# November 29, 2012 Proposal of Hyannis Air Service, Inc. dba Cape Air to provide subsidized Essential Air Service for: 

# Massena, NY To/From 

# Boston via Albany Docket DOT - OST - 2012 - 0163

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 9719

# Cape Air is delighted to have served Massena for more than four years

• Cape Air started serving Massena on September 16, 2008

• Since then we have flown more than 32,000 passengers to or from Massena

– The Massena enplanement pace for 2012 is approaching 5,000

• Cape Air serves Massena three times daily to/from Boston, via Albany

• Fares are low, in 2012 averaging just $58

• Serving both Massena and Ogdensburg provides critical mass to recover from irregular operations

1 Overview Massena ribbon cutting

# Massena enplanements in 2012 will be the highest in the last decade

2 Source: US DOT T100 and Cape Air FLIFO Estimated 

# Massena enplanements

723 2,327 2,056 3,201 2,925 2,085 950 3,252 3,350 4,396 5,063

0 1,000 2,000 3,000 4,000 5,000 6,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

# Massena ridership swelled with the addition of Boston service

3 Massena passengers Sum of both ways; year ending5,8496,1466,1476,2216,2236,2136,1456,1366,1786,2256,2866,3306,3946,4116,4686,4346,4806,5006,4686,5396,6776,8427,0487,2987,5387,8278,0108,3158,5968,7589,0359,2709,3549,4849,5629,6149,6209,6579,625



# 0 2,000 4,000 6,000 8,000 10,000 12,000Aug-09Oct-09Dec-09Feb-10Apr-10Jun-10Aug-10Oct-10Dec-10Feb-11Apr-11Jun-11Aug-11Oct-11Dec-11Feb-12Apr-12Jun-12Aug-12Oct-12 Source: Cape Air FLIFO

# Albany features flights to 20 non - stop destinations...

4 Albany route map December 2012

Source: OAG 

# Albany destinations served December 2012 

### Rank Destination Weekly Departures 1 Philadelphia, PA 43 2 Newark, NJ 32 3 Baltimore, MD 32 4 Detroit, MI 30 5 Chicago - O'Hare, IL 27 6 Washington - Dulles, VA 23 7 Cleveland, OH 21 8 Boston, MA 21 9 Massena, NY 21 10 Ogdensburg, NY 21 11 Charlotte - Douglas, NC 20 12 Atlanta, GA 19 13 Washington - National, DC 19 14 Orlando, FL 16 15 Chicago - Midway, IL 14 16 Toronto, ON, CA 9 17 Fort Lauderdale, FL 7 18 Las Vegas, NV 7 19 Tampa, FL 7 20 Minneapolis/St. Paul, MN 7 Total 396

# ...And Boston has service to 100 non - stop destinations, including 30 international destinations and comprehensive transcontinental service

Rank Destination Dpt/Wk Rank Destination Dpt/Wk Rank Destination Dpt/Wk Rank Destination Dpt/Wk

