: ;\(), : :-, ;--:"-,,,~u 

Before the United States Department of Transporta~iOP~':Ct c~' _, -_,; ~ _ I' 1 

August 3, 2011 

Proposal to Provide Essential Air Service at 

Cedar City, Utah Docket OST -2003-16395 

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

SeaPort Airlines, Inc. 

Proposal to Provide Essential Air Service at 

Cedar City, Utah 

By Order 2011-6027, the Department requested proposals for Essential Air Service at Cedar 

City, Utah due on August 3, 2011. 

Pursuant to that Order, SeaPort respectfully submits this timely proposal to provide subsidized 

essential air service to the community of Cedar City, Utah for a two year term beginning January 

1,2012. 

Correspondence regarding this proposal should be directed to: 

Timothy Sieber 

Vice President - Strategy & Corporate Development 

SeaPort Airlines, Inc. 

7505 NE Airport Way 

Portland, OR 97218 

(971)340-1716 

www.seaportairlines.com 
SEA <'PORT 

SeaPort Airlines: Focused On Serving Small Communities 

Company Overview 

SeaPort Airlines, Inc. is a FAA certified scheduled airline with over 27 years of experience in 

commercial aviation. Our company's foundation is built on efficient and reliable service to rural 

communities. Both SeaPort Airlines, and our sister brand Wings of Alaska, currently operate 

service under the Essential Air Service program, as well as unsubsidized routes.

1 

SeaPort's approximately 200 professionals operate an average of 100 daily departures to 20 

cities in nine states with a business that is focused on providing service to smaller communities. 

This is in sharp contrast to the strategies of the mega-airline brands, which no longer have the 

operational or economic capability, or strategic desire, to serve rural America. Last month's 

announcement by Delta Air Lines to cease service at over two dozen such communities is just 

the latest such example. 

SeaPort delivers Essential Air Service to seven communities: Excursion Inlet, Alaska; 

Pendleton, Oregon; Jonesboro, EI Dorado, Hot Springs, and Harrison, Arkansas; and Salina, 

Kansas. In each of these cases, after award of the EAS contract by US DOT, we have started 

on time, on budget, and with fares either at or below those outlined in our proposal. We would 

note that this stands in stark contrast to so many other airlines that place bids with 

unreasonable fares that are never realized by the traveling public, delay the start of service, or 

do not launch service that has been awarded by the Department. 

Aircraft 

SeaPort Airlines operates a fleet of Pilatus PC-12 aircraft configured for 9-passengers and two 

pilots. Manufactured in Switzerland, the PC-12 offers air conditioned, pressurized comfort with 

each seat being both a window and aisle. This aircraft operates at a cruising speed faster than 

any other 9-passenger aircraft currently in the EAS program (Le., Cessna 402 and Cessna 

Caravan) and comparable to larger turboprop aircraft, such as the Embraer 120 Brasilia and 

Saab 340. 

~ '0. 

-'~"'I! 

1 Wings of Alaska is the premier airline serving Southeast Alaska. Providing scheduled passenger service, fast 

freight and charter service between Juneau and Skagway, Haines, Hoonah, Gustavus, and weekly flights to 

Excursion Inlet. Wings of Alaska grew in reputation and size, becoming one of the most successful regional air 

carriers in Alaska, now comprised of a fleet of seven planes from Cessna 206 and 207's to Cessna Grand Caravans . 

Wings of Alaska presently operates 38 daily scheduled flights to six Southeast cities in Alaska. 

OST -2003-16395 

August 3,2011 Page 12 
SEA PORT 

<.=/. I f--' L I r; t. ~ 

The oversized cargo door on the PC-12 ensures plenty of room for customer baggage and is a 

strong contrast to other 9-passenger aircraft that rely on smaller "belly pods" and wing lockers. 

Equally as important, SeaPort does not charge for the first checked bag. 

Utilizing the PC-12, SeaPort is able to "right capacity" in small communities such as Cedar City 

with an optimal service pattern and frequency level that minimizes traffic leakage, enables us to 

offer reasonable fare levels, and reduces the economic burden on the Department. 

Pricing Model 

Generally, SeaPort Airlines employs a simplified pricing strategy of all fares being one-way with 

varying levels of advance purchase and capacity controls. 2 The objective of this strategy is to 

offer a community attractive fares while at the same time minimizing required levels of subsidy 

from the Department which, in turn, helps the community maintain its eligibility for participation 

in the Essential Air Service program. 

