### BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC

EssentialAir Service at WATERTOWN,NEW YORK Under 49 U.S.C §41731 et seq. DOT-OST -1997-2842 

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AMERICANAIRLINES PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICEAT 

### Watertown, New York
AmericanAirlines, a wholly owned subsidiary ofAMRCorporation, respectfully submits its proposal to continue subsidized Essential Air Service to Watertown,**NY~** American Airlines seeks to continue service from American's hub, Chicago O'Hare to the Watertown International Airport with two daily roundtrips with the exception ofSaturday for a total ofthirteen weekly roundtrips. The service would be conducted by American Airlines regional brand, American Eagle using 44 seatjet aircraft. American Airlines regional feed is operated under the American Eagle and American Connection brands. Flying for AmericanEagle is conducted by American Eagle Airlines, SkyWestAirlines, and ExpressJet. American Connection flying is operated solelyby Chautauqua Airlines. American Airlines customers currently have access to more than 260 cities, 50 countries and more than 3400 daily departures. Through our oneworld alliance, customers have access to more than 700 destinations and 140 countries. These flights will continue to be operated with the AA code, pursuantto a codesharing agreement with AmericanAirlines. Additional codes ofthe oneworld carriers are also applied to this route, and would continue to be. The service proposedbyAmerican Airlines continues existing service to American'shub, Chicago O'Hare ("ORD"). At ORD, American, American Connection, and American Eagle offermore than 460 daily departures to 120 destinations, making it one ofthe largesthubs inthe country. This direct access on such a large scale has helped stimulatetraffic from Watertown with significantly easier connecting options than what had been offered to travelers to and from the region priorto our award ofthe current EssentialAir Service bid. Watertown has performed well under subsidized Essential Air Service since American's EAS subsidy award inNovember 2011, despite regional tendencies to favor SYR and its presence of low-cost carrier and network carriers. Passengernumbers have increased steadily overthe course ofour nearly two years operating inthe market. We have made progress in developing airservice in Watertown, and see the influence ofthe current service geographicallyredefining thelocal catchment area. The proposed EAS subsidy is higherthan ourprevious agreementprimarily due to theproposed additional departure. The proposed subsidy also reflects the costs associated with the unique operational challenges that exist 

### in Watertown which were unforeseen 

### in our first two years ofoperation. Our currentbid should reflect ourbeliefthat the Essential Air Service subsidy is vital, and onthis trajectory the service may one day be able to exist profitably without Federal subsidy. American would like to also request thatthe DOT and Watertown allow us flexibility in substituting an Embraer EMB140 (44 seats), operated by Chautauquaunderthe American· Connectionbrand, when needed for the same rates. This will allow us to provide an additional. layer ofscheduleprotection. American also requests that the DOT and Watertown waive the right to hold-in American Eagle service upon issuance ofa 120 days-notice to terminate service. Although we do not foresee this to be an issue and plan to continue developing the Watertown market, we cannot be operationally constrained and kept in a market indefinitely, without ability to adapt to changing circumstances. We believe that ourto-date success in Watertownis demonstrative ofthe American Airlines network and marketing programs. American Airlines is the only airline with a dedicated Regional Market Developmentteamthat will continue its promotion ofthe brand and service in the communities. This is a testament ofAmerican's support and abilityto provide air service to small communities unlike low costcarriers inthe industry today. We look forward to serving the Watertown area for many years to come and appreciate the communities and the Department ofTransportation consideration ofcontinued American Airlines service.

Sincerely,

Charles Schubert Vice President American Airlines Network PlanningMarket: Aircraft Mileage Annual Deps (Factored) Block per Dep Watertown. NY to Chicago O'Hare EMB140**~nnual** Block Hours (Factored) Completion Percentage 617 1,329

2.12 2,823 98.0% Number of Seats per Dep Annual ASMs (Factored) Annual RPMs (Factored) Annual LF

Revenues Annual Passengers Avg Fare
- Onboard Total Revenues Expenses Flight Operations (incl Fuel) Aircraft Ownership Pax Variable Other Total Expenses
Profit I (Loss)
Profit Element(@ 5%) Subsidy Required Subsidy I Departure Subsidy I Pax

Segment ART-ORO ART-ORO 40,228 $132 $5,328,809

$6,975,187

$233,733 $830,340 $498,696 $8,537,956 ($3,209, 148) $426,898 $3,636,045 $2,736 $90.39

Proposed Schedule Depart 7:20AM 5:35PM Arrive 9:00AM 6:55PM Freguency Daily Daily* (Except Sat.) ORO-ART 2:15PM 5:00PM Daily* (Except Sat.) ORO-ART 3:15PM 6:00PM Saturday only ORO-ART 6:40PM 9:25PM Daily* (Except Sat.) 44 36,076,434 24,820,587 68.8%

** Schedule is shown for illustrative purposes only and American Airlines reserves the right to change without notice. All times are local.