\\DC - 035431/000001 - 6510688 v3 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Essential Air Service at ALTOONA, PENNSYLVANIA BRADFORD, PENNSYLVANIA FRANKLIN/OIL CITY, PENNSYLVANIA JAMESTOWN, NEW YORK Under 49 U.S.C. § 41731 et seq. ) ) ) ) ) ) ) ) ) Docket DOT-OST-2002-11446 Docket DOT-OST-2003-14528 Docket DOT-OST-1997-2523 Docket DOT-OST-2003-14950

MOTION OF SEAPORT AIRLINES, INC. TO REOPEN AND RESOLICIT EAS PROPOSALS

Communications with respect to this document should be addressed to: Timothy Sieber Executive Vice President SeaPort Airlines, Inc. 7505 NE Airport Way Portland, Oregon 97218 tsieber@seaportair.com Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659 robert.cohn@hoganlovells.com patrick.rizzi@hoganlovells.com Counsel for SeaPort Airlines, Inc.

April 8, 2015\\DC - 035431/000001 - 6510688 v3 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Essential Air Service at ALTOONA, PENNSYLVANIA BRADFORD, PENNSYLVANIA FRANKLIN/OIL CITY, PENNSYLVANIA JAMESTOWN, NEW YORK Under 49 U.S.C. § 41731 et seq. ) ) ) ) ) ) ) ) ) Docket DOT-OST-2002-11446 Docket DOT-OST-2003-14528 Docket DOT-OST-1997-2523 Docket DOT-OST-2003-14950

MOTION OF SEAPORT AIRLINES, INC. TO REOPEN AND RESOLICIT EAS PROPOSALS Material changes have occurred to the essential air service (“EAS”) being provided at Altoona, Bradford, Franklin/Oil City, and Jamestown, which completely undermine and negate the Department’s selection of Sun Air Express, LLC (“Sun Air”) to provide EAS at those communities. In light of those material changes, SeaPort Airlines, Inc. (“SeaPort”) respectfully requests the Department of Transportation to reopen its selection determination and resolicit EAS proposals to serve each of these
communities. SeaPort is an experienced EAS carrier and recognizes that this Motion to reopen the award and resolicit EAS proposals in the middle of the EAS term for these communities is unusual. However, SeaPort is compelled to take this action in light of significantly changed circumstances involving service by the selected EAS carrier. Instead of providing EAS with a two-engine aircraft consistent with the proposal on which its selection was premised, the service is now being provided with a single-engine aircraft, and not by Sun Air, but by another carrier. These service changes, already made at Jamestown, Bradford and Altoona and proposed at Franklin/Oil City, are soMotion of SeaPort Airlines Page 2

\\DC - 035431/000001 - 6510688 v3 fundamentally inconsistent with Sun Air’s EAS proposal as to effectively eliminate the very bases on which the Department made its EAS selections. To allow the selected EAS carrier to so materially change its service – including relying on an unrelated third party to provide a different service (single-engine aircraft) than it proposed – undermines the credibility of DOT’s EAS selection process and establishes a dangerous precedent for future EAS carrier-selection proceedings. The Department has awarded several EAS routes recently to Sun Air based on its commitment to operate twin-engine Piper Chieftain aircraft on these routes. The twin-engine Piper Chieftain was a critical and dispositive operational attribute under the Statute, which requires a two-engine aircraft be used unless the community waives it. Significantly, the communities refused to waive that requirement during the EAS selection process. As a result, the Department summarily rejected EAS proposals to operate single-engine aircraft (e.g., Boutique Air). See DOT Order 2014-10-21, at 3; DOT Order 2014-7-11, at 7. Other potential EAS bidders with single-engine aircraft, such as SeaPort, simply did not submit proposals in light of the communities’ refusals to waive the two-engine requirement. As a result, the Department was effectively compelled to select Sun Air.“This leaves Sun Air as the only carrier with a proposal that offers twinengine aircraft and is supported by Altoona and Jamestown.” DOT Order 2014-7-11, at 7.“Therefore, Sun Air is the only carrier with a proposal that offers twinengine aircraft and is supported by Bradford and Franklin.” DOT Order 2014-10-21, at 3Motion of SeaPort Airlines Page 3

