July 23, 2010 Proposal of Hyannis Air Service, Inc. dba “Cape Air” to provide subsidized Essential Air Service for: 

# Ft. Leonard Wood, MO DOCKET DOT- OST- 1996 - 1167 

### Four daily non - stop flights to Lambert - St. Louis International Airport With --------------------------- codeshare expected
Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 9719 Media inquiries to Charles Ferrara, VP Corporate Affairs: 617- 567- 35971 

# Cape Air is a small but robust commuter airline, operating and growing since 1989  First route was Boston – Provincetown, begun in October 1989 with three aircraft  Presently flying 59 Cessna 402s in five regions, and two ATR -42s in Micronesia  Operating up to 600 flights daily  In 2009 flew more than 610,000 passengers  Stable, mature and growing company Key facts Cape Air: Leading the pack nine* at a time

Photo courtesy Mark Garfinkel (August 7, 2000, Boston ) *Ft. Leonard Wood service with the American Airlines code would have two pilots and thus eight passenger seats2 

# For smaller communities and niche markets, Cape Air’s nine - seat * 

# planes have proven to be a great fit  High -frequency, non -stop service  Interline eticketing and baggage agreements  Complete GDS sales channels  Reliability  Subsidy used to lower fares  MOCHA HAGoTDI † culture and community investment Cape Air highlights “Key West Express”

*Eight seats with the American Airlines codeshare † Make Our Customers Happy And Have A Good Time Doing It3 

# Cape Air began service in 1989 with three aircraft...4 

# ...And one route: Boston – Provincetown

Provincetown Boston Original Cape Air route map

October 1989 route map5 

# Today Cape Air serves 16 communities in the Northeast... Northeast route map

Nantucket Martha’s Vineyard Provincetown Boston Hyannis

New Bedford Rockland Lebanon Saranac Lake Rutland Albany Watertown Ogdensburg Massena

July 2010 route map White Plains Providence6 

# ...And has developed niches along the East Coast, in the Caribbean and Micronesia... Caribbean Florida Keys Micronesia Continental Connection

Ft. Myers
Key West Florida Mid -Atlantic Ponce Mayaguez San Juan Vieques St. Croix St. Thomas Tortola

July 2010 route maps; Maps not to scale

# ...And now also in the Midwest, where Cape Air’s St. Louis operation began flights on November 8, 2009

7 Cape Air’s St. Louis region route map July 2010 Cape Air’s first St. Louis arrival taxis in! November 8, 2009; Sandi Dorrin, STL Asst. Station Manager Illinois
Missouri Cape Girardeau Marion Quincy Kirksville St. Louis
Cape Air route New EAS award

# In the first full quarter of operations, 1Q10, Cape Air increased enplanements at each of the airports served to St. Louis...

8 1.3 7.0 5.8 9.4 15.1 14.9

0 2 4 6 8 10 12 14 16

Cape Girardeau Marion Quincy YE1Q09 Cape Air 1Q10 St. Louis routes’ passengers daily each way

Sources: DOT and Cape Air

# ...And the enplanement trend is positive

9 St. Louis routes’ passengers Sum of both directions, since inception of Cape Air service Nov. 8, 2009

Partial month 539 914 805 884 1,034 1,054 1,106 1,213 567 885 763 856 1,066 1,093 1,252 1,309 285 536 523 486 688 584 699 774

0 500 1,000 1,500 2,000 2,500 3,000 3,500

Nov- 09 Dec- 09 Jan - 10 Feb - 10 Mar- 10 Apr- 10 May- 10 Jun - 10 Cape Girardeau Quincy Marion10 

# Cape Air is developing a track record of growing enplanements in EAS markets; in the first year of service at Rutland, Cape Air more than doubled enplanements

0 100 200 300 400 500 600 700 800 900 1,000

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Beech 1900 Predecessor Cape Air Rutland, Vermont passengers Cape Air’s first year of service YE10/08

Sources: Rutland Airport and Cape Air11 

# Enplanements in Saranac Lake are up 45% and climbing vs. our predecessor’s best year
5,574 5,571 8,119 9,384 6,468

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

2005 2006 2007 2008 2009 Saranac Lake passengers Sum of inbound and outbound 

## +45%

Partial yearCape AirCape Air

Sources: DOT and Cape Air12 

# Cape Air is an experienced community airline

with the features smaller communities need Feature Established Reliability Tickets sold through Expedia, Orbitz, Travelocity Interline eticketing Checked luggage transfer TSA security program

