Essential AirService at 

### ·BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC

Grand Island, Nebraska 

### DOT-OST-2002-13983 Under 49 U.S.C §41731 et seq.



### AMERICAN AIRLINES PROPOSALTO PROVIDE ESSENTIAL AIR SERVICE AT Grand Island. Nebraska

American Airlines, awholly owned subsidiary ofAMR Corporation, respectfully submits its proposal to continue subsidized Essential AirService to Grand Island, Nebraska. American Airlines seeks to continue service from American's largest hub, Dallas/Fort Worth International Airport, to the Grand Island Regional Airportwith two daily roundtrips. The service would be conducted by American Airlines regional brand, American Eagle using 

### 50seatjet aircraft. American Eagle is the primary regional feed for American Airlines, offering morethan 

### 1500 daily departureswith service to nearly 

### 160cities. Flying forAmerican Eagle is conducted by American Eagle Airlines, SkyWest Airlines, and ExpressJet. Through its relationship with American Airlines, American Eagle customers currently have access to morethan 

### 250 cities, 

### 40 countries and morethan 

### 3400 daily departures. Through our oneworld alliance, customers have access to morethan 

### 700 destinations and 

### 140 countries. These flights will continue to be operated withthe AA code, pursuantto acodesharing agreementwith American Airlines. Additional codes ofthe oneworld carriers are also applied to this route, and would continue to be. The service proposed byAmerican Airlines continues existing service to American's largest hub, Dallas/Ft Worth International Airport ("DFW"). At DFW, American and American Eagle offer morethan 

### 750 daily departures to over 

### 160 destinations, making it one ofthe largest hubs in the country. This direct access on such a large scale has helped stimulate trafficfrom Grand Island with significantly easier connecting optionsthan what had been offered totravelers to and from the region priorto our award ofthe current Essential Air Service bid. Grand Island has performed well under subsidized Essential AirService since American's EAS subsidy award in July 2011, despite regional tendencies to favor OMA and its presence of low- . ;; '

.**r~** 

### r1**'·~~·** i..jcost carriers. Passenger numbers have increased steadily over the course ofour nearlytwo ··--,---vears operating in.the_market•..

## We hav.e.**m.aci.~ grg~t**  p[()grE!?S i_l'l developing air-service Grand Island, and see the influence ofthe current service geographically redefining the--lo-cai ··- ·- catchment area. Our current bid should reflect our beliefthatthe Essential Air Service subsidy is vital, and on this trajectory may one day be able to exist profitablywithout Federal subsidy. American would like to also request thatthe DOT and Grand Island allow us flexibility in substituting a Bombardier CRJ200 (50 seats) aircraft, operated by Express Jet Airlines dba American Eagle, and Embraer EMB140 (44 seatsL operated by American Eagle Airlines, when needed forthe same rates. This will allow us to provide an additional layer ofschedule protection. American also requests that the DOT and Grand Island waive the right to hold-in American Eagle service upon issuance of a 120 days-notice to terminate service. Although we do notforesee this to be an issue and plan to continue developingthe Grand Island market, we cannot be operationally constrained and kept in a market indefinitely, without abilityto adapt to changing circumstances. We believe that ourto-date success in Grand Island is demonstrative ofthe American Airlines network and marketing programs. American Airlines is the onlyairline with adedicated Regional Market Developmentteam that will continue its promotion ofthe brand and service in the communities. We look forward to serving the Grand Island area for manyyears to come and appreciate the communities and the Department ofTransportation consideration ofcontinued American Airlines/ American Eagle service.

Sincerely,

Charles Schubert Vice President American Airlines Network PlanningMarket: Between DFWand GRI Aircraft EMB140 Mileage 561 NumberofSeats Daily Deps 3.7 ASMs per Flight Annual Deps 1,356 AnnuaiASMs Block per Dep 1.75 Annual RPMs Flight Hours per Dep 1.33 Annual LF Annual Block Hours 2,373 Annual**F~ght** Hours Annual Onboard Pax 46,717 Fuel Cost perGallon
Revenues Local Pax 5,791,476 Local Yield Local Avg Fare $123.97 SLA Local Yield Local Revenues $5,791,476
Connect Pax 46,512 ConnectYield ConnectAvg Fare $131.9 SLAConnectYield Connect Revenues $6,135,900
On Board Revenues $5,791,476
Online Upline/Oownline Rev $6,135,900 Total Revenues $11,927,376 Expenses Flight Operations (inc! Fuel) $ 5,947,502 Aircraft Ownership $ 195,512 Pax Variable $ 719,629 Other $ 402,593

Total Onboard Expenses $7,265,236 Total Up/Down Expense $2,801,833 FAE Profit/(Loss) ($1.473,7601 FAE Margin (25.4%) ; FAUDNC Profit/ (Loss) $1,860,306 FAUDNC Margin : 15.6% 

### i CASM $0.217 SLACASM i $0.245 44 24,684 33,471,504 26,208,188 78.3% 1,803 $3.25

$0.173 $0.250

$0.281 $0.317 FAE Margin
Onboard Psgr Revenue Upline/DownlineContribution Onboard Expense
FAE (PsgrOnly) Annual FAE Margin (Psgr Only) Annual FAUDNC (Psgr Only) Annual FAUDNC Margin (Psgr Only) Annual Onboard Psgr Revenue/Trip Onboard Expense/Trip Fuel Cost Onboard Psgr/Trip Load Factor Average Onboard Psgr Fare

Annual Subsidy For5% margin 1,837,021 Projection 0.0% 1.0% S.O(o $ 5,791,476 $ 7,265,236 $ 7,338,623 $ 7,647,617 $ 3,334,067 $ 3,334,067 

## s 3,334,067 $ 3,334,067 $ 7,265,236 $ 7,265,236 $ 7,265,236 $ 7,265,236 $ (1,473,760) $ - $ 72,652 363,261 (25.4%) 0.0% 1.0% 5.0%, 

## s 1,860,306 

## s3,334,067 

## s3,407,453

## Is 3,716.448 15.6% 24.9% 25.3% 27.0% 

## s 4,271 $ 5,358 $ 5,4121

## s 5,640 $ 5,358 $ 5,358 $ 5,358 $ 5,358 $ 3.25 $ 3.25 $ 3.25 $ 3.25 34.5 34.5 34.51 34.5 78.3% 78.3% 78.3% 78.3% $ 123.97 

## s 155.52 

## s 157.09 $ 163.70