Order 2011-1-6

Served: January 7, 2011

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 7

th day of January, 2011

ORDER SELECTING CARRIER, ESTABLISHING SUBSIDY RATES

AND REQUESTING PROPOSALS

Summary

By this order, the Department is selecting Hyannis Air Service, Inc. d/b/a Cape Air (Cape Air), to 

continue providing subsidized essential air service (EAS) at Massena (for two years), at the 

annual subsidy rate of $1,708,911, and at Ogdensburg (for four years), at the annual subsidy rate

of $1,702,697, beginning when the carrier inaugurates the new service pattern.

1 Also, by this 

order, we are requesting proposals, by February 9, from carriers interested in providing EAS at 

Watertown, with or without subsidy, for a new rate term. (See Appendix A for a map of the 

service area.)

Background

By Order 2008-3-15, March 14, 2008, the Department selected Cape Air to provide EAS at the 

three communities for the two-year period through September 30, 2010. That order established a 

total combined annual subsidy rate of $3,879,863 for service consisting of three daily nonstop 

round trips (21 per week) between each community and Albany County Airport, with 9-seat 

Cessna 402 aircraft.

In anticipation of the end of the rate term, the Department issued Order 2010-5-32, 

May 28, 2010, requesting proposals from carriers interested in providing replacement service at 

 

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

Essential Air Service at

MASSENA, OGDENSBURG and

WATERTOWN, NEW YORK

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

DOCKET DOT-OST-1997-2842
2

the communities, with subsidy support if necessary, for a new two-year period beginning 

October 1, 2010.

In response to that order, we received proposals from the incumbent, Cape Air, as well as 

Gulfstream International Airlines, Inc. (Gulfstream), and Charter Air Transport, Inc. (Charter 

Air).

The City of Ogdensburg and the Ogdensburg Bridge and Port Authority supported Cape Air, 

while the Massena Town Council and the City of Watertown both endorsed Gulfstream. 

Moreover, neither Massena nor Watertown was willing at that time to waive its statutory 

entitlement to service with 15-seat or larger aircraft.2

We attempt to accede to community views when practical and within budget, but, given the way 

the first round of proposals were packaged, that was not possible. Therefore, by 

Order 2010-10-7, October 8, 2010, we again solicited proposals in an effort to obtain proposals 

that would satisfy the needs of all three communities at competitive subsidy levels.

Carrier Proposals

Again, we received proposals from the same three carriers, Cape Air, Gulfstream and Charter Air 

Transport, all slightly different from the first round of submissions.

Cape Air proposed two service options, both with an associated two-year and four-year subsidy 

rate.3 Under Option 1, for any combination of cities, Cape Air proposes to continue to provide 

each community with three daily nonstop round trips (21 per week) to Albany, but with funnel 

flights continuing on to Boston, at the annual subsidy rates as follows: $1,708,911 ($1,657,644, 

4-yr) for Massena, $1,755,357 ($1,702,697, 4-yr) for Ogdensburg, and $1,665,889 ($1,615,912, 

4-yr) for Watertown. Under Option 2, requiring being selected to serve at least two cities, Cape 

Air proposes to provide three daily nonstop round trips (21 a week) from each community to 

Albany at the annual subsidy rates of $1,519,732 ($1,474,140, 4-yr) for Massena, $1,566,178 

($1,519,193, 4-yr) for Ogdensburg, and $1,476,709 ($1,432,408, 4-yr) for Watertown. Cape Air 

would continue providing all service with 9-seat Cessna 402 aircraft.