Consistent with this model, SeaPort charges reasonable fees for ticket changes ($35 v $100+ 

on most major airlines), pet travel, and unaccompanied minors. 3 These fee levels are reflective 

of SeaPort's philosophy of building customer loyalty through quality service at reasonable prices 

rather than opportunistically "nickel and diming" passengers at every possible term. 

Marketing & Public Relations Strategy 

SeaPort intends to implement a comprehensive marketing and public relations strategy aimed at 

introducing the brand and service model to the community and ensuring ridership levels are 

maintained. Among the marketing activities that SeaPort has implemented or presently is rolling 

out on a systemwide basis, and which will be applied in Cedar City, are the following: 

• Website: The majority of SeaPort's passenger book through the Company's website 

(www.SeaPortAir.com) which is currently undergoing a redesign to improve user navigation 

and facilitate an easier booking process. 

• Online Booking Portal. SeaPort recently developed a "stand alone" booking engine that 

can be easily imbedded in any outside website or social media site for direct booking on any 

SeaPort Airlines flight. This booking engine has been distributed to the website of airports in 

other EAS communities, local Chambers of Commerce, and several local travel/hotel 

websites. SeaPort would employ a similar strategy in Cedar City. 

• Local Event Marketing. Recognizing that visible participation in local events has been 

successful for both legacy and low-cost airlines, SeaPort has implemented a similar strategy 

in all of its communities. These have ranged from SeaPort Airlines community egg hunts to 

presenting at business expos to hosting "after hours" events at local Chamber of Commerce 

meetings. In addition, SeaPort often makes "in kind" donations of tickets for use by local 

charities, either for the conduct of their own business or as a fundraising tool (Le., raffles, 

silent auctions, etc.). 

2 From time to time SeaPort will offer fares outside of this basic model, however these are typically promotional fares 

with additional savings to passengers. 

3 Pets on SeaPort Airlines travel in a baggage compartment that is directly behind the passenger cabin and which 

ensures these four-legged customers enjoy the same pressurized, air conditioned, and heated environmental comfort 

as our human customers. 

OST -2003-16395 

August 3,2011 Page 13 
SEA PORT 

Sample SeaPort Airlines Advertising 

C2.l0JhJj J\.JJ J-bS) F2.lJJ:'JW i fly f-:. p...t(·mp~i-s o n J;;I),J,)I 7' C /' ',,:,' "!"'~ (o r It,,, ALlfoZon. l. i~ Bowl 

; °

1 fo r ' 49-$149 O rl# way ' 

. SEAtPORT ! .a>P0<1:"'rI;:~ lho 1""j' "lH:'i :, "" t' .~.,. 

L::..::::=oL: =~",",f', '" ," ", "c-"" _ _ _ 

r-·-··l 

: i I - i ..:- L ___ J 

SEA PORT .. -.. .",.,....... ~ 

:::- YOtI J:NI..- "-e ,..,... '-eI 

• Social Media. Beginning in 2010, SeaPort Airlines has managed a successful social media 

campaign, allowing the Company to dynamically engage its customer base in a two-way 

conversation through sites such as Facebook, Twitter, FourSquare & Linkedln. We have 

found social media to be an excellent tool for generating passenger referrals and information 

sharing in other communities, and expect similar results in Cedar City. 

• FlyerFlex Customer Rewards. During 2011, SeaPort launched a new and improved 

customer loyalty program called "FlyerFlex." This program provides the following benefits: 

- Free flights 

- Fee waivers 

- Bonus points 

- Gift memberships 

- Personalized cards or bag tags 

SeaPort anticipates unveiling phase two of the FlyerFlex program by the end of 2Q 2012 to 

include a wider choice of travel rewards. It is important to note that although this program is 

relatively new early indicators are that the objectives of generating new and repeat business 

are being achieved. 

OST -2003-16395 

August 3, 2011 Page 14 
SEAPORT 

• Corporate Value Accounts. SeaPort will offer its Corporate Value Account at Cedar City, a 

program that encourages businesses to make a long-term investment in local air service by 

offering a variety of benefits and savings, including 5%-15% reductions off published fares. 

It is important to note that unlike the corporate travel programs of major airlines that are not 

designed to effectively serve small businesses in rural communities, SeaPort's Corporate 

Value Accounts can provide savings to a company of virtually any size. 

