v ^ -v yôô'y^^/ ^^âirlineinfo.com/ostpdf82/624.pdf · comprised of a fleet of cessna 207s...

y^o^o'y^^/ ^ ^ ^ ^ V -V

DEPARTMENT OF -1A,\'SP0RTATI0M

'OCKET OPERATIONS

Before.the United States Department of TransporJatitDrji > -] A 9 35 October 14, 2011

Proposal to Provide Essential Air Service at

MUSCLE SHOALS. ALABAMA GREENVILLE, MISSISSIPPI LAUREL/HATTIESBURG, MISSISSIPPI TUPELO, MISSISSIPPI

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

Docket DOT-OST-2000-7856 Docket DOT-OST-2008-0209

Docket DOT-OST-2001-10685 Docket DOT-OST-2009-0305

SeaPort Airlines, Inc. Proposal to Provide Essential Air Service

By Order 2011-9-5, the Department requested proposals for essential air service (EAS) at a total of 23 communities. Pursuant to that Order, SeaPort respectfully submits this proposal to provide subsidized essential air service at the communities of Muscle Shoals, Alabama (MSL); and Greenville (GLH), Laurel/Hattiesburg (PIB), and Tupelo, Mississippi (TUP).

Except as otherwise noted herein,.proposals for each community are on a standalone basis. There is no intent in our proposal that the four communities represent an "all or nothing" bid.

Correspondence regarding this proposal should be directed to:

Timothy Sieber Vice President - Strategy & Corporate Development

SeaPort Airlines, Inc. 7505 NE Airport Way Portland, OR 97218

(971)340-1716 tsieber(5) seaportair.com

http://seaportair.com

October 14, 2011 SEAPORT

. I K L I N t b

SeaPort Airlines: Focused On Serving Small Communities

Company Overvievi^

SeaPort Airlines, Inc. is a FAA certified scheduled airline vt/ith nearly 30 years of experience in commercial aviation. Our company's foundation is built on efficient and reliable service to rural communities. Both SeaPort Airlines and our sister brand, Wings of Alaska, currently operate service under the Essential Air Service program as \Ne\\ as on an unsubsidized basis.'

SeaPort's approximately 200 professionals operate an average of 100 daily departures to 20 cities in nine states, of which only seven receive EAS subsidy. Our business model is focused on providing service to smaller communities. This is in sharp contrast to the strategies of the mega-airline brands, which no longer have the operational or economic capability, or strategic desire, to serve rural America.

SeaPort delivers Essential Air Service to seven communities: Excursion Inlet, Alaska; Pendleton, Oregon; Jonesboro, El Dorado, Hot Springs, and Harrison, Arkansas; and Salina, Kansas. In each of these cases, after award of the EAS contract by U.S. DOT, we have started by the date promised and with fares either at or below those outlined in our proposal. We would note that this stands in contrast to some other airlines that place bids with unreasonable fares that are never realized by the traveling public, delay the start of service, or do not launch service that has been awarded by the Department.

A Track Record of Building Community Partnerships

SeaPort Airlines prides itself on developing partnerships with each community it serves. This includes participation in local events, donation of tickets, regular community meetings, and advance notification of, and opportunity for input, related to schedule changes and fares.

We believe this approach serves our own interests equally with those of the community by fostering long-term, stable relationships that result in increased ridership and, eventually, reduced subsidy requirements. SeaPort's partnership approach is building recognition by those who watch the Essential Air Service program as evidenced by the following weblog entry from Skyland Centre for Essential Air Service:

Wings of Alaska is the premier airline serving Southeast Alaska providing scheduled passenger service, fast freight and charter sen/ice between Juneau and Skagway, Haines, Hoonah, Gustavus, and weekly flights to Excursion Inlet. Wings of Alaska grew in reputation and size, becoming one of the most successful regional air carriers in Alaska, now comprised of a fleet of Cessna 207s and Grand Caravans. Wings of Alaska presently operates an average of 38 daily scheduled flights to six Southeast.cities in Alaska.

SkyLand Centre for Essential Air Services offers news, information, expert opinion and industry insights through wvtw.SkyLandNew5.com home page, where breaking news is posted as it comes in and a weekly news digest, currently circulated to 5.000 essential air service professionals around the world.

DOT OST-2000-7856 DOT-OST-2008-0209 DOT-OST-2001-10685 DOT-OST-2009-0305

Page | 2

http://wvtw.SkyLandNew5.com

October 14, 2011 SEA^^PORT

If EAS and economic synergy - the perfect example

. Posted by SkyLand on August 21, 2011 al2i00pm " ^ ViewBlog

For those c\'nic5 who suggest essential air operations In the US are based on airline "take the money and run" tnmklng, the relationship Detv/een SeaPon Airlines and the community of Pendleton stands as an important case study.

SeaPort has an EAS contract for Pendleton-Portland; however, they fly an additional speculative week^' round trip above and beyond ther contract, and three weekly speculative round trips bet'.veen Pendleton and Boise. With the Pendleton Round-Up - an important tourism drav.' for the community' - right around the corner, SeaPort has announced the addition of one dait>- round trip flight between Pendleton and Portland (rem Tuesday, September I3ifi through Friday. September I6tti. Furthermore, from August I6th-September iBm, 2011. SeaPort will av/ard all passengers that 'v.-rangte" a flighl to and from Pendleton with double points through their Ft>erFlex customer rewards program'.

•We've been Pendleton's nometov.n airline for three years, and know that Round-Up is such a major pan ol the Pendleton culture.'' said Rob McKinney—President, SeaPort Airlines. 'We couidn t help but join in the fun."

Source: SeaPort Airlines, Inc.. & SkyLand.

Best Practice Av/ard, Augusl 2011.

i * Share t Twitter v'Ukc ^ T ]

We encourage the communities In this proposal to contact any of the EAS communities we presently serve for additional information. Additional evidence of our ability to develop a strong partnership and provide the communities in this proposal with reliable, customer-focused air service is demonstrated through community and customer comments that are provided later In this document.


Page j 3

October 14, 2011 SEA#PDRT

rA I R L I N E S

The SeaPort Airlines Experience

Below, we have summarized for the benefit of the Department and the community key elements of SeaPort's operating model and service strategy that we intend to employ if selected to provide essential air service at each of the communities in this proposal.

Aircraft

SeaPort Airlines is proposing service with Cessna Caravan turboprop aircraft.'^ Under production in the USA, the Caravan was originally designed in the 1980's to replace an aging fleet of piston-powered aircraft, such as the De Havilland Otter, Cessna 402, and Piper Chieftain. Over 2,000 Caravans have been built logging a combined total In excess of 12.5 million flight hours.

SeaPort Airlines Cessna Caravan

Although certified for single-pilot operation, SeaPort typically operates the Caravan with both a Captain and First Officer.

DOT OST-2000-7856 DOT-OST-2008-02Q9 DOT-OST-2001-10685. DOT-OST-2009-0305

Page | 4

October 14.2011 SEA#PDRT

: A I H L 1 f J t: S

The Caravan has a spacious cabin that seats passengers highlighted by a large aisle and generous windows for all around excellent visibility. The large cargo pod on the belly of the aircraft facilitates carriage of baggage volumes and weights much greater than that which can be accommodated on older piston-powered twins, and includes the ability to segregate passenger baggage for security purpose.

We believe the Cessna Caravan offers the "right size" capacity increment for each of these communities, enabling us to offer optimal frequency levels and reasonable fares to the community while simultaneously minimizing the required level of subsidy.

SeaPort Airlines currently operates eight Pilatus PC-12s and three Cessna Caravans, with two additional Caravans scheduled for delivery in November 2011.

Airport Terminals

SeaPort Airlines is offering multiple proposal options for consideration by each community that includes service to New Orleans, Nashville and/or Memphis. At each of the hub airports, SeaPort proposes the following terminal arrangements:

• Nashville (BNA): SeaPort Airlines would operate from the main terminal with TSA-screened operations. We have reached an agreement to be ground handled (both above and below wing) by an airline with an existing presence in Nashville, pending final carrier selection in this Docket.

• New^ Orleans (MSY): SeaPort Airlines would operate from the main terminal with TSA-screened operations. Depending on the number of operations at New Orleans following the carrier selection process in this Docket, we would either employ our own staff or utilize the services of a third-party ground handler.

