## January 6, 2011 Proposal of Hyannis Air Service, Inc., dba Cape Air to provide subsidized Essential Air Service for :

To/From Lambert - St. Louis International Airport City DOT Docket Marion/Herrin, IL DOT - OST -2000-7881 Quincy, IL DOT -OST -2003- 14492 Cape Girardeau, MO DOT - OST - 1996- 1559

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 9719 Please direct media inquires to: Leslie Myrbeck, director of community relations, at 508 - 862 - 9764 

## With codeshare of

# Cape Air’s Cape Girardeau, Marion and Quincy service began operations on November 8, 2009

1 Cape Air’s St. Louis region route map As of November 2009 

## Cape Air’s first St. Louis arrival taxis in! November 8, 2009; Sandi Dorrin, STL Asst. Station Manager

# Cape Air’s St. Louis operation now counts five cities, nine aircraft and up to 54 flights per day

2 Cape Air’s St. Louis region route map As of January 2011

# The community support of each city has been magnificent, and the service has proven popular

3 285 536 523 486 688 584 699 774 734 859 850 934 890 955

539 914 805 884 1034 1054 1106 1213 1125 1236 1300 1379 1362 1381

567 885 763 856 1066 1093 1252 1309 1271 1421 1299 1446 1480 1479

0 200 400 600 800 1000 1200 1400 1600

Nov- 09 Dec- 09 Jan - 10 Feb - 10 Mar- 10 Apr- 10 May- 10 Jun - 10 Jul - 10 Aug - 10 Sep - 10 Oct- 10 Nov- 10 Dec- 10 CGI MWA UIN



## This proposal is an exciting opportunity to build on what is working! Passengers

# The popularity of Cape Air’s service is due to complex, inter- related contributions by Cape Air and our community partners
Low fares: $49

Reliable service

High -frequency schedule: 36x weekly at MWA and UIN

Interline ability with all network

carriers at St. Louis Codeshare with Fully-functioning global distribution Community partnership



## 4 

# Popular service

# Cape Girardeau, Marion and Quincy are partnering with a prospering airline: Cape Air

• Total company revenue increased 9% in 2010

• Cape Air is consistently profitable

– Stable

– Investing in quality

– Engaged in our communities

• Cape Air will be adding at least four Cessna 402s in 2011, growing the fleet to 66 aircraft

• Cape Girardeau, Marion and Quincy have been stand - out markets for Cape Air

• Unmatched commuter airline expertise

5 Cape Air strengths Right plane at the right time

# While St. Louis is no longer the global gateway of 20 years ago, it still has 1,697 weekly departures to 59 non - stop destinations—including all the major markets

6 Non -stop St. Louis service January 2011

Source: OAG

# In addition to interline ability with all network carriers at St. Louis, Cape Air’s service is codeshared with American Airlines

7 Codeshare partners: American Airlines and Cape Air

Photo source: Jim Schnobrich ; Used with permission

# Cape Air’s proposal includes a city ticket office in each city to enhance airline and airport awareness

• Increases the visibility of the airport and air service within the community

• Provides a welcoming place for people to learn about the air service from a friendly Cape Air agent

• Enables the redemption of targeted promotions, providing wide latitude in marketing the air service

• Enhances the central business district with a vibrant new retail space 8 City ticket office highlights A typical city ticket office

# Cape Air’s proposal includes a ramp - side inter-terminal shuttle, facilitating seamless connections between terminals at St. Louis, without having to re-clear security

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# No more TSA rescreening to connect between terminals! St. Louis terminal shuttle

# Cape Air proposes a 4 -year term at each community to enhance stability and consistency

• Locks in reliable, popular air service for the communities

• Provides stability and the ability to plan for both the communities and Cape Air

• Enables Cape Air to invest more in the communities

– Robust marketing campaigns

– City ticket offices

– Employee domiciles

• Reduces the cost of service due to Cape Air’s ability to secure less expensive longer-term contracts
10 Key reasons for a 4-year term

# Cape Air proposes status quo service, but prefers a 4 -year term and at least six round trips on weekdays at all three cities

11 Drivers CGI MWA UIN CGI 6X6 

### Daily RTs 3.4 5.1 5.1 5.1 Pax/Dpt 4.4 4.4 4.4 4.4 LF 55% 55% 55% 55% Fare (net) $41.00 $41.00 $41.00 $41.00 Pax Rev/Dpt 

