## August 4 , 2014

U.S. Department of Transportation

Office of the Secretary of Transportation

1200 New Jersey Ave., S.E.

Washington, DC 20590

Dear Ms. Remo:

Below please find responses to the Deparment’s July 30 th 

## , 2014 reque st for additional

information as well as amendments /updates to Gem Air, LLC’s commuter application.

Amendments and Updates to Application:

1. Gem Air was planning to begin on

- demand air service May 1, 2014 but did not

begin on

- demand air service until June 12 th 

## , 2014

. 2. Changing proposed frequency of service:

a. Gem Air is amending the proposed frequency of service from 5 round

trips/week from September through May and 12 round trips/week from

June through August to: 5 round trips/week year

- round.

b. Updated financial statements that reflect the change to 5 round trips/week

are attached.

3. Gem Air will not rely on Spirit Air or W&S for financial assistance. Please see

updated attached financial information showing Gem Air has sufficient funds in

its name to meet the Department’s fitness test.

4. Gem A ir will lease the Quest Kodiak for its operations. Please find lease

agreement attached.

5. Please see attached updated commuter operations pro

- forma , on

- demand

operations pro

- forma, and consolidated pro

- forma financial statement s reflecting

the most up to date projections including above amendments and following

changes :

a. Commuter start date changed to November 1, 2014

b. Startup costs of $28,000, shown in Gem Air’s “SMN

- BOI

- SMN

Commuter 2015 Pro

- forma Profit and Loss” have already been incurred

and no further foreseeable startup costs exist. Therefore, these expenses

have been omitted from the pro

- forma statements.

The above amendments to the Gem Air application address the Department’s July 30 th



## 2014 request for further information. With a route frequency of 5 round trips per week

year

- round and a contribution of funds from its owners, Daniel Schroeder and JoAnn

Wolters, Gem Air has sufficient fund s to meet the Department’s fitness test. The atta ched

letter from Washington Federal Bank will confirm this.

Gem Air will not rely on Sprit Air or W&S for financial assistance and therefore the need

to provide balance sheets and financial statements of these businesses to the Department

has been obviate d. An updated income statement and balance sheet as of June 30 th 

## , 2014

, as requested, as well as updated pro

- forma statements for Gem Air are included

.Prepared 8/3/2014

1 Operating Aircraft: Quest Kodiak 100 9 seats

Nov. - Jan Feb. - April May - July Aug. - Oct. Total

Average Block Length (nm) 145 145 145 145 145

Scheduled Departures 130 130 130 130 520

Scheduled Block Hours 130 130 130 130 520

Projected Completion Factor 99% 99% 99% 99% 99%

Projected Completed Departures 129 129 129 129 515

Projected Completed Block Hours 129 129 129 129 515

Projected Completed Block Miles 18,662 18,662 18,662 18,662 74,646

Projected Passengers 455 455 650 585 2,145

Passengers Per Departure 3.5 3.5 5.0 4.5 4.1

Revenue per Passenger $199 $199 $199 $199 $199

Revenue Passenger Miles 65,315 65,315 93,308 83,977 307,915

Available Seat Miles 167,954 167,954 167,954 167,954 671,814

Projected Load Factor 39% 39% 56% 50% 46%

Revenue 90,545 $ 90,545 $ 129,350 $ 116,415 $ 426,855 $

Expenses

Flight Operations 19,500 $ 19,500 $ 19,500 $ 19,500 $ 78,000 $

Fuel & Oil 27,510 $ 27,510 $ 27,510 $ 27,510 $ 110,039 $

Sales & Marketing 5,000 $ 5,000 $ 5,000 $ 5,000 $ 20,000 $

Traffic Servicing 4,500 $ 4,500 $ 7,000 $ 6,500 $ 22,500 $

Insurance 4,800 $ 4,800 $ 4,800 $ 4,800 $ 19,200 $

Maintenance 16,900 $ 16,900 $ 16,900 $ 16,900 $ 67,600 $

Sub-Total - Direct 78,210 $ 78,210 $ 80,710 $ 80,210 $ 317,339 $

Indirect 3,000 $ 3,000 $ 3,000 $ 3,000 $ 12,000 $

Total Expenses 81,210 $ 81,210 $ 83,710 $ 83,210 $ 329,339 $

Projected Operating Profit/(Loss) 9,335 $ 9,335 $ 45,640 $ 33,205 $ 97,517 $

Less:

