Alternate Essential Air Service Proposal

for

Victoria, Texas

Presented By

Public Charters, Inc.

May 9, 2014
May 12, 2014

Jason Milewski, C.M., Managing Director

Victoria Regional Airport

502 Chimney Rock Dr.

Victoria, TX 77904

VIA Electronic Mail

Dear Mr. Milewski:

Public Charters, Inc. (PC) is pleased to present our proposal to provide Alternate Essential Air Service to 

the Victoria Regional Airport (VCT) under the pilot program established by 49 USC 41745(a)(3)(f).

Based upon the information that we have gathered, we anticipate enplanements at VCT to increase by 

approximately 71% over 2012 levels in the first year of our proposed program.

You will find that PC’s proposal reflects the attributes of Essential Air Service as originally conceived by 

Congress, with non-stop service to hub airports that makes sense for all stakeholders, in a better class of 

equipment than has recently been available at VCT at a fiscally responsible level of subsidy, and with the 

flexibility in scheduling and pricing to fine-tune operation to best meet the needs of the airport and the 

local community.

We are committed to ensuring continuity of service to VCT. Not only will we carefully coordinate our 

commencement of service with the incumbent carrier, we will work with you to finalize contract 

provisions at both the local and Federal level that permit us to be “held in” pending a contract renewal or 

selection of a replacement carrier.

Alternate Essential Air Service gives the community an unprecedented level of control of the air carrier 

and the service that they provide. As many in Congress continue to press for Essential Air Service 

reform, VCT has a unique opportunity to use this procurement to help define the future of the program, 

making the best use of Federal dollars while obtaining a better and more appropriate level of service for 

the community.

We respectfully request selection as your air carrier and look forward to collaborating with you on the 

successful implementation of Alterative Essential Air Service at VCT. 

Respectfully submitted this 12th day of May 2014,

____________________________

PUBLIC CHARTERS, INC.

Jim Gallagher, President/CEO

201 Hangar Road

Avoca, PA 18702

570-457-1950 (voice)

570-457-4113 (fax)

jg@publiccharters.com (e-mail)
May 12, 2014 Public Charters, Inc. Page 1

About the Offerors

PC is a U.S. Charter Operator authorized pursuant to 14 CFR Part 380 to organize and 

sell Public Charters as an Indirect Air Carrier. PC is authorized by the International Air 

Transportation Association (IATA) to use the two-letter code “P1” and has distribution rights on 

certain Global Distribution System (GDS) platforms including, but not limited to Sabre and 

Amadeus, through certain online travel agencies, including but not limited to Priceline.com and 

Fly.com, and has an agreement to settle ticket sales, including sales of public charters flights,

through the Airlines Reporting Corporation (ARC). A copy of ARC’s press release regarding its 

arrangement with PC (reprinted from travelagentcentral.com) is attached hereto as Exhibit A. PC

owns proprietary web-based software products that together address all aspects of ticket sales, 

distribution, e-ticketing, baggage tracking, and interline communications. PC is TSA Secure 

Flight compliant, providing both domestic and international TSA clearances. PC also has direct 

experience in all aspects of air carrier station operations and management. 

In 2012, PC received the first-ever award under the Alternate Essential Air Service under the 

pilot program, providing services for the Manistee-Blacker Airport in Manistee, Michigan (MBL) to 

Chicago Midway Airport (MDW). This Service is conducted between the main terminals at each airport 

with full TSA screening of passengers and baggage. All flights under this program are operated as public 

charters under 14 CFR Part 380. PC is the indirect air carrier and Corporate Flight Management, Inc. 

(CFM) is the direct air carrier. CFM conducts all flights for the program on its 19-passenger 

Jetstream aircraft. PC is presently negotiating an extension of this contract for a 4 year term.

