Dennis J. DeVany Chief, EAS & Domestic Analysis U.S. Department of Transportation Office of Aviation Analysis, X-50 400 Seventh Street, S.W. Washington, D.C. 20590
Re: Response of Big Sky Transportation Co. to Request for Proposals Order 2004-2-9 Service at Laramie, Riverton, Rock Springs and Worland, Wyoming
Dear Mr. DeVany:
Enclosed please find the original and four copies of Big Sky Airlines' EAS proposal as referenced above.
eveAdministrative Assistant
Enc.
1601 AVIATION PLACE BILLINGS, MT 59105 TELEPHONE (406) 247-3910 FAX (406) 247-3972 Before the UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.
Essential Air Service at
LARAMIE, WYOMING Docket OST-1997-2958 RIVERTON, WYOMING Docket OST-2003-1453 6 ROCK SPRINGS, WYOMING Docket OST-1997-2959 WORLAND, WYOMING Docket OST-1997-2981 under 49 U.S.C. 41731 et seq.
Response of Big Sky Transportation Co., doing business as Big Sky Airlines to Request for Proposals Order 2004-2-9 Competitive Proposals for Essential Air Service at Laramie, Riverton, Rock Springs and Worland, Wyoming.
Communications with respect to this document should be directed to:
Mr. Kim B. Champney President and Chief Executive Officer Big Sky Transportation Co. 1601 Aviation Place Billings, Montana 59105 Telephone: 406-247-3911 Fax: 406-247-3972 E-mail: [email protected]
Dated March 15,2004 Proposal to Provide Essential Air Service
Big Sky Transportation Co. is pleased to provide proposals to provide Essential Air
Service to the Wyoming points of Laramie, Riverton, Rock Springs and Worland. It is our belief that the proposals being made are unique and offer the Wyoming community’s substantially better service than is being provided by the incumbent carrier. The Big Sky proposals include service to both Denver and Salt Lake City from Riverton and Rock Springs, at the same EAS subsidy requirement for service to one hub.
Big Sky seeks and is prepared to begin service to all four communities in accordance with the service proposals contained herein. If Big Sky is awarded all four routes, its overall bid will be reduced by $135,000 annually, as a reflection of economies of scale that would be available for multiple flight operations at Denver. However, if less than all four routes are awarded to Big Sky, the proposed EAS subsidies will not be reduced.
Big Sky has met with civic parties in Rock Springs, Riverton and Worland and presented the proposals being made herewith. We were asked by the Laramie parties to schedule our local visit and proposal review after the DOT comment period has commenced. Based on the discussions we have had, the following summarizes the Big Sky proposal, details of which are contained in exhibits included with this submission.
2 Bip Sky Product Offering
Big Sky has been a certificated air carrier for 25 years. In 2004 we are celebrating our 25‘h anniversary with open house functions throughout our route system. Big
Sky is in the process of enhancing the interiors of its fleet of 19 passenger pressurized Fairchild Metro III/23 turbo-prop aircraft with new seat covers, carpeting and bulkhead coverings. Big Sky offers numerous pricing options to its customers, including its very popular “Bulk Ticket Program”, where customers can buy packages of transferable tickets at the lowest published fare for use anytime during the ensuing 12-month period on a reserved seat basis. Big Sky does not capacity control advanced purchase fares, does not overbook flights and makes all fares refundable.
In addition Big Sky offers special medical fares for the patient and companion, as well as bereavement fares and student fares to accommodate the special needs of its
Essential Air Service Customers.
Big Sky recently began a customer recognition program, Metro MVP, to reward our customers with gifts, companion fares and special promotions for their business.
Exhibit 1 is a program brochure describing this exciting program.
