TOBY DOUGHER'lY, CPM, CITY MANAGER 

PAUL J!RlSENO, ASSISTANT Cl'lY MANAGER 

P.O,BOX490 

1507 MAIN STREET 

HAYS, KANSAS 67601-0490 

TEL 785/628-7320 

FAX 785/628-7323 

www.haysusa.com 

January 6, 2014 

Kevin Schlemmer 

Director EAS Program 

West Building 

1200 New Jersey Ave. SE 

Washington D.C. 20590 

Docket DOT -OST-1998-3497 

Dear Kevin, 

COY COMMISSION 

KENT STEWARD, MAYOR , HEtiRY SCHWALLER, IV : : EBER PHELPS 

' :SHAUN MUSll. 

RONMEI.lJCK 

This letter is the formal response from the City of Hays, Kansas, to the Department's request for comments on the Hays 

Essential Air Service bids we received on December 10. 

In the case of Hays, we have been advised of and have reviewed three bids: 

);> SkyWest Airlines has proposed a regional jet service 12 times per week to Denver, operating under the United 

Airlines code and brand with a bid cost of $2,253,132. 

);> Great Lakes Airllnes offered two proposals, both to Denver. 

18 trips per week with a Beech 19000 for $1,699,520 

14 trips per week with a EMB-120 for $1,499,508 

The City of Hays and its residents give the strongest possible endorsement to the air service proposal of SkyWest Airlines. 

We urge the Department; to award the Hays EAS contract to SkyWest in a prompt manner. Below are our reasons and 

justifications. 

Great Lakes Airlines Has Failed to Provide Hays with Reliable Air Servlce 

Both the 819000 and E-120 service proposals of Great Lakes Airlines assume a 97% completion rate on scheduled flights in 

the bid calculation. Great Lakes Airlines has never achieved an annuafized 97% competition rate at Hays, Kansas, in its 

·entire service history here. Our records show the following flight completion statistics for the past five years for the 

carrier: 

2009 

2010 

2011 

2012 

2013 

95% 

91% 

93% 

94% 

85% January to November. In that period we have had 3,606 scheduled flights and 532 have been cancelled. 

· In 2013 so far we have also had only 65% of scheduled flights operate on time, using the definition of 

within 15 minutes of schedule. 

Narrowing in on the year 2013, below are the Hays on time and completion rates by month per our tracking. Due to this 

year's declining performance we have very significant concerns about the carrier's ability to provide reliable air service at 

our community going forward. 
Month 

July 

August 

September 

October 

On Time 

62% 

59% 

65% 

52% 

Completion 

86% 

89% 

90% 

70% 

November 43% 60"A. 

As the Department can imagine, our loyal passengers are deserting our airport in large numbers because local air service is 

simply not trustworthy and has been that way for months. 

Great Lakes Has Lowered Its Hays Subsidy Costs by Increasing Its Great Bend Subsidy Costs 

Great Lakes current subsidy contract at Hays calls for a subsidy level of $2,164,041 per year, based on 97% completion. 

The two Great Lakes proposals reduce the subsidy need to either $1,699,520 per year for three trips or $1,499,508 for two 

trips. These are dramatic subsidy reductions but it appears subsidy needs have just been shifted from Hays to Great Bend. 

Our review of the Great Lakes B1900D proposal shows the Great Bend subsidy need to be $1,975,110, with a routing 

change to via McCook. Current Great Bend subsidy is $1,082,020. The Hays subsidy reduction is not what it appears. 

Ci~ Current Subsidy level Great lakes Progosals Difference 

Hays $2,164,041 $1,699,520 -$464,521 

$1,499,508 -$664,533 

Great Bend $1,082,020 $1,975,110 +$893,090 

Total Difference $3,246,061 $3,674,630 Beech HYS +$428,610 

$3,474,618 E-120 HYS +$228,557 

In either the B1900D proposal or the EMB-120 proposal Great Lakes Is simply reducing Hays subsidy needs and 

dramatically increasing Great Bend subsidy needs. Either way the DOT wlll pay more in total than currently and, due to the 

operational issues, see significantly less passengers for the subsidy paid out. 