\\DC - 035431/000001 - 6510688 v3 In addition, Sun Air’s bid made no mention of a proposal to utilize another airline to provide the service. Consequently, the DOT’s awards for EAS to Altoona, Jamestown, Bradford and Franklin/Oil City specifically identified the selected EAS carrier as Sun Air Express, LLC d/b/a Sun Air International and further expressly identified the aircraft to be used as an “8-seat Piper Chieftain”. See, DOT Order 2014-7-11, Appendix B, at 2, 7; and DOT Order 2014-10-21, Appendix C, at 1, 2. After having received the EAS awards on the Altoona, Jamestown and Bradford routes based on Sun Air’s commitment to provide service with a two-engine aircraft, Sun Air changed its service offering in two material ways. First, the EAS service is now being provided with a single-engine aircraft (Cessna Caravan), not the two-engine Piper Chieftain on which its bid was selected. Second, Sun Air is not itself providing the service. Rather, the service is being provided by another unrelated carrier (Mokulele Airlines). See http://flysunairexpress.com . Sun Air is also planning on implementing the same aircraft type/operating carrier switch on the Franklin/Oil City route. 1 This is not simply a schedule change, nor is this a case where a mainline major carrier is using a regional carrier partner to operate EAS with regional jet aircraft under its brand, consistent with the EAS bid it submitted and the corresponding EAS award. Rather, this represents a material, substantive post-award service commitment reversal that eliminates the fundamental reasons for which Sun Air was selected: i.e., the operation by Sun Air of twin-engine aircraft. Moreover, it does not appear that there will be any reduction in the subsidy for the change in aircraft type or operating carrier. A single-engine aircraft with an

1 Letter from Venango County/Venango Regional Airport to DOT EAS Division (March 19, 2015), Docket DOT-OST-1997-2523.Motion of SeaPort Airlines Page 4

\\DC - 035431/000001 - 6510688 v3 additional passenger seat may well have lower operating costs than the twin-engine Piper Chieftain. For example, with respect to Franklin/Oil City, Boutique Air (with a single-engine, 9-seat Pilatus aircraft) proposed a subsidy of $1,287,147 for 18 weekly roundtrips, whereas Sun Air (with its twin-engine, 8-seat Chieftain) sought a higher subsidy of $1,442,788 (for 19 weekly roundtrips). See DOT Order 2014-10-21. This is particularly important given the budget pressures on the EAS Program as a whole and the fact that a number of EAS communities including Bradford, Jamestown, Altoona, and Franklin/Oil City are subject to the $200 per passenger subsidy cap. 2 At its core, this post-award change in aircraft and the operating carrier is nothing less than an EAS version of bait-and-switch. The Department should not countenancesuch gamesmanship because it undercuts the fairness of the EAS proposal-andselection process. It unfairly penalizes other carriers who submit (or, as in the case of SeaPort, would have submitted) good faith EAS proposals with single-engine aircraft. And, it does a major disservice to the EAS communities themselves. If the Department fails to correct this situation by reopening the selection and resoliciting EAS proposals, the precedent would be very troubling for future EAS proceedings. It would encourage carriers to overpromise EAS service to thecommunities and the Department, as Sun Air did here, and thereby discourage costeffective and competitive EAS proposals from single-engine aircraft bidders; and to do so with impunity because, as a result of this precedent, those same carriers would know that, once selected, such carriers could reverse course and change to single-engine aircraft (and use another carrier) without jeopardizing the award via a resolicitation proceeding. To be sure, the communities would need to waive the two-engine aircraft

