### Order: 2014

- 1

- 23

Served January 31, 2014



## UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 31 st 

### day of January , 201 4

ORDER TEMPORARILY EXTENDING CURRENT SUBSIDY

Summary By this O rder, the Department is extending the service period for SeaPort Airlines, Inc. (“SeaPort”) to provide Essential Air Service ( “ EAS ” ) operations at Jackson, Tennessee

, from February 1, 2014, until further Departmental a ction , but no later than September 30, 2014

. SeaPort will continue to provide Jackson with 12 nonstop round trips per week to Nashville International Airport and six nonstop round trips per week to Memp his International Airport 1 

### using nine

- seat Cessna Grand Caravan aircraft at an annual subsidy rate of $1,115,210. 2



### Background By Order 2011

- 12

- 15, issued on December 22, 2011, the Department selected SeaPort to provide subsidized EAS at Jackson with n ine

- seat Cessna Grand Caravan aircraft for a one

- year period through the end of the 12 th 

### month thereafter , at an annual subsidy rate of $1,149,703. SeaPort inaugurated service at Jackson on January 22, 2012, thus making the original expiration

date Januar y 31, 2013. That contract with SeaPort was extended for an additional year, from February 1, 2013, through January 31, 2014, by Order 2013

- 2

- 23, issued on February 25, 2013, at an annual subsidy rate of $1,115,210 , as described in SeaPort’s original propo sal

.

The complete public file for EAS at Jackson may be accessed online through the Federal Dockets Management System at: http://www.regulations.gov by entering “DOT

- OST

- 2000

- 7857” in the “SEARCH for: Rules, Comm ents, Adjudications or Supporting Documents:” field.

Legislative Changes Which May Affect Future EAS Eligibility at Jackson The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 (Public

Law No: 112

- 95) amended 49 U.S.C. § 41731(a )(1)(B) to change the definition of “eligible place” for the purpose of receiving EAS. The amendment states that to be eligible, a

1 SeaPort currently pr ovides six additional round trips per week to Memphis on a subsidy

- free basis.

2 Subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. 

### Essential Air Service at

JACKSON, TENNESSEE

Under 49 U.S.C. § 41731 et seq

. DOCKET DOT

- OST

- 200 0

- 7857

### 2

community must maintain an average of 10 enplanements or more per service day, as determined by the Secretary, during the mo st recent fiscal yea r beginning after September 30, 2012. 3 

### T he legislation exempts locations in Alaska and Hawaii and communities that are more than 175 driving miles from the nearest large

- or medium

- hub airport. As Jackson is located 86 miles from Memph is International Airport, which is a

medium

- hub airport, it must meet the 10

- enplanement

- a

- day threshold for EAS to continue after FY2013 or otherwise face termination of its eligibility to receive EAS, barring a waiver from the Secretary.

In addition, t he Department is prohibited from subsidizing air service at a community where the subsidy per passenger exceeds $200, unless the community is more than 210 highway miles from the nearest large

- or medium

- hub airport. This applies to Jackson due to the fac t that it is

located less than 210 miles from Memphis International Airport (MEM), a medium

- hub airport

. 4 

### As stated in Order 2013

- 2

- 23, Jackson was above the $200 per passenger cap and has been expected to work with SeaPort to maximize use of the service awarded under Order

2013

- 2

- 23 to avoid exceeding the cap, which could result in termination of eligibility for subsidy under the EAS program.

Decision

W e will extend SeaPort’s service period until f urther Departmental action , but no later than September 30, 2014 . We will set this contract extension, at an annual subsidy of $1,115,210, as described in SeaPort’s original proposal dated September 30, 2011, and further detailed in Appendix C of Order 2013

- 2

- 23 . Please note, however, that the Department is working towards implementation of 49 U.S.C. § 41731(a)(1)(B), and we anticipate addressing that

matter in the near future. As developments on the ten enplanement provision proceed, we will keep the carrier and the community fully informed and will take ap propriate action.

This Order is issued under authority delegated in 49 CFR Part 1. 25 a( b ).

