Before the United States Department of Transportation

November 24, 2014

Proposal to Provide Essential Air Service at

JACKSON, TENNESSEE

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

Docket OST-2000-7857

Proposal of SeaPort Airlines, Inc. to Provide 

Essential Air Service at Jackson, Tennessee

By Order 2014-10-21, the U.S. Department of Transportation (“the Department”) requested 

proposals from carriers interested in providing Essential Air Service (“EAS”) at Jackson, Tennessee 

(“Jackson”) no later than November 24, 2014. SeaPort Airlines, Inc. (“SeaPort”) respectfully submits 

this timely proposal to provide subsidized essential air service at Jackson as follows:

• Nashville, TN: 12 weekly roundtrips to Nashville International Airport

• Memphis, TN: 6 weekly roundtrips to Memphis International Airport

This proposal requests annual subsidy of $1,584,275 and is submitted on the assumption of 

award of a two year contract. At the discretion of the Department and the community, however, 

SeaPort would would agree a four year contract with annual subsidies equal to those requested for a 

two year contract.

After this proposal is docketed, SeaPort Airlines will schedule a meeting with the community to 

explain our proposal in detail and answer any questions. In the interim and throughout the carrier 

selection process, 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.com
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November 24, 2014 Page | 2

Discussion of Proposal 

Company Introduction

SeaPort Airlines, Inc. is a FAA certified scheduled airline based in Portland, Oregon with over 30

years of experience in commercial aviation. In addition to Portland, the company has operational 

bases at Memphis, Tennessee (MEM); San Diego, California (SAN); and Juneau, Alaska (JNU).

SeaPort’s team of over 300 aviation professionals operate an average of 150 daily flights to 23 cities 

across nine states. Begininning January 12, 2015, SeaPort will add Muscle Shoals, Alabama and 

Greenville, Mississippi to its route system, and anticipates being awarded the EAS contract at 

Visalia, California shortly. 

The primary focus of SeaPort is to provide affordable and reliable air service to rural communities

across America. Including contracts awarded but not yet started and contracts expected to be 

awarded, service to 12 of the communities on our route map is/will be provided under the EAS 

program: Muscle Shoals, Alabama; Pendleton, Oregon; El Dorado, Hot Springs, and Harrison, 

Arkansas; Tupleo and Greenville, Mississippi; Salina and Great Bend, Kansas; Jackson, Tennessee; 

and Visalia and Imperial/El Centro, California.

SeaPort Airlines History at Jackson

SeaPort Airlines initiated service to McKeller-Sipes Regional Airport on January 22, 2012, 

replacing Pacific Wings dba Tennessee Skies. During that carrier’s tenure at Jackson, 

enplanements deteriorated and subsidy levels climbed well above the statutory limit of $200 per 

passenger. While enplanements have grown during the time SeaPort’s tenure at Jackson, it has 

not been without challenges. 

 First, refusal by TSA to reinstate passenger screening at Jackson or perform reverse 

screening arriving in Nashville from Jackson requires that we deplane at the non-sterile 

FBO ramp and shuttle passengers to the main terminal. This has required customers to 

allow longer connecting times at Nashville and, as a result, suppressed traffic.1

 Second, when SeaPort initiated service to Jackson in January 2012, Delta operated an 

average 131 daily departures from Memphis. In January 2015, Delta’s daily departures 

number will be down to 43 per day. This eroded the value of Memphis International 

Airport as a connecting hub over much of the time that SeaPort was attempting to 

rebuild traffic at Jackson. That said, in recent months other airlines have added service 

to Memphis creating a more vibrant competitive environment that has resulted in lower 

fares. To illustrate, during 2Q 2014 fares at Memphis International Airport declined an 

average 4.2% compared to one year earlier, whereas at the other top 100 airports in the 

U.S. fares increased 2.5% on average.2 As the Memphis International Airport moves 

 1 The lack of TSA at Jackson and resultant non-sterile arrival procedures is a challenge that would exist for any carrier providing 

service to any hub from McKeller-Sipes Regional Airport. 

We note that flights departing Nashville to Jackson, do so from the main terminal having been able to obtain facilities despite claims 

of Pacific Wings it been “unable to procure counter of gate space at [Nashville InternationalAirport] on reasonable terms.” This was 

undertaken so as to minimize connecting times for passengers inbound to Jackson and attempt rebuild traffic levels.

2 Department of Transportation, Bureau of Transportation Statistics.
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November 24, 2014 Page | 3

ahead with announced initiatives to recruit additional service, further declines in fares 

and restoration of nonstop service to larger markets will improve connecting 

opportunities.