2 See DOT Order 2014-7-11, at 7, and DOT Order 2014-10-21, at 3-4.Motion of SeaPort Airlines Page 5

\\DC - 035431/000001 - 6510688 v3 service requirement now and for all future EAS bids, and indeed two of the communities faced with Sun Air’s recent aircraft type/operating carrier switch reversed their positions post-award and waived that minimum service requirement (Jamestown, NY; Bradford, PA)3. The EAS communities, however, should not be faced with such a post-award take-it-or-leave-it proposition from the EAS provider that effectively forces them to waive (now and for the future) the very statutory requirement they only recently declined to waive during the EAS solicitation-and-award proceeding (when there were multiple applicants). Indeed, Venango County Airport (serving Franklin/Oil City) would not waive its right to twin-engine aircraft service recently, instead offering to temporarily waive that right for a period of 60 days. 4 And, if the EAS communities are strong-armed by the incumbent carrier into waiving the two-engine aircraft requirement in the middle of the EAS term, the communities should at least be allowed to re-consider and evaluate service proposals from all eligible carriers, including single-engine aircraft operators. At a minimum, when Sun Air informed the communities and the Department about its desire to have another carrier operate the EAS and with single-engine aircraft (instead of Sun Air’s twin-engine Piper Chieftain) and the EAS communities conveyed a willingness to acquiesce and waive the two-engine aircraft requirement, the Department should have reopened the EAS award and resolicited bids from all EAS carriers, including single-engine aircraft operators like SeaPort. Without such a remedy, the Department will open the EAS proposal-and-selection process to the very gamesmanship and unfairness described above, to the substantial detriment of the

3 Letter from Chautauqua County Airports to DOT EAS Division (February 25, 2015), Docket DOT-OST-2003- 14950; Letter from Interim Airport Manager for Bradford Regional Airport to DOT EAS Division (February 2, 2015), Docket DOT-OST-2003-14528. 4 Letter from Venango County/Venango Regional Airport to DOT EAS Division (March 19, 2015), Docket DOT-OST-1997-2523.Motion of SeaPort Airlines Page 6

\\DC - 035431/000001 - 6510688 v3 communities, the EAS program, and the public interest. For the Department to allow that to happen would be arbitrary, capricious, and an abuse of discretion.
In conclusion, for the reasons set forth above, SeaPort respectfully requests that the Department issue an order reopening the EAS awards and resoliciting EAS service proposals for Altoona, Bradford, Jamestown, and Franklin/Oil City, making clear that single-engine aircraft proposals are now eligible for consideration.

Respectfully submitted,

___________________________________ Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659 Counsel for SeaPort Airlines, Inc.\\DC - 035431/000001 - 6510688 v3 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing Motion of SeaPort Airlines has been served this 8th day of April 2015, upon each of the following:
Mayor Matt Pacifico City of Altoona, Pennsylvania council@altoonapa.gov Tracy A. Plessinger, Manager Altoona-Blair County Airport Fax: +1 814 793 2655 Mayor Tom Riel City of Bradford, Pennsylvania Fax: +1 814 368 3335 cityofbradford@atlanticbb.net Alicia O. Dankesreiter Interim Airport Manager Bradford Regional Airport alicia@bradfordairport.net Mayor Douglas A. Baker City of Franklin, Pennsylvania dbaker@franklinpa.gov Mayor Barbara F. Crudo City of Oil City, Pennsylvania Fax: +1 814 678 3086 Otho C. Bell, Airport Manager Venango Regional Airport Fax: +1 814 432 2684 Mayor Samuel Teresi City of Jamestown, New York Fax: +1 716 483 7591 Vincent W. Horrigan, County Executive Chautauqua County, New York horriganv@co.chautauqua.ny.us
William Tucker Manager of Airports and Parks Chautauqua County, New York Fax +1 716 487 1322 David Hackett Chief Executive Officer Sun Air Express, LLC dhackett@gosunair.com

Jonathan Echmalian