Order 2013

- 9

- 4

Served: September 5, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5 th day o f September , 20 1 3

Essential Air Service at

GLASGOW, MONTANA

GLENDIVE, MONTANA

HAVRE, MONTANA

SIDNEY, MONTANA

WOLF POINT, MONTANA Docket DOT

- OST

- 1997

- 2605

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

ORDER SELECTING CARRIER

AND ESTABLISHING SUBSIDY RATES

Summary

By th is O rder, the Department is selecting Hyannis Air Service, Inc., D/B/A Cape Air

(“Cape Air”)

, to provide Essential Air Service ( “ EAS ” ) with 9

- passenger Cessna 402

aircraft at Glasgow, Glendive, Havre, Sidney, and Wolf Point

, Montana, for a two

- year

period beginning Dec ember 1, 2013, through Novem ber 3 0 , 2015

, at a co mbined annual

subsidy of $ 11,950,426

. 1 The subsi dy and level of service for each community under this

contract is as follows:

Community Subsidy Round trips Per Day

Glasgow $ 2,046,800 2

Glendive $ 1,944,467 2

Havre $ 2,036,254 2

Sidney $3 ,777,579 5

Wolf Point $ 2,145,326 2

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

-

Background

By Order 2011

- 1

- 27, served on February 3, 2011, the Department selected Silver Airways,

Inc

. (formally Gulfstream International Airlines) (“Silver”) to provide subsidized EAS with

19

- passenger Beech 1900

- D aircraft at the above five communities

, plus Lewistown and

Miles City, for the two

- year period ended May 31, 2013 , at a combined annual subsid y rate

of $ 10,903,854

.

The complete public file for EAS at each of the above Montana communities may be

accessed online through the Federal Dockets Management System (“FDMS”) at:

http://www.regulations.gov by entering “DOT

- OST

- 1997

- 2605” in the “SEARCH for:

Rules, Comments, Adjudications or Supporting Documents:” field.

Legislative Changes That Affected Lewistown and Miles City

The Federal Aviation Administration (“FAA”) Modernization and Reform Act of 2012

(Public Law 112

- 95), signed into law on February 14, 2012, amended the definition of

“eligible place” for the purpose of receiving EAS. 2 The amendment, among other things,

states that to be eligible, a community must have had an average subsidy per passen ger of

less than $1,000 during the most recent fiscal year, as determined by the Secretary of

Transportation. 3

Order to Show Cause

By Order 2013

- 3

- 13, issued on March 28, 2013, the Department tentatively determined to

terminate the eligibility of Lewistow n and Miles City , Montana

, under the EAS program.

Our tentative decision was based on the statutory requirement that the average subsidy per

passenger must be less than $1,000 during the most recent fiscal year.

For the most recent fiscal year (FY 2012) , Silver transported 660 total passengers at

Lewistown and 694 total passengers at Miles City at annual subsidy rates of $1,325,733

and $1,621,821, respectively. Thus, the corresponding average per passenger subsidy for

FY 2012 is $2,009 at Lewistown, and $2,337 at Miles City. Therefore, b y Order

2013

- 3

- 13, the Department directed all interested parties to show cause by April 17, 2013,

as to why the Department should not make final its tentative findings and conclusions.

Final Order, Allowing Suspens ion of Service, and Request for Proposals

Lewistown and Miles City object ed to the S how C ause Order , raising a number of issues.

However, they did not dispute our factual finding that both were over the cap . Therefore,

by Order 2013

- 6

- 13, issued on June 12, 2013, the Department: (1) terminated the eligibility

of Lewistown and Miles City, Montana, effective July 16, 2013, under the EAS program;

(2) allowed Silver to suspend service at Lewistown and Miles City after July 15, 2013, if it

c hose to do so; and (3) solicited proposals from air carriers interested in providing EAS at

Glasgow, Glendive, Havre, Sidney, and/or Wolf Point, Montana, for a new contract, with

or without subsidy. Those proposals were due by July 15, 2013.

