Before the United States Department of Transportation

October 3, 2012

Proposal to Provide Essential Air Service at

PENDLETON, OREGON

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

Docket DOT-OST-2004-19934

Proposal of SeaPort Airlines, Inc. to Provide 

Essential Air Service at Pendleton, Oregon

By Order 2012-8-13, the Department requested proposals from carriers interested in providing

Essential Air Service (EAS) at Pendleton, Oregon no later than September 19, 2012. By 

Memorandum and at the request of SeaPort Airlines, Inc., the Department extended the 

deadline for submission of proposals to October 3, 2012.

Pursuant to that Order, SeaPort Airlines, Inc. respectfully submits this timely proposal to provide 

subsidized EAS at Pendleton, Oregon for a first year subsidy rate of $1,834,708 and a second 

year subsidy rate of $1,926,444. SeaPort is offering the Department and the community the 

option of contracting a four-year term with an annual subsidy rate equal to the second year rate 

in this proposal.

Shortly after this proposal is docketed, SeaPort Airlines will contact the Airport Manager at 

Eastern Oregon Regional Airport 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

Vice President – Commercial

SeaPort Airlines, Inc.

7505 NE Airport Way

Portland, OR 97218

(971) 340-1716

tsieber@seaportair.com
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October 3, 2012 Page | 2

Introduction

Company Overview

SeaPort Airlines, Inc. is a FAA certified scheduled airline with 30 years of experience in 

commercial aviation. The company is headquartered in Portland, Oregon and has additional 

operational bases in Memphis, Tennessee and Juneau, Alaska. Our approximately 180 

professionals operate a fleet of 14 aircraft on an average of 90 daily departures to 20 cities in 

nine states.1

SeaPort’s business strategy is focused on providing efficient and reliable service to small and

rural communities, and stands in contrast to global airlines and their regional partners who no 

longer have a strategic desire, or the economic capability, to serve such communities. To serve 

these communities, SeaPort operates aircraft with operating costs and passenger capacity that 

are aligned with a market’s true demand. This allows us to offer greater frequencies and choice 

of departure times than would not be possible using larger aircraft, and to set fares at a level 

that are attractive to potential customers but do not unduly shift the true cost of air travel from 

the customer to the EAS program. This is enveloped in attentive and personal service that, in 

many of our markets, has become commonly referred to as “The SeaPort Experience.”

SeaPort’s service to Pendleton over the last four years illustrates the effectiveness of this 

strategy and, as outlined in this proposal, it is our hope to continue building on this success for 

another EAS contract period.

In addition to Pendleton, SeaPort employs this strategy at the following EAS communities: 

Athens, GA; Jackson, Tennessee El Dorado, Hot Springs, and Harrison, Arkansas; and Salina, 

Kansas. The success of this strategy is evident in the fact that at every one of our Lower 48 

EAS communities, SeaPort has been reselected for an additional contract period(s). In addition 

to our reselection at Pendleton during the last contract renewal, earlier this year SeaPort was 

reselected at Salina for a four-year contract (rather than the standard two-year contract) based 

on overwhelmingly positive support from that community.

A Solid Track Record of Responsive, Reliable Air Service at Pendleton 

SeaPort Airlines prides itself on developing partnerships with each community it serves as part 

of the EAS program. This includes participation in local events, serving on community boards, 

donation of tickets, on-going communication with airport managers, and regular community 

meetings. We believe this approach serves our own interests equally with those of our EAS 

communities by fostering long-term, stable relationships that result in increased ridership.

A small sample of how SeaPort has developed our relationship with the Pendleton community 

since first launching service at Eastern Oregon Regional Airport in early 2009 includes:

 Providing complimentary parking for City of Pendleton staff car at SeaPort Airlines’ 

corporate office (located on Portland International Airport).

 1 Includes Athens, GA scheduled to begin November 1, 2012.
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October 3, 2012 Page | 3

 Adjustment to flight schedules at the request of the community. For example, earlier this 

year SeaPort moved earlier the morning departure from Portland to allow the state’s child 

psychologist to schedule more appointments during his weekly trip to Pendleton.

