### Before the United States Department of Transportation May 16, 2013

Proposal to Provide Essential Air Service at

EL DORADO, ARKANSAS HARRISON, ARKANSAS HOT SPRINGS, ARKANSAS

Under 49 U.S.C. 41731 et seq. Docket DOT-OST-1997-2935



## Proposal of SeaPort Airlines, Inc. to Provide Essential Air Service for the Arkansas Communities of El Dorado, Harrison, and Hot Springs

By Order 2013-4-6, the Department requested pr oposals from carriers interested in providing Essential Air Service (EAS) at El Dorado/Camden (El Dorado), Harrison, and Hot Springs, Arkansas, with or without subsidy, for a contract term beginning on November 1, 2013.

SeaPort Airlines currently provides service to all three communities and is pleased to submit this proposal for reselection to provide EAS at El Dorado, Harrison, and Hot Springs and is requesting a new annual subsidy for all three markets of $5,865,372 ($1,977,153 for El Dorado, $2,251,207 for Harrison, $1,637,012 for Hot Springs).

The requested level of subsidy is lower than the current annual subsidy rate of $5,990,780. The difference reflects growth in traffic and revenue that SeaPort has been able achieve to date and which is projected to continue during the next contract term as a result of planned enhancements to our distribution and interline capabilities in the first and second years of the contract term, as well as lower operating costs resulting from a change in aircraft type, incremental economies of scale, and targeted impr ovements to operational efficiency across all of SeaPort Airlines operations.

The proposals herein are submitted on an inseparabl e basis and for a four year contract term.

Immediately after this proposal is docketed, SeaPort Airlines will contact the Airport Manager and local government officials at each airport to answer any questions and/or schedule public meetings where we may present our proposal to local residents, businesses, and community leaders. In the interim, 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.comDocket DOT-OST-1997-2935 May 16, 2013 Page | 2 

# SeaPort in Arkansas: A Proven Track Record

Introduction

SeaPort Airlines has provided Ess ential Air Service (EAS) for El Dor ado, Harrison, and Hot Springs since October 2009. In addition to these Arkans as communities, SeaPort provides EAS at Athens, Georgia; Imperial/El Centro, California; Jackso n, Tennessee; Pendleton, Oregon; and Salina, Kansas.

As the communities and Department are familiar with SeaPort Airlines, we opted not to include the introductory narrative typical in our proposals and directly proceed to our proposal to continue to build on our success over the last four years.



### EAS Background: El Dorado, Harrison, and Hot Springs

As noted above, SeaPort Airlines inaugurated service at El Dorado, Harrison, and Hot Springs in October 2009. This followed a period of 19 months during which these communities were without scheduled air service due to the bank ruptcy of the previous EAS operator, and unwillingness of subsequent awardees to commence replacement service. 1



### The effect of this dormancy period was a change in these communities’ travel habits that created significant challenges to rebuilding the customer base and restoring confidence in the air service that SeaPort offered at El Dorado (ELD ), Harrison (HRO), and Hot Springs (HOT). In partnership with each community over the nearly past four years, SeaPort has been able to gradually rebuild traffic at these airports.



## SeaPort Airlines Traffic Trends: 2010-2012 O&D Traffic at El Dorado, Harrison, and Hot Springs

1 After Air Midwest ceased operations, the Department awar ded the EAS contract at El Dorado, Harrison, and Hot Springs first to Island Air and then to Great Lakes Airlines. Neither of these carriers initia ted service, resulting in the DOT issuing another subsequent request for proposals w hich resulted in the initial selection of SeaPort.Docket DOT-OST-1997-2935 May 16, 2013 Page | 3 

### SeaPort’s success in rebuilding traffic at these Arkansas communities was noted by the Department in Order 2013-4-6:

“We note that traffic at all three communities has increased significantly since SeaPort inaugurated service in late 2009 and the community and the carrier’s efforts should be commended.” 2



### That said, and particularly with respect to Hot Springs, SeaPort proposes to take the lessons learned over the nearly past four years, apply them during the next four years, and secure the future of EAS in these communities.

