Before the United States Department of Transportation

May 9, 2012

Proposal to Provide Essential Air Service at

Victoria, Texas

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

Docket OST-2005-20454

SeaPort Airlines, Inc.

Proposal to Provide Essential Air Service at

Victoria, Texas

By Order 2012-3-14, the Department requested proposals for Essential Air Service at Victoria, Texas 

not later than April 25, 2012. By Memorandum date April 25, 2012, the Department extended the 

due date for proposals until May 9, 2012. Pursuant to that Memorandum, SeaPort Airlines, Inc. 

respectfully submits this timely proposal to provide subsidized essential air service to the community 

of Victoria, Texas. 

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

tsieber@seaportair.com
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SeaPort Airlines: Focused On Serving Small Communities

Company Overview

SeaPort Airlines, Inc. is a FAA certified scheduled airline with 30 years of experience in commercial 

aviation and built around providing efficient and reliable service to rural communities. This is in sharp 

contrast to the strategies of the global airline brands and their regional airline partners that no longer 

have the operational or economic capability, or in many cases even a strategic desire, to serve small 

and mid-size communities such as Victoria.

SeaPort’s approximately 165 professionals operate an average of 90 daily departures to 21 cities in 

eight states with a business that is focused on providing affordable and reliable service to small and 

rural communities. 

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

Pendleton, Oregon; El Dorado, Hot Springs, and Harrison, Arkansas; Salina, Kansas; and Jackson, 

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

service 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.

A Track Record of Building Community Partnerships

SeaPort Airlines prides itself on developing partnerships with each community it serves. This 

includes participation in local events, donation of tickets, regular community meetings, and advance 

notification of, and opportunity for input, related to schedule changes and fares.

We believe this approach serves our own interests equally with those of the community by fostering 

long-term, stable relationships that result in increased ridership and, eventually, reduced subsidy 

requirements. SeaPort’s partnership approach is building recognition by those who watch the 

Essential Air Service program as evidenced by the following weblog entry from Skyland Centre for 

Essential Air Service:1

 

1

SkyLand Centre for Essential Air Services offers news, information, expert opinion and industry insights through 

www.SkyLandNews.com home page, where breaking news is posted as it comes in and a weekly news digest, 

currently circulated to 5,000 essential air service professionals around the world.
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We encourage the communities in this proposal to contact any of the EAS communities we presently 

serve for additional information. Additional evidence of our ability to develop a strong partnership 

and provide the communities in this proposal with reliable, customer-focused air service is 

demonstrated through community and customer comments that are provided later in this document.

Aircraft

SeaPort Airlines proposes to serve Victoria with 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.

The PC-12 operates at a cruising speed faster than any other 9-passenger aircraft currently in the 

EAS program (i.e., Cessna 402 and Piper Chieftain) and comparable to larger turboprop aircraft, 

such as the Embraer 120 Brasilia and Saab 340.2

 

2 We also note that neither the Cessna 402 nor Piper Chieftain is pressurized as is the Pilatus PC-12.
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The oversized cargo door on the PC-12 ensures is a strong contrast to other 9-passenger aircraft 

that rely on wing lockers and nose compartments shared with avionics equipment. Equally as 

important, SeaPort does not charge a fee for the first checked bag.

Utilizing the 9-passenger PC-12, SeaPort is able to “right size” the capacity in small communities 

such as Victoria 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 

and, specifically, the EAS program.

The Victoria community acknowledged the benefits of greater frequency levels in an email to the 

Department during the last round EAS proposals in 2010.

“I must add that during these meetings, it became clear that the two flights per day 

covered under the EAS program provides insufficient service to our traveling public. 

Although I fully understand that it is not the program's intent to provide ideal service, 

adding a third flight would very likely result (in time) in not needing the subsidy at all. 

Our air service development studies all indicate that our enplanements are directly 

related to the frequency of flights offered to VCT. Increasing the frequency will 

undoubtedly reduce the need for the subsidy over time, as our travelers habits are 

changed. I must add that during these meetings, it became clear that the two flights 

per day covered under the EAS program provides insufficient service to our traveling 

public.

Our air service development studies all indicate that our enplanements are directly 

related to the frequency of flights offered to VCT. Increasing the frequency will 

undoubtedly reduce the need for the subsidy over time, as our travelers habits are 

changed.”3

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.4 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.

