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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASIllNGTON, D.C.

Essential Air Servi ce at

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Victoria, Texas

Under 49 U.S.C. §41731 et seq.

SUN AIR INTERNATIONAL PROPOSAL

TO PROVIDE SUBSIDIZED ESSENTIAL AIR SERICE

By Order 2014-3-6, the Department requested proposals from carriers interested in providing

Essential Air Service to the community of Victoria, Texas. Pursuant to that order, Sun Air

Express, LLC. ("Sun Air") cordially submits this proposal to continue to provide subsidized air

service to that community.

Correspondence with regard to this document should be addressed to:

David Hackett

Chief Executive Officer

Sun Air Express, LLC.

d/b/a Sun Air International

3201 Griffm Road, Suite 202

Ft. Lauderdale, FL 33312

Telephone: 954-660-9865

Fax: 954-894-0367

E-Mail: dhackett@gosunair.com

Bid Summary

Sun Air hereby offers a proposal to provide service to the community of Victoria, Texas from

Houston Intercontinental International Airport for a two year period beginning October 1,2014.

Sun Air proposes to operate four daily round peak round trips, with reduced frequencies on

weekends, a level of service that it believes adequately meets the capacity requirements for the

community in light of historical and expected demand levels. Flights will be operated with Sun

Air's 8 passenger Piper PA-31-350 Chieftain twin-engine aircraft. Passenger seating is limited to

eight seats to allow for the company's policy of including First Officers on scheduled flights.

Sun Air's current management team took over responsibility for the company's operations in

November, 2013 and since that time has made substantial improvements in performance, with the
percentage of controllable flights completed exceeding 98.5%. For the month-to-date period in

April, total completion factor (including weather) is over 99%.

Sun Air's operating plans are based upon having full-time back-up aircraft and an ample

availability of reserve flight crews, which has been in place since early 2014. Sun Air is in the

process of completing pre-operating and conformity inspections on an additional aircraft which

will be available to further support the existing two planes.

As the company has been operating in Victoria since late 2012, productivity and efficiency gains

have been achieved, which in conjunction with additional planned cost reduction initiatives, will

allow Sun Air to reduce its' proposed annual subsidy by almost $300,000 annually from current

levels. This improvement, along with marketing efforts discussed below, should allow Victoria

to regain compliance with the $200 per passenger subsidy cap.

Flights are displayed in all the major travel agent systems, and also available for booking on the

company's web site. Interline connections are available with most U.S. major airlines via Sun

Air's contracted distribution capabilities.

While Sun Air is open to discussions with the community regarding proposed flight schedules, it

believes that its current pattern of service provides adequate time of day and frequency coverage,

such that it would continue to operate in a manner similar to what it currently does.

The proposed subsidy amount and associated supporting information is included in Schedule 1

herein.

EAS Efu!ihilitv Discussion

For the past year, Victoria's subsidy per passenger has exceeded the $200 per-passenger cap by a

significant margin, as a result of passenger enplanement levels falling below projected and

historical levels.

While there are naturally a number of contributing factors to the decline in enplanements and

resulting increase in per-passenger subsidy, the passenger enplanement shortfalls experienced in

Victoria were most significantly the result of the following factors:

1. The community had lost all air service for a time prior to Sun Air being able to restart

service, which created confusion about the airport's status in the marketplace;

2. Sun Air's reliability was poor, driving away the passengers that did know about the

service. These reliability problems were in large part due to a chronic shortage of

pilots during the period where FAA resources were severely constrained due to the

mandated budget reductions from the sequester. At one point in time the airline

went nine months without being able to complete a single pilot check ride.

Prolonged periods of poor reliability will have a lasting impact on enplanement

levels, which Victoria has seen first-hand.

The community surrounding Victoria, Texas has many economic strengths, including major

heavy equipment manufacturing as well as a significant and growing oil-and-gas industry. It is a

long drive to any major airport outside of Victoria, and there is no reason that the enplanement

levels should not be dramatically higher.
Sun Air's management has been working to rebuild the market, with a plan that incorporates

several key elements:

1. Ensure highly reliable operations are conducted on a consistent, continuing basis

such that potential travelers know they can rely on Victoria for their air travel needs.

2. Begin an aggressive community outreach program that re-introduces the airline and

the airport. This includes a new and sustained advertising campaign, as well as

direct communication to such major customer bases as large local corporations.

Early responses have been clearly positive. The community wants and needs an

airline service that meets their needs.

3. Improve the airline's ability to handle larger bags, a need that is somewhat more

prevalent in Victoria relative to other markets due to the type of passengers that use

the airport. Sun Air has already implemented several operational changes and

expects to have aircraft baggage capacity enhancements implemented in the next

several weeks.

The combination of Sun Air's efficiency and cost improvements, which have enable it to reduce

its proposed subsidy by abnost $300,000 annually, along with real, sustained reliability

improvements and the prospect of recapturing enplanement levels to historical norms will allow

the operation to maintain subsidy levels below the $200 per passenger cap.

Sun Air's management believes that there is potential well beyond its projected enplanement

levels, and that over time a continuation of consistently reliable service will allow the passenger

levels to continue to grow and further reduce the per-passenger subsidy amounts. Roughly ten

years ago, enplanements were 30% greater than the projected levels included in this proposal, and

the local economy has seen significant growth since that time.

Service Proposal

Sun Air's proposes to continue operating a total of twenty-four weekly round trips between

Houston IAH and Victoria. This would provide for four weekday round trips and two each on

Saturdays and Sundays.

Interline connections are available through major travel systems, including the ability for

through-checking of baggage.

About Sun Air International

Sun Air Express, LLC d/b/a Sun Air International is a Fort Lauderdale, FL based commuter air

carrier currently serving markets in Pennsylvania, Virginia, Maryland and Texas.

The airline has operated charters and limited scheduled service within Florida and the Bahamas

for a number of years. New management was brought in near the end of 2013, and since that

time has focused on improving operations and initiating a range of marketing activities.
SCHEDULE 1

Annual Projected Operations

Passenger Revenue

Flight Operations 760,752

Maintenance 516,258

Sales & Service 776,202

Aircraft Ownership 162,000

Other Expenses 134,000

Total Operating Costs 2,349,213

Operating Profit/(Loss} $(1,879,517)

Profit Element (5%) (117,461)

Subsidy Required $(1,996,978)

ASMs 2,431,503

RPMs 1,313,012

Load Factor 54.0%

Block Hours 2,347

Annual Departures 2,471

Available Seats 19,768

Enplaned

Passengers 10,675

Average Segment Fare $ 44.00
In conclusion, Sun Air believes that its proposal will provide excellent levels of service to the

community, and ensure that they have proper access to the national air transportation network,

offering cost-effective options that meet the requirements of the Essential Air Service Program.

Respectfully Submitted: April 23,2014

David F. Hackett

Chief Executive

Sun Air Express, LLC

d/b/a Sun Air International