ALASKA JUNEAU AERONAUTICS, INC. DBA SEAPORT AIRLINES. PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT Ironwood, MI/ Ashland, WI Manistee/Ludington, MI

Transcription

1 SEAiPDRT '" AIRLINES ijujartment OF. i,1'.f\isportation ~::<ET OPERATIONS );:F'J ii'" r I') 1 A!Q: 51'... ~... t.. f "1 Essential Air Service at Ironwood, MI/Ashland, WI Manistee/Ludington, MI Docket OST.,qqlp-, ~to Ip Docket OST under 49 U.S.c et seq. ALASKA JUNEAU AERONAUTICS, INC. DBA SEAPORT AIRLINES PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT Ironwood, MI/ Ashland, WI Manistee/Ludington, MI DOCKET OST.,,,.. to- 1.z.1o~ OST Juneau Aeronautics, Inc. d/b/a SeaPort Airlines 7505 NE Airport Way, Portland, OR October 25,

2 Company Overview SeaPort Airlines is a dba of Alaska Juneau Aeronautics, an FAA certified scheduled air service provider with 27 years experience in commercial aviation. Our company's foundation is built on efficient and reliable service to rural communities. Both SeaPort Airlines and our sister company Wings of Alaska currently operate routes under the Essential Air Service program, as well as un-subsidized operations on established competitive routes. Wings of Alaska is the premier airline serving Southeast Alaska. Providing scheduled passenger service, fast freight and charter service between Juneau and Skagway, Haines, Hoonah, Gustavus, and weekly flights to Excursion Inlet. Wings of Alaska grew in reputation and size, becoming one of the most successful regional air carriers in Alaska, now comprised of a fleet of seven planes from Cessna 206 and 207's to Cessna Grand Caravans. -+ ALASKA JUNEAU ~~S" ~~, SEAtPDRT,====AIRLINES

3 SEAiPDRT ~========AIRLINES IT'S ABOUT TIMI;: : SeaPort Airlines currently operates 30 daily scheduled flights in five Northwest cities and 32 daily scheduled flights in five Mid-South cities. Effective April 19 th, 2010 SeaPort Airlines began operating 8 daily flights in the Midwest. SeaPort Airlines EAS Speculative State Contractual 6 Routes 1 Route 2 Routes

4 Bringing Southeast Alaska Closer Together: Wings of Alaska currently operates 38 daily scheduled flights to six Southeast Alaska cities. EAS Speculative Wings of Alaska 1 Routes 5 Routes t' *E.,,~;',1'",,,',t *<;,...14,'.'", J:. /,~. WI

5 Our Aircraft SeaPort Airlines operates 7 Pilatus PC-12 aircraft. The PC-12 is a Swiss-built pressurized turboprop aircraft typically found in corporate aviation, but utilized by SeaPort Airlines in a nine seat commuter configuration. The world's best-selling turbine business aircraft, still in production today, the PC-12 can shuttle you with comfort and speed with each seat both a window and aisle. Pilatus, the world market leader in the manufacture of turboprop aircraft and the only Swiss company to develop, produce and sell aircraft and training systems allover the world. ~~7.. : ~PILATUSa:;:r

6 Our President Rob McKinney: Graduate of Purdue University -Aviation Technology, and holds MBA from Ellis College Trained and experienced as commercial pilot in jets and turbo props, but always strived for opportunities to manage business aspects of flight operations in each company he served. In September, 2007, enticed by original investors and founders of SeaPort Airlines to join as first employee, and tasked with establishing scheduled commuter airline service from Portland, OR to Seattle, WA. Currently, a partial owner and President for SeaPort's three bases of operation - Portland, OR, Memphis, TN, and Juneau, AK, and working to establish additional routes and expand schedules in each market. "Growing up in a small town, 1m passionate about connecting rural America - the fabric 01. t " oursocle yo

7 I;AS I-lislory Whereas many communities have been promised service that has never transpired, SeaPort delivers Essential Air Service to seven communities: Excursion Inlet, Alaska, Pendleton, Oregon, Jonesboro, Arkansas, EI Dorado, Arkansas, Hot Springs, Arkansas, Harrison, Arkansas, and Salina, Kansas. Additionally, SeaPort serves Newport, OR and Astoria, OR under a combined state and federal grant program. In every case, after award, we have started on time, on budget, and with fares either at or below that which we outlined in our bid, as compared to so many other airlines who place bids with unreasonable fares that are never realized by the traveling public.