PC contracts with Corporate Flight Management (CFM) to provide aircraft, crews, flight 

operations, and aircraft maintenance CFM is a U. S. Direct Air Carrier (certificate number 

FJTA920D) authorized by the FAA to operate under 14 CFR Part 135. A copy of CFM’s Air 

Carrier certificate is attached hereto as Exhibit B-1. On January 14, 2014, CFM received its 

commuter fitness from USDOT. A copy of CFM’s Commuter Air Carrier Authorization is 

attached hereto as Exhibit B-2.
May 12, 2014 Public Charters, Inc. Page 2

CFM presently operates 6 BAE “Jetstream” regional airliners (4 Jetstream 31/32 series 

19-passenger aircraft and 2 Jetstream 41 30-passenger aircraft) in addition to the 20 other 

turbine-powered aircraft in its fleet. The company has a TSA-approved full aircraft security 

program permitting operations into and out of “sterile” airport terminals.

On the MBL-MDW route during the period beginning March 1, 2013 and ending March 

31, 2014 MBL-MDW program, PC and CFM have achieved a 98.6% flight completion rate. 

During that period, there were two weather – related events, one which resulted in a cancellation 

and one which resulted in a diversion. There were also five maintenance-related events, three of 

which resulted in flight delays that were completed the following day and two of which were 

completed within 4 hours or less. There were no delays or cancellations due to crew issues.

The Proposed Service

After consulting with representatives of VCT, PC has elected to propose service to two hub 

airports. The Program will consist of one round trip per day (excluding Sundays) between the Victoria 

Regional Airport (VCT) and Dallas-Fort Worth International Airport (DFW) with an intermediate stop on 

both the outbound and return legs at the Austin-Bergstrom International Airport (AUS). In addition, on 

the busier travel days of Monday, Wednesday, and Friday, PC proposes to operate a second round trip 

between VCT and AUS. Under PC’s proposed program, VCT would receive a total of 30 flight segments

per week: 24 with the VCT-AUS-DFW-AUS-VCT routing and 6 with the VCT-AUS-VCT routing. This 

Program will be provided as Alternate Essential Air Service (AltEAS) under the pilot program established 

by 49 USC 41745(a)(3)(f) and will be operated as public charters in accordance with 14 CFR Part 380.

The service will be operated during every week of the year on the following days: Monday, 

Tuesday, Wednesday, Thursday, Friday and Saturday. Each week, VCT will receive the equivalent of 9 

round-trips to AUS and 6 round-trips to DFW.

The gate-to-gate time for each flight segment between VCT and AUS is expected to be 

approximately 35 minutes (rounded to .6 hours). The gate-to-gate time for each flight segment between 

AUS and DFW is expected to be approximately 66 minutes (expressed as 1.1 hours). The total gate-togate time for one way travel between VCT and DFW is expected to be approximately 2 hours and 10 
May 12, 2014 Public Charters, Inc. Page 3

minutes, including time on the ground at AUS. All operations will be conducted to and from the main 

terminal at each airport. All passengers, their baggage, and the aircraft will undergo full TSA screening at

the main terminal at their trip’s point of origin. The passenger check-in location at each airport will be 

printed on the itinerary that we will provide to each passenger.

Proposed Daily Flight Schedule

PC proposes a service pattern tailored to meet the needs of the community Figure 1 below is a 

pro-forma timetable for the proposed morning service Monday through Saturday of each week. Figure 2

below is a pro-forma timetable for the proposed afternoon service on Mondays, Wednesdays, and Fridays 

of each week. All times in each figure are local times. PC will continually monitor changes in the 

timetables for the connecting carriers at AUS and DFW. In collaboration with VCT, PC will adjust its 

schedule, including – if necessary - the days on which the service operates, to best meet the connecting 

flight needs of its passengers. Also, please note that we propose service between the main terminals at 

each airport, which will require full TSA screening of passengers and baggage at VCT.

Pro-Forma Schedule: One-Stop Service (Mornings)

Depart Arrive Stops Time

VCT 6:00 AM AUS 6:35 AM 0 .6

AUS 7:05 AM DFW 8:10 AM 0 1.1

DFW 12:30 PM AUS 1:35 PM 0 1.1

AUS 2:05 PM VCT 2:40 PM 0 .6

Figure 1: Pro-Forma Daily Flight Schedule: All Weekdays and Saturdays

Pro-Forma Schedule: Non-Stop Service (Afternoons)

Depart Arrive Stops Time

VCT 3:30 PM AUS 4:05 PM 0 .6

AUS 4:35 PM VCT 5:10 PM 0 .6

Figure 2: Pro-Forma Daily Flight Schedule: Mondays, Wednesdays, and Fridays

We will base the aircraft, crews, and maintenance technicians at VCT to ensure on-time 

performance.

