### BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ )

Essential Air Service at )

)



### MANISTEE/LUDINGTON, MICHIGAN ) OST

- 1996

- 1711

)

Under 49 U .S.C. §41731 et seq. )

__________________________________________

SUN AIR INTERNATIONAL P ROPOSAL

TO PROVIDE S UBSIDIZED ESSENTIAL AIR SER V ICE

By Order 2014

- 2

- 1 , the Department requested proposals f o r Essential Air Service to

Manistee/Ludington, Michigan . Pursuant to that order, Sun Air Express, LLC . (“Sun Air”)

cordially submits this proposal to provide subsidize d air service to the community of

Manistee/Ludington, Michigan

.

Correspondence with regard to this documen t should be addressed to:

David F. Hackett

Sun Air Express, LLC

. d

ba Sun Air International

3201 Griffin Road,

Ft. Lauderdale, FL 33312

Telephone: 954

- 660

- 9865

Fax: 954

- 894

- 0367

E

- Mail: dhackett @gosunair.com



## Bid Summary

Sun Air hereby offers propo sal s to provide serv ice to the community of Manistee/Ludington,

Michigan (MBL)

. Sun Air’s proposed operations will be operated with eight

- passenger twin

engine Piper Chieftain aircraft. Flights will be displayed in major travel agent systems includ ing

Online Tra vel Agencies. Sun Air would operate to Manistee/Ludington from Milwaukee, WI

(MKE) with an option to also include Chicago , IL (MDW).

Sun Air inc luded a proposal to serve both Chicago and Milwaukee due to its ’ belief that

significant demand exists from both l ocations, and that the specified amount of seat capacity

would b e optimized through serving the two airports. Chicago is recognized as a strong source

of demand, and also has substantial connections throughout the country. The MKE demand was

proven also during Frontier ’ s servi ce there several years ago, wh ere an estimated 33% (7,500

passengers) of the total traffic was local (i.e, not connecting).Sun Air has constructed its’ proposal to incorporate the following essential elements of providing

successful, quality air transportation in these proposed markets:

1. LOW FARES: Sun Air will market its flights with a simple, low unrestrict ed price structure,

ranging from $39 to $ 7 9 each way. The accessibility of affordable airfares is key to developing

the local tourism industry through attracting both local and connecting passengers.

2. FREQUENT FLIGHTS: Sun Air’s service proposal provides for three to five daily departures

from MBL, depending upon the day of week and the season, or 24 weekly flights, compared to

four weekly departures currently being provided to MBL. The smaller aircraft is ideally suited to

th e demand patterns and seasonality of the market.

Sun Air would dedicate three full time aircraft to MBL in the peak season, allowing for much

great er schedule flexibility and the capability to customize those schedules to customer demand.

Sun Air’s service proposal allows for the option to serve Milwaukee alone , or both Milwaukee

and Chicago. The abi lity to serve two destinations provides even greater connecting

opportunities as well as a broader market focus for local tourism development.

3 . INTERLINE E

- TICKETING AND BAGGAGE AGREEMENTS : Sun Air has provided for a

significant investment in reserv ations and distribution systems to acquire access to industry

i nterline and baggage agreements with most major airlines . These agreements allow for

passengers to complete their itinerary on a single ticket, and allow for that full itinerary to be

displaye d in Global Distribution Systems and Online Travel Agencies.

, 4 . A COMMITMENT TO SAFETY & R ELIABILITY: Since a new management team took over

Sun Air in late 2013, Sun Air’s operational performance has ranked among the best in the airline

industry. The company’s 2014 controllable completion factor, or percentage of scheduled flights

that are operated or cancelled due to weather problems, is over 99 %, placing Sun Air in the top

tier of reliabil

ity performance

.

The company schedules flights to include a full time operational spare, plus additional aircraft

time to cover maintenance events, for each aircraft in scheduled service. The goal is to ensure

that serviceable aircraft are available for 100% of the scheduled flights.

The new leadership team at S un is comprised of airline executives with decades of experience, an

in particular at larger Part 121 operations. The safety philosophies embedded in Part 121

operators has been incorporated into Sun Air ’ s plans going forward. Example include that Sun

o nly sells 8 seats instead of the normal 9 seats, such that a full time First Officer can be included

, the company is adding the new position of Director of Safety, not required under Part 135

regulations, and has begun the process of introducing a Safety Management System into its

operations, all of which are typically only found at much larger airlines.



## Servic e Proposal

Sun Air offers two service proposals to the Manistee/Ludington community:

The first option is for Milwaukee

- only service, generally operating three daily round trips in the

winter and four daily roun d trips in the summer, comprised of six month service patterns for eac h.The second option provides for both Milwaukee and Chicago flights, with one and two daily

round trips respectively in the low season

, and two and three daily round trips respectively in the

peak season . Midweek frequency reductions are included to ensure a proper balan ce between

demand patterns and the subsidy requirements to serve the community.

Sun Air proposes contracting for a three year term with an Essential Air Service subsidy o f $ 2.6

million annually for MKE only service, and $3.2 million annual subsidy if both MKE and

Chica go (MDW)

. Financial d etail on each proposal is included in Schedule 1 attached.

