### BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ )

Essential Air Service at )

)



### Altoona , Pennsylvania ) OST

- 2002

- 11446

Johnstown , Pennsylvania ) OST

- 2002

- 11451

)

Under 49 U.S.C. §41731 et seq. )

__________________________________________

SUN AIR INTERNATIONAL P ROPOSAL

TO PROVIDE S UBSIDIZED ESSENTIAL AIR SERICE

By Order 2014

- 2

- 6 , the Department requested proposals from carriers interested in providing

Essential Air Service to the communities of Altoona and Johnstown, Pennsylvania. Pursuant to

that order, Sun Air Express, LLC . (“Sun Air”) cordially submits this proposal to provide

subsidize d air service to those com munities

.

Correspondence with regard to this document should be addressed to:

David Hackett

Chief Executive Officer

Sun Air Express, LLC

. d / b / a Sun Air International

3201 Griffin Road, Suite 202

Ft. Lauderdale, FL 33312

Telephone: 954

- 660

- 9865

Fax : 954

- 894

- 0367

E

- Mail: dhackett @gosunair.com



## Bid Summary

Sun Air hereby offers proposal s to provide serv ice to the communities of Altoona and Johnstown,

Pennsylvania from Pittsburgh International Airport.

Sun Air proposes to operate high frequency, low fare service to Pittsburgh using 8

- passenger Piper Chieftain aircraft. Sun Air’s management believes that this model is uniquely suited to

restoring passenger traffic at these airports after years of decline. Convenient flights times and

low local fa res can offer a superior alternative to low

- frequency service via larger aircraft under

traditional code

- share arrangements. Capacity is restricted to 8 passengers instead of the

traditional 9 seats due to the airline’s policy of including First Officers on its’ scheduled flights.Sun Air is prepared to make substantial investment s , both operationally as well as in the sales and

marketing area, to aid the communities in recover ing their air passenger demand potential. Sun

Air’s management believes strong ly that the combination of affordable fares, more frequent

flights and consistently reliable operations are critical ingredients to providing the air service that

these communities need.

Sun Air’s operating plans are based upon having multiple back

- up air craft and an ample

availability of reserve flight crews. Since Sun Air’s current management took over operations

late last year, the airline’s operational performance has ranked among the best in the airline

industry. F lights in the Hagerstown, MD and La ncaster, PA communities served from IAD have

not had a single controllable flight cancellation so far in 2014.

Both of Sun Air’s proposals are for a four

- year period , which the company believes is necessary

relative to the size of its’ planned investme nt in these communities. They are stand

- alone

proposals, meaning one or both may be accepted.

Flights will be displayed in all the major travel agent systems, and also available for booking on

the company’s web site. Interline connections are available with most U.S. major airlines via Sun

Air’s contracted distribution capabilities.

The respective subsidy amounts for each city pair are listed in Schedule 1 included herein.



## EAS Eligibility Discussion

Both Altoona and Johnstown have seen declines in pa ssenger volumes associated primarily with

inconvenient schedules and unreliable operations. Altoona’s passenger enplanements are

significantly less than 50% of what they were 10 years ago, causing it to exceed the Department’s

$200 per passenger subsidy l imitation.

While ther e are varied reasons for the enplanement declines , the driving factors include :

 Higher fares

 Inadequate local marketing

 The introduction of “one

- stop” service vs non

- stop

 Insufficient frequency of service and

 C onsistently poor reli ability by the operating carrier.

The U.S. regional airline industry has experienced a significant increase in the average size of

aircraft operated , which has left smaller communities with fewer choices and fewer flights.

Additionally, those few remaini ng regional airlines that operate under traditional code

- share

arrangements with major U.S. carriers are often subject to forced cancellations in times of

inclement weather, when they would otherwise be able to operate. To the extent weather limits

gate a ccess at the large hubs, the major carriers will dictate that the regional airlines operating

small aircraft be cancelled first. And thus a self

- perpetuating cycle results: regional airline code

share flights are the first to be cancelled, and the custom ers quickly learn that these small

communities cannot be relied upon for consistent service, causing lower passenger enplanements

. Small communities need access to reliable air service. It is a crucial component of their

economic development initiatives.

