Order: 2015

- 1

- 2

Served: January 6, 2015



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6 th day of January

, 20 1 5

Essential Air Service at

MASSENA, NEW YORK DOT

- OST

- 2012

- 0163

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 E ssential Air Service (E AS ) at Massena, New York ( Massena ) to Boston Logan International Airport (BOS) via Albany International Airport (ALB) using 9

- passe nger Cessna 402 aircraft for the two

- year term from April 1, 2015, through

March 30

, 201 7 . The ann ual subsidy rates are $2,608,773 for the first year , and $ 2,713,124 for the second year. 1

Background By Order 2013

- 12

- 21 (February 22, 2013 ), the Department re

- selected Cape Air to provide

EAS at Massena for the two

- year term from April 1, 2013 to March 30, 2015 . Under that

O rder, Cape Air provides Massena with three daily nonstop round trips (21 per week) to

BOS using Cessna 402 aircraft for a total annual subsidy of $2,090,949

.

As the end of the contract w as appro aching, the Department issued Order 2014

- 9

- 14 ( September 23

, 2014) requesting proposals from air carriers interested in providing EAS at

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.- 2

-

Massena for a new contract term. In res ponse to that Order

, two air carriers su bmitted proposals: Boutique Air and Cape Air (the incumbent air carrier)

.

Each air carrier’s complete proposal and community comments may be accessed online at www.regulations.gov by entering Docket number DOT

- OST

- 2012

- 0163 in the search

block.

Proposal of Boutique Air Boutique Air submitted a proposal to provide 12 nonstop round trips per week to ALB and 12 nonstop round trips per week to John F. Kennedy International Airport (JF K) in New York City using single

- engine 9

- passenger Pilatus PC

- 12 aircraft for an annual subsidy of $3,768,147.

Proposal of Cape Air Cape Air submitted two

- year and four

- year options to serve Massena from BOS via ALB using 9

- pass enger Cessna 402 aircraft

. Cape Air proposes to maintain i ts current service

l evel, with three daily nonstop round trips (21 per week) to BOS

. With regard to its annual subsidy request, Cape Air states in its bid that

, in order to align revenue with operating

costs over time, the airline has incorporated a 4% increase in annual subsidy for each year

of the EAS contract. Cape Air’s proposed subsidy is summarized below:

Massena proposed annual subsidy

Two

- Year Reselection Annual Subsidy

Year 1 $2,608,773

Year 2 $2,713,124

Four

- Year Reselection

Year 1 $ 2,549,293

Year 2 $ 2,651,265

Year 3 $ 2,757,315

Year 4 $ 2,867,608

Community Comments

On October 28

, 2014, the Department reque ste d comments from Massena regarding this

EAS air carrier

- selection case. In response, Supervisor Joseph D. Gray submitted

comments on behalf of the Town of Massena , supporting Cape Air’s proposal to provide

EAS for a new, two

- year term. In his letter, Supervisor Gray wrote, “The Council was pleased to see additional interest in the Massena EAS contract. We heard presentations from Cape Air and Boutique Air. While we were impressed with both, our positive experience with Cape Air was the deciding factor this year.”

Decision After carefully reviewing each air carrier’s proposal and taking into account community feedback, the Department has decided to re

- select Cape Air for a new, two

- year term. We- 3

-

base our decision on the five factors 49 U.S.C. § 41733(c)(1) directs us to consider: 1) service reliability; 2) contractual and marketing arran gements with a larger carrier at the hub; 3) interline agreements with a larger carrier at the hub; 4) community views, giving substantial weight to the views of the elected officials representing the users; 5) whether the carrier has included a plan in it s proposal to market its service to the community.

First, Cape Air has a proven record of providing reliable EAS at Massena, as well as several EAS communities. In addition, Cape Air’s service to BOS , a large hub airport, coupled with its established i nterline ticketing and baggage agreements with most major U.S. airlines, will provide customers with seamless connections to the national air transportation system. Furthermore, Cape Air has community support, a key carrier

sel ection criterion and include d annual marketing expenses in its proposal , samples of print

advertisements for its service , and noted that, in 2011, Cape Air opened a ticket office in Massena to provide greater community awareness and ticket sales to the public

. Moreover , Boutique Air does not currently h ave the required slots from the FAA to provide its proposed service to JFK. Lastly, Cape Air’s total subsidy request for a two

year contract is significantly lower than that of Boutique Air ($5,321,897 for Cape Air vs. $7,536,294 for Boutique Air).