Gulfstream proposes four service options – all three-city, all-or-nothing options – all to be 

provided using 19-seat Beech 1900D aircraft. Option 1 proposes two nonstop round trips per 

day, six days a week, between each community and Boston, at the combined annual subsidy rate 

of $7,705,513. Option 2 requires a total annual combined subsidy of $6,392,270 for the 

following service: Watertown – two nonstop round trips per day, six days a week, to Boston; 

Massena – two one-stop round trips per day to Albany, six days a week, and one nonstop round 

trip per day, six days a week, to Boston; Ogdensburg – two nonstop round trips per day to 

Albany, six days a week, and one nonstop round trip a day, six days a week, to Boston. Option 3 

requires a total combined subsidy of $7,030,239 for the following service: Watertown – two 

 

2 49 U.S.C. 41732 guarantees certain service minimums, including service with 15-seat or larger aircraft for most 

communities, including all three communities at issue here.

3 Cape Air proposed two- and four-year subsidy rates for both service options, offering a 3% annual savings for the 

longer term period.
3

nonstop round trips per week, six days a week, to Boston; Massena – one one-stop round trip per 

day, six days a week, to Albany and two nonstop round trips per day, six days a week, to Boston; 

Ogdensburg – two nonstop round trips per week, six days a week, to Albany and one one-stop 

round trips per day, six days a week, to Boston. Lastly, Option 4 would serve only Massena and 

Watertown and would require a combined subsidy of $4,650,963 for the following service: 

Watertown – two nonstop and one one-stop round trips per day, six days a week to Boston; 

Massena – one nonstop and two one-stop round trips per day, six days a week, to Boston.

Charter Air Transport also proposed several service options, either to Albany or Boston, all to be

provided with 30-seat Embraer EMB-120 aircraft; for Massena – 12 nonstop round trips per 

week to Boston at the annual subsidy of $2,830,806, or 12 nonstop round trips per week to 

Albany for $2,331,237; for Ogdensburg – 12 nonstop round trips per week to Boston at 

$2,830,806, or 12 nonstop round trips per week to Albany at $2,331,237; and, finally, Watertown 

service would require $2,411,727 for any of these patterns – 12 nonstop round trips per week to 

Buffalo, 12 nonstop round trips per week to Albany, or a combination of 12 nonstop round trips 

per week to Buffalo and Albany.

Community Comments

We received a large number of comments in response to the carriers’ proposals, both from 

community officials and from the general public.

Mr. Joseph Gray, on behalf of the Town of Massena and its Town Council, supports Cape Air for 

a new two-year term, noting that the community’s needs would be best met with service to 

Albany with a connecting flight to Boston.

The Executive Director of the Ogdensburg Bridge & Port Authority, Mr. Wade Davis, 

recommends that the Department select Cape Air’s Option 1 (Albany/Boston service) for a fouryear term, stating that the Authority has found the carrier to be reliable with a superior 

performance record.

Mayor William D. Nelson, of Ogdensburg, says the City Council voted unanimously to endorse 

Cape Air’s Option 1 for a four-year term, noting that the carrier has maintained exceptional 

service, high customer satisfaction, and exceptional on-time ratings. Additionally, Mayor Nelson 

advised that the Council also voted unanimously to waive the 15-passenger requirement.

Mr. Robert F. Hagemann, Jefferson County Administrator, endorses Gulfstream and believes that 

the carrier most closely matches the progressive business plan for the community of Watertown, 

and can provide the best opportunity to expand air transportation to the region.

Decision

The EAS program’s governing statute (see 49 U.S.C. 41732(b)) guarantees certain service 

minimums. When selecting a carrier to provide EAS, we must also take into consideration 

certain statutory factors, such as service reliability, interline and baggage arrangements with a 

larger carrier to allow for seamless connections beyond the hub, as well as community views

(49 U.S.C 41733(c)).
4

In narrowing the field of options, we first looked at Charter Air Transport.

4 The carrier has 

received no community support, has no interline baggage arrangements, and requires more 

subsidy than other carriers’ options that are supported by the communities. For these reasons, we 

have decided not to select Charter Air Transport.

Cape Air proposes service to all three communities and has the support of Massena and 

Ogdensburg. The carrier has been providing reliable service at the communities since 2008 and 

the carrier’s interline ticketing and baggage-handling agreements with most major carriers will 

continue to ensure convenient connecting opportunities beyond the hub. While Watertown 

endorses Gulfstream, the carrier’s proposal is a three-city, all-or-nothing package, and does not 

offer a Watertown-only option.