 Finally, the past two winters in the Southeast US have been unusually harsh, causing 

multiple extended periods of schedule disruptions which negatively impacted operational

reliability and hurt efforts to rebuild customer confidence in the air service available at 

McKeller-Sipes Regional Airport. SeaPort acknowledges that this challenge was 

compounded by the mechanical reliability of some older aircraft in its fleet, a problem 

which is being addressed by the acquisition of factory-new airplanes as discussed

below.

While we have faced these challenges, SeaPort has made progress toward Jackson achieving 

the statutory requirements needed to secure its participation in the EAS program: Maximum 

subsidy of $200 per passenger and enplanements averaging 10 per operating day. We traveled 

to Washington, DC with the airport manager and other community leaders to discuss with DOT 

staff, as well as provided a letter of support for the community’s waiver from the 10 enplanement

per day rule that the Department subsequently granted on September 26, 2014.3

That being said, we recognize additional work needs to be done and if selected for a new EAS 

term at Jackson, SeaPort will implement more aggressive strategies as outlined in the 

remainder of this proposal. We also recognize that achieving this goal will require SeaPort to 

nuture a stronger level of partnership with the Jackson community than we have in the past.

Aircraft

SeaPort Airlines is proposing to continue providing EAS at Jackson using Cessna Caravans that 

allow for safe, comfortable, and affordable service. That said, there will be a significant 

improvement in aircraft as a result of SeaPort taking delivery of three brand-new Cessna 

Caravans direct from the manufacturer. SeaPort has accepted two of the aircraft and one more 

will delivered be before the close of 2014. All three aircraft will be based at Memphis 

International Airport and, if SeaPort is reselected, routed through Jackson on a regular basis.

 3 Order 2014-9-21
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November 24, 2014 Page | 4

These new aircraft, one of which SeaPort displayed to the public at McKeller-Sipes Regional 

Airport on November 21st, will result higher schedule completion rates needed to restore 

ridership.

Each of the new Caravans are equipped with the state-of-the-art, all-glass Garmin G1000 

avionics suite which includes Synthetic Vision Technology (SVT) to provide flight crews with

topographical displays of terrain, visualization of other air traffic, and improved situational 

awareness. Real-time data and trend monitoring of aircraft systems and the engine can be 

transmitted to SeaPort’s maintenance personnel so that pre-emptive maintenance work can 

reduce flight delays and cancellations attributable to mechanical issues. The Garmin G1000

suite includes an advanced autopilot system that can perform virtually all pilot actions from 

climb-out through final descent, reducing pilot workload through precise vertical and horizontal 

guidance and benefit our customers through higher flight completion rates and enhanced levels 

of both safety and comfort.

Each of the new airplanes are being delivered with TKS anti-ice/de-ice systems that exude

glycol-based fluid through laser drilled holes on the leading edge of the wing and other critical 

surfaces. This system prevents precipitation from adhering the aircraft, enhancing both safety 

and operational reliability even during weather conditions as such as experienced in the 

Southeast U.S. over the past two winters.

Proposed Service Pattern & Flight Schedules

SeaPort proposes to continue providing service at Jackson with flights to both Nashville and 

Memphis, TN. Illustrative schedules for February 2014 are provided below:

Illustrative Schedules for Jackson, TN

It is important to note that in preparing this proposal, SeaPort evaluated the potential for service to 

different hubs and/or increasing the number of frequencies to Nashville. We concluded that a 

change might result in Jackson generating an average of 10 enplanements per day. The challenge 

with this approach, however, is that service to more distant hubs considered would require subsidy 

levels over the long-term virtually guaranteed to exceed the statutory limit of $200 per passenger.4

Our proposal to maintain service to Nashville and Memphis, allows us to build upon the customer 

base cultivated over the past three years. Service to another hub would discard this traffic base and 

increase the risk that Jackson not achieve the statutory requirements for continued EAS eligibility

within a reasonable. Building on the current base will be undertaken through the use of aggressive 

pricing and marketing strategies, both of which are outlined below.

 4 Hubs considered were St. Louis, Kansas City, and Atlanta, and cost of doing business at each airport (including initial deposits, as 

well as limited-time fee waivers and marketing support for new service).