• Memphis (MEM): SeaPort is keenly aware of each community's desire to have service operate into the main terminal at Memphis International Airport to facilitate interline connections. We have explored operations at the main terminal and have determined that leasing our own space would be economically unviable, particularly in the context of wishing to offer reasonable fares to our communities, funding of the EAS program, and the requirement to maintain subsidy levels below $200 per passenger. That being said, we are pursuing sub-lease agreements whereby SeaPort would sub-lease excess terminal space from a larger carrier. Until such an agreement can be finalized with acceptable economic terms, Memphis operations will be at our existing terminal business terminal that offers convenience for quick trips to and from the Memphis metropolitan area. For passengers connecting to or from other destinations, SeaPort Airlines provides a complimentary and quick shuttle service to the Memphis main terminal.''

In anticipation of reaching an agreement to sub-lease space at MEM. SeaPort proposes to maintain TSA screening in each of the EAS communities and continue screening of all outbound passengers including those bound for Memphis.


Page | 5

October 14.2011 SEAPORT

rA I R L I N t i

Pricing Model

SeaPort Airlines employs a pricing strategy of reasonable arid attractive fares that factors in ticket prices at other airports in the region {i.e., likely leakage points), total itinerary costs including connecting flights on other airlines, costs of other modes of transportation, and the need to minimize subsidy level and taxpayer expenditures.

The range of fares and forecasted average fare for each of the cities to each proposed hub is shown on the table below. All fares illustrated are one-way with varying levels of required advance purchase and inventory control.

SeaPort Airlines Illustrative Fares Pricing Range & Average

EAS Community Memphis Nashville New Orleans

Muscle Shoals, AL (MSL)

Greenville, MS (GLH)

Laurel/Hattiesburg, MS (PIB)

Tupelo, MS (TUP)

Fares ranging from $49-109;

average of $62.35


average of $51.75


average of $88.25

Fares ranging from $39-89; average of

$49.20


$51.20

N/A


average of $94.75


average of $75.80

N/A


average of $95.25


$53.75

N/A

NOTE Listed fares include Federal E)(c:ise Tax but not segment fees. PFCs, or security charges.

We believe the fares illustrated represent a responsible approach to pricing in EAS communities and which is consistent with the overall objectives of the EAS program. SeaPort Airlines does not engage in "baiting" communities with low fares that are not sustainable. Such pricing schemes shift the true cost of air transportation from the consumer to the Department and we believe are inconsistent with the intent of the essential air service program to ensure reasonable access to the air transportation system for smaller communities. Equally as important, the resultant higher levels of subsidy required by offering unreasonably low fare can increase the risk of a community exceeding $200 per passenger subsidy.


Page [ 6

October 14, 2011 SEA^DRT

Consistent with our pricing model, SeaPort charges reasonable fees for ticket changes, pet travel, and unaccompanied, minors.^ These fee levels reflect SeaPort's philosophy of building customer loyalty through quality service at reasonable prices rather than opportunistically "nickel and diming" passengers at every possible turn.

Global Distribution

SeaPort has invested heavily in improving our distribution capabilities and is now In all five major global distribution systems. This enables our flights to be available on all major online travel agencies and meta-searchers including Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir.

cheapOair* ^ •>o tOnan<orC i l lMmrTTe l l> , t> 1-<U-a)e.30SC

ObUfTdlCJl

Special Discount take up to S15 off sale^

Fi4tiini I KhT

LiDvcda b h v u i |>«>d l i j i i i f i n i h i ' — l a lanir i iH Tii " i r n n i r i i n n i l rupnii

l-t* EdTb AdjJI ' t i t

(t if lrm EUjPOgT

ll_.i'>a_j[_ijJv_JLI.iAB, JC_ '*»_! l_ ' i i *_ a i c w m c u j i w i i

cbi i T

KJT • •a r ^ i . l i i r j LJ.._-_J^ Sa. . A J L i i Z t C

Expedia priceline.com;

/Vame Vour Oivn Pr ice'

WeSBBTZ cheapOaircom®,,

T T 3 ^ ] CLb-rfMU I VT££Ck^1 M b i d i i i x c r l

SeaPort's fee for ticket changes in EAS markets is $30, well below those charged by legacy carriers at neighboring airports, providing an attractive value proposition that encourages use of ihe local airport but does place additional financial burden on the EAS program by having to subsidize unreasonably low fares.


Page j 7

http://priceline.com

October 14, 2011 MMR]

r i 11) L I N f S

Interline Connectivitv

SeaPort currently has an interline ticketing agreement with US Airways and is working toward securing agreements with other carriers that will facilitate single ticket itineraries from each of the communities in this proposal to destinations all around the world.^ We anticipate that these agreements will include industry standard interline e-ticketing (lET) and baggage check.

To facilitate implementation of interline agreements with lET, SeaPort will be migrating to a new reservation system with full such capability. We conservatively plan to have the new system in place and fully operational by the end of 2011.

A number of airlines are targeted for interline agreements during 2012 with this new system, including Delta Air Lines which is the leading carrier at Memphis International Airport. With Delta announcing a further reduction in Memphis flying effective in January 2012, we will also be pursuing Interline agreements with other carriers so as to ensure that each community in this proposal has maximum continued connectivity to the rest of the world.^

Marketing & Public Relations Strategy

SeaPort will implement a comprehensive marketing and public relations strategy aimed at introducing our brand to the community and maximizing the number of passengers onboard. In addition to local advertising, these activities include:

• Local Event Marketing: Recognizing that visible participation in local events has been successful for both legacy and low-cost airlines, SeaPort has implemented a similar strategy In all of its communities. These have ranged from SeaPort Airlines community egg hunts, to presenting at business expos, to hosting "after hours" events at local Chamber of Commerce meetings. In addition, SeaPort often makes "in kind" donations of tickets for use by local charities, either for their own business needs or as a fundraising tool (i.e., raffles, silent auctions, etc.).

• Website: The majority of SeaPort's passengers book through the Company's website (www.SeaPortAirlines.com).

• Social Media: Since 2010, SeaPort Airlines has managed a successful social media campaign that has allowed the Company to dynamically engage its customer base in a two-way conversation through sites such as Facebook, Twitter, Foursquare & Linkedln. We have found social media to be an excellent tool for generating passenger referrals and information sharing in our communities, and expect similar results in the four communities in this proposal.

6 US Airways serves all of the three hubs - Memphis, Nashville, and New Orleans - that are being offered to the communities in this proposal as access points to the national air transportation system.

' This IS further supplemented by proposal options Itial include access to multiple hubs, as outlined later in this document.

DOT OST-2000-7856 DOT-OST-200B-0209 DOT-OST-2001-10685 ^ ^ ^ ^ ' ° DOT-OST-2009-0305

http://www.SeaPortAirlines.com

• ^


-A I H L I IJ t S

• FlyerFlex Customer Rewards: During 2011, SeaPort launched a new and improved customer loyalty program called "FlyerFlex." This program provides customers with a variety of benefits including free flights, service charge waivers, and bonus points. SeaPort anticipates unveiling further enhancements of the FlyerFlex program during 2012 that will include a wider choice of travel rewards.

• Value Accounts: SeaPort offers a Corporate Value Account in every community served. This program encourages businesses to make a long-term investment in local air service by offering a variety of benefits such as change fee waivers and savings of 5% to 15%. It is Important to note that unlike the corporate travel programs of major airlines that are not designed to serve small businesses in rural communities, SeaPort's program can provide savings to a company of virtually any size and can be used by any employee of a company.

In the following proposals, SeaPort Airlines has allocated specific dollar amounts for marketing and sales activity appropriate to each community and service pattern. These estimated expenses take into consideration the lower costs of media in small markets and the reality that most local traffic typically originates in the EAS community rather than the hub market. Our approach to marketing budgeting is based on the philosophy that reasonable advertising budgets can be effectively leveraged with "new media" such as social networking, blogs, opt-in email, etc. to engage with customers on a 4more personal level.

We strongly believe that such a strategic approach represents a more fiscally responsible use of subsidy (and therefore taxpayer dollars) in EAS communities than irrationally high marketing budgets intended to promote smaller communities in a hub market as "destination." Passengers with trips beginning in other than the EAS community quite often are connecting from a more distant origination point. As outlined above, to increase connecting traffic SeaPort is transitioning to a new reservation system that will enable us maintain our current GDS presence and increase the number of interline agreements. Simply put, SeaPort is making an investment to ensure that our markets have "shelf space" virtually anyvirhere in global travel market.