 Assistance in preparing Eastern Oregon Regional Airport’s successful Small Community Air 

Service Development (SCASD) earlier this year which resulted in the airport being awarded 

$50,000 in grant money that will be used toward marketing and community awareness of its 

local air service.

 Membership in the Pendleton Chamber of Commerce and Round-Up City Development 

Corporation (RCDC), the primary economic development entity in the Pendleton region.

 Sponsorship of Tamastslikt Cultural Institute, supporting the opportunity for locals and 

visitors to experience the history, culture, and hospitality of the native peoples that have 

lived in the region for more than 10,000 years with exhibits, artwork and events all yearround.

 Active support for and promotion of Pendleton Round-Up and Happy Canyon, one of the 

largest rodeos anywhere in the world and attracting 60,000-70,000 spectators during the 

second full week of September, through fare sales, additional flights and/or “extra sections.”

SeaPort first initiated service to Pendleton in January 2009 and our EAS contract was 

subsequently renewed in January 2011. As outlined in this proposal, SeaPort is well positioned

and would be honored to continue serving the Pendleton community.
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Summary of Proposal

SeaPort Airlines is proposing to continue offering nonstop service between Pendleton and 

Portland International Airport, providing connectivity with America’s national transportation 

system, as well as business, medical, and government services in Portland. Specific elements 

of our proposal to provide EAS at Pendleton are as follows:

Interline Connections & GDS

All SeaPort Airlines flights are currently displayed in the major global distribution systems, 

making flights available for sale via travel agents and all primary online travel portals and metasearchers such as Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapOair. 

Since 2009, SeaPort has maintained an interline ticketing agreement with US Airways. A new 

interline agreement, including e-ticketing (IET) and thru baggage check-in, with Alaska Airlines 

is anticipated to be effective no later than October 31, 2012.

2 This agreement will facilitate 

single-ticket travel on itineraries that include flights of both carriers, including the 32 destinations 

that Alaska Airlines serves on a nonstop basis from PDX and as shown on the map below.

Single-Connection Destinations via PDX

SeaPort Airlines to Alaska Airlines

SOURCE: alaskaair.com September 29, 2012 for travel November 15, 2012

This new interline agreement will represent a significant enhancement to SeaPort’s existing 

service at Pendleton, particularly in the context of 49 U.S.C. § 41733 (C) which requires that

during the carrier selection process, among other factors, consideration be given to “the interline 

 2 Testing of message switching between both carriers respective reservation system’s is completed with signing of 

the agreement anticipated within the next 30 days.
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arrangements that the applicant has made with a larger carrier to allow passengers and cargo of 

the applicant at the hub airport to be transported by the larger carrier through one reservation, 

ticket, and baggage check-in.”

SeaPort recognizes the value to travelers of interline agreements and is working to secure 

additional agreements so that our customers may purchase single-ticket itineraries between 

Eastern Oregon Regional Airport and even more destinations around the world. We anticipate 

reaching at least one more agreement by the end of 2012. 

Southwest Airlines also maintains a significant presence at Portland International Airport, 

offering an average of 37 daily departures to 13 nonstop destinations. Southwest does not enter 

into interline agreements with any other airline, however our experience serving Pendleton over 

the past four years indicates that Southwest’s low-fare model attracts a large number of transfer 

passengers utilizing “end-to-end” ticketing. Other airlines serving Portland International Airport

are Air Canada, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, jetBlue 

Airways, Spirit Airlines, Virgin America, United Airlines, and US Airways.

One hurdle to the community fully realizing the benefits of SeaPort’s interline agreements is the 

Transportation Security Administration’s refusal to reestablish passenger and baggage 

screening at Eastern Oregon Regional Airport. The TSA has also refused to authorize 

alternative screening programs as proposed by SeaPort, such as a private screening program 

similar to that permitted for Part 380 charter operations. This has resulted in a need for flights 

operated with the PC-12, departing for and arriving from Eastern Oregon Regional Airport, to be 

remotely parked and passengers shuttled to the main terminal.

