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BOUTIQUE AIR
5 Third Street, Suite 320 San Francisco, CA 94103 t. 415.449.0505
f. 415.737.7671
Department of Transportation
Essential Air Service Division
United States Department of Transportation 1200 New Jersey Ave SE
Washington, DC 20590
Dear DOT, Grant County Commissioners, and Boutique Air Customers, My name is Shawn Simpson and I am the CEO of Boutique Air.

July 25, 2018
I’m writing today because on July 10th the Grant County Commissioners voted to replace Boutique Air with a new carrier that has no experience in rural community air service: Advanced Air.

Under normal circumstances, I am not one to question an official recommendation by a local government for the Essential Air Service program. In the last five years Boutique Air has been through dozens of bids with different communities; sometimes we are recommended, and sometimes we are not.

This particular recommendation was unlike any other that we have ever been through. The primary issue is that a public process was not followed for the two contending airlines. Boutique Air, with help from Grant County staff, setup a public meeting to make a presentation to the County Commissioners. Only one of the five decided to attend, however. There are five districts in the county and only one out of the five districts was represented at the meeting.

This means that the rather important information that Boutique Air intended to present to the elected officials was only seen by one of the five Commissioners. Our presentation included a tremendous amount of relevant information including updates on reliability, on time performance, passenger traffic, technological improvements, and our significant new codeshare agreement with United Airlines. The very people who are tasked with making this impactful recommendation on behalf of thousands of their constituents were, for some reason, not able to make it to this presentation that the county itself assisted in setting up.

Our competitor on the other hand met privately with Commissioners in one on one meetings and again in a meeting to which Boutique Air was not invited.

So in my view (and the view of many Grant County citizens who have spoken up), the process by which the Commissioners made their recommendation did not reflect that which most people would expect of a county government.

It would be one thing if Boutique Air’s service was a complete failure in Silver City. Instead, Boutique Air has set new passenger records*** every single year it has served this community and is on track to set a new record this year even considering the challenges we faced in Q1. If we are not truly serving the community then why are more passengers using us than ever before?
A side effect of not conducting official presentations by both airlines is a lot of incorrect information being sent out by city officials (and the Commissioners), concerning the companies, the proposals, the aircraft, aircraft parts availability, and even the EAS program itself. I am writing to clarify for the Commissioners, the DOT, and also our passengers what happened here as well as some facts.

First, I think it is worth asking, what is a normal EAS process? It is one where the decision makers and the public have the opportunity to meet with and hear from any company that has bid and may be a good candidate for providing air service. Airlines are complicated with many details surrounding pilots, maintenance, aircraft, customer service and technology so it is important that questions are asked and answered. There are many considerations.

As an example, here is an actual email I recently received from Dustin Allinger of Alamosa, Colorado where Boutique Air is the incumbent carrier.

Subject: Alamosa Essential Air Service Proposals Date: Fri Jul 13, 2018
Good Afternoon, Shawn,
Thank you again for taking the time to submit a proposal for the ALS-DEN essential airport service route. As a follow-up to my call yesterday, the community would like the opportunity to hear about your air service plan. We invite your team to present to the public during one of three time slots on July 25, 2018 at either 0900, 0935 or 1010, which the order will be determined soon.

Due to the busy schedule of the County Commissioners, we are asking that, if you bring an aircraft for display, it would be on site by 0800 on the 25th.

All presentations will take place in the County Commissioners chambers at 8900 Independence Way, Alamosa, Colorado 81101 (five minutes from the airport).
The presentations will be moderated to keep schedule. We ask that airline representatives only be present (in the chambers) for their own airline presentation.

Please let me know if you or a representative can attend and if you plan to display an aircraft.
Dustin Allinger
Airport Director
Alamosa Regional Airport
This message is very typical for this process. The same process where all carriers are invited to present has taken place in Show Low, Cortez, Page, Moab, Vernal, Massena, Beckley, Merced, Alliance and Chadron to name a few. Generally the Airport Director will coordinate with interested airlines to ensure that there is a fair and public process by which the airlines are given an equal opportunity to present information to the decision makers. We serve 16 essential air service cities. I have never tried to reach out or meet with a decision maker individually to try to exert extra influence. It does not seem right to me to be meeting with Commissioners individually outside of a public forum.

