•

Before the United States Department of Transportation

December 9, 2013

Proposal to Provide Essential Air Service at

,~ c. -0 I

,. ~ 1"..J .

DODGE CITY, KANSAS

GREAT BEND, KANSAS

LIBERAL, KANSAS

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

Docket OST-1998-3502

Docket OST-1998-3496

Docket OST-1998-3498

Proposal of SeaPort Airlines, Inc.

to Provide Essential Air Service at

Dodge City, Great Bend, and Liberal, Kansas

By Order 2013-11-2, the U.S. Department of Transportation ("the Department") requested proposals

for Essential Air Service (EAS) at Dodge City, Garden City, Great Bend, Hays, and Liberal, Kansas

no later than December 2, 2013. The due date for proposals was subsequently extended until

December 9,2013.

In response, SeaPort Airlines, Inc. respectfully submits the following proposals to provide subsidized

essential air service:

• Dodge City: 24 weekly roundtrips to Wichita with an annual subsidy requirement of $2,008,596

• Great Bend: 18 weekly roundtrips to Wichita with an annual subsidy requirement of $1,434,472

• Liberal: 24 weekly roundtrips to Wichita with an annual subsidy requirement of $2,790,489

Each proposal is for a two-year period and submitted on a stand-alone basis.

After this proposal is docketed, SeaPort Airlines will schedule a meeting with the community, 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

Executive Vice President

SeaPort Airlines, Inc.

7505 NE Airport Way

Portland, OR 97218

(971) 340-1716

tsieber@seaportair.com
SEA.tPORT C==========AIRLINES

Discussion of Proposal

Company Introduction

SeaPort Airlines, Inc. is a FAA certified scheduled airline based in Portland, Oregon with 30 years of

experience in commercial aviation. In addition to Portland, the company has operational bases at

Memphis, Tennessee (MEM); San Diego, Califomia (SAN); and Juneau, Alaska (JNU).

Our 221 professionals provide service to 21 cities across nine states with a fleet of 15 aircraft. The

company's route map as of the date of this proposal is provided below:

SEAf'PORT ~«¥Kf"/

===,AIRLINES ._ ••••OOM._ ••••.••••• ,••t

The primary focus of SeaPort Airlines is to provide affordable and reliable air service to small and rural

communities across America. Service to eight of the communities on our route map is provided under

the EAS program: Athens, Georgia; Pendleton, Oregon; EI Dorado, Hot Springs, and Harrison,

Arkansas; Salina, Kansas; Jackson, Tennessee; and Imperial/EI Centro, California.

Once SeaPort Airlines is awarded an EAS contract and service is launched, we develop a partnership

with each community by participating in local events, donation of tickets, on-going dialogue with airport

management and community leaders, and presentations to civic clubs and other similar organizations.

We also have a reputation of being responsive to community needs, affording them the opportunity to

comment on schedule and fare changes before they become effective.

OST-1998-3496, OST-1998-3498, OST-1998-3502

December 9, 2013

Pagel2
SEA.tPORT ====A1RlINES

Our commitment to EAS communities is demonstrated by the fact that in every "Lower 48" community

that SeaPort serves in the EAS program, we have been re-selected for subsequent terms at the end

of our first contract period. This includes reselection during 2012 to four-year contract renewals (rather

than the standard two-years) at both Salina, Kansas and Pendleton, Oregon, after both communities

voiced their overwhelming support for SeaPort Airlines. Similarly, we were selected for a four-year

renewal at the Arkansas communities of EI Dorado, Harrison, and Hot Springs, effective November 1,

2013.

Aircraft

SeaPort Airlines' proposal at Dodge City, Liberal and Great Bend contemplates operations with

Cessna Caravans which will allow us to offer safe, comfortable, and affordable air transportation

in a modern and economical aircraft.

Manufactured in Kansas, 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 almost 15 million flight hours. The Caravan is certified

for single-pilot operation, however SeaPort 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 Chieftain and Cessna 402) and allows us to segregate passenger

baggage for security purposes. 1

Proposed Service Pattern

SeaPort Airlines proposes to provide 24 weekly roundtrips between Wichita and both Dodge City and

Liberal. We propose 18 weekly roundtrips between Great Bend and Wichita. An Illustrative schedule

pattern for each community is on the next page.

1 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.

08T-1998-3496, 08T-1998-3498, 08T-1998-3502

December 9, 2013

Page 13
SEAtPORT

====,A1RlINES

_~ [)odge City to~Wichita .