# Cape Air’s St. Louis flights feature
------------------------ codeshare

13

# To complement the codeshare with American, Cape Air will soon be moving to Concourse C at Lambert- St. Louis, steps away from American’s gates

14 Cape Air15 

# In addition to codeshare, Cape Air has been an interline carrier since 1993 enabling connectivity with most major airlines

• Twenty-five interline agreements are in place with almost all legacy airlines • Cape Air has completed migration to interline eticketing , the updated industry norm • Cape Air operates flights in Micronesia as • Flights in the Caribbean have a code • Five Boston routes have a code, and Cape Air can interline with JetBlue • Flights in the Midwest operate with the code of Interline highlights

# Cape Air interlines checked luggage at Lambert- St. Louis with: American, Continental, Delta, Frontier, United and US Airways

16 A Cape Air interline bag cart in action at Lambert-St. Louis
Cape Air’s interline bag cart at St . Louis

# Cape Air has built its business over 20 years by providing reliable service for communities like Ft. Leonard Wood

17 

# Planes and pilots based in Ft. Leonard Wood Full service Cape Air maintenance base in St. Louis Spare aircraft located in St. Louis Factors in reliability

# Cape Air brings a time -tested approach to marketing small community air service
• Dedicated regional marketing manager for the Midwest • Cape Air’s proposal includes a robust budget for marketing of Ft. Leonard Wood’s air service • Proposed city ticket office

– To ensure that the airport and Cape Air’s service has heightened visibility in the community, especially given that the airport is on post • Civic involvement and philanthropy 18 Marketing highlights Costumed for Nantucket’s Daffodil Weekend19 

# Cape Air is already embedded in the global distribution systems (GDS) Cape Air is sold through:20 Cape Air’s Telephone Reservations Center 

# Cape Air has had its own reservations center, using the industry- standard , system for more than 15 years

Toll free reservations: 866- CAPE -

AIR Never a booking fee!21 

# Our company mantra: H ave A Good T ime Doing I t! M ake O ur C ustomers H appy, And Cape Air celebrates Valentine’s Day at a Caribbean station

# To best serve the Ft. Leonard Wood community’s luggage demand, Cape Air proposes combination passenger and freighter service, with the freighter used only as required

22 Daily RTs 4.0 Annual Sched. Departures 2,920 Pax/Dpt 3.6 Load Factor 45% Annual Passengers 10,197 Avg. Net Fare $98.00 Passenger Rev/Dpt $353 Passenger expenses Two -year selection Drivers Fuel $601,582 Subsidy/Dpt $470 Maintenance $531,060 Pilots $320,077 Frequency Sensitivity Ownership $143,976 Annual Pax Dpts 2,920 Rents $40,176 Staff $186,448 Usage Pct* Dpts Annual Ops and Landing Fees $115,620 10% 292 $137,095 Freighter Fixed Expenses $257,444 20% 584 $274,190 Marketing $37,436 30% 876 $411,285 General & Admin./Other $119,684 40% 1,168 $548,379 Operating expense $2,353,504 50% 1,460 $685,474 60% 1,752 $822,569 Return of 5% $123,869 70% 2,044 $959,664 Economic Expense $2,477,372 *Freighter only used when needed Passenger Revenue $999,271 Profit ($1,478,102) Annual Passenger Subsidy Required $1,478,102 Freighter subsidy proposed Subsidy Per Departure $522 at $470/dpt up to $959,664 annually Per Passenger $145 but only used when required Freighter variable expenses Two -year selection

Note: Utilization of the freighter will likely be a function of enplanements, which will keep the perpassenger subsidy below $200.23 

# Cape Air would be proud to serve the Ft. Leonard Wood community  Four daily flights to St. Louis with over one ton of baggage capability  Spare aircraft in the region helps ensure a reliable operation  ----------------------------- codeshare, plus interline connections , ticketing and bag transfer with most major airlines; global distribution  A healthy, strong, independent airline that cares passionately about serving communities Summary 

## Cape Air is a great choice for Ft. Leonard Wood

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 9719 Media inquiries to Charles Ferrara, VP Corporate Affairs: 617- 567- 3597

## Appendix 

# Interline Examples on Online Travel Agencies25 

# Cape Air is on Expedia.com Screenshot from Expedia.com showing Cape Air LNS- PHX search for travel 22SEP0926 

# Cape Air is on Travelocity.com Screenshot from Travelocity.com showing Cape Air ATL- MAZ search for travel 22SEP0927 

# Cape Air is on Orbitz.com Screenshot from Orbitz.com showing Cape Air ART- DCA search for travel 22SEP09