June 7, 2012 Proposal of Hyannis Air Service, Inc. dba “Cape Air” to provide subsidized Essential Air Service for: 

# Kirksville, Missouri DOCKET DOT - OST - 1997 - 2515 

### Three daily non - stop flights to/from Lambert - St. Louis International Airport With --------------------------- codeshare

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 97191 

# Cape Air is a small but robust commuter airline, operating and growing since 1989

 First route was Boston – Provincetown, begun in October 1989 with one aircraft  67 Cessna 402s in five regions, and two ATR - 42s in Micronesia  Operating up to 600 flights daily  In 2011 flew almost 700,000 passengers  Stable, mature and growing company Key facts Cape Air: Leading the pack nine at a time

Photo courtesy Mark Garfinkel (August 7, 2000, Boston )

# Cape Air 2011

• Cape Air is consistently profitable

• 2011 revenue approached $100M

• Cape Air has purchased three more Cessnas, which will bring the fleet total to 70

• 40 airports served; 17 in EAS

2 Captain Krista Poppe Boston based3 

# For smaller communities and niche markets, Cape Air’s nine - seat planes have proven to be a good fit

 High - frequency, non - stop service  branded service at St. Louis  Interline e - ticketing and baggage agreements  Complete GDS sales channels:  866 - Cape - Air  In - house Sabre reservations office  Reliability thanks to spare aircraft availability  MOCHA HAGoTDI † culture and community investment Cape Air highlights “Key West Express”

† Make Our Customers Happy And Have A Good Time Doing It4 

# Over more than 20 years Cape Air has invested in the airline features smaller communities need
Feature Established Reliability Tickets sold through Expedia, Orbitz, Travelocity Interline e - ticketing with all legacy airlines Checked luggage transfer with all legacy airlines TSA security program5 

# Cape Air has been an interline carrier since 1993

enabling connectivity with most major airlines...

• Interline agreements are in place with all US legacy airlines

• Cape Air has completed migration to interline e - ticketing

• Cape Air operates flights in Micronesia as

• Flights in the Caribbean have a code

• Cape Air is one of the only airlines that can interline with

• Flights in the Midwest operate with the code of Interline highlights

# ...And interlines with all of the legacy airlines plus JetBlue and Frontier

67 

# Participation in the global distribution system gives Cape Air’s communities access to the world Cape Air is sold through:8 Cape Air’s Telephone Reservations Center 

# Cape Air has its own internal reservations center

866 - CAPE - AIR Never a booking fee!

# Cape Air’s St. Louis service began operations on November 8, 2009

9 Cape Air’s St. Louis region route map As of November 2009 Cape Air’s first St. Louis arrival taxis in! November 8, 2009; Sandi Dorrin, STL Asst. Station Manager

# Cape Air’s St. Louis operation now includes six EAS cities, ten aircraft and up to 60 flights per day

10 Cape Air’s St. Louis route map As of June 2012

# Cape Air cut the ribbon on Kirksville service on Sept. 17, 2010

11

# Cape Air’s ridership in St. Louis has grown steadily to over 75,000 annual passengers, and climbing

12 St. Louis passengers on Cape Air

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

OWB TBN IRK UIN MWA CGI

# Since Cape Air became Kirksville’s airline Kirksville enplanements increased dramatically

13 0 1,000 2,000 3,000 4,000 5,000 6,000Sep-03Feb-04Jul-04Dec-04May-05Oct-05Mar-06Aug-06Jan-07Jun-07Nov-07Apr-08Sep-08Feb-09Jul-09Dec-09May-10Oct-10Mar-11Aug-11Jan-12 Predecessors Cape Air Kirksville enplanements Year - ending

Source: US DOT’s T100

# Due to a long history of low ridership in Kirksville during the last contract cycle in 2010 DOT gave Kirksville “one last chance to remain in the program”

In the selection order of Cape Air at Kirksville, DOT admonished:

– “We encourage the community and Cape Air to work together to maximize use of the service awarded under this Order to avoid exceeding the $200 per passenger cap, which could result in the termination of eligibility for subsidy under the EAS program.”

- Kirksville’s EAS airline selection order 2010

14

# Kirksville’s subsidy per passenger is now well below the statutory cap of $200 per passenger, and falling

15 $189 $162 $178 $201 $197 $145 $162 $146 $159 $161 $140 $133 $121 $121 $133 $160 $149 $133 $136

$
- $50 $100 $150 $200 $250Oct-10Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11Jun-11Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12 Kirksville subsidy per passenger DOT subsidy cap

# DOT has formally declared Kirksville to be an EAS community “in good standing”

DOT, August 26, 2011: “We congratulate the community of Kirksville and Cape Air in its success in increasing passenger traffic since the inauguration of service in September 2010. Kirksville is currently a community in good standing in the EAS program”

16 DOT awards letters of good standing August 26, 2011

# Cape Air has had fun marketing Kirksville’s air service!

17

# Cape Air has invested in a downtown City Ticket Office

18

# In addition to interline ability with all network carriers at St. Louis, Cape Air’s service is codeshared with American Airlines

19 Codeshare partners: American Airlines and Cape Air

Photo source: Jim Schnobrich ; Used with permission

# Connecting itineraries are sold on AA’s website

20

# Cape Air is co - located with American Airlines in St. Louis’ Concourse C

21 Cape Air

# St. Louis has 1,678 weekly departures to 61 non - stop destinations — including all the major markets

22 Non - stop St. Louis service — June 2012

Source: OAG

# Cape Air operates an inter - terminal shuttle at St. Louis

23 

## No more TSA rescreening to connect between terminals! Cape Air’s St. Louis inter - terminal shuttle

# Kirksville is on United.com, too

24

# Cape Air proposes three daily round trips between Kirksville and St. Louis at an annual subsidy of $1.6M for a four - year term

25 Drivers Economics

Daily RTs 3.0 Annual Sched. Dpts 2,190 Completion Rate 97% Annual Actual Dpts 2,124 PDEW 14.4 Pax/Dpt 5.0 Load Factor 55% Annual Passengers 10,515 Avg. Net Fare $45 Passenger Rev/Dpt $223 Fuel $594,804 Maintenance $574,424 Pilots $140,525 Ownership $122,645 Rents $186,776 Staff $115,274 Landing Fees $100,055 Marketing $46,538 General & Admin./Other $135,274 Operating expense $2,016,314 Return of 5% $106,122 Economic Expense $2,122,436 Passenger Revenue $473,188 Profit ($1,649,248) Annual Operating Subsidy Required $1,649,248 Subsidy Per Departure $776 Per Passenger $15726 

# Cape Air would be honored to continue serving Kirksville!

 Three daily flights to St. Louis at a fare of only $49 each way  Spare aircraft in the region helps ensure a reliable operation  ----------------------------- codeshare, plus interline connections , ticketing and bag transfer with most major airlines; global distribution  A healthy, strong, independent airline that cares passionately about serving communities Proposal highlights



## Cape Air is a great choice for Kirksville

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 971927 

# Thank you!

## Appendix 

# Interline Examples on Online Travel Agencies29 

# Cape Air is on Expedia.com Screenshot from Expedia.com showing Cape Air LNS - PHX search for travel 22SEP0930 

# Cape Air is on Travelocity.com Screenshot from Travelocity.com showing Cape Air ATL - MAZ search for travel 22SEP0931 

# Cape Air is on Orbitz.com Screenshot from Orbitz.com showing Cape Air ART - DCA search for travel 22SEP09