# SEAiPDRT

'" AIRLINES

Essential Air Service at Ironwood, MI/Ashland, WI Manistee/Ludington, MI under49 U.S.c. 41731 

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ALASKAJUNEAU AERONAUTICS, INC. DBA 

### SEAPORT AIRLINES

PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT Ironwood, MI/ Ashland, WI Manistee/Ludington, MI DOCKET OST.,,, ..to-**1.z.1o~** OST 1996-1711 

### Juneau Aeronautics, Inc. d/b/a SeaPortAirlines 7505 NE Airport Way, Portland, OR. 97217 

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## October 25,

# CompanyOverview

SeaPort Airlines is adba ofAlaska Juneau Aeronautics, an FAA certified scheduled air service provider with 27 years experience in commercial aviation. Our company's foundation is built on efficient and reliable service to rural communities. Both SeaPort Airlines and our sister companyWings ofAlaska currently operate routes underthe Essential Air Service program, as well as un-subsidized operations on established competitive routes. 

### Wings ofAlaska is the premier airline serving Southeast Alaska. Providing scheduled passenger service, fast freight and charter service between Juneau and Skagway, Haines, Hoonah, Gustavus, and weekly flights to Excursion Inlet. Wings ofAlaska grew in reputation and size, becoming one ofthe most successful regional air carriers in Alaska, now comprised ofafleet ofseven planes from Cessna 206 and 207's to Cessna Grand Caravans. 

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# IT'S ABOUTTIMI;: :SeaPort Airlines currently operates 30 daily scheduled flights in five Northwest cities and 32 daily scheduled flights in five Mid-South cities. Effective April 19th, 

# 2010 SeaPort Airlines began operating 8 daily flights in the Midwest. SeaPort Airlines EAS 6 Routes Speculative 1 Route State Contractual 2 Routes

## EAS 

# Bringing Southeast Alaska CloserTogether: Wings of Alaska currently operates 38 daily scheduled flights to six Southeast Alaska cities. Wings of Alaska Speculative 1 Routes 5 Routes 

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# OurAircraft

SeaPort Airlines operates 7 Pilatus PC-12 aircraft. The PC-12 is a Swiss-built pressurized turboprop aircraft typicallyfound in corporate aviation, but utilized by SeaPort Airlines in a nine seat commuter configuration. The world's best-selling turbine business aircraft, still in production today, the PC-12 can shuttle you with comfort and speed with each seat both awindow and aisle. Pilatus, the world market leader in the manufacture ofturboprop aircraft and the only Swiss companyto develop, produce and sell aircraft and training systems allover the world. http://www.pilatus-aircraft.com**~~7** •

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# Our President Rob McKinney: • Graduate of Purdue University -Aviation Technology, and holds MBAfrom Ellis College •Trained and experienced as commercial pilot in jets and turbo props, but always strived for opportunities to manage business aspects offlight operations in each company he served

. • In September, 2007, enticed by original investors and founders of

### SeaPortAirlines tojoin as first employee, and tasked with establishing scheduled commuter airline service from Portland, ORto Seattle, WA. • Currently, a partial owner and President for SeaPort's three bases ofoperation - Portland, OR, Memphis, TN, and Juneau, AK, and working to establish additional routes and expand schedules in each market.



## "Growingupinasmalltown, 

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# I;AS I-lislory

Whereas many communities have been promised service that has nevertranspired, SeaPort delivers Essential Air Service to seven communities: Excursion Inlet, Alaska, Pendleton, Oregon, Jonesboro, Arkansas, EI Dorado, Arkansas, Hot Springs, Arkansas, Harrison, Arkansas, and Salina, Kansas. Additionally, SeaPort serves Newport, OR and Astoria, OR under a combined state and federal grant program. In every case, after award, we have started on time, on budget, and with fares either at or belowthat which we outlined in our bid, as compared to so many other airlines who place bids with unreasonable fares that are never realized by the traveling public.