3 It has also resulted in longer 

minimum connect times and an added layer of complexity related to baggage transfers. SeaPort 

has worked on this issue for a number of months and, if reselected to provide EAS at 

Pendleton, is committed to pursuing a permanent solution that fully integrates the community 

with the national air transportation system.

Fare Structure & Proposed Fares

Throughout its route system, SeaPort Airlines offers a range of fares all of which are priced on a 

one-way basis. The highest price point (branded as “FullFlex”) provides a customer with total 

flexibility to change travel plans without incurring any change fee or, if desired, receive a total 

refund. The lowest price point (branded as “NoFlex”) is best suited for customers who are 

certain about their travel plans, requires an advance purchase of 21-days, is non-refundable, 

and does not permit any changes from the original booked itinerary. In between is a range of 

fares (“Flex4Free” and “Flex4Fee”) that provides a choice of price-points based largely on how 

certain a customer is that their travel plans will not change. 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 on the next page summarizes the range of proposed ticket prices in the Pendleton

market for the next EAS contract period, along with the rules and restrictions applicable to each 

price point. The price points are similar to those that SeaPort presently offers at Eastern Oregon 

Regional Airport.

 3 This is not specific to SeaPort Airlines or Pendleton, but rather reflects TSA policy toward reestablishment of 

screening in markets served with small aircraft and currently impacts a number of EAS served cities.
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SeaPort Airlines Illustrative Fares

Pendleton, Oregon

 NOTE: Listed price points include Federal Excise Tax and applicable fees.

During the first year of the next contract term, SeaPort Airlines projects an average fare of 

$102.63. Net of taxes and fees, per passenger revenue and the basis for calculation of subsidy 

requirements, is projected to be $92.12 to/from Portland.4

Aircraft Type

During the next EAS term, SeaPort is proposing to serve Eastern Oregon Regional Airport using 

the modern and efficient Cessna Caravan turboprop. Produced 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 and Piper Chieftain. To date, over 2,000 Caravans have been built which 

have logged a total of over 12.5 million flight hours.

During the previous two EAS contract terms, SeaPort has served Pendleton with the Pilatus PC12. While an excellent aircraft, the PC-12 is a remnant of the company’s earlier operating 

strategy that included private terminals, avoidance of TSA screening, and primarily targeted the 

“commuter briefcase passengers.” As the company’s strategy has shifted to its current focus on 

serving small and rural communities (including TSA-screening, interline connections, and main 

terminal operations), the typical mission profile and economic acceptability of specific aircraft 

economics also evolved. This has resulted in the Cessna Caravan emerging as the ideal aircraft 

 4 The 9/11 security charge will only be collected from passengers when departures from Portland International Airport 

are relocated to the main passenger terminal.

Summary of Fare Rules FullFlex Free2Flex NoFlex

Advance Purchase - No. of Days 0 3 3 7 14 21

Refundable Yes No No No No No

Change Fee $0 $0 $50 $50 $50 No Chg

Fare Code YR B3F M3L H7L Q14L L21X

FlyerFlex Loyalty Program Credit 200% 150% 100% 100% 100% 0%

Pendleton, OR to: FullFlex Free2Flex NoFlex

Portland, OR $165 $135 $115 $95 $80 $70

Flex4Fee

Flex4Fee
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for a majority of our routes, including PDX-PDT, based on operating economics, reliability, 

passenger comfort, and baggage capacity.

To this last point, the large cargo pod on the Caravan has a maximum capacity of 111 cubic feet 

and accommodates 1,090 pounds of baggage. This is substantially more, both in terms of 

weight and bulk than can be accommodated on the Pilatus PC-12 that it will replace, allowing a 

40+% increase to our free baggage allowance from 35 pounds to 50 pounds. Equally important, 

the cargo pod allows for segregation of passengers and baggage needed to comply with TSA 

security regulations and will enable the Pendleton market to be better able to take advantage of 

the interline agreement with Alaska Airlines as described above.