Big Sky will offer code-share service with its partners, Alaska/Horizon, America
West and Northwest, These code-sharing agreements provide single ticketing and
3 baggage handling service, including the ability to earn frequent flyer credit, to virtually any city in the world through the extensive systems of our partners. After arriving in Denver or Salt Lake City, our customers will be able to seamlessly transfer to Alaska/Horizon for service to the Northwest United States, America
West for service to the South and Southwest portions of the United States, and
Northwest for service to destinations in the East and Midwest parts of the United
States, as well as international connections at Minneapolis and Detroit.
Northwest in association with its partner KLM further enhances the international destination choices. Additionally, Northwest provides non-stop service from Denver to Los Angeles', which will allow service to Southern California, and connecting service to Hawaii and throughout the Pacific Basin. In addition, Big Sky maintains interline ticketing and baggage agreements with most major carriers serving Denver and Salt Lake City. Finally, if selected, Big Sky will attempt to enter a code-sharing agreement with Frontier Airlines for connecting service at Denver.
Service to Worland and Laramie
Big Sky proposes to offer 18 weekly departures between Worland and Denver with an intermediate stop in Laramie. The service pattern is well timed for connections at Denver and offers three daily flights and three flights during the weekend.
' Northwest will begin non-stop service between Denver and Los Angeles effective April 4,2004.
4 Big Sky would offer a special fare to provide an incentive for intra-Wyoming travel linking the Northern and Southern parts of the state. This service opportunity should be particularly attractive with the University of Wyoming’s home in
Laramie.
Based on Big Sky’s costs and estimated passenger traffic and revenue, an Essential
Air Service subsidy of $1,335,691 annually is required. Exhibit 2 presents details of the WorlandLaramie service proposal.
Service to Riverton
Big Sky proposes to offer 18 weekly departures between Riverton and Denver and
Salt Lake City. The service pattern is well timed for connections at both Denver and Salt Lake City and offers two daily flights to Denver and one daily flight to Salt
Lake City, as well as three flights during the weekend, two to Denver and one to Salt
Lake City. Based on Big Sky’s costs and estimated passenger traffic and revenue, an Essential Air Service subsidy of $574,680 annually is required. It should be noted that there is no additional cost to the EAS program as a result of the service proposal to two hubs. Big Sky, if awarded the Riverton route would like the ability to modify its flight schedule between the two hubs based on passenger demand with the understanding that Big Sky will not reduce the level of flying below the 18 weekly-required departures and will maintain the service with conveniently timed flights. Exhibit 3 presents details of the Riverton service proposal.
5 Service to Rock Sprinps
Big Sky proposes to offer 18 weekly departures between Rock Springs and Denver and Salt Lake City. The service pattern is well timed for connections at both
Denver and Salt Lake City and offers two daily flights to Denver and one daily flight to Salt Lake City, as well as three flights during the weekend, two to Denver and one to Salt Lake City. Based on Big Sky’s costs and estimated passenger traffic and revenue, an Essential Air Service subsidy of $749,132 annually is required. It should be noted that there is no additional cost to the EAS program as a result of the service proposal to two hubs. Big Sky, if awarded the Rock Springs route would like the ability to modify its flight schedule between the two hubs based on passenger demand with the understanding that Big Sky will not reduce the level of flying below the 18 weekly-required departures and will maintain the service with conveniently timed flights. Exhibit 4 presents details of the Rock Springs service proposal.
Summary
Exhibit 5 contains a summary of the Wyoming market proposals and reflects an overall $135,000 annual EAS subsidy reduction if all four markets are awarded to
Big Sky, thereby reducing the total annual subsidy from $2,639,503 to $2,524,503.
Big Sky is prepared to begin service to the Wyoming communities as soon as a reasonable transfer can be accomplished.
6 Respectfully submitted,
BIG SKY TRANSPORTATION CO.
