BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. JACKSON, TENNESSEE DOCKET OST

Transcription

1 BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Essen8al Air Service at: JACKSON, TENNESSEE DOCKET OST Under 49 U.S.C et seq. SOUTHERN AIRWAYS EXPRESS PROPOSAL TO PROVIDE SUBSIDIZED ESSENTIAL AIR SERVICE By Order , the Department requested proposals from carriers interested in providing EssenAal Air Service to Jackson, Tennessee. Pursuant to that Order, Southern Airways Express, LLC ( Southern ) cordially submits this proposal. Correspondence with regard to this document should be addressed to: R. Stanley LiTle Chief ExecuAve Officer Southern Airways Express 2525 Caffey Street Hernando, Mississippi Telephone: s.litle@iflysouthern.com

2 Southern Airways Express hereby offers a proposal to provide service to Jackson, Tennessee. Our proposal is for a period of two years. Southern proposes to operate reliable, low-fare service using 9-passenger turboprop Cessna Caravan aircra_. Southern s management believes that this model is well-suited to serve the market with properly-amed schedules and the ability to provide high levels of sustained reliability, a significant problem this and other EAS communiaes have suffered in the past. In the preceding six month period that Southern has provided service to eight EssenAal Air Service communiaes in the mid-atlanac region, controlled compleaon rates have approached 98% system-wide, with many communiaes experiencing 100% compleaon in any given month. Southern has adopted a flexible, community-focused approach to its proposals that not only provides low-fare service to important regional hubs, but is accompanied by flight schedules that have been tailored to provide maximum convenience and connecavity. It is criacal to successful enplanements that ciaes have full Ame-ofday coverage, with an early departure and a late return to accommodate same-day business travelers. All of our proposals include this coverage, meaning each city will have two crews per day operaang their flights. This proposal has been designed to ensure conanued high levels of service reliability. Southern has built a reputaaon for consistent reliability and high levels of customer service. This has been achieved by working to ensure full levels of flight crew staffing, realisac aircra_ schedules, and retaining mulaple full-ame operaaonal spare aircra_ MARKETING & DISTRIBUTION Flights will be displayed in the major travel agent systems: SABRE AMADEUS WORLDSPAN GALILEO TRAVELPORT APOLLO TRAVELSKY/CHINA (Coming in 2017) And on the major online travel agencies websites: Expedia Travelocity Orbitz Kayak Priceline CheapRckets Plus, on the company s web site. Here, Southern has invested considerable capital in an industry-leading technology that facilitates connecaons between the company and all other carriers which publish their schedules in OAG and their fares in ATPCO, including the Low Cost Carriers that have become an Important element in the US airline industry. Even where interline agreements

3 are not available, such as with Southwest and Allegiant, this technology (debuang January 3, 2017) will assist passengers in making connecaons to/from Southern and desanaaons world-wide. Uniquely in the industry, Southern has full-ame, dedicated EAS markeang professionals who maintain a physical presence in each service community. Including weekly markeang calls and bi-weekly visits with airport officials, Southern execuaves are engaged with the airports in every aspect of the operaaon. We adapt to local needs and include extra, non-subsidized service when occasions permit (sports-related flights, special event flights, etc.) Southern prides itself on the relaaonships that it has built with its service ciaes. SERVICE PROPOSAL While specific flight Ames will be completed in coordinaaon with the community, Southern s service proposal provides for an early morning (5:45am 6:15am) departure allowing for early morning hub connecaons, and arriving back to the hometown as late as 10:00pm, similarly allowing for later evening inbound connecaons. Southern believes that the value of such schedule flexibility more than offsets the incremental staffing costs required, and will be a meaningful contributor to growing passenger enplanements. Local fares would be set for effecaveness of add-on prices to flights to/from each respecave hub, generally in the $39 to $59 range each way, with an average fare in the $42 to $47 range. Southern has moved to an all-caravan fleet, each of which has a cargo capacity sufficient to carry two checked bags for each of the nine passengers, plus golf clubs and other parcels. The Caravan is the only nine-passenger aircra_ in the industry that can make this guarantee. Non-stop U.S. service from Nashville Non-stop worldwide service from Atlanta

