June 4, 2015 Proposal of Hyannis Air Service, Inc., dba Cape Air to provide subsidized Essential Air Service for :

To/From Lambert

- St. Louis International Airport City DOT Docket

Marion/Herrin, IL DOT

- OST

- 2000

- 7881

Quincy, IL DOT

- OST

- 2003

- 14492

Cape Girardeau, MO DOT

- OST

- 1996

- 1559

Hyannis Air Service, Inc., dba Cape Air

Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601

(508) 862

- 9719 With codeshare of1 

# Cape Air has grown from a single aircraft and route in 1989

to America’s largest commuter airline today

 First route was Boston

– Provincetown,

begun in October 1989 with one aircraft

 Today’s fleet

 83 Cessna 402s in four regions

 Four Britten

- Norman Islanders

 Two ATR

- 42s in Micronesia

 Operating up to 550 flights daily

 In 2014 flew 750,000 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 )2 

# Cape Air began service in 1989 with three aircraft...3 

# ...And one route: Boston

– Provincetown

Provincetown Boston Original Cape Air route map

November 1989 schedule

## \ San Juan

Mayaguez

St. Croix Vieques Tortola St. Thomas

Anguilla

Nevis Virgin Gorda Culebra Provincetown Hyannis

Nantucket Providence

New Bedford Martha’s Vineyard Augusta

Lebanon Rutland Saranac Lake Ogdensburg Massena

White Plains Albany

Manhattan Rockland Bar Harbor

Boston



# Cape Air Routes

2Q15 Ft. Leonard Wood

Cape Girardeau Quincy Kirksville

St. Louis

Owensboro Marion Havre Glasgow

Wolf Point

Sidney

Glendive

Billings

Map inset not to scale Rota Saipan

Guam Micronesia Denotes seasonal service 

# Proud to be America’s

premier commuter

airline! Block Island

# Cape Air 2015

• Annual revenue of $120M

• 44 airports served, 20 in EAS

• America’s premier commuter airline!

# Cape Air has grown steadily for ten years

6 $41 $52 $57 $57 $71 $77 $85 $99 $103 $108 $120

$

- $20 $40 $60 $80 $100 $120 $140

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Millions Revenue

# One of Cape Air’s unique features is interline connections

with all of the legacy airlines plus JetBlue

78 

# Cape Air codeshares with American and United

• Cape Air operates flights in Micronesia as

• Flights in the Caribbean have code

• Flights in the Midwest operate with the code of Codeshare highlights

# Itineraries connecting between Cape Air and United are

available on united.com

910 

# Over more than 25 years in business Cape Air has

invested in the airline features smaller communities need

Feature Established

Reliability

Tickets sold through

Expedia, Orbitz, Travelocity

Interline e

- ticketing

with all legacy airlines

Checked luggage transfer

with all legacy airlines

TSA security program

# The Cessna 402 is the backbone of Cape Air’s fleet

11

# In February 2014 Cape Air added four Britten

- Norman

Islanders to the fleet to serve niche markets with extremely

short runways

12 Cape Air’s Britten

- Norman Islander

# Cape Air operates two cabin

- class ATR

- 42s in Micronesia

for United Express configured with 46 passenger seats

13

# Cape Air’s total fleet is comprised of 90 aircraft

Cessna 402s

On line 75

Purchased Nov. 2014 7

Project 1

Total Cessna 402s 83

Britten

- Norman Islander

On line 4

Total Britten

- Norman Islanders 4

Cessna 414A (company business only) 1

ATR

- 42s 2

Grand Total 90

14 Cape Air fleet

# Cape Air takes environmental sustainability seriously by

investing in fuel

- saving aircraft technologies and

powering its offices with solar panels

1516 Cape Air’s Reservations Call Center 

# Cape Air has its own internal reservations center

800

- CAPE

- AIR

Never a booking fee!17 

# The key to Cape Air’s success is our friendly people...

Daffodil “Daffy” Day at Cape Air Reservations18 

# ...And our mantra:

H ave

A

Go od

T ime

D oing

I t! M ake

O ur

C ustomers

H appy,

A nd Cape Air celebrates 25 Years!