ACCORDINGLY,

1. The Department requires SeaPort Airlines, Inc., to continue to provide E ssential A ir S ervice

at Jackson, Tennessee , until further Departmental acti on ;

3 The Secretary has the authority to waive the 10

- passenger requirement , on an annual basis if the community can demonstrate that the reason the location averages fewer than 10 passengers per day is due to a temporary decline in enplanements. See 49 U.S.C. § 41731(e). A detailed explanation of the temporary decline would ha ve to be submitted to the Department with relevant supporting documents.

4 Congress first established the $200 ceiling under P.L. 101

- 164 for fiscal year 1990, and re

- established 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. 

### 2

. We set the rate of compensation for SeaPort Airlines, Inc., for the provision of E ssential A ir

S ervice at Jackson, Tennessee, as described in Appendix C ;

3. The Department direct s SeaPort Airlines, Inc. to retain all books, records, and othe r 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 sev en years from the issuance date

### 3

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 fo r any claim that is not supported under the terms of this O rder;

4

. Docket DOT

- OST

- 200 0

- 7857 will remain open until further order of the Department; and

5

. The Depart ment will serve a copy of this O rder on the m ayor of Jackson, the airport

manager of M cKellar

- Sipes Regional Airport

, SeaPort Airlines, Inc

. , and the service list of this

Docket.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

### Appendix A

O p e ra t i ng P ro j e c t i o n s

A v

e r ag e S e ct o r Leng t h ( s m ) Y e a r 1

111 Y e a r 2

111

S c hedu l e d D epa r t u r e s 1

, 87 2 1

, 87 2

S c hedu l e d B l o c k H ou r s 1

, 487

. 2 1

, 487

. 2

P r o j e c t e d C o m p l e t i o n F a c t o r 98

. 0 % 98

. 0 %

P r o j e c t e d C o m p l e t e d D epa r t u r e s 1

, 83 5 1

, 83 5

P r o j e c t e d C o m p l e t e d B l o c k H ou r s 1

, 457

. 5 1

, 457

. 5

Pass e n g e r P ro j e c t i o n s

P r o j e c t e d P a s s enge r s 5

, 89 9 6

, 48 9

P r o j e c t e d A v e r ag e F a r e $64

. 6 2 $65

. 9 2

R e v en u e P a ss enge r M il e s (R P M s ) 654

, 78 9 720

, 26 8

A v

a il ab l e S ea t M il e s ( AS M s ) 1

, 832

, 72 5 1

, 832

, 72 5

P r o j e c t e d Loa d F a c t o r 35

. 7 % 39

. 3 % 

### SeaPort Airlines, Inc. Option #2 6 Weekly Roundtrips: Jackson, TN

– Memphis, TN 12 Weekly Roundtrips: Jackson, TN

– Nashville, TN

F i na n c i a l P ro j e c t i o n s

R e v enue s

P a ss enge r T i c k e t R e v enue s $381

, 22 0 $427

, 72 9

A n c i l l a r y R e v enue s $ 9

, 18 8 $10

, 3 4 0

T

o t a l $390

, 40 8 $438

, 06 9

E x pen s e s

F li gh t O pe r a t i o n s $247

, 76 8 $250

, 53 7

A i r c r a f t O w ne r s h i p / Lea s e $164

, 64 0 $164

, 64 0

F ue l & O i l $405

, 31 9 $419

, 50 5

T

r a ff i c S e r v i c i n g $163

, 31 8 $169

, 91 2

I n s u r an c e $29

, 14 9 $29

, 73 2

M a i n t enan c e $240

, 48 0 $245

, 29 0

S ub

- T o t a l

- D i r e c t $1

, 250

, 67 4 $1

, 279

, 61 5

I nd i r e c t $216

, 09 9 $199

, 69 8

T

o t a l E x p e n s e s $1

, 466

, 77 3 $1

, 479

, 31 3

P r o j e c t e d O pe r a t i n g P r o f i t / ( L o ss ) ( $1

, 07 6

, 36 5 ) ( $ 1

, 041

, 244 )

