MEETING NOTICE CITY OF PAGE CITY COUNCIL

CITY COUNCIL WORK SESSION MEETING MARCH 8, 2017 CITY HALL, 697 VISTA AVE 5:30 P.M. PAGE, NOTICE OF PUBLIC MEETING AND AGENDA

CALL TO ORDER

ROLL CALL Mayor Bill Diak Vice Mayor John Kocjan Councilor Scott Sadler Councilor Korey Seyler Councilor Mike Bryan Councilor Levi Tappan Councilor Dennis Warner

DISCUSSION ITEMS

1. Discussion by the City Council pertaining to for the City of Page

ADJOURN

FOR YOUR INFORMATION Next Regular Meeting Wednesday, March 8, 2017, at 6:30 p.m. Pursuant to A.R. S. 38.431. 02, notice is hereby given to the members of the City Council and to the general public that the Page City Council will hold a meeting open to the public. Supporting documents and Staff reports, which were furnished to the City Council, with this agenda, are available for review at www.citvofpage.org or at the City Clerk's Office. Council Members of the City of Page City Council will attend either in person or by telephonic conference. City Council may vote to go into Executive Session for the purpose of obtaining legal advice from the City Attorney on any item listed on the agenda, pursuant to A.R.S. 38-431.03 (A)(3). City Council may modify the agenda order, if necessary. This agenda may be subject to change up to 24 hours prior to the meeting. Persons with disabilities should call Kim Larson, City Clerk, at 645-4221 (TDD 645-4216) for program and services information and accessibility. NOTICE TO PARENTS: Parents and legal guardians have the right to consent before the City of Page makes a video or voice recording of a minor child A.R.S. §1-602.A.9. City Council meetings are recorded and may be viewed on South Central Communications Channel 4. If you permit your child to participate in the City Council Meeting, a recording will be made. If your child is seated in the audience, your child may be recorded, but you may request that your child be seated in a designated area to avoid recording. Please submit your request to the City Clerk at 928-645- 4221.

If you would like to receive City Council agendas via email, please send your email address to [email protected] or call 928-645-4221. CERTIFICATION OF POSTING OF NOTICE The undersigned hereby certifies that a copy of the attached notice was duly posted at the following places: City Hall Bulletin Board located at 697 Vista Avenue, Page, Arizona, Justice Building Bulletin Board located at 547 Vista Avenue, Page, Arizona, U. S. Post Office Lobby located at 44 Sixth Avenue, Page, Arizona, on the ____ day of March, 2017, at _____ p.m. in accordance with the statement filed by the City of Page City Council with the City Clerk.

DATED this _____ day of March, 2017.

CITY OF PAGE

By: ______CITY CLERK'S OFFICE WORK SESSION DISCUSSION ITEM 1. City Council Work Session Agenda Meeting Date: 03/08/2017 Brief Title: Essential Air Service Presented by: Crystal Dyches, City Manager Department: City Manager Action: Other

RECOMMENDED ACTION: Discussion.

BACKGROUND: Last December, Via Air, Great Lakes Aviation, Ltd, and presented proposals to provide Essential Air Service during a joint work session of the City Council and Airport Advisory Board.

Representatives from Sky West , who did not submit a proposal, also attended, and advised the City that they have gained the permission of one of their network carrier partners to make a proposal to provide Page EAS service, should there be a re-bid.

After considerable discussion and research, the City Council narrowly passed a motion to request that the DOT re-bid the proposals for the EAS, citing concerns, which included: unreliable service, inability to fulfill EAS obligations, limited capacity/service routes, and/or use of single engine planes.

The City’s request was granted. DOT has requested proposals from air carriers interested in providing EAS. Unfortunately, without major modifications the current cannot accommodate jet service under Federal Aviation Administration (FAA) regulations. The DOT has received proposals from Boutique Air, Airlines, , and Public Charters, Inc. DBA (Alternate EAS only).

ALTERNATIVES CONSIDERED: N/A

ADVISORY BOARD / COMMISSION ACTION: The Airport Board met on March 1, 2017 and voted unanimously to recommend Boutique Airlines. The board felt that Boutique would offer timely and reliable service.

Fiscal Impact Budget Impact: The fiscal impact information is included in the proposals.

Attachments Memo Airport Director Boutique Airlines Proposal Grand Canyon Proposal Great Lakes Proposal Regional Sky - ALT EAS proposal MEMORANDUM

DATE: FEBRUARY 27, 2017

TO: AIRPORT BOARD

FROM: CLIFF BIGGS, AIRPORT DIRECTOR

SUBJECT: 2017 EAS BID SUMMARY

SUMMARY

Unfortunately, what may have been the best solution for air service for the city of Page, AZ cannot be entertained (SkyWest), due to the limitations of our current airport design. There was a strong possibility that SkyWest could have been able to serve Page from Phoenix but they had to drop out due to FAA airport limitations (see Appendix C).

We currently have multiple bids (four, a first for our city), in place, Boutique Air, , Great Lakes Airlines and RegionalSky (this is an “Alternate EAS” service, see Appendix B for description)

BID ANALYSIS

(Listed alphabetically by )

Boutique Airlines

Currently serves numerous cities in the southwest using Pilatus PC‐12, single engine turboprops and Beechcraft King Air 350 twin engine turboprop aircraft. These airplanes have all weather capability and two pilots. Boutique Airlines on‐time/completion record runs around 98% in communities currently served. Previous experience in other markets has shown an ability to quickly recover passenger losses due to Great Lakes Airline service failures.

They will operate service to Page with the twin turboprop King Air airplanes with four flights a day to Phoenix or PHX, PGA, DEN service, giving residents and the public ample choices of flights.

Although 9 seat capacity, the service provided shows the ability to lift @22 000 passenger seats per year. This is above what our past historical traffic has been.

Right now, we are emplaning approximately 4,500 passengers per year due to losses from poor service, by another carrier, in the past.

The airplanes themselves do have the ability to operate out of Page with full passengers and baggage to the destinations shown on a 95‐degree day in the summer time. Boutique is a fully licensed FAR Part 135 air carrier (see Appendix A for a description of Part 135 vs. Part 121 air carriers) and has gone beyond the baseline requirements of a Pt. 135 Air Carrier by installing a Director of Safety, Chief Inspector, Director of Training. They have also been awarded the FAA Diamond Award for aircraft maintenance.

The airplanes themselves are in what could be called “executive service” condition. Interior and exterior conditions are very good. They do have a lavatory.

Boutique has major service and maintenance support in Phoenix and uses a van and mechanics dispatched out of Phoenix for aircraft maintenance difficulties. They are also viewing the use of a Pilatus airplane for the maintenance response function. They have both King Airs and Pilatus airplanes available on short notice for recovery from grounded airplanes.

Options 4 and 5 seem to be the most reasonable for the city of Page.

Cons

Use of a nine seat has not been available for some time through our current provider (using 9 seats). The number of seats lifted per year however would provide the needed capacity for the contract period.

The designation of a Part 135 air carrier for our airline service might be viewed as a detriment when in fact it is not (see appendix A).

There is some concern that for a grounded airplane recovery, it might take the form of a single engine Pilatus aircraft. The DOT Order can be written to prescribe that we would not want any single engine service for recovery. With this restriction, we might see a longer time span for flight recovery if a plane is down.

There is some concern on the cost of this service but mitigation could be achieved by clearly stating that the current provider (and low bidder) has not been able for some time to provide suitable service and even in the near past has been dropping service legs from those stipulated.

Grand Canyon Airlines

Unfortunately, this bid does not meet the minimum DOT standards for acceptance. The DOT requirements stipulate that one flight must utilize a Mid or High Traffic Hub airport. By using only Boulder City Airport for service, we can’t entertain this bid.

This bid is also challenged with the use of unpressurized, single engine aircraft only, to which the Council has shown an aversion to their use on this contract.