8 Right-Sized for Ironwood and Manistee SeaPort proposes 2 direct round trips per day between Ironwood and Minneapolis, as well as 1 daily one stop round trip between Ironwood and either Milwaukee or Detroit. Additionally, we propose two daily round trips from Manistee to both Milwaukee and Detroit. This service would be six days per week. This service level will offer more than enough inventory to provide for the historical traffic of the last several years, while keeping capacity "right-sized" and avoiding an unnecessary flooding of empty seats and resulting higher operating costs, yet offering frequency and destination choice to spur additional traffic. Please see Exhibit "2" for details. SeaPort has constructed the schedule to maximize traffic flow with flights morning, midday and evening. SeaPort believes that traffic will increase in year two as the speed and convenience of our service become more familiar to the residents of these communities. In addition, a daily plane overnight in both Ironwood and Manistee adds reliability to the above schedule recommendation similar to the overnight success SeaPort experiences in our other EAS cities. We are therefore able to offer these communities the best possible fit with: Comfortable and fast pressurized Pilatus PC-12 aircraft Convenient schedules Affordable fares A reasonable and sustainable subsidy amount

9 Sea Pori's Proposed Plan SeaPort Airlines emphasizes customer service and convenience, and in so doing our platform is reminiscent of commercial air service of the past in that our passengers only need to arrive 20 minutes prior to departure from any of our terminals. In Minneapolis, Milwaukee, and Detroit, SeaPort would use the business aircraft center for an enhanced travel experience. From either terminal we will provide complimentary shuttle van service to and from the main terminal for those passengers needing to connect to, or returning from, more distant destinations. This model has proven itself well at our hub in Portland, OR, Memphis, TN, and Kansas City, MO and is no less convenient than a typical gate change-only with this one you get a complimentary shuttle ride. Further, a no-tsa model will offer the communities tremendous appeal for quick trips to and from the three hubs, or other potential major market connections to be served by SeaPort. Finally, a no-tsa model has the greatest potential to draw business and leisure traffic from the hubs that would otherwise travel by highway if a traditional TSA-restricted airline was the only flight option. Lastly, the $69 to $89 dollar fares in our proposal is an average fare. Travel to all three hubs will be as low as $49.00 one way. This fare is far less than the current operator.

10 No lines, never any wailing SeaPort Airlines is unique in that it proactively markets to travelers the ease and convenience of by-passing TSA security screening. Below are a few inherent cost saving benefits and customer benefits passed to you the airport when partnering with a carrier such as SeaPort Airlines: -Lower fares thanks to no gate fees -Increase reliability in arrival and departure times -Quicker turn times -Arrive just 20 minutes before departure, board, and go -No lines. No rubber gloves. No need to take your shoes off. -Complimentary shuttle service to and from the main terminal W~ J=OUND WI-IAT AIR TRAV~L LOST: ~AS~ AND CONV~NI~NC~

11 ~fficiency & Reach../ March 2010 full GDS connectivity (Sabre, Worldspan, Apollo, Galileo, and Amadeus) ""January 2011 full Online Travel Agency availability, (Expedia, Orbitz, Travelocity) ""Interline agreement with USAirways "" Reservations available online at SeaPortAirlines.com, toll-free at , or through local travel agents "" Low Fares thanks to low operating costs and efficient aircraft equipment "" High-frequency, non-stop daily service Customer focused bringing the convenience of a private plane to the average traveler for the same cost as commercial airlines.

12 Current Service Great Lakes Aviation is the current air service provider with flights from Ironwood, MI to Rhinelander, WI to Milwaukee, WI and from Manistee, MI to Milwaukee, WI. Non-refundable fares, depending on time of day range from $278 to $ per segment based on availability and time of booking for IWO-RHI-MKE and $ per segment for MBL-MKE. PRBITZ.~ What can the Ironwood/Manistee Airport Authority expect from SeaPort Airlines:./ Notification of any fare/schedule changes./ Community involvement through advertising/marketing./ A cohesive partnership focused on economic development and increased load factors QUick S...atrch I v~tion PiJc.k"g-e~ I Hotels ~ C... s & Raj( I Cruise'S I Activities I 'IJIlD......_... e MO nlojfj SO!i'1U1tC (tu.. fjtiiclust;lralh:l UttBEMAi!i. ~~l&'f o L... mmor My- _ -- ""-... S27. ~ :z.,.... t(jop& F_.. pwper&of!.il"l\.ls... ~~, o ==-~~-JI!'... ~-~...-..,... ~... L.O'Wes.t -pric:e ~p.. rture b..".. sn.ort... t fright.--.,..,i._ts!oortottnoo_./ Affordable fares ~ S377+S18_._-s:J95USD..,.."", N08{){JMhGf[[S./ A hassle-free travel experience for your,.,em Fri. Oct 22 Great Lakes Aviation 5298 ~10:%1em r~v community Q AmJe 10:.t7am '''i~troe!' W 1itop >"C-hangep4lM;l Tt'ne~'~ Cl'tf25rn.tlt 9 =,~~= Great LakM Aviati on 5281 ''''heli>~r '/1 "" t':jjw~..tee ON "<:' ~~e:. '1' Milwaukee Flights ::~ r.gttte. ~ MJlWauu. CO'ltlil'e ':"':e io'nk': ;:"3!'N 0"1 fright.,,(;ffl"7 rf~tri oo-i M1IWl1U.M Fflpl'1ts I::.,.,,1 1=::' I": :,,:1 '.'..;f.'1' 1 :"",,1' ",I:""::i-:'-: 1,,"'1 :::-"';:":1',..,:: ::':':"1 ':,' j:... :.'" ""'" : a 11RBITZ~=, H':'1f-Ftf TR':'t'G 1