S u b s i d y C a l c u l a t i o n s
O pe r a t i n g L o s s $1

, 07 6

, 3 6 5 $1

, 04 1

, 24 4

E c ono m i c R e t u r n @ 5 % $7 3

, 3 3 9 $73

, 9 6 6

R e qu i re d S ub s i d y $1

, 14 9

, 70 3 $1

, 115

, 21 0

S ub s i d y pe r D epa r t u r e $626

. 6 9 $607

. 8 9

S ub s i d y pe r P a ss enge r $ 19 4

. 9 0 $ 17 1

. 8 6

### Appendix B

S e a P o r t Ai r li n e s, I n c. E ss e n t ial Air S er vi c e t o b e P rovided at J a c k so n , T e nn e ss ee

E ffec tive Pe r iod : February 1 , 2014 , until September 30, 2014

S c h e dul ed S er vi ce : 12 n o nstop r ound t r ips p e r w ee k to N a shville I n t er n a ti o n a l Ai r po r t a nd 6 nonstop r ound t r ips p e r w ee k to M e mphis I nt er n a tion a l Ai rpo r t
Ai rcr a f t : C e ssna G r a nd C ara v a n, 9 s ea ts

R a te p er E l i g ible F l i g h t 1 

### : $608

W ee k l y C e ilin g 2 

### : $21,888

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not op era te in c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding the s er vi c e pl a ns outlin e d in the Order a nd a n y oth e r

s i g ni f i c a nt e l e m e nts of the re qui re d s er vi ce , without p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

o f

f a nd l a nding a t its s c h e du l e d d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion suppo r ti ng subsi d y

e li g i b ili t y f o r a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts a r e

c onsid ere d e l i g ible f or su b si d y

. I n a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its f li g hts in f ull

c on f o r m a n c e with the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e subsi d y c l a im f or t he p er iod in

qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond the s c ope o f the Order du r ing the a ppli ca ble

p e r iod of th e se ra t e s, it must f i r st not i f y the O ff i c e of Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be e nsu re d o f f ull c omp e ns a tion. S hould c i rc umst a n ce s w ar r a n t , the D e p ar tm e nt m a y l o c a te a nd

s e l e c t a re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r o ut e s. The air c a rr i e r must c ompl e te a ll f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of t r a f f ic will not be c omp e ns a t e d. I n d e t er mi ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting f l i ght should be a djust e d or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to
whi c h the g o a ls of the p r og ra m a r e m e t a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion s y s t e m p r ovid e d to

the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y , e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s p a y m e nts f or s e r vi c e or c h a ng e s

s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n, a t the e nd of the p e r iod f or whi c h the

D e p ar tm e nt d o e s m a ke p a y m e nts in the stipul a t e d a mounts or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y

cea se to p r ovide s er v i c e t o th a t sp ec i f ic lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion.

Those a djustm e nts in the l e v e ls of subsi d y a nd/or s er vi c e th a t ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt

a nd air ca r r i e r d o not c on s titute a tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

Funds may not be available for performance under this Order beyond September 30, 2014

. The Government’s obligation for performance under this Order beyond September 30, 2014 , is subje ct 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, 2014 , until funds are made available to the Depar tment for performance. If sufficient funds are not made available for performance beyond September 30, 2014 , the Department will provide notice in writing to the carrier.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o r po r a te b y r ef e re n c e
, r e l e v a nt st a t ut e s a nd D e p ar tm e nt r e g ul a tions, a s th e y

m a y be a m e nd e d fr om time to tim e . How e v er
, a n y su c h st a tut e s, r e g ul a tions, or a m e ndm e nts th ere to sh a ll not

op era te to c ont r o v er t the f o r e g oi n g p ar a g r a ph.

All claims for payment, including any amended claims, must be su bmitted within 9 0 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 st ; August claims must be submitted by November 30 th , and so on.

1 Annual compensation of $1,115,210, divided by 1,83 5 annual departures (36 weekly departures x 52 weeks x 98 percent completion).

2 36 flights per week multiplied by $608 per flight.