2 Order 2013-4-6, p3Docket DOT-OST-1997-2935 May 16, 2013 Page | 4 

# Discussion of Service Plan

Service Pattern

The following pages provide an overview of schedule s, aircraft type, pricing tactics, and marketing strategies that SeaPort Airlines has planned if reselected to provide EAS at El Dorado, Harrison, and Hot Springs. It should be noted that we employed many of these tactics which have been validated by our success in rebuilding ridership in these communities following the extended dormancy period when there was no EAS service.

Impact of Changes to Delta Hub at Memphis

As noted, SeaPort Airlines launched service from our new Memphis hub to El Dorado, Harrison, and Hot Springs in October 2009. At this time, Memphis International Airport was a large hub for Delta Air Lines making it a highly effective portal to the national air transportation system.

Beginning in March 2011, however, Delta began a gradual downsizing of the Memphis hub which has negatively impacted its functionality as a gateway to the air transportation system. This is reflected on the graph below, showing the decline from 205 average daily departures in October 2009 (the month that SeaPort started service at MEM) to 80 in December 2012.



# Delta Air Lines Average Daily Departures at MEM: Oct 2009 – Dec 2012

SOURCE: DOT T100 via Diio 0 50 100 150 200 250

Avg. Daily Departures,
Oct 2009 = 205 Avg. Daily Departures,
Dec 2012 = 80Docket DOT-OST-1997-2935 May 16, 2013 Page | 5 

### The service reductions at Memphis by Delta hav e reduced that airport’s effectiveness as a gateway to the national air transportation syst em. SeaPort responded by, with the Department’s approval, redirecting some of our three Arkansas communities’ flights to alternative hubs at Kansas City and Dallas (Love Field). This “m ultiple gateway” strategy has driven strong enplanement growth in the Arkansas markets and, as outlined below, our proposal for the next contract term aims to build on this success by incorporating community feedback and fine tuning schedules.

El Dorado (ELD)

The proposed service pattern at El Dorado includes 12 weekly nonstops to Dallas Love Field, and nine weekly direct flights to Memphis via Hot Springs. In addition, every day except Saturday, there is a single westbound flight between Memphis and El Dorado.

The formatted timetable on page 7 illustrates the proposed changes to El Dorado schedules that will allow travelers to fly to Dallas in the morning, complete a full day of business, and return home the same evening. Business travelers from Dallas will benefit from an improved schedule that provides 4.5 hours in El Dorado before returning home in a single day.

Schedules to Memphis would be modified to include a one-stop in Hot Springs with the intention of lowering per passenger subsidy levels at both El Dorado and Hot Springs. 3 

### Additionally, and in response to requests from El Dorado-based Mur phy Oil, Memphis flights would be retimed to enable connections with SeaPort’s Nashville service. 4



### Finally, and again in response to community comm ents, weekend schedules will be adjusted to better meet the needs of leisure travelers. This will result in more flights on Saturday mornings that would be offset by a reduction of Sunday morning flights.

Harrison (HRO)

At Harrison, SeaPort proposes to provide 12 weekly roundtrips to Memphis and six weekly roundtrips to Kansas City. As the Department noted in Order 2013-4-6, SeaPort provides Harrison with additional frequency on an unsubsidized basis and, if reselected, intends to continue this practice during the next contract term. 5



### While service to Memphis provides Harrison access to the six airlines serving that airport, there is significant local demand in this city-pair that results from Harrison being the headquarters for FedEx Ground. As the formatted timetable illustrates, the 18 weekly roundtrips to Memphis (12 subsidized plus 6 unsubsidized) are well-balanced and enable a single-day roundtrip in either direction.

Nonstop service to Kansas City will continue providing Harrison customers with access to connecting markets at fares which are typically lower than available at Memphis. This is a direct

3 The proposed schedule does include a single nonstop from Memphis to El Dorado in the evenings.

4 Murphy Oil is headquartered in El Dorado but retail operati ons are based in Franklin, TN, a suburb of Nashville.

5 This continues our current practice of providing Ha rrison with frequencies above the level awarded by the Department for subsidized service, but at no additional cost to taxpayers.Docket DOT-OST-1997-2935 May 16, 2013 Page | 6 

### result of Southwest Airlines having the largest market share at MCI and, as a result, applying downward pressure on the fares of all airlines serving that airport.

