HomeMy WebLinkAboutRES.2049.03-21-2005BILL NO. 05-67
RESOLUTION NO. -)CC9
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CAPE GIRARDEAU, MISSOURI,
DIRECTING THE CITY MANAGER TO MAKE
RECOMMENDATIONS TO THE UNITED STATES
DEPARTMENT OF TRANSPORTATION FOR CARRIER
SELECTION PERTAINING TO ESSENTIAL AIR
SERVICE AT THE CAPE GIRARDEAU REGIONAL
AIRPORT
WHEREAS, on December 29, 2004, the United States Department
of Transportation (US DOT) requested proposals from air carriers
interested in providing Essential Air Service to seven
communities, including Cape Girardeau, for a two-year contract;
and
WHEREAS, in selecting a carrier to provide subsidized
essential air service, the US DOT considers the following
factors: 1) service reliability; 2) contractual and marketing
arrangements the applicant has made with a larger carrier to
ensure service beyond the hub airport; 3) interline arrangements
with a larger carrier at the hub; 4) costs to provide the
service; and 5) community views; and
WHEREAS, the US DOT received three proposals for the above-
mentioned service from Great Lakes Aviation, Ltd., Mesa Air
Group, and Corporate Airlines (now called RegionsAir); and
WHEREAS, over the past two months, the Airport Staff and the
Airport Advisory Board have researched these proposals and
interviewed the two top contenders for the service, RegionsAir
and Mesa Air Group, to ascertain the best choice of carrier for
service at Cape Girardeau; and
WHEREAS, after considering each of the airline proposals,
the final recommendations of the Airport Advisory Board are: 1)
to recommend to the United States Department of Transportation to
award the Essential Air Service two-year contract to RegionsAir
to provide scheduled air service between Cape Girardeau and St.
Louis Lambert Airport, and 2) to recommend to the United States
Department of Transportation to award such contract to RegionsAir
utilizing the four daily roundtrip schedules proposed by the
airline in either Option 3 or Option 4 contained in the proposal
submitted by RegionsAir.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
CAPE GIRARDEAU, MISSOURI, AS FOLLOWS:
SECTION 1. The City Council hereby accepts the final
recommendations of the Airport Advisory Board pertaining to
carrier selection for Essential Air Service at the Cape Girardeau
Regional Airport, and directs the City Manager 1) to recommend to
the United States Department of Transportation to award the
Essential Air Service two-year contract to RegionsAir to provide
scheduled air service between Cape Girardeau and St. Louis
Lambert Airport, and 2) to recommend to the United States
Department of Transportation to award such contract to RegionsAir
utilizing the four daily roundtrip schedules proposed by the
airline in either Option 3 or Option 4 contained in the proposal
submitted by RegionsAir.
PASSED AND ADOPTED THIS DAY OF 20j .
Gayle L. P(�nrad, City Clerk
J B. Knudtson, Mayor
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03/17/2005 10:06 5733340499 CAPE AIRPORT PAGE 02
March 1 b, 2005
The Honorable Mayor
and
Members of the City Council
City of Cape Girardeau, Missouri
Subject. Recommendations to the United States Department of Transportation for
Carrier Selection Pertaining to Essential Air Service
BACKG OiTND
On December 29, 2004, the United States Department of Transportation requested
Proposals to carriers interested in providing Essential Air Service to seven communities
for a two-year contract. Those communities included: Burlington, .Iowa, Cape Girardeau,
Missouri, Ft. Leonard Wood, Missouri, Jackson, Tennessee, Marion/Herrin, Illinois,
Owensboro, Kentucky, and Kirksville, Missouri.
In selecting a carrier to provide subsidized essential air service, the U.S. DOT considers
the following four factors:
1) service reliability
2) contractual and marketing arrangements the applicant has made with a larger
carrier to ensure service beyond the hub airport
3) interline arrangements with a larger carrier at the hub
4) community views
Obviously, the costs to provide the service is also factored in by the U.S. DOT.
The U.S. DOT received three proposals for the above-mentioned service. These
proposals were from Great Lakes Aviation, Ltd., Mesa Air Group, and Corporate Airlines
(now called RegionsAir). A summary of our comments from the airline interviews and
the pros and cons of each proposal are outlined below.