The range of fares and forecasted average fare between Victoria and each of the two hub options

are proposing is shown on the table on the next page:

 

3

Email from Jason Milewski (Victoria Regional Airport) to Michael Martin (US DOT) on April 4, 2011 and published in 

Docket OST-2005-20454

4

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

with additional savings to passengers.
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SeaPort Airlines Illustrative Fares

Pricing Range & Average

EAS Community Dallas (Love Field) Houston (Bush 

Intercontinental)

Victoria, Texas (VCT)

Victoria Regional Airport

Fares ranging from $85 -

$175; average of $138

Fares ranging from $35 - $85; 

average of $55

NOTE: Listed fares include Federal Excise Tax and segments fees, PFCs, or security 

We believe the fares illustrated represent a responsible approach to pricing in EAS communities and 

one that is consistent with the overall objectives of the EAS program. SeaPort Airlines does not 

engage in “baiting” communities with low fares that are not sustainable. Such pricing schemes shift 

the true cost of air transportation from the consumer to the Department and we believe are 

inconsistent with the intent of the essential air service program to ensure reasonable access to the 

air transportation system for smaller communities. Equally as important, the resultant higher levels of 

subsidy required by offering unreasonably low fares can increase the risk of a community exceeding 

$200 of subsidy per passenger and thereby risking continued eligibility in the program.

SeaPort Airlines also charges reasonable fees for ticket changes ($35 v $100+ on most major

airlines), pet travel, and unaccompanied minors.5These charges are reflective of SeaPort’s 

philosophy of building customer loyalty in small communities through quality service at reasonable 

prices instead of opportunistically “nickel and diming” passengers at every possible turn.

Interline Connectivity

SeaPort currently has an interline ticketing agreement with US Airways and is working toward 

securing agreements with other carriers that will facilitate single ticket itineraries Victoria and 

destinations around the world. We anticipate that these agreements will include industry standard 

interline e-ticketing (IET) and baggage check.

To facilitate implementation of interline agreements with IET, SeaPort migrated to the Radixx 

reservation system on March 7, 2012. Radixx offers us the ability to enter into and execute unilaterial 

and bilaterial interline agreements, including inter airline thru check-in (IATCI). Simply put, SeaPort 

has made the necessary investment to ensure that airports such as Victoria Regional Airport have 

“shelf space” virtually anywhere in the global travel market. 

With this new system now functional, SeaPort anticipates announcing one, possibly two, interline 

agreements in the coming months. We have targeted additional airlines for interline agreements 

during the balance of 2012, including United Airlines which is the largest carrier operating at George 

Bush Intercontinental Airport. 

Global Distribution

In addition to interline agreements, SeaPort Airlines is presently displayed in the major global 

distribution systems. This enables our flights to be available on all major online travel agencies and 

meta-searchers including Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir. 

 

5

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. Additionally, SeaPort Airlines transports the pets of military families at no charge when 

relocation orders are presented.
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Marketing & Public Relations Strategy

If selected to serve Victoria, SeaPort will implement a comprehensive marketing and public relations 

strategy aimed at introducing our brand to the community and maximizing the number of passengers 

onboard. In addition to local advertising, these activities include:

 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 Easter 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 their own business needs or as a fundraising tool (i.e., raffles, silent auctions, 

etc.).

 Website: The majority of SeaPort’s passengers book through the Company’s website 

(www.SeaPortAirlines.com). 

 Social Media: Since 2010, SeaPort Airlines has managed a successful social media campaign 

that has allowed the Company to dynamically engage its customer base in a two-way 

conversation through sites such as Facebook, Twitter, FourSquare & LinkedIn. We have found 
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social media to be an excellent tool for generating passenger referrals and information sharing in 

our communities, and expect similar results in the four communities in this proposal.

 FlyerFlex Customer Rewards: During 2011, SeaPort launched a new and improved customer 

loyalty program called “FlyerFlex.” This program provides customers with a variety of benefits 

including free flights, service charge waivers, and bonus points. During the summer of 2012, 

SeaPort will be unveiling further enhancements to the FlyerFlex program including a wider range 

of travel award options and the ability for customers to check balances and redeem awards 

online.