Illustrative examples of SeaPort's advertising and promotional materials are provided on the next page.


Page | 9

•-JB

October 14.2011 SEA^DRT

rA I H L I rj b' S

Sample SeaPort Airlines Advertising & Promotional Materials


Page| 10

SEA^PDRT October 14, 2011 - . . R L I N E S

Community & Customer Feedback

While SeaPort Airlines has outlined above why we believe our airline is well positioned to ensure that reliable and reasonably priced air transportation continues to play a vital role in the economic vitality and quality of life in the communities of Tupelo, Muscle Shoals, Greenville, and Laurel/Hattiesburg, the strongest testament to this comes from the accolades that we receive on a regular basis.

Below is just a small sample of the comments SeaPort has received from our customers and community partners:

Our Essential Air Service Community Partners

"/ understand the importance of having dependable, reliable air sen/ice with an affordable cost. Not only will SeaPort Airlines meet these needs, but excel by providing great customer service, 3 high level of community involvement, and an eagerness to become a community partner".

- Luci Larson Former Mayor & Owner of Action Travel Salina, KS

"South Arkansas Regional Airport and the entire South-central Arkansas region suffered from the loss of air service previously provided by fvlesa Airlines in the Spring of 2008. Unreliable sen/ice and a poor schedule were already negatively impacting enplanements before Mesa pulled out, but at that point, the nearest option for air sen/ice of any kind was almost a two hour drive away. After sorting through applications from many different interested carriers, the El Dorado Airport Commission, along with El Dorado's Mayor, chose SeaPort to restore air service to South Arkansas. This was the beginning of a great partnership between SeaPort and our local community.

"Working with SeaPort has been nothing but a pleasure from the bottom to the top of their organization, and their commitment to excellence shines through the glowing comments that I hear from people who fly with them. In addition to hearing comments from others, I have flown SeaPort on several occasions, and have come away from the experience thinking 'This is how all air service should bo."

- Josh Zylks Airport Manager South Arkansas Regional Airport (Goodwin Field)

DOT OST-2000-7856 DOT-OST-2008-0209 DOT-OST-2001-10685 ^ ^ 9 ^ ' ^^ DOT-OST-2009-0305

«-ja

October 14.2011 SEA-rPQRT

rA I R L i r j f b

"Eastern Oregon Regional Airport at Pendleton had been struggling since schedule changes following 9/11 sen/ed by a carrier flying 37 seat aircraft. Low passenger count attributed to poor schedule, which then contributed to poorer passenger count. The carrier's solution was to bring in larger aircraft and fly to a different hub. The Airport and community balked at this suggestion and went in search of alternatives. The solution found through the EAS process was SeaPort Air flying a 9 passenger Pilatus. The passengers have welcomed the new service, much better schedule, and are elated with 'no security check' and stand by time. Passengers today will say, 7 love the sen/ice', 'great customer sen/ice,' and 'I'm sure glad I finally tried it, cause I'll be back'

"In our particular market, the 9 passenger aircraft is perfect, and SeaPort Air provides the schedule, the professionalism, and customer service we need and desire."

- Larry Dalrymple Airport Manager Pendleton Regional Airport

Our Customers

'Ti^o hours before the flight I booked my ticket to Memphis from Hot Springs. Wow! What a surprise: it was simple, convenient, great price, and impeccable sen/ice. It far exceeded my expectations and I will be flying to Memphis on SeaPort Airlines instead of driving from now on. The customer service was fabulous!"

- Ruth Ann Smith Customer (flew from Hot Springs to Memphis)

"My husband and I recently had to make a fast trip to Dallas for the funeral of a dear friend. I was not interested in making that drive over a fast weekend. Then I remembered that SeaPort had recently started flights between Hot Springs and Dallas. I called SeaPort, Jim and Bob were so quick to get us booked, last minute so we could fly down and attend the funeral and visit with family and friends that we don't get to see very often.

Everyone was so friendly, helpful and professional. It was a dream trip, even to attend a funeral. The pilot going down was so kind. When he found out that my husband had been a ball turret gunner in WWII, he gave him a set of headphones so he could listen to the communication between the pilots and the air traffic controllers. To say the least, my husband was impressed. It was such a blessing to have been taken care of in such a kind and professional manner, especially under the circumstances of our trip. Thank you, Jim, Bob, Chris, Doug, Rodney and Michael."

- Catherine Martin Customer (few from Hot Springs to Dallas)


Page I 12


rA I R L IN E S

'As a recent flyer on SeaPort, I wanted to pass on the great experience I had. I was heading to Hot Springs, AR to help-with fire and aviation management in the Arkansas • Oklahoma Interagency Coordination Center. In Memphis, nobody at Delta knew where to direct me. SATO, the government travel people, put me in touch with your office. They came right over and picked me up. Both the man who picked me up in the van and the woman who checked me in were very nice. When we were ready to go, the flight crew Keith and Jeremy were very professional, but had a nice, easy attitude. Once in Hot Springs, we were too late to pick up my rental car, and I was getting ready to call a cab. When they realized what was going on, they drove me to the hotel!

If I could summarize my experience with SeaPort Airlines, it would be that you exceeded my expectations in every way possible. Your staff was tremendous and reflects extremely well on your airline. With people like them, your airline will succeed and grow! Thanks for the service.

Clayton Camblin Customer (flew from Memphis to Hot Sphngs)

"I have never had such a positive experience connected with any airline. I read about SeaPort Air last October when they opened the Mid-South Route, but didn't have the chance to fly until March. Usually the dread of the process comes then you just grin and bear it: however, with SeaPort Air I could arrive 15 minutes early. The hassle free no TSA is wonderful and made me feel special. I have flown twice in the last 2 months and the customer service from start to finish is outstanding. I will be a regular customer and have already recommended the airline to several associates. Thank you, SeaPort Air, for making me feel like a queen!"

- Catherine Martin Customer (few from Memphis to Harrison)

"I want to let you know that Alan, the owner, and I were stuck in the horrendous traffic getting to the airport. Your people called to see where we were at. Called a few times to try and get us out of the jam - which was impossible, we were too far from the Gateway and we already had been on the road 1 'A hours. Did manage to break free taking 102 (I think) and called close to the Embassy to let them know we were just a minute away and they held the plane for us!! Amazing and kudos to your team!! I have been telling everyone of the stellar customer service and you will be our flight of choice going forward."

- Joanne Bosworth Customer (flew from Portland to Seattle)


Page! 13

October 14,2011 SEA#PDRT

'For two decades I have been picking my mother up at the airport and for two decades I have been met with the defeated, hang-dog look that the ordeal of air travel has given her I guess it pretty much does it to all of us, but (as she is well into her 80's) I worry about the toll it takes on her more and more lately.

"When I picked her up today from her SeaPort flight K52325 from Dallas, and saw she was smiling, you could have knocked me over with a feather! She couldn't stop raving about how pleasant the flight was. Let me be clear. My mother is a tough-as-nails Mid-western Yankee from the old school who has been around the world a couple of times since the late 1940's. She doesn't bestow idle praise and she seldom raves.

"Since it was a 9-seater plane that had to stop for a bathroom break, I can only conclude that it was the above average service she received from your staff. She, in fact, said as much. From the ticket counter in Dallas to the ride she got to the main terminal in Memphis she was impressed. She even liked the way she was asked to turn off her mobile phone and the help she was given doing so (she's not a big techie).

"I'm in the service industry myself and I know how often complaints come through. I just want to be sure to let you know how well everyone did on this flight. In the future, I will look to SeaPort first for my travel needs and will spread the good word to my friends.

"A smile and a kind word go a long way y'all. Thank you for getting this one so right."

- Mark Davis Peterson Customer (flew from Dallas to Memphis)

"Thank you so much for such great service. I had a tight timeframe flying in from the East Coast yesterday and was not sure I could make the Boise-Pendleton flight. Your staff responded via email and I even received a call to my cell as I got to the SeaPort terminal desk in Boise. I made the flight and really appreciated the caring service."

