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OST-00-7556

Commutair

By:  Commutair, Joel Raymond, 518.562.2700

Commutair

Order 2000-9-5 is prohibiting CommutAir, Inc., d/b/a US Air Express (CommutAir) from terminating its unsubsidized scheduled air service at Utica, New York, (b) requiring the carrier to maintain its current service at the community for an initial 30 day period following the end of the notice period, and (c) requesting proposals from carriers interested in providing replacement service

By:  Francisco Sanchez

Commutair

By:  Randall Bennett

Commutair

By:  Randall Bennett

Commutair

By:  County of Oneida, Ralph Eannace

Commutair

By:  Randall Bennett

Commutair

By:  Randall Bennett

CommutAir

Counsel:  Champlain Enterprises, Andrew Price

Commutair

By:  Randall Bennett

Commutair

The New York State Department of Transportation would like to submit this letter of support for the proposal for air service between Utica/Rome and JFK International Airport. The letter is intended to express support for the service to JFK, or any other Port Authority of New York and New Jersey airport in the New York City metropolitan area, regardless of the carrier providing the service. We are aware that, at this point, Commutair (d.b.a. Continental Connection) is proposing to serve this route if it obtains federal Essential Air Service (EAS) program support. Even though JFK does not offer the same connection possibilities that exist at Newark or LaGuardia airports, the service to JFK airport would offer Utica travelers access to a major hub with excellent service to the rest of the nation and to international destinations.

The community of Utica/Rome has strongly indicated that service to the New York City metropolitan area would be preferable over the current service to Boston via Syracuse. The NYSDOT agrees that this is a more logical route for the Utica market. A recent survey by the local Chamber of Commerce found that New York City was the top destination for local travelers.

By:  State of New York Department of Transportation, Joseph Boardman

Essential Air Serivce to Utica, NY and Rutland, VT; Augusta/Waterville, Bar Harbor, and Rockland, Maine, and Rutland, Vermont

Counsel:  Cape Air/Nantucket Airlines, Scott LaForge 

Commutair

By:  Randall Bennett

Commutair

By:  Dennis DeVany

Essential Air Serivce to Utica, NY and Rutland, VT; Augusta/Waterville, Bar Harbor, and Rockland, Maine, and Rutland, Vermont

Counsel:  Cape Air/Nantucket Airlines, Scott LaForge 

Commutair

By:  Susan McDermott

Commutair

By:  County of Oneida, Ralph Eannace 

Commutair

By this order we are selecting Champlain Enterprises, Inc., d/b/a CommutAir to provide essential air service (EAS) at Utica/Rome, New York, consisting of two nonstop round trips per day to New York City (JFK) for $1,133,415 annually.

By:  Susan McDermott

CommutAir

By:  Randall Bennett

Commutair

We have recently received inquiries from several carriers who expressed interest in serving the Utica/Rome market but did not have sufficient time before the filing deadline to complete their analyses of the market. In view of this fact, and the fact that no long-term proposals were received in response to our first request, we have decided to issue another request for proposals.

In the meantime, on December 2 CommutAir changed its code-share affiliation from US Airways Express to Continental Connection and now provides two round trips a day over a Utica/Rome-Syracuse-Boston routing. The hold-in rate being negotiated with the carrier provides for three round trips a day to Boston over either Syracuse or Albany. The carrier has indicated that it will be able to operate the third round trip starting on or about February 1, 2001.

By:  Francisco Sanchez

Essential Air Services At Muscle Shoals, AL; Owensboro Davies County Regional Airport; Jackson, TN; Topeka, Kansas; Alamogordo/Hollman AFB, New Mexico; Hot Springs and Jonesboro, Arkansas; Pueblo, Colorado; Hana, Hawaii; Kamuela, Hawaii; Augusta/Waterville; Oneida County Airport; Massena, New York; Enid, OK; Oil City/Franklin, Pennsylvania; Ponce, Puerto Rico; Oshkosh, Wisconsin

Because a $50 million budget can no longer cover the program's current commitments, the Administration's budget proposal also includes a proposal to revise some of the standards under which communities are ineligible for subsidy-supported scheduled air service. Under the proposed revisions, communities would not be eligible if they are:

• Located within 100 highway miles of the nearest large or medium hub airport² The current standard is 70 highway miles for both large and medium hubs. Located within 70 highway miles of the nearest small hub airport. There is no current standard addressing communities' proximity to small hub airports.
• Located within 50 highway miles of the nearest non-hub airport offering jet service. There is no current standard addressing communities' proximity to non-hub jet service.

The statutory prohibition against continuing to subsidize communities requiring subsidy of more than $200 per passenger, except for exceptionally isolated points, would remain unchanged.  The proposed revisions would allow the Department to continue to meet its core obligation of ensuring that truly isolated communities continue to receive at least a minimum level of scheduled air service and thereby remain connected to the national air transportation system. At the same time, it would curtail spending for local service at communities that are within reasonable driving distances of service at other airports.

In light of the program's current spending rate and the Administration's budget proposal, we have decided to issue this statement of proposed policy now, to give the communities and carriers ample notice of the program reductions that we will implement in the event that Congress enacts them into law. Those reductions will result in the termination of subsidy at the 17 communities listed below as of October 1, 2001 -- the first day of fiscal year 2002 -- and will allow the carriers providing subsidized service at those communities to discontinue service on the same date, if they choose, without the need to provide individual notice. Implementation of the reductions at the very outset of the next fiscal year is necessary for program spending to remain within the proposed $50 million budget. Waiting to initiate the process until Congress has already acted could delay implementation of the reductions and require us to make even deeper program cuts, affecting more communities, in order to remain within our budgetary constraints.

