Before the United States Department of Transportation

June 6, 2012

Proposal to Provide Essential Air Service at

Victoria, Texas

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

Docket OST-2005-20454

SeaPort Airlines, Inc.

Proposal to Provide Essential Air Service at

Victoria, Texas

By Order 2012-3-14, the Department requested proposals for Essential Air Service (EAS) at Victoria, 

Texas not later than April 25, 2012. By Memorandum dated April 25, 2012, the Department extended

the due date for proposals until May 9, 2012.

SeaPort Airlines, Inc. submitted the only proposal. The Victoria community, however, refused to 

waive its right to twin-engine aircraft and the proposal was rejected. By Order 2012-5-16, the 

Department requested a second round of proposals be submitted no later than June 6, 2012. 

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

essential air service to the community of Victoria, Texas. 

This proposal is materially different from our earlier submission as it relates to service pattern 

options and aircraft type and, therefore, we urge the community and Department to review in detail 

and give it careful consideration.

After this proposal is docketed, SeaPort Airlines will contact the Airport Manager to schedule a 

meeting in Victoria to explain our proposal in detail and answer any questions of the community. In 

the interim and throughout the carrier selection process, questions regarding this proposal should be 

directed to:

Timothy Sieber

Vice President – Strategy & Corporate Development

SeaPort Airlines, Inc.

7505 NE Airport Way

Portland, OR 97218

(971) 340-1716

tsieber@seaportair.com
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Description of Proposed Service

Company Overview

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

aviation and is built around providing efficient and reliable service to rural communities. This is in 

sharp contrast to the strategies of the global airline brands and their regional airline partners that no 

longer have the operational or economic capability, or in many cases even a strategic desire, to 

serve small and mid-size communities such as Victoria.

SeaPort’s approximately 180 professionals operate an average of 90 daily departures to 20 cities in 

eight states with a business that is focused on providing affordable and reliable service to small and 

rural communities. 

Presently, SeaPort delivers Essential Air Service to seven communities: Excursion Inlet, Alaska; 

Pendleton, Oregon; El Dorado, Hot Springs, and Harrison, Arkansas; Salina, Kansas; and Jackson, 

Tennessee.

1

In each of these cases, after award of the EAS contract by US DOT, we have started 

service on time, on budget, and with fares either at or below those outlined in our proposal. We 

would note that this stands in stark contrast to so many other airlines that place bids with 

unreasonable fares that are never realized by the traveling public, delay the start of service, or do 

not launch service that has been awarded by the Department.

A Track Record of Building Community Partnerships

SeaPort Airlines prides itself on developing partnerships with each community it serves. This 

includes participation in local events, donation of tickets, and regular community meetings. We 

believe this approach serves our own interests equally with those of the community by fostering 

long-term, stable relationships that result in increased ridership and, eventually, reduced subsidy 

requirements.

We would also note that in each of our EAS communities (except in Alaska), SeaPort Airlines 

represented the first time that service was offered with single-engine aircraft. While there was initial 

trepidation about aircraft size, the more frequent flights that the smaller aircraft can offer, combined 

with the affordable fares and highly-personal service offered by SeaPort, has resulted in strong 

community support and renewal of all EAS contracts in the Lower 48 states.2 We encourage the 

Victoria community to contact any of the EAS communities we presently serve for additional 

information.

Additional evidence of our ability to develop a strong partnership and provide the communities in this 

proposal with reliable, customer-focused air service is demonstrated through community and 

customer comments that are provided later in this document.

 

1

A proposal to provide Essential Air Service at Kake, Alaska has been submitted and is awaiting the Department’s 

decision on which carrier it will award the contract.

2

SeaPort had previously provided EAS at Jonesboro, AR but elected not to pursue a second contract term in that 

market due to weak traffic and market conditions that indicated a low chance the market could be revitalized. 
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Aircraft

Unlike our earlier proposal, SeaPort is offering for consideration by the Victoria community the option 

of different aircraft types. The two aircraft types offered are described below.