Therefore, considering all the facts, including community views and preferences, we have 

decided to select Cape Air to continue providing subsidized EAS at Massena and Ogdensburg, 

and we will again resolicit proposals from carriers interested in providing service at Watertown.

Massena and Ogdensburg

Both communities fully support Cape Air’s proposed service, specifically its Albany/Boston 

option, which would provide each community with three nonstop round trips per day to Albany, 

with service continuing on to Boston. Massena supports Cape Air’s two-year option, while 

Ogdensburg prefers its four-year option. In endorsing Cape Air, the communities understand that 

the carrier would continue providing this service with 9-seat Cessna 402 aircraft and, thereby, 

waive the right to the 15-seat requirement.

Therefore, after taking all of the above into careful consideration, we are hereby selecting Cape 

Air to continue providing subsidized EAS at Massena and Ogdensburg, as proposed, for two-year 

and four-year terms, respectively. Because these options require a change in service pattern that 

includes through service to Boston, we will start the two- and four-year contracts when Cape Air 

inaugurates the new service pattern. We find that the proposed service and subsidy levels are 

reasonable.

We shall make these selections contingent upon the Department’s 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 governing lobbying 

activities.

Watertown

As discussed above, Watertown indicated its preference for Gulfstream, stating that the carrier’s

proposed service would best suit the community’s needs. However, the carrier’s proposal is a 

three-city, all-or-nothing package, and does not offer a Watertown-only option. In addition,

Watertown has not waived its right to service with 15-seat or larger aircraft as is proposed by 

Cape Air. Therefore, given all of the facts, we are left with no choice but to reject the current 

 

4 See Order 2010-9-26 for a complete discussion of Charter Air Transport’s authority to provide EAS.
5

proposals and rebid the case in an effort to obtain proposals offering service that would satisfy 

Watertown’s EAS needs at subsidy levels that are competitive.

Request for Proposals

We are again requesting proposals from carriers interested in providing service at Watertown, 

with or without subsidy support, for a new rate term. Carriers should file their proposals no later 

than February 9. Staff will then docket proposals, thereby making them public, and shortly 

afterwards will provide a summary of the proposals to the communities and ask them for their 

final comments. We will give full consideration to all proposals filed in a timely manner.5

Interested carriers should prepare their proposals with every expectation that their initial 

proposals will also be their final and only proposals. We retain the discretion to negotiate 

proposals with carriers when we deem it desirable. We also retain the discretion to reject 

outright all unreasonable or unrealistic proposals and solicit a new round of proposals.

We are here providing interested carriers with some basic information to serve as guidance when 

they prepare their proposals, but we will not prescribe a precise format for their proposals. We 

expect proposals to adequately describe the service being proposed and the annual amount of 

subsidy being requested. The applicants can make their own judgments as to the level of detail 

they wish to present; however, they might want to include proposed schedules as well as 

supporting data for their subsidy requests, such as projected block hours, revenues and expenses. 

We strongly encourage clear, well-documented proposals that will facilitate their evaluation by 

the affected community and the Department.6

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order 

to assist carriers in developing traffic and revenue projections for their proposals, we have 

summarized historical passengers in Appendix B. For carriers proposing 15-seat or larger 

aircraft, we expect proposals for two round trips a day (12 per week). Service should be to 

Albany, Boston, New York or any hub that offers access to the national air transportation system.

We encourage proposals that meet these requirements in an efficient manner. Carriers are also 

welcome to propose more than one option, if they choose; they need not limit themselves to those 

requirements if they envision other, potentially more attractive service possibilities -- different 

hubs, for example -- with subsidy requirements that remain competitive. Applicants are 

encouraged to work together with the community of Watertown in advance of the due date for 

 

5 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide 

essential air service without subsidy and we determine that service can be reliably provided without such 

compensation, we do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s subsidyfree service as proposed.

