July 22, 2010

Proposal of Hyannis Air Service, Inc., dba Cape Air to provide subsidized Essential Air Service for:

Augusta/Waterville and Rockland, Maine

Docket DOT-OST-1997-2784

Each Non-Stop To/From Boston:

RKD: 5 daily round trips Jul-Aug, 4 Jun + Sep, 3 Oct-May

AUG: 4 daily round trips Jun-Sep, 3 Oct-May

For a two- or four-year term

Hyannis Air Service, Inc., dba Cape Air

Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 , (508) 862-9719

Media inquiries to Chuck Ferrara, VP Corporate Affairs: (617) 567-3597

Cape Air proposes to serve both Augusta/Waterville and Rockland, but is 

willing and able to operate either route without the other.
1

Cape Air is delighted to have served Rockland since 

2008, and would be honored to serve Augusta, too

• Cape Air’s Rockland – Boston service 

commenced November 1, 2008

• Annualized passengers carried YE2Q10 

are 12,691, and growing at a 28% rate!

• As promised, Cape Air has kept fares 

low, averaging just $69

• Cape Air proposes exclusively non-stop 

service to/from Boston

• Cape Air offers interline connectivity 

with most major airlines including both 

US Airways and JetBlue

Key points Cape Air Boston service, with Augusta

Thank you, Knox County, for a 

fabulous first two years serving 

your community!
2

Cape Air is a small but robust commuter airline, 

operating and growing since 1989

 First route was Boston –

Provincetown, begun in October 1989 with 

three aircraft

 Presently flying 59 Cessna 402s in five 

regions, and two ATR-42s in Micronesia

 Operating up to 600 flights daily

 In 2009 flew more than 610,000 

passengers

 Stable, mature and growing company 

Key facts Cape Air: Leading the pack nine at a time

Photo courtesy Mark Garfinkel (August 7, 2000, Boston)
3

For smaller communities and niche markets, 

Cape Air’s nine-seat planes have proven to be a good fit

 High-frequency, non-stop service

 Interline e-ticketing and baggage agreements

 Complete GDS sales channels:

 866-Cape-Air

 In-house “Sabre” reservations office

 Reliability

 Subsidies used to lower fares

 MOCHA HAGoTDI† culture and community 

investment

Cape Air highlights “Key West Express”

† Make Our Customers Happy And Have A Good Time Doing It
4

Today, Cape Air serves 16 communities in the Northeast...

Northeast route map

Nantucket

Martha’s Vineyard

Provincetown

Boston

Hyannis New Bedford

Rockland

Lebanon

Saranac Lake

Rutland

Albany

Watertown

Ogdensburg

Massena

July 2010 route map

White Plains

Providence
5

...And has developed niches along the East Coast, 

in the Caribbean, Midwest and Micronesia

Caribbean Florida Keys

Micronesia

Continental Connection

Ft. Myers

Key West

Florida

Mid-Atlantic

Ponce

Mayaguez

San Juan

Vieques

St. Croix

St. Thomas

Tortola

July 2010 route maps; Maps not to scale

Midwest

Illinois

Missouri

Cape Girardeau

Marion

Quincy

Kirksville

St. Louis
6

Cape Air has been an interline carrier since 1993

enabling connectivity with most major airlines,

now including ______ 

• Twenty-five interline agreements are in place, with almost all legacy airlines

• Cape Air has completed migration to interline e-ticketing, the updated industry norm 

• Cape Air operates flights in Micronesia as

• Flights in the Caribbean have a code 

• Five Boston routes have a code, and Cape Air can interline with JetBlue 

for Augusta and Rockland

• Flights in the Midwest operate with the code of 

Interline highlights
7

Cape Air participates in the global distribution systems 

(GDS), giving Augusta and Rockland access to the world, 

and the world access to Augusta and Rockland

Cape Air is sold through:
You can fly anywhere from Augusta or Rockland

via Cape Air

• Cape Air’s interline agreements allow single-ticket connecting itineraries and through-check of 

luggage with other airlines

• Purchase interline tickets via:

–

– Any legacy airline’s reservation center can book interline with Cape Air (including US Airways!)