Cessna 208B Grand Caravan 

Currently being 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. Over 2,000 Caravans have been built logging a total of over 12.5 million flight hours.

The Caravan seats nine passengers and we believe this aircraft offers the “right size” capacity 

increment for each of the communities in this proposal, enabling us to offer optimal frequency 

levels and reasonable fares while simultaneously minimizing the required level of subsidy. While 

the Caravan is certified for single-pilot operation SeaPort typically operates with both a Captain 

and First Officer.

The large cargo pod on the Caravan allows for more baggage than can be accommodated on 

older piston twins (i.e., Piper Navajo and Cessna 402) and allows us to segregate passenger 

baggage for security purposes.3

SeaPort Airlines recognizes that the community rejected our earlier proposal on the basis of it 

being operated with a single-engine aircraft. We believe, however, that in addition to being the 

right-sized increment of capacity that can offer attractive frequency levels, the Cessna Caravan 

offers travelers safe and reliable air transportation. We believe this for the following reasons, all 

of which we demonstrate on a daily basis operating an average of 90 daily departures in eight

states:

 The argument that single-engine aircraft are less safe than multi-engines is based on the 

presumption of engine failure. Failure of modern turbine engines is extremely rare and it is 

even more rare that engine failure is the primary cause of an accident or incident.

 

3

The cargo pod on the Cessna Caravan has a maximum capacity of 111 cubic feet and 1,090 pounds. In 

comparison, the Piper Chieftain has a maximum capacity of 65 cubic feet and 700 pounds in its nose compartment 

and two wing lockers.
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 Multi-engine aircraft experience asymmetric thrust and a rapid loss of climb performance of 

up to 80%. In contrast, single-engine aircraft don’t experience asymmetric thrust, and they 

typically have higher glide ratios and can land at slower speeds.

 As reliability has improved over the last 75 years, airlines have specified fewer engines on 

new aircraft designs – “more is better” no longer applies.

 Newer, modern technology single-engine aircraft provide a better customer experience than 

older twins.

Piper Chieftain

As noted above, the Victoria community rejected SeaPort’s earlier proposal on the basis that 49 

U.S.C. 41732(b)(5) entitles communities to EAS service with twin-engine aircraft. EAS 

communities can waive their right to twin-engine aircraft, however Victoria declined to do so 

following the earlier round of proposals. Notwithstanding our belief that the Caravan represents 

the best platform for frequent, economical and reliable air service at Victoria, option #2 in this 

proposal is based on the assumption of service with twin-engine Piper Chieftain.

Over 1,800 Chieftains were built between 1972 and 1984 by Piper Aircraft. Analysis of 

Chieftains offered for sale indicate that if one of the options in this proposal that include this 

aircraft are selected by the community we will not have any difficulty finding a suitable aircraft to 

service Victoria.

The Chieftain is a stretched version of the Piper Navajo that operates with a single-pilot and 9 

passengers. The aircraft has two Lycoming piston engines and baggage storage in a nose 

compartment and wing lockers.4 The aircraft offers adequate range with a full load of 

passengers to operate the service presented in option #2, and has a typical cruise speed of 175 

knots.

Frequency v. Aircraft Capacity

Both of the aircraft in SeaPort’s proposals contemplate aircraft smaller than the 34-passenger Saab 

340’s presently operated by Colgan Airways. The smaller number of seats per departure, however, 

are offset by higher frequencies than economically possible with larger aircraft. We believe this will 

contribute to positive enplanement growth at Victoria Regional Airport.

The Victoria community acknowledged the benefits of greater frequency levels in an email to the 

Department during the EAS carrier selection process in 2010:

“I must add that during these meetings, it became clear that the two flights per day 

covered under the EAS program provides insufficient service to our traveling public. 

Although I fully understand that it is not the program's intent to provide ideal service, 

adding a third flight would very likely result (in time) in not needing the subsidy at all. 