- Muriel Shaul Customer (flew from Boise to Pendleton)

DOT OST-2000-7856 DOT-OST-2008-0209 DOT-OST-2001-10685 DOT-OST-2009-030.5

Page | 14

October 14. 2011 SEA#PDRT

rA I If L I N E S

Introduction to Service Proposals

SeaPort Airlines is offering each community multiple service options that provide access to the national air transportation system via more than one hub airport.

Overview of SeaPort Airlines Service Options Each Community Provided Multiple Access Points

to the National Air Transportation System


Page I 15


rA I fi L I N t S

The enhanced option of multiple access points result in greater choice for consumers and will assist each community in this proposal to maximize the level of traffic retention at their local airport. This is based on our experience in Arkansas communities, where the addition of Dallas and/or Kansas City to existing Memphis service resulted in significant traffic growth. We strongly believe similar results will be achieved in the communities in this proposal.

SeaPort's service proposals are consistent with the Department's Request for Proposals when it states: "We may subsidize additional frequencies i f the affected community is served in conjunction with another community."^ Equally as important, however, the proposals "simultaneousiy satisfy the community's needs and minimize taxpayer expenditures. "^

The service levels and connecting opportunities at each hub are outlined below.

Memphis International Airport (MEM)

Memphis International Airport is a major connecting hub for Delta Air Lines, offering one-stop connecting service to virtually every metropolitan area in the United States, service to Amsterdam which functions as major European hub, and Toronto. In addition to Delta, virtually every major airline brand serves Memphis.

Nonstop Destinations from Memphis International Airport October 2011

SOURCE: GAG

'Order2011-9-5. p. 6

'Order 2011-9-5, p.7


Page I 16


rA I R L I rJ E S

Delta's flight schedule at MEM is structured into three distinctive connecting banks and, if selected to provide service In these communities, SeaPort Is committed to providing each community with flights that are well timed for connections. Delta's-flight schedule at MEM is illustrated on the next page and can be compared with the individual market schedule proposals provided later in this document.

Delta Air Lines Connecting Bank Structure at Memphis International Airport

October 2011

< ^ -\*5* ' ^ < ^ < ^ -^ ' { ^ ' ^ ^ < ^ < ^ ' K ^ ^ ^ ^ -^ ' ^ 4 fc^' ^'^ %^ # # N ' ' ^ ' # u^' # # '\^' # <f # ' ^*' # 'b*

•DL Arrivals DL Pepartures

SOURCE' Delta schedules accessed via delta com

Louis Armstrong New Orleans International Airport (MSY)

New Orleans is a major commercial center for the Southern United States, including the financial, medical, educational, legal, energy, and government sectors. Tourism, of course, is a major component of the New Orleans economy and if awarded the EAS contract in these markets, SeaPort would endeavor to offer weekend packages to these communities' residents.


Page | 17


rA I H LI rj t b

Louis Armstrong New Orleans International Airport offers consumers connecting opportunities to over 35 airports on a nonstop basis, as well as access the network of every major airline and each of the three major global alliances.

Nonstop Destinations from Louis Armstrong New Orleans International Airport

October 2011

SOURCE OAG

Of particular interest to the communities should be New Orleans' dynamic competitive environment resulting from a large percentage of low fare carrier service. JetBlue, Frontier, AirTran, and Southwest offer nearly half of the departing seats from MSY each day.'°

This results in the low-fare brands setting the ceiling on fares to and from New Orleans such that even when a passenger connects to a legacy brand carrier {i.e., Delta, American, United, etc.), they will realize the benefits of such price competition. The impact of this price competition is evidenced by the graphics on the next page which show that, on average, consumers at New Orleans paid 4.2% less than the national average in all markets.

The same graph notes that consumers at Memphis paid a fare premium of 22.8% above the national average, a reality that is not inconsistent in a hub market that is dominated by a single carrier but which is afforded multiple nonstop flights to numerous destinations. In this context,

While SoaPorl Airlines {along with every other U S. based airline) does nol have an interline ticketing and baggage agreement with Southwest Airlines, Internet savvy consumers figured out long ago how lo build "end to end" connecting itineraries with this carrier, as well as others. This has been validated in a number of our other EAS markets that are linked with airports served by Southwest (as well as other low-fare airlines).

DOT OST-2000-7856 DOT-OST-.2008-0209 DOT-OST-2001-10685 DOT-OST-2009-0305

Page| 18

October 14.2011 SEA#PDRT

l A I H L I fJ £ S

SeaPort Airlines is providing passengers with the choice of accessing a legacy carrier dominated hub or accessing a low-fare carrier dominated hub where lower fares to connecting markets can be purchased.

Capacity by Business Model Louis Armstrong New Orleans International Airport

October 2011

Legacy 58%

SOURCE: OAG

ith 4 Quarter 2010 Average Fare Premiums (Discounts) New Orleans v Other Hubs in Region

25.0%

20 0%

15 0%

10.0%

5.0%

0 0%

-5 0%

.10 0% J

22 8% • All Markets wiiri More Than 20 PassengGrs per Day

n

H 1 B

I H 1 1

HH A.2%

. - ^ . v -^ -•>?''

.^^^ ^ r . < ^ "

^-* . r f - .^*

, ^

^^

SOURCE: U.S. Department of Transportation, Domestic Airline Fares Consumer Report


Page | 19


rA I H L I rj E S

Nashville International Airport (BNA)

Nashville offers access to legacy carrier networks and low-fare airlines. During October 2011, the carriers serving Nashville International Airport will offer an average of 171 daily departures to 47 nonstop destinations in the United States and Canada.

Nonstop Destinations from Nashville International Airport October 2011

SOURCE. OAG

Southwest is the dominate carrier at Nashville, providing over 40% of the daily departing seats at BNA. Southwesl's service is complemented by Frontier Airlines, which provides service to its hubs at Milwaukee and Denver, with further onward connections.

Passenger Traffic Proiections

To develop projections of traffic and revenue for each community in the proposal, as well as the resultant subsidy requests, SeaPort Airlines utilized a Quality Service Index (QSI) forecasting methodology that considers frequency levels, connecting options, brand (i.e., independent v code-share), aircraft size, average fares, etc.

This approach results in SeaPort's traffic forecasts at each of the communities being, in most cases, below those of recent years as provided by the Department in Order 2011-9-5. The graph on the next page compares the reported traffic to SeaPort's forecast during the first year of service in each community.


Page|20


7A I R L I rj t: i,

Market Level O&D Traffic Comparisons Recent Years v SeaPort-Airlines Proposal

30,000

25.000

20.000 •

15.000

10.000 -

5.000 -

0 4 ^ ^ J «

• YE May 31, 2009

BYE May 31. 2010

• YE May 31, 2011

nSeaPort Option # l

DSeaPorl Option U2

a SeaPort Option U3

Tupelo (TUP) Muscle Shoals (MSL) Greenville (GLH) Laurel/Hattiesburg (PIB)

We raise this point because during communication with the EAS Division related to another Docket, SeaPort Airlines was advised that the Department's calculation of whether a proposal meets statutory requirements is based on actual passenger counts and not a carrier's forecast. Notwithstanding that application of numbers, we believe the forecasts which we have developed represent a reasonable estimate of traffic that will be generated in each market and therefore provides the basis for the proposals contained herein which "simultaneously satisfy the community's needs and minimize taxpayer expenditures."^^

DOTOrder2011-9-5. p, 7


Page|21

October 14. 2011 SEA^PDRT

rA I hi L IN t: b

Proposal: Greenville, Mississippi (GLH)

SeaPort Airlines is offering the community of Greenville, Mississippi (Mid-Delta Regional Airport) three service options as illustrated by the representative schedules below;'^

GLH Option #1

21 Weekly Roundtrips: Greenville - Memphis

(Standalone ProoosaH

Depan A m w Frequency Slops

From Greenville to Memphis

6:35am 7:30am Daily

11 20am 12.15pm Darly

. i .^Spm 5 40pm Daily

0

0

0

Depan Anive Frei juerKy Slops

From Mempfi is lo Gieenul le

8 OOam

3'30pm

7 35pm

8 •55am Daily

4 25pm Daily

8-30pm Daily

0

0

0

GLH Option #2

13 Weekly Roundtrips: Greenville - Memphis

13 Weekly Roundtrips: Greenville - New Orleans

(Standalone Prooosali

Depatl Am\e FreQuency Slops Depan Arrive Frequency Srops

From Greenulle to Memphis

6 3 5 a m 7 30am E i S u r

I.OSpm 2 00pm Daily

0

0

From Greeni^lle lo New Orleans

9.10am 10 45am Daily

4.40pni 6 15pm E«Sa1

0

0

From Mempnis l o Greenulle

8 OOam 8 55am Daily

3 30pm 4 25pm ExSa i

0

0

From New Orleans l o Greenville

11:15am 1250pm Daily

6 45pm 8 20pm ExSa i

0

0

GLH opt ion U3

19 Weekly Roundtrips: Greenville • Memphis

7 Weekly Roundtrips: Greenville - New Orleans

t t inaent on SeaPort Beina Selected to Serve Laurel /Hat l iesbura. MS)