– 800-JetBlue (JetBlue’s website coming soon, too!)

• Cape Air is the only regional airline that can interline with JetBlue

– 866-Cape-Air

– Any travel agent

8

With Cape Air, the world is your oyster lobster!
Cape Air’s independence offers numerous benefits

• Complete control of:

– Fares and fees

– Marketing and advertising

– Community philanthropy

– Schedule

• Direct relationships with the decision makers 

at Cape Air

• Independent reservations center: 

– 866-Cape-Air

– Capeair.com

• No fees to book tickets with a live Cape Air 

reservations agent or at the counter

• No first checked bag fee; no change fees

• Financially healthy airline

• Aircraft isolated on routes to provide reliability

– Good availability of spare aircraft

• Same connectivity as a network affiliate, since 

Cape Air has e-ticket and baggage 

agreements with most major airlines

9

Benefits of independence
So, how has Cape Air performed 

over the last two years serving Rockland?

10
At Rockland, passengers are up 14% compared to the 

predecessor and the trend is positive

11,333

11,564

11,744 11,840 11,833

12,028

12,205 12,301

12,691

10,500 

10,750 

11,000 

11,250 

11,500 

11,750 

12,000 

12,250 

12,500 

12,750 

13,000 

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10

11

Rockland passengers

Sum of both directions, year ending

Predecessor’s last year: 11,090

+14%
On a year/year basis for comparable months, 

Rockland traffic is up 28%...

12

461 

542 

400 

520 

500 

621 

798 

1,073 

692 722 

496 513 

695 

798 

894 

1,463 

0

200

400

600

800

1000

1200

1400

1600

Nov Dec Jan Feb Mar Apr May Jun

Last Year

This Year

Rockland passengers

Sum of both directions
In June 2010, Cape Air enplaned more passengers than in 

any previous June back through at least 1985

628

571

502 490

274

334 335

249 266 283

460 451 457

421

701

621

641

492 478

568

530

443

550

422

502

711

0

100

200

300

400

500

600

700

800

19851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010

13

Rockland June enplanements
14

Cape Air has kept Rockland fares low 

ensuring Rockland’s air service is accessible

$64 $63 $62 $61 $63 $64 $65 $66 $70

$66 $68 $66 $66 $67 $67 $68

$73

$72 $71

$75

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10

Actual

Proposed

Rockland fare, net each way

Excludes government-mandated taxes and fees
15

Now that JetBlue has switched to the Sabre reservations 

system, Augusta and Rockland can connect seamlessly within 

Logan’s Terminal C to Boston’s largest low-cost carrier

Boston Logan Terminal “C”

Note: Not to scale

Ticket counters

TSA Security

As an interline carrier for 15 years, Cape Air facilitates 

through ticketing and bag transfer to most major airlines

Customer service center

JetBlue is Boston’s largest low-cost carrier by either departures or ASMs, July 2010 OAG
Cape Air is the only regional airline that can connect 

passengers and checked luggage with JetBlue

16
17

Cape Air’s Telephone Reservations Center

Cape Air has had its own reservations center, using the 

industry-standard , system, for more than 15 years

Toll free reservations: 866-CAPE-AIR

Never a booking fee!
18

Connectivity with JetBlue is valuable to Augusta and Rockland 

because from Boston JetBlue has 535 weekly departures, to 

33 cities, and... 

