### BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ )

Essential Air Service at )



### Bradford, Pennsylvania ) DOT

- OST

- 2003

- 14528

Franklin/Oil City, Pennsylvania ) DOT

- OST

- 1997

- 2 523

DuBois, Pennsylvania ) DOT

- OST

- 2004

- 17617

Jamestown, New York ) DOT

- OST

- 2003

- 14950

)

Under 49 U.S.C. §41731 et seq. )

__________________________________________

GULFSTREAM INTERNATIONAL AIRLINES PROPOSAL

TO PROVI DE SUBSIDIZED AIR SERICE AT BRADFORD, PENNSYLVANIA;

FRANKLIN/OIL CITY, PENNSYLVANIA; DUBOIS, PENNSYLVANIA; AND

JAMESTOWN, NEW YORK

Correspondence with regard to this document should be addressed to:

Mickey Bowman

Vice President of Corporate Development

Gulfstream International Airlines

3201 Griffin Road, 4 th Floor

Ft. Lauderdale, FL 33312

Telephone: 270

- 689

- 2180

Fax: 270

- 689

- 2180

E

- Mail: mbowman@gulfstreamair.com

Gulfstream International Airlines (“Gulfstream”) cordially submits its proposal to provid e subsidized air

service to Bradford, PA; Franklin/Oil City, PA; DuBois, PA; and Jamestown, NY. Gulfstream hereby

offers two options for service. One service pattern assumes the retention of service at Franklin/Oil City, PA

and the other does not. As Fra nklin service requires no additional aircraft units, there are economies of

scale that are recognized in Option 1 versus Option 2 and the two options should be considered independent

of one another.

In both options, Gulfstream proposes to operate flights

, under its existing codeshare agreement with

Continental Airlines

, to the hub airport of Cleveland, Ohio. Gulfstream is the incumbent carrier in all four

of these communities, having commenced service in September of 2008 in DuBois and Franklin, and in

B radford and Jamestown shortly thereafter. Though a new base of operation for Gulfstream, our northern

system has proved to be the most reliable in our network. We have endeavored to build community

relationships and believe we have returned a sense of st ability and schedule integrity to the markets in

question. In compliance with Public Law 100

- 223, Gulfstream proposes to operate these flights using

Beech 1900D turboprops that are pressurized and accommodate 19 passengers to the, FAA defined, hub at

Clev eland, Ohio.Service Option 1

Current Market s Status Quo

- Including service to Franklin/Oil City Pennsylvania

Service Option 1 contemplates serving these four markets much as they are today. Gulfstream would like

to remind the DOT these routes were sta rted on the cusp of the worst financial recession of the past 50

years. As a consequence, ridership was not what we anticipated in some markets. Particularly hard hit was

Franklin. The RFP that this document answers contemplates the elimination of Frank lin from the Essential

Air Service program. Gulfstream believes that action to be premature and looks to partner with the

community in rebuilding their lost traffic. Advance booking for the Franklin market are running ahead of

the past year and we are pa rticularly heartened by the traffic relating to development of the Marcellus Shale

Natural Gas Deposit. Franklin/Oil City sets as a gateway to the development of this huge natural resource.

According to the Marcellus Shale Coalition, since 2008, gas fiel d development as added some $2.2 Billion

to the Pennsylvania economy and generated some 29,200 jobs. In 2010 alone the Coalition estimates the

financial impact to the Pennsylvania economy will be $8.2 Billion with an accompanying 107,000 jobs.

While all of these markets will benefit from this surge of activity, it could be particularly meaningful to

Franklin/Oil City. The required traffic levels to keep Franklin/Oil City under the $200 per enplaned

passenger cap are very low on a per departure basis. As a show of support for the community Gulfstream is

pr epared to waive both any G&A costs relating to flying the route and is prepared to waive the allowed 5%

profit element from this bid. In discussions with the community they have pledged to allow Gulfstr eam to

operate at the Venango Regional Airport free of airport related charges. The Oil Region Alliance and the

Venango County Chamber of Commerce have pledged their support in partnering with Gulfstream in a

campaign called “SOS’ or “Save Our Service”. This program will represent a large community outreach

focused on bringing traffic back to the local airport. While our bid Option 1 contemplates an average

Franklin

- Cleveland prorate fare of $70, Gulfstream stands ready to lower the local fare as necessa ry to

further stimulate ridership.