4 COMPANY HISTORY AND CULTURE Southern Airways was born out of necessity. When Delta Air Lines de-hubbed Memphis, a vacuum in air travel was created in the Mid-South. Most of the popular non-stop desanaaons that residents of the metro area had enjoyed for years were no longer offered. In 2013 Southern took flight and became the preferred method of travel not just for the masses commuang to the Florida Gulf Coast, but also for some of the area s most affluent business travelers. Providing affordable, high-touch, first class, charter-style service to passengers that had given-up on short haul air travel (and instead turned to the automobile) became the model upon which Southern built its reputaaon. In short, Southern Airways has a proven track record of puong people on airplanes In early 2016, Southern Airways acquired Sun Air Express in a transacaon that created greater resources for the combined company. Sun Air had developed a network of communiaes in the Mid-AtlanAc region within the EssenAal Air Service program. Combining the companies immediately led to unparalleled synergies. The resources and improved aircra_ of Southern, along with the operaaonal leadership of Sun, created an air service provider that is successful at operaang both EssenAal Air Service routes as well as tradiaonal market-based flights between high-density areas and popular desanaaons. Southern brings a leadership mindset that is focused on business development, relaaonship-building, community involvement, and passenger saasfacaon to a Sun Air product that has a strong and well-established infrastructure in the region. The operaaonal excellence of Sun and the customer-centric mindset and superior markeang ability of Southern has created a dynamic new company that will be the model for EssenAal Air Service providers in the future. Unique among EAS bidders in this region, Southern Airways does not focus exclusively on subsidized flying it is but one part of our overall airline business model. In the last sixty days, we ve announced to much fanfare new routes connecang PiTsburgh and Harrisburg (for the first non-stop service in eight years) and between Memphis and Nashville (for the first non-stops in over three years). Under this proposal, Jackson passengers will be able to connect to legacy carrier service at the world s busiest airport, Atlanta Hartsfield-Jackson InternaAonal Airport, or to flights from Southwest s premier Southeastern hub, Nashville InternaAonal Airport. With either of these choices, Jackson passengers will also receive unsubsidized service to Ultra Low Cost Carriers Allegiant and FronAer at Memphis InternaAonal Airport and seasonal, weekend service to DesAn ExecuAve Airport, Southern s exclusive Gulf Coast hub. Gulf Route Map Mid-Atlan0c Route Map JAMESTOWN/ CHATAUQUA BRADFORD SCRANTON/ WILKES-BARRE NEW HAVEN DALLAS/ FT. WORTH HARRISON HOT SPRINGS EL DORADO MEMPHIS JACKSON JACKSON NASHVILLE DESTIN KNOXVILLE ATLANTA Opera'ng or for sale Oct 2016 Expansion route 2017 PITTSBURGH MORGANTOWN FRANKLIN/ OIL CITY LATROBE DUBOIS June July August JOHNSTOWN ALTOONA HAGERSTOWN HARRISBURG LANCASTER WASHINGTON- DULLES TRENTON BALTIMORE/ WASHINGTON INT L SALISBURY/ OCEAN CITY ATLANTIC CITY

5 The moto of Southern Airways is Every Passenger, Every Flight, Every Day. That focus on the passenger experience can be seen through the countless tesamonials that passengers post onto our social media accounts. With over 20,000 Facebook followers in the Mid-South alone, Southern has leveraged its innovaave social media presence to create a dialogue with passengers. That dialogue has led to the highest levels of customer saasfacaon and enthusiasm. In addiaon to ualizing social media sites like Facebook, Instagram, YouTube, and Pinterest, Southern is also a big proponent of tradiaonal markeang and adverasing. From custom, professionally- produced radio jingles to a naaonal-broadcast quality television commercial, Southern is commited to community markeang on all levels. Links to Southern s Social Media Sites are listed below ABOUT SOUTHERN AIRWAYS EXPRESS Southern Airways Express is a Memphis (Southaven, Mississippi)-based commuter air carrier serving markets in Pennsylvania, Virginia, Maryland, West Virginia, New York, Tennessee, Georgia, Mississippi, Arkansas, and Florida. The airline has operated charters and scheduled service within a 14-state footprint for a number of years. The company is now the combined product of the original Southern Airways Express and the former Sun Air InternaAonal, having combined operaaons earlier this year. Since that Ame, Southern has focused on improving operaaons, upgrading technology, converang to an all-turbine fleet, and expanding the community-centric and high-touch personal service that has been the backbone of the company since its founding. OperaAonal improvements at the airline have been significant. For the Year to Date period, Southern (including the former Sun) is operaang almost a 98% controllable compleaon factor (percentage of scheduled flights that are completed, excluding weather). W e F l y To M a k e Yo u r D a y