Notice of Silver to Terminate EAS at Montana

On June 28, 2013, Silver filed a 90

- day notice of its intent to terminate its subsidized

service at Lewistown, Miles City, Glasgow, Glendive, Havre, Sidney, and Wolf Point

2 See 49 U.S.C. § 41731.

3 Communities in Alaska and Hawaii are exempt under 49 U.S.C. § 41731 (c)

.- 3

-

effective September 26, 2013. However, since we would not have completed the carrier

selection process and have a new carrier in place by the end of the 90

- notice period,

consistent with 49 U.S.C. 41734(c), and to ensure there is no service hiatus, by Order

2013

- 7

- 16, issued on July 19, 2013, we e xtend e d Silver’s service obligation at Glasgow,

Glendive, Havre, Sidney, and Wolf Point for 30 days beyond the end of the 90

- day notice

period, i.e

., October 26, 2013 , or until replacement service actually begins, whichever

occurs first.

Proposals

As noted above, b y Order 2013

- 6

- 13, the Department requested proposals from air carriers

interested in providing EAS at Glasgow, Glendive, Havre, Sidney, and Wolf Point. In

response to that Order

, the Department received proposals from three air carriers . All of

the proposals have been posted in Docket DOT

- OST

- 1997

- 2605

, and we summarize them

below.

Boutique Air, Inc.

Boutique Air

, Inc.

, (“Boutique”)

, submitted a proposal consisting of three stand

- alone

options, all using nine

- seat Pilatus PC

- 12 aircraft.

Option A consist s of 12 weekly non stop round trips from Havre to Billings Logan

International Airport (“Billings”)

, at a n annual subsidy request of $2,185,695.

Boutique Air’s Option A

EAS Community Subsidy Weekly Round Trips

Havre $2,185,695 1 2

Opti on B consist s of 12 weekly non stop round trips from Glasgow and Wolf Point to

Billings

, at a combined annual subsidy request of $2,941,760.

Boutique Air’s Option B

EAS Community Subsidy Weekly Round Trips

Glasgow $1,470,880 1 2

Wolf Point $1,470,880 1 2

Option C consist s of 30 weekly round trips from Sidney to Billings, with 12 of those flights

being routed through Glendive, at a combined annual subsidy request of $5,069,962.

Boutique Air’s Option C

EAS Community Subsidy Weekly Round Trips

Sidney $ 4,221,519 30

Glendive $ 848,443 12

Boutique Air offered to reduce the annual subsidy requested by $325,000 if we selected

tw o of its three proposed options as a result of synergies created at the Billings hub

. If we

were to select all three of its proposed options, Boutique would reduce the annual subsidy

requested by $675,000.- 4

-

Cape Air

Cape Air, which has interline ticketing and baggage agreements with all of the legacy air

carriers and Frontier, proposed two option s. Both options are contingent upon being

selected to provide EAS at no fewer than three of the Montana communities in order for the

air carrier to assu me the EAS routes

. Cape Air proposed to provide nonstop service

between each of the five communities and Billings utilizing Cessna 402 aircraft configured

with nine passenger seats.

Cape Air’s Option A consist s of three daily non stop round trips from Havre, Glasgow,

Wolf Point, and Glendive to Billings, and five daily non stop round trips from Sidney to

Billings, with an annual combined subsidy requirement of $14,112,169.

Cape Air’s Option A

EAS Community Subsidy Weekly Round Trips

Glasgow $2,590,286 20

Glendive $2,440,124 20

Havre $2,573,713 20

Sidney $3,777,579 34

Wolf Point $2,730,467 20

Cape Air’s Option B consisted of two daily non stop round trips from Havre, Glasgow,

Wolf Point, and Glendive to Billings, and four daily non stop round trips from Sidney to

Billings, with an annual combined subsidy requirement of $11,552,393. Option B is

summarized in the table below:

Cape Air’s Option B

EAS Community Subsidy Weekly Round Trips

Glasgow $2,046,800 13

Glendive $1,944,467 13

Havre $2,036,254 13

Sidney $3,379,546 27

Wolf Point $2,145,326 13

Great Lakes Aviation Ltd.