Great Lakes Airlines Being the current service provider, everyone has a good foundation on the service they have provided over the last four or five years. They are utilizing Beechcraft BE‐1900 twin engine, turboprop airplanes in either a 9 seat or 22 seat configurations. They have all weather capability and use two pilots. Historically due to pilot shortages and attendant low flight time pilots, they have been restricted to using the nine‐seat configuration and their FAA Part 135 Air Carrier certificate for Page service. The airplane condition although safe mechanically is somewhat depressed in the looks and reliability departments. They have no lavatory.

In the previous bid cycle, they indicated the ability to provide 22 seat service on all flights in this next contract.

Cons

Great Lakes has not shown a good performance history in its service to Page and many other cities. That is the main driver of the loss of enplanements in the last 5 years. Currently there are indications that cancelled flights are starting to rise again. Their offer to supply only 22 seat airplanes on the next EAS contract might be viewed with skepticism.

RegionalSky

RegionalSky is a newer entrant into EAS service utilizing the “Alternate EAS Service” provisions of the FAA. They service several city pairs in the mid‐continent area with a variety of service provider names. The main company actually organizes the EAS contract work for fully certified FAA Part 135 Charter companies who do the actual flying. All perfectly legal and above board. Service to Page would be using Dornier 328 twin Jet aircraft with 30 seat capacity. The flying qualities of the 328 are such that it would not be impacted in the manner that SkyWest was using CRJ‐200 aircraft (see Appendix C).

The Dornier 328 airplanes come equipped with a lavatory and Flight Attendant. Their condition can be described as the same as Boutique Air, executive condition.

The service they are proposing will be one round trip per day to Phoenix and with 1 day a week (our choice) as a dark day (no flying). This “dark day” is due to the limitations of the flight crew having to have full consecutive 24 hours off every seven days. They will have basically one crew for the contract.

They propose to lift @31,000 seats per year. They have the highest cost but have said they can operate for the highest pricing involved with Boutique Air. They can’t match the $3.9M bid in one option of Boutique Air however.

Cons The daily service schedule at one flight a day to each city is not too accommodating for customers. Having basically one crew for the contract brings up problems with pilot or F/A availability if sick.

Although there is the availability for recovery from broken airplanes, it may take some time to accomplish. Some service of light maintenance can be accomplished in Page through contracts (as Great Lakes does now) but parts availability may be an issue on short notice.

Utilizing this Alternate EAS Service will require the complete withdrawal from the traditional EAS program run by the FAA. Reinstatement is possible if so desired but application will need to be made.

The City itself would be responsible for administering the contract and payments to the airline (see Appendix B).

If RegioanalSky is accepted, modifications to the inside of the terminal will be necessary.

CONCLUSIONS

 One bidder (Grand Canyon) does not meet minimum standards for a bid and can’t be entertained  The Great Lakes bid, while viable, offers nothing new and comes with the specter of inconsistent service.  RegionalSky does offer a viable bid but with the stated limitations and concerns.  Boutique Air has a viable bid and in many respects, may be worth serious consideration as at this time. Without airport modifications (to accommodate a Part 121 airline like SkyWest), this may be the best option for Page at this time with all factors considered.

Appendix A

FAR Part 121 vs. Part 135 Air Carriers

Two different sets of rules to govern “public” air service. Part 135 could be considered the “on demand aircraft charter” set of rules and Part 121 can be considered the “scheduled airline” set of rules.

Companies offering “scheduled” airline service with larger airplanes will be certified under Part 121 of the Federal Air Regulations (FARs).

Companies offering to “charter on demand” will usually be certified under Part 135 of the FARs.

Both sets of rules have become very much similar over the last decade or so in scope and requirements.

Part 135 can include companies as small as one single engine airplane and one pilot to worldwide jet transportation with hundreds of employees. It all depends on the scope of the company. Larger Part 135 companies usually go beyond the minimum requirements of Part 135 and tailor their operations’ books closer to those of Part 121 operators. They install Directors of Safety, Chief Inspectors and training departments very similar to Part 121 Scheduled Air Carriers.

Some Part 135 companies can and do “scheduled service” between cities but they are limited to seating capacities of 9 and below. Any ‘scheduled service” with more than 9 seat requires a Part 121 airline certificate (with the exceptions noted in appendix C).

In many respects, larger Part 135 companies can show safety records as good as any Part 121 Airline. As with both entities, it is the corporate management that drives the desire for safety, not the rules they operate under.

As far as our airport is concerned, it makes no difference which set of rules our EAS provider is certified under. It will not impact our TSA, the EAS contract or our Part 139 airport certification.

Appendix B

Alternate EAS Service

Alternate EAS service is authorized by the FAA when a city desires to have airline type service with airplanes seating more than 9 passengers and no Part 121 airline wishes to enter in the bidding (such as SkyWest).

Cities can elect to withdraw from the FAA EAS program and enter into the Alternate program by “chartering” a larger airplane for their service and the FAA will then “possibly” approve the arrangement and settle on an amount of money that the FAA will forward to the city to pay for the airline service.

In effect, the “city” consummates a “charter agreement” with a charter company for so many flights a day, a week, a month and a fee schedule is set up. The city manages all of the charter paper work and payments to the charter company thereby getting a larger airplane for service than would have been included in the regular EAS bidding. This is how a plane larger than 9 seats can be used for “scheduled” service by a Part 135 certificated operator.

With the city in fact “contracting the charter service”, what liability the city assumes would need to be determined by the city attorney. The cost implications to the city for the management of the charter contract are unknown at this time.

Appendix C

Limitations to Airport and Future Jet EAS Operations

Page Airport is topographically challenged to accommodate jet traffic for airline use.

While large jets do use our airport legally, the use by certified airlines using regional jets is basically prohibited due to our runway.

Airline service is classified into several airport categories, A‐1, B‐2, C‐1, D‐1, etc. These categories are determined by the length (seating capacity) of the airplane used and the stalling speed of the airplane used. The regional jet that SkyWest wanted to use was a CRJ‐200 with an airport rating of D‐1. Our airport is rated at a B‐2 classification.

A D‐1 class airport is required to have 1,000 feet of flat land beyond the end of the takeoff runway (for possible overruns) and 600 feet of flat land before the end of the runway on the approach end. We have 300 feet on the approach end and 300 feet on the departure end. Thus, we do not qualify for the use of regional jet service by virtue of our runway.

Unless changes are made to the runway we will never be able to secure effective jet airline service to our city.

To simplify the discussion, we have two options to cure this issue.

Our Airport Master Plan has the future plan of extending to the north to allow a 7,200 foot runway plus the 1,000 foot overrun. This entails massive excavation and filling to bring the land up to the runway elevation.

A second possibility not defined previously in the master Plan would be to utilize what is called an Engineered Material Arresting System, EMAS for short. EMAS can substitute, in a much shorter distance, for the 1,000 foot overrun area beyond the end of the runway. It is composed of a short area (for a CRJ‐200 about 300 feet long) of material that crushes as an airplane passes over it thus slowing the airplane down quickly without damaging the airplane (much like a big truck runaway area on the highway). This option would be easier to install as it would only require building up the north end of the runway by about 400 feet. No engineering has been done yet and no costs have been anticipated. Several years ago, Arcata‐Eureka Airport in California did this for CRJ‐200 service and the cost was approximately $4.5M dollars. They did not have the fill issue we have. Our runway would stay at 5950 feet in length basically forever if this route was taken. That is not a real problem for the foreseeable future.

SkyWest indicated that they would be very interested in bidding again in two years if the appropriate runway improvements were undertaken. Their bid would most likely include service from Phoenix. Runway improvements, using the EMAS system, should be seriously considered if the value of a bid from SkyWest or other major airline is considered vital to the economic future of Page. The possibility of building out to a runway 7,200 feet long, as the Master Plan shows, is slim to none in any reasonable time period.

Some thought should be given to a reconsideration of planned improvement expenses to the airport over the next 2 years to realign those priorities and expenditures to the runway improvement in order to accomplish the EMAS construction as soon as practical, if that direction is warranted.

