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Proposal to Provide Essential Air Service at 

MERCED, CAL:IFORNIA 

VISALIA, CALIFORNIA 

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

Docket DOT -OST -1998-3521 

Docket DOT-OST-2004-19916 

SeaPort Airlines, Inc. 

Proposal to Provide Essential Air Service at 

Merced and Visalia, California 

By Order 2012-5-11, the Department requested proposals from carriers interested in providing 

Essential Air Service (EAS) at Merced and Visalia, California no later than June 11, 2012. By 

Memorandum, the Department subsequently extended the deadline for submission of proposals to 

no later than June 25, 2012. Pursuant to that Order, SeaPort Airlines, Inc. respectfully submits this 

timely proposal to provide subsidized essential air service to the communities of Merced and Visalia. 

This proposal has been structured to offer residents and visitors a greater number of departure time 

choices, more nonstop and direct destinations, and a comprehensive marketing strategy at a lower 

level of subsidy than being paid to the present operator of EAS at Merced and Visalia. The improved 

service at a lower level of subsidy in this proposal is intended to directly address concerns 

expressed by the Department in Order 2012-5-11 regarding subsidy levels at both Merced and 

Visalia which presently exceed the statutory limit of $200 per passengers. 

Shortly after this proposal is docketed, SeaPort Airlines will contact the Airport Manager in each 

co111munity to schedule a presentation to explain our proposal in detail and answer any questions. 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 
SEAtPORT 

=====AIRLINES 

Description of Proposed Service 

Company Overview 

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

aviation and 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 

communities such as Merced and Visalia. 

SeaPort Airlines is headquartered in Portland, Oregon and has operational bases in Portland, 

Memphis (Tennessee), and Juneau (Alaska). Our approximately 180 professionals operate a fleet of 

14 aircraft on an average of 90 daily departures to 20 cities in eight states. The focus of our business 

is providing affordable and reliable service to small and rural communities, with particular focus on 

providing connectivity with the national air transportation system. 

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, we have started service on 

time, on budget, and with fares either at or below those outlined in our proposal. This record stands 

in stark contrast to a number of other airlines in the EAS program that submit proposals with 

unreasonably low fares that are never realized by the traveling public, delay the start of service, or 

do not launch service after it 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, on-going communication, and regular 

community meetings. We believe this approach serves our own interests equally with those of our 

EAS communities by fostering long-term, stable relationships that result in increased ridership and, 

eventually, reduced subsidy requirements. 

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

represented the first time that service was offered with single-engine aircraft. Any initial trepidation 

about aircraft size quickly, however, dissipated as each experienced the benefit of higher frequency 

levels that can only be economically provided with smaller aircraft. Combined with our affordable 

fares and highly-personal service, SeaPort Airlines enjoys strong community support in our EAS 

communities. This point is underscored by the fact that every one of our EAS communities in the 

Lower 48 has selected SeaPort Airlines to continue serving their market for an additional contract 

period.2 This includes the recent reselection of SeaPort Airlines in Salina, Kansas for a four-year 

contract (rather than the standard two-year contract) based on overwhelmingly positive support from 

the community, and the selection of SeaPort Airlines at Pendleton, Oregon for a contract renewal 

over a competing bid that offered 37 -passenger aircraft and the brand of a major airlines. 

1 Proposals to provide Essential Air Service at Kake, Alaska are awaiting the Department's carrier selection. 

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. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 12 

June 25, 2012 
SEA>tPORT 

====AI RUNES 

We encourage the communities of Merced and Visalia to contact any of our EAS communities to 

discuss the responsive, affordable, and reliable air service that we provide. Additional evidence of 

our ability to develop strong partnerships and provide Merced and Visalia with reliable, customerfocused air service is demonstrated through community and customer comments that are provided 

later in this document. 