5

Proposed Frequencies & Illustrative Schedule

In Order 2012-8-18, the Department states: “With specific respect to Pendleton, the Department 

expects proposals consisting of three nonstop round trips a day (21 a week) with 8- or 9-

passenger aircraft or two daily round trips (12 a week) with larger aircraft to Portland, the hub 

that the community has historically preferred.”6

The requested subsidy level in this proposal is for 21 weekly roundtrips as requested by the 

Department. The schedule pattern illustrated below is for 22 weekly roundtrips, including an 

additional roundtrip operated that would be operated on an unsubsidized basis. This represents 

a continuation of the frequency that SeaPort presently offers in the Pendleton market.

Please note the service pattern illustrated is one that SeaPort has developed over the past four 

years of providing service at Pendleton, and has evolved with input from the community. This 

process of including the community in the schedule development will certainly continue if 

SeaPort is selected for this EAS renewal.

 5 SeaPort has implemented an interim solution through the balance of the current EAS contract that is based on 

operations using the Pilatus PC-12, however this solution results in much higher operating costs, remote aircraft 

parking, and longer published minimum connect times which inhibits the ability of the Pendleton market to fully benefit 

from the interline agreement with Alaska Airlines.

6 Order 2012-8-13, p. 2

Depart Arrive Frequency Stops Depart Arrive Frequency Stops

6:00am 7:15am ExSatSun 0 7:45am 9:00am ExSatSun 0

6:45am 8:00am SatOnly 0 12:15pm 1:30pm ExSat 0

9:15am 10:30am ExSatSun 0 3:30pm 4:45pm ExSatSun 0

1:45pm 3:00pm ExSat 0 6:45pm 8:00pm ExSat 0

5:00pm 6:15pm ExSatSun 0

Illustrative Schedule Pattern

22 Weekly Roundtrips: Pendleton - Portland, OR

SeaPort Airlines, Inc.

Aircraft Type: Cessna Caravan

Pendleton to Portland Portland to Pendleton

(21 Subsidized RTs + 1 Unsubsidized RT)
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Marketing & Community Relations 

In this proposal, SeaPort Airlines has allocated $15,000 per year for marketing and sales. This 

amount takes into consideration existing brand awareness that SeaPort Airlines enjoys in the 

Pendleton market along with the recent award of SCASD grant dollars for marketing.

Provided below are specific marketing tactics that SeaPort Airlines has utilized in the Pendleton 

market and/or intends to employ during the next EAS term:

 Hispanic Market Outreach: With a growing presence in regions that have large Hispanic 

populations, SeaPort Airlines intends to establish a Spanish-speaking reservation call center

during 2013 making our service more convenient and accessible to a larger percentage of 

the overall market. This will benefit a number of communities in the Eastern Oregon 

Regional Airport service area, such as Hermiston, Umatilla, and Weston have an increasing 

percentage of Spanish-speaking residents. In mid-2013, SeaPort plans to unveil a Spanish 

version of www.seaportairlines.com along with translation of targeted pieces of printed 

marketing collateral.

7

 Local Event Marketing: SeaPort Airlines has utilized visible participation in local events as 

an effective tool for developing brand awareness in the Pendleton area, including

community Easter egg hunts, presentations to and support of community business and 

cultural groups, membership in the Chamber of Commerce, etc. 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.).

 Social Media Strategy: Since 2010, SeaPort Airlines has managed a successful social 

media campaign that has allowed the company to dynamically engage customers across the 

route system (including in Pendleton) in a two-way conversation. This has included the use 

of popular Internet sites such as Facebook, Twitter, and LinkedIn, and we have found this 

strategy to be an excellent tool for generating passenger referrals and information sharing in 

our communities. This approach underscores our overall philosophy that advertising 

budgets can be effectively leveraged with “new media” such as social networking, blogs, 

opt-in email, etc. to engage customers on a truly personal level. 