Essential Air Service Proposal

Page, AZ DOT-OST-1997-2694

February 22nd, 2017

About Boutique Air

Our Story Headquartered in San Francisco, California, Boutique Air has been in operation since 2007. We began by flying fire surveillance missions for the U.S. Forestry Service and Bureau of Land Management. We evolved to provide air charter services across the west coast with our fleet of Pilatus and Cessna aircraft. As a charter operator we have received certifications from both industry-leading safety organizations, ARG/US and Wyvern. Boutique Air employs pilots that are highly experienced and hold the most advanced FAA ratings - a key reason for our continued perfect safety record.

In July of 2012, Boutique Air applied for commuter operating authority from the Department of Transportation. We quickly passed tests on financial fitness and management competency, receiving authority for scheduled service in January of 2014.

We began flying scheduled service between Los Angeles and in January of 2014.

We have worked to develop effective distribution channels. We have connections in place with all of the major Global Distribution Systems (GDSs), which travel agents use to access the market. You will find us on Worldspan and Galileo (Travelport), Sabre, and Amadeus. In addition, we are on the major Online Travel Agencies (OTAs), including Expedia, Travelocity, Priceline, Orbitz, CheapTickets, and CheapOAir.

EAS Contracts On April 22, 2014 Boutique Air received its first EAS contract when the DOT selected the airline to provide service between Clovis and DFW. Since then, we have continued our track record of success and now serve 16 different EAS communities and operate out of 27 different airports. Continuing on a path of successful growth in the EAS market, Boutique Air will begin service to the community of Massena, NY in April of this year.

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 1

What People Are Saying About Boutique Air

Boutique Air PC-12, one of the best turboprop aircraft on the market!... Give them a try!! ​ ​ -Tarek A. via Yelp.com

We also feel that the PC-12 aircraft bid by Boutique Air presents the safest and most ​ comfortable option for the traveling public. -Hon. Mayor David Lansford in Recommendation Letter City of Clovis, NM

Flew with Boutique from LA to Vegas and back and must say I was extremely surprised. From the ease of check-in, To the flight itself, the whole process was great. Price was ​ ​ competitive with any other airline out there. I plan on flying boutique for all my Vegas outings, and may even look into renting the whole plane for a group trip. Thanks Boutique! -Kevin J. via Yelp.com

We find that Boutique Air is fit, willing and able to operate as a commuter air carrier, ​ and capable of providing reliable Essential Air Service... -Susan L. Kurland in Clovis EAS Award Asst. Sec. for Aviation and International Affairs US DOT

Right now Boutique Air is a very cool secret. ​ -Examiner.com

Flew with Boutique Air from LA to Las Vegas round trip and it was a great experience. Good ​ service, on time departures, and a hassle free and nice way to travel in general. A really nice pilot and copilot as well. -Patrick S. via Yelp.com

​ Smooth flights and personable staff are part of the experience… -Clovis News Journal

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 2

Route Map

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 3

Aircraft:

Boutique Air currently operates a modern fleet of Pilatus PC​-12 and Beechcraft King Air 350 aircraft. All flights are flown by Captains with over 1,200 hours of flight experience and an instrument rating. While we are certified to fly single pilot we opt to fly with a two pilot crew. Boutique Air ensures pilots provide a level of customer service beyond that of normal commercial airlines. ● 8 Passenger Executive Configuration OR 9 Passenger Commuter Configuration ● Pressurized Cabin ● Power Outlets ● Enclosed Lavatory

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 4

Historical Passenger Traffic Performance Boutique Air has established a proven track record in resuscitating air service in Essential Air Service communities which have been devastated by poor execution from prior carriers.

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 5

Completion Reliability Performance (last 12 months)

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 6

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 7

Proposal

Overview Our proposals would be flown in eight or nine-seat, modern, pressurized Pilatus PC-12 or Beechcraft King Air 350 aircraft. The term is two years.

In order to increase brand recognition in the communities, Boutique Air will spend at least $20,000 per year in each community if it is selected for advertising & marketing to help ensure that air service for the community is a success. We will utilize a combination of radio, print, billboard, TV, and internet advertising.

Special Note on Service Start Date Boutique Air will begin service 60-90 days after the DOT issues the order selecting Boutique Air as the EAS Carrier. Boutique air will start service as early as operationally possible.

Special Note on Interline Boutique Air is in the process of implementing an interline agreement with one of the major airlines and expects it to be in place by early 2017.

Community Input

Shortly after the bids are complete, Boutique Air will schedule times to meet with airport and/or city officials. This will allow us to answer any questions and provide additional information.

While we can’t promise we will be able to implement everyone’s suggestions, we welcome feedback from all of the participating EAS communities, as well as anyone who may have an interest in the proposed flights. What we can promise is that we will listen to your feedback, and give it the attention and consideration it deserves.

With respect and appreciation,

Shawn Simpson CEO

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 8

Page, AZ

Option 1: KA-350, 18 Nonstop RTs Weekly PGA - LAX (3 Daily RTs) Operations Scheduled Flights 1,872 Completed Flights (98%) 1,834 Scheduled Block Hours 3,456 Scheduled Seats 16,848 Scheduled ASMs 7,463,664

Revenue Passengers 11,000 Average Fare $150 Fare Revenue $1,650,000 Total Revenue $1,650,000

Expenses Fuel $1,615,680 Ownership $860,000 Maintenance and Reserves $1,883,520 Crew $380,160 Airport Rent $225,660 Landing Fees $105,768 Staff $156,000 Insurance $20,000 Marketing and Distribution $20,000 Other Indirect Costs $27,600 Total Costs $5,294,388

Profit Element $264,719 Margin 5.0%

Total Subsidy $3,909,107

*** ​Community can elect to substitute in PC-12 for this option at an annual subsidy rate of $3,262,504

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 9

Page, AZ

Option 2A: KA-350, 20 Nonstop RTs Weekly PGA - DEN & LAX (13 / 7 Weekly RTs) Operations Scheduled Flights 2,080 Completed Flights (98%) 2,038 Scheduled Block Hours 3,720 Scheduled Seats 18,720 Scheduled ASMs 8,000,928

Revenue Passengers 12,000 Average Fare $150 Fare Revenue $1,800,000 Total Revenue $1,800,000

Expenses Fuel $1,739,100 Ownership $860,000 Maintenance and Reserves $2,027,400 Crew $409,200 Airport Rent $360,240 Landing Fees $96,192 Staff $306,800 Insurance $20,000 Marketing and Distribution $20,000 Other Indirect Costs $69,600 Total Costs $5,908,532

Profit Element $295,427 Margin 5.0%

Total Subsidy $4,403,959

** Community can elect 13 weekly RTs to LAX and 7 RTs to DEN instead in King Air for an annual subsidy of $4,483,721 (Option 2B). Community can also elect to substitute in PC-12 for either of these options: Option 2A: $3,465,082, Option 2B: $3,546,843.