 Value Accounts: SeaPort offers a Corporate Value Account in every community served. This 

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

variety of benefits such as change fee waivers and savings of 5% to 15%. It is important to note 

that unlike the corporate travel programs of major airlines that are not designed to serve small 

businesses in rural communities, SeaPort’s program can provide savings to a company of 

virtually any size and can be used by any employee of a company. 

In service proposals herein, SeaPort Airlines has allocated specific dollar amounts for marketing and 

sales activity appropriate to each community and service pattern. These estimated expenses take 

into consideration the lower costs of media in small markets and the reality that most local traffic 

typically originates in the EAS community rather than the hub market. Our approach to marketing 

budgeting is based on the philosophy that reasonable advertising budgets can be effectively 

leveraged with “new media” such as social networking, blogs, opt-in email, etc. to engage with 

customers on a more personal level.

We strongly believe that such a strategic approach represents a more fiscally responsible use of 

subsidy (and therefore taxpayer dollars) in EAS communities than irrationally high marketing 

budgets intended to promote smaller communities in a hub market as “destination.” Passengers with 

trips beginning in other than the EAS community quite often are connecting from a more distant 

origination point. 

Illustrative examples of SeaPort’s advertising and promotional materials are provided on the next 

page. 
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Sample SeaPort Airlines 

Advertising & Promotional Materials
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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 play a vital role in the local 

economy and quality of life in both of these communities, 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:

Our Essential Air Service Community Partners

“I understand the importance of having dependable, reliable air service with an affordable cost. Not 

only will SeaPort Airlines meet these needs, but excel by providing great customer service, a high 

level of community involvement, and an eagerness to become a community partner”.

− Luci Larson

Former Mayor & Owner of 

Action Travel

Salina, KS

“South Arkansas Regional Airport and the entire South-central Arkansas region suffered from the 

loss of air service previously provided by Mesa Airlines in the Spring of 2008. Unreliable service and 

a poor schedule were already negatively impacting enplanements before Mesa pulled out, but at that 

point, the nearest option for air service of any kind was almost a two hour drive away. After sorting 

through applications from many different interested carriers, the El Dorado Airport Commission, 

along with El Dorado’s Mayor, chose SeaPort to restore air service to South Arkansas. This was the 

beginning of a great partnership between SeaPort and our local community. 

“Working with SeaPort has been nothing but a pleasure from the bottom to the top of their 

organization, and their commitment to excellence shines through the glowing comments that I hear 

from people who fly with them. In addition to hearing comments from others, I have flown SeaPort 

on several occasions, and have come away from the experience thinking ‘This is how all air service 

should be.”

− Josh Zylks

Airport Manager

South Arkansas Regional Airport 

(Goodwin Field)

“Eastern Oregon Regional Airport at Pendleton had been struggling since schedule changes 

following 9/11 served 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 Pilatus. The passengers have welcomed the new service, much better schedule, and 

are elated with ‘no security check’ and stand by time. Passengers today will say, ‘I love the service’, 

‘great customer service,’ and ‘I'm sure glad I finally tried it, cause I'll be back’
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“In our particular market, the 9 passenger aircraft is perfect, and SeaPort Air provides the schedule, 

the professionalism, and customer service we need and desire.”

− Larry Dalrymple 

Airport Manager

Pendleton Regional Airport

Our Customers

“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!”

− Ruth Ann Smith 

Customer (flew from Hot 

Springs to Memphis)

“My husband and I recently had to make a fast trip to Dallas for the funeral of a dear friend. I was not 

interested in making that drive over a fast weekend. Then I remembered that SeaPort had recently 

started flights between Hot Springs and Dallas. I called SeaPort, Jim and Bob were so quick to get 

us booked, last minute so we could fly down and attend the funeral and visit with family and friends 

that we don't get to see very often. 

Everyone was so friendly, helpful and professional. It was a dream trip, even to attend a funeral. The 

pilot going down was so kind. When he found out that my husband had been a ball turret gunner in 

WWII, he gave him a set of headphones so he could listen to the communication between the pilots 

and the air traffic controllers. To say the least, my husband was impressed. It was such a blessing to 

have been taken care of in such a kind and professional manner, especially under the circumstances 

of our trip. Thank you, Jim, Bob, Chris, Doug, Rodney and Michael.”

− Catherine Martin

Customer (few from Hot Springs to 

Dallas)

“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 service 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!”