Great Lakes Aviation Ltd. (“Great Lakes”) , which has code

- share agreements with United

Airlines and Frontier Airlines at Denver , as well as interline ticketing and baggage

agreements with American Airlines, Delta Air Lines, Frontier Airlines, United Airlines,

and US Airways, submitted a proposal to serve Glendive and Sidney on a stand

- alone

basis. That proposal would offer one

- st op service from Glendive and Sidney to Denver

International Airport utilizing 19

- seat Beech 1900

- D aircraft, 4 for a combine d annual

subsidy of $4,484,573.

4 Great Lakes reserved the right to use 30

- seat Embraer 120 Brasilias at the air carrier’s discretion subject to

seat utilization.- 5

-

EAS Community Subsidy Weekly Round trips

Glendive $1,904,876 1 2

Sidney $2,579,697 17

Community Comments

On July 16, 2013, the Department sent correspondence to the members of the Montana

Essential Air Service Task Force (which includes officials from the five communities and

the Montana Aeronautics Division) summarizing the proposals and r equesting comments

and preferences on the carrier

- selection decision.

On July 26, 2013, the Department received a letter from the Chairman of the Montana

Essential Air Service Task Force, Mr. John Rabenberg, indicating that the Montana

communities unanimo usly voted in favor of Cape Air’s Option A. 5

D ecision

When selecting a carrier to provide subsidized EAS, 49 U.S.C. § 41733(c)(1) directs us to

consider five factors: (a) scheduled service reliability; (b) contractual and marketing

arrangements with a larger air carrier to ensure service beyond the hub airport; (c) interline

arrangements that the applicant has made with a larger air carrier at the hub; (d) community

views, giving substantial weight to the views of the elected officials representing th e users;

and (e) whether the air carrier has included a plan in its proposal to market its service to the

community. In addition, the Consolidated Appropriations Act, 2 012, Public Law No.

112

- 55, and continued by the full

- year Continuing Appropriations Act, 2013, Public Law

No. 113

- 6, provides that, when selecting a n air carrier to provide EAS, the Department may

consider the relative subsidy requirements, thus codifying a factor that we have considered

since the inception of the program.

After careful consideration, including the comments of the Montana Essential Air Service

Task Force, the Department has decided to select Cape Air as the EAS carrier for all five

communities

.

In narrowing the field of options, we first examined Boutique’s proposal. A l though

Boutique acquired the requisite authority to operate as a scheduled passenger commuter air

carrier on February 7, 2013, 6 it currently does not provide s cheduled service.

Additionally, Boutique does not have any contractual, marketing, or interline arrangements

with larger air carriers, and it received no community support

. Because it does not meet

any of the statutory, carrier

- selection criteria, we will not consider its proposal further.

The decision then boils down to Great Lakes or Cape Air, and Great Lakes submitted

proposals for only Glendive and Sidney. At Glendive, Great Lakes offers only minimal

subsidy savings compared to Cape Air’s two

- round

- trip option

-- $1,904,876 compared to

$1,944,467. We will defer to the community’s wishes given t he small difference in

subsidy

-- about 2%.

5 By letter dated August 2, 2013, the City of Billings Aviation and T ransit Department submitted support for

Cape Air’s Option A.

6 See Order 2013

- 2

- 8.- 6

-

At Sidney the sub sidy difference is much greater

-- about 37% when compared to Cape

Air’s Option A and 26% when compared to Cape Air’s Option B. This subsidy difference

for one community would usually be decisional. However, in this case, we are mindful of

the Montana Task Force’ s decades

- old position that having one carrier serving all of the

EAS communities in eastern Montana is in the best long

- ter m interests of the communities

and the State’s transportation system. Viewed in that context, the subsidy difference can

effectively be spread over all five communities

, and the difference is not nearly as great.

We also note several other factors. Sidn ey’s current service to Billings generated more

than 22,000 passengers d uring the year ended March 31, 2013, the most recent year for

which we have data. However, Great Lakes has forecast that only 14,000 passengers will

use its service to Denver. On the other hand, Ca p e Air forecast nearly 16,000 passengers.

One could conclude that the air carriers believe that Billings is the better hub for Sidney.

