### BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ )

Essential Air Service at )
)



### Altoona , Pennsylvania ) OST

- 2002

- 11446

Johnstown , Pennsylvania ) OST

- 2002

- 11451

)

Under 49 U.S.C. §41731 et seq. )

__________________________________________

SUN AIR INTERNATIONAL P ROPOSAL

TO PROVIDE S UBSIDIZED ESSENTIAL AIR SERICE

By Order 2014

- 2

- 6 , the Department requested proposals from carriers interested in providing

Essential Air Service to the communities of Altoona and Johnstown, Pennsylvania. Pursuant to

that order, Sun Air Express, LLC . (“Sun Air”) cordially submits this proposal to provide

subsidize d air service to those com munities

.

Correspondence with regard to this document should be addressed to:

David Hackett

Chief Executive Officer
Sun Air Express, LLC

. d / b / a Sun Air International

3201 Griffin Road, Suite 202

Ft. Lauderdale, FL 33312
Telephone: 954

- 660

- 9865

Fax : 954

- 894

- 0367

E

- Mail: dhackett @gosunair.com



## Bid Summary

Sun Air hereby offers proposal s to provide serv ice to the communities of Altoona and Johnstown,
Pennsylvania from Pittsburgh International Airport.

Sun Air proposes to operate high frequency, low fare service to Pittsburgh using 8

- passenger Piper Chieftain aircraft. Sun Air’s management believes that this model is uniquely suited to
restoring passenger traffic at these airports after years of decline. Convenient flights times and

low local fa res can offer a superior alternative to low

- frequency service via larger aircraft under

traditional code

- share arrangements. Capacity is restricted to 8 passengers instead of the

traditional 9 seats due to the airline’s policy of including First Officers o n its’ scheduled flights.Sun Air is prepared to make substantial investment s , both operationally as well as in the sales and

marketing area, to aid the communities in recover ing their air passenger demand potential. Sun Air’s management believes strongl y that the combination of affordable fares, more frequent
flights and consistently reliable operations are critical ingredients to providing the air service that

these communities need.

Sun Air’s operating plans are based upon having multiple back

- up airc raft and an ample
availability of reserve flight crews. Since Sun Air’s current management took over operations
late last year, the airline’s operational performance has ranked among the best in the airline
industry. F lights in the Hagerstown, MD and Lan caster, PA communities served from IAD have
not had a single controllable flight cancellation so far in 2014.

Both of Sun Air’s proposals are for a four

- year period , which the company believes is necessary relative to the size of its’ planned investmen t in these communities. They are stand

- alone
proposals, meaning one or both may be accepted.

Flights will be displayed in all the major travel agent systems, and also available for booking on the company’s web site. Interline connections are available w ith most U.S. major airlines via Sun Air’s contracted distribution capabilities.

The respective subsidy amounts for each city pair are listed in Schedule 1 included herein.



## EAS Eligibility Discussion

Both Altoona and Johnstown have seen declines in pas senger volumes associated primarily with inconvenient schedules and unreliable operations. Altoona’s passenger enplanements are
significantly less than 50% of what they were 10 years ago, causing it to exceed the Department’s $200 per passenger subsidy li mitation.

While ther e are varied reasons for the enplanement declines , the driving factors include :

 Higher fares

 Inadequate local marketing

 The introduction of “one

- stop” service vs non

- stop

 Insufficient frequency of service and

 C onsistently poor relia bility by the operating carrier.

The U.S. regional airline industry has experienced a significant increase in the average size of

aircraft operated , which has left smaller communities with fewer choices and fewer flights.
Additionally, those few remainin g regional airlines that operate under traditional code

- share
arrangements with major U.S. carriers are often subject to forced cancellations in times of

inclement weather, when they would otherwise be able to operate. To the extent weather limits

gate ac cess at the large hubs, the major carriers will dictate that the regional airlines operating

small aircraft be cancelled first. And thus a self

- perpetuating cycle results: regional airline code
share flights are the first to be cancelled, and the custome rs quickly learn that these small
communities cannot be relied upon for consistent service, causing lower passenger enplanements

. Small communities need access to reliable air service. It is a crucial component of their
economic development initiatives.