Aircraft 

SeaPort is offering two aircraft types for consideration by the communities of Merced and Visalia, 

both of which are described below: 

Cessna Caravan 

SeaPort Airlines is proposing to provide service at Merced and Visalia using the modern and 

efficient Cessna Caravan turboprop. 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 both 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 accommodates more baggage than on older piston twins 

(i.e., Piper Chieftain and Cessna 402) and allows for easier segregation of passengers and 

baggage for security purposes.3 

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. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 13 

June 25, 2012 
SEAtPDRT 

======:t.IRLINES 

As noted earlier, however, SeaPort operates single-engine aircraft and enjoys strong community 

support in all of the EAS markets that we serve. This is because on a daily basis we 

demonstrate that the Cessna Caravan is the ideal platform for safe and reliable air 

transportation with higher frequencies than would be economically possible with larger aircraft. 

While our experience in these other markets makes us confident of our ability to build support in 

Merced and Visalia, we offer the following additional points for consideration as both 

communities evaluate this proposal: 

+ 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 even 

rarer that engine failure is the primary cause of an accident or incident. 

+ Multi-engine aircraft experience asymmetric thrust and a 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 turboprops aircraft provide a better customer 

experience than 35 year old piston-powered twin engine aircraft. 

Piper Chieftain 

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

communities can waive their right to twin-engine aircraft. SeaPort Airlines presently provides 

service in all of our EAS communities with single engine aircraft and, as noted above, every one 

of our EAS communities in the Lower 48 has selected SeaPort Airlines to continue serving their 

market for an additional contract period. Notwithstanding our belief that the. Cessna Caravan 

represents the best platform for frequent, economical and reliable air service at Merced and 

Visalia, we are including in this proposal the option of service with twin-engine Piper Chieftains. 

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 pattern offered in this proposal, and has a typical cruise 

speed of 175 knots. 

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

presently offered for sale indicates that if the option of service with Chieftains is selected, we will 

not have any difficulty finding a suitable aircraft to serve Merced and Visalia. 

4 See footnote 3. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 14 

June 25, 2012 
SEAtPORT 

====•AIRliNES 

Interline Connectivity & GDS Display 

All SeaPort Airlines flights are displayed in the major global distribution systems, making our flights 

available for sale via travel agents and all primary online travel portals and meta-searchers such as 

Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir. 

SeaPort Airlines 

Availability in Global Distribution Channels 

J>mH 

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Tlille<Off~tflidlt) ' 

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• 

SeaPort has an interline ticketing agreement with US Airways and an agreement has been reached 

with a major airline that has a large presence on the West Coast that is scheduled to become 

effective on August 20, 2012. Additionally, we are close to securing additional interline agreements 

that will allow our customers to purchase single ticket itineraries between their local airport and even 

more destinations around the world. At least one, and possibly two more, interline agreements 

providing greater connecting opportunities for travelers from Merced and Visalia are anticipated to 

be in place by the end of 2012. 

To facilitate these agreements, SeaPort recently migrated to the Radixx reservation system. This 

new system provides us with the functionality to implement unilaterial and bilaterial ·interline eticketing (lET) agreements, including inter airline thru check-in (IATCI) for baggage check to a 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 15 

June 25, 2012 
SE ORT 

customer's final destination and (dependent on agreement terms with each carrier) issuance of 

connecting boarding passes. 

Proposed Aircraft Routing & Connecting Hubs 

At both Merced and Visalia, SeaPort Airlines is proposing a linear service pattern that provides 

service over the following routing: 

Oakland International Airport (serving the San Francisco Bay Area) ¢ Merced ¢ Visalia 

¢Burbank (serving the LA Basin)¢ San Diego · 

This routing will provide travelers in Merced and Visalia with a combination of nonstop and direct 

service to three of the four largest metropolitan areas in California (Sacramento being the only 

remaining one). Equally important, the proposed service pattern results in more frequent flights than 

presently offered at either Merced or Visalia. 

SeaPort Airlines, Inc. 