PROPOSALS
Great Lakes Aviation, Ltd.
The proposal by Great lakes Aviation for service between Cape Girardeau and St. Louis
has not been seriously considered at this time due to the lack of a code share relationship
with a major airline combined with the fact that we currently have daily service to St.
Louis. While we have great respect for Chuck Howell, the President and CEO of the
airline, it would not make sense for Cape Girardeau to select Great Lakes Aviation when
we already have equivalent service provided by RegionsAir with the American Airlines
code share relationship. RegionsAir also has a respectable history for reliability and on-
time performance.
Mesa Air Group
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5733340499
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PAGE 03
Order 2004-12-13
Served: December 29, 2004
4�of rp
UNITED STATES OF AMERICA.
DEPARTMENT OF TRANSPORTATION
QFFICE OF THE SECRETARY
`sr�r�s WASHINGTON, D.C.
Issued by the Department of Transportation
on the day of December, 2004
Essential Air Service at
�A-- BURLINGTON, IOWA
CAPE GIRARDEAU, MISSOURI
FT. LEONARD WOOD, MISSOURI
JACKSON, TENNESSEE
- MARION/HERRIN, ILLINOIS
OWENSBORO, KENTUCKY
7 KIRKSVILLE, MISSOURI
Under 49 U.S.C. 41731 et
Docket OST -2001-8731
Docket OST -1996-1559
Docket OST -1996-1167
Docket OST -2000-7857
Docket OST -2000-7881
Docket OST -2000-7855
Docket OST -1997-2515
ORDER REQUESTING PROPOSALS, AND ORDER TO SHOW
CAUSE TENTATIVELY TERMINATING SUBSIDY ELIGIBILITY
AND ALLOWING SUSPENSION OF SERVICE
Summary
By this order, the Department is requesting interested persons to show cause why we
should not terminate the essential air service (EAS) subsidy eligibility of Kirksville,
Missouri, and allow Corporate Airlines, Inc., d/b/a American Connection (Corporate), to
suspend its subsidized service_ The Department is also requesting proposals from carriers
interested in providing EAS at the other communities identified above for new two-year
periods. Proposals to provide subsidized EAS at each of the above communities, as well
as objections to the Department's tentative decision to terminate the subsidy eligibility of
03/17/2005 10:06 5733340499 CAPE AIRPORT PAGE 04
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Kirksville, are due within 30 days of the service date of this order. An Area Map is
attached as Appendix A.
Background
Corporate is the only carrier providing scheduled service at each community. The carrier
was selected to provide EAS at each community, for the two-year period indicated in the
respective orders as follows: at Burlington — by Order 2001-6-16, June 20, 2001, to
provide 18 weekly nonstop round trips to St. Louis for an annual subsidy of $929,085; at
Cape Girardeau and Ft. Leonard Wood -• by Order 2000-5-3, May 2, 2000, to provide 19
nonstop round trips each week between Cape Girardeau and St. Louis for an annual
subsidy of $430,925, and to provide 18 nonstop round trips each week between Fort
Leonard Wood and St. Louis for an annual subsidy of $573,725; at Jackson and
Owensboro — by Order 2001-3-21, March 21, 2001, to provide each community with
twelve nonstop round trips each week to St. Louis for the annual subsidy rates of $$$8,$63
and $1,077,812 respectively; at Marion/Herrin — by Order 2000-12-27,
December 29, 2000, to provide 26 weekly nonstop round trips to St. Louis for an annual
subsidy of $794,031; and at Kirksville — by Order 200.0-10-33, October 27, 2000, to
provide twelve nonstop round trips each week to St. Louis for an annual subsidy of
$732,363.
As these contracts expired, the Department issued Order 2003-5-12, served May 14, 2003,
which set final subsidy rates for Corporate's provision of EAS from the expiration of
their respective contracts at each community, until further Department action, as shown
in the table below. By this order, the Department is now soliciting routine carrier
proposals from carriers interested in providing EAS at any or all of the above
communities, except Kirksville, for new two-year periods.