Kim B. Champney President
7 Exhibit 1 Page 1 of 1
I
8 Exhibit 2 Page 1 of 4
Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Worland and Laramie, Wyoming Dockets OST-1997-2981 and OST-1997-2958
Proposed Schedule
Flight No. Leave Arrive Stops Frequency Flight No. Leave Arrive Stops Frequency Worland to Laramie Laramie to Worland 5013 6:15 7:05 0 Daily 5014 10:15 11:05 0 Daily 5015 11:15 12:05 0 X67 5016 14:30 15:20 0 X67 5017 15:35 16:25 0 X6 5018 19:55 20:45 0 X6
Worland to Denver Denver to Worland 5013 6:15 8:03 1 Daily 5014 9:15 11:05 1 Daily 5015 11:15 13:03 1 X67 5016 13:30 15:20 1 X67 5017 15:35 17:23 1 X6 5018 18:55 20:45 1 X6
Laramie to Denver Denver to Laramie 5013 7:20 8:03 0 Daily 5014 9:15 1o:oo 0 Daily 5015 12:20 13:03 0 X67 5016 13:30 14:15 0 X67 5017 16:40 17:23 0 X6 5018 18:55 19:40 0 X6
Proposed Fares
Worland-Denver Laramie-Denver Worland-Laramie Fare Type One-way Fare One-way Fare One-way Fare
14 Day Advance $90.00 $75.00
7 Day Advance $100.00 $85.00
3 Day advance $115.00 $95.00
Y9 - No Advance $140.00 $120.00 $50.00
Excludes PFC's, Segment, and Security Fees Tickets are refundable, less administration fee
9 Exhibit 2 Page 2 of 4
Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Worland and Laramie, Wyoming Dockets OST-1997-2981 and OST-1997-2958
Projected Passengers, Revenues and Statistics
Market Passengers Averape Fare -Re -renu i
WRL - DEN 4,600 $85.00 $391,000 LAR - DEN 15,324 $70.00 $1,072,680 WRL - LAR -600 $45.00 $27,000
Total 20,524 $72.63 $1,490,680
RPM's ASM's Load Factor
WRL - DEN 1,522,600 7,486,708 20.3% LAR - DEN 1,746,936 3,933,109 44.4% WRL - LAR 130,200 Incl Above
Total 3,399,736 12,054,252 28.2%
10 Exhibit 2 Page 3 of 4
Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Worland and Laramie, Wyoming Dockets OST-1997-2981 and OST-1997-2958
Annual Depart Arrive Frequency Block Hours Departures
Worland Laramie Daily 295 354
Laramie Denver Daily 254 354
Denver Laramie Daily 266 354
Laramie Worland Daily 295 354
Worland Laramie x SAT, SUN 210 252
Laramie Denver x SAT, SUN 181 252
Denver Laramie x SAT, SUN 189 252
Laramie Worland x SAT, SUN 210 252
Worland Laramie x SAT 253 304
Laramie Denver x SAT 218 304
Denver Laramie x SAT 228 304
Laramie Worland x SAT -253 304
Total 2.851 3.639
11 Exhibit 2 Page 4 of 4
Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Worland and Laramie, Wyoming Dockets OST-1997-2981 and OST-1997-2958
Metro I11 or 23 Aircraft 18 DEN Round-trips per Week Block Hours Revenue Block Hours 2,851
Revenue Departures 3,639
Operating Revenue Net Ave. Fare Total Passenger Revenue 20,524 Passengers $72.63 $1,490,680 Freight Revenue $14,907 Total Operating Revenue $1,505,587
Direct Operating Expenses Flying Operations $141.99 Per BH $404,794 Fuel & Oil $129.72 Per BH $369,818 Direct Maintenance $186.56 Per BH $531,866 Maintenance Burden $1 06,373 Aircraft Lease $98.18 Per BH $279,906 Hull Insurance $4.71 PerBH $13,437 Property Tax on Aircraft $14,400 Total Direct Expenses $1,720,595
Indirect Operating Expenses Advertising $5,000 Departure Related Costs $611,392 Traffic Related Costs $164,192 Capacity Related Costs $1 99,800 Total Indirect Expenses $980,384