Flight Leave Arrive Stops Frequency Flight Leave Arrive Stops Frequency

TO: MEMPHIS, TN FROM: MEMPHIS, TN

2621 9:05am 9:45am 0 ExSat 2612 4:30pm 5:10pm 0 ExSat

TO: NASHVILLE, TN FROM: NASHVILLE, TN

2610 8:25am 9:30am 0 ExSun 2621 7:45am 8:50am 0 ExSun

2612 5:25pm 5:30pm 0 ExSat 2623 5:55pm 7:00pm 0 ExSat
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Fares & Pricing

If reselected, SeaPort Airlines would commit to a $39 fare on every seat on every flight for at least 

six months. This would be supported by aggressive marketing and sales activities outlined below, 

and intended to have customers experience the new aircraft, our new location at the main terminal in 

Memphis and improvements to Nashville facilities, both of which will allow for more convenient 

connections.

At the end of six months, we propose to evaluate the response of the market to service 

improvements. If necessary, $39 fares could continue for a longer period. If themarket responds as 

anticipated, Jackson would migrate to the fare structure used by SeaPort in its other markets. This 

would result in price points ranging from $39 to $69 each way, including all taxes and fees. The fare 

rules for each price are as follows:

 Our “FULL Flex” ($69) fare is best-suited for business travelers and provides total flexibility 

to change travel plans or, if travel plans get cancelled, obtain a full refund without incurring a

service charge. Customers using this fare also are permitted a two checked bags and one 

carry-on bag at no charge and access to the “express” security checkpoint at Nashville and 

Memphis.

 Our “NO Flex” fare ($39) is intended for customers with very firm travel plans. This fare

requires an advance purchase of at least seven days prior to departure and does not permit 

any changes to itineraries or refunds after tickets are issued. This fare is only online. 

Customers ticketed on NO Flex fares are permitted one-checked and one carry-on bag.

 “Flex 4 FEE” ($59) fares are non-refundable, but provide customers the opportunity to 

change their flight plans for a $50 service charge. Customers may purchase this fare online, 

over the phone, or at any SeaPort airport counter, and are permitted one checked and one 

carry-on bag.

This fare structure does not limit the number of seats available at each price point. As such, 

customer largely controls how much they pay based on 1) perceived need for flexibility to change 

reservations or obtain a refund, 2) how far in advance tickets are purchased, and 3) value placed on 

extras such as greater baggage allowance and faster trips through security screening checkpoints.

We believe this approach to pricing will help reinvigorate traffic at McKeller-Sipes Regional Airport, 

but also collect sufficient revenue from actual users of the EAS service that so that within a 

reasonable time free an average of more than 10 enplanements per day is achieved at a subsidy per 

passenger below the $200 limit.

Sales & Marketing

SeaPort Airlines recognizes that low-fares and new airplanes will not be enough to maintain service 

at Jackson over the long term. To that end, our proposal to continue EAS at Jackson includes at 

least $50,000 per year in advertising and promotional activities. 

Advertising

Advertising would focus on radio, print, online, and outdoor (i.e, roadside signs and stadium boards) 

around the Jackson market. On a limited basis, we would purchase commercials during local 

television news broadcasts. Sponsorship of the Jackson Generals baseball team would be restored, 

but we plan to also seek to increase our visibility among demographic groups having a higher 

propensity for air travel, including charity events and sponsorship of the arts. 
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This plan is preliminary in nature and would not be implemented without input from the airport 

authority, Chamber of Commerce, and other economic and community development organzations. 

This will be the first step toward rebuilding our partnership with Jackson and working together on 

maintaining the community’s EAS elibility.

Sales & Community Relations

Advertising will be supported by aggressive and sustained sales activities focused on Jackson-area 

companies and organizations. The sales message would include explanation the value proposition 

of flying compared to driving, connectivity possibilities, service enhancements, and (probably most 

importantly) the importance of local busineses to support local air service. 

A key component of this sales effort are new products that SeaPort is rolling out over the next six 

months such as Commuter Cards and student stand-by fares. For example, SeaPort’s new

reservation platform will facilitate the capture of more corporate travel at McKeller-Sipes Regional 

Airport through the use of negotiated fares. This fare program would allow companies to realize 

progressive savings based on level of activity and/or share of their air travel budget committed to the 

local air service.

As with advertising, SeaPort would establish a sales and community relations calendar of events, as 

well prioritize sales targets with the input and participation of Jackson community leadership. Equally 

as important, costs of sales activities (i.e., printing, travel, etc.) are not included in the $50,000 

advertising budget.

Interline Connectivity & GDS Display

SeaPort Airlines tickets may be purchased by calling our toll-free reservation number, online at 

www.SeaPortAirlines.com, travel agents, or any major online travel agencies and meta-searchers 

such as Orbitz, Travelocity, Expedia, Kayak, Hipmunk, and CheapoAir. 