6 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c)(1) directs us to consider four 

factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; 

(3) interline arrangements with a larger carrier at the hub; and (4) community views. In addition, the Consolidated 

Appropriations Act, 2008, Public Law 110-161, provides that when selecting a 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. Interested carriers should also be aware that our general provisions governing EAS 

will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C 

of this order contains those general provisions.
6

proposals to craft a service pattern that is desirable to the community and meets the operational 

needs of the airline interested in submitting a proposal.

New Filing Procedures

Carrier proposals should be submitted to the Department with all materials merged into a single 

document. In addition, because the document will be published on Regulations.gov, each page 

should be formatted to be viewed online.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces and nondiscrimination.7 Consequently, all carriers receiving 

Federal subsidy to support essential air service must certify that they are in compliance with 

Department regulations regarding drug-free workplaces and nondiscrimination, and those carriers 

whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in 

compliance with the regulations governing lobbying activities. All carriers that plan to submit 

proposals involving subsidy should submit the required certifications along with their proposals. 

Interested carriers requiring more detailed information regarding these requirements, as well as 

copies of the certifications, should contact the Office of Aviation Analysis at (202) 366-5903. 

The Department is prohibited from paying subsidy to carriers that do not submit these 

documents.8

Community and State Comments

Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, 

we will provide a summary of the proposals to the civic parties and ask them to submit their final 

comments shortly after February 9, the due date for carrier proposals.

Carrier Fitness

49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable 

service before we may subsidize it to provide essential air service. 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 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 

finding. We therefore conclude that the carrier remains fit to conduct the operations proposed 

here.

 

7 The regulations applicable to these areas are: (1) 49 CFR Part 20 – New restrictions on lobbying; (2) 49 CFR 

Part 21 – Nondiscrimination in federally-assisted programs of the Department of Transportation – Effectuation of 

title VI of the Civil Rights Act of 1964; 49 CFR Part 27 – Nondiscrimination on the basis of disability in programs 

and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382 – Nondiscrimination on 

the basis of disability in air travel; and (3) 49 CFR Part 29 – Government-wide debarment and suspension (nonprocurement) and government-wide requirements for drug-free workplace (grants).

8 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.
7

Transitional Subsidy Rates

Cape Air’s previous rate term expired on September 30, 2010. However, the carrier has 

continued to provide service to the communities during the carrier-selection process, and is 

entitled to fair compensation. By Order 2010-11-13, November 12, 2010, the Department set 

short-term subsidy rates from October 1 until further Department action for Cape Air’s provision 

of service, based on its proposed Option 1 (from the first round of proposals), consistent with its 

current level of service – 21 nonstop round trips per week to Albany – requiring a total combined 

annual subsidy of $4,562,619. Those rates will remain in effect until Cape Air changes its 

service pattern to incorporate funnel flights to Boston. At that time, the rates not only for 

Massena and Ogdensburg, but also for Watertown, will be set at Cape Air’s proposed rates for its 

option including funnel flights to Boston, as set forth in detail in Appendix C.

This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. The Department selects Hyannis Air Service, Inc. d/b/a Cape Air, to continue providing 

essential air service at Massena, New York, and establishes the subsidy rate, as detailed in 

Appendix B, beginning on the service date of this order, until the carrier inaugurates the new 

service pattern, then until the 24th month thereafter;

2. The Department selects Hyannis Air Service, Inc. d/b/a Cape Air, to continue providing 

essential air service at Ogdensburg, New York, and establishes the subsidy rate, as detailed in 

Appendix B, beginning on the service date of this order, until the carrier inaugurates the new 

service pattern, then until the 48th month thereafter;

3. We set the final rate of compensation for Cape Air for the provision of essential air service at 

Massena, Ogdensburg and Watertown, payable as set forth in detail in Appendix C;

9

4. The Department finds that Cape Air continues to be fit, willing and able to operate as a 

commuter air carrier and capable of providing reliable EAS at Massena and Ogdensburg, 

New York;

5. We request that carriers interested in providing essential air service at Watertown, New York,

submit their proposals, with or without subsidy requests, no later than February 9, 2011. The 

proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air 

Service at Watertown, New York, Docket DOT-OST-1997-2842”;

10

6. We direct 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 or until the Department indicates that the records 

 

9 See Appendix C for the calculation of this rate, which assumes the use of the aircraft designated. If the carrier 

reports a significant number of aircraft substitutions, a revision of this rate may be required.

