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### Proposal Under the Alternate Essential Air Service Program Dockets DOT-OST-2004-18715 and DOT-OST-1997-276 1
Submitted b y 

### Raleigh County Memorial Airport

Tom Cochran Airport M anag er 176 Airport Circle Beaver , WV 25813 

### DUNS# 091548479 EIN #550482169 WV-03 

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## Raleigh County Memorial Airport Alternative Essential Air Service Program Grant Proposal

The Raleigh County Memorial Airport currently receives subsidized air service through the E ssential Air Service (EA S) Program and h a s done so for many y ears . Silver Airw ays, our incumb ent carrier , w as intere sted in remaining our EA S c arrier, ho wever , Silver was directed by United Airline s , it s code sharing partner at Washington Dulles , to remove Beckley from its route structure. Unfortunately, Silver Airw ays had no real choice in that matter and w e were forced to cons i der other options for our continuing EA S air service. Understanding of Proposal Requirements The submission of this proposal and participation in the Alternate EA S Pro gram is conting ent upon the ability of the Raleigh County M emorial Airport to enter into contractual commitments with an airline under terms satisfactory to the Airport and to the Department of Transportation. We believe we h ave an airline interested in providing replacement s ervice for Silver Airw ay s and this application i s bas ed on that understanding . If for any re ason w e are unable to re ach ac ceptable term s with the targ eted replacement carrier , then the request to participate in the Alternate EA S Program and to forgo participation in the Basic Essential Service Program is withdrawn

. Further , the reques t to participate in the Alternate EAS Program is bas ed upon our unders tanding of 49 U SC Section 41745 (f) , that if the program no longer address es the needs ofthe Ralei gh County Memorial Airport the Airport w ould b e accepted back into the Basic E ssential S ervi ce Program
. Historical and Current Air Service
Our service has shifted a few times since 1997 , including service to Charlotte in 1997 and service to Pittsburgh in 2002 , 2003 and 2004. Most often during the p a st 17 y ears with EAS s upported s ervic e our fli ghts have been to Washington Dulle s and f or mo s t o f that time it w a s a ssoci ated with the United Airlines brand and code

. Thi s w as b enefi ci al in that United operated a large connecting hub at Dulle s.3

Silver Airways assumed our EAS service to Dulles [rom Colgan Air in August 0[2012. Both Colgan Air , prior to August 0[2012 and Silver Airways , after that transition , struggled with providing reliable air service to our community. Both carriers operated SF-340 equipment to Dulles, with the United Airlines code, typically with a stop in Shenandoah Valley. For the ten years 2004 to 2013 we averaged 5 , 158 annual O&D passengers. We do note that Silver did stabilize its service somewhat in 2013 and we achieved 7 , 666 annual passengers that year , our highest total during the ten years and 49% higher than the ten year average. We also note that during 2013 Silver offered a significant number of nonstop flights as opposed to the typical one stop service. So a modest improvement in reliability combined with nonstop service resulted in a 49% surge in traffic above the ten year norm. Thus we were very disappointed when United Airlines , as part of some sort of change in their relationship with Silver Airways, declined to allow Silver to bid to remain our EAS carrier earlier this year. Community Air Service Needs Beckley is the largestcity in southernWest Virginia and a regional center for retail trade and commerce, educationand healthcare. Key employment and economic impact sectors in the local economy include; The Bechtel Summit High Adventure Camp, managed by the Boy Scouts of America (BSA) and host of multipleBSA activities each year, many of which require air service support. Five major federal facilities; a Federal Corrections

Institution

and a Department

of Defense MilitaryEntranceProcessingcenter,Veterans Medical Center , US Labor DepartmentTraining Facility,Internal