While we do not know the carrier preferences of our sister city Great Bend, we do note to the Department that SeaPort 

Airlines has proposed Great Bend service consisting of3 trips per day to Wichita at very low fares for $1,434,472. It Is our 

understanding that SeaPort currently offers very reliable and low fare EAS service at Salina (to Kansas City) and at about a 

half dozen other airports nationwide. Should Great Bend choose to endorse SeaPort service the Department will save 

$540,638 per year at Great Bend compared to the Great Lakes bid. 

Communication and Partnershig with Great lal<es Airlines Has Proven Difficult 

The City of Hays has reached out to Great Lakes repeatedly over the past several years in the hopes of developing a 

partnership with our designated air service provider. With rare and limited exception our efforts to develop a partnership 

with Great Lakes Airlines on any subject have been disappointing. 

The carrier has virtually no interest in marketing its product and has essentially not supported any of our efforts to market 

carrier service. In 2009 Hays applied for and was granted a Small Community Air Service Development (SCASD} Grant of 

$216,450. Combined with a local cash match of $15,000 and local in-kind contributions of $203,050, we had available to 

us $434,500 In funding or support to provide a comprehensive air service marketing program at Hays and in the 

surrounding 20 county area. Great Lakes did very little to support our marketing efforts. Despite the carrier not 

participating, we moved ahead with the Grant supported marketing efforts and achieved just under 20,000 annual 

passengers in and out in both 2011 and 2012. Those totals were on average a 20% increase over annual traffic totals ln 

2008 to 2010. We did this essentially without the carrier's support or participation. 
In January of 2012 two representatives of the City of Hays, Kansas traveled to Cheyenne to visit with Great Lakes Airlines. 

One primary goal of that meeting was to communicate to the airline that we understood that from time to time Great 

Lakes may, for any number of reasons, have operational challenges. We made very clear that if the airline would tell us 

when these situations were antidpated to occur we were very willing to accept a reduction from 4 trips per day to 3 trips 

per day to ensure reliability. We stressed to the carrier that all they had to do was advise us when this might happen and 

we would work with them. 

It is our understanding that the operational issues we currently endure are primarily due to pilot shortages caused by new 

FAA pilot duty and rest regulations. It is our understanding that these regulations where proposed years ago and finalized 

in either late 2012 or early 2013. This was a predictable bout of operational challenges. We visited the carrier in early 2012 

and specifically asked the carrier to let us know when operational challenges were forthcoming and we would work with 

the carrier to mitigate those challenges. Since our meeting in January of 2012 we have never heard from Great Lakes of 

any pending or even potential operational challenges. 

In summary we aggressively marketed and promoted the Hays Regional Airport using a DOT grant with very little carrier 

support. We journeyed to Cheyenne and specifically offered the carrier our intention to work with them when operational 

issues may be foreseen, but emphasized that we had to be advised in advance. The operational issues we face in 2013 

were predictable and we never received any communication of any sort, much less per our January 2012 request, from 

the carrier. We have worked hard to improve our airport infrastructure and to market the air service the Department has 

designated for us. This must not, this cannot continue. 

The SkyWest Airlines Regional Jet Proposal Will Mean Significantly Lower Long Term EAS Subsidy Needs at Hays · 

The big regional airlines that operate SO-seat regional jets for Network airlines are redirecting some of these aircraft to EAS 

service, with consistent increases in traffic and revenue, and eventually decreases in subsidy requirements. Both SkyWest 

Airlines and American Eagle Airlines have had outstanding success replacing Great Lakes, or other prop air service carriers, 

with regional jets. Some examples we are aware of include: · 

Initial RJ Second Cycle 

City Old Service/Traffic New Service/Traffic or Old Subsidy RJ Subsidy 

Garden City ZK DEN /21,102 AA DFW /45,424 $2.9m(AA) $1.4m 

Grand Island ZK DEN /16,780 AA DFW /45,860 $2.2m (AA) $1.8m 

Joplin ZK MCI I 7,649 AA DFW I 48,826 $2.8m(AA) $350k 

Manhattan ZK MCI I 21,477. MDFWI77,909 $1.2m (ZK) zero 

All four of these cities are within 300 miles of Hays. Garden aty and Grand Island are very similar cities to Hays: strong 

rural economies, significant isolation from large airports and from low fare carrier service and a strong local focus on 

retaining and improving local air service. 

While these examples all involve American Eagle and the DFW hub, SkyWest is a leader in developing EAS markets and has 

had great success placing regional jet or E-120 service in EAS markets. We have met with SkyWest Airlines and they have 

shared with us some examples of their success at four Midwest cities where they replaced network carrier turboprops 

with regional jets starting in 2010. SkyWest is now in their third EAS contract at these cities. 