PC and CFM have the flexibility to add non-subsidized flights on relatively short notice to AUS,

DFW, and other destinations and to bring in additional 19-passenger Jetstream aircraft in order to 

accommodate VCT’s varying air transportation needs. 
May 12, 2014 Public Charters, Inc. Page 4

In addition, if all of the flight segments of the proposed service individually average 15 or more 

enplanements for a period of 90 consecutive days, and the level of enplanements is consistent from flight 

to flight and is not attributable to seasonal or short-term factors, then VCT, PC, and CFM will evaluate 

the upgrading to an aircraft configured with 30 passenger seats.

The Hub Airports

AUS

AUS is served by over 15 airlines offering nearly 40 daily non-stop domestic destinations and 3

non-stop international destinations – including London, England – as well as dozens of daily connecting 

flights. In addition, AUS offers access to low cost carriers such as AirTran, Frontier, JetBlue and 

Southwest. 

AUS has 25 gates across the single concourse that comprises its passenger terminal. 

DFW

DFW is served by over 24 airlines offering nearly 700 daily non-stop domestic destinations and 

numerous daily non-stop international destinations, as well as hundreds of daily connecting flights. It is a 

hub airport for American Airlines. In addition, DFW offers access to low cost carriers such as JetBlue 

and Frontier. 

DFW has 195 gates across the 5 concourses that comprise its terminal. 

We have been in contact with the marketing offices and ground handlers at both AUS and DFW, 

and are confident that we will have ticket counter, gate space, and ground support in place at well in 

advance of the commencement of our AltEAS operations.
May 12, 2014 Public Charters, Inc. Page 5

The Aircraft and Crews

PC proposes operations using CFM’s Jetstream 31/32 19-

passenger aircraft. The Jetstream is a pressurized twin-engine 

turboprop airliner built and regulated to 14 CFR Part 25 standards. 

Figure 3 presents a layout of the Jetstream 31/32 cabin. Its crew 

compliment includes a Captain and First Officer. Both crew members 

receive regular simulator training at Flight Safety International. The 

Jetstream 31/32 offers the largest cabin in the 19-seat class of aircraft and 

have been proven to be both safe and economical in worldwide operation. It 

is the only 19-seat airliner to offer galley and enclosed lavatory facilities. 

Figure 4 is a photograph of the passenger seats in one of the Jetstream 

aircraft presently operated by CFM.

CFM’s Jetstream aircraft are fast, with a 265 mph “standard” cruise speed. They are also very 

fuel efficient, consuming approximately 115 gallons of fuel per flight hour (less than half that of 

a comparable regional jet). With 19 passengers plus standard baggage, the Jetstream has a 

maximum non-stop range of over 600 statute miles. AUS is approximately 103 statute air miles 

from VCT and DFW is approximately 191 statute air miles from VCT. Therefore, both proposed

hub airports are well within the Jetstream’s non-stop range. 

The Jetstream’s average runway requirement is 3,900 feet –

comparable to many general aviation aircraft. Its 25,000 

foot service ceiling permits CFM’s Jetstream aircraft to 

climb above most bad weather. The Jetstream aircraft are

fully-deice equipped for flying into known icing and has 

freon air conditioning for passenger comfort while on the 

ground. CFM’s Jetstreams are also equipped with advanced 

safety systems, including a Traffic Collision Avoidance 

System (TCAS I) and an Enhanced Ground Proximity Warning System (EGPWS). 

Figure 4: CFM’s Jetstreams Feature

Leather Passenger Seats
May 12, 2014 Public Charters, Inc. Page 6

In addition, the Jetstream features a flight deck that is physically separated from the main 

passenger cabin, a pressurized cargo hold with 628 lbs. / 65 cubic feet of baggage capacity, and 

an exterior cargo pod with an additional 435 lbs. / 20 cubic feet of baggage capacity. CFM’s 

Jetstream have an average useful load of up to 4,500 pounds, with over 1,000 pounds dedicated 

to baggage/cargo space. 