Gulfstream International Airlines northern route system is composed of three lines of flight with a fourth

aircraft functioning as a dedicated spare. In this option, as in current practice , Bradford and Jamestown are

flown together in a round robin fashion and occupy one aircraft. Similarly in Option 1, DuBois and

Franklin will continue to be operated in a round robin fashion and occupy one aircraft. In the time period

contemplated, the third line of flight in our no rthern system will be absorbed in operating our new market

linking Cleveland with Parkersburg, WV. Given the fact that Franklin service is incremental to our DuBois

service, no additional lease obligation is allocated specific to that service. For purpose s of review and

award, within Service Option 1, DuBois and Franklin are interdependent and must be considered and

awarded together. Similarly, Bradford and Jame s town service are interdependent and must be consider ed

and awarded together

. While Gulfstream would be amenable to being awarded the DUJ/FKL element of

Option 1 exclusive of the BFD/JHW element of Option 1. We would not be amenable to being awarded the

DUJ/FKL element of Option 1 along with the BFD/JHW element of Option 2. Note that we have speci fied

the requested subsidy amounts on a per city basis to more correctly reflect the cost allocations and revenue

requirements on our proposed round robin, ,IE: CLE

- JHW

- BFD

- CLE or CLE

- DUJ

- FKL

- CLE, markets.

These flights will continue to operate under our Continental Connection codeshare relationship with

Continental Airlines . The timing of these flights is optimized for connections to and from Co ntinental

flights at Cleveland. We would continue to encourage connecting traffic by using a simplified local fee

structures as well as “add on” pricing for through itineraries involving our interline partner. To

Summarize: Continental Codeshare

Market Proposed Servic e Aircraft Requested Subsidy

Bradford

– Cleveland 3 Roundtrips B1900D $1,087,306

Jamestow n

- Cleveland 3 Roundtrips B1900D $1,639,254

DuBois

– Cleveland 4 Roundtrips B1900D $2,228,996

Franklin

– Cleveland 2 Roundtrips B1900D $915,101Gulfstream Airlines

Proposed Flight Schedule

Service Option 1 (Status Quo)

