## • --^ARTMEHTO F



## Before th e Unite d State s Departmen t of Transportatio n Novembe r29 , 201 1 ' ;'- V " 0 A10: 4 3 Proposa l t o Provid e Essentia l Ai rServic e at Salina , Kansa s Unde r4 9 U.S.C . 4173 1 e t seq . Docke t DOT-OST-2002-1137 6



## SeaPor t Airlines , Inc . Proposa l t o Provid e Essentia l Ai rServic e a t

Salina , Kansa s B yOrde r2011-11-1 , th e Departmen t requeste d proposal s fo rEssentia l Ai rServic e a t Salina , Kansa s du e o n Novembe r29 , 2011 . Pursuan t t o tha t Order , SeaPor t respectfull ysubmit s thi s timel yproposa l t o provid e subsidize d essentia l ai rservic e t o th e Salin a communityfo ra tw o yea rter m beginnin g Apri l 1 , 2012 . Correspondenc e regardin g thi s proposa l shoul d b e directe d to : Timoth ySiebe r Vic e Presiden t - Strateg y& Corporat e Developmen t

SeaPor t Airlines , Inc . 750 5 N E Airpor

t Way Portland , O R 9721 8 (971)340-171 6 tsieber(a)seaportair.co m

# SEA>PDR T

r AI R L I N fc S 

# Backgroun d & Pla n T o Gro wSalin a Marke t SeaPor t Airline s ha s bee n providin g Essentia l Ai rServic e (EAS ) at Salina , Kansa s sinc e Apri l 19 , 2010 . Durin g tha t time , w e have bee n abl e t o increas e th e numbe rof passengers tha t utiliz e schedule d servic e at Salin a Municipa l Airport . 

# SL N Monthl yPassenger s (Enplane d + Deplaned )

Novembe r200 9 - Octobe r201 1 60 0 50 0 40 0 30 0 20 0
10 0 

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• Grea t Lake s Airline s • SeaPor t Airline s SOURCE : Salin a Airpor

t Authorityan d SeaPor

t Airline s interna l report s Notably , i n recen t month s SeaPor t ha s bee n abl e t o buil d traffi ci n Salin a t o level s tha t substantiall yexcee d thos e of th e previou s operator . B yimplementin g th e planne d product enhancement s outline d i n thi s document , w e ar e confiden t tha t traffi cwil l continu e t o gro wat a rat e tha t wil l mee t (o rexceed ) th e modes t projection s i n thi s proposal . Aircraft Fo rth e pas t tw o years , SeaPor t Airline s ha s serve d Salin a wit h Pilatu s PC-12' s configure d fo r 9-passengers an d tw o pilots . Ou rproposa l i s t o continu e servin g Salin a wit h PC-1 2 equipmen t tha t offers ai rconditione d an d pressurize d comfort . Thi s aircraft operate s a t a cruisin g spee d faste rtha n an yothe r9-passenge raircraft currentl yi n th e EAS progra m an d comparabl e t o large rturbopro p aircraft , suc h a s th e Embrae r12 0 Brasili a an d Saa b 340 .

Docke t DOT-OST-2002-1137 6 Novembe r29 , 201 1 Page| 2

# SEA>PDR T

r AI R L I N t S Utilizin g th e PC-12 , SeaPor t ha s bee n abl e t o "righ t size " capacityi n rura l communitie s suc h a s Salin a wit h optima l frequencylevel s tha t minimiz e traffi cleakag e an d enabl e u s t o offe r reasonabl e fares . Globa l Distributio n & Interlin e Connectivity SeaPor t ha s investe d heavil yi n improvin g ou rdistributio n capabilitie s an d i s nowi n al l fiv e globa l distributio n systems . Thi s enable s ou rflight s t o b e availabl e o n al l majo ronlin e trave l agencie s an d meta-searchers including :