5:45am 6:50am ExSun 0

11:15am 12:10pm ExSun 0

1:15pm 2:10pm ExSat 0

4:30 m 5:25 m ExSat 0

____ ~~atBend_toWichita ~ _

6:15am 7:00am ExSat 0

10:30am 11:15am ExSun 0

4:00 m 4:45 m ExSun 0

_____ ~ _biberal1o ~lfIIichita .

5:30am 6:55am ExSun 0

11:00am 12:25pm ExSun 0

2:45pm 4:10pm ExSat 0

6:30 m 7:55 m ExSat 0

8:55am

1:00pm

4:45pm

7:00 m

ExSun

ExSun

ExSat

ExSat

o

o

o

o

If selected to provide EAS, SeaPort Airlines will solicit comments from each community on proposed

flight schedules prior to making them available for sale to the public. As much as practical, these

comments will be incorporated into the final schedule and factoring any impact on flight schedules,

At Wichita, customers will be afforded connections to the route systems of the three large legacy

carriers (American, Delta, and United), as well as low-fare service provided by Southwest Airlines and

Allegiant Air.

J

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ATL (Atlanta)•

MSP (Minneapollsi '-.I

,

, '

•

\

J

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<

IAH(Houston)

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"

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~

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" .' ZDW~ChlcagOORD(ChIC~90)

DEN (Denve~ "

~

,MCI(K hsas City)

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DOC (DOdge. CIty) ~~BD lc9~~~~~) 'I _/

.I.R~ '" ,." .-.._~-,----::::::;:;::;::-==i~"' u

, ~ (LaSyegas)::::::::==-' ,~. .-.--.. .' ';UL (Tulsa)

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OKC (Oklahoma City)

>

. . .....

(Los Angeles) DFW(Dallas.Fort Worth)

___________ " AZA- (phoenix) DAL (Dallas

. ,-------- - _.-

Additionally, SeaPort intends to grow its presence at Wichita through the addition of short-haul service

that would provide customers with access to other Mid-Western communities such as Kansas City,

Tulsa, and Oklahoma City.

OST-1998-3496,OST-1998-349B,OST-199B-3502

December9,2013 Page I4
SEA.tPORT

====AIRLlNES

Fares & Pricing

All of SeaPort's fares are priced on a one-way basis, including all taxes and fees, and structured as

follows:

+ The highest price point (branded as "FULL Flex") provides our customers with total flexibility

to change their travel plans or, if they choose, obtain a full refund without incurring a service

charge.

+ The lowest price point (branded as "NO Flex") targets customers who are certain about their

travel plans. This fare requires an advance purchase of 14-days, is non-refundable, and does

not permit any changes from the original booked itinerary.

+ In between, SeaPort offers a range of fares ("FREE 2 Flex" and "Flex 4 FEE") with price points

based on how much flexibility a customer has in their travel plans. Except for the two highest

price points, fares are also subject to capacity controls meaning that the farther in advance a

reservation is made, the more likely a customer is to get a lower fare.

The table below summarizes the range of proposed ticket prices in each of the Kansas markets along

with the rules and restrictions applicable to each price point.

Fare Category +

FULL Flex FREE 2 Flex Flex4FEE NO Flex

••• Summary of Fare Rules

AdvancePurchase(dayspriorto departure) 3 7-to-14 14-to-21

ChangeFee $0 $50 Notpermitted

Refundable No No No

Free CheckedSa s 1 1 1

$99 $69 $49 $39

$79 $59 $49 $39

$99 $79 $59 $49

During the first 30 days of service, SeaPort Airlines would offer an introductory fare including all taxes

and fees) to/from Great Bend of $39 and tolfrom Liberal and Dodge City of $49. This fare will be

available on every seat and every flight during the period.

Interline Connectivity & GDS Display

SeaPort Airlines tickets may be purchased by calling our toll-free reservation number, online at

www.SeaPortAirlines.com. at any travel agent connected to the major global distribution systems

(GDS), or all of the major online travel agencies and meta-searchers such as Orbitz, Travelocity,

Expedia, Kayak, Hipmunk, and CheapoAir.

The company recently announced that it will migrate to the Amadeus Altea reservation platform on

March 22, 2014. With this new system, SeaPort will have unsurpassed capability compared to other

regional airlines with regard to interline ticketing, through baggage check-in, e-commerce, and InterAirline Thru Check-In (IATCI). Most importantly, with the new system the company will launch its first

full interline agreement on March 22, 2014 with a major airline to followed by a second carrier on May

1, 2014. The company is in discussions with two other major carriers regarding agreements for

implementation later in 2014.

OST-1998-3496,OST-1998-3498,OST-1998-3502

December9,2013

Page15
SEA.;PORT ===~'AI RLl N ES

Subsidy Request Calculations

The following pages contain the calculations that support SeaPort Airlines' request for subsidy to

provide EAS at Dodge City, Great Bend. and Liberal beginning May 1,2014.