• Destination Packaging. SeaPort has recently obtained the capability to create travel 

packages with other local businesses and plans are being formulated to offer packages with 

hotels, spas, and attractions in each community served. This will be included in the roll out 

of the "new and improved" www.SeaPortAir.com. referenced above. We intended to include 

Cedar City as part of this offering 

Distribution Strategy 

SeaPort has invested heavily in improving our inventory distribution abilities. We are now in all 

five major global distribution systems. We have distribution on all major online travel agencies 

and meta-searchers. SeaPort has an interline ticketing agreement with US Airways and is 

working on securing additional agreements. 

OST -2003-16395 

August 3, 2011 Page 15 
SEAPORT 

Community & Customer Feedback 

While SeaPort Airlines has outlined above why we believe our airline is well positioned to 

ensure that reliable and reasonably priced air transportation continues to playa vital role in the 

local economy and quality of life in Cedar City, the strongest proof resides in the accolades we 

receive. Below is just a small sample of the comments SeaPort has received from our 

customers and community partners: 

"Eastern Oregon Regional Airport at Pendleton had been struggling since 

schedule changes following 9/11 selVed by a carrier flying 37 seat aircraft. Low 

passenger count attributed to poor schedule, which then contributed to poorer 

passenger count. The carrier's solution was to bring in larger aircraft and fly to a 

different hub. The Airport and community balked at this suggestion and went in 

search of alternatives. The solution found through the EAS process was SeaPort 

Air flying a 9 passenger Pi/atus. The passengers have welcomed the new 

selVice, much better schedule, and are elated with "no security check" and stand 

by time. Passengers today will say, "I love the selVice", "great customer selVice", 

and "I'm sure glad I finally tried it, cause I'll be back". 

In our particular market, the 9 passenger aircraft is perfect, and SeaPort Air 

provides the schedule, the professionalism, and customer selVice we need and 

desire. " 

Larry Dalrymple 

Airport Manager 

Pendleton Regional Airport 

"I have never had such a positive experience connected with any airline. I read 

about Seaport Air last October when they opened the Mid-South Route, but didn't 

have the chance to fly until March. Usually the dread of the process comes then 

you just grin and bear it; however, with SeaPort Air I could arrive 15 minutes 

early. The hassle free no TSA is wonderful and made me feel special. I have 

flown twice in the last 2 months and the customer selVice from start to finish is 

outstanding. I will be a regular customer and have already recommended the 

airline to several associates. Thank you, SeaPort Air, for making me feel like a 

queen!" 

OST -2003-16395 

August 3, 2011 

- Catherine Martin 

Customer (few from Memphis to 

Harrison) 

Page 16 
SEA PORT 

"For two decades I have been picking my mother up at the airport and for two 

decades I have been met with the defeated, hang-dog look that the ordeal of air 

travel has given her. I guess it pretty much does it to all of us, but (as she is well 

into her 80's) I worry about the toll it takes on her more and more lately. 

When I picked her up today from her SeaPort flight K52325 from Dallas and saw 

she was smiling, you could have knocked me over with a feather! She couldn't 

stop raving about how pleasant the flight was. Let me be clear. My mother is a 

tough-as-nails Mid-western yankee from the old school who has been around 

the world a couple of times since the late 1940's. She doesn't bestow idle praise 

and she seldom raves. 

Since it was a 9-seater plane that had to stop for a bathroom break, I can only 

conclude that it was the above average service she received from your staff. 

She, in fact, said as much. From the ticket counter in Dallas to the ride she got 

to the main terminal in Memphis she was impressed. She even liked the way 

she was asked to turn off her mobile phone and the help she was given doing so 

(she's not a big techie). 

I'm in the service industry myself and I know how often complaints come 

through. I just want to be sure to let you know how well everyone did on this 

flight. In the future, I will look to SeaPort first for my travel needs and will spread 

the good word to my friends. 

A smile and a kind word go a long way y'all. Thank you for getting this one so 

right. " 

- Mark Davis Peterson 

Customer (flew from Dallas 

to Memphis) 

"I want to let you know that Alan, the owner, and I were stuck in the horrendous 

traffic getting to the airport. Your people called to see where we were at. Called 

a few times to try and get us out of the jam - which was impossible, we were too 

fare from the Gateway and we already had been on the road 1 Y2 hours. Did 

manage to break free taking 102 (I think) and called close to the Embassy to let 

them know we were just a minute away and they held the plane for us!! Amazing 

and kudos to your team!! I have been telling everyone of the stellar customer 

service and you will be our flight of choice going forward." 

