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 

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. 

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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. 

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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. 

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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 TSAscreened 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. 

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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 

Fares ranging 

from $39-109; 

average of 

$51.75 

Fares ranging 

from $69-179; 

average of 

$88.25 

Fares ranging 

from $39-89; 

average of 

$49.20 

Fares ranging 

from $39-79; 

average of 

$51.20 

N/A 

Fares ranging 

from $79-189; 

average of 

$94.75 

Fares ranging 

from $59-119; 

average of 

$75.80 

N/A 

Fares ranging 

from $69-159; 

average of 

$95.25 

Fares ranging 

from $39-89; 

average of 

$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. 

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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* ^•>otOnan<orCillMmrTTell>,t> 1-<U-a)e.30SC 

ObUfTdlCJl 

Special Discount take up to S15 off sale^ 

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l-t* EdTb AdjJI 'ti t 

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Expedia 

priceline.com; 

/Vame Vour Oivn Price' 

WeSBBTZ 

cheapOaircom®,, 

TT3 ^ ] CLb-rfMU I VT££Ck^1 Mbidiiixcr 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. 

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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 twoway 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. 

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-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. 

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rA I H L I rj b' S 

Sample SeaPort Airlines 

Advertising & Promotional Materials 

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October 14, 2011 -..RLINE 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) 

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"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) 

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'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) 

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'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) 

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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 

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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 if 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 

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October 14. 2011 

SEA#PDRT 

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. 

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October 14, 2011 SEAPORT 

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). 

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October 14.2011 

SEA#PDRT 

lA 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 .<^ " 

^-* .rf - .^* 

,^^ 

^^ 

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

DOT OST-2000-7856 

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October 14,2011 SEA#PDRT 

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. 

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October 14. 2011 

SEA#PDRT 

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 

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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 Am 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 FreijuerKy Slops 

From Mempfiis lo Gieenulle 

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 

635a m 7 30am EiSu 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 lo Greenulle 

8 OOam 8 55am Daily 

3 30pm 4 25pm ExSai 

0 

0 

From New Orleans lo Greenville 

11:15am 1250pm Daily 

6 45pm 8 20pm ExSai 

0 

0 

GLH option U3 

19 Weekly Roundtrips: Greenville • Memphis 

7 Weekly Roundtrips: Greenville - New Orleans 

ttinaent on SeaPort Beina Selected to Serve Laurel/Hatliesbura. MS) 

GLH (Greenville 

) /• ' 

\^--

•^ MEM (Memphis) 

Depan Arnve Frequency Stops 

Frorr> Gieenvalle lo 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 Ani\ e Frequency Slops 

From Memphis to Greenvtlle 

8.00am 8:55am Daily 0 

33Dp m 425p m EnSat 0 

7:35pm 8 30pm EnSat 0 

From New Orleans to Greenville 

11:153m 12.50pm Daily 0 

J ^ MSY (New Orleans)*-^*^. - \. 

^J—-— ^ fir- 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. 

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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 

Yearl 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 

[Required Subsidy $1,310.115 $1.331.8661 

Subsidy per Departure 

Subsidy per Passenger 

$612.11 

$136.98 

$622.27 

$137.88 

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Page|23 

October 14.2011 

SEA^PDRT 

r i I R L I N E S 

SeaPort Airlines, Inc. 

GLH Option #2 

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 

Projected Completion Factor 

PnDJected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Passengers per Departure 

PnDJecled Average Fare 

Revenue Passenger Miles (RPMs) 

Available Seal Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

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 

Subsidy per Departure 

Subsidy per Passenger 

$752.48 

$171.07 

$766.23 

$172.47 

DOT OST-2000-7856 

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Page[24 

October 14, 2011 

SEA^PDRT 

I R L I N K S 

SeaPort Airlines, Inc. 

GLH Option #3 

19 Weekly Roundtrips: Greenville - Memphis 

7 Weekly Roundtrips: Greenville • New^ Orleans 

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

Operating Projections 

Average Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Passengers per Departure 

Projected Average Fare 

Revenue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

Passenger Ticket Revenues 

Ancillary Revenues 

Year 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 Calculations 

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 

Subsidy per Departure 

Subsidy per Passenger 

DOT OST-2000-7856 

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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 Roundtrips: Tupelo - Memphis 

26 Weekly Roundtrips: Tupelo • Nashville 

(Standalone Proposal) 

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 Roundtrips: Tupelo - Memphis 

19 Weekly Roundtrips: Tupelo - Nashville 

21 Weekly Roundtrips: Tupelo - New Orieans (1-stop via PIB) 

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

Depai Am * Fruquency Sloos Depan 

. .- 'Y- BNAINlthvill*) 

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 ir35a m Daily 0 

SJOpm 7.50pm E-Sat 0 

From Tupelo lo Urn/ Orteans (Ma PB) 

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. 