So here is what happened in Silver City:
Some of the Boutique Air employees we have there started telling us that Advanced Air was holding meetings with government officials.

This, of course, was concerning to me because we are accustomed to a public process where times to present are established between the community and the airlines. Since we had no invitation or communication from anyone in the government regarding our proposal for the next bid cycle, I reached out to our contact at the county, Pricilla Lucero. She explained that Advanced Air had been setting up meetings. I told her that, of course, we would also like to give a presentation and meet with the relevant decision makers--I asked if she could help us do this. She agreed to assist.

I also explained that nearly any time would be fine on our end. She indicated that May 31st at 1:30pm would be the best time for everyone. I trusted that the relevant decision makers would be coming to this meeting. All five of the County Commissioners were invited, but in the end only one attended, Billy Billings. A handful of other people were present, but none of the decision makers, except Mr. Billings.

We assumed that the Commissioners would want to hear a presentation by Boutique Air so they could make an informed decision and ask questions. To this day, we have never presented to the Commissioners.

On July 3rd the Airport Director emailed me to collect information for the Commissioners meeting and asked that I answer several questions. These questions were related to schedule, fares, and our interline agreement with United. I emailed her our detailed answers. The Airport Director never indicated that I would be able to present any information at such a meeting, nor did she invite me to attend. She merely wanted me to answer questions via email. I had no reason to believe I would even be allowed to attend.

On July 10th the Commission met and voted to support Advanced Air. In the next day or two I learned that Advanced Air was not only present at the meeting but also given the opportunity to speak directly to the decision makers--the County Commissioners.

This is when the unfairness of the situation really started to become clear. It seemed that decision makers were not interested in hearing both sides. If they were--they would have made a point to hear from their current airline.

A Problem With the Facts
Upon hearing the news that Advanced Air had been recommended, many Boutique Air customers decided to write both the Commissioners and comment on the DOT’s docket for Silver City EAS.

It was the responses from the Commissioners to the passengers (their constituents) that really underscored the substantial mis-information that has been circulating; I would assume that much of this is the result of hearing a lot of information from an extremely hungry but inexperienced competitor such as Advanced Air.

Below are quite a few examples of this misinformation:
Advanced Air has sold itself as having 100% reliability and 98% on-time performance (stated very clearly in their bid). Well, that is interesting because every airline in the world would like to have 100% reliability and 98% on-time performance, but none do. This is because every airline is subject to things out of their control including fuel delays, weather delays, Air Traffic Control delays, mechanical delays, and occasional crew delays. Even the largest, best organized U.S. airlines with billions of dollars at their disposal have on-time performance that is much lower. In a recent article on U.S. airline performance* United ranked the best at 84.6% and JetBlue last at 74.1%. Essential Air Service carriers are subject to the same types of delays that the Majors face. It is significantly concerning to me that Advanced Air is so eager to with an EAS contract that they are making claims, which are not true, but sound really good. The Grant County Commissioners clearly are attracted to these claims as they referenced them in their recommendation letter to the DOT.

On July 11 a commissioner, defending their decision to recommend Advanced Air emailed the following to our customer:
“Less than six months in to the contract year, Boutique Air had already exhausted their maximum allowable number of flight cancellations, which is 50 per year.“

There is no such thing as a “maximum allowable number of flight cancellations”. An EAS carrier can fly 100%, 98%, or 50% of the planned flights and is paid proportionately by the DOT. During Q1 Boutique was hit with some maintenance issues related to de-ice systems; nonetheless in 2018 we have completed more than 96% of our planned flights. From April 1st through today we have completed 98.7% of our flights. Since we started flying in Silver City in January of 2015 we have competed 98.6% of planned flights. We had one difficult quarter (Q1 2018) out of 14 quarters so far and continue to set new passenger records each year--even in 2018 we will set a new one despite our tough Q1. We set new records because people like our service and because we have United as a partner.
The same commissioner also emailed this:
“The high number of flight cancellations is due to pilot rest requirements, mechanical issues and scheduling errors (not having the right number of planes in the right place at the right time to meet their commitments). Boutique Air has not responded adequately to repeated requests for better service.”