(We acknowledge that both carriers’ passenger forecasts are well below current levels, but

the reason may be that the service at Williston , North Dakota has increased dramatically

over the last year or so.) In further support of that theory, we note that nonstop jet service

to Denver is available at nearby Williston, about a 45

- minute drive from Sidney

. As a

result, subsidizing service to Denver for Sidney would be somewhat duplicative of the

nonstop jet service to Denver at Williston.

Based on all the above, we will select Cape Air to serve Glasgow, Glendive, Havre,

Sidney, and Wolf Point

.

In choosi ng between Cape Air’s Option A (three round trips and five round trips a day)

and Option B (two round trips and four round trips a day), we examined current and

historical passenger levels. D uring the year ended March 31, 201 3

, the most recent period

for which we have data

, Glasgow averaged 6 enplanements a day, Glendive 2 , Havre 4

, Sidney 3 6 , and Wolf Point 10

. Therefore, with the exception of Sidney, Cape Air’s

O ption B provid ing two round trips a day in nine

- seat aircraft provides more than an

adequate supply of seats to meet the communities’ demand , and we will select that option

. 7

At Sidney, Cape Air has proposed two different options using 9

- seat aircraft

-- one for four

round trips a day and one for five. Total passenger traffic at Sidney has grown

considerably over the last few years. Sidney experienced a 58% increase in total passenger

traffic from 2010 to 2011, and a 113% increase from 2011 to 2012. Given this impressive

trend, we will select Cape Air ’s five

- round

- trip option to accommodate the upward

demand

.

The core objective of the EAS program is to connect smaller communities to the national

air transportation system, and th ese service levels fully meet that objective. Cape Air is a

well

- established air carrier that provides EAS at many communities and maintains interline

7 As noted above in the Legislative Changes Section, Pu blic Law No: 112

- 95 amended 49 U.S.C.

§ 41731(a)(1)(B) to chang e the definition of “eligible place” for the purpose of receiving EAS. The

amendment , among other things, states that to be eligible, a community must maintain an average of 10

enplanements or more per service day, as determined by the Secretary, during the most recent fiscal yea r

beginning after September 30, 2012. The legislation has an exception for locations in Alaska and Hawaii and

communities that are more than 175 driving miles from the nearest large or medium hub airport

. Glasgow,

Glendive, Havr e, Sidney, and Wolf Point are all greater than 175 driving miles from the nearest large or

medium hub airport

, and therefore fall under this exception as codified in 49 U.S.C. § 41731(d)

.- 7

-

baggage and ticketing agreements with most of the major air carriers . Additionally, we

find both the service and subsidy levels of this option to be reasonable.

W e shall make this selection of Cape Air at the above five Montana communities

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 regulations concerning lobbying

activities

. 8

S ervice Transition

We expect Silver and Cape Air to work together to make a smooth transition at Glasgow,

Glendive, Havre, Sidney, and Wolf Point

. In that regard, before Silver suspends its service

, it must notify any passengers holding reservations for travel after the suspension date,

assist those passengers in making alternate air transportation arrangements, or provide a

refund of the ticket pric e, without penalty, if requested.

Future EAS Eligibi lity at Glasgow, Glendive, Havre, Sidney, and Wolf Point

As stated above, t he FAA Modernization and Reform A ct of 2012 (Public Law 112

- 95)

, amended the definition of “eligible place” for the purpose of receiving EAS. 9 The

amendment, among other things, states that to be eligible, a community must have had an

average subsidy per passenger of less than $1,000 during the most recent fiscal year, as

determined by the Secretary of Transportation. We will monitor the subsidy per passenger

rate at each of the five Montana communities during the upcoming contract

. The

Department highly encourages all parties involved to work together to maintain or increase

enplanements in order to remain in compli ance with the statute.

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 question the air carrier's fitness at th is time. We have

contacted the FAA , and it has raised no concerns that would negati vely affect our fitness

finding. We therefore conclude that Cape Air remains fit to conduct the operations

proposed here.

