Monday, May 23, 2016

Tupelo Regional Airport (KTUP) to appeal termination of air service subsidy, expects to get waiver

Tupelo Regional Airport officials will ask for a waiver from the U.S. Department of Transportation, which on Friday ordered the temporary termination of the Essential Air Service program at 30 communities across the country, including Tupelo.

Tupelo has relied on the EAS program for air service since 2012.

The communities either did not meet the requirement of 10 passengers a day or went above the subsidy cap of $200 per passenger.

The department said SeaPort exceeded the subsidy cap by $111 per passenger in Tupelo. Following the letter of the law, DOT sent the letter to Tupelo.

TRA Executive Director Cliff Nash said the letter of termination was expected, and that he expects a waiver to be granted.

The subsidy per passenger was calculated by taking the annual subsidy rate ($1.725 million) and dividing by the total number of enplanements plus deplanements for Fiscal Year 2015 (Oct, 1, 2014-Sept. 30, 2015).
The federal agency said the cities have 20 days to object to its findings and ask for a waiver.

Tupelo Regional Airport officials this morning were doing just that, citing the poor performance of the airline servicing the airport at the time, SeaPort Airlines, which earlier this year filed for Chapter 11 bankruptcy protection.

Friday’s order came a little more than six weeks after air service resumed in the All-America City with Corporate Flight Management and its airline, Contour Airlines.

The timing of the announcement may seem ironic, but DOT spokeswoman Caitlin Harvey said, “The order measured data for Fiscal Year 2015, which ended Sept. 30, 2015.  That is the period of time that DOT is required by statute to measure compliance.  The selection of CFM/Contour was made because no determination had been made on Tupelo’s EAS eligibility then.  As of today, we have a tentative determination, and we allow (and expect) all air service to continue at the affected communities during the time when DOT and the communities are working through the process.”

SeaPort struggled to provide reliable service in Tupelo, citing a pilot shortage. It ended its service in late October, two months before the DOT said it could leave. Tupelo was without service until April 5, when Contour started its operations.

Matt Chaifetz, the CEO of Contour, said the numbers don’t tell the whole story.

“I have full confidence that the department will grant a waiver based on SeaPort’s performance,” he said. “You can’t expect 10 enplanements a day when by September of last year SeaPort was actually operating less than one flight per day with an aircraft that only has nine seats.”

In fact, Seaport averaged fewer than five flights per day from January to April of last year; in May, that figured dropped below three, and from June to August, SeaPort averaged fewer than two flights per day. In September, the airline averaged half a flight a day and flew only 42 people the entire month.

By comparison, since starting service last month, Contour is averaging about 25 passengers per day. As for the subsidy cap, Chaifetz said Contour’s subsidy is averaging about $230 per passenger – still above the cap, but far less than SeaPort’s average.

DOT hasn’t given a time frame for when it will review and respond on the waiver requests, saying it will issue another order for that later. Should the waivers not be granted and service is terminated, it won’t be immediate, Harvey said.

The order says, “If the Department later finalizes the tentative findings to terminate a community’s EAS eligibility in a subsequent order, the Department will specify an effective date for termination of EAS at that community.  In that event, if a specific carrier providing EAS at one of the affected communities decides to suspend service upon the effective date, the Department will expect it to contact all passengers who hold reservations for flights that will be suspended to inform them of the suspension and assist them in arranging alternative transportation or to provide a refund of the ticket price, without penalty, if requested.  The Department reminds carriers that their contracts and service obligations remain in full force until the completion of this process.”

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