 FlyerFlex Customer Rewards: SeaPort offers a customer loyalty program called 

“FlyerFlex.” This program provides customers with a variety of benefits including free flights, 

service charge waivers, and bonus points. SeaPort will be unveiling major enhancements to 

our FlyerFlex program the third quarter of 2012, including a wider range of travel award 

options, ability for customers to check balances and redeem awards online, and access to 

security checkpoint express lanes for elite frequent flyers.

8

 Value Accounts: SeaPort offers Corporate Value Accounts that encourage businesses to 

make a long-term investment in local air service by offering a variety of benefits, such as 

waivers to change fees and savings of as much as 15% off published fares. Unlike 

 7 Earlier this year, an entirely new www.seaportairlines.com was unveiled that is easier to navigate and provides 

customers with more detailed travel information.

8 As interline agreements are added, SeaPort hopes to also offer credit accrual in the mileage programs of major 

airlines.
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corporate travel programs of major airlines that typically prevent small businesses from 

realizing meaningful benefits, companies of virtually any size (and any employee of those 

companies) can realize real savings and benefits from SeaPort’s Value Account program. 

The City of Pendleton has been a long time Value Account customer, realizing savings that 

it could not likely achieve with the corporate travel programs of a larger airline.

Samples of SeaPort’s advertising and community engagement over the past four years of

serving the Pendleton community are provided on the next page.
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Subsidy Requests & Supporting Calculations

The following pages contain the service proposal of SeaPort Airlines to provide essential air 

service at Pendleton, OR along with supporting calculations. 

This proposal is presented on the basis of annual subsidy requirementa for each year over a 

two year term. Notwithstanding the risk of rising costs in subsequent years (particularly related 

to fuel costs) that could possibly outstrip traffic growth and our ability to respond with reasonable 

fare increases, SeaPort is offering the Department and the community the option to contract at 

the second year subsidy level for each year of the four-year period. We believe this 

provides the Pendleton community with the assurance of stable air service for an extended 

period and reduces the administrative burden on both the Department and ourselves.

SeaPort Airlines, Inc. appreciates the opportunity to submit this proposal and welcomes any 

questions or comments from the communities and/or the Department.

Respectfully submitted on behalf of 

SeaPort Airlines, Inc.

Timothy Sieber

Vice President – Commercial

October 3, 2012
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Year 1 Year 2

Operating Projections

Average Sector Length (sm) 182 182

Scheduled Departures 2,184 2,184

Scheduled Block Hours 3,094.0 3,094.0

Projected Completion Factor 99.0% 99.0%

Projected Completed Departures 2,162 2,162

Projected Completed Block Hours 3,063.1 3,063.1

Passenger Projections

Projected Passengers 11,556 11,787

Passengers per Departure 5.3 5.5

Projected Average Fare $92.12 $93.96

Revenue Passenger Miles (RPMs) 2,103,208 2,145,273

Available Seat Miles (ASMs) 3,541,618 3,541,618

Projected Load Factor 59.4% 60.6%

Financial Projections

Revenues

Passenger Ticket Revenues $1,064,547 $1,107,555

Ancillary Revenues $21,291 $22,151

Total $1,085,838 $1,129,706

Expenses

Flight Operations $262,990 $276,140

Aircraft Ownership/Lease $252,000 $252,000

Fuel & Oil $776,903 $815,749

Sales & Marketing $15,000 $15,000

Traffic Servicing $453,612 $476,293

Insurance $55,692 $58,477

Maintenance $712,414 $748,035

Sub-Total - Direct $2,528,611 $2,655,042

Indirect $252,861 $265,504

Total Expenses $2,781,472 $2,920,546

Projected Operating Profit/(Loss) ($1,695,635) ($1,780,416)

Subsidy Calculations

Operating Loss $1,695,635 $1,780,416

Economic Return @ 5% $139,074 $146,027

Required Subsidy $1,834,708 $1,926,444

Subsidy per Departure $848.55 $890.98

Subsidy per Passenger $158.77 $163.44

Avg. Enplanements per Operational Day 18.5 18.9

Aircraft Option: Cessna Caravan

21 Weekly Roundtrips: Pendleton - Portland, OR

SeaPort Airlines, Inc.