JOHN 

## H . COX 

## III Mayor C ITY C O U N CI L Tommy L. Benson, Ill, Ward 1 Lois Hawkins, Ward 2 Carolyn Weather.;. Ward 3 Betty 

### J . Watkins, Ward 4 Ann Hollowell, Ward 5 Errick D. Simmons, Ward 6 

## CITY 

## OF GREENVILLE p. O. Box 897 " 340 Main St " Greenville, Mississippi 38701 0 'lelephone 662-378- 1501 c Facsimile: 662-378-0276 " Email: j ohncox@greenvillems.org 

## I July 7,2014

Reference DOT-OST-2008-0209 -

- . ~ ..•.. "- .; ":; . , - . - .; Mr. Michael Mart i n United States Department of Transportatio Office of Aviation Analysis 1200 New Jersey Avenue SE Room W86-472 Washington D . C . 20590 

# ~i~ ~i9

. , ' "

, j . • ' Dear Mr . Martin , On Monday June 2 n d , three airl ines submitted proposals to provide essential air service (EAS) at the Greenville Mid-Delta Regional Airport. The Airport serves Greenville, Mississippi and a large area of northwest Mississipp i as we ll as southeaste rn Arkansas and nort heast Louis i ana . The I Airport is a vital economic link to the world r r the entire region . As is noted i n today's letter to you from An ~ Hollowell , the City' s V i ce Mayor who is serving as Mayor during the temporary absence from the City of Mayor John H . Cox III , the City Council voted this morning to endorse the proposal of SeaPort Airl i nes to provide EAS at the Greenville Mid-Delta A i rport . This dec i sion was made after City offic i als had the oppo rtunity to meet wi t h , or speak with, representatives of each of the carriers . This letter constitutes the off i cia l comments of the City of Greenville regarding the vari ous air service proposals rece ived. First , we wish to thank all three carriers for he i r interest i n our market. We feel this high leve l of carrier interest confirms our belief that our 4 i rport is capable of generating dramatic airline traffic increases , with the appropriate carrier and service level. SeaPort ' s proposal calls for 18 round trip fli 

### ! hts per week to Memphis and requires an annua l subsidy leve l of $1 ,483 , 080 . The proposal ' s subs i dy need is between $700,000 and $800 , 000 lower than any other carrier proposal. Whi l e the forecast per passenger subs i dy i s $198 . 00, t h e forecast load factor is very modest at 45% . SeaPort is a we l l-established reg i onal airlin and already has facil i ties and operations at I Memphis. We look forward to significant tra IC growth with SeaPort se rvice . We are also

W\\r. ,V. emillems .orgconfident that frequent service to Memph i s at this modest subsidy level will generate traff i c well

in excess of the 10 enplanement per day requirements and also at subsidy levels well below 

### $200 per passenger. We do, again, appreciate the interest in our market by AirChoiceOne and Sun Air International. We are very impressed w i th AirChoiceOne's success providing EAS service in other cities. The carrier offered two Caravan proposals for Greenville, one for 18 round trips per week and one for 18 per week the first year and 24 per week the second year. We are deeply concerned about the higher subsidy level required in the carrier's proposals, especially when both carder proposals forecast subsidy per passenger in excess of $200 in the first year. We understand that the Department has made clear that , starting with fiscal year 2015 , Greenville will be subject to a strict enforcement of the $200 maximum subsidy per passenger cap. The car rier' s lowest proposed subsidy is $2 . 3 million annually , which would require Greenville to generate 11 , 500 passengers per year, including the first year. The proposal calls for 1 , 840 annual flights , so 6.25 passengers per flight, or a 69.4% load factor would be required in the first year of a new market that has been damaged by poor service by the previous carrier. Even in the carrie r's existing successful mature markets, with service into larger hubs than Memphis, the ca r rier does not achieve 69.4% annualized load factors even today . Sun Air International proposed service to Memphis. The carrier's proposal calls for 24 round tri ps per week using eight-seat Piper Navajo aircraft. The carrier forecasts a first and second year load factor of 60%, a total of 11,801 annual passengers and a subs i dy need of $2.279 million or $193 per passenger. We are concerned about a forecasted passenger total of 1 1 , 801 in the first years of service, the higher subsidy need and thus, again, as with AirChoiceOne, a potential exists for issues about complying with the $200 subsidy per passenger cap in fiscal year 2015 and beyond. The highest single month load factor that Sun Air has achieved in any of its existing EAS markets was 45%, on the V i ctoria - Houston Intercontinental route. Accordingly , we have major concerns whether Greenville can achieve a 60% load factor in the first year with Memphis service . However, the carrier's subsidy need would basically require us to do so, with no room for error. This EAS bid process for Greenville is proceeding under the c l oud of a 10-enplanement term i nation notice about which the Department has advised us. We will address in the appropriate venue the merits of our market and why we should be granted a waiver from the 10- enplanement rule and remain eligible for EAS flights . We will simply note here that our Airport averaged 14 , 932 annual passengers (20.5 enplanements per day) fo r the nine years prior to the arrival of our current air service. We believe that our failure to make 10 enplanements ' per day during FY 2013 was entirely temporary in nature, and was due only to the poor service Silver Airways offered in our market. Thus we believe that we will be able to strongly justify a wa iver from the 10 enplanement violation with new SeaPort service to Memphis . On that note , and looking forward to successful SeaPort service, we do not want to burden that carrier with having to overcome a subsidy cap deficit left by Silver Airways. The current Silver Airways service sees subsidy levels per passenger in excess of $500. Thus, we request t hat theDepa rtment term i nate the Silver A i rways service at our airport on September 30 , 2014 . Th i s

avoids the Airport and our new carrier having to overcome one or more months of S i lver service in October or November, with each month seeing subsidy levels of $500 per passenger. We will i nstead go dormant in terms of air service on October1 , 2014 until SeaPort can begin flights . Th i s action on our part saves the Department subsidy funds and gives our new air service partner a c l ean s l ate from wh i ch to grow our traff i c levels . We hope the Department can expedite the termination notice and waiver application process as well as the awarding of a new EAS contract for Greenvi lle to SeaPort . I deal l y we would like Seaport to be ab l e to begin service on October 1 , 2014 but we will understand if that date slips by a few weeks or a month. We would not wan t our dormancy to extend more than 45 days . We again express our thanks to the three airlines that offered service proposals, and we thank the Department i n advance for working with us as we navigate the challenges of preserving and growing our a i r service to meet the transportat ion needs of our reg i on .

Andrew N . Alexander III City Attorney ANAIII : blh