Proposed Service Pattern & Illustrative Schedule 

Merced & Visalia, California 

Basin !Burbank) 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 16 

June 25, 2012 
SEA ORT 

Frequency Levels 

In Order 2012-5-11, the Department states: "If 819-seat aircraft are proposed, we would expect 

·four or five roundtrips a day (24 or 30 a week).'.f> While Order 2012-5-11 is silent on service 

patterns in conjunction with another community, we note that in Orders requesting EAS proposals in 

other communities the Department has included language regarding higher frequency levels when 

communities share capacity. For example, in Order 2011-9-5 the Department stated: "We may 

subsidize additional frequencies if the affected community is served in conjunction with 

another community. '

13 

The linear service pattern that SeaPort Airlines proposes results in an average of six daily 

departures at both Merced Regional Airport and Visalia Municipal Airport. To complement the 

illustrative schedule shown on the previous page, the table below summarizes the total number 

of weekly and average daily arrivals from and departures to each connecting hub airport 

(including nonstop and direct flights), as well as the "bridge" flights between the two 

communities. 7 

San Diego (1-Stop) 

The greater choice of flight times and destinations provided by this service pattern is projected to 

result in higher passenger enplanements at both Merced and Visalia which, when combined with a 

requested subsidy level that is lower than the current rate, is responsive to the Departments 

concerns about present subsidy levels being above the $200 per passenger statutory limit. 

5 Order 2012-5-11, p. 3 

6 Order 2011-9-5, p. 6 

7 Nonstop segments are shaded and have bold typeface 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 17 

June 25, 2012 
SE PORT 

Finally, note that the proposed service pattern includes "up-line" San Diego service the VIS-BUR 

segment. None of the operating costs for the BUR-SAN segment have been included in the 

calculation of subsidy requirements and SeaPort Airlines will operate BUR-SAN entirely at its 

own risk. We have, however, included projected revenues that will be generated by passengers 

traveling between San Diego and Visalia (and to a lesser degree, between San Diego and Merced), 

contributing to a lower overall subsidy requirement. 8 

Connecting Hub Airports 

As noted, the service pattern that we are proposing at Merced and Visalia provides access to three 

of the four largest metropolitan areas in California. In addition, each of the "hub airports" provides a 

range of connection opportunities to domestic and international destinations on a mix of legacy and 

low-fare airlines. 

Oakland International Airport (serving the San Francisco Bay Area) 

Oakland International Airport (OAK) provides convenient access to the San Francisco Bay Area, 

including transportation to both downtown Oakland and San Francisco via the Bay Area Rapid 

Transit (BART) system. AirBART is a shuttle service that links with the BART rail system at the 

Coliseum/Oakland Airport station. From there, it is quick ride to major tourist and business centers 

in the Bay Area including: San Francisco's Embarcadero (21 min), downtown Berkeley (23 min), 

Central Oakland (1 0 min), and Balboa Park (33 min). 

Equally as important, Oakland International Airport provides connecting opportunities on nine airlines 

to destinations throughout the United States and Mexico. 9 It is important to point out that nearly 82% 

of capacity at OAK is provided by low-fare carriers, including Spirit and Allegiant, which are 

commonly referred to as "ultra-low fare" airlines. A map of nonstop service available from Oakland 

International Airport is provided on the next page. 

8 The higher level of flight activity at Burbank resulting from our operation of BUR-SAN will generate airport station 

efficiencies that accrue to the BUR-VIS further lowering our subsidy requirement. 

9 1n addition, ArkeFiy provides weekly summer seasonal service between OAK and Amsterdam. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 18 

June 25, 2012 
Oakland International Airport 

Nonstop Service- June 2012 

SEA(PDRT 

====·AIRLINES 

Finally, the most important advantage of Oakland International Airport as a gateway to the Bay Area 

is the lack of delays relative to those experienced at San Francisco International Airport, a situation 

that will be amplified over the next couple of years as the airport undergoes major runway 

construction. In the last year, SFO experienced 12% more delays, averaging 40% longer than 

OAK. 10 

Burbank Bob Hope Airport (serving the Los Angeles Basin) 

Burbank Bob Hope Airport (BUR) provides convenient, hassle-free access to the Los Angeles area. 

The airport is the closest to many of the most popular LA destinations, including Universal Studios, 

Warner Brothers Studios, Rose Bowl Stadium, Dodger Stadium, Kodak Theater, Getty Center, Santa 

Monica, Griffith Park, Hollywood Bowl, and The Grove. The airport is 30 minutes to downtown Los 

Angeles compared to 40 minutes from Los Angeles International Airport. 

