### Before the Department of Transportation Washington, DC Office of the Secretary

_______________________________________ In the Matter of ) ) ESSENTIAL AIR SERVICE AT ) Docket DOT

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, CALIFORNIA )

_______________________________________ )



# Service Proposal of Air Excursions LLC d / b / a Alaska Seaplanes & Redwood Airlines

Communications with respect to this document should be addressed to:

Kent Craford A ir Excursions LLC d/b/a Redwood Airlines 1873 Shell Simmons Dr. Ste. 110 Juneau, Alaska 99801 kent@flyalaskaseaplanes.com
February 17, 2015

## Serving the Oreg o n/Calif o rnia B o rder C o a s t

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# RED WOO D AIRLINE S R E D W O O D A I R L I N E S



## I

. Proposal Overview

II

. About Alaska Seaplanes

III

. Details of Service Plan

IV

. Sample Flight Schedule

V

. Letters of Support

# I. Proposal Overview :

 Non

- stop flights to Oakland and Portland

 Three times the previous fl ight frequency

-- with up to six depar tures per weekday

 Modern and reliable aircraft, which are still in production

 Superior schedule for better connectivity and shorter layovers

 Convenient private terminals with no TSA
, m aking day trips quick and hassle

- free

 Proven commitment to marketing, tourism development and community partnerships

 Oregon

- based owner and managem ent team

 A locally relevant brand

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# II. About Alaska Seaplanes :

Alaska Seaplanes (“Seaplanes”) is the premier commuter airline of Southeast Alaska. Operati ng from a hub in Juneau, Seaplanes operates scheduled wheel plane and float plane flights to 11 communities, six of which are served under the USDO T Essential Air Service Program.
The company was founded in 1997 and since 2011 has been owned by Mike Stedman and Kent Craford. Stedman has been in the Part 135 aviation business for 35 years and has over 20,000 hours as pilot

- in

- command. He is the former President of the Alaska Air Carriers Association, and an adviser to the Governor on aviation matters. He is also an owner of Juneau

- b ased Wings Airways.

Kent Craford is the former CEO of SeaPort Airlines and Wings of Alaska, and was the first American aviation entrepreneur to pioneer operating Pilatus PC

- 12s in business commuter service, a model that is now being widely adopted across the United States. Craford grew up in the San Francisco Bay Area and has lived in Portland since 2001.
In 2012, Stedman and C raford acquired the commuter airline Air Excursions and united its operations under the Alaska Seaplanes brand

. T oday, Alaska Seaplanes launches up to 150 flights per day and carries passengers, freight and US mail . It also offers charter flights through out Southeast Alaska. Seaplanes is headquart ered in Juneau, employs up to 85 people and operates year

- round.
Alaska Seaplanes prides itself on having the best people and equi pment among scheduled Juneau operators , hence the tagline, “Flying at a Higher Standard.” Seaplanes is the only IFR

- capable commuter airline in its market with newly refurbished aircraft that are ADS

- B equipped . The company also r ecently built a new aircraft maintenance hangar i n Juneau, demonstrating it s commitment to reinvestment in its operations.
Alaska Seaplanes has seen its market share grow substantially where it c ompetes directly with established competitors. The company’s commitment to customer service, quality equipment and marketing sets it apart.

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- venture tourism business with Kootznoowoo, Inc., the Alaska Native Corporation for the village of Angoon. Since its found ing four years ago, the joint venture business has grown over 50% per year and is realizing substantial gains in tourism development on Admiralty Island, and investment returns for its native shareholders.
Alaska Seaplanes understa nds tourism

- focused economies, and is committed to developing partnerships on the Border Coast to attract more tourists, by air, to the region.



### Success with **Essential Air Service** Alaska Seaplanes/Air Excursions has been operating wheel plane service to K ake, AK under an EAS contract since late 2010. Under the company’s stewardship
, traffic increased from roughly 2,500 passengers in 2009, to nearly 4,000 passengers in 2013 , the last full year for which statistics are available.

2009 to 2013 E nplanements Kake, Alaska 0 1000 2000 3000 4000

2009 2010 2011 2012 2013 

### Alaska Seaplanes

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# I II

. Details of Service Plan :

**Redwood Airlines** Redwood Airlines will be an independent division of Alaska Seaplanes, set up to serve Crescent City with three non

- stop roundtrip flights per weekday to Portland, and three non

- stop roundtrips per weekday to Oakland. 1

Redwood Airlines is headed by a n experienced team that has something unique to offer

— a superior air service model, tourism experience, knowledge of coastal economies, and roots in Portland and the Bay Area

. The company will be headquartered in Portland and overseen by owner and President Kent Craford, who worked in the West Coast seafood industry for several years. Alaska Seaplanes d/b/a Redwood Airlines is not an Essential Air Service “chaser,” bidding on contracts fro m Hawaii to New York. Crescent City is the first contract Alaska Seaplanes has bid on in the Lower 48, and only after careful analysis of the potential benefit to both the company and community. The m ission is to offer the Border Coast both northb ound and southbound flight options , without the hassle of TSA and SFO, at prices lower t han what is currently being offered, and to build a durable brand on the back of old fashioned on

- the

ground sales, marketing and advertising

.