Community
Order 2003-5-12
Annual Rates
Weekly Nonstop Round
Trips to St Louis
Burlin ton, IA
Cape Girardeau MO
$999,412
$990,694
18
19
Ft. Leonard Wood, MO
$885,918
18
Jackson, TN
$1,156,325
12
Marion/Herrin, IL
$1,253,076
26
Owensboro KY
$1,032,673
12
Kirksville, MO
$968,249
12
Tentative Decision for Kirksville
With the end of the current rate term approaching, we conducted a review of the
communities' traffic results in anticipation of requesting carrier proposals for a new rate
term beginning at the end of their current two-year terms. During calendar year 2003,
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Burlington averaged 24.0 enplanetnents a day, Cape Girardeau 23.7, Ft, Leonard Wood
20.0, Jackson 14.0, Marion/Herrin 34.6, Owensboro 17.6, and Kirksville 7.1. The
Department is prohibited from subsidizing service at communities where the subsidy
amounts to more than $200 per passenger, unless they are more than 210 highway miles
from the nearest large or medium hub. I Based on the 2003 traffic level of 4,428
passengers and the current subsidy rate of $968,249, Kirksville's subsidy per passenger is
$218.67 and, thus, exceeds the $200 -per -passenger ceiling. Appendix. A contains
historical traffic data, and, as can be seen, traffic has not increased in the first eight months
since 2004, so the community remains over the statutory cap. As a result, the Department
has tentatively concluded that the subsidy cost to serve Kirksville exceeds $200 per
passenger, that the community is within 210 highway miles (149 miles) of the medium -
hub airport at Kansas City, and that the community is no longer eligible to receive
scheduled airline service subsidized under the EAS program.
Objections
We will give interested persons 30 days after the service date of this order to submit
objections to our tentative decision to terminate the subsidy eligibility of Kirksville.
Objections should be fully documented and contain complete information on the data used
by the person objecting. In particular, we are prepared to review our tentative decision
here if the Kirksville community can demonstrate that Corporate or any other operating
carrier is prepared to submit credible service proposals for a new rate term with subsidy
requirements of less than $200 per passenger. We therefore encourage the community to
work with Corporate and other carriers to develop such proposals, including those with
smaller aircraft, and to include them as part of any objections.2
Request for Proposals
We request that any carriers interested in providing essential air service at any or all of the
communities, including Kirksville, and with or without subsidy, file their proposals within
30 days of the service date of this order. With respect to each community, we expect
proposals consisting of service, at a minimum, with two -pilot, twin -engine aircraft with at
least 15 passenger seats, and offering two or three one-stop or nonstop round trips each
weekday and each weekend period to St. Louis or any other suitable hub such as Kansas
City or Memphis. Carriers are also welcome to propose more than one service option, if
they choose; they need not limit themselves to those basic requirements if they envision
other, potentially more attractive service possibilities -- different hubs, for example -- with
I Congress first imposed the $200 ceiling in fiscal year 1490 appropriations languagc, repeated it in several
later appropriations, and then made it permanent by the Department of Transportation and Relved Agencies
Appropriations Act, 2000, P.L. 106-69,
Z We usually allow 20 days for objections in show -cause proceedings such as this one. However, because
we want to give the Kirksville community ample time to work with carriers in developing proposals under
the $200 ceiling, we arc allowing 30 days for objections in this case -- the same amount of time we arc
allowing for carriers to submit proposals for the other communities.
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subsidy requirements that remain competitive. We will give full consideration to all
proposals that are timely filed.3 At the end of the 30 -day period, our staff will docket any
proposals that we receive, thereby making them public, and also direct each carrier to
serve a copy of its proposal(s) on the Mayor and airport manager of the respective
community(s) and on any other applicants.
We note that Cape Girardeau and Owensboro have received grants from the Department
under the Small Community ,Air Service Development Program authorized by the AIR -21
legislation. We expect both communities to use portions of their grants to subsidize
additional service in an effort to increase demand and ultimately make the Iocal services
self-sufficient.