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

ACCORDINGLY,

1. The Department selects Hyannis Air Service , Inc., D/B/A Cape Air

, at Glasgow,

Glendive, Havre, Sidney, and Wolf Point, Montana , a nd establishes the subsidy rate as

detailed in Appendix B ;

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

8 The certifications are available on the Web at http://ostpxweb.dot.gov/aviation/index.html

.

9 See 49 U.S.C. § 41731.- 8

-

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 ai r carrier 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 , continues to be fit, willing and

able to operate as a commuter air carrie r

, and capable of providing reliable Essential Air

S ervice at Glasgow, Glendive, Havre, Sidney, and Wolf Point, Montana ;

4

. D ocket DOT

- OST

- 1997

- 2605 will remain open pending further Department action ; and

5

. We will serve copies of this Order on Great Lak es Aviation, Ltd., Boutique Air, Inc., the

mayors of Glasgow, Glendive, Havre, Sidney, and Wolf Poin t, Montana, the airport

managers at Wokal Field/Glasgow International Airport, Dawson Community Airport,

Havre City

- County Airport, Sid ney

- Richland Municipa l Airport, W olf Point International

Airport ; and the members of the Montana Essential Air Service Task Force

.

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



## Hyannis Air Service, Inc., D/B/A Cape Air

Annual Compensation Requirements for Essential Air Service at

Glasgow, Glendive, Havre, Sidney, and Wolf Point, Montana

Two D aily R ound T rips per weekday (Five Daily for Sidney)

9 5 .0% Completion Factor

Havre Glasgow Wolf Point Sidney Glendive

Daily Round Trips 2 2 2 5 2

Departures (net of completion) 1,416 1,416 1,416 3,541 1,416

Pax/Dpt 2.7 2.7 2.7 4.5 2.7

Load Factor 30% 30% 30% 50% 30%

fare (net) 42 $ 42 $ 42 $ 42 $ 42 $

Pax Rev 160,597 $ 160,597 $ 160,597 $ 669,155 $ 160,597 $

Fuel 522,247 $ 528,952 $ 575,884 $ 1,424,808 $ 475,316 $

Maintenance 384,895 $ 388,593 $ 414,482 $ 1,022,725 $ 359,005 $

Pilots 264,675 $ 264,675 $ 264,675 $ 301,651 $ 264,675 $

Ownership 129,425 $ 131,174 $ 143,417 $ 355,026 $ 117,182 $

Stations 416,449 $ 414,315 $ 422,851 $ 596,336 $ 414,315 $

Landing Fees 6,384 $ 6,384 $ 6,384 $ 15,614 $ 6,384 $

Marketing 45,333 $ 45,333 $ 45,333 $ 61,594 $ 45,333 $

General & Admin/Other 317,600 $ 317,600 $ 317,600 $ 446,643 $ 317,600 $

Operating Expense 2,087,009 $ 2,097,027 $ 2,190,627 $ 4,224,397 $ 1,999,811 $

Return of 5% 109,843 $ 110,370 $ 115,296 $ 222,337 $ 105,253 $

Economic Expense 2,196,851 $ 2,207,397 $ 2,305,923 $ 4,446,734 $ 2,105,064 $

Passenger Revenue 160,597 $ 160,597 $ 160,597 $ 669,155 $ 160,597 $

Profit (2,036,254) $ (2,046,800) $ (2,145,326) $ (3,777,579) $ (1,944,467) $

Subsidy Required 2,036,254 $ 2,046,800 $ 2,145,326 $ 3,777,579 $ 1,944,467 $

per Departure 1,438 $ 1,445 $ 1,515 $ 1,067 $ 1,373 $

Per Passenger 533 $ 535 $ 561 $ 237 $ 509 $Appendix B

Page 1 of 2

Hyannis Air Service, Inc., D/B/A Cape Air Essential Air Service

to be Provided at Havre, Glasgow and Wolf Point, Montana

Effective Period : Decemb er 1, 2013, through Novem ber 3 0 , 2015

Schedule Service: Havre: 14 nonstop round trips per week to Billings

Glasgow: 14 nonstop round trips per week to Billings

Wolf Point: 14 nonstop round trips per week to Billings

Intermediate Stop and

Upline Service: No service to any intermediate or upline points are contemplated

under the terms of the air carrier's proposal; accordingly, no such

service may be provided on subsidized flights without prior

Department approval

.