### Dual Hub Advantage T he management team at Alaska Seaplanes/ Redwood Airlines understands the value of a two hub proposition. The concept is simple

— give people more options, and more people will fly.

1 Weekend frequency will be 50% of the weekday schedule DOT

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- hub attraction

.

Source: BTS Transtats As you can see, there is small, natural year

- over
- year growth in the El Dorado (ELD ) and Hot Springs (HOT) markets . Now compare that to the Harrison (HRO) and Jonesboro (JBR) markets, where a second hub was added after the initial time perio d. The difference is substantial.



### Oakland Oakland is a natural alternative to the current service a t SFO , and offers connectivity in all directions

. 0 500 1000 1500 2000 2500 3000

ELD HOT HRO JBREnplanements

First full six months of service, compared to the same six months the following year after a second hub is added for HRO and JBR 

# Single Hub vs Dual Hub Growth

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Source: BTS Transtats With three flights daily between Oakland and Crescent City, Redwood Airlines will make day trips quick and convenient . Whether you’re renting a car, ho p ping on BART, or using your favorite ride

- share service; getting from our private terminal to where you n eed to be is simple and easy.



### Portland

Portland is an excellent complimentary hub to OAK, offering multiple non

- stops, including many East Coast destinations. In addition, PDX has a very low cancellation rate

– less than a third of SFO’s, as shown on the following page

. 0% 5% 10% 15% 20% 25% 30%

Delayed Departures Delayed Arrivals 

# Percentage of Flights Delayed

OAK

SFO

0 10 20 30 40 50 60 70

Length of Departure

Delays Length of Arrival Delays 

# Average Length

of Delay (min)

OAK

SFO

0.00% 0.50% 1.00% 1.50% 2.00% 2.50%

Cancellations 

# Percentage

of Flights Canceled

OAK

SFO

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- 2649PDX is more than a good place to connect. For those just going to the Portland metro area, t hree flights daily will allow you to make a day trip out of what would normally be a multi

- day affair. And with tax

- free shopping, important medical facilitie s, and Salem just down the road, Redwood Airlines knows PD X will o ffer the Border Coast more than just a hub

– it will be a destinatio n, as well as a source of weeke nd tourists

. 

### Fare Comparison Another benefit of both OAK and PDX i s the large presence of low cost carriers
, including Southwest and Spirit, which pushes down fares on all flights . The chart below demonstrates the savings to the average CEC passenger by flying through these hubs (including the forecasted Redwood Airlines fare) , as opposed to the current fares from CEC through SFO. 0% 5% 10% 15% 20% 25% 30%

Delayed Departures Delayed Arrivals 

# Percentage of Flights Delayed

PDX

SFO

0 10 20 30 40 50 60 70

Length of Departure

Delays Length of Arrival Delays 

# Average Length

of Delay (min)

PDX

SFO

0.00% 0.50% 1.00% 1.50% 2.00% 2.50%

Cancellations 

# Percentage

of Flights Canceled

PDX

SFO

$- $100 $200 $300 $400 $500 $600 $700

ATL LAX ORD JFK DFW LAS SEA BOS DEN Comparison is based on lowest fares with no advance purchase restrictions. Redwood Airlines proposed average fare of $129 (after taxes) included in all OAK and PDX fares. 

# CEC Current Fares vs. Fares Over OAK and PDX

CEC

OAK

PDX

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### Hassle

**- free**  One of the huge advantages of Redwood Airlines is the convenience of TSA

- free travel.

G o ing to the Bay Area or Portland? 2 Y ou’ll be able to fly without the hassles of taking your shoes off, throwing away your water, and walking through a body scanner. As for connecting passengers, they’ll only have to go through that rigmarole once. After all, why go through that in both Crescent City and the hub?
By eliminating TSA from the equation, you can show up for your flights just 20 minutes before departure time . On

- site rental cars at both hubs will keep you moving, eliminating unnecessary waiting periods or parking shuttles.



