Before the United States Department of Transportation 

September 30, 2014 

Essential Air Service at 

JACKSON, TENNESSEE Docket OST-2000-7857 

Under49 U.S.C. 41731 et seq. 

REQUEST FOR CHANGE IN COMPENSATION FOR 

PROVIDING ESSENTIAL AIR SERVICE AT JACKSON, TENNESSEE 

By Order 2011-12-15, the Department selected SeaPort to provide subsidized 

Essential Air Service ("EAS") at Jackson, Tennesee for a one year period at an annual 

subsidy rate of $1,149,703. The one year contract period was because concerns about 

Jackson's continued eligibility to receive subsidized EAS. 

By Order 2013-2-23, the Department extended the service period for SeaPort at 

Jackson, Tennessee through January 31, 2014 at an annual subsidy rate of $1,115, 210. 

The reduced rate was established based on SeaPort's original proposal to provide EAS at 

Jackson, and assumed that traffic levels at Jackson could be sufficiently restored after a 

year thereby lowering the required subsidy level. 

By Order 2014-1-23, the Department temporarily extended the service period until 

September 30, 2014 at the same subsidy rate established in Order 2013-2-23. This 

temporary extension was due to uncertaintity about Jackson's future eligibility for EAS 

resulting from changes to continued eligibility requirements in the Federal Aviation 

Adminstration (FAA) Modernization and Reform Act of 2012 (Public Law No: 112-95) and 

specifically that the community enplane an average of 10 passengers per day. 

By Order 2014-6-6, the Department issued a Final Order Terminating EAS Eligibiilty 

and Establishing Waiver Procedures for 13 communities in the EAS program, including 

Jackson. On September 26, 2014, the Department granted waivers to 12 of those 

communities, including Jackson. 1 

1 Order 2014-9-21 
SeaPort Airlines, Inc. 

Request for Change in EAS Compensation at Jackson 

Page 2 of4 

SeaPort is understanding of the Department having to manage the uncertaintity over 

Jackson's continued eligibility to receive subsidized EAS, we note that service is currently 

being provided at a rate first calculated in our proposal submitted on October 2, 2011. As 

such, SeaPort respectively requests an increase in subsidy at Jackson from $607.89 to 

$910.65 per departure. On annual basis, this equates to a subsidy rate of $1,687,696. 

To support this increase in subsidy, SeaPort provides the following: 

• Refusal by the Transportation Security Adminstration ("TSA") to reestablish 

passenger and baggage screening at Jackson has required SeaPort to deplane 

passengers arriving into BNA at the Fixed Based Operator ("FBO"). This has 

resulted in each SeaPort arrival at Jackson paying a ramp fee to the FBO and 

another fee to a commercial shuttle service that transports passengers to the main 

terminal. 

• Increased direct maintenance costs resulting from an additional engine starts to 

reposition aircraft from the FBO to the main terminal for departing flights. 

• Increased indirect maintenance costs due to renewal at a higher lease rate for our 

hangar at Memphis International Airport 

• Increase in fees charged by a third-party to ground handle SeaPort's passengers 

and aircraft at BNA. 

• Increased flight crew costs in the form higher of compensation and significantly 

higher frequency of training events due to the national pilot shortage. 

• Higher costs resulting from our switch to the Altea reservation platform which 

improves SeaPort's ability to enter into interline agreements but has not yet resulted 

in an agreement that will materially benefit enplanement levels at Jackson, such as 

Delta, American, or United.2 · 

• Enplanement levels at Jackson which were much higher than the previous provider 

of EAS but below those projected in the proposal submitted three years ago. This is 

due to 1) TSA's refusal to reestablish screening that suppresses traffic by adding 

inconvenience and time to make a connection at BNA, 2) SeaPort's underestimation 

of how much market confidence in air service at Jackson had been eroded by the 

previous EAS operator, and 3) delay in establishing interline agreements that 

specifically benefit enplanement levels at Jackson market. 

2 SeaPort has an interline with Alaska Airlines and is currently conducting testing to implement an agreement with 

Hawaiian Airlines in early November 2014. 
SeaPort Airlines, Inc. 

Request for Change in EAS Compensation at Jackson 

Page 3 of 4 

• Increases in corporate overhead which are primarily attributable to higher premiums 

on health insurance provided to our employees. 

The table on page 4 of this filing summarizes the data supporting the requested 

increase in subsidy to $910.65 per departure, approximating $1,687,696 on an annualized 

basis. 

With service period established in Order 2014-1-23 scheduled to expire on 

September 30, 2014, SeaPort respectively requests that the new subsidy rate be effective 

on October 1, 2014 and applied retroactively is the Department approves this request after 

that date. 

Until otherwise advised by the Department, SeaPort intends to continue providing 

subsidized EAS to the community of Jackson, Tennessee. Nonetheless, we ask that a 

Request for Proposals be issued as quickly as possible so that a permanent subsidy rate 

can be established through the typical carrier selection process.3 

Any questions related to this request can be directed as described below. 

Respectfully Submitted, 

Timothy Sieber 

Executive Vice President 

SeaPort Airlines, Inc. 

7505 NE Airport Way 

Portland International Airport 

Portland, Oregon 97218 

Office: (971) 340-1716 

email: tsieber@seaportair.com 

DATE: September 30, 2014 

3 SeaPort is understanding of the higher than workload faced by Department staff resulting from regular carrier 

selection proceedings, evaluation of SCASD proposals, and now the need to move ahead with carrier selections at 

communities where continued EAS eligibility was previously not assured. 
SeaPort Airlines, Inc. 

Request for Change in EAS Compensation at Jackson 

Page 4 of4 

OST -2000-7857 

Request for Change in EAS Compensation at Jackson, TN 

12 Weekly RTs: Jackson- Nashville 

6 Weekly RTs: Jackson -Memphis 

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 

Total 

Expenses 

Flight Operations 

Aircraft ONnership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Servicing 

Insurance 

Maintenance 

Sub-Total- Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

I Required Subsidy 

Subsidy per Departure 

Subsidy per Passenger 

Avg. Enplanements per Operational Day 

Proforma Data 

111 

1,872 

1,768.0 

99.0% 

1,853 

1,750.3 

5,051 

2.7 

$47.85 

560,661 

1,851,427 

30.3% 

$241,677 

$6,042 

$247,719 

$173,282 

$294,000 

$401,698 

$25,000 

$371,036 

$31,506 

$306,306 

$1,602,828 

$240,424 

$1,843,253 

($1 ,595,534) 

$1,595,534 

$92,163 

$1,687,6961 

$910.65 

$334.13 

8.1