CFM has no accidents or violations and has been given a Platinum rating by the independent air 

carrier evaluation firm ARG/US (see Exhibit B-3). 

Maintenance has always been the key to CFM’s reliable on time performance. As noted above, 

we will base aircraft technicians in VCT along with the aircraft. We will provide our technicians with an 

inventory of spare parts and the support equipment necessary to keep the dispatch reliability of CFM’s

Jetstreams at 99% or better. The on-site spare parts at VCT will be augmented by the over $5 million 

parts inventory maintained on hand at CFM’s headquarters in Smynra, Tennessee. 

As noted above, CFM presently has 4 Jetstream 31/32 aircraft in its fleet, providing 

ample reserve capacity to address planned and unplanned requirements. CFM also operates 2 

Jetstream 41 aircraft configured with 30 passenger seats that can replace or supplement the 19-

seat aircraft when necessary.

Sales

Sales will be conducted using PC’s “P1” IATA code through its proprietary computerized 

reservation system (CRS). PC’s CRS has “Type A” real time connectivity and has been certified 

for E-Ticketing on both the Sabre and Amadeus GDS platforms. One of the features that GDS 

participation provides is access to information about all available connections at the AltEAS hub 

airports. GDS participation also makes fares available world-wide, maximizing exposure for 

VCT. 
May 12, 2014 Public Charters, Inc. Page 7

In addition to GDS distribution, our flights will be available for purchase through a 

number of Online Travel Agents and travel aggregators, as well as through our own web site.

Figure 5 shows a screen capture from Cheapoair.com of a flight sold by PC under the MBLMDW AltEAS program. For the VCT AltEAS program, flights will display in a similar fashion. 

Through GDS and internet distribution, we enable passengers or their travel agents to

construct itineraries using multiple carriers by purchasing tickets on each carrier separately

through a single transaction. Travel agents can use a special “segment select” function that 

enables then to build each segment of flight with different carriers on the same itinerary 

regardless if there is an existing interline agreement. Figure 6 shows a screen capture of a 

combined itinerary for a MBL – MCO (Orlando, Florida) round trip with PC flights paired with

both low cost and major air carriers. 

Figure 5: Sample PC Cheapoair Search Screen 

We receive complete electronic information on all of our bookings, including multiple 

carrier itineraries. Our system is designed to identify such bookings and to provide the pertinent 

data to our upline and downline station personnel. Funds from all GDS and online sales will be 
May 12, 2014 Public Charters, Inc. Page 8

cleared through the Airline Reporting Corporation and remitted directly into the depository 

escrow account required by 14 CFR Part 380. In addition, passengers will protected by 14 CFR 

Part 380 bonding and escrow requirements applicable to both PC and CFM.

We will fully comply with the 14 CFR Part 380 provisions governing tour operatorparticipant contracts. Screen displays will disclose the information required by Part 380 and 

DOT guidance on advertising and internet sales. Also, as part of the purchase process, 

passengers or their travel agents will receive electronic copies of the Operator Participant 

Contract and the CFM Contract of Carriage. 

Figure 6: PC Combined Itinerary Generated by a Travel Agent 

with United and Frontier for a MBL-MCO Round Trip

CFM’s Contract of Carriage for AltEAS flights will incorporate all DOT regulations 

providing consumer protection that are applicable to commuter air carriers, meeting consumer 

expectations for scheduled service operations with aircraft having fewer than 60 passenger seats.