GLH (Greenvi l le

) / • '

\^--

• MEM (Memphis)

Depan Arnve Frequency Stops

Frorr> Gieenvalle l o Memphis

6.3&3m 7:30am ExSun

1 05pm 2.00pm Daily

4:45pm 5 4Dpm E<Sal

0

0

0

From GreenVIIte to New Orleans

9.10am 10 45am Daiiv 0

Depart A n i \ e Frequency Slops

From Memphis to Greenvtlle

8.00am 8:55am Daily 0

3 3 D p m 4 2 5 p m EnSat 0

7:35pm 8 30pm EnSat 0

From New Orleans to Greenville

11:153m 12.50pm Daily 0

J ^ MSY (New O r l e a n s ) * - ^ * ^ . - \.

^J—-— ^ f i r - j '•*••• J* '

Schedules between Memphis and Greenville are timed to meet Delta Air Lines' connecting banks, facilitating trips throughout that carrier's global network. ^

Note that Option #1 and Option #2 are standalone proposals. Option #3 is a contingent proposal, in this case being contingent on SeaPort Airlines being selected to serve Laurel/Hattiesburg, MS (see proposal below). This contingency is intended to eliminate the potential of SeaPort being required to open a station at New Orleans for a single daily departure which would, in turn, require a higher level of subsidy.

In all cases, the sctiedules provided in this proposal are intended to illustrate Itie type of schedule ttiat SeaPort would provide

Actual sctiedules will be developed after consulting wilti each community.

'^ See grapti on page 17.

DOT OST-2000-7856 DOT-OST-2a08-0209 DOT-OST-2001-10685 DOT-OST-2009-0305

Page j 22

Oclober 14. 2011 SEA+*'PORT

r.M R L I i-l t S

SeaPort Airlines, Inc. GLH Option #1

21 Weekly Roundtrips: Greenville, MS - Memphis, TN (Standalone Proposal)

Operating Projections

A\erage Sector Length (sm) Scheduleid Departures Scheduled Block Hours

Projected Completion Factor

Projected Completed Departures Projected Completed Block Hours

Passenger Projections Projected Passengers Passengers per Departure

Projected A\erage Fare

Re\enue Passenger Miles (RPMs) A\silable Seal Miles (ASMs) Projected Load Factor

Financial Projections Revenues

Passenger Ticket Re\enues Ancillary Re\enues

Year l Year 2

Total

Expenses Flight Operations Aircraft Ownership/Lease Fuel & Oil Sales & [Marketing Traffic Servicing Insurance fvlaintenance Sub-Total - Direct Indirect Total Expenses

Projected Operating Prof)t/(Loss)

Subsidy Calculations Operating Loss Economic Retum @ 5%

122 2,184

2,002.0

98.0%

2,140 1,962.0

9.564 4.5

$51.75

1,166.808 2,350,071

49.6%

$494,937 $14,848

$509,785

$170,170 $180,000 $551,351

$9,009 $259,481 $40,040

$365,620 $1,575,671

$157,567 $1,733,238

(31.223,453)

$1,223,453 $86,662

122 2.184

2,002.0

98.0%

2,140 1,962.0

9.660 4.5

$52.53

1,178,476 2,350,071

50.1%

$507,385 515,222

S522.606

$173,573 $180,000 $578,918

S9,189 $261,224 $40,841

$376,589 $1,620,334

$145,830 $1,766,164

($1,243,558)

$1,243,558 $88,308

$1,310.115 $1.331.8661 [Required Subsidy

Subsidy per Departure Subsidy per Passenger

$612.11 $136.98

$622.27 $137.88


Page|23

October 14.2011 SEA^PDRT

r i I R L I N E S


13 Weekly Roundtrips: Greenville -Memphis 13 Weekly Roundtrips: Greenville - New Orleans

(Standalone Proposal)

Operating Projectioris

A\erage Sector Length (sm)

Scheduled Departures

Scheduled Block Hours


PnDJected Completed Departures Projected Completed Block Hours


PnDJecled Average Fare

Revenue Passenger Miles (RPMs) Available Seal Miles (ASMs) Projected Load Factor


Passenger Ticket Revenues Ancillary Re\enues

Year 1 Year 2

Total

Expenses

Flight Operations Aircraft Ownership/Lease Fuel & Oil Sales & Marketing Traffic Senicing Insurance Maintenance

Sub-Total - Direct

Indirect

Total Expenses

Projected Operating Profit/(Loss]

Subsidy Calculations Operating Loss Economic Return @ 5%

[Required Subsidy

183 2,704

3,380.0

98.0%

2.650 3,312 4

11.656 4.4

$72.43

2,133,048

4.364,418 48.9%

$844,232 $25,327

$869,558

$281,554 $176,400 $912,235

$15,210 $432,870

$66,248 $594,762

$2,479,279 $247,928

$2,727,207

($1,857,649)

$1,857,649

$136,360

183 2.704

3.380.0

98 0%

2.650 3.312.4

11.773

4.4

$73.52

2,154,378 4,364,418

49.4%

$865,464

$25,964

$891,428

$287,185 $176,400 $957,847

$15,514 $435,843

$67,573 $612,605

$2,552,967

$229,767 $2,782,734

($1,891,306)

$1,891,306 $139,137

$1,994,009 $2,030,443


$752.48 $171.07

$766.23 $172.47


Page[24

October 14, 2011 SEA^PDRT

I R L I N K S


19 Weekly Roundtrips: Greenville - Memphis 7 Weekly Roundtrips: Greenville • New Orleans

(Contingent on SeaPort Being Selected to Serve Laurel/Hattiesburg, MS)

Operat ing Project ions

Average Sector Length (sm)

Scheduled Departures

Scheduled Block Hours



Passenger Project ions Projected Passengers Passengers per Departure

Projected Average Fare

Revenue Passenger Miles (RPMs) Available Seat Miles (ASMs) Projected Load Factor

Financia l Project ions Revenues

Passenger Ticket Revenues Ancillary Revenues

Y e a r l Year 2

Total

Expenses Flight Operations

Aircraft Ownership/Lease Fuel & Oil Sales & Marketing Traffic Sen^cing Insurance Maintenance Sub-Total - Direct

Indirect

Total Expenses

Projected Operating Profit/(Loss)

Subsidy Calculat ions Operating Loss

Economic Return 0 i 5%

155 2,704

2,964.0

98.0%

2,650 • 2.904.7

11,162 4.2

$64.69

1,728,393

3.692.969 46.8%

$722,097

$21,663 $743,760

$246,901 $245,000 $799,960

$13,338 $377,042

$58,094

$481,121 $2,221,457

$222,146 $2,443,602

($1,699,842)

$1,699,842

$122,180

$1,822,023

$687.58 $163 23

155 2,704

2.964,0

98,0%

2,650 2,904.7

11,274

4,3

$65.66

1,745,677

3,692,969 47,3%

$740,258 $22,208

$762,465

$251,839 $245,000 $839,958

$13,605 $379,584

$59,256 $495,555

$2,284,797

$205,632

$2,490,429

($1,727,964)

. $1,727,964

$124,521

$1,852,485

$699.07

$164,32

Required Subsidy



Page|25

October 14, 2011 SEA#DRT

rA I H L I N t" i

Proposal: Tupelo, MS (TUP)

SeaPort Airlines is offering the community of Tupelo, Mississippi (Tupelo Regional Airport) three service options as illustrated by the representative schedules below. Note that the flights to and from Memphis are aligned with the hours of Delta's connecting banks at that airport.^''