Aircraft Type: Cessna 402 (9 passenger seats)

Timing of Flights: Flights must be well

- timed and well

- spaced in order to ensure full

compensation

.

Annual Compensation: Havre : $2, 036,254

Glasgow : $ 2,046,800

Wolf Point : $ 2,145,326

This rate assumes an annual completion factor of 9 5 percent. A

compensation ceiling is to be applied per calendar week such that

service above that ceiling in one week cannot make up for service

shortfalls in another week.

Subsidy Rate per Flight: Havre : $ 1,438 1

Glasgow : $ 1,445 2

Wolf Point : $ 1,515 3

Weekly Compensation

Ceiling: Havre : $ 3 4

, 512 4

Glasgow : $ 3 4

, 680 5

Wolf Point : $ 36

, 360 6

1 $2 ,036,254 divided by 1,416 annual departures: ( 2 8 flights per week x .9 7) = 1,438

. 2 $ 2,046,800 divided by 1,416 annual departures = 1,445

. 3 $2, 145,326 divided by 1,416 annual departures = 1,515

. 4 2 8 flights per week multiplied by $1, 438 per flight.

5 28 flights per week multiplied by $1, 445 per flight.

6 28 fligh ts per week multiplied by $1,515 per flight.Appendix B

Page 2 of 2

Hyannis Air Service, Inc., D/B/A Cape Air Essential Air Service

to be Provided at Sidney and Glendive, Montana

Effective Period : December 1, 2013, through November 30 , 2015

Schedule Service: Sidney : Thirty

- four nonstop round trips each week to Billings

Glendive : Thirteen nonstop round trips per week to Billings

Intermediate Stop and

Upline Service: No service to any intermediate or upline points are contemplated

under the terms of the air carrier's proposal; accordingly, no such

service may be provided on subsidized flights without prior

Department approval

.

Aircraft Type: Cessna 402 (9 passenger seats)

Timing of Flights: Flights must be well

- timed and well

- spaced in order to ensure full

compensation

.

Annual Compensation: Sidney : $ 3,777,579

Glendive : $ 1,944,467

This rate assumes an annual completion factor of 9 5 percent. A

compensation ceiling is to be applied per calendar week such that

service above that ceiling in one week cannot make up for service

shortfalls in another week.

Subsidy Rate per Flight: Sidney : $ 1,06 7 7

Glendive : $ 1,373 8

Weekly Compensation

Ceilin g: Sidney : $ 7 4

, 620 9

Glendive : $ 3 2

, 952 10

7 $3,777,579 divided by 3,541 annual departures (70 flights per week x .9 7 completion ) = 1,06 7

8 $ 1,944,467 divided by 1,416 annual departures (28 flights per week x .9 7 completion ) = 1,373

9 70 flights per week multiplied by $1,06 7 per flight.

10 2 8 flights per week multiplie d by $1,373 per flight.Appendix C

Note:

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 ting 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 noti 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 out 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 m i 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 do 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.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o rpo 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.

F unds may not be a v a il a ble f or p erf o r m a n c e und e r this Order b e y ond September 30, 2013 . The

Gov er n m e nt ' s obli g a tion f or p erf o r m a n c e und e r this Order b e y o n d September 30, 2013 , is

subj ec t to the a v a il a bili t y of f unds f r o m whi c h p a y m e nt f or s e r vi ce s c a n be m a d e . No l e g a l

li a bili t y on the p a r t of the Go v er nm e nt f or a n y p a y m e nt m a y a r ise f or p erf o r m a n c e und e r th i s

Order b e y ond September 30, 2013 , until f unds ar e m a de a v a i l a ble to the D e p a r tm e nt f or

p erf o r m a n c e

. I f sufficient f u n ds ar e not m a de a v a il a ble f o r p e r f o r m a n c e b e y ond

September 30, 2013 , the D e p a r tm e nt will p r ovide noti c e in w r iting to the air c arr i er

.

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

provided in July must be filed by Octob er 31; August claim s must be submitted by

November 30, and so on.