Upon recognizing that we had a problem in February, we worked to solve it in the most pro-active way possible. We purchased N521PE on March 2, N7YR on April 2nd, and N814WA on April 24th for a total cost to Boutique Air over $7,000,000. We purchased these aircraft to specifically address the reliability issues we were experiencing. Given that our reliability in Silver City is at 98.7% since April, I would absolutely say that we have addressed the problem. I’m not sure why the commissioner would say that we have not when by EAS standards 98.7% flight completion is very good.

The same commissioner also wrote:
“There was significant public input asking for earlier outbound flights and later inbound flights to and from Albuquerque to accommodate a longer business day. Advanced Air took that into consideration in their pr​ oposal and Boutique did not.”

We have never received any communication from the county or city about changing our schedule. Did any of the Commissioners or anyone else for that matter ever ask us for a different schedule? The answer is “No.” When we are setting record passenger numbers every month it would not dawn on us to come up with a new schedule unless we are asked about it specifically. I have written the airport director and the Commissioners directly about changing our schedule and none of them have ever responded to me.

The Commissioner wrote:
“Advanced Air and Boutique had the opportunity to make a public presentation at the Grant County Convention Center on May 31, 2018 at 1:30.​”

This is false. Boutique Air did not “have the opportunity to make a public presentation”; Boutique Air had to set up its own meeting on May 31st 2018 with assistance from Priscilla Lucero. Only one of the five Commissioners came, though all were invited. Advanced Air was not welcome to present at the meeting that we setup--nor did they come since they already gave private presentations to the Commissioners.

The Commissioner wrote to a customer:
“Advanced Air was present at the meeting on July 10, 2018 to answer any final questions regarding their proposal and Boutique Air was not.”
What the Commissioner left out here is that we were not invited to the meeting. We have no magical way of knowing which meetings we are welcome to attend and speak; we need to be invited.

Another Commissioner wrote on July 11:
“My main concern about Advanced Air is that we will double their number of scheduled flights (as opposed to chartered flights, which are their specialty) all by ourselves. This almost caused me to vote with Boutique, but I was impressed enough by Advanced Air's presentations that I felt confident they could do what they say they'll do. In addition, Boutique Air did not even send a representative to answer questions at our commission meeting, which left me feeling they did not consider Grant County a high priority.”

This Commissioner is suggesting we did not bother showing up to their meeting and the implication is that we didn’t care enough. Nothing could be further from the truth. We have dedicated ourselves to bringing air service back to a healthy state in Silver City and our record setting passenger traffic proves this more than anything else. We care *a lot* and it is this care that has brought air service back to life in Grant County. People in the town are big fans of our service--this is why we keep hitting all time highs; This is why United decided to partner with us. We are all about doing a great job. It does not mean we are perfect--we most certainly are not--but we do put in a big effort and we usually succeed.

He also stated:
“Advanced Air's pricing should be much the same as Boutique's for regular users and better than Boutique's for occasional and last-minute fliers. Their planes are quieter, take nine passengers instead of eight, and are purportedly easier to maintain due to the ready availability of spare parts compared to the less common Pilatus planes used by Boutique. The larger capacity planes should mean more people flying per year, which is a key element in determining how much subsidy we receive from the feds.”

Here is a public discussion by pilots about the noise level in a King Air vs a Pilatus. There is general agreement that a King Air is louder for the passengers: https://www.airlinepilotforums.com/part-135/101147-noise-level-pc12-vs-king-air.html

The commissioner is also talking about parts availability for the King Air vs. the ‘less common’ Pilatus. Well, as it turns out there are more Pilatus PC12s (about 1, 600 according to wikipedia) than there are King Air 300/350s (about 1,300 on wikipedia). Lack of parts availability from Pilatus has never been a problem. Again, incorrect information being disseminated, but still part of the decision making process.

Some of the Commissioners have emailed about how there will be more passengers with the King Air. Well, over the last year, 9% of our Silver City flights have been full. This is only 224 of the 2,496 flights we are scheduled to fly in a year. If we assume that half of the the fully booked flights would have had an extra passenger then you might expect an extra 112 passengers to fill the 9th seat.