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• ^ 

October 14,2011 

SEA#PDRT 

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 if the service we linked to another a 

community."^^ 

•p 6 

DOT OST-2000-7856 

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Page | 27 

October 14. 2011 

SEA#PDRT 

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 

(Standalone Proposal) 

Operating Projections 

A\«rage Sector Length (sm) 

Scheduled 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 

Revenue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

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) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

[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 

DOT OST-2000-7856 

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Page|28 

•JP 

October 14,2011 

SEA#PDRT 

rA I H L I [J t S 

SeaPor t Airlines , Inc . 

T U P Optio n # 2 

19 Weekl y Roundtrips : Tupelo , M S - Memphis , T N 

19 Weekl y Roundtrips : Tupelo , M S - Nashville , T N 

2 1 Weekl y Roundtrips : Tupelo , M S - Ne w Orleans , L A (1 -sto p vi a PIB) 

(Contingen t o n SeaPort Bein g Selecte d to Serve Laurel/Hattiesburg , MS) 

Operating Projections 

Average Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Passengers per Departure 

Projected Awrage Fare 

Re«nue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

Passenger Ticket Re\enues 

Ancillary Revenues 

Year l Year 2 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Serwcing 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

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 

Subsidy per Departure 

Subsidy per Passenger 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

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 (HattiesburgLaurel 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 

EiSun 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.Sj n 

Daily 

Daily 

Daily 

£<Sal 

EiSaiSun 

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) 

IContinaen l a n fip;tPfirt R^ln a S^lt^tc d t o Tuael o MS I 

Depari Am\c Frequency Slops 

From Laurol'Hal ties Dung lo Ne * 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 Lajra/Hall 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 (Naitivillir 

TUP rfupalo) 

MSY |N«w Or\»tn\)4''^t:j-'- ' 

^>IB (Hzttlciburg'Laurel) 

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." 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

Page | 30 

October 14, 2011 

SEA#PDRT 

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) 

Operating Projections 

A\erage Sector Length (sm) 

Scheduled 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 

Revenue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Re\enues 

Passenger Ticket Re\enues 

Ancillary Revenues 

Yearl Year 2 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Servcing 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

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 

Subsidy per Departure 

Subsidy per Passenger 

$461.89 

$106.47 

$467.65 

$106.73 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

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 

Average Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Passengers per Departure 

Projected Average Fare 

Revenue Passenger Miles (RPMs) 

Available Seat Wiles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

Passenger Ticket Revenues 

Ancillary Revenues 

Yearl Year 2 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Ser^cing 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

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 

Subsidy per Departure 

Subsidy per Passenger 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

Page | 32 

October 14, 2011 SEAPORT 

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 Roundtrips: Muscle Shoals, AL - Memphis, TN 

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

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

(Standalone Proposal) 

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. 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

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 

(Standalone Proposal) 

Operating Projections 

Average Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Passengers per Departure 

Projected Average Fare 

Revenue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

Passenger Ticket Re\enues 

Ancillary Revenues 

Yearl Year 2 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Ser^cing 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

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 

Subsidy per Departure 

Subsidy per Passenger 

DOT OST-2000-7856 

DOT-O3T-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

Page | 34 

October 14, 2011 

SEA#PDRT 

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 

(Standalone Proposal) 

Operating Projections 

Average Seclor Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Passengers per Departure 

Projected Average Fare 

Revenue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Projected Load Factor 

Financial Projections 

Revenues 

Passenger Ticket Revenues 

Ancillary Revenues 

Year 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 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

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 

Subsidy per Departure 

Subsidy per Passenger 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

Page | 35 

October 14, 2011 SEA#PDRT 

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 

Subsidy per Passenger 

Subsidy per Departure 

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 

Subsidy per Passenger 

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\^lle- 19 

New Orieans (l-slop)-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-stop)-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 

Subsidy per Departure 

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. 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

Page | 36 

October 14, 2011 

SEA#PDRT 

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 

DOT OST-2000-7856 

DOT-OST-2008-0209 

DOT-OST-2001-10685 

DOT-OST-2009-0305 

Page | 37