Hot Springs (HOT)

As the Department noted in Order 2013-4-6, subsidy levels at Hot Springs are presently above the $200 statutory limit. If reselected to serve Hot Springs and the other Arkansas communities, SeaPort Airlines will address this issue using a list of specific “action items” that are explained beginning on page 10 of this proposal. However, first among the action items will be an adjustment to flight schedules.

With the proposed schedule illustrated on page 7, travelers between Dallas and Hot Springs are provided a choice of 18 one-stop flights (six westbound and 12 eastbound, six days per week) each week with a brief stop in El Dorado. The introduction of DAL service in 2011 marked a turning point in SeaPort’s efforts to rebuild traffic at HOT and the proposed schedule is intended to build on that success. Of particular note, the schedule would include a Saturday morning inbound from Dallas aimed at attracting visitors to “America’s First Resort.”

The proposed schedule also provides 12 flights each week to and six flights each week from Memphis. While connecting options at Memphi s have declined, as outl ined previously, demand between Hot Springs and Memphis has remained firm. SeaPort believes this is in response to increased advertising in the market and more aggressive pricing tactics. The flight times between Hot Springs and Memphis in the proposed schedule include adjustments to create connecting opportunities with SeaPort’s service to Jackson and Nashville.

Illustrative Flight Schedule

Illustrative flight schedules for El Dorado, Harrison, and Hot Springs are provided on the next page. As outlined, many of the changes are responsive to community feedback that we have received via email, telephone conversations, and community meetings in recent months. Nonetheless, if reselected to provide EAS in these communities, we will again solicit comment on schedules and, as much as practical, incorporate community requests into the final schedule.Docket DOT-OST-1997-2935 May 16, 2013 Page | 7 

## SeaPort Airlines Illustrative Flight Schedule EAS at El Dorado, Harrison, and Hot Springs, Arkansas

Flt Dep Arr Stops Freq Flt Dep Arr Stops Freq

TO: DALLAS FROM: DALLAS 100 0615 0750 0 ExSun 101 0815 0950 0 ExSun
321 1420 1555 0 ExSat 322 1615 1750 0 Exsat
TO: HOT SPRINGS FROM: HOT SPRINGS 101 1005 1100 0 ExSun 312 1310 1405 0 ExSun
313 1805 1900 0 ExSat
TO: JACKSON FROM: JACKSON

101/102 1005 1445 MEM ExSatSun 311/312 0900 1405 MEM ExSun
417/418 1750 2020 MEM ExSat
TO: MEMPHIS FROM: MEMPHIS 101 1005 1235 1 ExSun 312 1135 1405 1 ExSun
313 1805 2030 1 ExSat 418 1900 2020 0 ExSat
TO: NASHVILLE FROM: NASHVILLE

101/102 1005 1605 MEM ExSatSun 311/312 0740 1405 MEM ExSun
417/418 1630 2020 MEM ExSat

TO: KANSAS CITY FROM: KANSAS CITY
206 1130 1305 0 ExSat 207 1330 1505 0 ExSat
TO: MEMPHIS FROM: MEMPHIS
205 0810 0930 0 ExSatSun 204 0630 0750 0 ExSatSun
207 1515 1635 0 ExSat 206 1000 1120 0 ExSat
209 1845 2005 0 ExSun 208 1710 1830 0 ExSun
TO: SALINA FROM: SALINA 206/522 1130 1455 MCI ExSatSun 521/207 1130 1505 MCI ExSatSun

TO: DALLAS FROM: DALLAS 312 1310 1555 1 ExSat 101 0815 1100 1 ExSun
313 1615 1800 1 ExSat
TO: EL DORADO FROM: EL DORADO 312 1310 1405 0 ExSat 101 1005 1100 0 ExSun
313 1805 1900 0 ExSat
TO: JACKSON FROM: JACKSON

101/102 1115 1445 MEM ExSatSun 311/312 0900 1255 MEM ExSun
TO: MEMPHIS FROM: MEMPHIS 101 1115 1235 0 ExSun 312 1135 1255 0 ExSat
313 1910 2030 0 ExSat
TO: NASHVILLE FROM: NASHVILLE