Revenue Service Computer Center. A large local healthcare

facility with a surrounding

clusterof supportoffices. Tamarack,the largesttourism attraction in the state. Three National Parks with up to 1.5 million annual visitors. Tourist Attractions: white water rafting , mountain biking/climbing , skiing and ATV trail riding. While our air transportation needs are significant for a city our size, our isolation from alternative air service options, especially options with reasonable airfares, is significant; Charleston (CRW) is 62 miles and 1:09 drive time. Average fares at CRW are in the $250 range with service from American, Delta and United. Roanoke (ROA) is 122 miles and 2:11 drive time. Average fares at ROA are in the $240 range (except for Allegiant Air) with service by American , Delta and United. Charlotte (CLT) is a 213 miles and 3:26 drive time and is an American hub. Columbus is 225 miles and a 3 :40 drive time. Pittsburgh is 245 miles and a 3:59 drive time.4

We believe that our region generates significant air travel demand and that demand is simply using , for the most part , other airports in the region and either paying very hi gh fares at CRW or ROA or driving three to four hours one way to larger airports like CLT , CMH or PIT. We believe that air travel demand in our region will be increasing significantly in the coming years , driven by general economic growth and the BSA facility, which has just opened in the past few y ears and will see more and more BSA related activities and travel demand. The 49% increase in traffic over the ten year average that we achieved in 2013 , from the same carrier and route but simply with a modest improvement in reliability and the introduction of nonstop service , proves to us that with all nonstop service to a major hub from a reliable carrier we can perhaps double our 2013 results in 2015 and begin to move toward lower EAS subsidy needs. The 2014 EAS Bid Process The 2014 EAS bid process for Beckley was very complex in that the DOT RFP for Beckley wa s associated with EAS bids for eleven other cities in West Virginia , Virginia , Penns ylv ania and New York. Furthermore , several of these cities were subject to 10- enplanement termination notices by the Department and several were s erved to Cleveland and United had just announced it was closing the hub there, thus damaging those services. Thus many cities were available to bid and the status of several was unclear as they were put to bid. Compounding this , United informed Silver after the first bid deadline that several cities , including Beckley, had to be remo ved from the United Airline s network. This triggered a partial rebid of the initial RFP. For Beckley the final results of the initial RFP were bids from two airlines; Boutique Air with 9-seat PC-12 service and City Air Link , with nine seat Beech King Air, both with service to Pittsburgh. Beckley , while appreciating the interest of both carriers in the market , requested a re-bid

. Boutique Air was offering a single engine aircraf t and we exercised our right to decline that service. City Link Air was a startup airline without any operating certificate or existing services. We appreciate that the DOT moved promptly to request are-bid of Beckley and we worked closely with two airlines that expressed interest in our market. At the close of the second bid we received proposals from Sun Air and Charter Air Transport (CAT). Sun Air proposed 8-seat Navajo service to either Pittsburgh (where the carrier w as establishing a hub to serve several Penns ylvania cities it was awarded from the f irst RFP) or Charlotte. The Charlotte bid by Sun Air was submitted at our request based on discussions with the carrier prior to the bidding deadline. The Pittsburgh proposal called for 24 trips per week for $3.46 million in annual subsidy while the Charlotte proposal 

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called for 18 trips per week to CLT and 6 trips to PIT for $3.664 million annually. CAT also worked closely with us prior to the bid and submitted three bids , for service to Charlotte , Pittsburgh or Washington Dulles

. All three bids were for 12 round trips per week with 30-seat EMB-120 aircraft. The CLT proposal required $2.7 million in subs i dy , the PIT proposal $2.5 million and the lAD proposal $2.8 million. We hosted both carriers in Beckley and had extended discussions inv olving the carrier ' s management and our civic leaders. After those community meetings and then after considerable internal discussion we reached a community consensus that we preferred the CAT proposal to Charlotte with 30-seat aircraft. Our letter to the DOT dated August 14 outlines in detail our evaluation process and why we concluded that the CAT proposal for service to CL T was in our best interests as w ell as one o f the lo w est cost proposals , thus saving the DOT subsidy funds. After submitting our letter supporting Charter Air Transport (CAT) we learned on September 4th that CAT did not have the necessary FAA Part 121 authority to operate 30- seat aircraft as proposed in Option C. This did not change our conclusions and preference regarding our air s ervice options , as outlined abo ve and detailed in our August 14 community comments letter. We spent a great deal of time and consideration on the future of our air service and concluded that CAT and Option C wa s our best option

. In light of the September 4th news we learned that the only way to retain our preference and choice , CAT and option C, would be via the Alternative Essential Air Service Program (AEAS).