TUP Option #1

18 Weekly Roundt r ips : Tupelo - Memphis

26 Weekly Roundtr ips: Tupelo • Nashville


Depan

6 30am M-50,nm •J 55pnt

7 OOam 1035am 1:50 cm

3-45pm

Amve

From Tupelo 7.10am

12.30pm 5.35pm

From Tupelo 8. l0am 11:35am 300pm 4 45pm

Frequency 10 Memphis

EjiSun EKSUH

E.Sat

[p Nashulle E'Sun Daily Daily

E.Sal

Slops

0 0 0

0 0 . 0 0

Depart Am « F rcquen c v Slops

FrT>m Memphis ID Tupelo 9 30am 2 50pm BOOpm

10:IOam EiSun 3-30pri E>Sal 8 40pni E.Sal

0 0 0

From Nashvillp lo Ti«»lo 8 40am 12.15pm 3.30pm S.lSpm

9.50am EiSun 1:25pm Daily 4.40pm DaMy 5.25om E.Sat

0 0 0 0

TUP Option 1)2

19 Weekly Roundtr ips: Tupelo - Memphis

19 Weekly Roundtr ips: Tupelo - Nashvil le

21 Weekly Roundt r ips : Tupelo - New Orieans (1-stop via PIB)

(Conlinqent on SeaPort Being Selected to Serve Laurel/Hattiest}ur

Depai A m * Fruquency Sloos Depan

. .- 'Y-B N A I N l t h v i l l * )

From Tupelo to Memjyis 6:30am 7 10am EiSun 0 12 00pm 12.40pm Daily 0 SOOpn 6 40pm E>Sal 0

From Tupelo lo Nash'^lle 6 45am 7-5Sam EnSun 0 10.25am i r 3 5 a m Daily 0 SJOpm 7.50pm E-Sat 0

From Tupelo lo Urn/ Orteans (Ma P B ) 10 25am 12.45pm Daily 1 1:30pm 3 50pm Daily I 3 JOpm 6 05pm Daily l .

From Memphis Lo Tupelo 9.303m 10 10am EiSun 0 2.45om 3.25pm Daily 0 eoOpm 8 40pm EiSar 0

From NashMlte to Tupato 8 35am 9 35am EiSun 0 12:05pm l:15p(n Daily 0 8 10pm 9 20pm E'Sal 0

Fiom Nvw Oieans to Tupelo (va PIB) 9 25am n-45am Daily ] 325om 5 45pm Daily i 415om 6 25pm Daily i

SeaPort recognizes the important role that Toyota in the Tupelo economy. With that in.mind, we note that the three hub options in this proposal afford connections to points throughout North America where Toyota has major operations and/or suppliers.

Option #1 is presented as a standalone proposal whereas Option #2 is contingent on SeaPort being awarded the EAS contract at Laurel/Hattiesburg, MS. For purposes of calculating subsidy requirement in Option #2 that includes one-stop service to New Orleans via Laurel/Hattiesburg:

• 50% of the direct operating costs of flight segments between Laurel/Hattiesburg and Tupelo have been allocated to Tupelo;

• Remaining costs have been allocated to Laurel/Hattiesburg (see below);

See grapti on page 17.

DOT OST-2000-7856 DOT-OST-2008-0209 DOT-OST-200M0685 DOT-OST-2009-0305

Page|26

• ^


rA I R L I N E S

• 100% of the revenue generated by passengers traveling between Tupelo and New Orleans has been allocated to the Tupelo market; and

• Zero traffic is forecast between Tupelo and Laurel/Hattiesburg.

It is also worth noting that Option #2 has higher frequency levels than Option #1 given that Option #2 involves frequency being shared with Laurel/Hattiesburg. Such proposals are consistent with the Department's Order 2011-9-5 which states: "ive would consider subsidizing additional frequencies at any community i f the service we l inked to another a community."^^

•p 6

DOT OST-2000-7856 DOT-OST-2008-Q209 DOT-OST-2001-10685 DOT-OST-2009-0305

Page | 27


r- I H L I N t S

SeaPort Airlines, Inc. TUP Option #1

18 Weekly Roundtrips: Tupelo, MS - Memphis, TN 26 Weekly Roundtrips: Tupelo, MS - Nashville, TN



A\«rage Sector Length (sm) Scheduled Departures Scheduled Block Hours


Projected Completed Departures

Projected Completed Block Hours





Passenger Ticket Revenues Ancillary Re^nues

Year 1 Year 2

Total

Expenses Flight Operations Aircraft Ownership/Lease

Fuel & Oil Sales & Marketing Traffic Serycing Insurance Maintenance Sub-Total - Direct Indirect Total Expenses

Projected Operating Profit/{Loss)


[Required Subsidy

138 4,576

4,402.7

98.0%

4,484

4,314.6

19,771 4.4

$63.36

2,736.486

5,586,235 49.0%

$1,252,592 $45,093

$1,297,685

$375,371

$329,280 $1,176,595

$15,409 $572,725

$86,292 $889,918

$3,445,592 $310,103

$3,755,695

($2,458,010)

$2,458,010 $187,785

$2,645,795

$589.99 $133 82

138 4,576

4,402.7

98.0%

4,484

4.314.6

19.969 4.5

$64.31

2.763,851 5.586,235

49.5%

$1,284,094 $46,227

$1,330,322

$382,879

$329,280 $1,223,659

$15,718 $576,821

$88,018 $916,616

$3,532,990 $282,639

$3,815,629

($2,485,307)

$2,485,307

$190,781

$2,676,089|

$596.74

$134.01

Subsidy per Departure

Subsidy per Passenger


Page|28

•JP


rA I H L I [J t S

S e a P o r t A i r l i n e s , I n c .

T U P O p t i o n # 2

19 W e e k l y R o u n d t r i p s : T u p e l o , M S - M e m p h i s , T N

19 W e e k l y R o u n d t r i p s : T u p e l o , M S - N a s h v i l l e , T N

2 1 W e e k l y R o u n d t r i p s : T u p e l o , M S - N e w O r l e a n s , L A (1 - s t o p v i a P I B )

( C o n t i n g e n t o n SeaPor t B e i n g S e l e c t e d to Se rve L a u r e l / H a t t i e s b u r g , MS)


Average Sector Length (sm) Scheduled Departures Scheduled Block Hours




Projected Awrage Fare

Re«nue Passenger Miles (RPMs) Available Seat Miles (ASMs) Projected Load Factor


Passenger Ticket Re\enues Ancillary Revenues

Y e a r l Year 2

Total


Fuel & Oil Sales & Marketing Traffic Serwcing Insurance Maintenance Sub-Total - Direct Indirect Total Expenses



149 6,136

6,534.7

98.0%

6,013 6,404.0

21.334 3.5

$68.43

3,171.534

8,045.463 39.4%

$1,459,855 $52,555

$1,512,409

$420,593 $248,576

$1,318,342 $22,871

$649,050 $73,867

$931,385 $3,664,685

$329,822 $3,994,506

($2,482,097)

$2,482,097 $199,725

$2,681,822

$445.98 $125.71

149 6,136

6,534 7

98.0%

6,013 6.404.0

21.547 3 6

$69.45

3.203.249 8.045,463

39.8%

$1,496,570 $53,877

$1,550,446

$429,005 $248,576

$1,371,076 $23,329

$653,823 $98,622

$959,327 $3,783,757

$302,701 $4,086,458

($2,536,011)

$2,536,011 $204,323

$2,740,334

$455 71 $127.18

Required Subsidy



Page | 29

October 14. 2011 SEA#DRT

rA I H L I I'J t S

Proposal: Laurel/Hattiesburg, MS (PIB)

SeaPort Airlines is offering the communities of Laurel and Hattiesburg, Mississippi (Hattiesburg-Laurel Regional Airport) three service options as illustrated by the representative schedules below:

PIB Option n^ 44 Weettly Roundtrips: Laurel/Hattiesburg, MS - New Orleans, LA

(Standalone Proposal) [>pan

From 5-45om

7:55ani ID Obam 12 30pri 2 iOpm

A SOpm 7 00 pm

A m w lauiTi)JH^Ilio<

6 3aam

8.10am 10 50am

1:15pm 3.25pfn 535pm 7.J5prn

FreauefKy Sioos burn 10 Now Orloans

E iSun 0 E>Sun 0

Daily 0 DaJy 0

Daily 0 E>5al 0

E.SnlSun 0

Depart Amw! From New Otioans

6.55am 9 05am 11:30am l-40pm 3-50pm

6 00pm 8 lOpm

7 40am

9.50am 12 15om

2.25pm 4.35pm

6-^5pm 6 55pm

Frequency to LaurpVHall

E.Sun

E . S j n Daily Daily Daily

£<Sal E iSa iSun

Slops FiSDuit)