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 10

Page, AZ

Option 3: KA-350, 26 Nonstop RTs Weekly PGA - PHX & LAX (13/13 Weekly RTs) Operations Scheduled Flights 2,704 Completed Flights (98%) 2,648 Scheduled Block Hours 4,032 Scheduled Seats 24,336 Scheduled ASMs 8,347,248

Revenue Passengers 15,000 Average Fare $137 Fare Revenue $2,055,000 Total Revenue $2,055,000

Expenses Fuel $1,969,440 Ownership $860,000 Maintenance and Reserves $2,197,440 Crew $443,520 Airport Rent $328,950 Landing Fees $96,465 Staff $306,800 Insurance $20,000 Marketing and Distribution $20,000 Other Indirect Costs $75,600 Total Costs $6,318,215

Profit Element $315,911 Margin 5.0%

Total Subsidy $4,579,126

*** ​Community can elect to substitute in PC-12 for this option at an annual subsidy rate of $3,812,100.

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 11

Page, AZ

Option 4: KA-350, 26 Nonstop RTs Weekly PGA - PHX & DEN (13/13 Weekly RTs) Operations Scheduled Flights 2,704 Completed Flights (98%) 2,648 Scheduled Block Hours 3,912 Scheduled Seats 24,336 Scheduled ASMs 8,055,216

Revenue Passengers 15,000 Average Fare $137 Fare Revenue $2,055,000 Total Revenue $2,055,000

Expenses Fuel $1,913,340 Ownership $860,000 Maintenance and Reserves $2,132,040 Crew $430,320 Airport Rent $270,000 Landing Fees $75,137 Staff $301,600 Insurance $20,000 Marketing and Distribution $20,000 Other Indirect Costs $90,000 Total Costs $6,112,437

Profit Element $305,622 Margin 5.0%

Total Subsidy $4,363,059

*** ​Community can elect to substitute in PC-12 for this option at an annual subsidy rate of $3,770,844.

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 12

Page, AZ

Option 5: KA-350, 24 Nonstop RTs Weekly PGA - PHX (4 Daily RTs) Operations Scheduled Flights 2,496 Completed Flights (98%) 2,446 Scheduled Block Hours 2,856 Scheduled Seats 22,464 Scheduled ASMs 5,458,752

Revenue Passengers 13,500 Average Fare $99 Fare Revenue $1,336,500 Total Revenue $1,336,500

Expenses Fuel $1,492,260 Ownership $860,000 Maintenance and Reserves $1,556,520 Crew $314,160 Airport Rent $114,000 Landing Fees $37,066 Staff $150,800 Insurance $20,000 Marketing and Distribution $20,000 Other Indirect Costs $48,000 Total Costs $4,612,806

Profit Element $230,640 Margin 5.0%

Total Subsidy $3,506,946

*** ​Community can elect to substitute in PC-12 for this option at an annual subsidy rate of $3,014,558.

548 Market St, Suite 73298 | San Francisco, CA 94104 | t. 415.449.0505 | f. 415.738.7671 13

February 22, 2017

Ms. Susan M. McDermott U.S. Department of Transportation Office of Aviation Analysis 400 Seventh Street S.W. Washington, DC 20590

RE: OST #1997-2694 Essential Air Service at Page, Arizona

Dear Ms. McDermott,

Enclosed please find our proposal for the Essential Air Service program for Page, Arizona.

Our proposal intends to offer conveniently timed connecting services to the McCarran International airport located in Las Vegas, Nevada. Local service will be marketed and priced utilizing the Grand Canyon Airlines (“GCA”) brand and reservations system. All of which will offer passengers traveling to and from these communities supplemental access to the domestic and international air transportation system. McCarran is consistently one of the world’s busiest airports and offering direct flights throughout the country and internationally along with many low fare airlines. In addition to all of the flights offered at McCarran, we also believe Las Vegas will be an attractive destination for the residents of Page. Our mini bus service will also deliver our customers directly to and from their hotels in connection with their flight.

GCA is proposing 3 round trips per day in scheduled service between Page and Las Vegas. The final scheduled times of this service is to be determined in conjunction with Page to meet scheduled air carrier connections. We have included a proposed schedule in our bid. The direct service between Page and Las Vegas will be through our privately owned Boulder City terminal, which has convenient mini bus connections to McCarran International and to Las Vegas Strip Hotels. The mini bus operation is operated as a courtesy shuttle by our sister company boarding more than 200,000 passengers a year to and from McCarran and Strip Hotels. The statutory definition of air transportation includes situations where the transportation is partly by air, and partly by other means. Our mini buses would drop off and pick up passengers at the zero level at McCarran. This is the same location as the airport transportation busses drop off passengers from one terminal to another terminal. It is also the location for limo pick up and drop off. Our customers would have easy access from the zero level to the ticket counters.

GCA currently operates 5 Cessna Grand Caravan turboprop aircraft, which seat 9 passengers. They are all-weather equipped; TKS anti-ice system, Garmin G1000 Glass Cockpit; autopilot and dual GPS with WAAS certified for direct enroute flight. These aircraft meet quiet technology standards. We hold FAA air carrier certificate #GCNA035A issued in November 1969 along with FAA “commuter” authority to operate scheduled service 9 passengers or less. We also hold US Department of Transportation Certificate of Public Convenience & Necessity issued in November 2008 after a rigorous review of GCA’s fitness. We are more than just an air tour operator as we acquired Scenic Airlines in 2007, which previously held E.A.S. authority serving Elko/Ely, Nevada and Merced, Visalia, and Palmdale, California.

We have been serving the community of Page for ten plus years with longtime residents managing our Page operations. We have 15,000 passenger enplanements a year and starting May 1, 2017 we have committed to basing a flight crew and aircraft in Page year round. We are committed to the Page community and it is a large part of our long-term growth strategy. We are unique compared to other bidders as our Company is tourism based and has a large international customer base. We provide products and services that promote Page and all of the attractions it has to offer. We have committed resources in personnel, capital to invest in the city and an annual marketing budget dedicated to the City of Page. All of these items will encourage more travel to Page and over time substantially decrease the annual subsidy required to provide air service. We also provide a significant marketing connection to Las Vegas with its tourism base and ability to bring international tourists. We believe by working with the community we will be able to help grow Page as a tourist destination and improve the local economy by providing year round tourism.

Questions and comments may be referred to:

Jake Tomlin President Grand Canyon Airlines 1265 Airport Road Boulder City, NV 89005 (702) 638-3200

Our History

Grand Canyon Airlines is believed to be the world’s oldest, most experienced air Tour Company in continuous operation since 1927. Proudly owned since 1967 by Elling B. Halvorson and family, Mr. Halvorson has been credited with truly developing and shaping the Grand Canyon airplane tour industry. Just 23 years after the Wright brothers broke the surly bonds of earth's gravity with a powered and controlled aircraft; another visionary named J. Parker Van Zandt had the desire to further promote and create a niche in aviation dedicated solely to promote man's ability to fly with sightseeing. And he found what he thought was the perfect spot on earth to do that: the Grand Canyon. Organized in 1927 under the name Scenic Airways, the first commercial air tour of the Grand Canyon was on October 3, 1927. Since that time, and now under a new name, Grand Canyon Airlines (“GCA”) is credited with providing the first commercial air tours and charters over Rainbow Natural Bridge, Monument Valley, and much more. Van Zandt thought the west and southwest was so beautiful, he named the flights “The Rainbow Route,” as depicted on the aircraft at that time. The company thrived by expanding south looking for winter business where Van Zandt bought five cotton farms just outside of Phoenix, built an airport, and named it “Sky Harbor.” The first flight from Sky Harbor was aboard our Ford Tri-Motor on November 18, 1928. The following year saw more growth before the stock market crashed in 1929 and the Great Depression set in, causing Van Zandt to sell the company and assets to some local Arizona pilots. The company then changed its name to Grand Canyon Airlines and the Thunderbird was introduced as the logo in 1930. A short while later the name was simplified and changed it to Grand Canyon Airlines, and Service continued with expansion to Boulder City, NV, where air tours were provided over the newly constructed Hoover Dam (then known as Boulder Dam) and the Grand Canyon. That service was discontinued in the late 1930's but was started again in 2005. Today, GCA has provided millions of visitors from all over the world with memories and experiences of a lifetime and GCA continues to share the Grand Canyon, Rainbow Bridge, Monument Valley, and more. As previously discussed GCA does have significant experience with E.A.S service, this experience resulted from the acquisition of Scenic Airlines in 2007. It was Scenic Airlines that was the E.A.S service provider for Ely/Elko, Nevada, and Merced, Visalia, and Palmdale, California. Scenic Airlines provided E.A.S. service from those cities in Nevada and California to the North Las Vegas Airport, and then a similar courtesy mini bus service was provided to McCarran Airport, or to the hotels in Las Vegas. Many Scenic employees remain in management and the operations of Grand Canyon Airlines. The actual travel time from Boulder City airport to McCarran is shorter than the travel time from the North Las Vegas airport to McCarran.