Bob Hope Airport also offers travelers the convenience of multi-model transportation. Ten Amtrak 

trains and 29 Metrolink trains serve the Bob Hope Airport Train Station daily, helping travelers get to 

Downtown Burbank, Glendale and Union Station in Downtown Los Angeles. In addition to train 

service, the airport offers free shuttle service to the Downtown Burbank Station, where connections 

can be made with the Santa Clarita Line, and to the North Hollywood Red Line Station where Red 

Line provides easy access to Hollywood and· Downtown Los Angeles. 

As for connections, Bob Hope Airport offers an average of 75 nonstop flights daily on Alaska, Delta, 

jetBiue, Southwest, United, and US Airways to West Coast cities, mid-continent hubs and New York. 

Current nonstop connecting destinations are illustrated on the map on the next page. 

10 SOURCE: Bureau of Transportation Statistics. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 19 

June 25, 2012 
Burbank Bob Hope Airport 

Nonstop Service- June 2012 

SEAtPORT 

o====•A I R ll N E S 

The greatest strength of Burbank Bob Hope Airport is the convenient travel experience, particularly 

relative to Los Angeles International Airport. All connecting flights at BUR are in one terminal, 

compared to multiple terminals (and security checkpoints) at LAX. For travelers departing BUR, it is 

a short walk from the parking shuttle to short security lines and onto the aircraft. For arriving 

travelers, there is curbside pick-up, convenient access to rental cars, quick parking shuttles, and 

freeways located only a mile away. 

San Diego International Airport 

San Diego International Airport (SAN) provides convenient access to the San Diego metropolitan 

area, including downtown San Diego, San Diego Cruise Ship Terminal, NAS North Island, and 

MCAS Miramar. The airport consistently ranks high in surveys conducted by Airports Council 

International (ACI) that capture passenger appraisal of service factors, from check-in through to 

departure at the gate. 

The airport is served by 17 airline brands (including affiliated regional partners) offering nonstop 

service to over 50 destinations on an average of 250 daily departures. As shown on the map on the 

next page, this includes domestic service as well as service to Canada, Mexico, and the United 

Kingdom. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 110 

June 25, 2012 
San Diego International Airport 

Nonstop Service- June 2012 

SEA>tPORT 

====<~~.tRLINES 

In addition to service shown on the map, Alaska Airlines has announced it will begin nonstop service 

between San Diego and Orlando on October 11, 2012 and Japan Airlines will begin nonstop service 

to Tokyo, Japan (Narita Airport) in December 2012 using Boeing 787 aircraft. 

Pricing Model 

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

of advance purchase and capacity controls. This approach allows us to offer attractive fares while 

minimizing required levels of subsidy and offering a path for continued eligibility to participate in the 

EAS program. 

The projected highest and lowest fare in both Merced and Visalia, along with a projection of the 

average fare, is provided on the table below: 

SeaPort Airlines Illustrative Fares 

Pricing Range & Average 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 111 

June 25, 2012 
SE PORT 

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. 

Passenger Traffic Projections 

SeaPort's projections of traffic and revenue at Merced and Visalia were developed using a 

forecasting methodology that factors recent and historical traffic levels, in addition to 

frequencies, connecting options, aircraft size, nonstop v multi-stop flights, average fares, etc. 

SeaPort Airlines 

Projected Passenger O&D Traffic by City-Pair 

Note that projections include 7,825 local O&D passengers between San Diego and Burbank. This 

equates to approximately 10.8 passengers daily each way (PDEW) and is provided to demonstrate 

that there will be sufficient capacity on this "up line" service to accommodate thru passengers 

traveling to and from Visalia and Merced. 

Marketing & Community Relations 

In this proposal, SeaPort Airlines has allocated $50,000 per year for marketing and sales activity for 

both Merced and Visalia (combined total of $1 00,000). If selected to provide EAS, we will employ a 

comprehensive mix of marketing and public relations strategies to introduce our brand to the 

community and increase enplanements at Merced and Visalia. 

In addition to traditional advertising in each community, including a mix of print and radio, key 

strategies that we will employ 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.). 