Total Operating Expenses $2,700,979
Operating Loss $1,195,392 Profit Element (@ 5% of TOE) $135,049 Interest $5.250
Compensation Requirement $1,335,691
Compensation Per Block Hour $468.52
Compensation Per Departure $367.00
Compensation Per Passenger $65.08
12 Exhibit 3 Page 1 of 3 Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Riverton, Wyoming Docket OST-2003-14536
Proposed Schedule
Flight No. Leave Arrive Stops Frequency Flight No. Leave Arrive Stops Frequency
Riverton to Denver Denver to Riverton 400 1 6:15 7:33 0 x7 4002 9:55 11:17 0 x7 4005 16:45 18:03 0 X6 4006 19:OO 20:22 0 X6
Riverton to Salt Lake City Salt Lake City to Riverton 4003 11:45 13:OO 0 X6 4004 14:OO 15:15 0 X6
Proposed Fares
Denver Salt Lake City Fare Type One-way Fare One-way Fare
14 Day Advance $99.00 $79.00
7 Day Advance $109.00 $89.00
3 Day advance $119.00 $99.00
Y9 - No Advance $149.00 $129.00
Excludes PFC's, Segment, and Security Fees Tickets are refundable, less administration fee
13 Exhibit 3 Page 2 of 3 Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Riverton, Wyoming Docket OST-2003-14536
Projected Passengers, Revenues and Statistics
Market Passengers Average Fare Revenue
RIW - DEN 15,241 $91.00 $1,386,896 RIW - SLC 5,475 $82.00 $448,950
Total 20,716 $88.62 $1,835,846
RPM's ASM's Load Factor
RIW - DEN 4,511,221 6,808,189 66.3% RIW - SLC 1,3 14,000 2,760,077 47.6%
Total 5,825,221 9,568,266 60.9%
Annual Depart Arrive Frequency Block Hours Departures
River t o n Denver x SUN 395 304
Denver Riverton x SUN 415 304
Riverton Salt Lake City x SAT 380 3 04
Salt Lake City Riverton x SAT 380 304
Riverton Denver x SAT 395 304
Denver Riverton x SAT -415 -304
Total 2,378 1,822 14 Exhibit 3 Page 3 of 3 Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Riverton, Wyoming Docket OST-2003-14536
Metro I11 or 23 Aircraft 12 DEN/6 SLC Round-trips per Week Block Hours Revenue Block Hours 2,378
Revenue Departures 1,822
Operating Revenue Net AVP. Fare Total Passenger Revenue 20,716 Passengers $88.62 $1,835,846 Freight Revenue $18,358 Total Operating Revenue $1,854,204
Direct Operating Expenses Flying Operations $141.99 Per BH $337,688 Fuel & Oil $129.72 Per BH $308,510 Direct Maintenance $186.56 Per BH $443,694 Maintenance Burden $88,739 Aircraft Lease $98.18 PerBH $233,504 Hull Insurance $4.71 PerBH $11,209 Property Tax on Aircraft $14,400 Total Direct Expenses $1,437,745
Indirect Operating Expenses Advertising $5,000 Departure Related Costs $499,953 Traffic Related Costs $165,725 Capacity Related Costs $1 99,800 Total Indirect Expenses $870,478
Total Operating Expenses $2,308,223
Operating Loss $454,019 Profit Element (@ 5% of TOE) $1 15,411 Interest $5,250
Compensation Requirement $574,680
Compensation Per Block Hour $241.64
Compensation Per Departure $315.47
Compensation Per Passenger 15 $27.74 Exhibit 4 Page 1 of 3 Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Rock Springs, Wyoming Docket OST-1997-2959
Proposed Schedule
Flight No. Leave Arrive Stops Frequency Flight No. Leave Arrive Stops Frequency Rock Springs to Denver Denver to Rock Springs 5020 6:20 7:30 0 x7 502 1 9:30 10:so 0 x7
