# Sovereig nMr , Inc ,

Julys , 201 0 Denni s J

. DeVany , Chie f EA S & Domesti cAnalysi s Division , X-5 3 Offic e o fAviatio n Analysi s Departmen t o fTransportatio n 120 0 Ne wJerse yAve

. S E Washington , D

C 2059 0
Re : Proposa l t o Provid e Essentia l Ai rServic e at : Ironw/ood , Michigan/Ashland , Wisconsin , DOT-OST-1996-126 6 Manistee/Lundington , Michigan , DOT-OST-1996-171 1

Dea rMr

. DeVany : I n respons e t o Orde r2010-6-4 , Sovereig n Air , Inc

. offer s th e followin g proposal : Sovereig n Air , Inc

. (SAI ) i s plannin g t o us e eithe rtw o 8 passenge rsea tKin g Ai rC90' s wit h thre e roun d trip s o ron e 9 passenge rKin g Ai r20 0 wit h tw o roun d trip s fo rthi s Essentia l Ai rServic e routes

. Ou rflight s wil l servic e onl yth e EA S citie s an d th e OR D Hub

. Sovereig n Ai rbelieve s tha twit h goo d schedules , prope rpricin g an d a recoverin g economy , th e loa d factor s wil l likel yincreas e i n thes e markets

. SA I wil l bas e it s aircraft , crew s an d maintenanc e personnel , bankin g an d purchas e fue l i n Ironwood

. Thi s wil l hel p kee p th e EA S monie s i n th e loca l community

. Additiona l flight s wil l b e adde d a s neede d t o accommodat e period s o fincrease d demand

. SA I wil l hav e baggag e an d ticke tagreement s wit h th e majo rai rcarrier s i n Chicag o byth e star to fthi s EA S service

. SA I wil l als o hav e carg o agreement s fo rbot h domesti can d internationa l ai rfreigh t movements

. SA I wil l b e HAZMA

Tapprove d an d wil l b e workin g i n conjunctio n wit h hospital s t o expedit e variou s HAZMA Tmaterial s tha tthe ynee d t o transport

. SAI' s goa l i s t o wor k

hand-in-han d wit h EA S communitie s t o reduc e th e nee d fo rEA S subsidie s withi n th e nex tfou rt o si xyears
. Sovereig n Ai ri s currentl yi n th e proces s o facquirin g it s Schedule d Servic e Authorit yan d anticipate s bein g abl e t o star tthi s Essentia l Ai rService

. Sovereig n Ai rwil l b e full yintegrate d int o th e Globa l Distributio n Syste m (GDS) i n conjunctio n wit h Worldspan

. SA I i s no ttie d t o jus ton e airline , allowin g Sovereig n Ai rbette rvisibilit yi n th e variou s reservatio n systems

. Passengers wil l hav e a broa d rang e o fchannel s throug h whic h t o purchas e tickets , includin g al l airlin e reservatio n system s an d trave l agencies

. Customer s wil l b e abl e t o cal l ou r reservatio n office s o rvisi tou rwebsit e t o boo k flights

. Passenger

s ca n als o purchas e ticket s an d mak e reservation s a tou rticke tcounters

.SAI' s fina l schedule s wil l b e develope d byth e EA S CityAirpor tBoard s an d SA I t o reduc e layove rtime s i n Chicag o an d provid e th e bes tpossibl e arriva l an d departur e time s fo rth e travellin g public

. A s such , th e followin g schedule s wil l likel yb e adjusted : Propose d Schedul e Option s Optio n # 1 SCHEDULE S BEECH C-9 0 IWD-KBL-OR D 3 R

TDAIL Y
Fi t# Fre q Fro m 1 0 123456 7 IW D 1 1 123456 7 OR D 

### 2 0 1213456 7 IW

D 2 1 123456 7 OR D 2 0 123456 7 IW D 2 1 123456 7 OR D

Optio n # 2

Fi t# Fre q Fro m 1 0 123456 7 IW D 1 1 123456 7 OR D 2 0 123456 7 IW D 2 1 123456 7 OR D TO KBL KB L KB L KB L KB L KB L Dpt-Ar r 6:0 0 -7:0 0 9:30-10:1 0 12:00-01:0 0 02:30-03:1 0 04:00-05:0 0 08:00-08:4 0