101/102 1115 1605 MEM ExSatSun 311/312 0740 1255 MEM ExSun 

# EL DORADO, AR

HARRISON, AR

HOT SPRINGS, AR

UNSUBSIDIZEDDocket DOT-OST-1997-2935 May 16, 2013 Page | 8 Aircraft Type



### Current Fleet: Pilatus PC-12

Since 2009, SeaPort Airlines has provided service to El Dorado, Harrison, and Hot Springs using the Swiss-built Pilatus PC-12. This aircr aft type was the launch platform for SeaPort Airlines and until fairly recently represented 100% of our fleet in the “Lower 48.” The PC-12s in SeaPort’s fleet will be retired as leases expir e and/or EAS contracts come due for renewal.

Fleet Renewal Plan: Cessna Caravan 208

To replace PC-12s and grow our route network, SeaPort Airlines is transitioning to the Cessna Caravan as our 9-passenger platform. This aircraft, which already comprises the majority of our fleet, allows us to offer the same 9-seats at a lower acquisition cost and also lower hourly operating costs than the PC-12.

Consistent with this fleet plan, SeaPort’s proposal to provide EAS at El Dorado, Harrison, and Hot Springs is based on flights operated with Cessna Caravans. With the better operating economics outlined above, and aided by operational effi ciency initiatives, SeaPort Airlines is able to submit this proposal to continue providing our customers in Arkansas with safe, reliable, and affordable service, but at a lower subsidy rate than our current EAS contract.

Produced in the USA, the Caravan’s design is simple but robust. Caravans have high dispatch reliability which is a factor we deem critical to maintaining customer confidence in the scheduled service at their “hometown airport.”

Another major benefit of the Caravan is the large cargo pod, which accommodates more baggage (volume and weight) than any other 9-pass enger aircraft. For example, previously our customers were limited to 35 pounds of chec ked baggage. The Caravan allows us to increase that limit to 50 pounds, but at no additional cost to the customer. Equally important, the cargo pod allows for segregation of passengers and their baggage, a TSA requirement and necessity of interline agreements that include transfer of checked baggage between airlines.Docket DOT-OST-1997-2935 May 16, 2013 Page | 9 Fares & Pricing Structure

In all of our markets, whether with subsidy or entir ely at risk, SeaPort employs a fare structure that includes a full range of price points with varying leve ls of restrictions int ended to attract a wide spectrum of customers. This includes fully flex ible fares that can be purchased right up until departure (and are reasonable compared to “walk-up” of other airlines) and wh ich allows customers to change their itinerary or obtain a refund without a service charge. The low fare option provides less flexibility however it stimulates additional traffi c volume in the form of net-new customers and/or more frequent travel by existing customers.

This pricing strategy has played an integral part in SeaPort’s rebuilding of traffic at El Dorado, Harrison, and Hot Springs, and will continue to be majo r part of the mix of serv ices and products that make up “The SeaPort Experience.”

The table below summarizes SeaPort’s current fare s in the Arkansas comm unities as of May 15,
2013.



## SeaPort Airlines Fare Structure El Dorado, Harrison, and Hot Springs

NOTE: Listed price points include Federal Excise Tax and segment fees

The level of requested subsidy in this proposal is based on calculat ions that use the average fare shown next to each desti nation. While we are un able to guarantee fares over the term of an EAS contract due to fuel prices being s ubject to significant volatility.

Enhancements to Distribution & Interline Connectivity

SeaPort Airlines tickets may be purchased by calling our toll-free reservation number, at www.SeaPortAirlines.com, at any “brick and mortar” travel agency connected to major global distribution systems (GDS), and all of the major online travel agencies and meta-searchers such as Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir. FARE BRAND   SUMMARY OF FARE RULES Booking Class/Fare Basis Code YR B3F M3L Q14L L21X Advance Purchase (days prior to departure) 0 3 3 14 21 Change Fee $0 $0 $50 $50 Not Permitted
Refundable Yes No No No No
PUBLISHED FARES TO/FROM EL DORADO: Dallas $199 $119 $89 $59 $49 Hot Springs $99 $79 $59 $49 $39 Jackson $169 $109 $99 $79 $59 Memphis $149 $89 $69 $49 $39 Nashville $199 $139 $129 $109 $89
PUBLISHED FARES TO/FROM HARRISON: Kansas City $189 $129 $79 $69 $59 Memphis $189 $129 $79 $69 $59 Salina $199 $149 $139 $119 $89