1 Washington - National, DC 133 26 Presque Isle, ME 37 51 Hyannis, MA 13 76 Dublin, IE 7 2 New York - La Guardia, NY 127 27 Montreal - PET, QC, CA 33 52 Seattle/Tacoma, WA 13 77 Reykjavik, IS 6 3 Chicago - O'Hare, IL 107 28 Martha's Vineyard, MA 33 53 Halifax, NS, CA 12 78 Munich, DE 6 4 Philadelphia, PA 104 29 West Palm Beach, FL 33 54 Rochester, NY 12 79 Santo Domingo, DO 6 5 Baltimore, MD 100 30 Houston - Intercontinental, TX 31 55 Las Vegas, NV 11 80 Zurich, CH 6 6 New York - JFK, NY 100 31 Buffalo, NY 29 56 Ottawa, ON, CA 11 81 Harrisburg, PA 6 7 Atlanta, GA 95 32 Phoenix, AZ 29 57 Salt Lake City, UT 11 82 Sarasota/Bradenton, FL 6 8 Newark, NJ 91 33 Toronto - City, ON, CA 28 58 San Diego, CA 10 83 Santiago, DO 5 9 Charlotte - Douglas, NC 73 34 Lebanon, NH 28 59 Indianapolis, IN 9 84 St. Thomas, VI 5 10 Dallas/Fort Worth, TX 71 35 Cleveland, OH 27 60 Columbus, OH 9 85 Frankfurt, DE 5 11 San Francisco, CA 70 36 Chicago - Midway, IL 27 61 Norfolk, VA 9 86 New Orleans, LA 5 12 Orlando, FL 67 37 Tampa, FL 26 62 Syracuse, NY 9 87 Rome - Da Vinci, IT 5 13 Los Angeles, CA 63 38 San Juan, PR 25 63 Aruba, AW 8 88 Long Beach, CA 5 14 Toronto, ON, CA 61 39 Plattsburgh, NY 23 64 Akron/Canton, OH 8 89 San Jose, CA 4 15 Raleigh/Durham, NC 51 40 Provincetown, MA 22 65 Memphis, TN 7 90 Nassau, BS 4 16 Fort Lauderdale, FL 49 41 Bar Harbor, ME 22 66 Amsterdam, NL 7 91 Punta Cana, DO 3 17 Miami, FL 49 42 Albany, NY 21 67 Austin, TX 7 92 Madrid, ES 3 18 Fort Myers, FL 49 43 Augusta, ME 21 68 Nashville, TN 7 93 Kansas City, MO 3 19 Washington - Dulles, VA 48 44 Richmond, VA 21 69 Cancun, MX 7 94 Shannon, IE 3 20 Nantucket, MA 46 45 Rockland, ME 21 70 Jacksonville, FL 7 95 Praia, CV 2 21 Denver, CO 43 46 Rutland, VT 21 71 Myrtle Beach, SC 7 96 Montego Bay, JM 2 22 Pittsburgh, PA 43 47 Saranac Lake, NY 21 72 Tokyo - Narita, JP 7 97 Ponta Delgada, PT 2 23 Detroit, MI 39 48 Cincinnati, OH/Covington, KY 21 73 Portland, OR 7 98 Providenciales, TC 2 24 London - Heathrow, EN, GB 39 49 St. Louis, MO 16 74 Bermuda, BM 7 99 St. Maarten, SX 2 25 Minneapolis/St. Paul, MN 37 50 Milwaukee, WI 14 75 Paris - De Gaulle, FR 7 100 Grand Cayman Island, KY 1 Total 2,716 

# 5 Boston destinations served December 2012

Source: OAG Note: Shading denotes international service

# The empirical success in ridership growth at Massena is due to a service solution that fits

Low fares
Service to Albany and

Boston

Convenient schedule at

3x daily

Interlines with

all legacy

airlines Connection to Fully - functioning global distribution plus local outreach Safe and conservative

operating philosophy



# 6 

# Popular service Constellation of success

# 7 

# A great fit for Massena : Cape Air is a small but robust commuter airline, operating and growing since 1989
 First route was Boston – Provincetown, begun in October 1989 with one aircraft  67 Cessna 402s in four regions , and two ATR - 42s in Micronesia  Operating up to 600 flights daily  In 2011 flew almost 700,000 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 )

# Cape Air 2012

• Annual revenue over $100M

• Financially stable

• Cape Air has purchased three more Cessnas, which will bring the fleet total to 70

• 37 airports served, 15 in EAS
8 Captain Krista Poppe Boston based

# 9 

# 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:  800 - Cape - Air  In - house reservations call center  Reliability thanks to spare aircraft availability  MOCHA HAGoTDI † 

# culture and community investment Cape Air highlights “Key West Express”

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

# 10 

# Cape Air began service in 1989 with a few aircraft...

# 11 

# ...And one route: Boston – Provincetown

Provincetown Boston 

# Original Cape Air route map

November 1989 schedule

# 12 

# Today, Cape Air serves 17 communities in the Northeast... Northeast route map

Nantucket Martha’s Vineyard Provincetown Boston
Hyannis New Bedford Rockland Lebanon Saranac Lake

Rutland

Albany Ogdensburg Massena

December 2012 route map (including summer - seasonal service) White Plains Providence Augusta Bar Harbor

