• Abstract and Figures
• Public Full-text

Application for Inclusion into the Alternate Essential Air Service Program Docket DOT-OST-1997-2694 Page Municipal Airport - Royce K. Knight Field Service in 30 Seat ERJ-135 Aircraft Operated by Contour Airlines For the Proposed Grant Period July 1, 2018 – September 30, 2020 Applicant and Legal Sponsor: City of Page 697 Vista Avenue Page, Arizona 86040 Attention: Kyle Christiansen, Aviation Director – City of Page Phone: (928) 614-0785 Email: [email protected] DUNS Number: 07-448-0781 EIN: 86-0295443 I. Summary The City of Page, Arizona (“Page” or the “City”) hereby submits its application for inclusion into the Alternate Essential Air Service Program (“AEAS”) to fund 12 weekly round trips from the Page Regional Airport, Royce K. Knight Field (“PGA”) to the Phoenix Sky Harbor International Airport, a large-hub airport, in Phoenix, Arizona (“PHX”), for a twenty-seven (27) month period beginning July 1, 2018. At the community’s discretion and with no additional subsidy requirement, frequencies to PHX may be substituted with frequencies to Las Vegas, Nevada (“LAS”). All such flights will be operated as 14 CFR Part 380 public charter flights by Corporate Flight Management, Inc. d/b/a Contour Airlines in Embraer ERJ-135 twin jet pressurized aircraft configured with 30 passenger seats. II. Current Service At present, PGA is experiencing a hiatus in Essential Air Service (“EAS”). Until Monday, March 26, 2018, PGA received traditional EAS from Great Lakes Airlines pursuant to DOT Order 2017-5-15. Flights were provided in Beech 1900D pressurized twin turboprop aircraft. Great Lakes Airlines offered service to the following large hub airports: PHX (non-stop) and/or one-stop to Denver International Airport (“DEN”); and/or one-stop to Los Angeles International Airport (“LAX”). Flight frequencies varied seasonally between 12 and 24 flights per week to accommodate PGA’s tourism passenger traffic, averaging 19 flights per week over the course of a year. III. Service History Great Lakes Airlines provided traditional EAS to PGA from March of 2001, (when it was selected to replace the defunct Sunrise Airlines, Inc.), until March 26, 2018, the date on which the airline ceased flight operations. During its 16 years providing EAS at PGA, Great Lakes Airlines served the community exclusively with 19-seat twin turboprop pressurized Beech 1900D aircraft. During that time, Great Lakes Airlines provided flights to each of the following large-hub airports: PHX (non-stop) and/or one-stop to Denver International Airport (DEN); and/or one-stop to Los Angeles International Airport (LAX); and/or McCarran International Airport (LAS). The flight frequencies offered by Great Lakes Airlines varied seasonally, with a low of 12 flights per week in the winter and 24 flights per week in the summer, averaging approximately 19 flights per week during the course of a year. Following Great Lakes Airline’s cessation of operations at the end of March 2018, the DOT issued Order 2018-3-25 soliciting proposals for service at PGA on an emergency basis. In response to the proposals received by DOT, PGA opted to make this application for inclusion into the Alternate Essential Air Service Program. PGA AEAS Application May 2018 Page 1 IV. Proposed AEAS The City of Page was concerned with the suitability of the traditional EAS proposals received by DOT in response to Order 2018-3-25. The general consensus from the community was that none of those proposals really met PGA’s needs due to the limited number of seats in the proposed aircraft and the offerors’ lack of flexibility in flight scheduling. Currently, the City experiences in excess of three million visitors per year, primarily between the months of April and October. Although the seasonality of travel in Page has been leveling to a degree, the City still experiences fluctuations in travel on a seasonal basis, driving the need for flexible flight schedules. In addition, the community generally expressed the need for larger seating capacity than the nine seat configurations that were proposed by the carriers responding to Order 2018-3-25. Upon learning of the AEAS Program, the City began to explore it as an option to the carriers and service patterns available under traditional EAS and determined the AEAS was the best fit for Page. The City researched potential AEAS providers that might be able to serve PGA. Page then requested proposals for service that would meet the needs of the community. Of the carriers contacted by the City, only Contour Airlines was willing and able to proceed with proposed service at this time. Contour is also the only provider that has offered a thirty-passenger aircraft that has the capability of flying in and out of PGA. Page is therefore pursuing this Application for Inclusion in to the AEAS Program with Contour as the City’s intended air service provider. It is also important to note that in comparing Contour’s proposal to the proposals received by DOT in response to Order 2018-3-25, Page feels