− Catherine Martin

Customer (few from Memphis to 

Harrison)

“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 far from the Gateway and we already had been on the 

road 1 1⁄2 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 
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team!! I have been telling everyone of the stellar customer service and you will be our flight of choice 

going forward.”

− Joanne Bosworth

Customer (flew from Portland to 

Seattle)

“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)
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Service Proposal

SeaPort Airlines is proposing a service plan at Victoria that includes nonstop service to both Dallas 

(Love Field) and Houston (George H. Bush Intercontinental Airport).

We have found that offering access to more than one hub from an EAS market can result in 

significant traffic growth, specifically in our Arkansas communities, where the addition of Dallas 

and/or Kansas City to our existing Memphis service has resulted in significant recent traffic growth. 

We believe that similar results can be achieved at Victoria Regional Airport by offering a service 

pattern that meets the travel needs of a higher percentage of the overall potential traffic base 

resulting in higher traffic retention at VCT and, eventually, leading to lower levels of subsidy. 

An illustrative schedule is provided below, however final schedules will only be established following 

consultation with the community.

The proposal consists of 24 frequencies a week, which is compliant with the Departments directive 

in Order 2012-3-14 requesting: “two round trips a day (12 a week) with 30-seat or larger aircraft; or 

three round trips a day (18 a week) with 19-seat aircraft and additional frequencies with 8/9 seat 

aircraft.”6

Finally, the proposal is presented on the basis of a two year term. Notwithstanding the risk of cost 

inflation in coming years (particularly related to fuel) that could possibly outstrip traffic growth and 

reasonable fare increases, SeaPort is offering the Department and the community the option to 

contract the proposed annual subsidy for a four year period at no increase in annual subsidy 

beyond that level specified for the two year term. We believe this provides the Victoria 

community with the assurance of stable air service for an extended period and reduces the 

administrative burden on both the Department and ourselves.

Respectfully submitted,

Timothy Sieber

Vice President – Strategy & Corporate Development

SeaPort Airlines, Inc.

May 9, 2012

 

6 Order 2012-3-14, p.3

Depart Arrive Frequency Stops Depart Arrive Frequency Stops

6:00am 7:15am ExSun 0 7:45am 9:00am ExSun 0

11:30am 12:45pm ExSun 0 2:30pm 3:45pm ExSat 0

9:20am 10:00am ExSun 0 10:30am 11:10am ExSun 0

4:20pm 5:00pm ExSat 0 6:00pm 6:40pm ExSat 0

From Victoria to Houston (Bush Intercontinental) From Houston (Bush Intercontinental) to Victoria

12 Weekly Roundtrips: Victoria - Dallas (Love Field)

12 Weekly Roundtrips: Victoria - Houston (Bush Intercontinental)

From Victoria to Dallas (Love Field) From Dallas (Love Field) to Victoria
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Operating Projections

Average Sector Length (sm) 199

Scheduled Departures 2,496

Scheduled Block Hours 2,392.0

Projected Completion Factor 97.5%

Projected Completed Departures 2,434

Projected Completed Block Hours 2,332.2

Passenger Projections

Projected Passengers 10,075

Passengers per Departure 4.1

Projected Average Fare $86.54

Revenue Passenger Miles (RPMs) 2,004,925

Available Seat Miles (ASMs) 4,358,578

Projected Load Factor 46.0%

Financial Projections

Revenues

Passenger Ticket Revenues $871,907

Ancillary Revenues $17,438

Total $889,345

Expenses

Flight Operations $191,240

Aircraft Ownership/Lease $396,000

Fuel & Oil $906,060

Sales & Marketing $15,000

Traffic Servicing $358,229

Insurance $39,647

Maintenance $536,406

Sub-Total - Direct $2,442,582

Indirect $219,832

Total Expenses $2,662,415

Projected Operating Profit/(Loss) ($1,773,070)

Subsidy Calculations

Operating Loss $1,773,070

Economic Return @ 5% $133,121

Required Subsidy $1,906,191

Subsidy per Departure $783.28

Subsidy per Passenger $189.20

12 Weekly Roundtrips: Victoria - Houston (Bush Intercontinental)

SeaPort Airlines, Inc.

12 Weekly Roundtrips: Victoria - Dallas (Love Field)