Sun Air ’ s proposed service pattern is flexible based upon community input , and initially

structured along the following line s (all times local) :



### Winter Schedule

– Option 1 Service to MKE and MDW ( 7 weekly MKE round trips , 10 MDW )

Thurs, Fri and Mon: Early AM MKE departure for MBL

Two round trips from M BL to Chicago Midway (MDW)

Evening return to MKE

Tues, Wed, Sat: Late morning MKE departure to MBL

One mid

- day round trip MBL

- MDW

Late afternoon return to MKE

Sunday: Early afternoon MKE to MBL

Afternoon round trip MBL to MDW

Evening return from MBL to MKE



### Summer Schedule

– Option 1 Service to MKE and MDW (11 weekly MKE round trips, 22 MDW)

Mon, Tues and Wed: Early Morning MKE to MBL flight

Two round trips MBL

– MDW

Evening return MBL

– MKE

Thurs, Fri, Sat, Sun: Early Morning MKE to MBL

Two round trips MBL

- MDW

Late afternoon MBL to MKE plus

Late morning MKE to MBL

Two round trips MBL to MDW

Evening return MBL to MKE

S hould the community wish to concentrate flights to Milwa ukee, Sun proposes to operate the

following representative schedules (all times local) :

Winter Schedule

– Option 2 MKE on ly (21 weekly)

Daily Flights : MKE to MBL: 0700 MKE to MBL: 0930

1030 1330

1400 1630Summer Schedule

– Option 2 MKE only (28 weekly)

Daily Flights : MKE to MBL 0700 MBL to MKE 0930

1100

- 1230

13 00 1530

16 0 0 1830



### Marketing Initiatives

Sun Air will partner with the community to ensure that its service and pricing features are

properly commu nicated, particularly given that Sun ’ s proposed flight s chedules and fares

represent a major improvement over what the community has had access to in the past.

In addition to s tandard participation in Global Distribution Systems and online travel agencies

such as Orbitz, Expedia and Travelocity, Sun Air ’ s MBL flights would be supported by

advertising in the local community as well as the destinations of Chicago and M ilwau k ee

() depending of course upon the Service Option chosen).

Sun Air would also look to actively coordinate with local tourism attractions to market the

regional destination, including arranging vacation packages and related programs to stimulate

visitor traffic and enhance destinati on awareness.



### About Sun Air International

Sun Air Express, LLC is a Fort Lauderdale, FL based scheduled commuter airline serving EAS

markets in the Washington, DC area as well as Houston, Texas. The airline operates a fleet of

eight passenger Piper Chieftain aircraft.

The company has been in operation for many years, principally flying within Florida and the

Bahamas. The company ’ s principals have extensive experience in providing air service to

tourism

- based destinations, and understand the unique needs of those markets, balancing the

requirements of year

- round residents with the large influx of visitors expected each summer.

S un Air’s management team was put in place in late 2013 and early 2014, comprised of seasoned

regional airline executives with extensive Part 135 and Part 121 experience , and introduced a

much higher degree of focus on operational and customer service quality. The airline ’ s

controllable completion factor ( scheduled flights operated plus weather related cancellatio ns

compared to total flights scheduled ) for 2014 has been over 99%, a dramatic improvement from

2013.

## SCHEDULE 1

Projected Operations Option 1

Option 1

Annual

MBL

MDW/MKE

Passenger $ 517

, 155

Other Rev enues 9

, 265

TOTAL OPERATING REVENUE $ 526,420

OPERATING EXPENSES

Flight Operations 537,700

Fuel 832,106

Maintenance 700,355

Passenger Service 968, 703

Aircraft Ownership 184,800

Other 310,000

Total Operating Cost 3,533,664

OPERATING INCOME/(LOSS) $ (3,007 ,509 )

Profit Element

- 5% of Operating Costs $ 17 6,683

Subsidy Required $ (3,184

, 192 )

Subsidy per Departure $1,276

Summary Statistics (annual) :

Departures 2,496

Available Seat Miles 3,705,601

Passengers 6,909

Average Segment Fare $55.90

Block Hours 2,915Projected Operations Option 2

Option 2

Annual

MBL

- MKE

Passenger $ 304,782

Other Rev enues 6,849

TOTAL OPERATING REVENUE $ 311,631

OPERATING EXPENSES

Flight Operations 453,456

Fuel 645,765

Maintenance 566,838

Passenger Service 648,488

Aircraft Ownership 184,8 00

Other 2 69,000

Total Operating Cost 2,768,347

OPERATING INCOME/(LOSS) $ (2,456,717 )

Profit Element

- 5% of Operating Costs $ 138,417

Subsidy Required $ (2,595,134 )

Subsidy per Departure $1,061

Summary Statistics (annual) :

Departures 2,44 6

Available Seat Miles 2,729,825

Passengers 6,849

Average Segment Fare $44.5 0

Block Hours 2,1 5 3In conclusion, Sun Air believes that its proposal will provide excellent leve ls of serv ice to the

community of Manistee /Ludington

, ensure that they have proper access to the national air

transportation network, provide a meaningful contribution to tourism development, and offer s

cost

- effective options that meet the requirements of the Essentia l Air Service Program.

Respectfully Submitted: February 27, 2014

____ __________________ David F. Hack

ett

C hief Executive

Sun Air Express, LLC.