_ So our options were ; endorse Sun Air and its $3

. 664 million dollar proposal to offer 4 trips per day , three to Charlotte and on to Pittsburgh, request another RFP be issued , or apply for and enter the AEAS program. We have already exhaustively examined the Sun Air options

. We very much appreciate the airline ' s interest in our market. However , the 8-seat Nav ajo , f lown over the extended distance to either Charlotte or Pittsburgh , will simply not be successful with our resident population and business community

. We have researched this and reached this conclusion. Furthermore , this carrier has been awarded multiple EAS cities in Pennsylvania and a startup timeline for assuming our service might be extended. Finally , the carrier proposals require very high s ubsidy rates , $3.46 million for all Pittsburgh service and $3.664 million for combined Charlotte and Pittsburgh service

. Given the modest traffic results Sun Air has achieved in other EAS markets , we would be concerned about a very high subsidy per passenger amount and if Congress were to further lower the maximum subsidy per passenger from $1 , 000 to $500 or in some way broaden the applicability of the current $200 cap we would see our EAS eligibility put at risk with $3

. 46 or $3.664 million dollar 

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annual subsidies for 8-seat Navajo service. The option of another RFP is not likely to produce any new alternative or an improved bid compared to the bids received in the second cycle. Furthermore , a new RFP would take a minimum of two months to complete and our current service provider , Silver Airway s , is under considerable pressure from its code and brand partner United Airlines, to exit the Beckley market. Thus a re-bid sequence might result in a loss of Beckley air service for some time at the end of 20 14 and into 2015. The City of Beckley , the Raleigh County Memorial Airport and our community partners all wish to move forward with Charter Air Transport and their option C for service to Charlotte. The carrier is ready to begin service and we believe as detailed this service is our best option and the best combination of hub , aircraft and subsidy requirement. Given those clear parameters , the City of Beckley , the Raleigh County Memorial Airport and our community partners request, via this document, entry into the Alternative EAS program in a prompt manner.
Intent of Alternate EAS Pilot Program The Alternative EAS Pilot Program was established in order to allow subsidy eligible EAS communities to deviate from the traditional program in order to provide transportation services that were more beneficial to the individual community than those available under the traditional program. The Departments Notice announcing the establishment of the program addressed the purpose of the program as follows: Congress established this Pilot Program to provide communities with an alternative to the traditional EAS-type service. Typically, the EAS program pays subsidy to regional air carriers to provide two or three round trips a day to a major hub airport with 19-seat aircraft. The new Pilot program is designed to allow communities to forego their EAS for a prescribed amount of time in exchange for receiving a grant to spend in a variety of ways that might better suit their individual needs. These options are spelled out in statute and include more frequent service with smaller aircraft, on-demand air taxi service , scheduled or on-demand surface transportation , regionalized air service , or purchasing an aircraft. We are implementing the Pilot Program by inviting communities to submit applications to use EAS funds in an alternative manner to address their transportation needs. We will use an open and flexible format for applications because we recognize that each community's circumstances may be different; and they need latitude in identifying their own objectives and developing strategies for accomplishing them. At the same time , general, vague, or unsupported applications will not be entertained. The more highly defined the 

# e;r;;jliJf t7 application, the more likely it will receive favorable consideration. (Emphases added) The overall goal of the Program is de s cribed in the Notice as follows :

" We seek proposals that are fully thought out and are designed to meet the individual needs of a community. We encourage proposals that have the greatest chance of increasing passenger usage and therefore reducing the need for future subsidy under either the EAS or Pilot Program." Summary of the Alternate Essential Air Service Proposal The Raleigh County Memorial Airport and the community of Beckley desires to receive its air service via the AEAS program under the terms of the Charter Air Transport bid option C , offering 12 trips per week to Charlotte using an 30-seat EMB-120 aircraft. Charter Air Transport has the necessary FAA and DOT certificate s to provide this service under AEAS. The carrier currently performs extensive charter programs including track programs and air cruises. It has an active reservations function for the booking o f air cruises. The carrier ' s airline code is VC and it will employ either the Skyv antage or Ameli aRES automated reserv ations s y stem. Why Alternate Essential Air Service for Beckley? There are three factors we believe are critical for successful air service at small rural communities like Beckley. Those three factors are ; reliable air service , reasonable pricing and quality customer service