13 I;AS Testimonial Pendlelon Regional Airporl Larry Dalrymple - Airport Manager: "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, that would eliminate the need for TSA security as well as mandatory ARFF standby, saving the Airport personnel costs in an already short budget. 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". 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."

14 I;:AS Testimonial Salina Municipal Airport Luci Larson - Former Mayor of the city of Salina Kansas & owner of Action Travel: The Department of Transportation (DOT) announced on the selection of SeaPort Airlines as Salina's new essential air service provider. Service to Salina from Kansas City will start as early as April 19 th with three daily roundtrip flights Sunday through Friday. "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 Salina partner." Says Luci Larson - former Mayor of the city of Salina and owner of Action Travel. The letter supports a few key deliverables that only SeaPort Airlines can support, such as: greater frequency, a 9-seat "right sized" aircraft, affordable fares, military/government fares, and an active community marketing plan. "I applaud their entrepreneurship and look forward to our working relationship. Their presence here in the Midwest is a win-win situation for all of us. The "door-to-door" service they will provide will be truly appreciated by all passengers. Want to travel like rock star? Fly SeaPort Airlines!" Says former Mayor Larson.

15 Customer I=eedback Ruth Ann Smith - Hot Springs to Memphis: "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!" Catherine Martin - Memphis to Harrison: "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!" Barbara Covell - Portland to Newport: "This is a class operation, very professional and the staff provide the kind of customer service that most people can only dream about. I have flown several times in order to avoid the LONG car trip from the Oregon central coast to Portland airport. Today my husband had to get to the emergency room at Portland VA Medical Center. The staff and crew actually held the flight in Newport while we made haste to get there. If that wasn't enough, they had a taxi waiting when he arrived at Portland airport. Many, many thanks!"

16 () o 3 3 c: ::::J -- ~ - ::::J ~ - ~ 3 td ::::J,...

17 Recent News For a list of SeaPort news articles visit Economy doesn't ground airline start-ups (click here) :: 11/16/2009 They're just realistic about the history of this industry and the likelihood (a) new start-up will not survive/' says Craford, who helped launch SeaPort in... Scheduled air service returns to Region 8 (click here) KAIT TV:: 10/26/2009 SeaPort Airlines will link Memphis and four Arkansas cities» The... (click here) Gloria Levston of Signature Flight Support adds fuel to a SeaPort Airlines Pilatus PC12 plane at the SeaPort facility at Memphis International Airport The...

