### Before the United States D epartment of Transportation January 31, 2014

Proposal to Provide Essential Air Service at

McCook, Nebraska

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

### Docket OST-1997-3005



### Proposal of SeaPort Airlines, Inc. to Provide Essential Air Service at McCook, Nebraska

By Order 2013-12-10, the U.S. Department of Transportation (“the Department”) requested proposals for Essential Air Service (EAS) at Mc Cook, Nebraska no later than January 31, 2014. Pursuant to that Order, SeaPort Airlines, Inc. res pectfully submits this timely proposal to provide subsidized EAS at McCook, Nebraska.

This proposal provides the community of McCook three service pattern options. The requested subsidy levels in the proposals, during year one, range from $1,938,697 to $2,706,256.

Shortly after this proposal is docketed, SeaPort Airlines will contact the Airport Manager at McCook to schedule a presentation to the community that explains our proposal in detail and to answer any questions. In the interim and throughout the carrier selection process, questions regarding this proposal should be directed to:

Timothy Sieber Executive Vice President

SeaPort Airlines, Inc. 7505 NE Airport Way Portland, OR 97218 (971) 340-1716 tsieber@seaportair.comOST-1997-3005 January 31, 2014 Page | 2 

# Discussion of Proposal

Company Introduction

SeaPort Airlines, Inc. is a FAA certified scheduled airline based in Portland, Oregon with 30 years of experience in commercial aviation. In addition to Portland, the company has operational bases at Memphis, Tennessee (MEM); San Diego, California (SAN); and Juneau, Alaska (JNU).

Our 221 professionals provide service to 21 cities ac ross nine states with a fleet of 15 aircraft. The company’s route map as of the date of this proposal is provided below:

The primary focus of SeaPort Airlines is to pr ovide affordable and reliable air service to small and rural communities across America. Service to eight of the communities on our route map is provided under the EAS program: Athens, Georgia; Pendleton, Oregon; El Dorado, Hot Springs, and Harrison, Arkansas; Salina, Kansas; Jackson, Tennessee; and Imperial/El Centro, California.

Once SeaPort Airlines is awarded an EAS contract and service is launched, we develop a partnership with each community by participating in local events, donation of tickets, on-goingOST-1997-3005 January 31, 2014 Page | 3 

### dialogue with airport management and community leaders, and presentations to civic clubs and other similar organizations. We also have a reputation of being responsive to community needs, affording them the opportunity to comment on schedule and fare changes before they become effective.

Our commitment to EAS communities is demonstrated by the fact that in every “Lower 48” community that SeaPort serves in the EAS program, we have been re-selected for subsequent terms at the end of our first contract period. This includes reselection during 2012 to four-year contract renewals (rather than the standard tw o-years) at both Salina, Kansas and Pendleton, Oregon, after both communities voiced their overwhelming support for SeaPort Airlines. Similarly, we were selected for a four-year rene wal at the Arkansas communities of El Dorado, Harrison, and Hot Springs, effective November 1, 2013.

Aircraft

SeaPort Airlines’ proposal at McCook contemplates operations with Cessna Caravans which will allow us to offer safe, comfortable, and affordable air transportation in a modern and economical aircraft.

Manufactured in Kansas, the “Caravan” was originally designed in the 1980’s to replace an aging fleet of piston-powered aircraft, such as the De Havilland Otter and Piper Chieftain. Over 2,000 Caravans have been built logging a total of almost 15 million flight hours. The Caravan is certified for single-pilot operation, however SeaPort operates with both a Captain and First Officer.

The large cargo pod on the Caravan allows for more baggage than can be accommodated on older piston twins (i.e., Piper Chieftain and Cessna 402) and allows us to segregate passenger baggage for security purposes. The cargo pod on the Cessna Caravan has a maximum capacity of 111 cubic feet and 1,090 pounds. In comparison, the Piper Chieftain has a maximum capacity of 65 cubic feet and 700 pounds in its nose compartment and two wing lockers.OST-1997-3005 January 31, 2014 Page | 4 

### Scheduling and Hub Options

SeaPort is proposing the three following different service options for consideration:

 Option #1: 12 weekly round-trip to ICT.

 Option #2: 12 weekly round-trip to OMA

 Option #3: 12 weekly round-trip to ICT and 6 weekly round-trip to MCI

Illustrative schedules for each option are below. Final schedules, however, would be established in consultation with the community and take into consideration connecting schedules at that time with those airlines which SeaPort has interline agreements.