SCHEDULE S BEECH 20 0 IWD-KBL-OR D 2 R

TDail y
TO KB L KB L KB L KB L Dpt-Ar r 6:0 0 -7:0 0 9:30-10:1 0 04:00-05:0 0 08:00-08:4 0 T

O OR D IW D OR D IW D OR D IW D

T O OR D IW D OR D IW D Dpt-Ar r 7:10-7:5 0 10:20-11:2 0 01:10-01:5 0 03:20-04:2 0 05:10-05:5 0 08:50-09:5 0

Dpt-Ar r 7:10-7:5 0 10:20-11:2 0 05:10-05:5 0 08:50-09:5 0Optio n # 1 Subsidy : $2.551.72 5

Sovereig n Air , Inc

. Annua l Compensatio n Requiremen tfo rEssentia l Ai rServic e fo r IW D KB LOR D Aircraf tTyp e Availabl e Seat s Pe rDepartur e Passenger s Pe rTri p Bloc k Hours Departure s Tota l Passenger s Averag e Far e IW D OR D Averag e Far e KB LOR D Revenu e Passenge rMile s Availabl e Sea tMile s 3 Roun d Trip s 8-sea t Beechcraf t

8 3. 6 4,19 6 4,23 7 7,76 2 $125.5 0 $69.0 0 1,532,77 6 7,151,98 8 Passenge rRevenue Othe rRev

. @ 6 % o fpax
. Rev

. Tota l Revenu e $664,963.0 0 $39,897.7 8 $704,860.7 8
Aircraf tan d Hul l Insuranc e Fue l an d Oil Flyin g Operation s Othe rDirec tCost s Maintenanc e Tota l Direct Cost s $135,500.0 0 $944,062.4 8 $407,030.6 2 $549,817.8 1 $303,959.5 1 $2,340,370.4 3
Tota l Indirec tCost s $761,140.0 0
Tota l Operatin g Expense s $3,101,510.4 3 Operatin g Los s Profi t@ 5 %

Completio n Rat e Subsid ype rle g Loa d Facto r Annua l Compensatio n Requiremen t Monthl yCompensatio n

Requiremen t $2,396,649.6 5

$155,075.5 2 $2,551,725.1 7 $212,643.7 6
97 % $602.2 5 44.4 %Optio n # 2 Subsidv : $2.053.75 9

Sovereig n Air , Inc

. Annua l Compensatio n Requiremen tfo rEssentia l Ai rServic e fo r OR D IW D KB L Aircraf tTyp e Availabl e Seat s Pe rDepartur e Passenger s Pe rTri p Roun d Trip s 9-sea t Beechcraf t

9 2. 7
Bloc k Hour s Departure s Tota l Passenger s Averag e Far e IW D Averag e Far e KB L Revenu e Passenge rMile s Availabl e Sea tMile s OR D OR D 2,57 4 2,82 5 7,76 2 $125.5 0 $69.0 0 1,532,77 6 5,363,99 1 Passenge rRevenue Othe rRev

. @ 6 % ofpax
. Rev

. Tota l Revenue $664,963.0 0 $39,897.7 8 $704,860.7 8
Aircraf tan d Hul l Insuranc e Fue l an d Oil Flyin g Operation s Othe rDirectCost s Maintenanc e Tota l DirectCost s $222,000.0 0 $780,216.9 3 $313,349.7 3 $342,137.8 6 $219,392.6 6 $1,877,097.1 8
Tota l Indirec tCost s $750,160.0 0
Tota l Operatin g Expense s $2,627,257.1 8 Operatin g Los s Profi t@ 5 % Annua l Compensatio n Requiremen t Monthl yCompensatio n

Requiremen t Completio n Rat e Subsid ype rle g Loa d Facto r $1,922,396.4 0 $131,362.8 6 $2,053,759.2 6 $171,146.6 0
97 % $727.0 9 59.2 %Custome rsafet yan d servic e ar e Priorit yOn e wit h SAI

. Sovereig n Ai rlook s forwar d t o providin g

Essentia l Ai rServic e t o bot h Ironwoo d an d Manistee

.

Sincerely ,

Jo n Payne , CF

O Sovereig n Air , Inc

.