# Right-Sized for Ironwood and Manistee

SeaPort proposes 2 direct round trips per day between Ironwood and Minneapolis, as well as 1 daily one stop round trip between Ironwood and either Milwaukee or Detroit. Additionally, we propose two daily round tripsfrom Manistee to both Milwaukee and Detroit. This service would be six days per week. This service level will offer more than enough inventoryto provide forthe historical traffic ofthe last several years, while keeping capacity "right-sized" and avoiding an unnecessary flooding ofempty seats and resulting higher operating costs, yet offeringfrequency and destination choice to spur additional traffic. Please see Exhibit "2" for details. SeaPort has constructed the schedule to maximize traffic flowwith flights morning, midday and evening. SeaPort believes thattraffic will increase in yeartwo as the speed and convenience ofour service become more familiar tothe residents ofthese communities. In addition, adaily plane overnight in both Ironwood and Manistee adds reliabilitytothe above schedule recommendation similar tothe overnight success SeaPort experiences in our other EAS cities. We are therefore able to offerthese communities the best possible fitwith: • Comfortable and fast pressurized Pilatus PC-12 aircraft • Convenient schedules • Affordable fares • A reasonable and sustainable subsidy amount

# SeaPori's 

# Proposed Plan

SeaPort Airlines emphasizes customer service and convenience, and in so doing our platform is reminiscent of commercial air service ofthe past in that our passengers only need to arrive 20 minutes priorto departure from any ofourterminals. In Minneapolis, Milwaukee, and Detroit, SeaPort would use the business aircraft centerfor an enhanced travel experience. From eitherterminal we will provide complimentary shuttle van service to and from the main terminal forthose passengers needing to connect to, or returningfrom, more distant destinations. This model has proven itselfwell at our hub in Portland, OR, Memphis, TN, 

### and Kansas City, MO and is no less convenient than atypical gate change-onlywith this one you get a complimentary shuttle ride. Further, a no-TSA model will offerthe communities tremendous appeal for quicktripsto and from the three hubs, orother potential major market connections to be served by SeaPort. Finally, a no-TSA model has the greatest potential to draw business and leisure trafficfrom the hubs that would otherwise travel by highway ifatraditional TSA-restricted airline was the onlyflight option. Lastly, the $69 to $89 dollarfares in our proposal is an average fare. Travel to all three hubs will be as low as $49.00 one way. This fare is far less than the current operator.

# Nolines, neveranywailing

SeaPort Airlines is unique in that it proactively markets totravelers the ease and convenience of by-passing TSA security screening. Below are afew inherent cost saving benefits and customer benefits passed toyou the airportwhen partnering with acarrier such as SeaPort Airlines: -Lowerfares thanks to no gate fees -Increase reliability in arrival and departure times -Quicker turn times -Arrivejust 20 minutes before departure, board, and go -No lines. No rubber gloves. No need totake your shoes off. -Complimentary shuttle service to and from the main terminal

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../ March 2010 full 

## GDS connectivity (Sabre, Worldspan, Apollo, Galileo, and Amadeus) ""January 2011 full Online Travel Agency availability, (Expedia, Orbitz, Travelocity) ""Interline agreement with USAirways "" Reservations 

## available online at SeaPortAirlines.com, toll-free at 888.573.2767, or through local travel agents "" Low Fares 

## thanks to low operating costs and efficient aircraft equipment "" High-frequency, 

## non-stop dailyservice Customerfocused 

## bringingthe convenience ofa private plane to the average travelerforthe same cost as commercial airlines.

# CurrentService

Great Lakes Aviation is the current air service provider with flights from Ironwood, MI to Rhinelander, WI to Milwaukee, WI and from Manistee, MI to Milwaukee, WI. Non-refundable fares, depending on time ofday range from $278 to $377.00 per segment based on availability and time of booking for IWO-RHI-MKE and $209.00 per segment for MBL-MKE.**PRBITZ.~** QUick S
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### What can the Ironwood/ManisteeAirportAuthority expectfrom SeaPort Airlines: ./ Notification ofany fare/schedule changes ./ Community involvementthrough advertising/marketing ./ A cohesive partnership focused on economic 

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# I;ASTestimonial Pendlelon Regional Airporl Larry Dalrymple - Airport Manager: "Eastern Oregon Regional Airport at Pendleton had been struggling since schedule changes following 9/11 served by a carrierflying 37 seat aircraft. Low passenger count attributed to poor schedule, which then contributed to poorer passenger count. The carrier's solution was to bring in larger aircraft and flyto a different hub. The Airport and community balked at this suggestion and went in search ofalternatives. The solution found through the EAS process was SeaPort Airflying a 9 passenger Pilatus, that would eliminate the need forTSA security as well as mandatoryARFF standby, saving the Airport personnel costs in an already short budget. The passengers have welcomed the new service, much betterschedule, and are elated with "no security check" and stand by time. Passengers today will say, "I love the service", "great customer service", and "I'm sure glad Ifinally tried it, cause I'll be back". In our particular market, the 9 passenger aircraft is perfect, and SeaPort Air provides the schedule, the professionalism, and customer service we need and desire."

