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## BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC

Essential Air Service at

Grand Island, Nebraska DOT

- OST

- 2002

- 13983

Under 49 U.S.C §41731 et seq.

AMERICAN AIRLINES PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT

G RAND ISLAND, NEBRASKA

American Airlines , a wholly owned subsidiary of American Airlines Group, Inc. respectfully

submits its proposal to continue subsidized Essential Air Service to Grand Island, Nebraska

.

Am erican Airlines seeks to continue service from American’s largest hub

, Dallas/F ort Worth

International Airport (“DFW”)

, to the Grand Island Regional Airport (“GRI”) with two daily

roundtrips . The service would be conducted by American Airlines ’ regional brand , American

Eagle

, using 50 seat regional jet aircraft

.

American Airlines regional feed is operated under the American Eagle and US Airways Express

brands. American Airlines customers have access to 339 cities, 56 countries, and more than

6,700 daily departures. Through our one world alliance, customers have ac cess to more than

700 destinations and 140 countries.

The service proposed by American Airlines cont inues existing service to American’s largest hub,

Dallas/ Ft Worth International Airport . At DFW, American a nd American Eagle offer more than

8 50 dail y departures to over 160 destinations , making it one of the largest hubs in the country

. This direct access on such a large scale h as helped stimulate traffic from Grand Island with

significantly easier connecting options than what had been offered to travelers to and from the

region prior to our award of the current Essential Air Service bid

.

Grand Island has performed well under subsidized Essential Air Service since American’s EAS

subsidy award in July 201 3 , despite regional tendencies to favor OMA and its presence of low

cost carriers

. Passenger numbers have increased steadily over the course of our nearly two

years operating in the market . We have made great progress in developing air

- service in Grand

Island, and see the influence of the current se rvice geographically redefining the local

catchment area . Our current bid should reflect our belief that the Essential Air Service subsidy is

vital

, and on this trajectory may one day be able to exist profitably without Federal subsidy.

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### Our bid is based on the 50 seat ERJ

- 145. This is the most commonly used type on this route

currently. American’s intent is to operate the route with 50 seat aircraft. American would like to

request that the DOT and Grand Island allow us flexibility in subs tituting 50 seat Bombardier

CRJ200 and 44 seat Embraer ERJ

- 140 regional jets when needed for the same rate as the ERJ

145. This will provide operational flexibility, which will improve reliability. American also

requests that the DOT and Grand Island wai ve the right to hold

- in American Airlines service

upon issuance of 120 days

- notice to terminate service. Although our intent is to remain in the

GRI market for the long term, we cannot be operationally constrained and kept in a market

indefinitely without the ability to adapt to changing circumstances.

We believe that our success in Grand Island over the past two years is demonstrative of the

American Airlines network and mark eting programs.

We lo ok forward to serving the Grand Island area for many ye ars to come and appreciate the

communit y’s and the Department of Transportation ’s consideration of continued service by

American Airlines

.

Sincerely,

Charles Schubert

Vice President

American Airlines Network Planning

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Essential Air Service Market DFW

- GRI Prepared: 2/17/2015

A/C Type EMB145 Seats 50

Weekly Round Trips 13 Annual Onboard Pax 49,362

Mileage 561 Average Fare $137.62

Annual Deps (98% completion factor) 1,329 RPMs 27,691,867

Block per Dep 1.8 ASMs 37,275,084

Estimated Load Factor 74.3% Subsidy per Departure $956

Estimated Fuel Price $3.25 Subsidy per Pax $25.74

Revenue Annualized Per Departure

Passenger $6,793,235 $5,112

Ancillary $944,834 $711

Cargo $1,329 $1

Total $7,739,397 $5,824

Expense

Pax Variable Expense $653,005 $491

Direct Expense (ex Pax) $5,799,547 $4,364

Indirect Expense (ex Pax) $984,312 $741

Ownership Expense $453,208 $341

Fixed Expense $669,527 $504

Total $8,559,599 $6,441

Segment Profit (820,202) (617)

Segment Profit Margin (FAC) (10.6%) (10.6%)

Subsidy Requirement $1,270,707 $956

New Segment Revenue $9,010,104 $6,780

New Segment Profit $450,505 $339

New Segment Profit Margin (FAC) 5.0% 5.0%



### Proposed Schedule

Segment Depart Arrive Frequency

GRI

- DFW 6: 0 0 7 : 52 Daily

GRI

- DFW 

### 1 4 : 30 16: 14 Daily

DFW

- GRI 12: 0 0 1 3 : 56 Daily

DFW

- GRI 20: 1 5 2 2 : 10 Daily

* Schedule is shown for illustrative purposes only and American Airlines reserves the right to change without notice