18 Recent SeaPort News ~ t " \,,:,'. 'This is a great day for EI Dorado' SeaPort Airlines welcomed as new air service provider By: John Worthen Published: 10/28/2009 Approximately 50 people gathered Tuesday morning at the South Arkansas Regional Airport terminal to celebrate the return of air service to EI Dorado. Representatives from SeaPort Airlines, who arrived on a flight from Memphis International Airport to commemorate the occasion, were greeted with cheers and smiles by community members and local officials. The Portland, Ore.-based company will offer round-trip flights between EI Dorado and Memphis on the Swiss-built Pilat us PC-12, a pressurized turbo-prop airplane. Departure times from the SARA are 4:10 a.m., 11:20 a.m., and 8:20 p.m., according to SeaPort's website. SeaPort will also operate round-trip flights to Memphis from Harrison, Hot Springs and Jonesboro. These communities, along with EI Dorado, have been without regular service since 2008, when Air Midwest, a subsidiary of Mesa Airlines, pulled out of the markets. SeaPort beat out several companies that submitted proposals to the Department of Transportation and signed a two-year contract to provide the service for a $6,047,789 federal subsidy. The Essential Air Services program subsidizes airlines to provide service that wouldn't be profitable on the open market. SeaPort officially opened Monday in EI Dorado with a 4:30 a.m. flight from SARA to Memphis International. At the ceremony Tuesday, local officials touted SeaPort as a quality airline that will help EI Dorado's economic engine hum. Jeff Teague, chairman of the EI Dorado Airport Commission, called the day a "bright one," despite cloudy, mist-filled skies that had the SARA socked in. Getting this airline "has been an arduous task, but we got the best service we could have," Teague said. "Transportation is the key issue in economic development, and not having air service in EI Dorado for the past year or so has really not been a good thing. And now, with all that's going on in EI Dorado, with the conference center and the new high school, (Sea-Port's arrival) is just the icing on the cake." Kent Craford, chief executive officer of SeaPort, called Tuesday "an exciting day for us at SeaPort. We feel that our small nine-passenger airplane is a perfect fit for EI Dorado's air service needs. And the fact that we will be offering three trips a day allows for better connection service and same day travel opportunities to Memphis and beyond. We are your hometown airline." EI Dorado Mayor Mike Dumas spoke highly of SeaPort officials and said he looks forward to working with them throughout their tenure here. "This is a great day for EI Dorado," Dumas said. "We have been working on this for more than a year, and it's great to finally have air service back in EI Dorado. We welcome you, SeaPort, and we thank you for your service." More information and reservation information is available by logging on to the SeaPort Web site at

19 SeaPort welcomes this opportunity to be chosen to provide essential air service at Ironwood/ Manistee for the next two year period. We bring a fresh approach, and believe we have presented a proposal that will meet the EAS needs of the communities at reasonable subsidy levels. Thank you for your consideration. Respectfully submitted,

20 Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST / OST Annual Subsidy Requirement May April 2012 Exhibit 1A Year 1 Ironwood Ironwood Manistee Manistee Total IWD-MBl IWD-MSP MBl-MKE MBl-DTW Revenue: Passenger: Forecasted Passengers 1,500 2,500 4,500 4,500 Average Revenue I Pax: 13,000 Current: May April 2012 $ $ $ $ Revenue I Pax Change 0.00% 0.00% 0.00% 0.00% Average Revenue I Pax $ $ $ $ Passenger Revenue $ 103,500 $ 222,500 $ 355,500 $ 400,500 Other Revenue: $ 1,082,000 Ratio to Passenger Revenue 1.00% 1.00% 1.00% 1.00% Other Revenue $ 1,035 $ 2,225 $ 3,555 $ 4,005 Total Revenue $ 104,535 $ 224,725 $ 359,055 $ 404,505 $ 10,820 $ 1,092,820 Ol2erating EXl2enses Completed Block Hours , , Direct Flight Crews 50,397 88,662 74,662 93,328 Fuel 196, , , ,488 Insurance 24,940 43,876 36,948 46,185 Maintenance 149, , , ,300 Aircraft Cost 159, , , ,948 Total Direct $ 580,635 $ 1,021,488 $ 860,198 $ 1,075,249 Indirect Expense 487, , , ,209 Total Operating Exp $ 1,068,368 $ 1,879,538 $ 1,582,764 $ 1,978,458 Return 53,418 93,977 79,138 98,923 Total Economic Cost $ 1,121,786 $ 1,973,515 $ 1,661,902 $ 2,077,381 Surplus I (Deficit) $ (1,017,251 ) $ (1,748,790) $ (1,302,847) $ (1,672,876) Annual Subsidy $ 1,017,251 $ 1,748,790 $ 1,302,847 $ 1,672,876 Completed Departures 614 1,228 1,228 1,228 4, ,049 1,195, , , ,669 $ 3,537,570 2,971,558 $ 6,509, ,456 $ 6,834,584 $ (5,741,764) $ 5,741,764 4,298