Ci~ 2012 Subsid:-l L Traffic 2014 Subsld~ L Projected Traffic Change Subsiffi' LTraffic 

Eau Claire $1,733,576 I 35,000 $1,546,536/40,000 -10% +14% 

Houghton $934,156/44,000 $690,976/50,000 -26% +14% 

Muskegon $1,576,067 I 25,000 $1,389,952/33,700 -12% +35% 

Paducah $1,710,775 I 35,ooo $2,034,160 I 42,230 +19% +21% 

Group Total $5,954,574 I 139,000 $5,661,648 I 165,930 -5% +19% 
' • I ~ 

SkyWest was able to reduce total subsidy costs is these four cities by 5% in a two year period where typical DOT subsidy 

costs have gone up in many markets by double digit percentages. At the same time SkyWest has reduced subsidy needs in 

these cities, it is projected to grow traffic 1go,1;, in the fifth and sixth year of service from the third and fourth. 

We are aware of SkyWest's outstanding reputation for reliable and on time air service, for high quality customer service 

and for working with airport partners to achieve maximum traffic and revenue results in every small dty they serve. 

We are eager to work with such an airline. We are extremely confident that our market will react to SkyWest United 

branded service the same way Garden City and Grand Island reacted to the replacement of Great Lakes B1900D service 

with American branded service. 

We believe our traffic can quickly grow to at least 35,000 annual O&D passengers, if not 40,000 annual passengers. We 

are therefore confident that SkyWest's initial $2,253,132 subsidy need with 26,000 forecast annual passengers can shrink 

substantially in the second two year term to $1.5 million per year or even less. 

We commit, in this letter, to providing $50,000 in local cash funding to market SkyWest service, should that carrier be 

designated to serve Hays. 

Hays, Kansas Has One of the Strongest Ru raJ Economies in the Nation 

Hays is a thriving and growing City on the western Kansas plains. Our local unemployment rate is about 3%. It "topped 

out" during the Great Recession at about 4%. We have a major University in the City (Fort Hays State University) and 

multiple private sector local employers in Health Care, Telecommunications, Oil and Gas mining and light manufacturing. 

We actuaHy had a local call center company move out of Hays because they could not find enough workers in our strong 

and growing economy. 

Like any rural economy, our abi.lity to retain existing companies and institutions, support the growth ofthese entities, and 

recruit new companies to our business friendly City, depends on having reliable and efficient air service. The Department 

must appreciate that we have struggled with Great Lakes for years now. We have documented our service reliability issues 

and what appears to us to be the shifting of the subsidy burden from Hays to Great Bend. We have documented our 

efforts to work with the carrier as partners. We have made significant infrastructure improvements at our Airport and we 

market, as best we can, the air service that Great Lakes provides at our airport. 

It Is time for a change in our air service provider. We have done all we can do with Great Lakes, to no avail. 

Summary 

Hays, Kansas, air service is at a crosHoad. We have one of the strongest rural economies in the nation, in many ways 

stronger than that at Garden City and Grand Island. Our local EAS air service, which has always been disappointing in 

terms of reliability and sense of partnership, has seen serious declines in reliability and on time performance this year. We 

have no Indication from our incumbent carrier when this might improve. 

We are at risk of our local air service going into a permanent decline, if Great Lakes were to continue to provide it. The 

impact of such an event upon our economy is very great and It Is critical that we avoid that outcome. 

We have the opportunity, with SkyWest, to join similar cities in growing our traffic dramatically, solidifying our air service 

with a quality network brand, and moving in the direction of reducing and hopefully someday eliminating our need for 

EAS subsidy. 

We strongly endorse the air service proposal of SkyWest and call upon the Department to award SkyWest the EAS 

contract at Hays for the 2014-2016 contract period. 
Thank you in advance for your consideration of this letter and our request and the reasoning behind our request. Please 

contact me if there are any questions regarding our letter or our strong endorsement of SkyWest' to be our air service 

provider. 

~~ Kent L. Steward 

Mayor 

Attachments 

CC: Toby Dougherty, City Manager 

Paul Brlseno1 Assistant City Manager 

I.D. Creech1 Director of Public Works 

City Commission