PUBLISHED FARES TO/FROM HOT SPRINGS: Dallas $199 $129 $99 $79 $69 El Dorado $99 $79 $59 $49 $39 Jackson $159 $129 $99 $79 $59 Memphis $149 $99 $69 $49 $39 Nashville $199 $149 $129 $109 $89 FullFlex Free 2 Flex Flex 4 Fee No FlexDocket DOT-OST-1997-2935 May 16, 2013 Page | 10 These distribution channels were not all available during the early months that SeaPort served the Arkansas communities when we were dependent on only two channels for sale: the telephone and our website ( www.SeaPortAirlines.com ). Subsequently, investments in new systems have been made that resulted in SeaPort’s inventory bei ng available through the channels named above and which resulted in measurable traffic growth. Duri ng 2012 and into 2013, SeaPort Airlines made further investments in reservat ions and distribution technology.

SeaPort is committed to making additional IT inve stments into 2014 that will permit implementation of interline agreements with multiple airlines which include e-ticketing, thru baggage check-in, and (with select carriers) issuance of connecting boarding passes. Thes e new capabilities are projected to generate traffic growth far in excess of that ex perienced as a result of our earlier enhancements. Specifically, with interlin e agreements, customers from virtually anywhere in the world will be able to easily find, price, and purchase a travel itinerary to anywhere in our route system, including the Arkansas markets.



### Action Plan to Increase Passengers & Lower Subsidies at Hot Springs

In Order 2013-4-6 the Department noted:

“The Department is prohibited from subsidizing air service at a community where the subsidy per passenger exceeds $200, unless the community is more than 210 highway miles from the nearest large or medium hub airport. Hot Springs is 198 miles from Memphis International Airport and based on CY2012 data (January 1, 2012, through December 31, 2012), 4,749 passengers were enplaned and deplaned at Hot Springs. The annual subsidy amount for Hot Springs is $1,474,388. Therefore, the subsidy per passenger at Hot Springs is $310. Rather than terminate the community’s eligibility, at this stage, the Department will solicit proposals for EAS and evaluate all proposals submitted before either committing to a new rate term or making a final determination on Hot Springs’ continuing eligibility to receive EAS in light of its current subsidy per passenger being above the $200 ceiling. Before proposals are due, we expect the community to work aggressively with all potential applicants to mitigate some of the risks that carriers may face in an attempt to lower their subsidy levels. We also expect air carriers to detail in their proposals how they will work with the community in lowering the subsidy per passenger below the $200 cap.”

As outlined in this proposal and noted by the Department in Order 2013-4-6, SeaPort and the community have been able to rebuild traffic at Hot Springs after the dormancy period. However, additional work will be required to ensure continued eligibility in the EAS program. SeaPort Airlines believes the specific tactics listed below, some of which have been discussed in detail elsewhere in this proposal, directly address the Department’s concerns and will be effective over the following four year term in reducing subsidy levels at HOT to below $200 per

passenger.

Adjustments to Flight Schedules

SeaPort’s proposed flight schedule in cludes continued connectivity to the national air transportation system at Dallas and Memphis, but represents an improvement by spreading departures more evenly throughout the day and shifting limited frequencie s to the weekend with the aim of increasing tourist traffic.Docket DOT-OST-1997-2935 May 16, 2013 Page | 11 Lower Operating Costs of Caravan

As outlined, the Cessna Caravan w ill allow SeaPort to offer the sa me number of seats per departure as the PC-12 but with reduced costs.

Advertising

During the 2012 Christmas season, SeaPort Airlines experimented with adve rtising that emphasized sale fares. Limited to the daily newspaper, the ob jective was to gauge the ma rket’s elasticity and whether this tactic could be applied more aggressi vely in the form of “flash sales” when advance bookings appear weak.