By:  Susan McDermott

Commutair

By:  County of Oneida, Ralph Eannace

Commutair

By this order, the Department is tentatively terminating the subsidy eligibility of Utica/Rome, New York, after June 30, 2002, because the cost of subsidizing each passenger using the local airport exceeds the $200 per passenger statutory ceiling.  The issue of terminating subsidy for air service at any community is a very serious one and not one we make lightly, especially at a community such as Utica/Rome that generated as many as 24,000 passengers a year as recently as 1998. As discussed below, current and recent usage levels are far below that. The community was served subsidy­-free until CommutAir filed a notice to terminate its service on June 21, 2000, simultaneous with the precipitous drop in passenger traffic. We subsequently issued Order 2001-3-31 on March 30, 2001, setting a subsidy rate of $1,133,415. There were 4,000 forecast passengers in the subsidy rate, a level in excess of the $200 per passenger cap. However, our long-standing program policy has been to use actual passenger levels rather than forecast, on the grounds that forecast passengers are estimates at best. We would not terminate a community's subsidy eligibility based solely on forecasts. As it has turned out, passenger levels at Utica/Rome are well below even the forecast levels.

It appears that the aviation landscape for Utica/Rome has changed fundamentally in ways that are not likely to reverse themselves. First, on May 8, 2000, Southwest Airlines inaugurated service at Albany. Southwest is the largest low-fare carrier in the nation and its effects on passenger demand are well documented. In short, the evidence is clear that passengers will drive long distances to take advantage of low-fare jet service, such as Southwest's. And low-fare service tends to discipline the market, i.e., the other carriers at the hub tend to lower their fares, further increasing the attractiveness of the hub. In this case, the Albany airport is only 90 miles east of Utica via the New York State Thruway, I­90. There is no question that the presence of Southwest at nearby Albany has contributed to the dramatic decline in passengers using the local Utica/Rome airport.

JetBlue Airlines inaugurated service at Syracuse on May 7, 2001. It also is a low-fare jet carrier. The Syracuse airport is only about 49 miles west of Utica, also via the New York State Thruway. In addition to the attraction of JetBlue's low-fare jet service, Syracuse has been a small hub airport for many years. It is served by Delta Air Lines, Northwest Airlines, United Air Lines, US Airways and American Airlines, offering nonstop jet service to a number of destinations. Given the recent advent of low-fare jet service by Southwest only 90 miles away at Albany, and by JetBlue only 49 miles away at Syracuse, it is highly unlikely that Utica/Rome's enplanements will reverse their trend and start growing again.

By:  Read Van de Water

Essential Air Service at Massena, Ogdensburg, Watertown and Utica, NY (Oneida Country Airport)

Utica/Rome recommends the USDOT consider the following short-term solutions: Suspend the current order recommending the elimination of EAS cities, pending further review by Congress in upcoming sessions. Alternatively, instead of eliminating these cities, consider the following: Rather than eliminate subsidies to Utica/Rome, New York, and other communities, temporarily reduce the number of subsidized round trip flights by one each day to communities within 150 miles of a hub airport, if more than two roundtrips a day currently exist. The immediate goal is to maintain air service in these communities.

The most potentially successful solution to the loss of EAS subsidy would be combining the current subsidies for Utica and the proposed subsidy for the extension to Watertown and combining the passenger figures for the two airports.

The state of small community air service is so precarious that any hesitation in addressing the problems associated with loss of air service to small communities will not only have a serious impact on local economies, but will significantly impact interstate commerce. We ask that you stay the implementation of the most recent cuts to affected cities.

By:  Stephen Pearce, 315.798.5910

This letter presents the recommendations of the New York State Department of Transportation regarding air service supported under the Essential Air Service (EAS) program affecting the communities of Massena, Ogdensburg, Watertown, and Utica (Oneida County Airport). NYSDOT's recommendations address the air service needs of each of the communities while working within program policies of the federal government. The interrelationship of the air service option among all four communities means that no decision should be made regarding service to Utica independent of the service proposals to Massena, Ogdensburg, and Watertown.

By:  NY DOT, Steven Lewis, 518.457.2821

Commutair

We are denying the objections of NYDOT and the Utica/Rome Airport. We disagree with much of the Airport and NYDOT's comments, especially as they relate to the $275 subsidy-per-passenger cap. First, that eligibility standard is one that has been proposed by the administration for fiscal year 2003; however, under current law, only Congress can establish eligibility criteria -- not the Department of Transportation. Further, under the administration's proposal, the $275 cap would be in addition to, not in lieu of, the current $200 cap. Under the current standards, the Department is prohibited from subsidizing air service at communities in the lower 48 states where the subsidy per passenger exceeds $200, unless that community is more than 210 miles from the nearest large and medium hub airport. The administration's proposed $275 ceiling, on the other hand, is a hard cap, i.e., we would be prohibited from paying subsidy to any community whose subsidy-per-passenger exceeded $275, regardless of isolation, the only exception being the State of Alaska.

Stepping back from the mechanics of the calculations, neither the Airport nor NYDOT dispute the fundamental facts of the case, and they have not changed. As we stated in the show-cause order, Southwest Airlines has served Albany with low-fare jet service since May 2000, and the Albany airport is about 90 highway miles away on the New York State Thruway. In addition, JetBlue inaugurated low-fare jet service at Syracuse, about 49 miles away, also via the New York State Thruway, on May 7, 2001. Since Southwest inaugurated service at Albany, Utica's traffic has fallen significantly. With JetBlue now at Syracuse, and with the abundant amount of additional service available from other carriers at both Albany and Syracuse, we see little chance of a reversal of passengers' continuing to drive to these two airports to take advantage of the low-fare jet service.

By:  Read Van de Water

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