OST -2003-16395 

August 3, 2011 

- Joanne Bosworth 

Customer (flew from Portland) 

Page 17 
SEAPORT 

"Two hours before the flight I booked my ticket to Memphis from Hot Springs. 

Wow! What a surprise; it was simple, convenient, great price, and impeccable 

service. It far exceeded my expectations and I will be flying to Memphis on 

SeaPort Airlines instead of driving from now on. The customer service was 

fabulous!" 

OST -2003-16395 

August 3, 2011 

Ruth Ann Smith 

Customer (flew from Hot 

Springs to Memphis) 

Page 18 
SEA ~c PDRT 

Schedules & Capacity 

Schedules 

While final schedules will be established after consultation with the community, SeaPort's 

illustrative schedule for Cedar City is outlined below. It takes into consideration both the 

community's need for access to Salt Lake City, as well connections with airlines during peak 

"push periods" at SLC.

4 

6:15am 

12:15pm 

7:30am 

1:30pm 

o 

o 

o 

ExSun 

ExSat 

ExSat 

9:00am 

3:15pm 

8:1 

10:15am 

4:30pm 

9' 

o 

o 

o 

ExSun 

ExSat 

ExSat 

The Department and community should know that SeaPort evaluated proposing service to Las 

Vegas as an alternative or in addition to Salt Lake City. This would have represented a shorter 

stage length and resultant lower subsidy requirement. However, taking into consideration the 

community's long-standing ties with Salt Lake City as an economic, governmental, and cultural 

center, SeaPort believes that the proposal herein best serves the community and objectives of 

the Essential Air Service program. 

Capacity 

SeaPort Airlines is proposing 18 weekly round trip flights between Cedar City and Salt Lake City 

International Airport. This represents a 50% increase over the frequency level currently offered 

at Cedar City. 

This level of frequency will result in a projected load factor of 60.0% at SeaPort's annually 

forecast of 9,7990&0 passengers. We recognize that such a load factor is above the 50% level 

desired by the Department, however we believe it represents a more effective use of EAS funds 

and will provide the community with a greater choice of departure times than the current twice 

daily current service pattern, and which had a 29.9% load factor during the 12 months ending 

March 31, 2011. 

Moreover, as the graph on the next page illustrates, demand at Cedar City is subject to minimal 

seasonal fluctuations and, therefore, SeaPort's capacity proposal is sufficient for Cedar City.5 

' We would also note that while connections with Delta Air Lines are the primary focus at Salt Lake City community, SeaPort has 

found a high percentage of our passengers in our other EAS markets also connect with low-fare carriers. The proposed schedule 

factors in those of jetBlue, Southwest, and Frontier Airlines at SLC. 

5 Source: T-100 

OST -2003-16395 

August 3, 2011 Page 19 
SEA "PORT 

Cedar City Load Factors: YE March 31,2011 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

• ~ 

__ -4 .... ____ .-4.--~ . ...-----.--~~ ~ ~

~-....,.e----4.~____. 

20% 

10% 

0% 

-Load Factor 

Finally, we would point to the press release on the next page (issued by the Salina Airport 

Authority) as indicative of how SeaPort dynamically manages capacity but equally important of 

how we are an effective community partner. Cedar City can expect a similar partnership from 

SeaPort if we are selected to provide air service and become part of the community. 

OST -2003-16395 

August 3,2011 Page 110 
FOR IIIDIEDHTE RELE.\sE 

SeaPort offers flexibility to fit Salina 

Salina Airport Authority 

J.Helissa J.'1cCoy 

. 

Jfanager of Public Affairs and Communications 

SEAPORT 

Salina~ Ka.n., (May 17,2011) - SeaPort Airlines has a long reputation of departing early if 

all passengers are accounted for and re.ady to go, but ,,,hen it group of loc.al officials 

booked the 7:30 a.m. flight and left three hours e.arly~ they may have set a nevv' record. 

The flight \\ClS booked weeks prior to their March 7 flight and completely filled ,,,i.th 

Salina representatives ,,,nose final destination ,vas 'Washington, D.C. 