Why choose us….

 Currently we have an operational base in Page and are expanding our air tour and charter business in the region.  Boulder City Airport is the third largest airport in the state of Nevada with over 200,000 enplanements and deplanements a year.  Mini bus service to all Las Vegas Strip hotels and casinos along with access to Zero Level at McCarran International, which is limousine, shuttle, town car service level and avoids all the regular traffic, taxis, Uber and Lyft.  During our summer tour season we have flights going to Page and would be able to offer them to meet any excess capacity during the summer months (May through September).  We have partnerships with some of the largest international tour operators in the world and especially strong ties with Chinese, Korean and Japanese operators.  We are committed to investing in the community (building new facilities, adding long-term employment, residents and increasing our products and services).  The future economic viability of Page is very reliant upon tourism and we provide a connection to Las Vegas and its domestic and international tourism base. Other bidders would provide a Phoenix, Salt Lake City or Denver connection, which do not have anywhere near the amount of tourists that could further connect to Page.  We would commit a significant marketing budget to Page promoting the city to the tourists arriving in Las Vegas to make Page a part of their travel plans. It is especially important to capture Las Vegas winter visitors to the City of Page to bring more off-season visitations.  Partnered with local hotels and resorts providing charter service and air tours for their cliental.  We see our base in Boulder City as a strategic advantage in working with the Page community and its airport. We understand the unique opportunities and challenges of being a small to mid- sized community, having similar history (Lake Mead and Powell) and understand the tourism business.

Proposed Flight Schedule

Daylight Saving Time:

Departing PGA for BLD: Departing BLD to PGA:

6:15am arrive BLD 7:45am 8:10am arrive 9:35am

10:00am arrive BLD 11:30am 12:30pm arrive 1:55pm

2:20pm arrive BLD 3:55pm 4:20pm arrive 5:45pm

Standard Time:

Departing PGA for BLD: Departing BLD to PGA:

7:15am arrive BLD 7:45am 8:10am arrive 10:35am

11:00am arrive BLD 11:30am 12:30pm arrive 2:55pm

3:20pm arrive BLD 3:50pm 4:20pm arrive 6:45pm

Grand Canyon Airlines Essential Air Service at Page, AZ, Docket -ST 2694 Based on a 2 year contract - subsidy requirement per year 2017 -2019 CESSNA GRAND CARAVAN – 9 PASSENGERS

PAGE, ARIZONA (PGA) 21 Nonstop RT Weekly PGA-BLD (3 Daily RTs)

OPERATIONS Scheduled Flights: 2,190 Completed Flights (98%) 2,146 Scheduled Block Hours: 3,193.8 Scheduled Seats: 19,710 Available Seat : 3,922,290

REVENUE Passengers 6,701 Average Fare $ 199 Total Revenue $ 1,333,579

EXPENSES Fuel 546,546 Ownership 540,000 Maintenance 785,559 Labor 826,160 Marketing 60,000 Other Indirect Costs 685,187 Total Costs 3,443,452

OPERATING LOSS $ (2,109,873)

PROFIT ELEMENT Margin (5% of Total Costs) 172,173

Total Subsidy $ 2,282,046

Great Lakes Aviation, Ltd.

Provider of Essential Air Service for over 30 years throughout Midwest and Western regions of the United States. Meet Our Fleet

 Beechcraft 1900D  EMB120 Brasilia 28 aircraft 6 aircraft  19 seat turboprop  30 seat turboprop  Flight Attendant

 Lavatory Business Model

• Equipment branded as Great Lakes

• Local segment service sold as Great Lakes (ZK)

• Codeshare with (UA).

• Electronic Interline ticketing agreements with , Delta Airlines, and United Airlines. Codeshare with United Airlines

• Allows passengers to effortlessly transfer to a United flight. • Baggage transfer to final destination. • Access to over 100 domestic and international destinations Marketing &Ticketing

Sold on major travel agencies – Expedia – Travelocity – Priceline – Also sold on our website Flygreatlakes.com Before the United States Department of Transportation

Washington, DC

February 22, 2016

Essential Air Service at

PAGE, ARIZONA Docket OST-1997-2694 under 49 U.S.C. 41731 et.seq.

This document contains the response of Great Lakes Aviation, Ltd. to Order Requesting Proposals 2017-30

Great Lakes Aviation, Ltd. is pleased to submit these proposals to provide essential air transportation to Page, Arizona and the Lake Powell region.

Our proposals provide conveniently timed schedules to our Phoenix, Los Angeles and Denver hubs, whereby passengers may utilize our code-share agreement with United Airlines. In addition to our code- share agreement with United Airlines, Great Lakes maintains electronic interline ticketing and baggage agreements with American, Delta and United. Passengers will also be eligible for Delta Sky Miles Frequent Flyer program when travel is booked through Delta's sales channels. All of which will offer passengers traveling to and from these communities supplemental access to the domestic and international air transportation system.

The Company has created a pilot domiciling program that facilitates a significantly improved quality of life by enabling pilots to return home every night. By not relying on pilots that routinely commute to a hub to originate their duty day a pilot can enjoy more time available to be home with family. This practice will improve the quality of service and contribute to improved reliability of service for the communities.

Great Lakes is proposing two service alternatives for Page. The first proposal consists of Beech 1900D service configured with 19 seats in a schedule that follows historical seasonal patterns. As a optional summer seasonal service the company would be prepared to offer a Regional Jet rate subject to additional US DOT and community negotiation regarding optimal scheduling and the airport meeting the additional certification requirements for a 50 seat regional jet.

Questions and comments may be referred to:

Philip Lundeen Chief Financial Officer Great Lakes Aviation, Ltd. 1022 Airport Parkway Cheyenne, WY 82001 (307) 432-7000 Table of Contents:

Subsidy Passengers Avg Service Bid Points Hub Options Equipment Requirement Forecast Fare

Phoenix (non- 1Page stop) and/or 19 Seat Beech 1900D $2,282,818 20,000 $92.94 Denver (one-stop) /and or Los Angeles (one- stop)

124 departures in 37 to 50 2 Page Denver (non-stop) seat $482,112 3,000 $114.75 Regional Jet option Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

Page, Arizona to Phoenix (PHX), Los Angeles (LAX) and/or (DEN) one-stop B1900 - (nineteen seat configuration) (at 98 percent completion)

Departures: 1,936

Operating Revenues:

Passenger: PGA 20,000 psgrs at $92.94 $1,858,800

Other: (at 0.62% of passenger revenue) $11,525

Total Operating Revenues: $1,870,325

Operating Expenses: Aircraft and Hull Direct: Insurance $395,725 Fuel and Oil $870,315 Flying Operations $640,879 Maintenance $1,015,914

Total Direct Expenses: $2,922,833

Total Indirect Expenses: $1,032,541

Total Operating Expenses: $3,955,374

Operating Loss ($2,085,049) Profit Element (5.0% of Total Operating Expenses) $197,769

Annual Compensation Requirement: $2,282,818

Historical published schedules should be used as sample service levels. Hub options eligible for subsidy are Phoenix (non-stop) and/or Denver (one-stop) or Los Angeles (one-stop).

As has been occurring in recent years, Great Lakes would operate four peak day round trip departures with reduced service to three round trips in shoulder periods and two round trips per day in off peak seasonal periods. Schedules would be coordinated with community input.

No less than 1,936 annual departures would be operated assuming a 98% completion factor.

This Proposal is submitted with no upline scheduling restrictions Great Lakes Aviation, Ltd.