This experiment was successful with December traffic up and, it appear s, a benefit from the resultant awareness that lingers after the fare sales expired. As a result of this, SeaPort continues to tactically purchase and trade media placement s in the Hot Springs media.

Sales Visits to Major Employers & Travel Agents

In a number of EAS markets, SeaPort Airlines has reve rted to a “back to future ” strategy with respect to sales calls on larger employers and travel ge nerators. This person-to -person interaction has produced verifiable traffic gains, and therefor e we intend to increase our “housecalls.”

Dynamic Packaging of Hot Springs

SeaPort Airlines has partnered with a third-party to package travel on a dynamic basis that will allow us to reach deeper into the leisure market, of which Hot Springs is believed to have the strongest potential among the Arkansas communi ties. With this new partnership, our customers will be able to purchase air fare, hotel, ground transportation, and (i n some cases) entry to attractions and shows, in a single transaction.Docket DOT-OST-1997-2935 May 16, 2013 Page | 12 

# Annual Subsidy Request

The following pages contain the proposals of SeaPort Airlines to continue providing EAS at the Arkansas communities of El Dorado, Harrison, and Hot Springs for a new term beginning on November 1, 2013. The proposed service patterns at these communities, and summarized earlier in this proposal, results in an annual subsid y request of $5,865,372 su mmarized as follows:



## Summary of EAS Subsidy Requests in Arkansas (Docket DOT-OST-1997-2935)

EAS Community Service Pattern Requested Annual Subsidy

El Dorado (ELD) 24 segments per week between ELD and Dallas Love Field + 6 weekly segments between Memphis and ELD + 18 weekly segments between ELD and Memphis (charged to HOT subsidy request) $1,977,153

Harrison (HRO) 24 weekly segments between HRO and Memphis (plus 12 weekly segments provided on a subsidized basis) + 12 weekly segments between HRO and Kansas City $2,251,207

Hot Springs (HOT) 18 weekly segments between HOT and Memphis + 18 segments between HOT and El Dorado that also provides one-stop service to/from Dallas/Love Field $1,637,012

TOTAL $5,865,372



### The subsidy request incorporates the following assumptions and data points:

 The proposals for each EAS community are being submitted on an inseparable basis.

 The proposals are being submitted with the request that the Department award SeaPort Airlines a four-year contract term.

 For each of the three EAS communities, the proposal provides nonstop and/or one-stop flights to hub airports at Dallas, Kansas City, and/or Memphis.

 The proposal for each EAS community assumes that all flights operate with Cessna Caravan. These aircraft are more cost efficient and have higher operational reliability than the Pilatus PC-12 they will replace.

 Traffic and revenue projections reflect the enhanced selling capability that SeaPort will realize from 1) enhanced distribution of inventory and pricing, 2) increased number of interline agreements, and 3) introduction of packaging capabilities (i.e., hotels, rental cars, attraction tickets) to capture a higher percentage of current market demand and stimulation of net-new demand.Docket DOT-OST-1997-2935 May 16, 2013 Page | 13 

###  On-going efforts to improve operating effici encies through cost reductions also resulted in a lower total subsidy request.

The most important component of our proposal, however, is SeaPort’s commitment to continue to provide each community with reliable, affordable, and customer-focused air service. The specific proposals to provide EAS at El Dorado, Harrison, and Hot Springs are provided on the following pages.

Respectfully submitted,

Timothy Sieber Executive Vice President SeaPort Airlines, Inc.Docket DOT-OST-1997-2935 May 16, 2013 Page | 14 Proforma Data Operating Projections Average Sector Length (sm) 230 Scheduled Departures 1,560 Scheduled Block Hours 2,080.0

Projected Completion Factor 99.5%

Projected Completed Departures 1,552 Projected Completed Block Hours 2,069.6

Passenger Projections Projected Passengers 6,892 Passengers per Departure 4.4

Projected Average Fare $60.66

Revenue Passenger Miles (RPMs) 1,583,782 Available Seat Miles (ASMs) 3,210,260 Projected Load Factor 49.3%

Financial Projections
Revenues Passenger Ticket Revenues $418,072 Ancillary Revenues $8,361 Total $426,433