"'Salina community leaders \\ill meet \\1.th our congressional delegation and share with 

them those federal policy issues and initiatives most important to Salina's future," 

explained City Manager Jason Gage before hopping aboard the Pilatus PC-12. "It also 

provides an opportunity to learn more about the federal legislative process and to build 

important relationships which have a long-lasting, positive impact on our community." 

A week before the flight, SeaPort officials checked the passenger list and let the group 

know if they wanted to leave earlier it wouldn't be a problem. 

"Had we had additional passengers on the 7:30 flight ,\'e'd have had to figure something 

else out," explained SeaPort Operations Manager Cullen Krause. "One of the benefits of 

SeaPort is that we have the ability to be flexible and work with the community on short 

notice to accommodate Salina's air travel needs." 

SeaPort Airlines' convenience and flexibility not only saved the group money, but 

allotted them an extra day to use in 'Washington instead of on travel. 

Fljing on SeaPort to Kansas City and then c.atching a flight with a different airline to 

\Vashington, the group saved themselves a three-hour car ride in each direction, parking 

fees and a whole lot of headaches. 

SeaPort added a plane to the regular flight schedule to accommodate the group as well 

as other passengers for their return to Salina. 

"We are fortunate to have SeaPort as our travel option,'" said Gage. "'Their aircraft is 

comfortable and their convenient arrival and departure schedules are not only 

affordable, but match up well v.i.th the frequent flyer's travel needs. SeaPort is truly an 

asset for Salina." 

OST -2003-16395 

August 3,2011 Page 111 
SEAPORT 

Service Proposal 

SeaPort Airlines is submitting a single proposal to serve Cedar City for a two-year term with 18 

weekly roundtrip flights between Salt Lake City at an annual subsidy rate of $1,956,900. Fare 

between Cedar City and Salt Lake will be as low as $79 each way, inclusive of taxes and fees. 

Projected revenue and operating expenses that form the economic basis of this proposal are 

summarized on the table on the next page for a two year period beginning on January 1, 2012. 

SeaPort's margin is very small and we are concerned about significant cost inflation in coming 

years that could reasonably outstrip traffic growth and reasonable fare increases. However, 

SeaPort is offering the Department the option to contract the proposed annual subsidy for a four 

year period (Le., no increase in annual subsidy). We believe this offer provides the community 

with the assurance of stable air service for an extended period, as well as reduces the 

administrative burden on the Department. 

Respectfully submitted, 

Robert L. McKinney 

President 

SeaPort Airlines, Inc. 

OST-2003-16395 

August 3, 2011 Page 112 
08T -2003-16395 

August 3, 2011 

SEA PORT 

:=t.lkLII,tc 

SeaPort Airlines, Inc. 

Cedar City, UT - Salt Lake City, UT 

Mon thru Fri: 3x Roundtrip, Sat 1x RT, Sun 2x RT 

Operating Projections 

Sector Length (sm) 

Scheduled Departures 

Scheduled Block Hours 

Projected Completion Factor 

Projected Completed Departures 

Projected Completed Block Hours 

Passenger Projections 

Projected Passengers 

Local Traffic 

Connecting Traffic 

Total 

Projected Al.€rage Fare 

Rel.€nue Passenger Miles (RPMs) 

Available Seat Miles 

Projected Load Factor 

Financial Projections 

Rel.€nues 

Passenger TIcket Rel.€nues 

Ancillary Rel.€nues 

Total 

Expenses 

Flight Operations 

Aircraft Ownership/Lease 

Fuel & Oil 

Traffic Servicing 

Insurance 

Maintenance 

Sub-Total - Direct 

Indirect 

Repositioning 

Total Expenses 

Projected Operating Profitl(Loss) 

Subsidy Calculations 

Operating Loss 

Economic Return @ 5% 

Required Subsidy 

221 

1,872 

2,215.2 

97.0% 

1,816 

2,148.7 

2,310 

7,489 

9,799 

$99.45 

2,165,579 

3,611,706 

60.0% 

$974,511 

$24,515 

$999,025 

$247,106 

$408,261 

$874,539 

$138,069 

$42,975 

$494,211 

$2,205,160 

$430,006 

$180,000 

$2,815,167 

($1,816,141) 

$1,816,141 

$140,758 

$1,956,900 

Page 113