21 Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST / OST Annual Subsidy Requirement May April 2013 Exhibit 1B Year 2 Ironwood Ironwood Manistee Manistee Total IWD-MBL IWD-MSP MBL-MKE MBL-DTW Revenue: Passenger Forecasted Passengers 1,575 2,625 4,725 4,725 Average Revenue I Pax 13,650 Estimate: May April 2013 $ $ $ $ Revenue I Pax Change 0.00% 0.00% 0.00% 0.00% Average Revenue I Pax $ $ $ $ Passenger Revenue $ 108,675 $ 233,625 $ 373,275 $ 420,525 Other Revenue: $ 1,136,100 Ratio to Passenger Revenue 1.00% 1.00% 1.00% 1.00% Other Revenue $ 1,087 $ 2,336 $ 3,733 $ 4,205 Total Revenue $ 109,762 $ 235,961 $ 377,008 $ 424,730 $ 11,361 $ 1,147,461 O~erating Ex~enses Completed Block Hours , , Direct Flight Crews 51,909 91,321 76,902 96,128 Fuel 198, , , ,032 Insurance 24,940 43,876 36,948 46,185 Maintenance 152, , , ,440 Aircraft Cost 159, , , ,948 Total Direct $ 587,916 $1,034,296 $ 870,985 $1,088,733 Indirect Expense 493, , , ,536 Total Operating Exp $1,081,765 $1,903,105 $ 1,602,612 $ 2,003,269 Return 54,088 95,155 80, ,163 Total Economic Cost $1,135,853 $ 1,998,260 $1,682,743 $ 2,103,432 Surplus I (Deficit) $(1,026,091 ) $(1,762,299) $(1,305,735) $(1,678,702) Annual Subsidv $1,026,091 $1,762,299 $1,305,735 $1,678,702 Completed Departures 614 1,228 1,228 1,228 4, ,260 1,211, , , ,910 $ 3,582,738 3,008,821 $ 6,591, ,537 $ 6,921,096 $ (5,772,827) $ 5,772,827 4,298

22 Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket CST / CST Proposed Departure Schedule May April 2013 Exhibit 2 Sched City Block Sched Community Pair Time Seg Ironwood IWO 6:00AM MBL 7:00AM 1 MBL 9:45 AM IWO 10:45 AM 1 IWO 11:15 AM MSP 12:15 PM 1 MSP 12:45 PM IWO 1:45 PM 1 IWO 4:30 PM MSP 5:30 PM 1 MSP 5:50 PM IWO 6:50 PM 1 Manistee MBL 7:15 AM OTW 8:15 AM 1 MBL 8:25 AM MKE 9:15 AM 1 OTW 8:25 AM MBL 9:25 AM 1 MKE 8:25AM MBL 9:15 AM 1 MBL 9:30AM OTW 10:30 AM 1 OTW 11:00 AM MBL 12:00 PM 1 MBL 12:30 PM MKE 1:30 PM 1 MKE 4:45PM MBL 5:45 PM Sched Block Hours I Seg Sched Sched Sched Block Block Sched Freq I Hours I Hours I Seg I Week Week Year Year , , , ,496 Comp Factor Comp Comp Block Seg I Hours I Year Year ,842 1, ,456 2, Totals Route Totals , , , ,

23 Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket CST / CST Annual Subsidy Requirement May April 2012 Exhibit 2A Year 1 Ironwood Ironwood Manistee Manistee IWD-MBl IWD-MSP MBl-MKE MBl-DTW Performance: Rev Block Hours Scheduled , , Completion % Completed Block Hours , , Rev Departures Scheduled 624 1,248 1,248 1,248 Completion % Completed Departures 614 1,228 1,228 1,228 Rev Passengers Est 2011/2012 Passengers 1,500 2,500 4,500 4,500 Forecasted Growth Rate 0.00% 0.00% 0.00% 0.00%1 Total Passengers 1,500 2,500 4,500 4,500 I Average Segment Share % % % % Segment Passengers 1,500 2,500 4,500 4,500 I Available Seats 5,526 11,052 11,052 11,052 Average load Factor 27.14% 22.62% 40.72% 40.72% Average Pax I Flight

24 Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket CST / CST Annual Subsidy Requirement May April 2013 Exhibit 28 Year 2 Performance: Rev Block Hours Ironwood Ironwood Manistee Manistee IWD-MBl IWD-MSP MBl-MKE MBl-DTW Scheduled , , Completion % Completed Block Hours 663,12 1,166, ,228,00 Rev Departures Scheduled 624 1,248 1,248 1,248 Completion % Completed Departures 614 1,228 1,228 1,228 Rev Passengers Est Pax 2012/2013 1,575 2,625 4,725 4,725 Forecasted Growth Rate 5.00% 5.00% 5.00% 5.00% Total Passengers.1,575 2,625 4,725 4,725 Average Segment Share % % % % Segment Passengers 1,575 2,625 4,725 4,725 Available Seats 5,526 11,052 11,052 11,052 Average load Factor 28,50% 23,75% 42.75% 42.75% Average Pax / Fliaht