Optional Compensation Requirements for Essential Air Service at

Page, Arizona to Denver (DEN) Season Regional Jet option - Three round trips per week for 21 weeks (at 98 percent completion)

Departures: 21 weeks - May 15th through October 6th 124 Block Hours 189 RPM's PGA- DEN miles 420 1,260,000

ASM'S available seats/dept 50 2,604,000 Load Factor 48.4%

Operating Revenues:

Passenger: PGA 3,000 psgrs at $114.75 $344,250

Other: (at 0.62% of passenger revenue) $2,134

Total Operating Revenues: $346,384

Operating Expenses: Aircraft and Hull Direct: Insurance $84,207 Fuel and Oil $220,462 Flying Operations $71,847 Maintenance $184,318

Total Direct Expenses: $560,834

Total Indirect Expenses: $228,210

Total Operating Expenses: $789,044

Operating Loss ($442,660) Profit Element (5.0% of Total Operating Expenses) $39,452

Annual Compensation Requirement: $482,112

Subsidy per departure $3,888 Subsidy per passenger $161

If the community is interested in negotiating Regional Jet service, Great Lakes would provide the community with 3 round trips per week of service for the Summer season peak.

The schedule recommended for this type of product offering would be a overnight aircraft with a 7:00 AM departure to Denver and a evening return leaving Denver at 6:30 PM.

This Regional Jet offering relies upon use of a contracted partnership with a FAR Part 121 air carrier and Great Lakes. The proposal also assumes that all FAA FAR part 139 airport certification requirements can be complied with for the operation of the regional jet aircraft.

Alternate Essential Air Service Proposal for Page, Arizona

Presented By Public Charters, Inc. February 20, 2017

February 20, 2017

Clifford Biggs Airport Direct Page Municipal Airport 238 North 10th Ave. Page, AZ 86040

VIA Electronic Mail

Dear Mr. Biggs:

Public Charters, Inc. DBA Regional Sky (PC) is pleased to present our proposal to provide Alternate Essential Air Service to the Page Municipal Airport (PGA) under the pilot program established by 49 USC 41745(a)(3)(f). Based upon the information that we have gathered, we anticipate enplanements at PGA to increase by approximately 25% over 2016 levels in the first year of our proposed program.

You will find that PC’s proposal reflects the attributes of Essential Air Service as originally conceived by Congress, with non-stop service to hub airports that makes sense for all stakeholders, in a better class of equipment than has recently been available at PGA at a fiscally responsible level of subsidy, and with the flexibility in scheduling and pricing to fine-tune operation to best meet the needs of the airport and the local community.

We are committed to ensuring continuity of service to PGA. Not only will we carefully coordinate our commencement of service with the incumbent carrier, we will work with you to finalize contract provisions at both the local and Federal level that permit us to be “held in” pending a contract renewal or selection of a replacement carrier.

Alternate Essential Air Service gives the community an unprecedented level of control of the air carrier and the service that they provide. As many in Congress continue to press for Essential Air Service reform, PGA has a unique opportunity to use this procurement to help define the future of the program, making the best use of Federal dollars while obtaining a better and more appropriate level of service for the community.

We respectfully request selection as your air carrier and look forward to collaborating with you on the successful implementation of Alterative Essential Air Service at PGA.

Respectfully submitted this 1st day of August 2016,

______PUBLIC CHARTERS, INC. DBA Regional Sky Jim Gallagher, President/CEO 201 Hangar Road Avoca, PA 18702 570-457-1950 (voice) 570-457-4113 (fax) [email protected] (e-mail)

About the Offerors

PC is a U.S. Charter Operator authorized pursuant to 14 CFR Part 380 to organize and sell Public Charters as an Indirect Air Carrier. PC is authorized by the International Air Transportation Association (IATA) to use the two-letter code “P1” and has distribution rights on certain Global Distribution System (GDS) platforms including, but not limited to Sabre and Amadeus, through certain online travel agencies, including but not limited to Priceline.com and Fly.com, and has an agreement to settle ticket sales, including sales of public charters flights, through the Airlines Reporting Corporation (ARC). A copy of ARC’s press release regarding its arrangement with PC (reprinted from travelagentcentral.com) is attached hereto as Exhibit A. PC owns proprietary web-based software products that together address all aspects of ticket sales, distribution, e-ticketing, baggage tracking, and interline communications. PC is TSA Secure Flight compliant, providing both domestic and international TSA clearances. PC also has direct experience in all aspects of air carrier station operations and management.

PC contracts with Ultimate Jet Charters (IJC) to provide aircraft, crews, flight operations, and aircraft maintenance UJC is a U. S. Carrier (certificate number FJTA920D) authorized by the FAA to operate under 14 CFR Part 135. A copy of UJCs Air Carrier certificate is attached hereto as Exhibit B-1. UJC received its commuter fitness from USDOT. A copy of UJC’s Insurance certifcate is attached hereto as Exhibit B-1

CFM presently operates 7 Dornier 328 Jet airliners (30)-passenger aircraft) in addition to (2) EMB-135 aircrafts in its fleet. The company has a TSA-approved full aircraft security program permitting operations into and out of “sterile” airport terminals.

The Proposed Service

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After consulting with representatives of PGA, PC has elected to propose service to two hub airports. The Program will consist of one round trip per day (excluding Saturdays) between the Page Municipal Airport (PGA) to Salt Lake City International Airport (SLC) and one round trip per day (excluding Saturdays )to Phoenix Sky Harbor International Airport (PHX). Under PC’s proposed program, PGA would receive a total of 24 flight segments per week: 12 for each Hub city including SLC and PHX. This schedule would run for 8 months from March through October each Calendar year. During the off season November through February PC will re-locate the aircraft from SLC airport to PGA airport and operate one (1) single round trip flight to PHX (excluding Saturdays). This Program will be provided as Alternate Essential Air Service (AltEAS) under the pilot program established by 49 USC 41745(a)(3)(f) and will be operated as public charters in accordance with 14 CFR Part 380.

The gate-to-gate time for each flight segment between PGA and SLC or PHX is expected to be approximately 1 hour. All operations will be conducted to and from the main terminal at each airport. All passengers, their baggage, and the aircraft will undergo full TSA screening at the main terminal at their trip’s point of origin. The passenger check-in location at each airport will be printed on the itinerary that we will provide to each passenger.

Proposed Flight Schedule

PC proposes a service pattern tailored to meet the needs of the community Figure 1 below is a pro-forma timetable for the proposed morning service Monday through Saturday of each week. Figure 2 below is a pro-forma timetable for the proposed afternoon service on Mondays, Wednesdays, and Fridays of each week. All times in each figure are local times. PC will continually monitor changes in the timetables for the connecting carriers at SLC and PHX. In collaboration with PGA; PC will adjust its schedule, including – if necessary - the days on which the service operates, to best meet the connecting flight needs of its passengers. Also, please note that we propose service between the main terminals at each airport, which will require full TSA screening of passengers and baggage at PGA. PC will drop the SLC service seasonally for the months of November, December, January, and February and move the aircraft to be based at PGA to operate a single turn 6 days per week to PHX. PC will operate 210 round trip flight to and from SLC During the months between March and October and the same 210 round trip flights during the same period for PHX. Seasonally between November and February; PC will only operate 1 daily round trip between PGA and PHX for a total of 104 total round trip flights. All of the above flights are less 4 Holidays that are No operational Days including Christmas, Easter, Independence

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Day, and Thanksgiving. Round Trip Flights calculated as follows: (This is what the subsidy calculation is based upon) March through October 210 round trip flights during main season to SLC= 12,600 potential passengers 210 round trip flights during main season to PHX= 12,600 potential passengers November through February 104 round trip flights during the Off season to PHX= 6,240 potential passengers Totals 1,048 flight segments annually ( less (6) holiday round trip- 2 during Peak season 2 during Off peak season or 6 round trips / 12 flight segments / 360 total potential passenger segments)

Schedule: Days Daily X6 *times are flexible according to further city input and gate allotments Arrive Stops SLC 10:00 AM PGA 11:00 AM 0 PGA 11:40 AM PHX 12:40 AM 0 PHX 5:00 PM PGA 6:00 PM 0 PGA 6:40 PM SLC 7:40 PM 0

Figure 1: Pro-Forma Daily Flight Schedule: Daly except Saturdays (Peak)

PGA 9:00 AM PHX 10:00 AM 0 PHX 3:00 PM PGA 4:00 PM 0

Figure 1: Pro-Forma Daily Flight Schedule: Daly except Saturdays ( Off Peak)

PC has been working with other cities in on the Alternate EAS Program. PC constantly monitors the hub airports and frequency in order to better manage the program outcome to for the benefit of the community. The flexibility to meet the demands of the passengers will be the key to our success. . While we still have our Ups and Downs; there is a commitment to serving the community and a great team that has been developed to help Deliver the quality service that the Community expects.

