Before the United States Department of Transportation

July 11, 2014

Proposal to Provide Essential Air Service at

MERCED, CALIFORNIA

VISALIA, CALIFORNIA

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

Docket OST-1998-3521

Docket OST-2004-19916

Proposal of SeaPort Airlines, Inc. to Provide 

Essential Air Service at Merced and Visalia, California

By Order 2014-5-9, the U.S. Department of Transportation (“the Department”) requested proposals 

from carriers interested in providing Essential Air Service (EAS) at Merced and Visalia, California no 

later than June 27, 2014. On June 25, 2014, Mokulele Airlines requested and was granted an 

extension of the proposal submission deadline to July 11, 2014.

SeaPort Airlines, Inc. respectfully submits the proposals to provide subsidized essential air service

contained herein and summarized as follows:

 Merced, California: 18 weekly roundtrips to Oakland International Airport (San Francisco Bay 

Area) and 6 weekly roundtrips to Burbank Bob Hope Airport (Central Los Angeles) with an

annual subsidy requirement of $1,838,623.

 Visalia, California: 12 weekly roundtrips to Oakland International Airport and 12 weekly 

roundtrips to Burbank Bob Hope Airport requiring an annual subsidy of $1,990,563.

Each proposal is submitted on a stand-alone basis and assumes award of a two year contract. At

the discretion of the Department and each community, however, SeaPort would enter into a four 

year contract with annual subsidies equal to those requested for a two year contract.

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

Executive Vice President

SeaPort Airlines, Inc.

7505 NE Airport Way

Portland, OR 97218

(971) 340-1716

tsieber@seaportair.com
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July 11, 2014

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Discussion of Proposal 

Company Introduction

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

years of experience in commercial aviation. In addition to Portland, the company has operational 

bases at Memphis, Tennessee (MEM); San Diego, California (SAN); and Juneau, Alaska (JNU).

Our 240 professionals provide service to 23 cities across nine states with a fleet of 18 aircraft. The 

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

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

rural communities across America. Service to nine of the communities on our route map is provided 

under the EAS program: Athens, Georgia; Pendleton, Oregon; El Dorado, Hot Springs, and 

Harrison, Arkansas; Salina and Great Bend, Kansas; Jackson, Tennessee; and Imperial/El Centro, 

California. SeaPort Airlines has submitted proposals to provide EAS at Tupelo and Greenville, 

Mississippi and Muscle Shoals, Alabama. 

Finally, increasing our presence in California is a major focus of SeaPort Airlines. In addition to the 

proposals herein to provide EAS at Merced and Visalia, SeaPort has submitted applications to the 

Department for authority to operate service between San Diego and San Felipe, Baja California, 
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July 11, 2014

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Mexico. SeaPort has also identified four intra-California routes that it believes have strong profit 

potential and, subject to available aircraft, will be added during 2015.

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. The most recent example occurred at Imperial/El Centro, CA, where a departure time from 

Burbank was moved 10 minutes later to better accommodate connections with a Southwest Airlines 

flight from Sacramento.

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, 

during 2013, we were selected for a four-year renewal at the Arkansas communities of El Dorado, 

Harrison, and Hot Springs.

Aircraft

SeaPort Airlines’ proposal at Merced and Visalia contemplates operations with Cessna 

Caravans that will allow us to offer safe, comfortable, and affordable air transportation with a 

reasonable level of frequency. 

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 is 

certified for single-pilot operation, however SeaPort typically operates with both a Captain and 

First Officer.
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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 Patterns & Illustrative Flight Schedules

At Merced, SeaPort Airlines proposes to provide 18 weekly roundtrips to Oakland and 6 weekly 

roundtrips to Burbank. At Visalia, 12 weekly roundtrips to Oakland and 12 weekly roundtrips to 

Burbank are proposed. An Illustrative schedule for Merced and Visalia is provided below.

Illustrative Schedules for Merced & Visalia, California

It is important to point out that the schedules shown are for illustrative purposes only and that, if 

selected to provide EAS at Merced and/or Visalia, SeaPort Airlines will solicit comments from each 

community on proposed flight schedules prior to publishing them for sale to the public and, as much 

as practical, any comments will be incorporated into the final schedule. 

SeaPort believes that the schedule pattern contained herein would meet the needs of travelers 

to/from Merced and Visalia for the following reasons: 

 Schedules at both communities include 1-stop service (no change of planes) to/from San 

Diego via Burbank that SeaPort would initiate concurrent with the new EAS service at 

Merced and Visalia, resulting in both communities having nonstop or 1-stop to three of the 

four largest markets in California.2

 

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.