FROM TO DEP ARR FLT EQUI P FREQUENCY STOP

STA STA TIME TIME NUM

BFD CLE 600am 750am 9304 BE1 Monday thru Saturday 1

BFD CLE 1225pm 215pm 9306 BE1 Sunday Only 1

BFD CLE 115pm 225pm 9306 BE1 Monday thru Friday 0

BFD CLE 440pm 625pm 9307 BE1 Sunday thru Friday 1

CLE BFD 1120 am 100pm 9306 BE1 Monday thru Friday 1

CLE BFD 1225pm 210pm 9306 BE1 Saturday Only 1

CLE BFD 320pm 425pm 9307 BE1 Sunday thru Friday 0

CLE BFD 745pm 925pm 9308 BE1 Sunday thru Friday 1

FROM TO DEP ARR FLT EQUIP FREQUENCY STOP

STA STA TIME TIME NUM

J HW CLE 645am 750am 9304 BE1 Monday thru Saturday 0

JHW CLE 110pm 215pm 9306 BE1 Sunday Only 0

JHW CLE 1230pm 225pm 9306 BE1 Monday thru Friday 1

JHW CLE 520pm 625pm 9307 BE1 Sunday thru Friday 0

CLE JHW 1120am 1220pm 9306 BE1 Monday thru Friday 0

CLE JHW 1225pm 125pm 9306 BE1 Saturday Only 0

CLE JHW 320pm 510pm 9307 BE1 Sunday thru Friday 1

CLE JHW 745pm 845pm 9308 BE1 Sunday thru Friday 0

FROM TO DEP ARR FLT EQUIP FREQUENCY STOP

STA STA TIME TIME NUM

DUJ CLE 600am 740am 9290 BE1 Monday thr u Friday 1

DUJ CLE 620am 810am 9290 BE1 Saturday Only 1

DUJ CLE 1020am 1130am 9291 BE1 Sunday Only 0

DUJ CLE 1025am 1135am 9291 BE1 Monday thru Friday 0

DUJ CLE 100pm 210pm 9292 BE1 Sunday Only 0

DUJ CLE 130pm 240pm 9292 BE1 Monday thru Friday 0

DU J CLE 445pm 620pm 9293 BE1 Sunday thru Friday 1

CLE DUJ 835am 1010am 9291 BE1 Monday thru Friday 1

CLE DUJ 1215pm 120pm 9292 BE1 Monday thru Friday 0

CLE DUJ 325pm 430pm 9293 BE1 Sunday thru Friday 0

CLE DUJ 535pm 710pm 9295 BE1 Saturday Only 1

C LE DUJ 740pm 915pm 9294 BE1 Sunday thru Friday 1

CLE DUJ 850pm 955pm 9296 BE1 Friday Only 0

FROM TO DEP ARR FLT EQUIP FREQUENCY STOP

STA STA TIME TIME NUM

FKL CLE 650am 740am 9290 BE1 Monday thru Friday 0

FKL CLE 7 20am 810am 9290 BE1 Saturday O nly 0

FKL CLE 530pm 620pm 9293 BE1 Sunday thru Friday 0

CLE FKL 835am 925am 9291 BE1 Monday thru Friday 0

CLE FKL 535pm 625pm 9295 BE1 Saturday Only 0

CLE FKL 740pm 830pm 9294 BE1 Sunday thru Friday 0GULFSTREAM INTERNATIONAL AIRLINES GULFS TREAM INTERNATIONAL AIRLINES

Essential Air Service Proposal Essential Air Service Proposal

Bradford, PA

- Cleveland, OH Jamestown, ,NY

- Cleveland, OH

Wrapped with Jamestown Wrapped with Bradford

Option 1 Option 1

Bra dford Jamestown

Hub Served Cleveland Hub Served Cleveland

Number of Roundtrips per Service Day 3 Number of Roundtrips per Service Day 3

Operating Statistics Operating Statistics

Assumed Completion % 97% Assumed Completion % 97%

Annual Adjusted Block Hours 994.47 Annual Adjusted Block Hours 1,427.44

Annual Adjusted Departures 1,820.83 Annual Adjusted Departures 1,820.83

Annual Adjusted ASMs 2,336,287 Annual Adjusted ASMs 3,875,588

Annual RPMs 757,205 Annual RPMs 1,555,495

Projected Load Factor 32.4% Projected Load Factor 40.1%

Revenue Projections Revenue Projections

Enplaned Passengers 5,515 Enplaned Passengers 8,250

Mileage (Average as

Operated) 68 Mi leage (Average as

Operated) 112

Average Fare $ 73.00 Average Fare $ 72.00

Passenger Revenue $ 402,595 Passenger Revenue $ 594,000

Expense Projections Expense Projections

Flight Opera tions $122,829 Flight Operations $176,305

Ownership $119,657 Ownership $171,753

Maintenance $383,734 Maintenance $564,857

Reservations, Stations & Administration $429,722 Reservations, Stations & Administration $695,116

Fuel $358,011 Fuel $513,878

Marketing $5,000 Marketing $5,000

Total Annual Expenses $1,418,953 Total Annual Expenses $2,126,909

Projected Profit / (Loss) ($1,016,358) Projected Profit / (Loss) ($1,532,909)

Profit Element @ 5% $70,948 Profit Element @

5% $106,345

Annual Subsidy Required $1,087,306 Annual Subsidy Required $1,639,254

Subsidy per Departure $597.15 Subsidy per Departure $900.28

Subsidy per Passenger $197.15 Subsidy per Passenger $198.70GULFSTREAM INTERNATIONAL AIRLINES GULFSTREAM INTERNATIONAL AIRLINES

Essential Air Service Proposal Essential Air Service Proposal

DuBois, PA

- Cleveland, OH Franklin/Oil City, PA

- Cleveland , OH

Wrapped with Franklin Wrapped with DuBois

Option 1 Option 1

DuBois Franklin

Hub Served Cleveland Hub Served Cleveland

Number of Roundtrips per Service Day 4 Number of Roundtrips per Service Day 2

(2 non

- stop, 2 one stop)