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The Hub Airports

SLC SLC is served by over 15 airlines offering nearly 86 daily non-stop domestic destinations and over 9 non-stop international destinations – including London, England – as well as dozens of daily connecting flights. In addition, SLC offers access to low cost carriers such as Frontier, JetBlue and Southwest.

PHX PHX is served by over 35 airlines offering nearly 80 daily non-stop domestic destinations and 20 daily non-stop international destinations, as well as hundreds of daily connecting flights. It is a hub airport for American Airlines. In addition, offers access to low cost carriers such as Spirit Air and Frontier.

We have been in contact with the marketing offices and ground handlers at both SLC and PHX, and are working toward securing ticket counter, gate space, and ground support of our AltEAS operations.

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Actual Interior Photo Do328 Jet 30 Passenger Seats Figure 2

The Aircraft and Crews

PC proposes operations using UJC’s Dornier 328 Jet 30-passenger aircraft. The Dornier Jet is a pressurized twin-engine turbine airliner built and regulated to 14 CFR Part 25 standards. Figure 3 presents a layout of the Dornier 328 Jet cabin. Its crew compliment includes a Captain and First Officer. Both crew members receive regular simulator training at Flight Safety International. The Dornier 328 Jet offers the largest cabin in the 30-seat class of aircraft and have been

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proven to be both safe and economical in worldwide operation. It is the only 30-seat airliner to offer galley and enclosed lavatory facilities.

UJC’s Dornier 328 aircraft are fast, with a 300 mph “standard” cruise speed. With 30 passengers plus standard baggage, the Dornier has a maximum non-stop range of over 1000 statute miles. SLC is approximately 250 statute air miles from PGA and PHX is approximately 250 statute air miles from PGA. Therefore, both proposed hub airports are well within the Dornier’s non-stop range.

The Dornier’s average runway requirement is 4,800 feet – comparable to many general aviation aircraft. Its 31,000 foot service ceiling permits UJC’s Jetstream aircraft to climb above most bad weather. The Dornier 328 aircraft are fully-deice equipped for flying into known icing and has freon air conditioning for passenger comfort while on the ground. UJC’s Dornier’s are also equipped with advanced safety systems, including a Traffic Collision Avoidance System (TCAS I) and an Enhanced Ground Proximity Warning System (EGPWS). In addition, the Dornier 328 features a flight deck that is physically separated from the main passenger cabin, a pressurized cargo hold with 2000 lbs.

UJC has no accidents or violations and has been given a Gold rating by the carrier evaluation firm ARGUS.

Maintenance has always been the key to UJC’s reliable on time performance. We will provide our technicians with an inventory of spare parts and the support equipment necessary to keep the dispatch reliability of UJC’s Dornier’s at above industry standards. The on-site spare parts at SLC will be augmented by the over $millions of dollars of spare parts inventory maintained on hand at UJC’s headquarters in Akron, Ohio.

As noted above, CFM presently has 7 Dornier 328 Jet aircraft in its fleet, providing ample reserve capacity to address planned and unplanned requirements. UJC also operates 2 Embraer 135 aircraft configured with 30 passenger seats.

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Sales

Sales will be conducted using PC’s “P1” IATA code through its proprietary computerized reservation system (CRS). PC’s CRS has “Type A” real time connectivity and has been certified for E-Ticketing on both the Sabre and Amadeus GDS platforms. One of the features that GDS participation provides is access to information about all available connections at the AltEAS hub airports. GDS participation also makes fares available world-wide, maximizing exposure for PGAT.

In addition to GDS distribution, our flights will be available for purchase through a number of Online Travel Agents and travel aggregators, as well as through our own web site. Figure 3 shows a screen capture from Cheapoair.com of a flight sold by PC under the MBL- MDW AltEAS program. For the PGA AltEAS program, flights will display in a similar fashion.

Through GDS and internet distribution, we enable passengers or their travel agents to construct itineraries using multiple carriers by purchasing tickets on each carrier separately through a single transaction. Travel agents can use a special “segment select” function that enables then to build each segment of flight with different carriers on the same itinerary regardless if there is an existing interline agreement. Figure 4 shows a screen capture of a combined itinerary for a MBL – MCO (Orlando, Florida) round trip with PC flights paired with both low cost and major air carriers.

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Figure 3: Sample PC Cheapoair Search Screen

We receive complete electronic information on all of our bookings, including multiple carrier itineraries. Our system is designed to identify such bookings and to provide the pertinent data to our upline and downline station personnel. Funds from all GDS and online sales will be cleared through the Airline Reporting Corporation and remitted directly into the depository escrow account required by 14 CFR Part 380. In addition, passengers will protected by 14 CFR Part 380 bonding and escrow requirements applicable to both PC and CFM.

We will fully comply with the 14 CFR Part 380 provisions governing tour operator- participant contracts. Screen displays will disclose the information required by Part 380 and DOT guidance on advertising and internet sales. Also, as part of the purchase process, passengers or their travel agents will receive electronic copies of the Operator Participant Contract and the CFM Contract of Carriage.

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Figure 4: PC Combined Itinerary Generated by a Travel Agent with United and Frontier for a MBL-MCO Round Trip

UJC’s Contract of Carriage for AltEAS flights will incorporate all DOT regulations providing consumer protection that are applicable to commuter air carriers, meeting consumer expectations for scheduled service operations with aircraft having fewer than 60 passenger seats.

Flights operated as public charters offer enhanced consumer protections when compared to tickets sold by traditional , regional, and commuter air carriers:

 The funds from all ticket purchases for each flight are held in escrow at a USDOT- approved financial institution. Neither the direct or indirect air carrier can access the funds until the flight is complete  Passenger refunds are protected by a public charter payment bond. The bonding company can make refund payments to passengers if the carrier is unable to do so  14 CFR Part 380 places significant restrictions on the cancellation of pubic charter flights. It specifically prohibits the cancellation of any flight within 10 days of its scheduled departure other than for circumstances that make it physically impossible to perform the trip  All public charter programs are approved – and adherence to the public charter regulations is monitored by - the USDOT’s Special Authorities Division. Rule infractions may lead to the termination of a carrier’s public charter program and denial of approval for future programs

Program Phase-in and Commencement of Service

We expect to commence phase-in activities and ticket pre-sales approximately 60 days prior to our start date. We will coordinate with the new routes and schedules in our marketing plan..

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Projected Fares

We have determined that an average one-way fare to SLC and PHX of approximately $100.00 net of per head taxes but inclusive of FET. PC will yield manage a work with the airport seasonally to adjust the rates PC’s fares to maximize market demand and tolerance comparable to the service rendered. Standard fares will have limitations on the circumstances under which they will be refunded.

Projected PGA Enplanements

Our analysis indicates that the combination of direct service from PGA to SLC and PHX, coupled with competitive one-way and round trip fares, reliably delivered using aircraft configured and equipped with the amenities expected of regional carriers by the flying public, could increase annual enplanements at PGA by approximately 25% over 2016 levels in the first year of AltEAS operations. Total traffic(enplaned and deplaned) at the airport could conceivably exceed 12,500 passengers.

Proposed Subsidy

Our proposed service will require an annual subsidy of $4,668,000.00. (1036 flight segments per year ) This breaks down to a per-flight segment amount of $4,505.00. Even at the projected load factor, the program will average over 10 passengers per day. The details of our subsidy calculation appear in Attachment C hereto. We believe this to be a fiscally responsible level of subsidy and one that maximizes the utility of the service to the community and the flying public for each dollar spent.