M arketing resources earmarked for the new routes by Sun Air are substantially above those

historically spent. Sun Air will be actively involved with the local communities (including on the

PI T side) and has already identified co

- op marketing funds to su pport the initiatives. While itmay take some time for the communities to see the major reversal of enplanement trends, the

need is clearly there and the Department should support efforts to achieve those important goals.

The Pennsylvania Air Service C ommittee recently contracted for one of the country’s leading

aviation consulting firms to complete a comprehensive study of whether regional service into and

out of PIT would be viable, referred to as the “PIT Connector” project. The enplanement

forecast s incorporated in that study are in line with the levels projected by Sun Air, without

taking into consideration our plans to operate more than twice the frequency of flights (with

smaller aircraft) than the study assumed . Discussions with the local comm unities have

confirmed there is significant demand for re

- establishing links to PIT, even in light of the

elimination of USAirways’ former hub, due to the convenience, pricing and reliability

improvement available to the communities.



## Service Proposal

Sun Air’s proposed weekly frequencies are shown below. Each community would have at least

one overnight aircraft to enable an early morning departure and evening arrival. Flight schedules

throughout the rest of the day would be spread out, and would be fina lized in cooperation with the

respective community. None of the markets envision one

- stop or through flights

... all are nonstop.

Proposed Flight Frequencies, Round Trip to and from Pittsburgh International Airport:

Altoona: 26 Weekly round trips , with four during the weekdays and three each weekend day.

Johnstown : 31 Weekly round trips, with five during the weekdays and three each weekend day.

Local fares would be set for effectiveness of “add

- on” prices to flights from PIT, generally in the

$29 t o $59 range each way. These fares would allow all PIT Connector flights to be priced very

attractively to the passengers, taking advantage of low fares in PIT relative to other regional

higher

- cost hubs. Additionally, the low local fares increase the cho ices available regarding which

airline they connect with in PIT vs the traditional code

- share model of single

- airline itineraries.

Interline connections are available through major travel systems, including the ability for

through

- checking of baggage. Su n Air is in the process of installing enhanced baggage storage

features on its aircraft which will substantially improve its capacity for checked baggage handling

that meets all relevant TSA requirements. Previously, the company’s aircraft have had

limita tions on baggage capacity, particularly with respect to large hard

- sided bags that did not fit

in the existing storage facilities.



### About Sun Air International

Sun Air Express, LLC d / b / a Sun Air International is a Fort Lauderdale, FL based commuter air

c arrier currently serving markets in Pennsylvania, Virginia, Maryland and Texas.

The airline has operated charters and limited scheduled service within Florida and the Bahamas

for a number of years. New management was brought in near the end of 2013, and since that

time has focused on improving operations and initiating a range of marketing activities.

Operational improvements at the airline have been significant. For the Year to Date period, Sun

Air is operating at 100% controllable completion factor (p ercentage of scheduled flights that are

completed, excluding weather) in its northern operations and over 98% in Texas.

## SCHEDULE 1

Annual Projected Operations

AOO

- PIT JST

- PIT

Passenger Revenue $ 516,945 $ 567,069

Flight Operations 957,481 941,003

Maintenance 516,482 657,336

Sales & Service 886,813 1,00 0 ,707

Aircraft Ownership 13 6,000 138,000

Other Expen ses 230,000 280,000

Total Operating

Costs 2,726

, 775 3,01 7,446

Operating

Profit/(Loss) $(2,209,829 ) $(2449,977 )

Profit Element (5%) (136,339 ) (150,852 )

Subsidy Required $(2,346,168 ) $(2,600,829 )

ASMs 2,893,550 2,190,240

RPMs 1,591,453 1,248,437

Load Factor 55.0% 57.0%

Block Hours 2,505 2,738

Annual Departures 2,636 3,143

Available Seats 23,525

Enplaned Passengers 11,600 13,857

Average Segment Fare $42 $41In conclusion, Sun Air believes that its proposal will provide excellent leve ls of serv ice to the

communities

, and ensure s that they have proper access to the national air transportation network,

offer ing cost

- effective options that meet the requirem ents of the Essential Air Service Program.

Respectfully Submitted: May 2 7, 2014

____ __________________ David F. Hackett

C hief Executive

Sun Air Express, LLC

d/b/a Sun Air International