City Wkly Dpts

1 New York-JFK, NY 52

2 Washington-Dulles, VA 47

3 Orlando, FL 42

4 Baltimore, MD 34

5 Charlotte-Douglas, NC 28

6 Fort Lauderdale, FL 28

7 Buffalo, NY 21

8 Chicago-O'Hare, IL 21

9 Pittsburgh, PA 21

10 Raleigh/Durham, NC 21

11 Tampa, FL 21

12 Denver, CO 14

13 Los Angeles, CA 14

14 West Palm Beach, FL 14

15 Richmond, VA 14

16 Fort Myers, FL 14

17 San Diego, CA 14

18 Seattle/Tacoma, WA 14

19 San Juan, PR 14

20 San Francisco, CA 13

21 Austin, TX 7

22 Bermuda, BM 7

23 Jacksonville, FL 7

24 Las Vegas, NV 7

25 Long Beach, CA 7

26 New Orleans, LA 7

27 Oakland, CA 7

28 Santo Domingo, DO 7

29 San Jose, CA 7

30 Aruba, AW 4

31 Cancun, MX 3

32 Montego Bay, JM 2

33 Punta Cana, DO 2

Total 535

JetBlue’s Boston service

July 2010 schedule

Source: OAG

JetBlue’s Boston route map

July 2010
19

...Among the nine largest carriers at Boston, 

JetBlue has among the lowest yield, or fare per mile 

flown, meaning low total travel costs for Augusta and Rockland

$0.102 $0.102 $0.104 $0.106 $0.112

$0.132

$0.139 $0.143

$0.165

$0.00

$0.05

$0.10

$0.15

$0.20

United Southwest JetBlue American AirTran Continental Delta Air CanadaUS Airways

Boston yield by carrier

YE1Q10, revenue per passenger-mile flown

Source: US DOT O&D Survey

Note: Largest carriers by departure frequency, OAG July 2010, excluding Cape Air

Cape Air’s connections to JetBlue mean low total trip costs

Wkly Dpts 200 144 535 439 137 139 488 124 591
20

JetBlue serves non-stop 

13 of the most popular 15 markets at Boston

Rank Daily Passengers US Airways JetBlue

1 San Francisco, CA 1255 JetBlue

2 Los Angeles, CA 1204 JetBlue

3 Orlando, FL 1152 JetBlue

4 Chicago-O'Hare, IL 1134 JetBlue

5 New York-La Guardia, NY 1072 US Airways JFK

6 Baltimore, MD 1038 JetBlue

7 Atlanta, GA 1004

8 Fort Lauderdale, FL 799 JetBlue

9 Washington-National, DC 781 US Airways Dulles

10 Washington-Dulles, VA 621 DCA JetBlue

11 Dallas/Fort Worth, TX 603

12 Fort Myers, FL 595 JetBlue

13 Denver, CO 579 JetBlue

14 Tampa, FL 547 JetBlue

15 West Palm Beach, FL 537 JetBlue

Top Boston markets

YE1Q10passenger data, ranked by daily passengers each way; July 2010 schedule; alternative service noted

Source: “O&D” Survey and Official Airline Guide
21

“JetBlue Airways Announces Major Expansion in Boston...”

BOSTON, Oct. 29, 2009 /PRNewswire-FirstCall/ -- JetBlue Airways (Nasdaq: JBLU) today announces 

a major expansion of service from its focus city at Boston Logan International Airport. The 

airline, which already offers service to the most nonstop destinations of any carrier from 

Boston, plans to boost daily departures by 30% by summer 2010. With its expanded 

schedule, JetBlue and its growing base of 1,300 Boston crewmembers will offer travelers up to 78 

daily flights to 33 top destinations.... 