Our air service development studies all indicate that our enplanements are directly 

related to the frequency of flights offered to VCT. Increasing the frequency will 

 

4

See footnote 3.
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undoubtedly reduce the need for the subsidy over time, as our travelers habits are 

changed.”5

SeaPort’s previous proposal to provide EAS at Victoria included 12 weekly roundtrips to Dallas 

(Love Field) and 12 weekly roundtrips to Houston (George Bush Intercontinental Airport). In this 

proposal, we are continuing to offer the option of service to Houston but have replaced Dallas with 

additional frequencies to Houston for a total of 24 weekly roundtrips. This addresses the concerns 

about frequency that the community has voiced in the past.

Pricing Model

SeaPort Airlines employs a simplified pricing strategy of all fares being one-way with varying levels 

of advance purchase and capacity controls.6 This strategy is intended to offer an attractive price 

point while also minimizing required subsidy levels.

It is noted that high fares have been an ongoing subject of frustration in the Victoria community and 

has resulted in a high percentage of potential VCT travelers opting to drive to other airports. The 

projected average fare between Victoria and Houston is shown on the table below and are 

measurably lower than those offered by Colgan Air. Moreover, we believe that the sum of two local 

fares (i.e., SeaPort fare plus that of the connecting airline to point beyond the hub) will offer savings 

compared to fares published in the Victoria market for sale on the Colgan operated flights.

SeaPort Airlines Illustrative Fares

Pricing Range & Average

EAS Community Houston

Victoria, Texas (VCT)

Victoria Regional Airport Fares ranging from $35 - $85; average of $62

NOTE: Listed fares include Federal Excise Tax and segments fees, PFCs, or security 

SeaPort Airlines believes that our fare structure represents a responsible approach to pricing in EAS 

communities and is consistent with the overall objectives of the program. While we offer affordable 

fares that can be combined with fares from the connecting hub for an overall reasonable trip cost, we

do not believe that pricing strategies that shift the true cost of air transportation from the consumer to 

the Department are consistent with the intent of the essential air service program. Equally important, 

the higher levels of subsidy required as a result of exceptionally low fares increases the risk that a

community may exceed the statutory subsidy limit of $200 per passenger thereby endangering

continued eligibility in the EAS program.

Interline Connectivity & GDS Display

SeaPort has an interline ticketing agreement with US Airways and is working to secure agreements 

with other carriers so that customers will be able to purchase single ticket itineraries between

Victoria and other communities around the world. 

 

5

Email from Jason Milewski (Victoria Regional Airport) to Michael Martin (US DOT) on April 4, 2011 and published in 

Docket OST-2005-20454

6

From time to time SeaPort will offer fares outside of this basic model, however these are typically promotional fares 

with additional savings to passengers.
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To allow for interline agreements, SeaPort migrated to the Radixx reservation system on March 7, 

2012. Radixx offers us the ability to enter into and execute unilaterial and bilaterial interline eticketing (IET) agreements, including inter airline thru check-in (IATCI) that facilitates baggage check 

to the customer’s final destination, and (dependent on agreement terms with specific carriers) 

issuance of boarding passes for connecting flights upon check-in with SeaPort. 

With this new system now functional, SeaPort anticipates announcing one, possibly two, interline 

agreements in the next 60 days and has initiated discussions with carriers that can be most 

beneficial to customers in our markets. United Airlines, which has a large hub at Houston’s George 

Bush Intercontinental Airport, is included in this group of carriers.

In addition to interline agreements, SeaPort Airlines is presently displayed in the major global 

distribution systems. This enables our flights to be available on all major online travel agencies and 

meta-searchers including Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir. 