September , 2014, Provincetown, Massachusetts

# QUINCY, MARION/HERRIN, CAPE GIRARDEAU Essential Air Service for:

19

# Cape Air has had the privilege of serving Quincy,

Marion/Herrin and Cape Girardeau since November of 2009

20 Cape Air’s first St. Louis arrival

November 8, 2009

# Ridership has returned to and plateaued at healthy levels

21 STL passengers

Twelve

- months ending

0 5,000 10,000 15,000 20,000 25,000Oct-10Jan-11Apr-11Jul-11Oct-11Jan-12Apr-12Jul-12Oct-12Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15 CGI

MWA

UIN

# The popularity of Cape Air’s service is due to

complex, inter

- related contributions

by Cape Air and our community partners

Low fares:

Reset to $49

Reliable service

High

- frequency

schedule: 36x

weekly at MWA

and UIN

Interline ability

with all legacy

carriers at St.

Louis Codeshare with Fully

- functioning

global

distribution Community

partnership

22 

## Popular

service

# American Airlines continues to be extremely supportive of

our codeshare relationship in St. Louis that makes each

community an “AA” city

23

# St. Louis connecting itineraries

are sold on AA’s website as American flights

24

# While St. Louis is no longer the global gateway of 20 years

ago, STL still has 1,623 weekly departures to 62 non

- stop

destinations

— including all the major markets

25 Non

- stop St. Louis service

June 2015

Source: OAG

# Cape Air’s proposal includes a downtown ticket office in

each city to enhance airline and airport awareness

• Increases the visibility of the airport and air

service within the community

• Provides a welcoming place for people to learn

about the air service from a friendly Cape Air

agent

• Enables the redemption of targeted

promotions, providing wide latitude in

marketing the air service

• Enhances the central business district with a

vibrant new retail space

26 City ticket office highlights

Cape Air Ticket Office in Cape Girardeau

# Cape Air’s proposal includes a ramp

- side inter

- terminal

shuttle, facilitating seamless connections between

terminals at St. Louis, without having to re

- clear security

27 

## No TSA rescreening to connect between terminals! Cape Air’s St. Louis inter

- terminal shuttle

# Subsidy per passenger is well clear of the U.S. DOT’s cap

of $200 per passenger

28 Cape Air EAS subsidy per passenger

Year ending March 2015

$200 subsidy per passenger cap

$104 $108 $134

$0 $50 $100 $150 $200 $250

UIN MWA CGI29 

# 10,000 Enplanements!

Cape Air enplaned more than 10,000 passengers at

Quincy and Marion/Herrin in each of the last three years

Quincy’s 10,000 th passenger of 2013

Michael Troyanovich December 11, 2013

# Cape Air proposes a continuation of status quo service for

Quincy, Marion/Herrin and Cape Girardeau,

and prefers a 4

- year reselection at a discount to DOT

30 Expenses

Two

- year term; discount for 4

- year term, preferred, is noted below

Drivers

Inseparable package of three cities

Drivers CGI MWA UIN

Daily RTs 3.4 5.1 5.1

Pax/Dpt 4.8 5.1 5.1

LF 60% 64% 64%

Fare (net) $38.50 $38.50 $38.50

Pax Rev/Dpt $185 $197 $197

Annual Sched Dpts 2,428 3,642 3,642

Annual Pax 12,014 19,222 19,222 CGI MWA UIN

Fuel $484,315 $692,460 $648,378

Maintenance $683,532 $973,211 $894,834

Pilots $282,085 $332,064 $332,064

Ownership $167,853 $236,969 $215,703

Rents $84,749 $182,325 $163,486

Staff $211,054 $275,718 $275,718

Landing Fees $175,149 $162,661 $160,046

Marketing $67,385 $67,385 $67,385

Customer Svc. $136,529 $169,846 $169,846

General & Admin./Other $93,829 $147,214 $160,209

Operating expense $2,386,480 $3,239,851 $3,087,669

Return of 5% $125,604 $170,518 $162,509

Economic Expense $2,512,084 $3,410,370 $3,250,178

Passenger Revenue $448,652 $717,843 $717,843

Profit ($2,063,432) ($2,692,527) ($2,532,335)