On March 23, 2014, SeaPort became the first US airline to be completely hosted by the Amadeus 

Altéa reservation platform. This system is one the top three distribution systems in the world and is 

the same reservation system for such leading airlines as Air France/KLM, Qantas, Emirates, Korean 

Airlines, and others. Southwest Airlines has announced that it too will be fully hosted by Amadeus, in 

2015, when domestic markets are joined with international markets that were deployed on Altea in 

January 2014. 

With this new system, SeaPort has unsurpassed capability compared to other regional airlines with 

respect to interline ticketing, offering optional services, through baggage check-in, Inter-Airline Thru 

Check-In (IATCI), SMS notifications to customers of schedule changes and flight irregularities, the 

ability for customers to make online changes to reservations, and (eventually) online check-in.

Most importantly, however, Altéa enabled SeaPort Airlines to implement its first bilateral interline eticketing and baggage agreement.5

 That agreement with Alaska Airlines was activated on March 24, 

2014, the day after the reservation migration was completed. A second agreement with Hawaiian 

Airlines will become active on or about December 1, 2014. The company has initiated discussions

with multiple airlines about potential incremental revenue from connecting SeaPort customers to 

build a business cases for interline agreements similar to Alaska Airlines and Hawaiian Airlines. 

 5 Bilateral agreements allow both participating carriers to make reservations and issue tickets on each other’s flights. A unilateral 

agreement only allows one carrier to sell and issue tickets.
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In addition to the new reservation platform, in 2014 SeaPort began offering rental cars and hotels on 

its own website. This capability will be enhanced by mid-2015 with a dynamic booking process for 

business trips and vacations that will allow customers to book flights (including those of interline 

partners), rental car, and hotel in a single transaction and all from a single screen.
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Subsidy Request Calculations

In December 2011, the Department selected SeaPort to provide subsidized EAS at Jackson for 

a one year period with an annual subsidy of of $1,149,703. Based on SeaPort’s original 

proposal, the Department subsequently extended that service period through January 31, 2014 

at an annual subsidy of $1,115,210. That service obligation was further extended, at the same 

rate, through September 30, 2014 while the Department considered a waiver from the continued 

EAS eligibility requirements contained in the Federal Aviation Administration (FAA) 

Modernization and Reform Act of 2012 (Public Law No: 1112-95). This waiver was granted on 

September 24, 2014. 

On September 30, 2014, SeaPort requested an increase in annual subsidy to $1,687,696 due to 

multiple factors, including costs at Nashville International and increased training costs due to the 

national pilot shortage.

Our proposal herein requests an annual subsidy of $1,584,275. This slight reduction from the 

earlier requested increase is due to greater operating efficiencies at Nashville to be realized as 

a result o new service to Tupelo and Muscle Shoals. Additionally, the brand-new Cessna 

Caravans being added to SeaPort’s fleet will have lower maintenance costs and provide a slight 

increase in fuel efficiency. The table on the next page details and supports the requested level 

of subsidy.

As noted on the cover page, this proposal is being submitted for a two-year contract. If desired 

by the community and approved by the Department, SeaPort Airlines would agree to a four-year 

contract at the same level of annual subsidy.

Respectfully submitted,

Timothy Sieber

Executive Vice President

SeaPort Airlines, Inc.

November 24, 2014
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Operating Projections

Average Sector Length (sm) 111

Scheduled Departures 1,872

Scheduled Block Hours 1,768.0

Projected Completion Factor 99.0%

Projected Completed Departures 1,853

Projected Completed Block Hours 1,750.3

Passenger Projections

Projected Passengers 5,061

Passengers per Departure 2.7

Projected Average Fare $48.16

Revenue Passenger Miles (RPMs) 561,771

Available Seat Miles (ASMs) 1,851,427

Projected Load Factor 30.3%

Financial Projections

Revenues

Passenger Ticket Revenues $243,723

Ancillary Revenues $4,874

Total $248,597

Expenses

Flight Operations $171,531

Aircraft Ownership/Lease $300,000

Fuel & Oil $401,698

Sales & Marketing $50,000

Traffic Servicing $289,434

Insurance $29,755

Maintenance $288,803

Sub-Total - Direct $1,531,222

Indirect $214,371

Total Expenses $1,745,593

Projected Operating Profit/(Loss) ($1,496,996)

Subsidy Calculations

Operating Loss $1,496,996

Economic Return @ 5% $87,280

Required Subsidy $1,584,275

Subsidy per Departure $854.85

Subsidy per Passenger $313.04

OST-2000-7857

SeaPort Airlines, Inc.

12 Weekly Roundtrips: Jackson - Nashville

6 Weekly Roundtrips: Tupelo - Memphis