Marketing & Public Relations Strategy

If selected to serve Victoria, SeaPort will implement a comprehensive marketing and public relations 

strategy aimed at introducing our brand to the community and maximizing the number of passengers 

onboard. In addition to local advertising, these activities include:

 Local Event Marketing: Recognizing that visible participation in local events has been 

successful for both legacy and low-cost airlines, SeaPort has implemented a similar strategy in 

all of its communities. These have ranged from SeaPort Airlines community Easter egg hunts, to 

presenting at business expos, to hosting “after hours” events at local Chamber of Commerce 

meetings. 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: Since 2010, SeaPort Airlines has managed a successful social media campaign 

that has allowed the Company to dynamically engage its customer base in a two-way 

conversation through sites such as Facebook, Twitter, FourSquare & LinkedIn. We have found 

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

our communities, and expect similar results in Victoria.

 FlyerFlex Customer Rewards: During 2011, SeaPort launched a new and improved customer 

loyalty program called “FlyerFlex.” This program provides customers with a variety of benefits 

including free flights, service charge waivers, and bonus points. During the summer of 2012, 

SeaPort will be unveiling further enhancements to the FlyerFlex program including a wider range 

of travel award options and the ability for customers to check balances and redeem awards 

online.

 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 5% to 15%. It is important to note that unlike the corporate travel 

programs of major airlines that are not designed to serve small businesses in rural communities, 

SeaPort’s program can provide savings to a company of virtually any size and can be used by 

any employee of a company. 
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In service proposals herein, SeaPort Airlines has allocated $20,000 per year for marketing and sales 

activity in Victoria. This budget takes into consideration the lower costs of media in small markets 

and the reality that most local traffic typically originates in the EAS community rather than the hub 

market. Our approach to marketing budgeting is based on the philosophy that reasonable 

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

opt-in email, etc. to engage with customers on a more personal level. Similar to our fare structure, 

we believe this approach represents a fiscally responsible use of subsidy (and therefore taxpayer 

dollars) in the EAS program. 
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Community & Customer Feedback 

While we have outlined above why we believe that SeaPort is well positioned to provide reliable and 

reasonably priced air transportation that can contribute to Victoria’s economic vitality and quality of 

life in, the strongest proof resides in the accolades we receive. Below is just a small sample of the 

comments SeaPort has received from our customers and community partners:

Our Essential Air Service Community Partners

“South Arkansas Regional Airport and the entire South-central Arkansas region suffered from the 

loss of air service previously provided by Mesa Airlines in the Spring of 2008. Unreliable service and 

a poor schedule were already negatively impacting enplanements before Mesa pulled out, but at that 

point, the nearest option for air service of any kind was almost a two hour drive away. After sorting 

through applications from many different interested carriers, the El Dorado Airport Commission, 

along with El Dorado’s Mayor, chose SeaPort to restore air service to South Arkansas. This was the 

beginning of a great partnership between SeaPort and our local community. 

“Working with SeaPort has been nothing but a pleasure from the bottom to the top of their 

organization, and their commitment to excellence shines through the glowing comments that I hear 

from people who fly with them. In addition to hearing comments from others, I have flown SeaPort 

on several occasions, and have come away from the experience thinking ‘This is how all air service 

should be.”

− Josh Zylks

Airport Manager

South Arkansas Regional Airport 

(Goodwin Field)

“Eastern Oregon Regional Airport at Pendleton had been struggling since schedule changes 

following 9/11 served by a carrier flying 37 seat aircraft. Low passenger count attributed to poor 

schedule, which then contributed to poorer passenger count. The carrier's solution was to bring in 

larger aircraft and fly to a different hub. The Airport and community balked at this suggestion and 

went in search of alternatives. The solution found through the EAS process was SeaPort Air flying a 

9 passenger Pilatus. The passengers have welcomed the new service, much better schedule, and 

are elated with ‘no security check’ and stand by time. Passengers today will say, ‘I love the service’, 

‘great customer service,’ and ‘I'm sure glad I finally tried it, cause I'll be back’

“In our particular market, the 9 passenger aircraft is perfect, and SeaPort Air provides the schedule, 

the professionalism, and customer service we need and desire.”

− Larry Dalrymple 

Airport Manager

Pendleton Regional Airport
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“I understand the importance of having dependable, reliable air service with an affordable cost. Not 

only will SeaPort Airlines meet these needs, but excel by providing great customer service, a high 

level of community involvement, and an eagerness to become a community partner”.