+ City Ticket Offices: SeaPort's plans for Merced and Visalia include establishing city ticket 

offices in the downtown area of each community. Borrowing from the success of such offices by 

other airlines, we believe that this will increase visibility of the airport and air service, create an 

additional opportunity to provide the highly-personalized customer service on which we have 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 112 

June 25, 2012 
SEA>tPDRT 

AIRLINES 

built our reputation, and reinvest in the local communities. We are also considering the use of 

city ticket offices as the base for a new Spanish-speaking call center. 11 

+ 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 & Linkedln. 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 both Merced and Visalia. 

+ FlyerFiex Customer Rewards: SeaPort offers a customer loyalty program called "F/yerF/ex." 

This program provides customers with a variety of benefits including free flights, service charge 

waivers, and bonus points. With the implementation of our new reservation system complete 

(described above), SeaPort plans to unveil enhancements to the F/yerF/ex program over the 

next six months that include a wider range of travel award options and ability for customers to 

check balances and redeem awards online. 12 

+ 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 as much as 15% off published fares. Unlike corporate travel 

programs of major airlines that typically prevent small businesses from realizing meaningful 

benefits, companies of virtually any size (and any employee of those companies) can realize real 

savings and benefits from SeaPort's Value Account program. 

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 EAS. 

11 Because of the investment required, establishment of city ticket offices is contingent on the selection of four-year 

EAS contract as discussed later in this proposal. 

12 As interline agreements are added, SeaPort will seek to offer opportunities for credit accrual in the frequent flyer 

programs of our major airline partners. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 113 

June 25, 2012 
SEAtPDRT 

":::.":===:AIRLINES 

Community & Customer Feedback 

To this point, we have outlined our own view of why SeaPort Airlines is uniquely positioned to 

provide reliable and reasonably priced air transportation, contribute to economic vitality and quality 

of life in both Merced and Visalia, and ensure that the communities maintain their eligibility to 

participate in the EAS community by reducing subsidy levels to below the $200 per passenger cap. 

The strongest proof of our ability to deliver this product can be found in the accolades we regularly 

receive from both our customers and community partners. Below is just a small sample of the 

comments that we have received: 

Our Essential Air Service Community Partners 

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

Joss 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 s_truggling since schedule changes 

following 9111 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, '/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." 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Larry Dalrymple 

Airport Manager 

Pendleton Regional Airport 

Page 114 

June 25, 2012 
SEA(PORT 

====AIRLINES 

"/ 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". 

Our Customers 

Luci Larson 

· Former Mayor & Owner of 

Action Travel 

Salina, KS 

"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) 

"Flew with you guys from Wenatchee to Vancouver WA and back. Awesome trip, had a great flight. 

TONS more fun than a bigger plane, and a lot less hassle. Will be making the same trip again this 

fall! Thanks a bunch for the awesome service here, we've needed a decent carrier out of Pangborn 

for a long time." 

Dan Brown 

Customer (flew from Wenatchee to 

Portland) 

"Had a great flight last Friday from Hot Springs AR to Dallas Love field ... had Jeremy (The Flying 

Hawaiian) & Colin ... Best Flight ever! Highly recommend this airline .... Great & Friendly service! I will 

definitely fly this airline again!" 

- Susan Gower 

Customer (flew from Hot Springs to 

Dallas) 

"/ 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 unW 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 fee/like a queen!" 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

- Catherine Martin 

Customer (few from Memphis to 

Harrison) 

Page 115 

June 25, 2012 
SEA/PORT 

====1\IRLINES 

"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 vefY often. 

EvefYone 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 

WW/1, 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) 

"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 worfY 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 industfY myself and I know how often complaints come through. I just want to be 

sure to let you know how well evefYone 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." 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Mark Davis Peterson 

Customer (flew from Dallas to 

Memphis) 

Page 116 

June 25, 2012 
SEAtPDRT 

.:::::===:<\I R Ll N ES 

Service Proposal 

SeaPort Airlines is proposing a single and inseparable service proposal at Merced and Visalia with 

the option of flights using either the Cessna Caravan or Piper Chieftain. The level of requested 

subsidy, by airplane type, is summarized on the table below. 

Cessna Caravan Piper Chieftain 

Merced $1,578,113 $1,604,249 

Visalia $1,857,912 $1,890,839 

TOTAL $3,436,025 $3,495,088 

This proposal provides each community with an attractive mix of nonstop and direct service to 

multiple destinations that, when combined with an aggressive marketing strategy, is structured to 

result in higher traffic levels which will lower subsidy per passenger levels to below the $200 

statutory limit.13 

Furthermore, the subsidy levels requested are below that currently provided to the incumbent carrier. 