• Orbitz ; • Travelocity ; • Expedia ; • Kayak ; • Hipmunk ; an d • CheapoAir . SeaPor t currentl yha s a n interlin e ticketin g agreemen t wit h U S Airway s an d i s workin g towar d securin g agreement s wit h othe rcarriers tha t wil l facilitat e singl e ticke t itinerarie s fro m Salin a t o destination s aroun d th e world . W e anticipat e tha t thes e agreement s wil l includ e industr y standar d interlin e e-ticketin g (lET ) an d baggag e check . T o facilitat e implementatio n o f interlin e agreement s wit h lET , SeaPor t wil l b e migratin g t o a ne wreservatio n platfor m earl yi n th e firs t quarte rof 2012 . Th e passenge rforecas t i n thi s proposa l reflect s th e Increase d traffi ctha t SeaPor t expect s t o realiz e fro m th e enhance d connectivit yresultin g fro m lE Tagreements . Pricin g Mode l SeaPor t Airline s employ s a pricin g strateg yo f reasonabl e an d attractiv e fare s tha t facto ri n ticke t price s at othe rairport s i n th e regio n (i.e. , likel yleakag e points) , tota l itinerar ycost s includin g connectin g flight s o n othe rairlines , cost s o f othe rmode s o f transportation , an d nee d t o minimiz e subsid ylevel s an d resultan t taxpaye rexpenditures . W e believ e thi s approac h t o pricin g i n EA S communitie s provide s goo d consume rvalu e an d i s consisten t wit h th e overal l objective s of th e EA S program . SeaPor t Airline s doe s no t engag e i n "baiting " communitie s wit h lo wfare s tha t are not sustainable . Suc h pricin g scheme s shift th e tru e cos t of ai rtransportatio n fro m th e consume rt o th e EA S progra m an d w e believ e ar e inconsisten t wit h th e inten t o f th e essentia l ai rservic e progra m t o ensur e reasonabl e acces s t o th e ai rtransportatio n syste m fo rsmalle rcommunities . Equall ya s important , th e resultan t highe r level s o f subsid yrequire d b yofferin g unreasonabl ylo wfare s ca n increas e th e ris k o f a communityexceedin g $20 0 pe rpassenge rsubsid yi f th e projecte d passenge rvolume s ar e no t achieved . Rather , w e believ e a more pruden t approac h i s t o inves t i n technolog ytha t enhance s globa l connectivitya s i s bein g don e wit h ou rnewreservation s system . Consisten t wit h ou rpricin g model , SeaPor t charge s reasonabl e fee s fo rticke t changes , pet travel , an d unaccompanie d minors. ^ Thes e fe e level s reflect SeaPort' s philosoph yo f buildin g

^ SeaPort' s fe e fo rticke t change s i n EA S market s i s $30 , wel l belo wthos e charge d bylegac ycarriers a t neighborin g airports , providin g a n attractiv e valu e propositio n tha t encourage s us e of th e loca l airpor t bu t doe s plac e additiona l financia l burde n o n th e EA S progra m byhavin g t o subsidiz e unreasonabl ylowfares . Docke t DOT-OST-2002-1137 6 PaQ g i 3 Novembe r29 , 201 1

# SEA^PDR T

r AI R L I N E S custome rloyalt

ythroug h qualit yservic e at reasonabl e price s rathe rtha n opportunisticall y"nicke l an d diming " passengers at ever ypossibl e turn . Marketin g & Publi cRelation s Strateg y SeaPort' s succes s i n buildin g traffi cat Salin a beyon d thos e generate d b yth e previou s carrie ri s th e direct resul t of a comprehensiv e marketin g an d communication s relation s strategy . SeaPor t ha s investe d heavil yi n marketin g a t SLN , includin g print , radio , an d communityevents .

I n additio n t o th e activitie s illustrate d above , SeaPor t Airline s focuse s o n communityan d custome rengagemen t throug h extensiv e us e o f socia l media , includin g Facebook , Twitter , Linkedin , an d Foursquare . Thi s strateg yha s bee n successfu l an d i s nowbein g imitate d b y othe rproviders of EA S i n rura l communities .

