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US. Deportment of 

Transportation 

Office of the Secretary 

of Transportation 

The Honorable Bill Paxton 

City Hall 

300 South 5th Street 

PO Box 2267 

Paducah, KY 42002-2267 

Dear Mayor Paxton: 

Ti .. l) -· 1200 New Jersey Avenue, SE 

Washington, DC 20590 

September 2, 2011 

As you know, SkyWest Airlines, Inc., d/b/a United Express (SkyWest), provides 

subsidized air service under the essential air service (EAS) program at Paducah. The 

Department's current contract with SkyWest at Paducah calls for an annual subsidy of 

$567,923 with fourteen nonstop round trips per week to Chicago O'Hare with 50-seat 

CRJ-200 aircraft, and it expires December 31, 2011. In anticipation of the end of that 

contract, by Order 2011-8-10 the Department requested "best and final" proposals to serve 

Paducah for a new, two-year period, and we received timely-filed proposals from 

SkyWest, Sovereign Air, Inc., and Multi-Aero, Inc., d/b/a Air Choice One (Air Choice 

One). 

My purpose in writing is to inform you of the results of each carrier's service and subsidy 

proposal and request your comment before we submit a recommendation on the carrierselection issue to the Assistant Secretary for Aviation and International Affairs for 

decision. Copies of each carrier's full proposal may be accessed online through the 

Department's Dockets Management System at http://www.regulations.gov/ by entering 

"DOT -OST 2009-0299" in the "enter Keyword or ID" field, so we will only summarize 

them here. 

Air Choice One The carrier proposes to provide a total of forty two ( 42) nonstop round 

trips per week to St. Louis, Missouri, for $2,239,605 annual subsidy. All service would be 

with 9-seat, single-engine, unpressurized, turboprop Cessna Caravan aircraft. 

We note that Paducah's EAS calls for service with 15-seat, twin-engine aircraft. Thus it is 

likely we would only select Air Choice One if the community waives those assurances. In 

that event, we would consider that waiver effective only for the two-year period of the Air 

Choice One's contract. 

Sovereign Air The carrier proposes to operate nineteen ( 19) nonstop round trips per week 

to Chicago O'Hare for $826,598 annual subsidy. All service would be with 30-seat 

Domier 328 regional-jet aircraft. The carrier notes that it is "currently in the process of 

acquiring its scheduled service authority and anticipates being able to start its Essential Air 

Service by December 15, 2011." 
- 2 -

Sky West The carrier proposes to provide a total of fourteen (14) nonstop round trips per 

week to Chicago O'Hare for $1,245,426 annual subsidy. All service would be with 50-seat 

CRJ-200 regional-jet aircraft. 

Please note that the average passenger fares shown in the carriers' proposals do not 

necessarily reflect the average local fares passengers would pay, but rather reflect the 

prorated portion of the total ticket price, e.g., the Paducah- Chicago portion of a Paducah 

- Chicago - New York ticket that the carrier would realize.,. Also, the implicit average 

fare, as reflected in the carriers' subsidy calculations is net of certain charges such as 

federal transportation security fees, excise and ticket taxes, and passenger facility charges. 

Of course, carriers have the discretion to charge fares they deem appropriate, and the 

proposed passenger fares were developed for subsidy rate computation purposes only. 

Each carrier would have to realize passenger fares comparable to the averages shown in its 

proposal in order to achieve break-even or profitable operations even with subsidy. 

You should also note that any schedules submitted by the carriers are illustrative only, and 

the carrier selected may make schedule changes to reflect changing conditions, e.g., to 

better meet shifting connecting bank times at the hub. The Department expects subsidized 

air carriers to maintain well-timed and well-spaced flights in order to ensure full 

compensation. 

We know this matter is important to you and we will act as quickly as possible upon receipt of 

your letter. In order to expedite the case, please submit your comments by email to 

EAS@dot.gov and to Kevin.Adams@dot.gov, by October 3. If you have any questions or do 

not wish to submit formal comments, please contact Kevin Adams at (202) 366-1047. 

Enclosures 

Sincerely, 

5\~ Dennis 

~~ 

J. DeVany 

Chief, Essential Air Service Division 

Office of Aviation Analysis 

cc: Airport Manager, SkyWest, Air Choice One, Sovereign Air 
Paducah, Kentucky- Lambert St. Louis International Airport- Caravan 

Operation Revenues 

PAH-STL Revenues 

Other Revenues 

Total Operating Revenues 

Direct Operating Expenses 

Flying Operations 

Fuel and Oil 

Maintenance 

Aircraft Leases 

Total Direct 

Marketing 

Indirect 

Total Operating Expenses 

Operating Loss 

Profit Element (5% total Oper. Exp.) 