− Luci Larson

Former Mayor & Owner of 

Action Travel

Salina, KS

Our Customers

“Two hours before the flight I booked my ticket to Memphis from Hot Springs. Wow! What a 

surprise; it was simple, convenient, great price, and impeccable service. It far exceeded my 

expectations and I will be flying to Memphis on SeaPort Airlines instead of driving from now on. The 

customer service was fabulous!”

− Ruth Ann Smith 

Customer (flew from Hot 

Springs to Memphis)

“My husband and I recently had to make a fast trip to Dallas for the funeral of a dear friend. I was not 

interested in making that drive over a fast weekend. Then I remembered that SeaPort had recently 

started flights between Hot Springs and Dallas. I called SeaPort, Jim and Bob were so quick to get 

us booked, last minute so we could fly down and attend the funeral and visit with family and friends 

that we don't get to see very often. 

Everyone was so friendly, helpful and professional. It was a dream trip, even to attend a funeral. The 

pilot going down was so kind. When he found out that my husband had been a ball turret gunner in 

WWII, he gave him a set of headphones so he could listen to the communication between the pilots 

and the air traffic controllers. To say the least, my husband was impressed. It was such a blessing to 

have been taken care of in such a kind and professional manner, especially under the circumstances 

of our trip. Thank you, Jim, Bob, Chris, Doug, Rodney and Michael.”

− Catherine Martin

Customer (few from Hot Springs to 

Dallas)

“I have never had such a positive experience connected with any airline. I read about SeaPort Air 

last October when they opened the Mid-South Route, but didn’t have the chance to fly until March. 

Usually the dread of the process comes then you just grin and bear it; however, with SeaPort Air I 

could arrive 15 minutes early. The hassle free no TSA is wonderful and made me feel special. I have 

flown twice in the last 2 months and the customer service from start to finish is outstanding. I will be 

a regular customer and have already recommended the airline to several associates. Thank you, 

SeaPort Air, for making me feel like a queen!”

− Catherine Martin

Customer (few from Memphis to 

Harrison)
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“For two decades I have been picking my mother up at the airport and for two decades I have been 

met with the defeated, hang-dog look that the ordeal of air travel has given her. I guess it pretty 

much does it to all of us, but (as she is well into her 80's) I worry about the toll it takes on her more 

and more lately.

“When I picked her up today from her SeaPort flight K52325 from Dallas and saw she was smiling, 

you could have knocked me over with a feather! She couldn't stop raving about how pleasant the 

flight was. Let me be clear. My mother is a tough-as-nails Mid-western Yankee from the old school 

who has been around the world a couple of times since the late 1940's. She doesn't bestow idle 

praise and she seldom raves.

“I'm in the service industry myself and I know how often complaints come through. I just want to be 

sure to let you know how well everyone did on this flight. In the future, I will look to SeaPort first for 

my travel needs and will spread the good word to my friends. 

“A smile and a kind word go a long way y'all. Thank you for getting this one so right.”

− Mark Davis Peterson

Customer (flew from Dallas to 

Memphis)
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Service Proposals

Summary of Service Options

An Illustrative schedule pattern is illustrated below and reflects the marginal speed differences 

between the two aircraft types being offered. Final schedules would be established in consultation 

with the community.

Note that the service proposals include 24 weekly roundtrips and is compliant with the Departments 

directive in Order 2012-3-14 requesting: “two round trips a day (12 a week) with 30-seat or larger 

aircraft; or three round trips a day (18 a week) with 19-seat aircraft and additional frequencies with 

8/9 seat aircraft.”7

Proposed Start Dates by Aircraft Type

It has been reported in the news media that Colgan Air intends to end service at Victoria on June 30. 

Given the due date for this proposal, necessary time for the community to evaluate each proposal

and submit its comments, followed by the Department’s own analysis, we have prepared this 

proposal with the assumption that on an accelerated basis in response to Colgan’s stated intent, the

Department could issue a carrier selection Order for EAS at Victoria around June 30, 2012.