The Department shall make this selection contingent upon its receiving properly executed

certifications from Cape Air 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 the Department find an air carrier fit, willing, and able to provide reliable service before the Department 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 question the air carrier’s

fitness at this time. The Department has contacted the Federal Aviation Administrati on, and it has raised no concerns that would negatively affect our fitness findin gs. The Department therefore conclude s that Cape Air is reliable and fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Pa rt 1

. 25a(b)

.

ACCORDINGLY,

1. The Department re

- select s Hyannis Air Service, Inc. d/b/a Cape Air to provide

Essential Air S ervice at Massena, New York

, and establish es the annual subsidy rate s as described in Appendix C ;

2

. The Department direct s 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

2 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/essential

- air

- service- 4

-

to preserve and maintain such documentation in a manner that readily permits its audit and examination by r epresentatives 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 s may forfeit their compensation for any claim that is not supported under the terms of this Order ;

3

. The Department f i nd s 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 reliable Essential Air

S ervice at Massena, New York ;

4

. Th is docket will remain open pending further Department action ; and

5

. The Department will serve a copy of this O rder on the Mayor and Town Supervi sor of Massena, New York ; the Airport M anager of Massena International Airport ; Boutique Air, and Hyannis Air Service, Inc. d/b/a Cape Air.

B y:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

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



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B Page 1 of 2



### Es sential Air Service at Massena, New YorkAppendix B Page 2 of 2Appendix C Page 1 of 2

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

Essential Air Service to be Provided at Massena, New York

DOT

- OST

- 2012

- 0163

Annual Subsidy: $2,608,773

Effective Period : April 1, 2015

, through March 30

, 2016

Hub : Boston Logan International Airport (BOS) via Albany International Airport (ALB)

Scheduled Service : 21 one

- stop round trips per week to BOS

Aircraft : 9

- passenger Cessna 402 Rate per Eligible Flight: 1 $ 1,231 Weekly Ceiling : 2 $ 51,702

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 significan t 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, suc h 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 per iod, 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 fr om 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 exte nt 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 fo r 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 cessat ion. 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 p erformance under this Order beyond January 14, 2015

. The Government’s obligation for performance under this Order beyond January 14, 2015 , 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 January 14, 2015 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond January 14, 2015 , th e 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 provi ded in July must be filed by

October 31; August claims must be submitted by November 30, and so on.

1 A nnual compensation of $2,608,773 divided by 2,119 annual departures (42 weekly departures x 52 weeks x 97 percent completion )

2 42 arrivals and departur es per week multiplied by $1,231Appendix C Page 2 of 2

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

Essential Air Service to be Provided at Massena, New York

DOT

- OST

- 2012

- 0163

Annual Subsidy: $2,713,124

Effective Period : April 1, 2016, through March 30, 2017

Hub : Boston Logan International Airport (BOS) via Albany International Airport (ALB)

Scheduled Service : 21 one

- stop round trips per week to BOS

Aircraft : 9

- passenger Cessna 402 Rate per Eligible Flight: 1 $1,280 Weekly Ceiling : 2 $ 53,760

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 significan t elements of the required service, without prior approval. The carrier understands that an aircraft t ake

- 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 eli gible for subsidy. In addition, if the carrier does not schedule or operate its flights in full conformance with the Order for a significant per iod, it may jeopardize its entire subsidy claim for the period in question. If the carrier contemplates any su ch 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

w arrant, 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 determin ing 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 commun ity.

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 d oes 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 mutu ally 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

ame nded 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 January 14, 2015

. The Government’s obligat ion for performance under this Order beyond January 14, 2015 , 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 January 14, 2015 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond January 14, 2015 , 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 $2,713,124 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 $1,280