2

San Francisco/Oakland, Greater Los Angeles, and San Diego, with Sacramento being the unserved fourth largest 

metro market.

Flight Leave Arrive Freq Stops Flight Leave Arrive Freq Stops

Merced  Burbank Burbank  Merced

5305 12:20pm 2:05pm ExSun 0 5104 12:25pm 2:10pm ExSat 0

Merced  Oakland Oakland  Merced

5301 6:00am 6:50am ExSun 0 5302 8:45am 9:35am ExSun 0

5303 10:00am 10:50am ExSat 0 5304 11:10am 12:00pm ExSat 0

5105 2:30pm 3:20pm ExSat 0 5108 7:10pm 8:00pm ExSat 0

Merced  San Diego San Diego  Merced

5305 12:20pm 3:30pm ExSun 1 5104 11:00am 2:10pm ExSat 1

Visalia  Burbank Burbank  Visalia

5440 5:45am 6:50am ExSun 0 5200 8:10am 9:15am ExSun 0

5203 2:15pm 3:20pm ExSat 0 5306 6:10pm 7:15pm ExSat 0

Visalia Oakland Oakland  Visalia

5201 10:30am 11:50am ExSun 0 5202 11:45am 1:05pm ExSun 0

5107 5:30pm 6:50pm ExSat 0 5105 3:50pm 5:10pm ExSat 0

Visalia  San Diego San Diego  Visalia

5440 5:45am 8:15am ExSun 1 5200 6:45am 9:15am ExSun 1

5203 1:35pm 4:05pm ExSat 1 5306 4:45pm 7:15pm ExSat 1
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July 11, 2014

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 At both Merced and Visalia, we are proposing four flights each weekday to/from hub airports, 

with reduced frequencies on Saturdays and Sundays. This is double the number of flights 

to/from the hub that the incumbent operates and we believe the greater choice of flight times 

(along with attractive fares) will result in more residents and visitors using the “hometown” 

airports at Merced and Visalia. 

 We propose that an aircraft overnight at both Merced and Visalia, allowing both cities the 

benefit of an early morning departure.

 Both communities will be provided with a dual-hub service that provides extensive 

connectivity with both legacy and low-fare airlines. As we have proven in other EAS markets, 

dual-hub service plus greater flight frequencies increases resident and visitor use of the local 

airport.3

 Most importantly, our proposal will not result in Merced and Visalia sharing aircraft capacity. 

This means that each community will have access to 100% of the capacity of each flight, 

increasing chances that seats will be available at a reasonable fare. This is particularly 

important at Merced, which is at risk of losing its eligibility for subsidized EAS service (see 

discussion below). 

As outlined above, SeaPort’s proposal contemplates service from Merced and Visalia to both 

Oakland International Airport and Burbank Bob Hope Airport. The benefits of each of these hubs as

gateways to the national air transportation system are summarized below.

Oakland International Airport (San Francisco Bay Area)

SeaPort Airlines’ proposal to provide EAS at Merced includes three roundtrips to Oakland 

International Airport (OAK) each weekday, two roundtrips on Saturday, and one roundtrip on 

Sunday. The proposal at Visalia includes two roundtrips to OAK each weekday and one roundtrip 

on both Saturday and Sunday.

Oakland International Airport is one of three major airports serving the San Francisco bay area. Of 

the three airports, OAK has the lowest cost per enplanement, which translates into lower subsidy 

requirements which enhances our ability to offer low fares that can increase enplanements. Equally 

important, Oakland does not incur air traffic delays at any meaningful level, and certainly not in any 

way comparable to those at San Francisco 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 a quick ride to major tourist and business centers in the Bay Area including San 

Francisco’s Embarcadero (21 min), downtown Berkeley (23 min), and Central Oakland (10 min). 

As of June 2014, OAK was served by eight airlines offering an average of 142 daily departures to 49 

nonstop destinations. Low-fare carrier Southwest Airlines has the largest presence at OAK, offering 

approximately 71% of the total departing seats at the airport each day. While Southwest is not the 

low-fare leader it once was, it still provides market discipline with respect to fares which, when 

combined with the carrier’s large presence, results in average paid fares at Oakland being lower 

than at either San Francisco International Airport or San Jose International Airport.

 

3

This is not operationally or economically viable in all EAS markets. In the case of Merced and Visalia, however, it is 

feasible and therefore should be leveraged.
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July 11, 2014

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Nonstop Destinations Served from Oakland International Airport – June 2014

The newest carrier at OAK is Norwegian Air Shuttle, a carrier that offers low-fare trans-Atlantic 

service to Stockholm and Oslo on the advanced Boeing 787. From these two hubs, connections are 

offered to major cities throughout Europe. Norwegian Air Shuttle has announced that during Summer 

2015, it will add service from Oakland to Barcelona and London Gatwick.