5024 , 16:35 17:45 0 X6 5025 19:15 20:35 0 X6
Rock Springs to Salt Lake City Salt Lake City to Rock Springs 5022 11:30 12:20 0 X6 5023 14:OO 1455 0 X6
Proposed Fares
Denver Salt Lake City Fare Type One-way Fare One-way Fare
14 Day Advance $92.00 $72.00
7 Day Advance $102.00 $82.00
3 Day advance $112.00 $92.00
Y9 - No Advance $130.00 $110.00
Excludes PFC's, Segment, and Security Fees Tickets are refundable, less administration fee
16 Exhibit 4 Page 2 of 3 Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Rock Springs, Wyoming Docket OST-1997-2959
Projected Passengers, Revenues and Statistics
Market Passengers Average Fare Revenue
RKS - DEN 12,576 $85.00 $1,068,960 RKS - SLC 4,380 $78.00 $341,640
Total 16,956 $83.19 $1,410,600
RPM's ASM's Load Factor
RKS - DEN 3,269,760 5,980,166 54.7% RKS - SLC 705,180 1,851,552 38.1%
Total 3,974,940 7,831,718 50.8%
Annual Depart Arrive Frequency Block Hours Departures
Rock Springs Denver x SUN 354 304
Denver Rock Springs x SUN 405 304
Rock Springs Salt Lake City x SAT 253 304
Salt Lake City Rock Springs x SAT 278 3 04
Rock Springs Denver x SAT 354 304
Denver Rock Springs x SAT -405 -304
Total 2,049 1,822
17 Exhibit 4 Page 3 of 3 Big Sky Transportation Co., d/b/a Big Sky Airlines Essential Air Service Proposal for Rock Springs, Wyoming Docket OST-1997-2959
Metro I11 or 23 Aircraft 12 DEN/6 SLC Round-trips per Week Block Hours Revenue Block Hours 2,049
Revenue Departures 1,822
Operating Revenue Net Avg. Fare Total Passenger Revenue 16,956 Passengers $83.19 $1,410,600 Freight Revenue $14,106 Total Operating Revenue $1,424,706
Direct Operating Expenses Flying Operations $141.99 Per BH $290,987 Fuel & Oil $129.72 Per BH $265,844 Direct Maintenance $186.56 Per BH $382,332 Maintenance Burden $76,466 Aircraft Lease $98.18 Per BH $201,211 Hull Insurance $4.71 Per BH $9,659 Property Tax on Aircraft $14,400 Total Direct Expenses $1,240,899
Indirect Operating Expenses Advertising $5,000 Departure Related Costs $483,975 Traffic Related Costs $135,648 Capacity Related Costs $199,800 Total Indirect Expenses $824,423
Total Operating Expenses $2,065,322
Operating Loss %640,616 Profit Element (@ 5% of TOE) $103,266 Interest $5,250
Compensation Requirement $749,132
Compensation Per Block Hour $365.54
Compensation Per Departure $411.24
Compensation Per Passenger Exhibit 5 Page 1 of 1
Response of Big Sky Transportation Co., doing business as Big Sky Airlines to Request for Proposals Order 2004-2-9 Competitive Proposals for Essential Air Service at Laramie, Riverton, Rock Springs and Worland, Wyoming.
Summary
Annual Annual Annual Revenue Revenue Annual Annual Annual Compensation Block Hours Departures Passengers Revenue Expenses Requirement
Worland/Laramie 2,851 3,639 20,524 $ 1,505,587 $ 2,841,278 $ 1,335,691
Riverton 2,378 1,822 20,716 $ 1,854,204 $ 2,428,884 $ 574,680
Rock Springs 2,049 1,822 16,956 $ 1,424,706 $ 2,173,838 $ 749,132
Expense reduction for service to all four communities $ (135,000)
All Wyoming Markets 7,278 7,283 58,196 $ 4,784,497 $ 7,309,000 $ 2,524,503
19