 

7 Order 2012-3-14, p.3

Depart Arrive Frequency Stops Depart Arrive Frequency Stops

6:00am 6:55am ExSun 0 8:00am 8:55am ExSun 0

10:00am 10:55am ExSun 0 11:30am 12:25pm ExSun 0

2:00pm 2:55pm ExSat 0 3:30pm 4:25pm ExSat 0

4:50pm 5:45pm ExSat 0 6:20pm 7:15pm ExSat 0

Depart Arrive Frequency Stops Depart Arrive Frequency Stops

6:00am 6:50am ExSun 0 8:00am 8:50am ExSun 0

10:00am 10:50am ExSun 0 11:30am 12:20pm ExSun 0

2:00pm 2:50pm ExSat 0 3:30pm 4:20pm ExSat 0

4:50pm 5:40pm ExSat 0 6:20pm 7:10pm ExSat 0

Option #2 - Illustrative Schedule

24 Weekly Roundtrips: Victoria - Houston

Aircraft Type: Piper Chieftain

From Victoria to Houston From Houston to Victoria

Option #1 - Illustrative Schedule

24 Weekly Roundtrips: Victoria - Houston

Aircraft Type: Cessna Caravan

From Victoria to Houston From Houston to Victoria
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Based on this assumption, the service options in this proposal have different start dates attributable 

to the different aircraft types. Specifically,

 Cessna Caravan: SeaPort currently operates six Cessna Caravans. As the operational 

infrastructure for this type is already established, if the community selects Option #1 we 

reasonably believe that service at Victoria could be initiated by August 1, 2012.

 Piper Chieftain: SeaPort Airlines does not presently operate any Piper Chieftains which will

require adding the type to our fleet and Operations Specifications. Given this, if the community 

selects Option #2 we believe service could be initiated by September 15, 2012, excepting for 

unanticipated delays.

SeaPort Airlines has a proven record of initiating EAS flights as promised and we have never 

delayed a service start date or failed to initiate a market awarded by the Department. We are 

committed to maintaining this perfect record and, based on assumption regarding timing of the Order 

selecting replacement service, will work diligently to initiate service at VCT on or before the dates set 

forth above.

8

Regardless of the actual date that DOT issues carrier selection Order, the end of Colgan Airways 

flights on June 30 makes it a certainty that Victoria is facing a period without scheduled air service.

9

From our own experience restoring EAS in four Arkansas communities after a 15 month service 

hiatus, traffic will likely be slow to return toVictoria Regional Airport.

10 We believe the longer a 

service hiatus persists and the more accustomed the traffic base becomes to driving to access air 

service, the greater the challenge in rebuilding traffic in an EAS community. This has the potential to 

result in subsidy levels that exceed the statutory limit of $200 per passenger, thereby endangering

continued eligibility in the EAS program. We would strongly urge the Victoria community to consider 

duration of the impending service hiatus when evaluating the various proposal options of SeaPort or

any other carrier that may submit a proposal.

 

8

If the Order is not issued June 30, 2012 (e.g., +/- three-days), SeaPort would will work with the Department and 

community to define an exact start date. The timeframe between the actual Order and start of service will be similar 

to that reflected above based on the June 30th assumption.

9

"We're going to go dark for a while. This can go on almost indefinitely." Jason Milewski (Victoria Regional Airport) 

quoted in the May 29, 2012 issue of the Victoria Advocate.

10 These fours communities are: El Dorado, Harrison, Hot Springs, and Jonesboro. In addition, in January SeaPort 

initiated service at Jackson, TN, replacing a carrier that had what could best be described as a “contentious”

relationship with the community. Enplanements at Jackson had fallen below 50 passengers per month during the end 

of that carrier’s tenure. Notwithstanding the impact of the relationship between the community and previous EAS 

carrier, we believe that the impact of two periods of service hiatus (including one lasting 23 months) continue to be 

reflected in the traffic we have been able to generate. While it has been less than six months since we initiated 

service, traffic is presently below the level needed to maintain Jackson’s eligibility in the EAS program.
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Two-Year and Four-Year Contract Term Options

Finally, the following service proposals specify the level of subsidy required on an annual basis and 

assuming a typical two year EAS contract with the Department.