When making their subsidy and cost projections, prospective carriers should also note that
the Department is precluded from subsidizing service at any community where the subsidy
exceeds $200 per passenger and they are within 210 highway miles of a medium or large
hub. Based on the current subsidy rates and the historical passenger traffic shown in
Appendix A, both Jackson and Owensboro are close to the $200 -per -passenger ceiling.
New Procedures
The preceding section refects streamlined carrier -selection procedures that we first
introduced in Order 2003-8-10 for the EAS program generally and are continuing here. In.
the past, we have accepted initial carrier proposals, reviewed there, and then negotiated
final proposals with each applicant before formally presenting them to the community and
asking it to submit any final comments. We found that a two-step process was generally
necessary because, in most cases, the incumbent carrier was the only one interested. As a
result, we had been unable to rely on competition to discipline carrier subsidy requests,
and communities had to wait on a protracted negotiation and selection process. More
recently, however, most orders requesting essential air service proposals have drawn
interest from at least two carriers and sometimes more. Under these circumstances, we
expect that competition among multiple carriers will ensure reasonable subsidy requests,
obviate the need for rate negotiations, and allow us to streamline the carrier -selection
process.
Consequently, interested carriers should prepare their proposals with every expectation
that their initial proposals will also be their final and only proposals.4 We retain the
discretion to negotiate proposals when we deem it desirable; in such cases, of course, we
3 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.
4 For this reason, we will allow carriers 30 days to submit their proposals, rather than just 20 as in the past.
Because the new procedures anticipate that a carrier's first proposed will also be its final proposal, we expect
to enforce our filing deadlines more stringently than in the past. Carriers should not expect the Department
to accept late filings. The additional 10 days will comfortably accommodate the additional time carriers
may find necessary to prepare their proposals.
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will give all applicants the same opportunity. Further, we anticipate that we will continue
to negotiate rates in cases where there is only a single interested carrier, as is typically the
situation in Alaska. We also retain the discretion to reject outright all unreasonable or
unrealistic proposals; and to resalieit a new round of proposals when necessary. However,
we anticipate that negotiation or rejection will remain only occasional exceptions to the
rule_
We are here providing interested carriers with some basic information to help guide the
preparation of their proposals, but we will not prescribe a precise format for them to
follow. We expect proposals to adequately describe the service being proposed and the
annual amount of subsidy being requested. Applicants can make their awn 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 review and evaluation by local officials and the Department. We
do not anticipate any change in our selection criteria, nor in the general provisions
governing subsidy payments for essential air service.5
Historical Traffic
In order to assist prospective applicants in making traffic and revenue forecasts, we have
included historical passenger data from 1993 through August 2004 in Appendix A. As
can be seen in Appendix B, traffic levels at all of the communities, except Cape Girardeau
and Marion/Herrin, are still below pre -9/11 levels_
Other Carrier Requirements
The Department is responsible for implementing various Federal statutes governing
lobbying activities, drug-free workplaces, and nondiscrimination.6 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 $100,000 over the life of the
rate term must also certify that they are in compliance with regulations governing
lobbying activities. All carriers that plan to submit proposals involving subsidy should
submit the required certifications along with their proposals. Interested carriers requiring
5 in selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733 directs us to consider four
factors: (1) service reliability; (2) contractual and marketing arrangements the applicant has made with a
larger carrier to ensure service beyond the hub airport ; (3) interline arrangements with a larger carrier at the
hub; and (4) community views.
6 The regulations applicable to these areas are: (1) 49 M. Part 20 -- New restrictions on lobbying; (2) 49
CFR Part 21 --Nondiscrimination in federally -assisted programs of the Department of Transportation —
Effectuation of title Vl of the Civil Rights Act of 1964; 49 CFR Part 27 — Nondiscrimination on the basis of
disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR
Part 382 - Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29 — Government -
wide debarment and suspension (non -procurement) and government -wide requirements for drug-free
workplace (grants)_
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more detailed information regarding these requirements as well as copies of the
certifications should contact the Office of Aviation Analysis at (202) 366-1053. The
Department is prohibited from paying subsidy to carriers that do not submit these
documents.'