Respectfully submitted,

Timothy Sieber

Vice President - Commercial

SeaPort Airlines, Inc.

December 9,2013

OST-199B-3496, OST-199B-349B, OST-199B-3502

December 9, 2013 Pagel6
SEAtPDRT -====.A IR1INES

OST-1998-3502

Cessna Caravan, Two-Pilots

24 Weekly RTs: Dodge City - Wichita

Proforma Data

Operating Projections

A\erage Sector Length (sm)

Scheduled Departures

Scheduled Block Hours

Projected Completion Factor

Projected Completed Departures

Projected Completed Block Hours

Passenger Projections

Projecled Passengers

Passengers per Departure

Projecled A\erage Fare

Re\enue Passenger Miles (RPMs)

Available Seal Miles (ASMs)

Projecled Load Factor

Financial Projections

Re\enues

Passenger Ticket Re\enues

Ancillary Re\enues

Total

Expenses

Flight Operations

Aircraft Ownership/Lease

Fuel & Oil

Sales & Marketing

Traffic Servicing

Insurance

Mainlenance

Sub-Tolal - Direcl

Indirect

Tolal Expenses

Projecled Operating ProfiU(Loss)

Subsidy Calculations

Operating Loss

Economic Relurn @ 5%

1Required Subsidy

Subsidy per Departure

Subsidy per Passenger

OST-1998-3496, OST-1998-3498, OST-1998-3502

December 9, 2013

139

2,496

2,288.0

98.5%

2,459

2,253.7

11,500

4.7

$54.30

1,598,500

3,075,659

52.0%

$624,450

$15,611

$640,061

$214,100

$385,000

$547,644

$25,000

$515,700

$36,059

$470,003

$2,193,505

$329,026

$2,522,531

($1,882,470)

$1,882,470

$126,127

$2,008,5961

$816.98

$174.66

Page 17
. . SEA.tPORT

-==-==-====ArRlINES

OST-1998-3496

Cessna Caravan, Two-Pilots

18 Weekly RTs: Great Bend - Wichita

Proforma Data

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

Anciilary Revenues

Total

Expenses

Flight Operations

Aircraft Ownership/Lease

Fuel & Oil

Sales & Marketing

Traffic Senicing

Insurance

Maintenance

Sub-Total - Direct

Indirect

Total Expenses

Projected Operating Profit/(Loss)

Subsidy Calculations

Operating Loss

Economic Retum @ 5%

IRequired Subsidy

Subsidy per Departure

Subsidy per Passenger

OST-1998-3496, OST-1998-3498, OST-1998-3502

December 9, 2013

55

3,120

1,248.0

98.5%

3,073

1,229.3

3,100

1.0

$51.30

169,260

1,510,170

11.2%

$159,030

$3,976

$163,006

$116,782

$300,000

$298,715

$25,000

$353,820

$19,668

$208,978

$1,322,963

$198,444

$1,521,407

($1,358,401)

$1,358,401

$76,070

$1,434,4721

$466.77

$462.73

Page 18
.. SEA/PORT ====,AIRLINES

CST-1998-3498

Cessna Caravan, Two-Pilots

24 Weekly RTs: Liberal- Wichita

Proforma Data

Operating Projections

A\erage Sector Length (sm)

Scheduled Departures

Scheduled Block Hours

Projected Completion Factor

Projected Completed Departures

Projected Completed Block Hours

f>assenger Projections

Projected Passengers

Passengers per Departure

Projected A\erage Fare

Re\enue Passenger Miles (RPMs)

Available Seat Miles (ASMs)

Projected Load Factor

Financial Projections

Re\enues

Passenger Ticket Re\enues

Ancillary Re\enues

Total

Expenses

Flight Operations

Aircraft Ownership/Lease

Fuel & Oil

Sales & Marketing

Traffic Sen.;cing

Insurance

Maintenance

Sub-Total - Direct

Indirect

Total Expenses

Projected Operating Profit/(Loss)

Subsidy Calculations

Operating Loss

Economic Retum @ 5%

IRequired Subsidy

Subsidy per Departure

Subsidy per Passenger

OST-1998-3496, OST-1998-3498,OST-1998-3502

December 9, 2013

I

199

2,496

3,536.0

98.5%

2,459

3,483.0

11,500

4.7

$64.23

2,288,500

4,403,281

52.0%

$738,645

$18,466

$757,111

$330,881

$385,000

$846,359

$25,000

$702,900

$55,727

$592,103

$2,937,971

$440,696

$3,378,667

($2,621,556)

$2,621,556

$168,933

$2,790,4891

$1,135.01

$242.65

Page 19