Flights operated as public charters offer enhanced consumer protections when compared 

to tickets sold by traditional mainline, regional, and commuter air carriers:

 The funds from all ticket purchases for each flight are held in escrow at a USDOTapproved financial institution. Neither the direct or indirect air carrier can access the 

funds until the flight is complete

 Passenger refunds are protected by a public charter payment bond. The bonding 

company can make refund payments to passengers if the carrier is unable to do so

 14 CFR Part 380 places significant restrictions on the cancellation of pubic charter 

flights. It specifically prohibits the cancellation of any flight within 10 days of its 

scheduled departure other than for circumstances that make it physically impossible 

to perform the trip
May 12, 2014 Public Charters, Inc. Page 9

 All public charter programs are approved – and adherence to the public charter 

regulations is monitored by - the USDOT’s Special Authorities Division. Rule 

infractions may lead to the termination of a carrier’s public charter program and 

denial of approval for future programs

Program Phase-in and Commencement of Service

The contract with the incumbent Essential Air Service provider is scheduled to end on 

September 30, 2014. PC’s service would commence the following day. We expect to 

commence phase-in activities and ticket pre-sales approximately 60 days prior to our start date. 

We will coordinate with the incumbent carrier to ensure a smooth transition. PC would consider 

an earlier start date in the event that the DOT, the incumbent carrier, and the community agreed 

to an early termination of the existing contract, provided that PC would have at least 60 days for 

phase-in.

Projected Fares

We have determined that an average one-way fare to AUS of approximately $59.00 and an 

average one-way fare to DFW of approximately $89.00. The average all-in price for a VCT-AUS round 

trip would be $118.00 and the average all-in price for a VCT-DFW round trip would be $178.00. PC’s 

standard fares will have limitations on the circumstances under which they will be refunded. 

Projected VCT Enplanements

Our analysis indicates that the combination of direct service from VCT to AUS and DFW, 

coupled with competitive one-way and round trip fares, reliably delivered using aircraft configured and 

equipped with the amenities expected of regional carriers by the flying public, could increase annual 

enplanements at VCT by approximately 71% over 2012 levels in the first year of AltEAS operations. 

Total traffic at the airport could conceivably exceed 10,000 passengers. 
May 12, 2014 Public Charters, Inc. Page 10

Proposed Subsidy 

Our proposed service will require an annual subsidy of $2,288,152. This breaks down to a perflight segment amount of $2,217 or $146 per projected passenger (inbound and outbound). The details of

our subsidy calculation appear in Attachment C hereto. 

We believe this to be a fiscally responsible level of subsidy and one that maximizes the utility of 

the service to the community and the flying public for each dollar spent.

Interline Agreements

PC has held discussions with a number of major air carriers regarding the possibility of interline 

agreements. We are also in discussions with current holders of interlines with major carriers regarding 

joint marketing efforts for several routes, including VCT-AUS-DFW and VCT-AUS.

The technical implementation of the interline arrangements will take some months to complete. 

Until such time and prior to the final implementation of the interlines, we will use innovative approaches 

such as combining internet boarding pass printing technology with color coded baggage identification 

tags to facilitate the transfer of passengers and baggage to and from other carriers through sterile terminal 

operations. Our station personnel will work one-on-one with the station personnel of the other carriers 

using these and other creative methods to provide seamless boarding and baggage handling for our 

connecting passengers until the interlines are fully implemented.

...rest of page intentionally left blank
May 12, 2014 Public Charters, Inc. Page 11

Figure 7 “Scooter” – an animated character developed by 

PC for TV and web ads

Market Development

We will initiate a number of marketing activities including, but not limited to:

 Local televised marketing campaigns (Figure 7 below shows a still from an animated TV and web 

campaign created by PC for various markets)

 Web marking campaigns by IP zip codes

 Trade campaigns (“Free Seats for Free Trades”) to promote local support, including 60 free seats 

per contract year to the Victoria Regional Airport Authority for marking purposes 

 “Flying Billboard” promotions to help local businesses use the aircraft to promote their products 

and services 

 Local promotions including discount 

coupons, promotional code savings 

campaigns, “Buy One Get One Free” 

purchase programs and travel vouchers 

to help raise enplanements 

PC will put marketing people on the 

ground in the VCT market in order to put 

these promotional plans into action. 

In the future, the needs of the community may change. It is possible that there may come a time 

that AUS or DFW are no longer the best airports to be served from VCT. PC will conduct continual data 

analysis and maintain open lines of communication with all stakeholders to ensure that we provide service 

to the hub that best meets the over-all needs of VCT users. If a change of the hub airport is warranted, we 

will carefully coordinate the selection of and transition to the new hub with the community and all 

stakeholder groups.

