flight: $6421

Weekly Ceiling for each community: $26,9642

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 this rate, 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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 September 30, 2013. The Government’s obligation for 

performance under this order beyond September 30, 2013, 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 September 30, 2013, until funds are made available to the Department for performance. If sufficient funds are 

not made available for performance beyond September 30, 2013, 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 31; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $1,360,481 divided by 2,119 annual departures (42 weekly departures x 52 weeks x 97

percent completion). 2 42 arrivals and departures per week multiplied by $642 per flight.