SeaPort’s interline partner, Alaska Airlines, provides a wide breadth of service from Oakland 

including to its two largest hubs at Seattle and Portland, as well as service to four markets in Hawaii.

In total, Alaska Airlines provides an average of 10 departures each day from OAK.

SeaPort has met with Oakland International Airport to discuss facilities to accommodate the flight 

schedules to/from Merced and Visalia, as contained herein, with those discussions resulting in 

estimates for the calculation of “Traffic Servicing” costs in the requested subsidy levels. SeaPort 

would utilize a “common use” ticket counter in Terminal 1 and enplane/deplane passengers through 

gate 4A, which provides ground level boarding with an elevator to accommodate handicapped 

customers. This gate is in the same concourse as all other airlines serving OAK, except Southwest, 

which operates from preferential use gates in a separate concourse that is connected by a walkway

inside the security checkpoint (i.e., no need to reclear security when not checking baggage).

Burbank Bob Hope Airport (Los Angeles Basin)

SeaPort’s proposal to provide EAS at Merced includes a single roundtrip to Burbank each business 

day, with no northbound service (i.e., Burbank to Merced) on Saturday and no southbound service 

on Sunday. SeaPort’s Visalia proposal includes two roundtrips each weekday, one roundtrip on 

Saturday, and one roundtrip on Sunday.

Burbank Bob Hope Airport (BUR) provides convenient access to the Los Angeles area. It is the 

closest commercial service airport to many popular LA destinations, including Universal Studios, 

Warner Brothers Studios, Rose Bowl Stadium, Dodger Stadium, Kodak Theater, Getty Center, Santa 
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July 11, 2014

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Monica, Griffith Park, Hollywood Bowl, and The Grove. The drive from BUR to downtown Los 

Angeles typically takes about 30 minutes compared to 45 minutes from Los Angeles International 

Airport.

BUR also offers the convenience of multi-model transportation. Both Amtrak and Metrolink trains 

serve the Bob Hope Airport Train Station daily, providing service to Downtown Burbank, Glendale 

and Union Station in Downtown Los Angeles. In addition, the airport offers free shuttle service to the 

Downtown Burbank Station, where connections with the Santa Clarita Line can be made, as well as

to the North Hollywood Red Line Station for easy access to Hollywood and Downtown Los Angeles.

As of June 2014, BUR was served by seven airlines (including SeaPort) that operate an average of 

66 departures each day to 12 nonstop destinations. As with OAK, the largest carrier at Burbank is 

Southwest Airlines, which offers approximately 80% of the total departing seats each day. This 

contributes to Burbank consistently having the lowest average fare among all of the airports in the 

Los Angeles Basin.4

Nonstop Destinations Served from Burbank Bob Hope Airport – June 2014

SeaPort currently provides service at Burbank and our existing leasehold is sufficient to 

accommodate the average 3 additional flights that Merced and Visalia would generate, as well as 

the planned frequencies between SAN and BUR that would be launched on the same day if awarded 

the EAS contracts in this proposal.

5

 

4

Includes Burbank Bob Hope Airport, Los Angeles International Airport, Orange County/John Wayne Airport, and 

Ontario International Airport.

5

And planned flights SAN-BUR flights planned to launch concurrent with this EAS contract or, if not selected, during 

4Q2014. 
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July 11, 2014

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Fares & Pricing

In every market that SeaPort serves, we offer fares priced on a one-way basis with the following 

structure:

 The highest price point (branded “FULLFlex”) provides customers with total flexibility to 

change their travel plans or, if travel plans get cancelled, obtain a full refund without incurring 

a service charge. Customers using this fare also are permitted a second checked bag at no 

additional charge and, at select airports, access to the “express lane” at the security 

checkpoint (this option will be sought at Oakland).

 The lowest price point (branded “NOFlex”) is offered on a limited number of seats on each 

flight and best suited to customers certain about their travel plans. This fare requires an 

advance purchase of between 7 and 14-days and once purchased, no refunds or changes to 

the itinerary are permitted. In exchange customers get a great low fare, with NOFlex fares 

typically priced between $39 to $59, including taxes and fees.

 In between these two price points are a range of fares (branded as “FREE2Flex” and 

“Flex4FEE”) offering different levels of flexibility to change tickets depending on a specific 

customer need. As with NOFlex fares, these fares are made available on every flight, but on 

a limited number of seats depending on time of day, day of the week, season, etc. The 

farther in advance a reservation is made, the more likely a customer will be to obtain the fare 

best for them. 

