Beforethe US DepartmentofTransportation Essential Air Serviceat: IRONWOOD, MICHIGAN/ASHLAND,WISCONSIN And MANISTEE/LUDINGTON, MICHIGAN Under49 U.S.C. 41731 etseq. Docket DOT-OST-1996-1266 Docket DOT-OST-1996-1711**~-i** 

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Chautauqua Airlines, a wholly owned subsidiaryof Republic Airways Holdings and doing business as Frontier Airlines ("Frontier") respectfully submits its proposal to provide subsidized Essential Air Service to Ironwood, MI/Ashland, WI ("Ironwood"), and Manistee/Ludington, MI ("Manistee"). The service contemplated would operate to/from Frontier's hub at Milwaukee, WI, using 37-seat Embraer ERJ-135jet aircraft. Two roundtrips per daywould be operated nonstopfrom Milwaukeeto Manistee, and two roundtrips per daywould be operated from Milwaukeeto Ironwood with an intermediate stop in Rhinelander, WI orWausau/Stevens Point, WI. Theflights would be sold under Frontier's F9 code. Frontier (including flying by its regional affiliates) is the largest operator at Milwaukee, from where it offers nonstop service as of November2010to 34 nonstop destinations in the U.S. and Mexico with overSO weekday departures. Summerseasonal service is alsooffered nonstopto large West Coast markets including San Francisco and Seattle. In addition, further destinations are available via online connections through Frontier's Kansas Cityand Denver hubs. As a low-fare airline, we will be ableto offer lowerfares to the destinationsthat customersfrom Ironwood and Manisteewantto reach, and Milwaukee has been recognized as the airportwhere airfares have been falling the fastest in the DOT's ConsumerAirfares Report. Additional access is availablefor Manistee and Iron(wood passengers thanks to the factthat we have full interline agreements with over20 airlines, including American Airlines, Continental Airlines, United Airlines, and US Airways who provide furthertravel options with connections in Milwaukee.. In addition to sales via its website and reservations centers, Frontier makes all of its flights availablefor sale in each of the majorG.D.S., making it easyfor customers to purchase tickets through corporate travel departments, local travel agencies, and all of the majoronline travel agencies. Frontier already has a presence in smaller communities in the region, including both Appleton and Green Bay, WI, and both Grand Rapids and Flint, MI. Additionally, we are committed to continuing to develop services in the area. This pastsummer, we operated a successful new service from Denverto Green Bay, and we are looking to continueto develop serviceto smaller markets where we can stimulate demand with lowerfares. We believe that adding further service directly into our Milwaukee hub will increase demand for airtravel from the communities of Ironwood and Manistee. This is an all-or-nothing bid and we do notwish to be considered for serviceto onlyone of the points in the application. Frontier requests flexibilityto operatethe service using a 50-seat ERJ-145 aircraft in place of the ERJ-135 detailed herein. Finally, Frontier requests thatthe DOT, Ironwood, and Manistee waive the right to hold-in Frontier upon a 1SO-day noticetoterminate service. We do notforesee this to be an issue, but we do need the flexibilityto reactto changing costs and demand.

Daniel Shurz, Vice President, Strategyand Planning

### Table of Contents

Proposal Service Points Hub Served Round Trips Equipment Subsidy Pax Part Depts Forecast 1 MBL MKE 2 E135 1329 21,588 2 IWD MKE 2 (1-stop) E135 1329 11,888



### Totals in Bid Annual Subsidy Requirement Depts Passengers $3,082,333 2658 33,476 Subsidy/Dept $1160 Subsidy/Pax $92



### Schedule Proposals Manistee-Milwaukee Fit # Freq Routing Schedule Time Enroute Equip 2002 x7 MKE-MBL 08:3010:15 0:45 ER3 2003 D MBL-MKE 10:3510:20 0:45 ER3 2008 D MKE-MBL 15:1216:57 0:45 ER3 2009 x6 MBL-MKE 17:1717:02 0:45 ER3



### Ironwood-Milwaukee Fit # Freq Routing Schedule Time Enroute Equip 2000 x7 IWD-MKE 1-stop 05:4007:25 1:45 ER3 2003 D MKE-IWD 1-stop 10:4512:36 1:51 ER3 2008 D IWD-MKE 1-stop 12:5614:41 1:45 ER3 2009 x6 MKE-IWD 1-stop 18:0019:51 1:51 ER3 

### Average Fare $75 $87

### Market: Manisteeto Milwaukee 

### Aircraft Mileage Daily Departures Annual Departures Block per Departure Annual Block Hours Annual Onboard Pax Completion Percent

Revenue 

### Annual Pax ERJ135 123 4 1329 0.75 hours 997 hours 21,588 98%

21,588 Average Segment Fare $75.02 Total Revenue Expenses $1,619,531



### System/Station Costs $2,284,606 Fuel Costs $871 ,894 Total Annual Expense $3,156,500

Profit/(Loss) ($1,536,969) Profit Margin @5% $157,825 Subsidy Request $1,694,794 Subsidy/Departure $1275.24 Subsidy/Pax $78.50 Seats ASMs/Flight Annual ASMs Annual RPMs Load Factor Annual Seats Fuel Cost per Gallon 37 4551 6,048,279 2,655,324 43.9% 49,173 $2.50

### Market: Ironwoodto Milwaukee (Assumed stop location is Rhinelander, WI and costsapply to Ironwood-Rhinelander,WI) Aircraft ERJ135 Seats 37 Mileage 70 ASMs/Flight 2,590 Daily Departures 4 Annual ASMs 3,442,110 Annual Departures 1329 Annual RPMs 832,160 Block per Departure 0.45 hours Load Factor 24.2% Annual Block Hours 598 hours Annual Seats 49,173 Annual Onboard Pax 11,888 Fuel Cost per Gallon $2.50 Completion Percent 98%

Revenue Annual Pax 11,888 Average Segment Fare $87.83 Total Revenue $1,044,123 Expenses System/Station Costs $1,792,780 Fuel Costs $523,136 Total Annual Expense $2,315,916

Profit/(Loss) ($1,271,793) Profit Margin @5% $115,796 Subsidy Request $1,387,589 Subsidy/Departure $1044.08 Subsidy/Pax $116.72