10 Questions regarding filings in response to this order should be directed to Dennis DeVany at 202-366-1061, or 

via email at dennis.devany@dot.gov.
8

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;

7. Docket DOT-OST-1997-2842 will remain open until further order of the Department; and

8. The Department will serve a copy of this order on the mayors and airport managers of 

Massena, Ogdensburg and Watertown, Hyannis Air Service, Inc. d/b/a Cape Air, Gulfstream 

International Airlines, Inc., Charter Air Transport, Inc., and the parties listed in Appendix E.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

 and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov
Appendix A

Area Map
Appendix B

Page 1 of 2

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

MASSENA, OGDENSBURG, and WATERTOWN, NEW YORK

(beginning on the service date of this order, until the carrier inaugurates the new service pattern)
Appendix B

Page 2 of 2

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

MASSENA, OGDENSBURG, and WATERTOWN, NEW YORK

(beginning when the carrier inaugurates the new service pattern, thru the 24th month thereafter for 

MSS, the 48th month thereafter for OGS, and until further notice for ART)
APPENDIX C

Page 1 of 7

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

MASSENA, NEW YORK

Effective period: Beginning on the service date of this order, until the carrier 

inaugurates the new service pattern.

Service: 21 nonstop round trips per week to Albany

Aircraft type: Cessna 402 aircraft (9 seats)

Intermediate Stops and 

timing of flights:

No other service to any intermediate or upline communities is 

contemplated; accordingly, no such service would be subsidyeligible without prior Department approval. Flights must be 

well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,519,732

Subsidy Rate Per

Arrival/Departure: $7161

Weekly Compensation 

Ceiling: 2$30,0723

___________________________

1

 Annual compensation of $1,519,732 divided by 2,124 annual arrivals and departures 

calculated as follows: 6 flights per day x 365 days x 97% completion = 2,124.

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $805 multiplied by 42 eligible arrivals and departures.
APPENDIX C

Page 2 of 7

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

MASSENA, NEW YORK

Effective period: Beginning when the carrier inaugurates the new service pattern, 

until the 24th month thereafter (two years).

Service: 21 nonstop round trips per week to Albany, with continuing 

service to Boston.

Aircraft type: Cessna 402 aircraft (9 seats)

Intermediate Stops and

timing of flights:

No other service to any intermediate or upline communities is 

contemplated; accordingly, no such service would be subsidyeligible without prior Department approval. Flights must be 

well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,708,911

Subsidy Rate Per

Arrival/Departure: $8051

Weekly Compensation 

Ceiling: 2$33,8103

___________________________

1

 Annual compensation of $1,708,911 divided by 2,124 annual arrivals and departures 

calculated as follows: 6 flights per day x 365 days x 97% completion = 2,124.

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $805 multiplied by 42 eligible arrivals and departures.
APPENDIX C

Page 3 of 7

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

OGDENSBURG, NEW YORK

Effective period: Beginning on the service date of this order, until the carrier 

inaugurates the new service pattern.

Service: 21 nonstop round trips per week to Albany

Aircraft type: Cessna 402 aircraft (9 seats)

Intermediate Stops and 

timing of flights:

No other service to any intermediate or upline communities is 

contemplated; accordingly, no such service would be subsidyeligible without prior Department approval. Flights must be 

well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,566,178

Subsidy Rate Per

Arrival/Departure: $7371

Weekly Compensation 

Ceiling: 2$30,9543

___________________________

1

 Annual compensation of $1,566,178 divided by 2,124 annual arrivals and departures 

calculated as follows: 6 flights per day x 365 days x 97% completion = 2,124.