Expenses Flight Operations $335,275 Aircraft Ownership/Lease $300,000 Fuel & Oil $698,490 Sales & Marketing $50,000 Traffic Servicing $266,876 Insurance $51,740 Maintenance $341,484 Sub-Total - Direct $2,043,865 Indirect $245,264 Total Expenses $2,289,129

Projected Operating Profit/(Loss) ($1,862,696)

Subsidy Calculations Operating Loss $1,862,696 Economic Return @ 5% $114,456

Required Subsidy $1,977,153

Subsidy per Departure $1,273.77 Subsidy per Passenger $286.88 Avg. Enplanements per Operational Day 11.0 18 Weekly Segments: El Dorado - Hot Springs (continued to MEM)

24 Weekly Segments: El Dorado - Dallas (Love Field) 6 Weekly Segments: Memphis - El Dorado (westbound) 

### SEAPORT AIRLINES, INC. EL DORADO, ARKANSASDocket DOT-OST-1997-2935 May 16, 2013 Page | 15 Proforma Data Operating Projections Average Sector Length (sm) 207 Scheduled Departures 1,872 Scheduled Block Hours 2,652.0

Projected Completion Factor 99.5%

Projected Completed Departures 1,863 Projected Completed Block Hours 2,638.7

Passenger Projections Projected Passengers 11,001 Passengers per Departure 5.9

Projected Average Fare $60.55

Revenue Passenger Miles (RPMs) 2,280,874 Available Seat Miles (ASMs) 3,475,686 Projected Load Factor 65.6%

Financial Projections
Revenues Passenger Ticket Revenues $666,086 Ancillary Revenues $23,313 Total $689,399

Expenses Flight Operations $459,141 Aircraft Ownership/Lease $300,000 Fuel & Oil $890,575 Sales & Marketing $50,000 Traffic Servicing $299,439 Insurance $65,969 Maintenance $435,392 Sub-Total - Direct $2,500,515 Indirect $300,062 Total Expenses $2,800,576

Projected Operating Profit/(Loss) ($2,111,178)

Subsidy Calculations Operating Loss $2,111,178 Economic Return @ 5% $140,029

Required Subsidy $2,251,207

Subsidy per Departure $1,208.61 Subsidy per Passenger $204.64 Avg. Enplanements per Operational Day 17.6 

### HARRISON, ARKANSAS SEAPORT AIRLINES, INC.

12 Weekly Segments: Harrison - Kansas City

24 Weekly Segments: Harrison - MemphisDocket DOT-OST-1997-2935 May 16, 2013 Page | 16 Proforma Data Operating Projections Average Sector Length (sm) 135 Scheduled Departures 1,872 Scheduled Block Hours 2,106.0

Projected Completion Factor 99.5%

Projected Completed Departures 1,863 Projected Completed Block Hours 2,095.5

Passenger Projections Projected Passengers 6,027 Passengers per Departure 3.2

Projected Average Fare $65.37

Revenue Passenger Miles (RPMs) 813,645 Available Seat Miles (ASMs) 2,263,108 Projected Load Factor 36.0%

Financial Projections
Revenues Passenger Ticket Revenues $393,957 Ancillary Revenues $13,789 Total $407,746

Expenses Flight Operations $303,843 Aircraft Ownership/Lease $264,000 Fuel & Oil $565,777 Sales & Marketing $50,000 Traffic Servicing $175,839 Insurance $33,528 Maintenance $345,753 Sub-Total - Direct $1,738,740 Indirect $208,649 Total Expenses $1,947,388

Projected Operating Profit/(Loss) ($1,539,642)

Subsidy Calculations Operating Loss $1,539,642 Economic Return @ 5% $97,369

Required Subsidy $1,637,012

Subsidy per Departure $878.87 Subsidy per Passenger $271.61 Avg. Enplanements per Operational Day 9.7 

### HOT SPRINGS, ARKANSAS SEAPORT AIRLINES, INC.

18 Weekly Segments: Hot Springs - Memphis 18 Weekly Segments: Hot Springs - El Dorado (continue to DAL)Docket DOT-OST-1997-2935 May 16, 2013 Page | 17