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Proposal Under the Alternate Essential Air Service Program

Dockets DOT-OST-2004-18715 and DOT-OST-1997-2761

Submitted by

Raleigh County Memorial Airport

Tom

Cochran

Airport Manager

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 Essential Air Service (EAS) Program and has done so for many years. Silver

Airways, our incumbent carrier, was interested in remaining our EAS carrier, however,

Silver was directed by United Airlines, its code sharing partner at Washington Dulles, to

remove Beckley from its route structure. Unfortunately, Silver Airways had no real

choice in that matter and we were forced to consider other options for our continuing

EAS air service.

Understanding of Proposal Requirements

The submission of this proposal and participation in the Alternate EAS Program is

contingent upon the ability of the Raleigh County Memorial Airport to enter into

contractual commitments with an airline under terms satisfactory to the Airport and to the

Department of Transportation. We believe we have an airline interested in providing

replacement service for Silver Airways and this application is based on that understanding.

If for any reason we are unable to reach acceptable terms with the targeted replacement

carrier, then the request to participate in the Alternate EAS Program and to forgo

participation in the Basic Essential Service Program is withdrawn. Further, the request to

participate in the Alternate EAS Program is based upon our understanding of 49 USC

Section 41745(f), that if the program no longer addresses the needs ofthe Raleigh County

Memorial Airport the Airport would be accepted back into the Basic Essential Service

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 past 17 years

with EAS supported service our flights have been to Washington Dulles and for most of

that time it was associated with the United Airlines brand and code. This was beneficial

in that United operated a large connecting hub at Dulles.
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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 isthe largestcityin southernWestVirginiaand a regionalcenterforretailtradeand

commerce,educationand healthcare.Key employmentand economicimpactsectorsinthe local

economyinclude;

The BechtelSummitHighAdventureCamp,managedby theBoy ScoutsofAmerica (BSA)

and hostofmultipleBSA activitieseachyear,many of whichrequireairservicesupport.

Fivemajorfederalfacilities;a FederalCorrectionsInstitutionand a Departmentof Defense

MilitaryEntranceProcessingcenter,VeteransMedicalCenter,US LaborDepartmentTraining

Facility,InternalRevenueServiceComputerCenter.

A largelocalhealthcarefacilitywitha surroundingclusterofsupportoffices.

Tamarack,the largesttourismattractioninthe state.

ThreeNationalParkswithup to 1.5millionannualvisitors.

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.
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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 high

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 years 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 was associated with EAS bids for eleven other cities in West Virginia, Virginia,

Pennsylvania and New York. Furthermore, several of these cities were subject to 10-

enplanement termination notices by the Department and several were served 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 removed from the United Airlines 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 aircraft 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 was

establishing a hub to serve several Pennsylvania cities it was awarded from the first 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 subsidy,

the PIT proposal $2.5 million and the lAD proposal $2.8 million.

We hosted both carriers in Beckley and had extended discussions involving 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 CLT was in our best interests as well

as one of the lowest cost proposals, thus saving the DOT subsidy funds.

After submitting our letter supporting Charter Air Transport (CAT) we learned on

September 4ththat 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 service options, as outlined above 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 was our best option.

In light of the September 4thnews 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 Navajo, flown 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 subsidy 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 Airways, 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

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application, the more likely it will receive favorable consideration. (Emphases

added)

The overall goal of the Program is described 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 certificates 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 of air

cruises. The carrier's airline code is VC and it will employ either the Skyvantage or

AmeliaRES automated reservations system.

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 years 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 below 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 loyalty.

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 range

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 of

providing service and the tendency of regional airlines to pay low wages 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 is

not sometimes that a flight cancels but how that cancellation is handled on the front line
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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 (CLT & 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.
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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.