0 0 0 0 0

0 0

PIB Option »2 40 Weekly Roundtrips: Laurel/Hattiesburg, MS - New Orieans. LA

13.5 Weekly Roundtrips: Laurel/Hattiesburg. MS - Memphis, TN (1-stop via TUP) 6.5 Weekly Roundtrips: Laurel/HaRiesburg, MS - Nashville. TN (1-stop via TUP)

I C o n t i n a e n l a n f i p ; tP f i r t R ^ l n a S ^ l t ^ t c d t o T u a e l o M S I

Depari Am\c Frequency Slops From Laurol'Hal ties Dung lo N e * Orleans

GOOant e 4Sam E>Sun 0

a lOom 6 55am Daily 0 12 00pm 12:45pm Daily 0 2.15pm 3 00pm Daily 0 3 05pm 3-50pm Daily 0 5 ?0pm 6.05pm ExSal 0

From Laj ra/Hal l IBS burg lo Mompfiis (s-a TUP! 102Sam 12.40pm Daily l 4-25pm 6 40pm Daily 1

From L a jml 'Hat lies burg lo Nash'^llc |Ma TUP) 5.15pm 7.50pm E>Sal 1

Depart A-imo Frequency SiOOi From New Orloans to Laural/Halliosburq

7 10am /.55am EjcSun 0 9 25am I0 : l0am Dajly 0 1-IOpm 1.55pm Daily 0 3 25pm 4- iCCm Daily 0 4-15pm 500pm Daily 0 6.30pm 7.15pm ExSal 0

Frpm Mompnis lo LaurOl/Hatticst^Ji^ (sia TUP} 9.30am 11:45am EvSun 1

2.45pm 5 05pm Daily 1

From Nashnlle lo Laiirol/Halticsburq tva TUP) 12.05pm J.SCOm Daily 1

BHA ( N a i t i v i l l i r

TUP r fupa lo )

MSY |N«w O r \ » t n \ ) 4 ' ' ^ t : j - ' - '

^>IB (Hz t t l c iburg 'Laure l )

X.

option #1 Is a standalone proposal whereas Option #2 is contingent on SeaPort Airlines being awarded the EAS contract at Tupelo, MS. For purposes of calculating subsidy requirement in Option #2 that includes one-stop service from Laurel/Hattiesburg to Memphis and Nashville:

• 50% of the direct operating costs of flight segments between Laurel/Hattiesburg and Tupelo have been allocated to Laurel/Hattiesburg for purposes of calculating subsidy requirements;

• Remaining costs of these segments have been allocated to Tupelo (see above);

• 100% of the revenue generated by passengers traveling between Laurel/Hattiesburg and both Memphis and Nashville has been allocated to the Laurel/Hattiesburg market; and

• Zero traffic is forecast between Tupelo and Laurel/Hattiesburg.

As noted under our Tupelo proposal, Option #2 has higher frequency levels than Option #1 but such a proposal is consistent with the Order 2011-9-5 which states: "we would consider subsidizing additional frequencies at any community if the service we linf<ed to another a community."


Page | 30


rA I D L 1 N i; S

SeaPort Airlines, Inc. PIB Option #1

44 Weekly Roundtrips: Laurel/Hattiesburg, MS - New Orleans, LA (Standalone Proposal)


A\erage Sector Length (sm) Scheduled Departures Scheduled Block Hours






Financial Projections Re\enues

Passenger Ticket Re\enues Ancillary Revenues

Year l Year 2

Total

Expenses Flight Operations Aircraft Ownership/Lease Fuel & Oil Sales & Marketing Traffic Servcing Insurance Maintenance Sub-Total - Direct Indirect Total Expenses



JRequired Subsidy

115 4,576

3,432.0

98.0%

4,484 3.363.4

19,455 4.3

$53.75

2,237,325 4,641,437

48.2%

$1,045,706 $41,828

$1,087,535

$291,720 $180,000 $935,906

312.870 $461,982

$68,640 $808,920

$2,760,038 $248,403

$3,008,442

$1,920,907 $150,422

115 4,576

3,432.0

98.0%

4.484 3,363.4

19,650 4.4

$54.56

2.259,698 4,641,437

48.7%

$1,072,006 $42,880

$1,114,886

$297,554 $180,000 $973,343

$12,999 $465,401 $70,013

$833.188 $2,832,497

$226,600 $3,059,097

($1,920,907) ($1,944,211;

$1,944,211 $152,955

$2,071,329 $2,097.1651


$461.89 $106.47

$467.65 $106.73


Page | 31

October 14, 2011 SEA-TPDRT

rA IR LI rj t s

SeaPort Airlines, Inc. PIB Option #2

40 Weekly Roundtrips: Laurel/Hattiesburg, MS - New Orleans, LA 13.5 Weekly Roundtrips: Laurel/Hattiesburg, MS -Memphis, TN (1-stop via TUP) 6.5 Weekly Roundtrips: Laurel/Hattiesburg, MS - Nashville, TN (1-stop via TUP)

(Contingent on SeaPort Being Selected Serve to Tupelo, MS)

operating Projeclions






Revenue Passenger Miles (RPMs) Available Seat Wiles (ASMs) Projected Load Factor


Passenger Ticket Revenues Ancillary Revenues

Year l Year 2

Total


Fuel & Oil Sales & Marketing Traffic Ser^cing Insurance Maintenance Sub-Total - Direct Indirect Total Expenses



142 6,240

5.893.3

98.0%

• 6.115 5,775.5

23.852 3.9

$67.77

3,386.984 7,315.226

43.3%

$1,616,400 $64,656

$1,681,056

$363,854 $261,487

$1,167,331 $16,380

$758,801 $85,613

$964,643 $3,618,110

$325,630 $3,943,739

($2,262,683)

$2,262,683 $197,187

$2,459,870

$402.26 $103.13

142 6,240

5,893.3

98.0%

6,115 5,775.5

24.091 3.9

$68.78

3.420.854 7,815.226

43.8%

$1,657,052 $66,282

$1,723,335

$371,131 $261,487

$1,214,024 $16,544

$764,086 $87,325

$993,583 $3,708,180

$296,654 $4,004,834

($2,281,500)

$2,281,500 $200,242

$2,481,742

$405.83 $103.02

Required Subsidy



Page | 32


rA I H L I I'J t b

Proposal: Muscle Shoals, AL (MSL)

SeaPort Airlines is offering tlie Muscle Shoals community two service options, providing access to the national air transportation system at Memphis and Nashville with various frequency levels. This is illustrated on the representative schedules below.

MSL Option #1 19 Weekly Roundtr ips: Muscle Shoals, AL - Memphis, TN 13 Weekly Roundtr ips: Muscle Shoals, AL - Nashville, TN

(Standalone Proposal) . .

Depan Am\e Frequency Stops Depart A(Ti\e Frequency Slops From Muscle Shoals to Memphis

6.25am 7:25am ExSun 0 12:15pm 1:15pm Daily 0 6:00pm 700pm ExSat 0

From Muscie Shoals to Nashylle 10.00am 10:45am ExSun 0 3 45pm 4:30pm Daily 0

From Memphis to Muscle Shoals 8.45am 945am ExSun 0 2:30pm 3.30pin Daily 0 7:45pm 8 45pm ExSal 0

From Nashwite to Muscle Shoals 11:15am 12:00pm ExSun 0 500pm • 5:45pm Daily 0

MSL Option #2 13 Weekly Roundtr ips: Muscle Shoals, AL - Memphis, TN 19 Weekly Roundtr ips: Muscle Shoals, AL - Nashville, TN


Depart Afn\e Frequency Slops From Muscie Shoais to Memphis

8:30am OSOam ExSun 0 1-30pm 2:30pm Daiiy 0

From Muscie Shoais lo Nashwlle 6:15am 7:00am ExSun 0 11.15am 12:00pm Daily 0 4:15pm 5 00pm ExSat 0

Depart Arn\e Frequency Stops . From Memphis to Muscle Shoais

10:00am ll.OOam ExSun 0 3:00pm 4 OOpm Daily 0

From Nashyile lo Muscle Shoais 7:30am . 8:15am ExSun 0 12.30pm T15pm Daiiy 0 5:30pm 6-15pm ExSat 0

^'

r ' MEM (iviemphls)

MSL (Muscle Shoals)

BNA (Nashville)

Both options presented above are standalone proposals.