Business Structure

PC anticipates using the same structure with VCT that we successfully employ with MBL. VCT

would enter into an agreement with the Federal Government for the program funding. PC would enter in 
May 12, 2014 Public Charters, Inc. Page 12

to an agreement with VCT for the services. PC would then enter into a contract with CFM for direct air 

carrier services and with other entities for various other functions to support the program.

The safety and consumer protection regulations that govern the services that we will provide through 

this program dictate that certain functions may be performed only by the entity that is licensed or 

otherwise approved to do so. This means that CFM will be solely responsible for all flight operations and 

PC will be solely responsible for all ticket sales. The regulations permit PC to provide other functions, 

such as customer service, gate agent service, and ground support directly through our PC or through 

subcontractors at each airport.

Contractual Considerations

We believe that the service contract between VCT and PC (and the corresponding agreement

between VCT and the Federal Government) should reflect as much as possible the terms and conditions 

applicable to traditional Essential Air Service. Upon notice that VCT wishes to procure PC’s services 

under the AltEAS program, we will provide model documents that can be used to effectively reflect the 

features of traditional EAS in the agreements that establish and fund the proposed VCT-DFW program 

while also satisfying the guidelines established by the DOT for AltEAS in Notice DOT-OST-2004-

18715-0001. Having successfully navigated the AltEAS contracting process at the local and Federal level 

with our existing MBL-MDW program, we can provide a significant amount of support in this area.

Furthermore, consistent with the AltEAS contract between PC and MBL, PC requires an initial 

cash deposit of One Hundred Fifty Thousand Dollars ($150,000.00) from the AltEAS grant funds not less 

than thirty (30) days prior to the start of service.

Proposed Contract Term

While there is no set term for an AltEAS program, PC believes that a four (4) year contract model

which is also acceptable under the traditional EAS program is appropriate for this program. We propose a 

24 month base contract period with an additional 24 month option period to be exercised at the discretion 

of VCT. The base period and option period will each require the annual subsidy amount set forth herein.

We understand how critical the continuity of air service is to the community. We therefore 

propose that at the end of the term, PC continue to provide AltEAS on a month-to-month basis until such 

time as a new contract is issued to us or a replacement carrier commences service. We propose that our 
May 12, 2014 Public Charters, Inc. Page 13

subsidy for each such “hold-in” month be 1/12 ($190,679) of the total annual subsidy amount set forth 

herein.

Payment Terms for the Subsidy

Subject to the requirement for the initial $150,000 deposit discussed above, PC proposes that the 

per flight subsidy be based on flights completed during each calendar month and paid in arrears to its

public charter escrow account upon VCT’s receipt of a report from PC detailing that month’s flight 

operations. The form and content of the report will be agreed to by the parties as part of the contracting 

process. This payment protocol will ensure that the AltEAS funds are only paid for flight services 

rendered.

Other Contractual Terms and Conditions

There are a myriad of specific items, such as reporting and performance metrics, that need to be 

agreed to in detail as part of implementing the proposed service. It is also advisable for us to have 

contractual mechanisms that allow the incorporation of new regulations, such as enhanced air traveler 

protections, or changes to the over-all EAS program that may be implemented in the current session of 

Congress. As noted above, upon notice that VCT wishes to procure PC’s services under the AltEAS 

program, we will provide model documents that address these various details. Again, having successfully 

the AltEAS contracting process at the local and Federal level with our existing MBL-MDW program, we 

can provide a significant amount of practical guidance and support in working through these matters.
May 12, 2014 Public Charters, Inc. Exhibit A

Exhibit A
May 12, 2014 Public Charters, Inc. Exhibit B-1

Exhibit B-1
May 12, 2014 Public Charters, Inc. Exhibit B-2

Exhibit B-2
May 12, 2014 Public Charters, Inc. Exhibit B-2

Exhibit B-2
May 12, 2014 Public Charters, Inc. Exhibit B-2

Exhibit B-2
May 12, 2014 Public Charters, Inc. Exhibit B-3

Exhibit B-3
May 12, 2014 Public Charters, Inc. Exhibit C

Exhibit C