Operating Statistics Operating Statistics

Assumed Completion % 97.5 % Assumed Completion % 97%

Annual Adjusted Block Hours 1,970.38 Annual Adjusted Block Hours 910.42

Annual Adjusted Departures 2,440.29 Ann ual Adjusted Departures 1,213.89

Annual Adjusted ASMs 4,785,372 Annual Adjusted ASMs 2,398,645

Annual RPMs 1,154,051 Annual RPMs 1,061,320

Projected Load Factor 24.1% Projected Load Factor 44.2%

Revenue Projections Re venue Projections

Enplaned Passengers 11,210 Enplaned Passengers 4,600

Mileage (Average as

Operated) 103 Mileage (Average as Operated) 104

Average Fare $ 72.07 Average Fare $ 70.00

Passenger Revenue $ 807, 905 Passenger Revenue $322,000

Expense Projections Expense Projections

Flight Operations $243,365 Flight Operations $112,447

Ownership $346,625 Ownership $0

Maintenance $780,951 Maintenance $339,090

Reservati ons, Stations & Administration $807,007 Reservations, Stations & Administration $452,813

Fuel $709,339 Fuel $327,750

Marketing $5,000 Marketing $5,000

Total Annual Expenses $2,892,286 Total Annual Expenses $1,237,101

Pr ojected Profit / (Loss) ($2,084,382) Projected Profit / (Loss) ($1,237,101)

Profit Element @ 5% $144,614 Profit Element $0

Annual Subsidy Required $2,228,996 Annual Subsidy Required $915,101

Subsi dy per Departure $913.41 Subsidy per Departure $753.86

Subsidy per Passenger $198.84 Subsidy per Passenger $198.93Service Option 2

Current Markets Exclusive of service to Franklin/Oil City Pennsylvania

. In Service Option 2, no F ranklin service is contemplated and consequently the DuBois

– Cleveland

market is delegated a full aircraft. . In Service Option 2, Bradford and Jamestown are again interdependent

and must be considered and awarded together. To clarify, Gulfstream would be amenable to being a warded

the DuBois element of Option 2 exclusive of being awarded the Bradford / Jamestown element of Option 2

. We would not be amenable to being awarded the DuBois/Franklin element of Option 1 paired with the

Bradford/Jamestown elem ent of Option 2, nor would we be amenable to being awarded the DuBois

element of Option 2 paired with the Bradford/Jamestown element of Option 1.

. To Summarize: Continental Codeshare

Market Proposed Servic e Aircraft Requested Subsidy

Bradford

– Cle veland 3 Roundtrips B1900D $1,116,213

Jamestown

- Cleveland 3 Roundtrips B1900D $1,662,715

DuBois

– Cleveland 3 Roundtrips B1900D $2,247,023

Gulfstream Airlines

Proposed Flight Schedule

Service Option 2 (No FKL Servic e)