If selected to provide EAS, SeaPort Airlines will solicit comments from each community on proposed flight schedules prior to making them available for sale to the public. As much as practical, these comments will be incorporated into the final schedule and factoring any impact on flight schedules. Option #1: 12 weekly roundtrips, McCook - Wichita Depart Arrive Frequency Stops Depart Arrive Frequency Stops
McCook to Wichita Wichita to McCook 5:50am 7:30am ExSun 0 11:30am 1:10pm ExSat 0 2:30pm 4:10pm ExSat 0 5:00pm 6:40pm ExSun 0

Option #2: 12 weekly roundtrips, McCook - Omaha Depart Arrive Frequency Stops Depart Arrive Frequency Stops
McCook to Omaha Omaha to McCook 5:45am 7:30am ExSun 0 11:30am 1:15pm ExSat 0 2:30pm 4:15pm ExSat 0 5:45pm 7:30pm ExSun 0

Option #3: 12 weekly roundtrips, McCook - Wichita + 6 weekly McCook - Kansas City

Depart Arrive Frequency Stops Depart Arrive Frequency Stops McCook to Kansas City Kansas City to McCook 10:45am 12:50pm ExSun 0 1:30pm 3:35pm ExSat 0
McCook to Wichita Wichita to McCook
5:50am 7:30am ExSun 0 8:30am 10:10am ExSat 0 4:00pm 5:40pm ExSat 0 6:00pm 7:40pm ExSun 0OST-1997-3005 January 31, 2014 Page | 5 

### Industry Comparison

The charts below illustrates a comparison between current Great Lakes’ round-trip fares and prospective SeaPort fares to six major US cities based on a walk-up scenario. The SeaPort prices do not include a blending discount. As exem plified, SeaPort provides savings for the community members of McCook.

LAX ORD DFW DCA IAD

GREAT LAKES $653 $756 $555 $897 $960

SEAPORT $591 $375 $356 $559 $759 $0 $200 $400 $600 $800 $1,000 $1,200 

# OPTION #1 ICT WALK

‐ UP RT COMPARISON

LAX JFK ORD DFW DCA IAD

GREAT LAKES $653 $685 $756 $555 $897 $960

SEAPORT $495 $592 $290 $430 $510 $810 $0 $200 $400 $600 $800 $1,000 $1,200 

# OPTION #2 OMA WALK

‐ UP RT COMPARISONOST-1997-3005 January 31, 2014 Page | 6 LAX JFK ORD DFW DCA IAD

GREAT LAKES $653 $685 $756 $555 $897 $960

SEAPORT $545 $529 $592 $431 $280 $809 $0 $200 $400 $600 $800 $1,000 $1,200 

# OPTION #3 MCI WALK

‐ UP RT COMPARISONOST-1997-3005 January 31, 2014 Page | 7 

### Fares & Pricing

All of SeaPort’s fares are priced on a one-way basis, including all taxes and fees, and structured as follows:

 The highest price point (branded as “ FULL Flex”) provides our customers with total flexibility to change their travel plans or, if they choose, obtain a full refund without incurring a service charge.

 The lowest price point (branded as “ NO Flex”) targets customers who are certain about their travel plans. This fare requires an adv ance purchase of 14-days, is non-refundable, and does not permit any changes from the original booked itinerary.

 In between, SeaPort offers a range of fares (“ FREE 2 Flex” and “Flex 4 FEE ”) with price points based on how much flexibility a customer has in their travel plans. Except for the two highest price points, fares are also subject to capacity controls meaning that the farther in advance a reservation is made, the more likely a customer is to get a lower fare.

The table below summarizes the range of proposed ticket prices in each of the markets along with the rules and restrictions applicable to each price point.

FARE BRAND FAMILY FULL Flex FREE 2 Flex Flex 4 FEE No Flex Booking Class/Fare Basis Code Y B Q M Advance Purchase (days prior to departure) 0 3 3-7 7-14 Change Fee $0 $0 $50 Not permitted

Refundable Yes No No No Published Fares to/from McCook, NE Kansas City (Avg Fare = $71.40) $99 $79 $59 $49 Omaha (Avg Fare = $68.40) $99 $79 $49 $39 Wichita (Avg Fare = $54.20) $89 $69 $49 $39



### Interline Connectivity & GDS Display

SeaPort Airlines tickets may be purchased by calling our toll-free reservation number, online at www.SeaPortAirlines.com, at any travel agent connected to the major global distribution systems (GDS), or all of the major online tr avel agencies and meta-searchers such as Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir.

The company recently announced that it will migrat e to the Amadeus Altea reservation platform on March 22, 2014. With this new system, Se aPort will have unsurpassed capability comparedto other regional airlines with regard to interline ticketing, through baggage check-in, ecommerce, and Inter-Airline Thru Check-In (IATCI). Most importantly, with the new system the company will launch its first full interline agreem ent on March 22, 2014 with a major airline to be followed by a second “Big Three” carrier on May 1, 2014. The company is in discussions with two other major carriers regarding agreements for implementation later in 2014.OST-1997-3005 January 31, 2014 Page | 8 

### Subsidy Request Calculations

The following pages contain the calculations that support SeaPort Airlines’ request for subsidy to provide EAS at McCook, Nebraska.