strongly that not only does Contour’s proposal best meet the needs of the community, but it also represents the best value. Contour’s proposed subsidy is less than the lowest twin engine proposal (Boutique Air’s traditional EAS Option 4), while offering greater seating capacity and more scheduling flexibility to address the seasonality of travel to and from Page that the community has historically experienced. In fact, under AEAS, Contour proposes to deliver 37,440 total seats per full contract year in the PGA market compared to only 19,442 seats that would have been provided by Boutique Air in a full contract year under its traditional EAS Option 4 proposal. By way of comparison, Great Lakes Airline had a maximum of 36,748 available seats per full contract year. PGA is entitled to EAS provided in twin-engine pressurized aircraft. The community has expressed a strong preference for initiating service with Contour to PHX and/or LAS using its 30-seat Embraer ERJ-135 pressurized twin jet aircraft. Based on its unique understanding of its market, PGA believes that increasing the gauge of service to Contour’s regional jets will result in significantly more passengers using the air service year round. Contour must operate the proposed flights using the ERJ-135 at PGA as 14 CFR Part 380 public charters. PGA AEAS Application May 2018 Page 2 DOT has previously determined that 14 CFR Part 380 public charters are not eligible for subsidy under traditional EAS but are eligible for subsidy under AEAS. Therefore, PGA proposes the following AEAS program: • A twenty-seven (27) month AEAS grant term beginning on July 1, 2018 and ending on September 30, 2020; • On average, 12 scheduled subsidized round trips/24 flight segments per week (624 round trips/1,248 flights per year) for each full year of the grant; • A subsidy rate of $3,559.00 per flight, with an annual subsidy not to exceed $4,398,924.00 (presuming 99% completion of all planned flights), and a total subsidy not to exceed $9,897,579.00 for the 27 month term of the AEAS grant (again, presuming 99% completion of all planned flights); • Service to be provided by Contour using Embraer ERJ-135 twin jet pressurized aircraft configured with 30 passenger seats; • All flights to be operated under 14 CFR Part 380 with Contour acting as both Indirect and Direct Air Carrier. Details of PGA’s financial proposal appear in Attachment A hereto. PGA and Contour are in dialogue concerning the timing of departures and arrivals of the flights during each grant year. A proposed timetable will be provided to DOT prior to the commencement of service under the grant. Contour’s one-way fare is expected to average $65.00, with lower seasonal, promotional, and advanced booking fares mixed with higher fares based on demand and other market factors. PGA would anticipate applying for a follow-on grant under the AEAS program with similar terms and conditions following the completion of the initial AEAS grant period. In choosing to enter AEAS with Contour, PGA has taken into account Contour’s exceptional performance at other communities receiving traditional EAS and AEAS, including Tupelo, Mississippi, Macon, Georgia, and most recently, Crescent City, California. The depth of Contour’s organizational resources coupled with their stellar performance give PGA confidence that Contour can achieve its performance targets. It is worth noting that unlike the proposals received by DOT for traditional EAS, only AEAS service with Contour results in comparable annual seat capacity to what the community was receiving from its previous carrier, Great Lakes Airlines. PGA AEAS Application May 2018 Page 3 V. Monitoring Results PGA’s objectives for AEAS are simple and straight forward: 1. Increase total annual ridership by matching capacity to demand on a seasonal basis 2. Decrease the per passenger subsidy required for operations 3. Improve the on-time performance and completion factor of the service relative to the prior carrier in the market PGA will monitor each of these factors through monthly reports submitted by Contour, along with its own airport operating data. In the event that actual enplanements and/or per passenger subsidy experience an unfavorable shift, PGA and Contour will consult regarding the underlying cause(s) and implement the appropriate action(s) to reverse the negative trend. VI. Grant Compliance PGA understands that it will need to execute a grant agreement and various grant assurances in order to implement AEAS. It has reviewed DOT’s Order establishing Alternate Essential Air Service as well as the grants awarded to other AEAS communities and understands its obligations and requirements Upon the execution of the AEAS grant agreement and assurances with DOT, PGA will enter into a written agreement for the AEAS with Contour that flows through the appropriate terms, conditions, and assurances from the grant, as well as other provisions appropriate to the performance by each party in relation to the subsidized air service.

Load more

  8

Copy Link