Community and State Comments
The communities and states are welcome to submit comments on the proposals at any
time. As noted earlier, however, we will provide a summary of the proposals to the civic
parties and ask them to submit their final comments shortly after the end of the 30 -day
period for carrier proposals.$
This order is issued under authority delegated in 49 CFR 1.56a(f),
ACCORDINGLY,
1. We request that carriers interested in providing essential air service at one or all of the
above communities submit their proposals, with or without requests for subsidy, within 30
days of the service date of this order_ An original and five copies of the proposal should
be sent to the EAS and Domestic Analysis Division, X-53, Office of Aviation Analysis,
Room 6401, Department of Transportation, 400 7"' Street, S.W., Washington, D.C. 2090,
with the title: "Proposal to Provide Essential Air Service at Burlington, Iowa, Docket
OST -2001-8731, or Cape Girardeau, Missouri, Docket OST -1996-1559, or Ft. Leonard
Wood, Missouri, Docket OST -1996-1167, or Jackson, Tennessee, Docket OST -200-7857,
or Marion/Herrin, Illinois, Docket OST -2000-7881, or Owensboro, Kentucky, Docket
OST -2000-7$55, or Kirksville, Missouri, Docket OST -1997-2515";'9
2. We tentatively terminate the essential air service subsidy eligibility of Kirksville,
Missouri, 30 days after the service date of this order;
3. We tentatively allow Corporate Airlines, Inc., to suspend its services at Kirksville,
Missouri, 30 days after the service date ofthis order;
4. We direct all interested persons to show cause within 30 days of the date of service of
this order why we should not make final the tentative findings and conclusions set forth
The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.htrni,
a Civic parties should file an original and two copies of their comments in Docket OST -2001-8731
(Burlington), Docket OST -1996.1559 (Cape Girardeau), Docket OST -1996-1167 (Ft_ Leonard Wood),
Docket OST -1997-2515 (Kirksville), Docket OST -2000-7857 (Jackson), Docket 0ST-2000-7881
(MarimMerrin), and Docket OST -2000-7855 (Owensboro). This filing should be addressed to: EAS &
Domestic Analysis Division, X-53, Office of Aviation Analysis, Room 6401, Department of Transportation,
400 7th Street, S.W., Washington, DC 20590.
9 Carriers should also provide copies of their proposals to the Mayor and Airport Manager of each
community they are submitting a proposal for, and to the respective Governor and responsible stats aviation
or state transportation official for each community_ Questions regarding filings in response to this order may
be directed to Mike Waters at (202) 366-6494.
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above- Objections should be filed with the Documentary Services and Media
Management Division, M-30, Room PL -401, 400 7th Street S.W., Washington, DC
20590;
5. In the event that no objections are filed, all further procedural steps will be deemed
waived and this order shall become final on the 31" day following its date of service;
b. If this order becomes final as stipulated above, and Corporate decides to suspend
service on or after that date, the carrier shall contact all passengers who hold reservations
for flights that will be suspended, inform therm of the suspension, and assist them in
arranging alternate transportation;
7. These dockets will remain open until further order of the Department; and
8. We will serve copies of this order on the Mayors and airport managers of Burlington,
Iowa; Cape Girardeau, Ft. Leonard Wood, and Kirksville, Missouri; Owensboro,
Kentucky; Marion and Herrin, Illinois; and Jackson, Tennessee. We will also serve copies
of this order on the Governors of Iowa, Missouri, Kentucky, Illinois, and Tennessee; the
Commanding Officer of the U.S. Army Engineer Center and Fort Leonard Wood, the
Aviation Staff of the Iowa Department of Transportation, the Aviation Section of the
Missouri Department of Transportation, the Division of Aeronautics of the Kentucky
Transportation Cabinet, the Division of ,Aeronautics of the Illinois Department of
Transportation, and the Aeronautics Division of the Tennessee Department of
Transportation; Corporate Airlines, Inc.; and the carriers listed in Appendix C.
By.
KARAN K. BHATIA
Assistant Secretary for Aviation
and International Affairs
(SEAL)
An electronic version of this document is available on the World Wide Web at
h11n:11drav,d01.gov