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 8 th d ay of August , 20 1 3

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 th is O rder, the Department is re

- selecting H yannis 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 w ill provide three daily (21 a week) nonstop round trips

to Boston Logan Internatio nal 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, issue d 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 t he contract was a pproaching, 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.- 2

-

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 f or 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 $1,942,18 3 for a four

year 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 m ost 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 du e 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 proposal s to choose is more complicated and requires us to look at several

factors.

T he 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 i s 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 enplanement s of 19 passengers a day. Cape’s Air’s existing service providing 27 seats per day each way more than adequatel y meets the community’s EAS needs.

While the community supports the additional service to White Plains, Cape A ir’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 su bsidy. 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- 3

-

sufficient air service connectin g 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 two

year proposal issue, the community supported the four

- year option, albeit with the

inclusion of the Whit e 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 decide s that they want only a two

- year term, we w ill 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 m ore flights to White Plains for the same annual subsidy, with the community ’s concurrence

.

We shall make this selectio n 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 regu lations regarding drug

- free workplaces and nondiscrimination, as well as the regula tions 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 ha s 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 S ervice

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 d ocumentation 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 ca rrier may forfeit its compensation for any claim that is not supported under the terms of this Order ;

3 . We f i nd that Hyannis Air Service, Inc. d/b/a Cape Air is fit, willing and able to operate

as a commuter air carrie r
, and capable of providing reliabl e Essential Air S ervice 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.

B y:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

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



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B



### Cape Air Proposal for EAS at RutlandAppendix 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

- passen ger Cessna 402 aircraft Rate per Eligible Flight: $ 642 1
Weekly Ceiling for each community : $ 26,964 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 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 explanatio n 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 conf ormance 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 not ify 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. I n determining whether subsidy payment for a deviating flight should be adjusted or disallowed, the Department w ill 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 reductio n 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 o f 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 A nnual compensation of $ 1 ,360,481 divide d by 2,119 annual departures (42 wee kly departures x 52 weeks x 97 percent completion)

. 2 42 arrivals and depart ures per week multiplied by $642 per flight

.