# I;:AS Testimonial Salina Municipal Airport

Luci Larson - Former Mayorofthe city ofSalina Kansas 

## &owner ofAction Travel: 

### The Department ofTransportation (DOT) announced on the selection ofSeaPortAirlines as Salina's new essential air service provider. Service to Salina from Kansas City will start as early asApril 19th 

### with three daily roundtrip flights Sunday through Friday. "I understand the importance of having dependable, reliable air service with an affordable cost. Not only will SeaPortAirlines meet these needs, but excel by providing great customer service, a high level ofcommunity involvement and an eagerness to become a Salina partner." Says Luci Larson - former Mayorofthe city of Salina and owner ofAction Travel. The letter supports a few key deliverables that only SeaPortAirlines can support, such as: greaterfrequency, a 9-seat "right sized" aircraft, affordable fares, military/governmentfares, and an active community marketing plan. "I applaud their entrepreneurship and look forward to ourworking relationship. Their presence here in the Midwest is a win-win situation for all of us. The "door-to-door" service they will provide will be truly appreciated by all passengers. Want to travel like rock star? Fly SeaPort Airlines!" Says former Mayor Larson.

# Customer 

# I=eedback

Ruth Ann Smith - HotSprings to Memphis: "Two hours before the flight I booked myticket to Memphis from Hot Springs. Wow! What a surprise; itwas simple, convenient, great price, and impeccable service. 

### It far exceeded my expectations and Iwill be flying to Memphis on SeaPort Airlines instead ofdriving from now on. The customer service was fabulous!" Catherine Martin- Memphisto Harrison: "I have never had such a positive experience connected with any airline. I read about Seaport Air last Octoberwhen they opened the Mid-South Route, but didn't have the chance to fly until March. Usually the dread ofthe process comes then you just grin and bear it; however, with SeaPortAir Icould arrive 15 minutes early. The hassle free no TSA is wonderful and made me feel special. I have flown twice in the last 2 months and the customer service from startto finish is outstanding. I will be a regular customer and have already recommended the airline to several associates. Thank you, SeaPort Air, for making me feel like a queen!" Barbara Covell - Portland to Newport: "This is a class operation, very professional and the staff provide the kind ofcustomer service that most people can only dream about. I have flown several times in order to avoid the LONG car trip from the Oregon central coast to Portland airport. Today my husband had to getto the emergency room at Portland VA Medical Center. The staffand crew actually held the flight in Newport while we made haste to getthere. 

### Ifthatwasn't enough, they had a taxi waiting when he arrived at Portland airport. Many, many thanks!"

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# Recent 

# News

For a list ofSeaPort news articlesvisit http://www.SeaPortAir.com/press Economy doesn't ground airline start-ups (click here) 

### :: 11/16/2009 They're just realistic aboutthe history ofthis industry and the likelihood (a) newstart-up will not survive/' says Craford, who helped launch SeaPort 

### in

... Scheduled air service returns to Region 8 (click here) 

### KAIT TV:: 10/26/2009 SeaPort 

### Airlines will link Memphis and four Arkansas cities»The

... (click here) 

### Gloria Levston ofSignature Flight Support adds fuel to aSeaPort Airlines 

### Pilatus PC12 plane atthe SeaPort 

### facility at Memphis International AirportThe

...