M arketing resources earmarked for the new routes by Sun Air are substantially above those
historically spent. Sun Air will be actively involved with the local communities (including on the

PI T side) and has already identified co

- op marketing funds to sup port the initiatives. While itmay take some time for the communities to see the major reversal of enplanement trends, the

need is clearly there and the Department should support efforts to achieve those important goals.

The Pennsylvania Air Service Co mmittee recently contracted for one of the country’s leading
aviation consulting firms to complete a comprehensive study of whether regional service into and out of PIT would be viable, referred to as the “PIT Connector” project. The enplanement

forecasts incorporated in that study are in line with the levels projected by Sun Air, without

taking into consideration our plans to operate more than twice the frequency of flights (with

smaller aircraft) than the study assumed . Discussions with the local commu nities have
confirmed there is significant demand for re

- establishing links to PIT, even in light of the elimination of USAirways’ former hub, due to the convenience, pricing and reliability
improvement available to the communities.



## Service Proposal

Sun A ir’s proposed weekly frequencies are shown below. Each community would have at least
one overnight aircraft to enable an early morning departure and evening arrival. Flight schedules
throughout the rest of the day would be spread out, and would be final ized in cooperation with the
respective community. None of the markets envision one

- stop or through flights

... all are nonstop.

Proposed Flight Frequencies, Round Trip to and from Pittsburgh International Airport:

Altoona: 29 Weekly round trips, with five during the weekdays and two each weekend day.

Johnstown : 36 Weekly round trips, with six during the weekdays and three each weekend day.

Local fares would be set for effectiveness of “add

- on” prices to flights from PIT, generally in the $29 to $59 range each way. These fares would allow all PIT Connector flights to be priced very

attractively to the passengers , taking advantage of low fares in PIT relative to other regional
higher

- cost hubs. Additionally, the low local fares increase the choices available regarding which
airline they connect with in PIT vs the traditional code

- share model of single

- airline iti neraries.

Interline connections are available through major travel systems, including the ability for
through

- checking of baggage. Sun Air is in the process of installing enhanced baggage storage
features on its aircraft which will substantially improve its capacity for checked baggage handling that meets all relevant TSA requirements. Previously, the company’s aircraft have had

limitations on baggage capacity, particularly with respect to large hard

- sided bags that did not fit
in the existing storage fa cilities.



### About Sun Air International

Sun Air Express, LLC d / b / a Sun Air International is a Fort Lauderdale, FL based commuter air
carrier currently serving markets in Pennsylvania, Virginia, Maryland and Texas.

The airline has operated charters and li mited scheduled service within Florida and the Bahamas
for a number of years. New management was brought in near the end of 2013, and since that
time has focused on improving operations and initiating a range of marketing activities.

Operational improvem ents at the airline have been significant. For the Year to Date period, Sun

Air is operating at 100% controllable completion factor (percentage of scheduled flights that are
completed, excluding weather) in its northern operations and over 98% in Texas.

## SCHEDULE 1

Annual Projected Operations

AOO

- PIT JST

- PIT

Passenger Revenue $ 556,362 $ 682,479

Flight Operations 1,021,610 1,054,488

Maintenance 527,872 710,438

Sa les & Service 888,622 1,025,996

Aircraft Ownership 146,000 185,000

Other Expenses 230,000 280,000 Total Operating

Costs 2,814,103 3,255,922

Operating
Profit/(Loss) $(2,257,742) $(2,573,443)

Profit Element (5%) (140,705) (162,796)

Subsidy Required $(2,398,447) $(2,736,239)

ASMs 2,893,550 2,190,24 0

RPMs 1,591,453 1,248,437

Load Factor 55.0% 57.0%

Block Hours 2,794 2,738

Annual Departures 2,941 3,650

Available Seats 23,5 25 29,203

Enplaned Passengers 12,939 16,646

Average Segment Fare $43 $41In conclusion, Sun Air believes that its proposal will provide excellent leve ls of serv ice to the

communities

, a nd ensure s that they have proper access to the national air transportation network,

offer ing cost

- effective options that meet the requirements of the Essential Air Service Program.

Respectfully Submitted: April 17, 2014

_______ _______________ Davi d F. Hackett

C hief Executive
Sun Air Express, LLC

d/b/a Sun Air International