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 30th, 2014 request 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 12th, 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 Air 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 statements 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 30th

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 funds to meet the Department’s fitness test. The attached 

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 obviated. An updated income statement and balance sheet as of June 30th, 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 200T
Prepared 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