As with the other markets, flight schedules to and Memphis are aligned with Delta's connecting hub allowing for easy connections.^^

' See graph on page 17.


Page|33

iJJI

October 14,2011 SEA^PDRT

rA I H L I N E S

SeaPort Airlines, Inc. Option #1

19 Weekly Roundtrips: Muscle Shoals,'AL -Memphis, TN 13 Weekly Roundtrips: Muscle Shoals, AL - Nashville, TN










Passenger Ticket Re\enues

Ancillary Revenues

Y e a r l Year 2

Total

Expenses Flight Operations Aircraft Ownership/Lease Fuel & Oil Sales & Marketing Traffic Ser^cing

Insurance Maintenance Sub-Total - Direct Indirect Total Expenses


Subsidy Calculations Operating Loss Economic Retum @ 5%

[Required Subsidy

125 3.328

2,990.0

98.0%

3.261 2.930.2

13.780 4.2

$57.85

1.722,931 3,670,037

46.9%

$797,200 $23,916

$821,116

$249,067 $170,520 $799,066

$10,465 $404,628 $58,604

$509,404

$2,201,754 $330,263

$2,532,017

($1,710,900)

$1,710,900 $126,601

$1,837,501

$563.40 $133.35

125 3,328

2,990.0

98.0%

3,261 2,930.2

13,946 4.3

$58.71

1,743.635 3,670.037

47,5%

$818,694

$24,561 $843,255

$254,048 $170,520 $831,028 $10,674

$407,637

$59,776 $524,686

$2,258,370 $316,172

$2,574,542

($1,731,287)

$1,731,287 $128,727

$1,860,014|

$570.30 $133.38



DOT OST-2000-7856 DOT-O3T-2008-0209 DOT-OST-2001-10685 DOT-OST-2009-0305

Page | 34


rA I R L I rJ E S

SeaPort Airlines, Inc. Option #2

13 Weekly Roundtrips: Muscle Shoals, AL -Memphis, TN 19 Weekly Roundtrips: Muscle Shoals, AL -Nashville, TN


Operat ing Project ions

Average Seclor Length (sm) Scheduled Departures Scheduled Block Hours



Passenger Project ions Projected Passengers Passengers per Departure



Financial Project ions

Revenues Passenger Ticket Revenues Ancillary Revenues

Y e a r l Year 2

Total

Expenses Flight Operations

Aircraft Owners hip/Lease Fuel & Oil Sales & Marketing Traffic Servicing

Insurance Maintenance Sub-Total - Direct

Indirect Total Expenses


Subsidy Calculat ions Operating Loss Economic Retum @ 5%

120 3,328 •

2,834.0

98.0%

3,261 2,777.3

14,277 4.4

$55.67

1.712,794

3,521.438 48.6%

$794,760 S23.B43

$818,603

$236,072 $259,691 $757,375

$9,919 $388,998 355,546

$444,371

$2,151,973 $322,796

$2,474,769

($1,656,166)

$1,656,166 $123,738

$1,779,905

$545.74 $124.67

120 3,328

2,834.0

98,0%

3.261 2,777.3

14,463 4.4

$56.49

1,735.055 3.521,438

49,3%

$816,972 $24,509

$841,481

$240,794

$259,691 $787,670

$10,117

$392,108 $56,657

$457,702 $2,204,740

$308,664 $2,513,404

($1,671,922)

$1,671,922 $125,670

$1,797,592|

$551.17 $124.29

Required Subsidy



Page | 35


lA I R L I rj E S

Summary & Conclusion

In summary, SeaPort Airlines is providing the communities of Muscle Shoals, Alabama and Greenville, Tupelo, and Laurel/Hattiesburg, Mississippi a variety of air service options summarized as follows:

Summary of SeaPort Airlines Proposals To Provide Essential Air Service Greenwlle, MS

DOT OST-2008-0209

Tupelo, MS

DOT OST-2009-0305 Laurel/Hattios burg, MS

WUl"«U^VJUMf^!H

Muscle Shoals, AL

DOT OST-2000-7856

Option ttl

Service Pattern (Weekly

Roundtrips)

Proiecled Passenqere

Proiected Awraqe Fare

Required Subsidy



Weekly RT Subsidy

Memphis - 21

9.564

S51.75

51,310,115

SI36 98

$612.11

$62,386

9,660

S52.53

$1,331,866

$137 86 S622.27

S63,422

Memphis - 18

Nashville - 26

19,771

S63.36

$2,645,795

5133 82

S589.99

560,132

19.969

S64.31

$2,676,089

$134.01 $596.74

$60,820

New Orteans - 44

19,455

$53.75

$2,071,329

$106.47

$461.89

$47,076

19,650

$54.56

$2,097,165

$106 73

S467 65

$47,663

Memphis - 19

Nashwile - 13

13.780

S57 85

$1,837,501

$133.35

$563.40

$57,422

13,946 $58 71

Si.860,014

$133 38

$570 30

$58,125

Option tf2

Serwce Pattern (Weekly

Roundtrips)

Proiected Passengers

Protected A\eraqe Fare

Required Subsidy


Sutisidy per Departure

Weekly RT Subsidy

Memphis - 13

New Orleans • 13

11,656

$72,43

$1,994,009

$171.01

$752 48

$76,693

11,773

$73 52

$2,030,443 $172.47

5766.23

$78,094

Memphis - 1 9

Nash\^l le- 19

New Orieans ( l - s l o p ) - 2 1

21.334

S68 43

$2,681,822

S125 71

$445.98

S45.455

21,547

$69.45 $2,740,334

$127 18

$455.71

$46,446

New Orteans - 40

Memphis (1-stop) - 1 3 5

Nashwile (1-s top)-6 .5

23.852

$67.77

$2,459,870

$103 13

$402.26

$40,998

24,091

$68.78

$2,481,742

$103.02

$405 83

$41,362

Memphis - 13

Nashville - 19

14,277

$55 67

$1,779,905

$124.67 $545.74

$55,622

14,463

$56.49

$1,797,592

$124.29 $551.17

$56,175

Option ff3

Serwce Pattern (Weekly

Round! nps)

Projected Passenqers

Projected A\efaqe Fare Required Subsidy

Subsidy per Passenqer


Weekly RT Subsidy

Memphis - 19

New Orleans - 7

11,162

$64.69 $1,822,023

$163 23

S687.58

$70,078

11.274

$65.66

$1,852,485

$164.32

$699.07

$71,249

Contingencies

Contingencies

Option #3 is contingent on

SeaPon being selected lo

ser\e Laurel/Hattiesburg, MS

Option «2 is contingent on

SeaPod being selected lo

serve Laurel/l-lal ties burg, MS

option #2 IS contingent on

SeaPort being selected to

ser\e Tupelo. MS

In each case, the service proposal provides the communities wWh options that include access to multiple connecting hubs at subsidy levels that are well below the statutory limit of $200 in per passenger subsidy.


Page | 36


rA I R L I N f S

Finally, the proposals herein are based on a two year term. Notwithstanding the risk of cost inflation in coming years {particularly related to fuel) that could possibly outstrip traffic growth and reasonable fare increases, SeaPort is offering the Department and communities the option to contract the proposed annual subsidy for a four year period at no increase in annual subsidy beyond that level specified for the second year of each option in this proposal._We believe this offer provides each community with the assurance of stable air service for an extended period and reduces the administrative burden on both the Department and ourselves.

Our existing infrastructure at Memphis (Including maintenance and crew bases) combined with additional aircraft scheduled for delivery in November 2011 allows SeaPort to implement the proposed service In a timely manner and at a cost that minimizes taxpayer expenditure. We appreciate the opportunity to submit this proposal and welcome any questions from the communities and/or Department.

Respectfully submitted.

Timothy Sieber Vice President - Strategy & Corporate Development SeaPort Airlines, Inc.

October 14, 2011

11


Page | 37

v ^ -v yôô'y^^/ ^^âirlineinfo.com/ostpdf82/624.pdf · comprised of a fleet of cessna 207s...

Documents