### $180 $180 $180 $180 Annual Act. Dpts 

### 2,428 3,642 3,642 3,642 Annual Pax 

### 11,013 16,519 16,519 16,519 CGI MWA UIN CGI 6X6 Fuel $478,197 $666,061 $622,708 $717,296 Maintenance $460,968 $646,483 $601,514 $691,452 Pilots $228,626 $228,626 $228,626 $228,626 Ownership $131,848 $181,485 $165,198 $197,772 Rents $84,652 $156,479 $105,922 $111,569 Staff $229,543 $289,564 $289,564 $289,564 Landing Fees $114,105 $164,773 $162,881 $171,158 Marketing $58,508 $58,508 $58,508 $58,508 Customer Svc. $123,545 $147,231 $147,231 $147,231 General & Admin./Other $91,449 $134,446 $147,611 $134,446 Operating expense $2,001,443 $2,673,657 $2,529,763 $2,747,624 Return of 5% $105,339 $140,719 $133,145 $144,612 Economic Expense $2,106,782 $2,814,375 $2,662,908 $2,892,235 Passenger Revenue $437,970 $656,955 $656,955 $656,955 Profit ($1,668,812) ($2,157,421) ($2,005,954) ($2,235,280) Proposed Subsidy $1,668,812 $2,157,421 $2,005,954 $2,235,280 Per Departure $687 $592 $551 $614 Discount for 4-year term Proposed Subsidy $1,627,966 $2,104,616 $1,956,856 $2,180,570 Per Departure $671 $578 $537 $599 Status quo service for Cape Girardeau at 24 weekly flights is proposed as requested, but Cape Air strongly prefers a 36x weekly pattern, at parity with Quincy and Marion (see right- most columns). Note about Cape Girardeau service options 

## Expenses Two -year term; discount for 4 -year term, preferred, is noted below 

## Drivers

Inseparable package of three cities

# A service pattern of 6x daily at each community would provide a better service pattern for the communities and dramatically lower unit costs

12 Drivers CGI MWA UIN 

### Daily RTs 6.0 6.0 6.0 Pax/Dpt 4.4 4.4 4.4 LF 55% 55% 55% Fare (net) $41.00 $41.00 $41.00 Pax Rev/Dpt 

### $180 $180 $180 Annual Act. Dpts 

### 4,249 4,249 4,249 Annual Pax 

### 19,272 19,272 19,272 CGI MWA UIN Fuel $836,845 $777,071 $726,492 Maintenance $772,874 $720,410 $667,946 Pilots $240,659 $240,659 $240,659 Ownership $230,734 $211,732 $192,731 Rents $125,028 $169,937 $119,380 Staff $319,575 $319,575 $319,575 Landing Fees $199,684 $192,235 $190,028 Marketing $68,260 $68,260 $68,260 Customer Svc. $159,074 $159,074 $159,074 General & Admin./Other $155,945 $155,945 $171,304 Operating expense $3,108,678 $3,014,898 $2,855,449 Return of 5% $163,615 $158,679 $150,287 Economic Expense $3,272,293 $3,173,577 $3,005,736 Passenger Revenue $766,447 $766,447 $766,447 Profit ($2,505,845) ($2,407,130) ($2,239,288) Proposed Subsidy $2,505,845 $2,407,130 $2,239,288 Per Departure $590 $567 $527 Discount for 4-year term Proposed Subsidy $2,444,513 $2,348,214 $2,184,480 Per Departure $575 $553 $514 

## Expenses Two -year term; discount for 4 -year term, preferred, is noted below 

## Drivers

A consistent daily schedule makes the air service more dependable Inseparable package of three cities

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# Cape Air is delighted to have reinvigorated air service at Cape Girardeau, Marion and Quincy, and is eager to build on these successes

 Proven track record in Cape Girardeau, Marion, and Quincy, where the service has been popular  Cape Air is a prospering, experienced community airline  All the amenities needed for successful small community air service are provided  Full interline ability  American Airlines codeshare  Fully-functioning global distribution  Low fares: $49  Reliability Highlights of Cape Air service



# Cape Air: Building on success! Kicking it up in Marion

# Thank you for a great first term!

Cape Girardeau ribbon cutting Quincy inaugural cake cutting

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