11 Notwithstanding the risk of inflation 

in coming years (particularly related to fuel costs) that could possibly outstrip traffic growth and 

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

contract the proposed annual subsidy for a four year period at no increase in annual subsidy 

beyond that level specified for the two year term.

We believe this provides the Victoria community with the assurance of stable air service for an 

extended period (a factor that may have increased relevancy given the impending service hiatus) 

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

Respectfully submitted,

Timothy Sieber

Vice President – Strategy & Corporate Development

SeaPort Airlines, Inc.

June 6, 2012

 

11 The higher “Indirect Expenses” shown in Option #2 reflect with costs associated with an additional aircraft type on 

the SeaPort Airlines operating certificate. As Victoria would be the only market where we operate Piper Chieftains, all

of these costs have been included in the calculation of required annual subsidy levels.
OST

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Operating Projections

Average Sector Length (sm) 123

Scheduled Departures 2,496

Scheduled Block Hours 2,288.0

Projected Completion Factor 98.5%

Projected Completed Departures 2,459

Projected Completed Block Hours 2,253.7

Passenger Projections

Projected Passengers 9,400

Passengers per Departure 3.8

Projected Average Fare $59.20

Revenue Passenger Miles (RPMs) 1,156,200

Available Seat Miles (ASMs) 2,721,626

Projected Load Factor 42.5%

Financial Projections

Revenues

Passenger Ticket Revenues $556,480

Ancillary Revenues $11,130

Total $567,610

Expenses

Flight Operations $184,802

Aircraft Ownership/Lease $312,000

Fuel & Oil $632,833

Sales & Marketing $20,000

Traffic Servicing $340,002

Insurance $40,566

Maintenance $416,931

Sub-Total - Direct $1,947,134

Indirect $350,484

Total Expenses $2,297,618

Projected Operating Profit/(Loss) ($1,730,008)

Subsidy Calculations

Operating Loss $1,730,008

Economic Return @ 5% $114,881

Required Subsidy $1,844,889

Subsidy per Departure $750.39

Subsidy per Passenger $196.26

24 Weekly Roundtrips: Victoria - Houston (Bush Intercontinental)

Option #1

SeaPort Airlines, Inc.

Cessna Caravan
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Operating Projections

Average Sector Length (sm) 123

Scheduled Departures 2,496

Scheduled Block Hours 2,080.0

Projected Completion Factor 98.5%

Projected Completed Departures 2,459

Projected Completed Block Hours 2,048.8

Passenger Projections

Projected Passengers 9,400

Passengers per Departure 3.8

Projected Average Fare $59.20

Revenue Passenger Miles (RPMs) 1,156,200

Available Seat Miles (ASMs) 2,721,626

Projected Load Factor 42.5%

Financial Projections

Revenues

Passenger Ticket Revenues $556,480

Ancillary Revenues $11,130

Total $567,610

Expenses

Flight Operations $122,928

Aircraft Ownership/Lease $144,000

Fuel & Oil $622,835

Sales & Marketing $20,000

Traffic Servicing $340,002

Insurance $79,903

Maintenance $558,101

Sub-Total - Direct $1,887,769

Indirect $434,187

Total Expenses $2,321,956

Projected Operating Profit/(Loss) ($1,754,346)

Subsidy Calculations

Operating Loss $1,754,346

Economic Return @ 5% $116,098

Required Subsidy $1,870,444

Subsidy per Departure $760.79

Subsidy per Passenger $198.98

24 Weekly Roundtrips: Victoria - Houston (Bush Intercontinental)

Option #2

SeaPort Airlines, Inc.

Piper Chieftain