BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
J anuary 14, 2015

P roposal of Gem Air, LLC to provide Essential Air Service at

C HADRON, NEBRASKA ALLIANCE, NEBRASKA

U nder 49 U.S.C. 41731 et seq. DOCKET DOT

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P roposal of Gem Air, LLC to Provide Essential Air Service to the Communities of Alliance, Nebraska and Chadron, Nebraska

I n response to Department of Transportation Order 2014-11-10, requesting proposals from carriers interested in providing Essential Air Service (EAS) at Alliance and/or Chadron, Nebraska, Gem Air, LLC is please d to prese nt an air service proposal for both communities. In the following proposal Gem Air offers to provide both communities with 12 non-stop, weekly, round trip flights to Denver International Airport. The total annual subsidy under this offer would be $3,177,640 and the proposal for each community is submitted on an inseparable basis. Gem Air requests a 2 year contract with a service start date of September 14, 2015.

W ithin 48 hours of this proposal being submitted, Gem Air will contact the Airport Manager of both communities to answer questions and/or schedule public meetings. Please contact David Schroeder, Gem Air Director of Business Development with any questions.

S incerely,

D avid Schroeder Director of Airline Development Gem Air, LLC 31 Hamner Drive Salmon, ID 83467 (208) 756-7382 david.schroeder@gemairfights.com ,GE M AIR: A LONG HISTORY OF “FLYING YOUR WAY”

S ince 1982, Gem Air, LL C, has been providing clean, safe, and reliable air service. Based in the mountainous rural Idaho town of Salmon (population 3,200), Gem Air (formerly dba Salmon Air) has constantly worked to accommodate the needs of its customers . From providing special , friendly , community charter flights to/from collegiate and high school sporting events to servicing EAS routes to/from Salt Lake International Airport, Gem Air’s goal has always been quality, customer oriented service.

W hile building a self

- sustaining, un

- subsidized, commuter route between Salmon, ID and Boise, the Idaho State Capital, Gem Air flew freight for the community’s UPS shipments as well. As a result of working closely with the Salmon community, Gem Air understands the importance of the vital link that quality air service provides , and strives to build enduring relationships with the communities it serves.

T hrough the service proposed herein , Gem Air wishes to work closely with each community and its leaders. The goal is to establish an air service that maximizes economic and social opportunities with an emphasis on utilizing local workers and businesses in its operations.

S ERVICE PROPOSAL

F requency/Destination

G em Air proposes offering 12 weekly, non

- stop, round

- trip, flights for each community to Denver International Airport. For Monday through Fr iday in each community Gem Air suggests one morning round trip flight and one evening round trip flight, which means two round trip flights to each community each weekday. For Saturday and Sunday, we suggest 1 r ound trip flight for each community each day

. Arrival and departure times will be planned with each community’s needs in mind and designed to offer the best timing for flight connections at DEN.

T icketing/Pricing

G em Air is committed to working toward providing interline ticketing and checked luggage transfer with the major airlines at DEN. In addition, Gem Air plans to market its inventory online through popular travel booking sites like Expedia, Orbitz, and Travelocity and through gemairflights.com . Flight reservations will also be available by contacting our reservation center by phone.

T o maximize value, community utilization, and increase enplanements, Gem Air will offer all tickets on every flight for $49. With increased ridership, the per

- passenger subsidy rate will remain low.

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- 8322 Page | 1 January 14, 2015A ircraft/Crew

G em Air’s proposal includes utilization of the comfortable 9

- passenger, twin

- engine, Piper Navajo Chieftain. A total of three aircraft will be dedicated to serving Alliance and Chadron. To maintain the highest levels of reliability, one Chieftain will be based in Alliance, a second in Chadron, and a third, as backup, will be based in either Alliance or Chadron.

T he Chieftain is a fast (over 200 MPH cruising speed) well

designed commuter aircraft and offers excessive leg room and large passenger windows

. Seating is top

- notch as every seat is an aisle seat and a window seat. The Chieftain has ample external baggage space with two wing lockers and a nose baggage compartment. The ability to sepa rate passengers from

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- 8322 Page | 2 January 14, 2015their baggage is a requirement for TSA and interline agreements which include transferring of checked baggage.

T he redundancy of the Chieftain’s two engines, which provides safety and peace - of

- mind, will be duplicated in the cockpit. Although not required by Federal Aviation Regulations, Gem Air flights will operate with a crew of 2, including a First Officer and an ATP

- rated Captain. Extra flight crews will also be standing by, ensuring a reliable schedule.

L ocal Employment

G em Air will base flight crews and key managers locally, including base managers; and regional directors of operation and maintenance. To the extent that local resources are available, Gem Air will utilize the existing workforce, as well as maintenance and flight service facilities, including aircraft hangaring and refueling.



## Gem Air Proposal

**Reliable Backup aircraft and crew stationed**  **locally**
**Affordable $49 tickets for every seat on every**  **flight**

**Convenient Non** 

**- stop flights, on** 

**- line**  **ticketing, interlining, checked baggage**  **transferring Community Partnership**  **Utilization of local workforce and facilities**  **Responsive Community based Airline**  **The needs of the community are the priority**  **, and Gem Air will always**  **work to accommodate them**

Ge m Air submits this proposal with the first

- hand knowledge that quality, safe, reliable air service can profoundly improve a community’s social and economic opportunities, affecting even those that do not fly. It would be Gem Air’s privilege to commit to se rving Chadron and Alliance. We hope Gem Air can become a positive and lasting influence in these communities, and we thank you for your consideration.

S incerely,

D avid Schroeder Director of Airline Development Gem Air, LLC

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- 8322 Page | 3 January 14, 2015Chadron Alliance Average Block Length (nm) 200 170 Scheduled Departures 1,248 1,248 Scheduled Block Hours 1,513 1,286
Projected Completion Factor 99% 99%
Projected Completed Departures 1,236 1,236 Projected Completed Block Hours 1,498 1,273 Projected Completed Block Miles 247,104 210,038
Projected Passengers 4,353 2,975 Passengers Per Departure 3.5 2.4
Revenue per Passenger (net) $42 $42
Revenue Passenger Miles 870,600 505,750 Available Seat Miles 1,976,832 1,680,307 Projected Load Factor 44% 30%

Revenue 182,826 $ 124,950 $

EXPENSES Flight Operations 272,048 231,241 Aircraft Ownership 90,000 90,000 General and Admin/Other 200,987 170,839 Fuel & Oil 408,436 347,171 Marketing 55,000 55,000 Stations 413,514 351,486 Insurance 30,000 30,000 Maintenance 287,418 244,305 Landing Fees 20,999 20,999 Total Expenses 1,778,402 $ 1,541,042 $

Return of 5% 88,920 $ 77,052 $

Profit (1,684,496) $ (1,493,144) $
Annual Subsidy Required 1,684,496 $ 1,493,144 $ Total Annual Subsidy Required
Subsidy per passenger 387 $ 502 $ Subsidy per departure 1,363 $ 1,209 $ Avg. Daily enplanements 14.1 9.6 Gem Air, LLC 12 Weekly, Non-Stop, Round Trips to DEN Pro Forma Data

3,177,640 $ Pro Forma Data

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- 8322 Page | 4 January 14, 2015