Term of Contract Option 

The service proposal is structured on the basis of a two year term. Notwithstanding the risk of cost 

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

reasonable fare increases, SeaPort is offering the Department and the communities the option 

to contract the proposed annual subsidy rate 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 

communities of Merced and Visalia with the assurance of stable air service for an extended period 

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

SeaPort Airlines, Inc. appreciates the opportunity to submit this proposal and we welcome any 

questions or comments from the communities and/or the Department. 

Respectfully submitted, 

Timothy Sieber 

Vice President - Strategy & Corporate Development 

SeaPort Airlines, Inc. 

June 11, 2012 

13 Note that the higher "Indirect Expenses" for Piper Chieftain reflect that, should the communities select this type, 

these would be the only such aircraft in our fleet. Calculations of TRAFFIC SERVICING factor in the operating costs 

of Merced Regional Airport as outlined in the May 17, 2012 letter to the Department from John Bramble, City 

Manager in Merced. Finally, the communities and Department are reminded that costs associated with operation of 

"up-line" BUR-SAN segment are not included in calculations of subsidy requirement and that we intend to operate 

that segment at its own risk. seaPort Airlines will agree to consult with the Department and communities prior to 

making any changes to this up-line service. 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

Page 117 

June 25, 2012 
SeaPort Airlines, Inc. 

Merced, California (Cessna Caravan) 

Operating Projections 

Awrage Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger & Revenue Projections 

Projected Passengers 

MCE-BUR 

MCE-OAK 

MCE-SAN 

MCE-VIS 

Total 

Projected Awrage Fare 

MCE-BUR 

MCE-OAK 

MCE-SAN 

MCE-VIS 

Awrage 

Local Rewnue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Load Factor 

Projected Market Load Factor (Local Traffic Only) 

Average Segment Load Factor (Includes Thru Traffic) 

Onboard Segment Load Factor: MCE-OAK 

Onboard Segment Load Factor: MCE-VIS 

Financial Projections 

Rewnues 

Passenger Ticket Rewnues 

Ancillary Rewnues 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Sel\icing 

Insurance 

Maintenance 

Sub-Total- Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

!Required Subsidy 

Subsidy per Departure 

Subsidy per Passenger- MCE O&D Only 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

SEA~PDRT =====AIRLINES 

96 

2,808 

2,106.0 

98.5% 

2,766 

2,074.4 

1,875 

5,201 

982 

14 

8,072 

$119.80 

$52.65 

$151.12 

$48.12 

$80.22 

770,959 

2,381,423 

32.4% 

48.0%l 

54.7% 

40.8% 

$647,531 

$15,217 

$662,748 

$176,325 

$360,319 

$582,494 

$50,000 

$346,938 

$33,191 

$373,394 

$1,922,661 

$211,493 

$2,134,153 

($1 ,471 ,405) 

$1,471,405 

$106,708 

$1,578,1131 

$570.56 

$195.50 

Page 118 

June 25, 2012 
SeaPort Airlines, Inc. 

Visalia, California (Cessna Caravan) 

Operating Projections 

A.erage Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

VIS-BUR 

VIS-SAN 

VIS-OAK 

VIS-MCE 

Total 

Projected A.erage Fare 

VIS-BUR 

VIS-SAN 

VIS-OAK 

VIS-MCE 

A.erage 

Re.enue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Load Factor 

Projected Market Load Factor (Local Traffic Only) 

Average Segment Load Factor (Includes Thru Traffic) 

Onboard Segment Load Factor: VIS-BUR 

Onboard Segment Load Factor: VIS-MCE 

Financial Projections 

Re.enues 

Passenger licket Re.enues 

Ancillary Re.enues 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Servicing 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Total Expenses 

Projected Operating Profiti(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

!Required Subsidy 

Subsidy per Departure 

Subsidy per Passenger - VIS O&D Only 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

SEAtPDRT 

c:=:=:====~IRLINES 

135 

2,808 

2,730.0 

98.5% 

2,766 

2,689.1 

3,995 

1,620 

3,901 

14 

9,530 

$78.52 

$146.12 

$106.36 

$48.12 

$101.36 

974,150 

3,360,544 

29.0% 

49.2%1 

54.1% 

40.8% 

$965,986 

$22,701 

$988,687 

$228,569 

$467,081 

$755,085 

$50,000 

$388,337 

$43,025 

$532,491 

$2,464,588 

$246,459 

$2,711,046 

($1,722,360) 

$1,722,360 

$135,552 

$1,857,9121 

$671.73 

$194.95 

Page 119 

June 25, 2012 
SeaPort Airlines, Inc. 

