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United States of America Department of Transportation Office of the Secretary Washington, D.C

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United States of America Department of Transportation Office of the Secretary Washington, D.C Order: 2011-3-28 Served: March 22, 2011 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 22nd day of March, 2011 Essential Air Service at MAYAGUEZ, PUERTO RICO DOCKET DOT-OST-2004-19622 under 49 U.S.C. 41731 et seq. ORDER RE-SELECTING CARRIER Summary By this order, the Department is re-selecting Hyannis Air Service Inc., operating as Cape Air (Cape Air), to provide essential air service (EAS) using 9-seat Cessna 402 aircraft at Mayaguez, Puerto Rico, for the five-year period beginning May 1, 2011, through April 30, 2016, for an annual subsidy of $1,198,824.1 Background By Order 2009-3-1, March 3, 2009, the Department selected Cape Air to continue providing EAS at Mayaguez and Ponce from May 1, 2009, through April 30, 2011. That order established annual subsidy rates of $980,980 and $740,416 at Mayaguez and Ponce, respectively, for service consisting of four daily nonstop round trips to San Juan, with 9- seat Cessna 402 aircraft. As the end of the contract was approaching, we issued Order 2010-12-31, December 23, 2010, requesting proposals to serve only Mayaguez for a new term. In response to our request, three airlines submitted proposals: Air Sunshine, Inc. 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds. - 2 - (Air Sunshine), Cape Air, and Seaborne Virgin Islands, Inc., (Seaborne). Because Ponce also receives subsidy-free jet service on a daily basis – one round trip to Orlando and one round trip to New York – provided by JetBlue, using 150-seat Airbus A320 aircraft, we decided not seek proposals for EAS replacement service.2 Each carrier’s complete proposal and community comments may be accessed online at http://www.regulations.gov/ by entering Docket number DOT-OST-2004-19622 in the search block. Proposal of Air Sunshine Air Sunshine proposed four nonstop round trips a day (28 round trips a week) to San Juan using 9-seat Cessna 402 Caravan aircraft for an annual subsidy of $980,000. Proposal of Cape Air Cape Air proposed four nonstop round trips a day (28 round trips a week) to San Juan using 9-seat Cessna 402 aircraft for an annual subsidy of $1,228,923 for a two-year contract, or an annual subsidy of $1,198,824 for a five-year contract. Proposal of Seaborne Seaborne proposed two daily nonstop round trips (14 round trips a week) to San Juan using 19-seat de Havilland DHC-6-300 aircraft for an annual subsidy of $855,532. Community Comments On January 24, 2011, we requested community comments regarding this carrier-selection case, and, in response, we received two letters, both supporting Cape Air’s proposal. José Guillermo Rodriguez, Mayor of Mayaguez, strongly recommended that the Department re- select Cape Air, and requested the airline’s five-year option, stating the airline “has been efficient and acceptable to our community”, and Arnaldo Deleo, General Manager for Luiz Munoz Marin International and Regional Airports, also wrote in support of Cape Air’s proposal, pointing out that Cape Air has successfully served the community since 2005 and that it provides an important air link between Mayaguez and San Juan. Decision After carefully reviewing each carrier’s proposal and taking into account community feedback, we have decided to select Cape Air’s five-year proposal of four Mayaguez-San Juan nonstop round trips a day (28 a week) for an annual subsidy of $1,198,824. We base our decision on the four carrier-selection criteria contained in 49 U.S.C. §41733(c): 1) the demonstrated reliability providing scheduled air service; 2) the contractual and marketing arrangements with a larger carrier to ensure service beyond a hub airport; 3) interline agreements with a larger carrier; and 4) support by the community’s elected officials for the applicant’s proposal. 2 The community has filed a Petition for Review of that decision and we are handling that in a separate proceeding in the Ponce Docket, DOT-OST-1999-6592. - 3 - Cape Air’s proposal meets all four statutory criteria. Cape Air is a well-established scheduled air carrier serving communities throughout the U.S., and, in the case of Mayaguez, has provided the community reliable air service for several years. Cape Air has a code share with Continental Airlines and, therefore, can provide its passengers connections beyond the San Juan hub to the national air transportation network with relative ease. Cape Air, through its code share with Continental Airlines, has interline agreements with most major air carriers, enabling passengers to reach their destination with one reservation, ticket, and baggage check-in. Lastly, the community, in particular, the elected officials, overwhelming supports Cape Air’s proposal. Neither Air Sunshine nor Seaborne received any community support, and in the case of Seaborne, the airline currently does not have any interline agreements with a larger airline, which we note above is a requirement for selection to provide EAS. Finally, as between Cape Air’s two-year or five-year option, the community supports Cape Air’s five-year proposal, and it offers some subsidy savings to the Department, so we will select the five-year option. We shall make this selection of Cape Air at Mayaguez contingent upon the Department’s receiving properly executed certifications from the carriers that they are in compliance with the Department’s regulations regarding drug-free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. 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 findings. We therefore conclude that the carriers remain fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f). ACCORDINGLY, 1. We select Hyannis Air Service, Inc. to provide essential air service at Mayaguez, Puerto Rico, and establish an annual subsidy rate of $1,198,824, as described in Appendix C; 2. We direct Hyannis Air Service, Inc. 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 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; 3. We find that Hyannis Air Service, Inc. continues to be fit, willing and able to operate as a commuter carrier, and capable of providing reliable essential air service at Mayaguez; - 4 - 4. This docket will remain open pending further Department action; and 5. We will serve copies of this order on the Mayor of Mayaguez, Air Sunshine, Inc., Hyannis Air Service, Inc., and Seaborne Virgin Islands, Inc. By: SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is available on the World Wide Web at http://www.regulations.gov Appendix A AREA MAP Appendix B Appendix C Hyannis Air Service, Inc. Essential Air Service to be Provided at Mayaguez, Puerto Rico Effective Period: May 1, 2011 through April 30, 2016 Scheduled Service: 28 weekly nonstop round trips between Mayaguez and San Juan Aircraft: 9-seat Cessna 402 Rate per Eligible Flight: $423;1 Weekly Ceiling: $23,6882 Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulations of the rate order, including the service plans outlined in the order and any other significant elements of the required service, without prior approval. The carrier understands that an aircraft take-off and landing at its scheduled destination constitutes a completed flight; absent an 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.
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