6 New Codeshare and Interline Agreement In late 2016, Southern Airways entered into a binding LeTer of Intent to acquire Puerto Rico-based Seaborne Airlines and to begin a new codeshare agreement with the airline. Under this agreement, all Southern flights that connect at a hub airport will also be marketed online as Seaborne flights. Seaborne currently has codeshare agreements with Delta, American, and Jet Blue. It has interline Acket and baggage agreements with United. In the American aviaaon industry, there are many air carriers flying small to mid-size aircra_. Southern Airways differenaates itself through its conanuing commitment to diversify its distribuaon plauorm and further enhance the customer experience. CONCLUSION In conclusion, Southern Airways Express believes that its proposal will provide an unsurpassed level of service to the city of Jackson and ensures that it has proper access to the naaonal air transportaaon network, offering cost-effecave opaons that meet the requirements of the EssenAal Air Service Program. Respecuully SubmiTed: December 15, 2016 R. Stanley LiTle Chief ExecuAve Officer Southern Airways Express, LLC

7 JACKSON (MKL): OpAon A 18 Weekly Round-trips to BNA 8 Weekly Round-trips to MEM (unsubsidized) 1 Weekly Seasonal Round-trip to DSI (unsubsidized)* Representa8ve Schedule DEPARTURES FROM MKL 6:00am to BNA 10:05am to MEM 12:25pm to BNA 15:15pm to MEM 17:30pm to BNA Opera8ng Revenues MKL-BNA $322, $336,570 Opera8ng Expenses (BNA Only) Flying OperaAons $633,251 Fuel and Into Plane $471,510 Maintenance $375,180 Aircra_ $342,000 Indirect $395, TOTAL OPERATING EXPENSES $2,217,256 OperaAng Loss $1,880,686 Profit Element (5%) $ 110,862 COMPENSATION REQUIRED $1,991,548 ARRIVALS TO MKL COMPENSATION PER PAX COMPENSATION PER DEPARTURE $ 162 (all) $1080 (BNA) 9:45am from BNA 12:05pm from MEM 14:55pm from BNA 17:05pm from MEM 21:30 pm from BNA *Includes non-subsidized service Annual Seats 23,971 (BNA+MEM) Annual Passengers Load Factor Departures Block Hours 11,580 (BNA+MEM) 52% BNA 40% MEM 1,844 (BNA) 2,028 (BNA) Average Fare $39 (BNA) CompleAon Factor *DesAn flights not included in the above calculaaons 98.5% (BNA)

8 JACKSON (MKL): OpAon B 18 Weekly Round-trips to ATL 8 Weekly Round-trips to MEM (unsubsidized) 1 Weekly Seasonal Round-trip to DSI (unsubsidized)* Representa8ve Schedule DEPARTURES FROM MKL 5:05am to ATL 9:55am to MEM 12:05pm to ATL 16:55pm to MEM 18:55pm to ATL Opera8ng Revenues MKL-ATL $528, $528,563 Opera8ng Expenses (BNA Only) Flying OperaAons $849,876 Fuel and Into Plane $825,142 Maintenance $656,565 Aircra_ $342,000 Indirect $494, TOTAL OPERATING EXPENSES $3,167,726 OperaAng Loss $2,639,163 Profit Element (5%) $ 158,386 COMPENSATION REQUIRED $2,797,549 ARRIVALS TO MKL COMPENSATION PER PAX COMPENSATION PER DEPARTURE $ 198 (all) $1517 (ATL) 9:35am from ATL 11:45am from MEM 16:35pm from ATL 18:35pm from MEM 23:25 pm from ATL *Includes non-subsidized service Annual Seats 23,971 (ATL+MEM) Annual Passengers Load Factor Departures Block Hours 14,105 (ATL+MEM) 65% ATL 45% MEM 1,844 (ATL) 3,503 (ATL) Average Fare $49 (ATL) CompleAon Factor *DesAn flights not included in the above calculaaons 98.5% (ATL)