Merced, California (Piper Chieftain) 

Operating Projections 

Awrage Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger & Revenue Projections 

Projected Passengers 

MCE-BUR 

MCE-OAK 

MCE-SAN 

MCE-VIS 

Total 

Projected Awrage Fare 

MCE-BUR 

MCE-OAK 

MCE-SAN 

MCE-VIS 

Awrage 

Local Rewnue Passenger Miles (RPMs) 

AVclilable Seat Miles (ASMs) 

Load Factor 

Projected Market Load Factor (Local Traffic Only) 

Average Segment Load Factor (Includes Thru Traffic) 

Onboard Segment Load Factor: MCE-OAK 

Onboard Segment Load Factor: MCE-VIS 

Financial Projections 

Rewnues 

Passenger Ticket Rewnues 

Ancillary Rewnues 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Sen.king 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

!Required Subsidy 

Subsidy per Departure 

Subsidy per Passenger- MCE O&D Only 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

SEA~PDRT =====AIRLINES 

96 

2,808 

2,074.8 

98.5% 

2,766 

2,043.7 

1,875 

5,201 

982 

14 

8,072 

$119.80 

$52.65 

$151.12 

$48.12 

$80.22 

770,959 

2,381,423 

32.4% 

54.7% 

40.8% 

$647,531 

$15,217 

$662,748 

$122,621 

$93,083 

$621,278 

$50,000 

$346,938 

$79,703 

$500,701 

$1,814,323 

$344,721 

$2,159,045 

($1 ,496,297) 

$1,496,297 

$107,952 

$1,604,2491 

$580.01 

$198.74 

Page 120 

June 25, 2012 
SeaPort Airlines, Inc. 

Visalia, California (Piper Chieftain) 

Operating Projections 

A~.erage Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

VIS-BUR 

VIS-SAN 

VIS-OAK 

VIS-MCE 

Total 

Projected A~.erage Fare 

VIS-BUR 

VIS-SAN 

VIS-OAK 

VIS-MCE 

A~.erage 

Re~.enue Passenger Miles (RPMs) 

Available Seat Miles (ASMs) 

Load Factor 

Projected Market Load Factor (Local Traffic Only) 

Average Segment Load Factor (Includes Thru Traffic) 

Onboard Segment L:oad Factor: VIS-BUR 

Onboard Segment Load Factor: VIS-MCE 

Financial Projections 

Re~.enues 

Passenger licket Re~.enues 

Ancillary Re~.enues 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Sales & Marketing 

Traffic Senncing 

Insurance 

Maintenance 

Sub-Total- Direct 

Indirect 

Total Expenses 

Projected Operating Profit/(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

!Required Subsidy 

Subsidy per Departure 

Subsidy per Passenger- VIS O&D Only 

Merced, California: DOT-OST-1998-3521 

Visalia, California: DOT-OST-2004-19916 

SEA(PORT 

=====AIRLINES 

135 

2,808 

2,667.6 

98.5% 

2,766 

2,627.6 

3,995 

1,620 

3,901 

14 

9,530 

$78.52 

$146.12 

$106.36 

$48.12 

$101.36 

974,150 

3,360,544 

29.0% 

49.2%1 

54.1% 

40.8% 

$965,986 

$22,701 

$988,687 

$157,655 

$119,678 

$798,786 

$50,000 

$388,337 

$102,476 

$687,611 

$2,304,542 

$437,863 

$2,742,405 

($1,753,719) 

$1,753,719 

$137,120 

$1,890,8391 

$683.63 

$198.41 

Page I 21 

June 25, 2012