Compensation Required 

Compensation per PAX 

Compensation per Departure 

$1,755,000.00 

8,775.00 

$1,763,775.00 

$ 646,006.20 

1,017' 736.62 

793,664.76 

475,000.00 

$2,932,407.58 

186,475.50 

693,860.00 

$3,812,7 43.08 

$2,048,968.08 

190,637.16 

$2,239,605.24 

$82.95 

$521.76 

I 

! 

# Passengers: 

Average Fare: 

Departures: 

Block Hours: 

Revenue Passenger Miles: 

Available Seat Miles: 

27,000 

$65.00 

4,292 

3,691 

3,915,000 

5,586,235 

Representative Schedule 

Departure Arrival 

PAH 6:00AM CT STL 7:00AM CT 

STL 7:30AM CT PAH 8:30AM CT 

PAH 9:00AM CT STL 10:00 AM CT 

STL 10:15 AM CT PAH 11:15 AM CT 

PAH 11:30 AM CT STL 12:30 PM CT 

STL 1:00PM CT PAH 2:00PM CT 

PAH 2:15PM CT STL 3:15PM CT 

STL 3:30PM CT PAH 4:30PM CT 

PAH 4:45 PM CT STL 5:45 PM CT 

STL 6:00PM CT I PAH 7:00PM CT 

PAH 7:15PM CT 

I 

STL 8:15 PM CT 

STL 8:30PM CT PAH 9:30PM CT 

i 

i 
Paducah Schedule 

Fit# Freq From 

102 1234567 PAH 

112 1234567 ORD 

202 23456 PAH 

212 23456 ORD 

302 1234567 PAH 

312 1234567 ORD 

TO 

ORD 

PAH 

ORD . ~ 

PAH 

ORD 

PAH 

Dpt-Arr 

6:40am-7:40am 

8:40am-9:40am 

10:40am11:40am 

12:40pm-1:40pm 

6:40pm-7:40pm 

8:40pm-9:40pm 

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30-Seat Dornier 328 Jet 

Sovereign Air, Inc. 

Annual Compensation Requirement for Essential Air Service for Paducah 

Aircraft Type 

Available Seats Per Departure 

Passengers Per Trip 

Block Hours 

Departures 

Total Passengers 

Average Fare 

Revenue Passenger Miles 

Available Seat Miles 

Passenger Revenue 

Other Rev. @ .6 of pax. Rev. % 

Total Revenue 

Aircraft and Hull Insurance 

Fuel and Oil 

Flying Operations 

Other Direct Costs 

Maintenance 

Total Direct Costs 

Total Indirect Costs 

Total Operating Expenses 

Operating Loss 

Profit@ 5% 

Completion Rate 

Load Factor 

19 Round trips Per Week 

$165 one way 

Annual Compensation 

Requirement 

30-seats 

30 

19.5 

1,916 

1,916 

37,347 

14,688,575 

22,589,640 

$6,162,255 

$308,113 

$6,470,368 

$220,000 

$2,038,624 

$1,116,939 

$572,245 

$1,272,517 

$5,220,325 

$1,729,166 

$6,949,491 

$479,123 

$347,475 

$826,598 

97% 

65% 
SkyWest Airlines 

Paducah, KV Essential Air Service Bid 

8/31/2011 

Number of round-trips per week 

Aircraft type 

Passenger Revenue 

Passengers 

Average fare 

Revenue 

Block Time 

Trip block time (minutes) 

Total scheduled block time 

Total completed block time 

RPMS 

Passengers 

Stage length 

ASMs 

Scheduled departures 

Competed departures 

Stage length 

Available Seats 

Revenue 

Direct operating expenses 

Flight attendant 

RPM related 

Departure related 

ASM related 

Total expenses 

Operating income (loss) 

5% profit margin 

Subtotal 

Marketing assistance 

Subsidy requirement 

SkyWest effective rates per unit 

Cost per trip 

Cost per passenger 

SkyWest cost per block hour 

Effective Subsidy rate per unit 

Subsidy per trip 

Subsidy per passenger 

Load factor 

98% 

98% 

CRJ 

Blk Hr $ 2,066.24 

Blk Hr $ 37.30 

RPMs $ 0.003 

Departures $ 412.56 

ASMs $ 0.011 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

2012-2013 

Paducah, KY 

Chicago, IL 

14 

CRJ200 

35,000 

109.00 

3,815,000 

78 

1,893 

1,855 

35,000 

342 

11,970,000 

1,456 

1,427 

342 

50 

24,897,600 

3,815,000 

3,832,759 

69,189 

35,910 

588,674 

273,874 

4,800,406 

(985,406) 

240,020 

1,225,426 

20,000 

1,245,426 

3,364 

137 

2,588 

859 

35 

48% 

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