Having a United interline, on the other hand puts Silver City on the map when trying to fly there from anywhere in the world. We expect hundreds of bookings to Silver City because of this partnership. Advanced Air does not have such a partnership with a major airline. Most communities value a partnership with a major airline over an extra seat--especially when our average load factor is only 61%. In other words very few flights in Silver City are full. An Interline helps fill them up!

He states:
“Scheduling will remain much as it is currently, with 17 flights to Albuquerque and 7 to Phoenix each week. Advanced has expresses a willingness to work with us on the departure and arrival times, and has already agreed to push the flights from PHX to SVC later in the evening on M, W, and F, which I believe is helpful.”

Boutique Air has always been willing to try different schedules, but none of the Commissioners or other officials ever brought this up with us. I asked our lead Customer Service Representative if she has heard of requests for a different schedule from the airport director or passengers and she has not.

In Response to the Commissioners’ Recommendation Letter to DOT

The official letter sent by the county to the DOT stated three main reasons for the decision: reliability, fare transparency, and schedule.

1) Reliability. We have very clearly addressed this issue as discussed earlier in this letter.

2) Lack of transparent pricing. We use the same pricing model as all other airlines in that as the flight fills up the seats become more expensive. We do not increase prices just because it is a last minute purchase. We use the same strategy in all of our communities and most people seem to understand and appreciate the approach. We also have vouchers, which are very popular in Silver City and allow a fixed price all the time.

The Airport Director emailed me this question on the pricing in our bid in advance of the Commissioners’ vote. Despite me sending this explanation to her (for her to send along to the Commissioners) in the letter to the DOT the lack of transparent pricing was still an issue.

The Airport Director stated:
“You state in the proposal that your average fare is $60.00. I thought that was your lowest fare. Can you please provide an updated average fare?”

Our Answer:

“Because this is a financial proposal (and not for customer marketing) we have included the expected NET revenue that we get from tickets *after* federal taxes, airport taxes, and airport fees, GDS fees, and major airline partnership interline fees. We also offer vouchers that include the costs of all the taxes and fees as well so on these also NET about $60.00.​ ​“

What is appearing to passengers with all taxes and fees included is going to be generally be averaging $70 - $80 for Silver City to Albuquerque and in the $80 - 90 range for Silver City to Phoenix. We also regularly send out discount promotions which brings down the average revenue we receive per ticket as well and is reflected in the $60 number.

If transparent pricing is such an issue, why is Boutique Air selling more than twice as many tickets as any previous carrier? It would seem that our approach works better.

3) The Letter suggested we are not willing or able to tailor our schedule to the community. Here is what I wrote to the Airport Director for her to pass along to the Commissioners:
“Our flight schedule is quite flexible regardless of whether or not we were to use King Air or Pilatus. If there is a strong mandate for a different schedule then we simply need to know and will accommodate it regardless of a King Air or Pilatus.”

In summary, I do not believe that a process was followed in Grant County that allowed for a fair examination of the carriers by the decision makers. I do not believe it was the intention of the Commissioners to conduct such a slanted process, but slanted it was and it has yielded an uninformed recommendation that does not reflect the interests of the community. A proper process would involve the board meeting with the carrier that has out performed all others, before making a decision. All of this was exacerbated by a competing carrier that has many big claims but no experience in community air service.
Best,
Shawn Simpson CEO
Boutique Air

Notes:
*On Time Performance: https://www.usatoday.com/story/travel/flights/todayinthesky/2018/02/09/united-leads-list-time-u- s-airlines/324746002/
** Noise in a King Air vs. Pilatus: https://www.airlinepilotforums.com/part-135/101147-noise-level-pc12-vs-king-air.html
*** Historical Passenger enplanements for Silver City Airport since 2003:
2003: 1,683
2004: 1,998
2005: 2,064
2006: 2,327
2007: 2,196
2008: 2,607
2009: 1,823
2010: 1,496
2011: 1,609
2012: 1,363
2013: 1,670
2014: 1,128
2015: 3,945 <-- First year of Boutique Air 2016: 5,439 <-- Second year of Boutique Air 2017: 5,683 <-- Third year of Boutique Air

In 2016 and 2017 we did more than double the passenger traffic that any airline has ever done. We are on track to set a new record in 2018.

Live from Silver City

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