Proposed Subsidy $2,063,432 $2,692,527 $2,532,335

Per Departure $850 $739 $695

Discount for 4

- year term

Proposed Subsidy $2,012,928 $2,626,625 $2,470,354

Per Departure $829 $721 $678 4

- year option

preferredYear 1Year 1

Note: See escalation factors next slide

# To align revenue with costs over time

Cape Air proposes a 4% annual escalation factor

31 Annual subsidy including escalation



### Two

- year reselection CGI MWA UIN

Year 1 $2,063,432 $2,692,527 $2,532,335

Year 2 $2,145,969 $2,800,228 $2,633,628

Four

- year reselection

Year 1 $2,012,928 $2,626,625 $2,470,354

Year 2 $2,093,445 $2,731,690 $2,569,168

Year 3 $2,177,183 $2,840,958 $2,671,935

Year 4 $2,264,270 $2,954,596 $2,778,812Expenses: CGI 4x daily service

Two

- year term; discount for 4

- year term, preferred, is noted below 

# CAPE GIRARDEAU 4x DAILY OPTION

Cape Air also proposes an option, requested by

Cape Girardeau, for service at 4x daily

32 CGI 4x Daily

Daily RTs 4.0

Pax/Dpt 4.8

LF 60%

Fare (net) $38.50

Pax Rev/Dpt $185

Annual Sched Dpts 2,831

Annual Pax 13,951 CGI 4x

Fuel $564,813

Maintenance $797,142

Pilots $327,564

Ownership $167,853

Rents $84,749

Staff $211,054

Landing Fees $204,260

Marketing $67,385

Customer Svc. $136,529

General & Admin./Other $105,106

Operating expense $2,666,455

Return of 5% $140,340

Economic Expense $2,806,795

Passenger Revenue $523,223

Profit ($2,283,572)

Proposed Subsidy $2,283,572

Per Departure $807

Discount for 4

- year term

Proposed Subsidy $2,227,680

Per Departure $787 Drivers

4

- year option

preferredYear 1Year 1

Note: See escalation factors next slide Key points

• 24 weekly departures, the requested frequency, has historically

been predicated on two round trips on weekend days, which are no

longer off

- peak times due to Cape Air’s opening of EAS markets to

leisure travelers due to the low fares.

• Consistent daily service has proven time and again to generate a

disproportionate amount of ridership

• The incremental departures come at a discount, as fixed costs are

covered

# Escalation factors for 4x daily Cape Girardeau service

Two

- year reselection CGI 4x

Year 1 $2,283,572

Year 2 $2,374,915

Four

- year reselection

Year 1 $2,227,680

Year 2 $2,316,788

Year 3 $2,409,459

Year 4 $2,505,837

33 Annual subsidy including escalation34 

# Cape Air would be honored to be reselected to provide EAS at

Quincy, Marion/Herrin and Cape Girardeau

 Full interline connectivity , allowing same

- ticket connections with the world

 Codeshare with American Airlines

 Proven track record, making Cape Air a low

- risk option

 Global distribution

 Robust marketing and local ticket offices in the downtown business districts

 Robust infrastructure of a mature commuter airline Cape Air features:



## Cape Air: a great choice for EAS

at Quincy, Marion/Herrin and Cape Girardeau

Hyannis Air Service, Inc., dba Cape Air

Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601

(508) 862

- 9719