The table below summarizes the selling fares that SeaPort proposes to offer at Merced and Visalia

along with the rules and restrictions applicable to each “fare family.”

SeaPort Airlines Fare Families & Proposed Selling Fares at

Merced & Visalia, California

During the first 30 days of service, SeaPort Airlines would offer an introductory fare of $39 (including 

all taxes and fees) in both Merced and Visalia. This fare would be available on every seat and every 

flight during the period. 

Fare Brand FULL Flex FREE 2 Flex Flex 4 FEE NO Flex

Booking Class Y B M Q

Typical Advance Purchase (days before departure) 0 0, 3 3,7 7,14,21

Refunds Permitted Yes No No No

Changes to Itinerary After Ticketed $0 $0 $50 Not Permitted

Stand-By For Earlier Flight on Same Day as Ticketed $0 $0 $25 Not Permitted

Access to Express Security Screening Yes No No No

2nd Checked Bag at Not Charge Yes No No No

Service Fee for Booking By Telephone $0 $0 $0 $25

To/From Burbank (Los Angeles) $99 $79 $49 $39

To/From Oakland (San Francisco) $79 $69 $49 $39

To/From Burbank (Los Angeles) $99 $79 $59 $49

To/From Oakland (San Francisco) $99 $79 $59 $49

Description of Fare Families

Proposed Fares at Merced

Proposed Fares at Visalia
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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 a major global distribution system

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

Expedia, Kayak, Hipmunk, and CheapoAir. 

On March 23, 2014, SeaPort Airlines became the first US airline to be completely hosted by the 

Amadeus Altéa reservation platform. This system is one of the top three distribution systems in the 

world and is the same reservation system for such leading airlines as Air France/KLM, Qantas, 

Emirates, Korean Airlines, and others. Southwest Airlines has announced it will become the second 

US carrier to be fully hosted by Amadeus, when it migrates domestic reservations to Altea in 2015 

having already deployed the platform for its international service in January 2014. 

With this new system, SeaPort has unsurpassed capability compared to other regional airlines with 

respect to interline ticketing, offering optional services, through baggage check-in, Inter-Airline Thru 

Check-In (IATCI), SMS notifications to customers of schedule changes and flight irregularities, the 

ability for customers to make online changes to reservations, and (eventually) online check-in.

Most importantly, however, Altéa enabled SeaPort Airlines to implement its first bilateral interline eticketing and baggage agreement.6

 That agreement with Alaska Airlines was activated on March 24, 

2014, the day after the reservation migration was completed. The company has initiated discussions

with multiple airlines about potential incremental revenue from connecting SeaPort customers to 

build a business case for interline agreements similar to the one with Alaska Airlines. Among those 

carriers is Norwegian Air Shuttle, the low-fare international carrier as previously described, that also 

uses Altea as its reservation platform.

In addition to the reservation platform, in early 2014 SeaPort Airlines began to offer rental cars and 

hotels on its website. SeaPort will enhance this offering by early 2015 with a dynamic booking 

process for business trips and vacations that will allow customers to book flights (including those of 

interline partners), rental car, and hotel in a single transaction and all from a single screen.

Continued EAS Eligibility for Merced

DOT has filed a notice of determination and intent to terminate the eligibility of Merced for EAS 

subsidized service based on enplanements for the year ending September 30, 2013 being below an 

average of 10 per day. DOT provided similar notices to 12 other communities.

SeaPort’s proposal specifically addresses the EAS eligibility challenge facing Merced as follows:

 A greater choice of departure times, including an aircraft that originates in Merced each 

morning.

 Elimination of Merced service potentially being tied as “upline” from Visalia and resulting in 

both communities having to share seats on each flight. By separating the two markets, this 

ensures that Merced customers will have more access to the seats they want at the price 

they want.

 

6 Bilateral agreements allow both participating carriers to make reservations and issue tickets on each other’s flights. A unilateral 

agreement only allows one carrier to sell and issue tickets.
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July 11, 2014

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 Service to Oakland and Burbank, two airports dominated by Southwest Airlines, with 

resultant downward pressure on fares that encourages more traffic, more so than would the 

addition of the local segment to fares offered at Los Angeles International Airport. 

 SeaPort’s operations are conducted under FAR Part 135 which minimizes the impact of the

current pilot shortage affecting other airlines, including the incumbent carrier at Merced and 

Visalia, lowering the exposure to cancellations, and delays due to crew shortages.