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $737 multiplied by 42 eligible arrivals and departures.
APPENDIX C

Page 4 of 7

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

OGDENSBURG, NEW YORK

Effective period: Beginning when the carrier inaugurates new service pattern, 

until the 48th month thereafter (four years).

Service: 21 nonstop round trips per week to Albany, with continuing 

service to Boston.

Aircraft type: Cessna 402 aircraft (9 seats)

Intermediate Stops and 

timing of flights:

No other service to any intermediate or upline communities is 

contemplated; accordingly, no such service would be subsidyeligible without prior Department approval. Flights must be 

well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,702,697

Subsidy Rate Per

Arrival/Departure: $8021

Weekly Compensation 

Ceiling: 2$33,6843

___________________________

1

 Annual compensation of $1,702,697 divided by 2,124 annual arrivals and departures 

calculated as follows: 6 flights per day x 365 days x 97% completion = 2,124.

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $802 multiplied by 42 eligible arrivals and departures.
APPENDIX C

Page 5 of 7

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

WATERTOWN, NEW YORK

Effective period: Beginning on the service date of this order, until the carrier 

inaugurates the new service pattern.

Service: 21 nonstop round trips per week to Albany

Aircraft type: Cessna 402 aircraft (9 seats)

Intermediate Stops and 

timing of flights:

No other service to any intermediate or upline communities is 

contemplated; accordingly, no such service would be subsidyeligible without prior Department approval. Flights must be 

well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,476,709

Subsidy Rate Per

Arrival/Departure: $6951

Weekly Compensation 

Ceiling: 2$29,1903

___________________________

1

 Annual compensation of $1,476,709 divided by 2,124 annual arrivals and departures 

calculated as follows: 6 flights per day x 365 days x 97% completion = 2,124.

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $695 multiplied by 42 eligible arrivals and departures.
APPENDIX C

Page 6 of 7

HYANNIS AIR SERVICE, INC. d/b/a CAPE AIR

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

WATERTOWN, NEW YORK

Effective period: Beginning when the carrier inaugurates new service pattern, 

until further notice.

Service: 21 nonstop round trips per week to Albany, with continuing 

service to Boston.

Aircraft type: Cessna 402 aircraft (9 seats)

Intermediate Stops and 

timing of flights:

No other service to any intermediate or upline communities is 

contemplated; accordingly, no such service would be subsidyeligible without prior Department approval. Flights must be 

well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,665,889

Subsidy Rate Per

Arrival/Departure: $7841

Weekly Compensation 

Ceiling: 2$32,9283

___________________________

1

 Annual compensation of $1,665,889 divided by 2,124 annual arrivals and departures 

calculated as follows: 6 flights per day x 365 days x 97% completion = 2,124.

2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $784 multiplied by 42 eligible arrivals and departures.
APPENDIX C

Page 7 of 7

Example of General Terms and Conditions for Essential Air Service

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 these rates, 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 

amounts or at the stipulated service levels, the carrier may cease to provide service to that 

specific location without regard 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 contracts 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 are not currently available for performance under this solicitation beyond December 3, 

2010. The Department’s obligation for performance under this solicitation beyond December 3, 

2010, is contingent upon the availability of appropriated 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 December 3, 2010, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond 

December 3, 2010, the carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of the last day of service provided 

under this order.
Appendix D

Historical O&D Traffic and Average Daily Enplanements1

at Watertown, New York

Average Daily

O&D Traffic Enplanements2

2007 18,232 29.1

2008* 1,217 1.9

2009 4,832 7.7

________________________________

1 Source: Bureau of Transportation Statistics; TranStats Form 41, Schedule T-100.

2 Daily averages are based on one-half of the O&D passengers, divided by 313 service days (314 during 

leap years).