Respectfully submitted,

Timothy Sieber Vice President – Commercial SeaPort Airlines, Inc.

January 31, 2014OST-1997-3005 January 31, 2014 Page | 9 Proforma Data Operating Projections Average Sector Length (sm) 245 Scheduled Departures 1,248 Scheduled Block Hours 2,080.0

Projected Completion Factor 98.5%

Projected Completed Departures 1,229 Projected Completed Block Hours 2,048.8

Passenger Projections Projected Passengers 3,000 Passengers per Departure 2.4

Projected Average Fare $54.20

Revenue Passenger Miles (RPMs) 735,000 Available Seat Miles (ASMs) 2,710,562 Projected Load Factor 27.1%

Financial Projections
Revenues Passenger Ticket Revenues $162,600 Ancillary Revenues $4,065 Total $166,665

Expenses Flight Operations $194,636 Aircraft Ownership/Lease $288,000 Fuel & Oil $497,858 Sales & Marketing $25,000 Traffic Servicing $357,000 Insurance $32,781 Maintenance $348,296 Sub-Total - Direct $1,743,571 Indirect $261,536 Total Expenses $2,005,107

Projected Operating Profit/(Loss) ($1,838,442)

Subsidy Calculations Operating Loss $1,838,442 Economic Return @ 5% $100,255

Required Subsidy $1,938,697

Subsidy per Departure $1,577.10 Subsidy per Passenger $646.23 Avg. Enplanements per Operational Day 4.8 

### 12 Weekly RTs: McCook - Wichita Option #1 

### Cessna Caravan, Two-Pilots OST-1997-3005OST-1997-3005 January 31, 2014 Page | 10 Proforma Data Operating Projections Average Sector Length (sm) 258 Scheduled Departures 1,248 Scheduled Block Hours 2,184.0

Projected Completion Factor 98.5%

Projected Completed Departures 1,229 Projected Completed Block Hours 2,151.2

Passenger Projections Projected Passengers 3,100 Passengers per Departure 2.5

Projected Average Fare $68.40

Revenue Passenger Miles (RPMs) 799,800 Available Seat Miles (ASMs) 2,854,388 Projected Load Factor 28.0%

Financial Projections
Revenues Passenger Ticket Revenues $212,040 Ancillary Revenues $5,301 Total $217,341

Expenses Flight Operations $204,368 Aircraft Ownership/Lease $288,000 Fuel & Oil $551,793 Sales & Marketing $25,000 Traffic Servicing $383,400 Insurance $36,571 Maintenance $365,711 Sub-Total - Direct $1,854,843 Indirect $278,226 Total Expenses $2,133,069

Projected Operating Profit/(Loss) ($1,915,728)

Subsidy Calculations Operating Loss $1,915,728 Economic Return @ 5% $106,653

Required Subsidy $2,022,382

Subsidy per Departure $1,645.18 Subsidy per Passenger $652.38 Avg. Enplanements per Operational Day 5.0 

### Cessna Caravan, Two-Pilots OST-1997-3005

12 Weekly RTs: McCook - Omaha Option #2OST-1997-3005 January 31, 2014 Page | 11 Proforma Data Operating Projections Average Sector Length (sm) 270 Scheduled Departures 1,872 Scheduled Block Hours 3,380.0

Projected Completion Factor 98.5%

Projected Completed Departures 1,844 Projected Completed Block Hours 3,329.3

Passenger Projections Projected Passengers 4,600 Passengers per Departure 2.5

Projected Average Fare $60.11

Revenue Passenger Miles (RPMs) 1,240,467 Available Seat Miles (ASMs) 4,475,194 Projected Load Factor 27.7%

Financial Projections
Revenues Passenger Ticket Revenues $276,520 Ancillary Revenues $6,913 Total $283,433

Expenses Flight Operations $316,284 Aircraft Ownership/Lease $288,000 Fuel & Oil $809,020 Sales & Marketing $25,000 Traffic Servicing $345,588 Insurance $53,269 Maintenance $638,773 Sub-Total - Direct $2,475,933 Indirect $371,390 Total Expenses $2,847,323

Projected Operating Profit/(Loss) ($2,563,890)

Subsidy Calculations Operating Loss $2,563,890 Economic Return @ 5% $142,366

Required Subsidy $2,706,256

Subsidy per Departure $1,467.66 Subsidy per Passenger $588.32 Avg. Enplanements per Operational Day 7.4 

### Cessna Caravan, Two-Pilots

12 Weekly RTs: McCook - Wichita OST-1997-3005

6 Weekly RTs: McCook - Kansas City Option #3