2704 W. JACKSONST.

TUPELO, MS 38801

TUPELO REGIONAL

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TELEPHONE(662) 841-6570

FAX(662) 841-6571

www.flytupelo.com

________________________ A_I_R___P O_R_T ~

July 9,2014

Mr. Michael Martin

United States Department of Transportation

Office of Aviation Analysis

1200 New Jersey Avenue SE,Room W86-472

Washington D.C. 20590

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Reference DOT-OST-2009-0305

Dear Mr. Martin,

On Monday June 2

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, four airlines submitted proposals to provide essential air service (EAS)at the

Tupelo Regional Airport. This letter constitutes the comments ofthe City of Tupelo regarding the various

air service proposals received.

First, we wish to thank all four carriers for their interest in our market. We feel this high level of interest

confirms our belief that our Airport is capable of generating dramatic airline traffic increases, with the

appropriate carrier and service level.

We have met with or talked with each of the carriers and reviewed their proposals very carefully. After

this review we would like to endorse the proposal of SeaPort Airlines to provide EASat our Airport.

SeaPort's proposal calls for 30 round trip flights per week to Nashville and Memphis and requires an

annual subsidy level of $2,506,436. The carriers proposal offers the lowest subsidy level of any proposal

of any carrier that submitted a bid. The bid also offers a high level of frequency and service to two hubs.

SeaPort is a well-established regional airline and already has facilities and operations at both Memphis

and Nashville. We look forward to significant traffic growth with SeaPort service. We are also confident

that frequent service to Memphis and Nashville at this modest subsidy level will generate traffic 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 Aerodynamics, Inc. (ADI), AirChoiceOne and-Sun

Air International.

ADI proposed 12 round trips per week with ERJ-145equipment to Atlanta for a subsidy of $3.831

million. The carrier's proposal was tied to a similar proposal the carrier made to serve Hattiesburg and

Meridian, Mississippi, with all three cities receiving essentially the same service pattern to Atlanta. The

carrier's bid was "all or nothing", requiring ADI to receive EASdesignation at all three cities. Hattiesburg

and Meridian chose to endorse another carrier with a lower subsidy level. Furthermore, we were

concerned about the carrier's standing to provide scheduled air service. While the carrier has the

necessary FAA certifications, it did not appear to have a Clear path to DOT authority, nor did we get a
2704 W. JACKSONST.

TUPELO, MS 38801

TUPELO REGIONAL

~~~ ." ....•

TELEPHONE(662) 841-6570

FAX(662) 841-6571

www.flytupelo.com

AIRPORT ~

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clear picture of the carriers status with regards to basic airline infrastructure, such as a reservations

system. For these various reasons we ended our consideration of ADI's proposal.

We are very impressed with AirChoiceOne's success in other cities but are deeply concerned about the

higher subsidy level required in the carrier's proposals. The carrier submitted four proposals to provide

Tupelo EAS.Two proposals were for Memphis service only, at 30 round trips and 36 round trips per

week respectively. Two proposals were for a combination of Memphis and Nashville service, again with

30 and 36 round trips respectively.

The lowest AirChoiceOne subsidy need was $2.9 million for 30 round trips per week to Memphis only.

The other proposals had progressively higher subsidy needs with the highest subsidy need being $3.9

million for 36 round trips to a combination of Memphis and Nashville.

Tupelo understands that it is very likely that the $200 subsidy per passenger cap will be enforced in FY

2015. The carrier's uT2" proposal was the most attractive of the group, offering 30 round trips per week

to a combination of Memphis and Nashville. However the subsidy need was $3,536,182, which would

have required generation of 17,681 annual passengers the first year at a 64.6% load factor (with nine

seats). As much as we appreciate the carrier's success in other markets it does not today achieve that

annualized load factor on any mature route, even using an 8-seat interior. Thus, we feel that achieving

traffic to subsidy ratios at or below $200 using proposal T2 will be nearly impossible, at least in the first

two years of service.

Sun Air International proposed service to Memphis. The Memphis only proposal was $365,000 higher

than that of SeaPort and would require annual traffic of at least 14,3550&0 to meet the $200 cap. The

carrier's proposal forecast a load factor of 62%, yet the carrier has not achieved annualized load factors

above 40% on any of its existing routes.

We again thank all four carriers for their interest in the Tupelo market. We look forward to working

closely with SeaPort Airlines. It is our intention to dramatically increase our airline traffic over the next

two years and further reduce our reliance on EASsubsidies.

We urge the Department to promptly issue the EASaward to SeaPort so that service may begin in the

fall of 2014 and with adequate lead time, but also allowing our incumbent carrier, Silver Airways, to exit

the market promptly.

We thank the Department in advance for working with us as we navigate the challenges of preserving

and growing our air service to meet the transportation needs of our region.

Fre ook

Chair, Tupelo Airport Authority