# 13 

# ...And has developed niches in Florida, the Caribbean, Midwest and Micronesia

Florida Keys Ft. Myers

Key West 

### Florida Kirksville 

# Micronesia

Guam Rota Saipan Anguilla

Nevis St. Croix Vieques Mayaguez Tortola St. Thomas San Juan 

# Caribbean

Quincy

Ft. Leonard Wood Cape Girardeau Marion Owensboro 

## Kentucky Missouri Illinois

St. Louis 

# Midwest

December 2012 route maps; not to scale

### San Juan Map inset not to scale Guam Rota Saipan 

# Micronesia

Caribbean Florida Midwest Northeast Provincetown Hyannis Nantucket Providence New Bedford Martha’s Vineyard 

### Boston Augusta Lebanon Rutland Saranac Lake Ogdensburg Massena

White Plains 

### Albany

Ft. Leonard Wood Cape Girardeau Marion Quincy Kirksville 

### St. Louis

Key West 

### Ft. Myers

Mayaguez St. Croix Vieques Tortola St. Thomas Anguilla Nevis 

# Cape Air Routes December 2012 Including seasonal service Owensboro Manhattan Rockland Bar Harbor

# 15 

# Over more than 20 years in business Cape Air has invested in the airline features smaller communities need
Feature Established Reliability Tickets sold through Expedia, Orbitz, Travelocity Interline e - ticketing with all legacy airlines Checked luggage transfer with all legacy airlines TSA security program

# Cape Air is delighted to operate a full - time city ticket office in Massena

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# Cape Air aggressively markets Massena’s air service, and actively participates in community life

17

# 18 

# Cape Air codeshares with American and United...

• Cape Air operates flights in Micronesia as

• Flights in the Caribbean have code

• Flights in the Midwest operate with the code of Codeshare highlights

# ...And interlines with all of the legacy airlines plus JetBlue and Frontier

19

# 20 

# Participation in the global distribution system gives Massena access to the world and the world access to Massena Cape Air is sold through:

# Cape Air puts Massena on jetblue.com...

21

# ...And United.com

22

# 23 Cape Air’s Reservations Call Center 

# Cape Air has its own reservations call center: 800 - CAPE - AIR

# CORPORATE UPDATE

24

# Cape Air continues to work on development of the next generation twin - engine nine - seat airliner

25 Tecnam’s P2012 Traveler

# On February 25, 2012 Cape Air became the launch customer for ’s new passenger service system

26

# Cape Air takes environmental sustainability seriously by investing in fuel - saving aircraft technologies and powering its offices with solar panels

27

# MASSENA PROPOSAL Cape Air’s November 2012 Essential Air Service

28

# Cape Air proposes a continuation of Massena’s 3x daily “through” service to Boston via Albany

• Each flight operates non - stop to Albany, then continues on to Boston

• In distribution systems the service is displayed as an exquisitely timed Cape Air connection

• Dual hub service retains the intra - state link with Albany while providing access to Boston’s world - class hub and major metropolitan area

29 Highlights
Massena Ogdensburg

Albany Boston 

# Through service to Boston map

# Massena Proposal Economics

30 Drivers Expenses Two - year selection, with discounted four - year option



## 4 - Year Discount 

# Daily RTs 3 Pax/Dpt 4.95 Load Factor 55% Fare (net) $57.75 Pax Rev/Dpt $285.87 Fuel $849,145 Maintenance $912,148 Pilots $249,971 Ownership $263,909 Stations $452,773 Operating Fees $118,605 Marketing $56,154 General & Admin./Other $249,128 Operating Expense $3,151,832 Return of 5% $165,886 Economic Expense $3,317,718 Passenger Revenue $1,226,769 Profit ($2,090,949) Subsidy Required $2,090,949 Per Departure $984 Per Passenger $195 4 - Year Contract Discount $2,039,094 Per Departure $960 Cape Air offers (and prefers) a four - year discounted contract to improve stability and planning

# 31 

# Cape Air is proud to be Massena’s airline!

 3x daily non - stop service to Boston via Albany  Ample fleet of back - up aircraft, and Ogdensburg service for operational flexibility  Full interline connectivity with all the major airlines, including JetBlue, allowing same ticket connections with the world  Global distribution Cape Air offers the airline amenities Massena needs:



# Cape Air would be honored to be reselected to serve Massena

# 32 

# Thank you!