BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC

Essential Air Service at

WATERLOO, IOWA

Under 49 U.S.C 941731 et seq.

DOT-OST-2011-0132

AMERICAN AIRLINES PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT

WATERLOO, IOWA

American Airlines, a wholly owned subsidiary of AMR Corporation, respectfully submits its

proposal to continue subsidized Essential Air Service to Waterloo, Iowa. American Airlines

seeks to continue service from American's hub, Chicago O'Hare International Airport ("ORD")

to the Waterloo Regional Airport ("ALO"), with 13 weekly round trips. The service would be

operated by the American Airlines regional brand, American Eagle using 50 seat jet aircraft.

American Airlines regional feed is operated under the American Eagle and American Connection

brands. American Airlines customers have access to more than 250 cities, 40 countries and more

than 3,400 daily departures. Through our oneworld alliance, customers have access to more than

700 destinations and 140 countries. These flights will continue to be operated with the AA code,

pursuant to a codesharing agreement ~ith American Airlines. Additional codes of the oneworld

carriers are also applied to this route, and would continue to be.

The service proposed by American Airlines continues existing service to American's hub,

Chicago O'Hare International Airport. At ORD, American, American Connection, and

American Eagle offer more than 460 daily departures to over 120 destinations, making it one of

the largest hubs in the country. This direct access to so many places has helped stimulate traffic

from Waterloo with significantly easier connecting ?ptions than what had been offered Waterloo

travelers prior to our award of the current Essential Air Service bid.

Waterloo has performed well under subsidized Essential Air Service since American's EAS

subsidy award in April 2012. Passenger bookings have reflected the industry norms over the

course of our nearly two years operating in the market. We have made great progress in

developing air-service in Waterloo, bringing new business and industry to the Waterloo region.

Our current bid should reflect our belief that the Essential Air Service subsidy is vital, as the

market is on a traj ectory to one day be self-sustaining.
American would like to also request that the DOT and Waterloo allow us flexibility in

substituting a Bombardier CRJ200 (50 seats) aircraft and Embraer Regional jets when needed for

the same rates. Allowing us to substitute 44- or 50-seat RJs will provide us the flexibility to

match supply with demand, as well as provide operational flexibility, which will improve

reliability. American also requests that the DOT and Waterloo waive the right to hold-in

American Airlines service upon issuance of 120 days-notice to terminate service. Although we

do not foresee this to be an issue and plan to continue developing the Waterloo market, we

cannot be operationally constrained and kept in a market indefinitely, without ability to adapt to

changing circumstances .

.We believe that our to-date success in Waterloo is demonstrative of the American Airlines

network and marketing programs. American Airlines is the only airline with a dedicated

Regional Partnerships group that will continue its promotion of the brand and service in

Waterloo. '

We look forward to serving the Waterloo area for many years to come and appreciate the

community's and the Department of Transportation's consideration of continued American

Airlines service.

Sincerely,

Charles Schubert

Vice President

American Airlines Network Planning
Market: Waterloo, IA to Chicago O'Hare

Aircraft

Number of Seats per

Mileage 234 Oep 50

Annual ASMs

Annual Oeps (Factored) 1,325 (Factored) 15,502,032

Annual RPMs

Block per Oep 1.25 (Factored) 9,177,203

Annual Block Hours

(Factored) 1,656 Annual LF 59.2%

Completion Percentage 98.0%

Revenues

Annual Passengers 40,019

Avg Fare - Onboard $1'67

Total Revenues $4,278,179

Expenses

Flight Operations (incl Fuel) $3,948,850

Aircraft Ownership $236,088

Pax Variable $494,247

Other $295,792

Total Expenses $4,974,976

Profit J (Loss) ($696,798)

Profit Element (@ 5%) $248,749

Subsidy Required $945,546 Previous Subsidy $1,541,824

Subsidy J Departure $714 Previous J Departure $1,160

Subsidy J Pax $23.63 Previous J Pax $35.68

Proposed Schedule

Segment Depart ~ Freguency

ALO-ORO 6:00 7:20 Oaily

ALO-ORO 17:00 18:15 XJ

ORO-ALO 15:15 16:25 Oaily

ORO-ALO 19:45 20:55 XJ