Multiple Ticket Purchase PC has no Interline Agreements at this time. We are re-creating an expanded search engine on our web site (Under the Regional Sky Brand) that searches for additional connecting flights that could be bought as a separate ticket to the initial ticket purchased from PGA to transport a passenger to their desired destination. This would be a multiple ticket purchase transaction.

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Market Development We will initiate a number of marketing activities including, but not limited to:

 Local televised marketing campaigns (Figure 5 below shows a still from an animated TV and web campaign created by PC for various markets)  Web marking campaigns by IP zip codes  Trade campaigns (“Free Seats for Free Trades”) to promote local support, including 60 free seats per contract year to the Victoria Regional Airport Authority for marking purposes  “Flying Billboard” promotions to help local businesses use the aircraft to promote their products and services  Local promotions including discount coupons, promotional code savings campaigns, “Buy One Get One Free” purchase programs and travel vouchers to help raise enplanements

PC will put marketing people on the Figure 5 “Scooter” – an animated character developed by ground in the PGA market in order to put PC for TV and web ads

these promotional plans into action.

In the future, the needs of the community may change. It is possible that there may come a time that SLC or PHX are no longer the best airports to be served from PGA. PC will conduct continual data analysis and maintain open lines of communication with all stakeholders to ensure that we provide service to the hub that best meets the over-all needs of PGA users. If a change of the hub airport is warranted, we will carefully coordinate the selection of and transition to the new hub with the community and all stakeholder groups.

Business Structure

PC anticipates using the same structure with PGA that we successfully employ currently on other Alt EAS markets. PGA would enter into an agreement with the Federal Government for the program funding. PC would enter in to an agreement with PGA for the services. PC would then enter into a

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contract with UJC for direct air carrier services and with other entities for various other functions to support the program. The safety and consumer protection regulations that govern the services that we will provide through this program dictate that certain functions may be performed only by the entity that is licensed or otherwise approved to do so. This means that IJC will be solely responsible for all flight operations and PC will be solely responsible for all ticket sales. The regulations permit PC to provide other functions, such as customer service, gate agent service, and ground support directly through our PC or through subcontractors at each airport.

Contractual Considerations

We believe that the service contract between PGA and PC (and the corresponding agreement between PGA and the Federal Government) should reflect as much as possible the terms and conditions applicable to traditional Essential Air Service. Upon notice that PGA wishes to procure PC’s services under the AltEAS program, we will provide model documents that can be used to effectively reflect the features of traditional EAS in the agreements that establish and fund the proposed PGA-SLC and PHX program while also satisfying the guidelines established by the DOT for AltEAS in Notice DOT-OST- 2004-18715-0001. Having successfully navigated the AltEAS contracting process at the local and Federal level with our existing MBL-MDW program, we can provide a significant amount of support in this area.

Proposed Contract Term

While there is no set term for an AltEAS program, PC believes that a four (4) year contract model which is also acceptable under the traditional EAS program is appropriate for this program. We propose a 24 month base contract period with an additional 24 month option period to be exercised at the discretion of PGA. The base period and option period will each require the annual subsidy amount set forth herein.

We understand how critical the continuity of air service is to the community. We therefore propose that at the end of the term, PC continue to provide AltEAS on a month-to-month basis until such time as a new contract is issued to us or a replacement carrier commences service. We propose that our subsidy for each such “hold-in” month be 1/12 ($389,000.00) of the total annual subsidy amount set forth herein.

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Payment Terms for the Subsidy

PC proposes that the per flight subsidy be based on flights completed during each calendar month and paid in arrears to its public charter escrow account upon PGA’s receipt of a report from PC detailing that month’s flight operations. The form and content of the report will be agreed to by the parties as part of the contracting process. This payment protocol will ensure that the AltEAS funds are only paid for flight services rendered.

In the first year PC will require an upfront deposit of $200,000.00 to be deducted from the annual subsidy amount. Year #1: $4,668,000.00 - ($200,000.00) = $4,468,000.00 / 1036 = $4,312.00 per segment (ROUNDED) Years 2 with options $4,668,000.00 / 1036 = $4,505.00 per segment (ROUNDED)

February 20, 2017

Public Charters, Inc. Page 13

Exhibit A

May 12, 2014 Public Charters, Inc. Exhibit A

Exhibit B-1

May 12, 2014 Public Charters, Inc. Exhibit B-1

Exhibit B-2

Wells Fargo Insurance Services USA, Inc. Page 1 of 2 CERTIFICATE OF INSURANCE Certificate Holder: To Whom It May Concern This certificate has been issued to certify to the above that the below Insurers, each for its own part and not one for the other, are providing the following insurance: Named Insured: Ultimate JETCHARTERS, LLC Address: 6061 West Airport Drive, North Canton, OH 44720 Policy Period: July 14, 2016 to July 14, 2017 at 12:01 a.m. Local Standard Time Geographical Limits: Worldwide Use: All operations of the Named Insured, including PT 135 / Commercial use for hire Description of Coverages: Aircraft Hull and Liability Insurance, Ground and Full Flight Coverage Aircraft Liability Coverage Coverages Limits of Liability Combined Single Limit including Passengers (BI & PD) $225,000,000 Each Occurrence Medical Expenses, including Crew $ 25,000 Each Person Aircraft Physical Damage Coverage Hull Deductible Make and Model FAA No. of Aircraft Insured Value In Motion/Not In Motion 2001 Dornier 328-300 N328WW As Agreed $25,000/$25,000 2001 Dornier 328-300 N406FJ As Agreed $25,000/$25,000 2001 Dornier 328-300 N407FJ As Agreed $25,000/$25,000 2001 Dornier 328-300 N411FJ As Agreed $25,000/$25,000 2001 Dornier 328-300 N419FJ As Agreed $25,000/$25,000 2001 Dornier 328-300 N425FJ As Agreed $25,000/$25,000 2001 Dornier 328-300 N429FJ As Agreed $25,000/$25,000 2001 Dornier 328-300 N359SK As Agreed $25,000/$25,000 Embraer EMB 135LR N356BZ As Agreed $25,000/$25,000 War Physical Damage and War Liability Coverage included. ______It is agreed that with respect to charter service provided by the Named Insured under a contract or other agreement: The aircraft charter customer is included as an additional insured but only with respect to liability because of acts or omissions of the Named Insured while the insured aircraft or temporary substitute aircraft is actually being used by the Named Insured on behalf of the aircraft charter customer. However, the charter customer is not an Insured if he, she, or it, or any of his, her or its agents or employees is the owner or lessor of the temporary substitute aircraft.

May 12, 2014 Public Charters, Inc. Exhibit B-2

Exhibit C Calculations

1,036 annual Flight segments (after adjustment for Holidays below) = 31,080 potential passengers @ 35% load factor = 10,864 passengers. Calculating $86.81 net revenue per seat ($100.00 / ticket less FET, CC processing, and Travel agent commissions)= $933,712.20

( 4 Holidays as No Op Days: Christmas, New Years, Independence Day; Thanksgiving – 6 round trips)

Aircraft costs ($2.903,416.00)

Fuel ($1,118,880.00)- ($3.00 Base)

Airport Fees/ Ground Handling fees (1,101,312.00)

Marketing ($63,624.40)

CC processing ($70,111.40)

GDS Fees ($70,000.00)

Call center and Travel Agent Commissions (54,240.00)

Profit : ($220,128.40)

Total Expenses ($5,601,712.20)

Plus Revenue $933,712.20

Proposed Subsidy $4,668,000.00 (ROUNDED)

1036 segments @ 30 seats = 31,080 passengers $4,505.00 (ROUNDED)

per segment

1rst year less $200,000 deposit = $468,000 / 1036 = $4312.00 (ROUNDED) per segment

May 12, 2014 Public Charters, Inc. Exhibit C