 SeaPort’s marketing activities would be targeted to address the specific challenge faced by 

Merced. This would translate into “front loading” of marketing expenditures using media 

placement (print, radio, outdoor, etc.) with each dollar spent leveraged into additional 

advertising placement through trade agreements. The marketing program will be supported 

by customer engagement on social media sites and community outreach conducted by

SeaPort’s full-time, California-based Manager of Community Affairs. These activities will 

focus primarily on the Merced community but will also reach into the catchment area of 

Modesto City-County Airport (see discussion below). 

 Fares as low as $39 (even the highest fare is less than $100) are aimed at stimulatiing use of 

the Merced’s air service, but yet not so low that resultant subsidies exceed $200 per 

passenger (another measure that EAS communities must not exceed to maintain eligibility 

for subsidized service).

Finally, we believe that enplanements at Merced will benefit from the recent end of scheduled air 

service at Modesto, a community 38 highway miles away (or about 44 minutes drive time). SeaPort 

believes it reasonable to assume a percentage of those travelers that historically used Modesto CityCounty Airport to fly to the Bay Area will, at the very least, explore the service available them at 

Merced Regional Airport. A portion of marketing and communication activities outlined above are 

specifically intended to target this new source of enplanements.

SeaPort Airlines looks forward to the opportunity to work with the Merced community, and the 

Department, to rebuild enplanement levels such that EAS eligibility is no longer at risk.
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July 11, 2014

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Subsidy Request Calculations

The following pages contain the calculations to support the requested levels of subsidy for SeaPort 

Airlines to provide EAS at Merced and Visalia, California.

As noted on the cover page, each proposal is submitted on a stand-alone basis and assumes award 

of a two-year contract. If desired by one or both communities and approved by the Department, 

SeaPort Airlines would agree to a four-year contract at the same level of annual subsidy 

Respectfully submitted,

Timothy Sieber

Executive Vice President

SeaPort Airlines, Inc.

July 11, 2014
OST

-1998-3521 & OST-2004-19916

July 11, 2014

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Proforma Data

Operating Projections

Average Sector Length (sm) 136

Scheduled Departures 2,496

Scheduled Block Hours 2,600.0

Projected Completion Factor 99.0%

Projected Completed Departures 2,471

Projected Completed Block Hours 2,574.0

Passenger Projections

Projected Passengers 9,204

Passengers per Departure 3.7

Projected Average Fare $55.45

Revenue Passenger Miles (RPMs) 1,247,142

Available Seat Miles (ASMs) 3,013,433

Projected Load Factor 41.4%

Financial Projections

Revenues

Passenger Ticket Revenues $510,335

Ancillary Revenues $12,758

Total $523,094

Expenses

Flight Operations $254,826

Aircraft Ownership/Lease $300,000

Fuel & Oil $564,324

Sales & Marketing $25,000

Traffic Servicing $422,604

Insurance $46,332

Maintenance $450,450

Sub-Total - Direct $2,063,536

Indirect $185,718

Total Expenses $2,249,254

Projected Operating Profit/(Loss) ($1,726,160)

Subsidy Calculations

Operating Loss $1,726,160

Economic Return @ 5% $112,463

Required Subsidy $1,838,623

OST-1998-3521

6 Weekly RTs: Merced - Burbank (Los Angeles)

18 Weekly RTs: Merced - Oakland (San Francisco)

Cessna Caravan, Two-Pilots
OST

-1998-3521 & OST-2004-19916

July 11, 2014

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Proforma Data

Operating Projections

Average Sector Length (sm) 171

Scheduled Departures 2,496

Scheduled Block Hours 3,016.0

Projected Completion Factor 99.0%

Projected Completed Departures 2,471

Projected Completed Block Hours 2,985.8

Passenger Projections

Projected Passengers 9,985

Passengers per Departure 4.0

Projected Average Fare $67.50

Revenue Passenger Miles (RPMs) 1,702,443

Available Seat Miles (ASMs) 3,791,811

Projected Load Factor 44.9%

Financial Projections

Revenues

Passenger Ticket Revenues $673,988

Ancillary Revenues $16,850

Total $690,837

Expenses

Flight Operations $292,612

Aircraft Ownership/Lease $300,000

Fuel & Oil $651,391

Sales & Marketing $25,000

Traffic Servicing $497,587

Insurance $53,745

Maintenance $522,522

Sub-Total - Direct $2,342,857

Indirect $210,857

Total Expenses $2,553,714

Projected Operating Profit/(Loss) ($1,862,877)

Subsidy Calculations

Operating Loss $1,862,877

Economic Return @ 5% $127,686

Required Subsidy $1,990,563

Cessna Caravan, Two-Pilots

OST-2004-1996

12 Weekly RTs: Visalia - Burbank

12 Weekly RTs: Visalia - Oakland