# RecentSeaPort News

'This is a great day for EI Dorado' SeaPort Airlines welcomed as newairservice provider By: John Worthen Published: 10/28/2009**~----**

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Approximately 50 people gathered Tuesday morning atthe South Arkansas Regional Airportterminal to celebrate the return ofair service to EI Dorado. Representatives from SeaPort Airlines, who arrived on aflight from Memphis International Airport to commemorate the occasion, were greeted with cheers and smiles by community members and local officials. The Portland, Ore.-based company will offer round-tripflights between EI Dorado and Memphis on the Swiss-built Pilatus PC-12, a pressurized turbo-prop airplane. Departure times from the SARA are 4:10 a.m., 11:20a.m., and 8:20 p.m., according toSeaPort's website. SeaPort will also operate round-trip flights to Memphisfrom Harrison, Hot Springs and Jonesboro. These communities, along with EI Dorado, have been without regular service since 2008, when Air Midwest, a subsidiary of Mesa Airlines, pulled out ofthe markets. SeaPort beat outseveral companies that submitted proposals tothe Department ofTransportation and signed atwo-year contractto provide the service for a $6,047,789 federal subsidy. The Essential Air Services program subsidizes airlines to provide service thatwouldn't be profitable on the open market. SeaPort offiCially opened Monday in EI Dorado with a4:30 a.m. flight from SARA to Memphis International. At the ceremonyTuesday, local officials touted SeaPort as a quality airline thatwill help EI Dorado's economic engine hum. JeffTeague, chairman ofthe EI Dorado Airport Commission, called the day a "bright one," despite cloudy, mist-filled skies that had the SARA socked in. Gettingthis airline "has been an arduous task, butwe gotthe best service we could have," Teague said. "Transportation is the key issue in economic development, and not having air service in EI Dorado forthe past year orso has really not been agood thing. And now, with all that's going on in EI Dorado, with the conference center and the new high school, (Sea-Port's arrival) is justthe icing on the cake." Kent Craford, chief executive officer ofSeaPort, called Tuesday "an exciting dayfor us atSeaPort. We feel that oursmall nine-passenger airplane is a perfect fit for EI Dorado's air service needs. And thefact thatwe will be offering three trips a day allows for betterconnection service and same day travel opportunities to Memphis and beyond. We are your hometown airline." EI Dorado Mayor Mike Dumas spoke highly ofSeaPort officials and said he looks forward toworking with them throughouttheirtenure here. "This is agreat day for EI Dorado," Dumas said. "We have been working on this for morethan ayear, and it's great tofinally have air service back in EI Dorado. We welcome you, SeaPort, and we thankyou foryour service." More information and reservation information is available by logging on tothe SeaPort Web site atwww.seaportair.com.

## SeaPort welcomes this opportunityto be chosen to provide essential air service at Ironwood/ Manistee forthe nexttwo year period. We bring a fresh approach, and believe we have presented a proposal thatwill meetthe

EAS needs ofthe communities at reasonable subsidy levels. Thank you for your consideration. Respectfully submitted,Alaska Juneau Aeronautics, Inc. d/b/a SeaPortAirlines Essential Air Service Proposal Docket OST-1999-5712/ OST-1996-1711 Annual Subsidy Requirement May 2011 - April 2012 Ironwood Ironwood Manistee Manistee IWD-MBl IWD-MSP MBl-MKE MBl-DTW Revenue:

Passenger:

Forecasted Passengers 1,500 2,500 4,500 4,500 Average Revenue I Pax:

Current: May 2011 -April 2012 $ 69.00 $ 89.00 $ 79.00 $ 89.00 Revenue I Pax Change 0.00% 0.00% 0.00% 0.00% Average Revenue I Pax $ 69.00 $ 89.00 $ 79.00 $ 89.00 Passenger Revenue $ 103,500 $ 222,500 $ 355,500 $ 400,500 Other Revenue:

Ratio to Passenger Revenue 1.00% 1.00% 1.00% 1.00% Other Revenue $ 1,035 $ 2,225 $ 3,555 $ 4,005 Total Revenue $ 104,535 $ 224,725 $ 359,055 $ 404,505 Ol2erating EXl2enses