FROM TO DEP ARR FLT EQUIP FREQUENCY STOP

STA STA TIME TIME NUM

BFD CLE 600am 750am 9304 BE1 Monday thru Saturday 1

BFD CLE 1225pm 215pm 9306 BE1 Sunday Only 1

BFD CLE 115pm 225pm 9306 BE1 Monday thru Friday 0

BFD CLE 440pm 625pm 9307 BE1 Sunday thru Friday 1

CLE BFD 1120a m 100pm 9306 BE1 Monday thru Friday 1

CLE BFD 1225pm 210pm 9306 BE1 Saturday Only 1

CLE BFD 320pm 425pm 9307 BE1 Sunday thru Friday 0

CLE BFD 745pm 925pm 9308 BE1 Sunday thru Friday 1

FROM TO DEP ARR FLT EQUIP FREQUENCY STOP

STA STA TIME TIME NUM

JH W CLE 645am 750am 9304 BE1 Monday thru Saturday 0

JHW CLE 110pm 215pm 9306 BE1 Sunday Only 0

JHW CLE 1230pm 225pm 9306 BE1 Monday thru Friday 1

JHW CLE 520pm 625pm 9307 BE1 Sunday thru Friday 0

CLE JHW 1120am 1220pm 9306 BE1 Monday thru Friday 0

C LE JHW 1225pm 125pm 9306 BE1 Saturday Only 0

CLE JHW 320pm 510pm 9307 BE1 Sunday thru Friday 1

CLE JHW 745pm 845pm 9308 BE1 Sunday thru Friday 0

FROM TO DEP ARR FLT EQUIP FREQUENCY STOP

STA STA TIME TIME NUM

DUJ CLE 630am 740am 9290 BE1 Monday thru Friday 0

DUJ CLE 700am 810am 9290 BE1 Saturday Only 0

DUJ CLE 110 pm 2 2 0pm 9292 BE1 Sunday Only 0

DUJ CLE 130pm 240pm 9292 BE1 Monday thru Friday 0

DUJ CLE 520pm 63 0 pm 9293 BE1 Sunday thru Friday 0

CLE DUJ 1215pm 1 20pm 9292 BE1 Monday thru Satur day 0

CLE DUJ 400pm 505 pm 9293 BE1 Sunday thru Friday 0

CLE DUJ 740pm 845pm 9294 BE1 Sunday thru Friday 0GULFSTREAM INTERNATIONAL AIRLINES GULFSTREAM INTERNATIONAL AIRLINES

Essential Air Service Proposal Essential Air Service Proposal

Bradford, PA

- Cleveland, OH Jamestown, NY

- Cleveland, OH

Wrapped with Jamestown Wrapped with Bradford

Option 2 Option 2

Bradford Jamestown

Hub Served Cleveland Hub Served Cleveland

Number of Roundtrips per Service Day 3 Number of Roundtrips per Service Day 3

Operating Statistics Operating Statistics

Assumed Completion % 97% Assumed Completion % 97%

Annual Adjusted Block Hours 994.47 Annual Adjusted Block Hours 1,427.44

Annual Adjusted Departures 1,820.83 Annual Adjusted Departures 1,820.83

Annual Adjusted ASMs 2,336,287 Annual Adjusted ASMs 3,875,588

Annual RPMs 769,724 Annual RPMs 1,580,976

Projected Load Factor 32.9% Projected Load Factor 40.8%

Revenue Projections Revenue Projections

Enplaned Passengers 5,615 Enplaned Passengers 8,375

Mileage (Average as

Operated) 68 Mileage (Average as

Operated) 112

Average Fare $ 72.85 Average Fare $ 72.00

Passenger Revenue $ 409,053 Passenger Revenue $ 603,000

Expense Projections Expense Projections

Flight Operations $125,352 Flight Operations $179,926

Ownership $136,055 Ownership $195,290

Mainten ance $394,898 Maintenance $581,291

Reservations, Stations & Administration $433,318 Reservations, Stations & Administration $682,439

Fuel $358,011 Fuel $513,878

Marketing $5,000 Marketing $5,000

Total Annual Expenses $1, 452,634 Total Annual Expenses $2,157,824

Projected Profit / (Loss) ($1,043,581) Projected Profit / (Loss) ($1,554,824)

Profit Element @ 5% $72,632 Profit Element @ 5% $107,891

Annual Subsidy Required $ 1,116,213 Annual Subsidy Required $1,662,715

Subsidy per Departure $613.02 Subsidy per Departure $913.16

Subsidy per Passenger $198.79 Subsidy per Passenger $198.53GULFSTREAM INTERNATIONAL AIRLINES

Essential Air Servi ce Proposal

DuBois, PA

- Cleveland, OH

Option 2

DuBois

Hub Served Cleveland

Number of Roundtrips per Service Day 3

Operating Statistics

Assumed Completion % 98%

Annual Adjusted Block Hours 1,960.19

Annual Adjust ed Departures 1,839.61

Annual Adjusted ASMs 5,379,074

Annual RPMs 1,738,263

Projected Load Factor 32.3%

Revenue Projections

Enplaned Passengers 11,295

Mileage (Average as

Operated) 154

Average Fare $ 72.07

Passenger Revenue $ 814,031

Expense Projections

Flight Operations $247,078

Ownership $268,176

Maintenance $819,513

Reservations, Stations & Administration $869,854

Fuel $705,668

Marketing $5,000

Total Annual Expenses $2,915, 289

Projected Profit / (Loss) ($2,101,258)

Profit Element @ 5% $145,764

Annual Subsidy Required $2,247,023

Subsidy per Departure $1,221.47

Subsidy per Passenger $198.94In conclusion, Gulfstream believes that these proposals will provide the communities o f Bradford, DuBois,

Franklin /Oil City and Jamestown with superior air s ervice. These cities will continue to benefit from the

strength of the Continental codeshare and the integrity of service that has been a hallmark of the Gulfstream

operation.

Respectfully Submitted: June 30, 2010

______________________ Mickey Bowman

Vice President of Corporate Development

Gulfstream International Airlines