*Service Hiatus
Appendix E

Scheduled Air Carriers, Contiguous US and Puerto Rico

Air Sunshine, Inc. Jet Air, Daniel Wolford

Air Sunshine, Mirmohammad Adili Kenmore Air, Tim Brooks 

Air West, Inc., John Raatz McCall Aviation and Salmon Air, Dan Scott

Air Wisconsin, Annette Daly McCall Aviation, Michelle

Airline Associates, Bill Mishk Mesa Air, Jonathan Ornstein

Alaska Airlines, Jeff Cole Mesa Air, Michael Lotz 

Alaska Airlines, Sandy Sinick Mesa Air, Mike Holcomb

Allegiant Air, Robert Ashscroft Mesaba, John Spanjers 

American Airlines, Carl Nelson Mesaba, Max Shemesh

American Eagle, Jeffrey Hartz Midstar Airlines, Jeffrey Fonner

Atlantic Southeast, Jon Lindlief Midwest Airlines, Anthony Intravia 

Atlantic Southeast, Roger Weston Midwest Airlines, Greg Aretakis

Bemidji Aviation, Cori Rude Midwest Airlines, J.C. Augustson

Bemidji Aviation, Arlen Rinkenberger MN Aviation, Jose Maldonado 

Cape Air, Andrew Bonney Multi Aero, Darnea

Cape Air, Dan Wolf Multi Aero, Shane Storz

Cape Air, J.Flaherty Northwest, Tim McDonald 

Classic Aviation, Tony Henderson NYDC, Henok Araya

Colgan Air, Mike Colgan OST, Brian Swanson

CommutAir, Andy Price OST, Dennis DeVany

CommutAir, Joel Raymond OST, Kevin Adams

Consultant, Robert Silverberg OST, Kevin Schlemmer

Continental, Bruce Keiner OST, Michael Martin 

Continental, Dan Weiss OST, Renee Williams

Continental, Lorry Halloway Pacific Wings, Frank Ford

Delta, Amy Martin Pacific Wings, Greg Kahlstorf

Delta, Dan Shuman PenAir, Danny Seybert

Delta, Jeff Morgan PenAir, Scott Bloomquist

Delta, Joe Esposito Pinnacle Airlines, Joe Williams 

Delta, Karen Zachary Pinnacle Airlines, Phil Reed

Delta, Sascha Vanderbellen Public Charters, Jim Gallagher

Dorato Jets Scenic, Mary Schneider

Dorato Jets, Mark McKenna Scenic, Mitzi Daines

Era Aviation, Mike Lenorman Seaborne Airlines, Wayne D'Amico

Executive Airlines, Kate Soled SeaPort Airlines, Jim Day 

Frontier Flying, Bob Hajducovich SeaPort Airlines, Rob McKinney

Gem Air, Dan Schroeder Shuttle America, Jerry Balsano 

Gem Air, JoAnn Wolters SkyWest, Eric Christensen

Great Lakes, Chuck Howell SkyWest, Michael Thompson

Great Lakes, Doug Voss Sovereign Air, Bob Karns

Great Lakes, Greg Stephens Sovereign Air, Lois R. Barton

Gulfstream, Dave Hackett Tradewind, Eric Zipkin 

Gulfstream, Mickey Bowman TransStates, Fred Oxley

Gulfstream, T. Cooper Transtates, Gerry Wigmore 

Homeland Security, Bill Ragan United, Alicia Gabriel

Homeland Security, David Bernier United, James Starnes

Homeland Security, Randy Webb US Airways, Benjamin Slocum

Horizon Airlines, Dan Russo US Airways, Howard Kass

Horizon Airlines, Jennifer Thompson US Airways, Jason Reisinger 

Horizon, Jeff Cole Warbelows Air Ventures, Art Warbelow

ICEPR, Luis Irizarry Wings Air (Air Greco), Aaron Goerlich

Island Air Charters, Linda House