Completed Block Hours 663.12 1,166.60 982.40 1,228.00 Direct

Flight Crews 50,397 88,662 74,662 93,328 Fuel 196,284 345,314 290,790 363,488 Insurance 24,940 43,876 36,948 46,185 Maintenance 149,202 262,485 221,040 276,300 Aircraft Cost 159,812 281,151 236,758 295,948 Total Direct $ 580,635 $ 1,021,488 $ 860,198 $ 1,075,249 Indirect Expense 487,733 858,050 722,566 903,209 Total Operating Exp $ 1,068,368 $ 1,879,538 $ 1,582,764 $ 1,978,458 Return 53,418 93,977 79,138 98,923 Total Economic Cost $ 1,121,786 $ 1,973,515 $ 1,661,902 $ 2,077,381 Surplus I (Deficit) $ (1,017,251) $ (1,748,790) $ (1,302,847) $ (1,672,876) Annual Subsidy $ 1,017,251 $ 1,748,790 $ 1,302,847 $ 1,672,876 Completed Departures 614 1,228 1,228 1,228 Total

13,000

$ 1,082,000

$ 10,820 $ 1,092,820 4,040.12 307,049 1,195,876

151,949 909,027 973,669 $ 3,537,570

2,971,558 $ 6,509,128 325,456 $ 6,834,584 $ (5,741,764) $ 5,741,764 4,298 Exhibit 1A Year 1Alaska Juneau Aeronautics, Inc. d/b/a SeaPortAirlines Essential Air Service Proposal Docket OST-1999-5712/ OST-1996-1711 Annual Subsidy Requirement May 2012 - April 2013 Ironwood Ironwood Manistee Manistee IWD-MBL IWD-MSP MBL-MKE MBL-DTW Revenue:

Passenger

Forecasted Passengers 1,575 2,625 4,725 4,725 Average Revenue I Pax

Estimate: May 2012 - April 2013 $ 69.00 $ 89.00 $ 79.00 $ 89.00 Revenue I Pax Change 0.00% 0.00% 0.00% 0.00% Average Revenue I Pax $ 69.00 $ 89.00 $ 79.00 $ 89.00 Passenger Revenue $ 108,675 $ 233,625 $ 373,275 $ 420,525 Other Revenue:

Ratio to Passenger Revenue 1.00% 1.00% 1.00% 1.00% Other Revenue $ 1,087 $ 2,336 $ 3,733 $ 4,205 Total Revenue $ 109,762 $ 235,961 $ 377,008 $ 424,730**O~erating Ex~enses**  Completed Block Hours 663.12 1,166.60 982.40 1,228.00 Direct

Flight Crews 51,909 91,321 76,902 96,128 Fuel 198,737 349,630 294,425 368,032 Insurance 24,940 43,876 36,948 46,185 Maintenance 152,518 268,318 225,952 282,440 Aircraft Cost 159,812 281,151 236,758 295,948 Total Direct $ 587,916 $1,034,296 $ 870,985 $1,088,733 Indirect Expense 493,849 868,809 731,627 914,536 Total Operating Exp $1,081,765 $1,903,105 $ 1,602,612 $ 2,003,269 Return 54,088 95,155 80,131 100,163 Total Economic Cost $1,135,853 $ 1,998,260 $1,682,743 $ 2,103,432 Surplus I (Deficit) $(1,026,091) $(1,762,299) $(1,305,735) $(1,678,702) Annual Subsidv $1,026,091 $1,762,299 $1,305,735 $1,678,702 Completed Departures 614 1,228 1,228 1,228 Total

13,650

$ 1,136,100

$ 11,361 $ 1,147,461 4,040.12 316,260 1,211,124

151,987 929,458 973,910 $ 3,582,738 3,008,821 $ 6,591,559 329,537 $ 6,921,096 $ (5,772,827) $ 5,772,827 4,298 Exhibit 1B Year 2Sched City Block Sched Community Pair Time Seg Ironwood IWO 6:00AM MBL 7:00AM 1 MBL 9:45 AM IWO 10:45 AM 1 IWO 11:15 AM MSP 12:15 PM 1 MSP 12:45 PM IWO 1:45 PM 1 IWO 4:30 PM MSP 5:30 PM 1 MSP 5:50 PM IWO 6:50 PM 1 6 Manistee MBL 7:15 AM OTW 8:15 AM 1 MBL 8:25 AM MKE 9:15 AM 1 OTW 8:25 AM MBL 9:25 AM 1 MKE 8:25AM MBL 9:15 AM 1 MBL 9:30AM OTW 10:30AM 1 OTW 11:00 AM MBL 12:00 PM 1 MBL 12:30 PM MKE 1:30 PM 1 MKE 4:45PM MBL 5:45 PM 1 8 Totals 14.00 Route Totals Alaska Juneau Aeronautics, Inc. d/b/a SeaPortAirlines Essential Air Service Proposal