### Tourism U nlike many EAS communities where the traffic nearly exclusively originates in the community, Crescent City has a thriving tourism market as the “Redwood Gate to the Golden State”. Redwood Airlines is best positioned to capitalize on this, both because of it s locally branded service, and Alaska Seaplanes ’ experience in tourism marketing

. The company knows how to create successful tourism packages, as was evidenced by our recent profile on the TODAY Show. Redwood Airlines will create similar tourism packages with local attractions, guides and lodging establishment s. In fact, Redwood Airlines’ reservation system wi ll allow the company to add tours, attraction tickets, and other activities directly into the booking process.

2 According to data provided by Sixe l , the Bay Area has over four times the demand of any other destination. DOT

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### Aircraft

Due to Crescent C ity’s l onger -t han -a v erage distanc e to a hub, R edwood Airlines f irmly believes t hat t he Swiss-built Pilatus PC -1 2 is t he best aircraft for the job. While it i s faster than other Part 135 offerings, i ts main benefit i s the comfortable pressurized cabin. Though the PC -1 2 has only been used in US commuter mark ets for several years
, i t is becoming more widely adopted due to its operational reliability and customer appeal. With a private-jet style cabin, individual seats , and the lowest cabin noise and vibration among airplanes in its class, the PC-12 is the right airplane for the Border Coast. 

### Proposal

Redwood Airlines is proposing three non

- stop, round trip flights each week day from Crescent City to both Oakland and Portland, totaling six round trips daily, and six total roundtrips on the weekend. The company anticipates an average fare of $129, including taxes

. The company will operate on a legacy airline reservation platfor m with full GDS connectivity and interline capability, an d visibility on the major Online Travel Agencies

.

YEAR 1 YEAR 2

Operations Operations Scheduled Flights 3,744 Scheduled Flights 3,744 Completed Flights @ 98% 3,669 Completed Flights @ 98% 3,669 Scheduled Block Hours 5,304 Scheduled Block Hours 5,304 Scheduled Seats 33,696 Scheduled Seats 33,696 Scheduled ASMs 9,721,296 Scheduled ASMs 9,721,296

Revenue Revenue Passengers 23,232 Passengers 23,760 Average Fare $120.00 Average Fare $120.00 Fare Revenue $2,787,840 Fare Revenue $2,851,200 Total Revenue $2,787,840 Total Revenue $2,851,200

Expenses Expenses Aircraft $1,008,000 Aircraft $1,008,000 Employees $1,172,560 Employees $1,172,560 Fuel and Oil $1, 85 4,666 Fuel and Oil $1, 85 4,666 Maintenance and Reserves $1,432,080 Maintenance and Reserves $1,432,080 Marketing and Distribution $354,288 Marketing and Distribution $261,360 Insurance $ 9 3,200 Insurance $ 9 3,200 Other Indirect Expenses $547,595 Other Indirect Expenses $547,595 Total Expenses $6,462,389 Total Expenses $6,369,461

Profit $323,119 Profit $318,473 Margin 5.00% Margin 5.00%
Total Subsidy Required $3,997,668 Total Subsidy Required $3,836,734

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# IV. Sample Schedule :

**Crescent City to Oakland Oakland to Crescent City** 
**Departure Arrival**  **Departure Arrival** 

5:3 0 am 7:0 0 am 7:3 0 am 9:0 0 am

9 :2 5 am 10:5 5 am 4:25 pm 5:55 pm
6:20 pm 7:50 pm 8:20 pm 9:50 pm



### Crescent City to **Portland Portland to Crescent City** 
**Departure Arrival**  **Departure Arrival** 

5: 3 0 am 6 :5 0 am 7:3 0 am 8:5 0 am

9:2 5 am 10:4 5 am 4:2 5 pm 5 :45 pm

6:2 0 pm 7:4 0 pm 8 :2 0 pm 9:4 0 pm

These schedules were developed with both the connecting and local passenger in mind. They are tentative and will be refined with feedback from the community and passengers.

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# V. Letters of Support

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- 2649From: WFOA [mailto:wfoa@charter.net] Sent: Thursday, January 22, 2015 8:23 AM To: jylansing@aol.com Subject: WFOA Support for Air Service



### John:

Please forward this
Western Fishboat Owners Association (WFOA) representing about 400 west coast U.S. albacore fishermen and support businesses strongly encourages the development of air service from Crescent City, CA to Portland, OR and Oakland, CA. Over the past 10 years the access to flights from the Northern California area both north and south have been steadily declining. This region is important to our members who may want to utilize the service and save long drives. WFOA encourages this project to move forward.

Thanks
Wayne Heikkila Executive Director Western Fishboat Owners Association American Fishermen's Research Foundation P.O. Box 992723 Redding, CA 96099 Website: http://www.wfoa-tuna.org Phone 530.229.1097 Fax 530.232-0107 E-Mail < wfoa@charter.net >