. Historically we have not had any ofthese on a consistent basis at Beckley under the standard EAS program. For the past ten y ears Beckley has averaged a 94.8 % completion rate by its EAS carrier

. In 2006 and 2007 we actually had annual reliability rates over 98%. In 2008 it was 96.7%. However , in every other year reliability was b elow 95% , including 84 % in 2010 and 91.8 % in 2012. In any market with only one airline and only a few flights a day, reliability below 97 % is very damaging to customer loy alty. The DOT traffic and fare data tells us that Beckley connect passengers (excluding Washington local traffic) via Dulles paid average one way net fares in the $270 rang e during 2012 and 2013. These average fares are measurably above what customers pay at CRW and well above average fares at CLT or PIT. Regional airline customer service is often a struggle , made so by the economic cost o f providing service and the tendency of regional airlines to pay low w ages to customer service personnel. Low wages mean high turnover and poorly motivated and trained customer service personnel. The difference between a good airline and a bad airline i s not sometimes that a flight cancels but how that cancellation is handled on the f ront line8

with customer service personnel committed to their profession. From our conversations with Charter Air Transport and from a review of their existing (non EAS) air service offerings; we believe they will address our concerns on the three key factors. CAT has had a very good record of reliability in the various track program and charter activities it performs. We have had conversations with CAT about Charlotte service pricing and are comfortable that pricing will be designed to generate traffic. Finally, we are very impressed with CAT's commitment to customer service and focus on that important element of air service In addition to the quality of the service and reasonableness of the airfares , there are other factors that lead us to want to enter the AEAS program as an alternative to remaining in traditional EAS and having to select from the two Sun Air 8-seat service proposals at much higher subsidy costs. We do believe that, for our market and its distance from available hub airports, that the 30 seat aircraft will be much better received than the 8- seat aircraft , which is more suited to shorter flights. We believe that Charlotte is by far the best hub airport for our market ; it is the closest and has the most network airline flights , in comparison to Pittsburgh or Washington Dulles. Why Do We Reject the Standard EAS Proposal of Sun Air? Our letter of August 14 indicating our preference for Charter Air Transport option C service also detailed our concerns about Sun Air and our reasons for choosing Charter Air Transport. As we noted in our August 14 letter we are very appreciative of Sun Air ' s interest in our market and we wish them the best in the development of the Pittsburgh hub. However, our market is some distance from both Charlotte and Pittsburgh and we felt very strongly that the extended schedule times of 1 :20 or more in such a small aircraft would not work in our market , especially since we have had SF-340 service for many years . Furthermore, we note that the Sun Air proposals required $3.46 million (PIT) or $3.664 million (CL T & PIT) in annual subsidy whereas the Charter Air Transport proposal C we have endorsed has one of the lowest subsidy requirements at $2.6 million , a savings for the EAS program of up to $1 million dollars per year. Summary The elected officials of Raleigh County and Beckley, our Airport Board and our concerned citizens all concluded after careful examination and discussions with interested carriers that Charter Air Transport and their EAS proposal Option C for 12 trips per week to Charlotte with EMB-120 aircraft for $2.6 million in annual subsidy was the best future air service option for Beckley and our region

. Our community comments letter of August 14 clearly states this conclusion.9

We have since learned that Charter Air Transport service under option C would have to be administered under the Alternative Essential Air Service Program. (AEAS) We have reviewed the requirements of this program and are eager to promptly move forward under it so as to allow Charter Air Transport to begin service at our city this year. We are confident that Charter Air Transport will be a good air service partner , focused on success and measuring that success in increased traffic and satisfied customers. We urge the Department to promptly designate Beckley for participation in the Alternative EAS program and grant us the necessary funds under that program to begin working with Charter Air Transport, as defined in that carrier's Charlotte air service proposal C. We are available to provide any additional documentation of our preference for this designation and change in our air service program and status.