Sched Block Hours I

Seg 1.08 1.08 0.95 0.95 0.95 0.95 5.96 1.00 0.80 1.00 0.80 1.00 1.00 0.80 0.80 7.20 13.16 Docket CST-1999-5712/ CST-1996-1711 Proposed Departure Schedule May2011 - April 2013 Sched Sched Sched Block Block Sched Freq I Hours I Hours I Seg I Week Week Year Year 6 6.48 336.96 312 6 6.48 336.96 312 6 5.70 296.40 312 6 5.70 296.40 312 6 5.70 296.40 312 6 5.70 296.40 312 6 35.76 1,859.52 1,872 6 6.00 312.00 312 6 4.80 249.60 312 6 6.00 312.00 312 6 4.80 249.60 312 6 6.00 312.00 312 6 6.00 312.00 312 6 4.80 249.60 312 6 4.80 249.60 312 6 43.20 2,246.40 2,496 6.00 78.96 4,105.92 4,368.00 Comp Factor 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% 98.50% Exhibit 2

Comp Comp Block Seg I Hours I Year Year 307 331.56 307 331.56 307 291.65 307 291.65 307 291.65 307 291.65 1,842 1,829.72

307 307.00 307 245.60 307 307.00 307 245.60 307 307.00 307 307.00 307 245.60 307 245.60 2,456 2,210.40 4,298.00 4,040.12 337 241Alaska Juneau Aeronautics, Inc. d/b/a SeaPortAirlines Essential Air Service Proposal Docket CST-1999-5712 / CST-1996-1711 Annual Subsidy Requirement May 2011 - April 2012 Ironwood Ironwood Manistee Manistee IWD-MBl IWD-MSP MBl-MKE MBl-DTW Performance: Rev Block Hours

Scheduled 673.92 1,185.60 998.40 1,248.00 Completion % 98.50% 98.50% 98.50% 98.50% Completed Block Hours 663.12 1,166.60 982.40 1,228.00 Rev Departures Scheduled 624 1,248 1,248 1,248 Completion % 98.50% 98.50% 98.50% 98.50% Completed Departures 614 1,228 1,228 1,228 Rev Passengers

Est 2011/2012 Passengers 1,500 2,500 4,500 4,500 Forecasted Growth Rate 0.00% 0.00% 0.00% 0.00%1 Total Passengers 1,500 2,500 4,500 4,500 I Average Segment Share 100.00% 100.00% 100.00% 100.00% Segment Passengers 1,500 2,500 4,500 4,500 I Available Seats 5,526 11,052 11,052 11,052 Average load Factor 27.14% 22.62% 40.72% 40.72% Average Pax I Flight 2.4 2.0 3.7 3.7 Exhibit 2A Year 1Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential AirService Proposal Docket CST-1999-5712/ CST-1996-1711 Annual Subsidy Requirement May2012 - April 2013 Ironwood Ironwood Manistee Manistee IWD-MBl IWD-MSP MBl-MKE MBl-DTW Performance: Rev Block Hours

Scheduled 673.92 1,185.60 998.40 1,248.00 Completion % 98.50% 98.50% 98.50% 98.50% Completed Block Hours 663,12 1,166,60 982.40 1,228,00 Rev Departures

Scheduled 624 1,248 1,248 1,248 Completion % 98.50% 98.50% 98.50% 98.50% Completed Departures 614 1,228 1,228 1,228 Rev Passengers

Est Pax 2012/2013 1,575 2,625 4,725 4,725 Forecasted Growth Rate 5.00% 5.00% 5.00% 5.00% Total Passengers .1,575 2,625 4,725 4,725 Average Segment Share 100.00% 100.00% 100.00% 100.00% Segment Passengers 1,575 2,625 4,725 4,725 Available Seats 5,526 11,052 11,052 11,052 Average load Factor 28,50% 23,75% 42.75% 42.75% Average Pax/ Fliaht 2.6 2.1 3.8 3.8 Exhibit28 Year 2