Aircraft Lease (467) $ (467) $ (2,282) $ (1,660) $ (4,876) $

FET (6,791) $ (6,791) $ (9,701) $ (8,731) $ (32,014) $

Merchant fees (2,716) $ (2,716) $ (3,881) $ (3,492) $ (12,806) $

Net Operating Profit/(Loss) 9,802 $ 9,802 $ 47,922 $ 34,866 $ 102,392 $

Statement prepared on the cash basis

Initial service start-up will not require the hiring/training of additional personnel SMN-BOI-SMN Commuter Gem Air LLC

Hangar and office space is owned free and clear by JoAnn Wolters and Daniel Schroeder and is personally

contributed to the operation Financial Projections Commuter Operations Pro-forma Profit and Loss

The above pro-forma data, including load factors, are based upon local knowledge and historical operating data and

experience when Daniel Schroeder and JoAnn Wolters operated the same commuter route from 2001-2005 November 1, 2014 - October 31, 2015 with Commuter start date November 1, 2014

Scheduled frequency is 5 rounds trips per week year-round Operating costs are calculated based on the use of a leased 2006 Quest Kodiak

## Prepared 8/3/2014

9 seats

5 seats

Nov. - Jan Feb. - April May - July Aug. - Oct. Total

Projected Completed Block Hours

Kodiak 10 10 15 15 30

Seneca 5 5 5 5 10

Average Rate/hour

Kodiak 975 $ 975 $ 975 $ 975 $ 975 $

Seneca 550 $ 550 $ 550 $ 550 $ 550 $

Revenue

Kodiak $9,750 $9,750 $14,625 $14,625 $29,250

Seneca $2,750 $2,750 $2,750 $2,750 $5,500

Total On-Demand Revenue $12,500 $12,500 $17,375 $17,375 $34,750

Total Direct Operating Expenses/hour*

Kodiak 475 $ 475 $ 475 $ 475 $ 475 $

Seneca 380 $ 380 $ 380 $ 380 $ 380 $

Operating Expenses

Kodiak 4,750 $ 4,750 $ 7,125 $ 7,125 $ 14,250 $

Seneca 1,900 $ 1,900 $ 1,900 $ 1,900 $ 3,800 $

Total Expenses 6,650 $ 6,650 $ 9,025 $ 9,025 $ 18,050 $

Projected Operating Profit/(Loss) $5,850 $5,850 $8,350 $8,350 $16,700

Statement prepared on the cash basis

*Hourly Direct Operating costs = total

of Crew wages + fuel/oil costs + airport

fees + engine/prop/maintenence

reserves + Aircraft Insurance Gem Air LLC

SMN-BOI-SMN Commuter

On-Demand Flying Pro-forma Profit and Loss

November 1, 2014 - October 31, 2015

2 Operating Aircraft: Quest Kodiak 100

Piper Seneca PA-34 200TPrepared 8/3/2014

Nov. - Jan. Feb. - April May - July Aug. - Oct. Total

INCOME

On-Demand 12,500 $ 12,500 $ 17,375 $ 17,375 $ 59,750 $

Commuter 90,545 $ 90,545 $ 129,350 $ 116,415 $ 426,855 $

Total 103,045 $ 103,045 $ 146,725 $ 133,790 $ 486,605 $

Expenses

On-Demand 6,650 $ 6,650 $ 9,025 $ 9,025 $ 31,350 $

Commuter 81,210 $ 81,210 $ 83,710 $ 83,210 $ 329,339 $

Total 87,860 $ 87,860 $ 92,735 $ 92,235 $ 360,689 $

Projected Operating Profit/Loss 15,185 $ 15,185 $ 53,990 $ 41,555 $ 125,917 $ Consolidated Pro-forma Profit and Loss

Novemer 1, 2014 - October 31, 2015 with Commuter Operations start date June 15th, 2014 Gem Air LLC