Docke t DOT-OST-2002-1137 6 Novembe r29 , 201 1 Page| 4

# SEA^PDR T

r AI R L I N E S 

# Servic e Proposa l SeaPor t Airline s i s proposin g t o provid e Salin a wit h 1 8 well-time d weekl yroun d trip s t o Kansa s CityInternationa l Airport , th e sam e leve l o f servic e a s currentl yprovided , at a n annua l subsid y rat e o f $1,490,479
. Not e tha t thi s represent s a margina l reductio n fro m th e curren t subsid ylevel . Projecte d revenu e an d operatin g expense s tha t for m th e economi cbasi s o f thi s reques t ar e summarize d o n th e tabl e o n th e nex t page . Throug h a combinatio n of appropriatel ysize d aircraft , enhance d distributio n an d expande d interlin e connectivity , reasonabl e far e structure , an d comprehensiv e marketin g an d communityrelations , SeaPor t Airline s i s confiden t tha t i t wil l b e abl e t o continu e buildin g passenge ra t Salin a Municipa l Airport . Thi s wil l ensur e tha t Salina' s pe rpassenge rsubsid yleve l i s belo wth e $20 0 statutor ylimit . Th e proposa l herei n i s base d o n th e assumptio n of a tw o yea rter m beginnin g Apri l 1 , 2012 . Notwithstandin g th e ris k o f cos t inflatio n i n comin g year s (particularl yrelate d t o fuel ) tha t coul d possibl youtstri p traffi cgrowt h an d reasonabl e far e increases , SeaPor t i s offerin g th e Departmen t th e optio n t o contrac t th e propose d annua l subsid yfo ra fou r yea rperio d a t n o increas e i n annua l subsidy . W e believ e thi s offe rprovide s th e community wit h th e assuranc e o f stabl e ai rservic e fo ra n extende d perio d an d reduce s th e administrativ e burde n o n bot h th e Departmen t an d ourselves . Respectfull ysubmitted ,
Timoth ySiebe r Vic e Presiden t - Strateg y& Corporat e Developmen t SeaPor t Airlines , Inc .

Docke t DOT-OST-2002-1137 6 p-n g I 5 Novembe r29 , 201 1 ^ '

# SEA^PDR T

r AI R L I N E S 

### SeaPor t Airlines , Inc . 1 8 Weekl yRoundtrips : Salina , K S - Kansa s City , M O Operatin g Projection s SLN-MC I A\erag e Secto rLengt h (sm ) 16 2 Schedule d Departure s 1,87 2 Schedule d Bloc k

Hour s 1,560. 0 Projecte d Completio n Facto r97.5 % Projecte d Complete d Departure s 1,82 5 Projecte d Complete d Bloc k Hour s 1,521. 0 Passenge rProjection s Projecte d Passengers 7,68 7 Passengers pe rDeparture 4. 2 Projecte d Averag e Far

e $59.8 8 Revenu e Passenge rMile s (RPMs ) 1,245,29 4 Availabl e Seat Mile s (ASMs ) 2,661,14 2 Projecte d Loa d Facto r46.8 % Financia l Projection s Revenue s Passenge rTicke t Revenue s $460,29 8 AncillaryRevenue s $13,80 9 Tota l $474,10 6 Expense s Fligh t Operation s $140,40 0 Aircraft Ownership/Leas e $342,00 0 Fue l & Oi l $555,98 4 Sale s & Marketin g $9,36 0 Traffi cServicin g $212,64 2 Insuranc e $31,20 0 Maintenanc e $335,40 0 Sub-Tota l - Direct $1,626,98 6 Indirec t $244,04 8 Tota l Expense s $1,871,03 4 Projecte d Operatin g Profit/(Loss ) ($1,396,927 ) Subsid yCalculation s Operatin g Los s $1,396,92 7 Economi cRetu m @ 5 % $93,55 2 [Require d Subsid y$1,490,479 ] Subsid ype rDeparture $816.6 1 Subsid ype rPassenge r$193.9 0
Docke t DOT-OST-2002-1137

6 p-n e | 6 Novembe r29 , 201 1 ^ '