"Here at JetBlue we are officially declaring Summer 2010 the Summer of Boston," said Robin 

Hayes, Chief Commercial Officer for JetBlue. "Today's added flights represent an important next 

step in our commitment to offering Boston travelers the most robust schedule as well as the most 

destinations of any airline. 

http://www.newscom.com/cgi-bin/prnh/20090217/NY71475LOGO-b

Reuters, October 29, 2009 http://www.reuters.com/article/pressRelease/idUS203603+29-Oct-2009+PRN20091029

While
22

...US Airways is shrinking in Boston, 

with capacity in the last two years down 19%

0

50

100

150

200

250

300

350

400

450

500

Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-10

-19%

US Airways available seat miles at Boston

Year-ending weekly ASMs, in millions

Source: Official Airline Guide
Cape Air has had a wonderful time marketing in Knox 

County, and looks forward to expanding marketing efforts if 

selected for Augusta

• More than $46,000 annual marketing budget proposed for each community

• Experienced, professional, in-house marketing department to promote Cape Air’s service

• Features in Cape Air’s in-flight magazine, The Birds’ Eye View

• Community sponsorships, like the 2010 Wings & Wheels at the Owls Head Transportation Museum

23

Marketing highlights
To better serve these seasonal markets, Cape Air 

proposes increased frequency in summer months

Augusta daily non-stop round trips

0

1

2

3

4

5

Jan

Feb

Mar

Apr

May

Jun

Jul

AugSep

Oct

NovDec

Rockland daily non-stop round trips

24

0

1

2

3

4

5

Jan

Feb

Mar

Apr

May

Jun

Jul

AugSep

Oct

NovDec
Cape Air proposes service at the following subsidy rates, 

including a preferred, discounted four-year selection option

25

AUG RKD

Stage (naut. miles) 129 135

Seats/Dpt 9 9

Sched. Dpts/Day 3.3 3.5

Annual Actual Dpts 2,328 2,481

PDEW 12.1 16.7

Pax/Dpt 3.7 4.8

Load Factor 41% 53%

Annual Passengers 8,856 12,202

Avg. Net Fare $64 $69

Passenger Rev. $549,780 $816,657

AUG RKD

Fuel $645,672 $705,675

Maintenance $516,338 $553,830

Pilots $166,667 $183,105

Ownership $100,590 $134,046

Stations $205,989 $374,748

Marketing $46,154 $49,192

De-icing $24,175 $25,767

General & Admin./Other $148,650 $138,030

Operating Expense $1,854,235 $2,164,393

Return of 5% $97,591 $113,915

Economic Expense $1,951,826 $2,278,308

Passenger Revenue $549,780 $816,657

Profit ($1,402,046) ($1,461,651)

Subsidy Required $1,402,046 $1,461,651

Per Departure $602 $589

Per Passenger $163 $123

Subsidy Required $1,362,616 $1,420,545

Per Departure $585 $573

Per Passenger $159 $120

Expenses

Drivers

2-year

4-year

Selection term

Preferred
26

Cape Air is proud to be a great air service provider for 

Rockland, and would be honored to serve Augusta, too

 A thriving, growing, successful air service, increasing enplanements at Rockland

 Full interline connectivity, allowing same-ticket connections with the world on most major 

airlines

 Seamless connectivity with Boston’s largest low-cost airline 

 High-frequency, non-stop service to Boston for each community:

 RKD: 5 daily non-stop flights in Jul and Aug; 4 in Jun and Sep; 3 Oct-May

 AUG: 4 daily non-stop flights Jun-Sep; 3 in Oct-May

Cape Air offers the airline amenities Augusta and Rockland need:

Thank you for inviting Cape Air to serve 

Augusta and Rockland!

Hyannis Air Service, Inc., dba Cape Air

Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 , (508) 862-9719

Media inquiries to Chuck Ferrara, VP Corporate Affairs: (617) 567-3597
Appendix

Interline Examples on Online Travel Agencies
28

Cape Air is on Expedia.com

Screenshot from Expedia.com showing Cape Air 

LNS-PHX search for travel 22SEP09
29

Cape Air is on Travelocity.com

Screenshot from Travelocity.com showing Cape Air 

ATL-MAZ search for travel 22SEP09
30

Cape Air is on Orbitz.com

Screenshot from Orbitz.com showing Cape Air 

ART-DCA search for travel 22SEP09
31

And on the Continental Airlines website