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Proposal of HyannisAir Service, Inc., dba CapeAir to provide subsidized Essential Air Service for: 

# Lebanon, NH Docket DOT -OST -2003-14822 

# Boston Logan 4x 

# Daily and 

# NewYork City 2x Daily

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, VP Planning, 660 Barnstable Road, Hyannis, MA 02601, (508) 862-9719 Media inquiries to Chuck Ferrara, VP Corporate Affairs: (617) 567-3597 

## August 27,2010

### ....- .. .......... i.
__-..._



# ..



# iP/JOM a41 pue 'uols09 'Al!CJ >/JO).. MaN 01 AeMaleE) 

# lJOdJ!V led!:)!unV\l uoueqal

# Cape Air has been honored to serve the UpperValley since November 2008 Cape Air**hi~hlights** 

## • Cape Air key company statistics

- 62 Cessna 402s

- 36 cities served

- 21 years in business

- Thriving, growing and stable company
• Cape Air started Lebanon - Boston service on November 1, 2008, now4x daily
• Added Lebanon - New York City service in March 2010, 2x daily
• Annually carrying over 14,000 passengers, and growing at a 26% annual rate
• Adding unsubsidized flights at Lebanon! Cape Air's ribbon cutting at Lebanon Airport November 12,2008



## 2

# Cape Air started Lebanon Airport service in November 2008, and has been working hard to earn the Upper Valley's ridership Lebanon passengers on Cape Air 1800----------- 1600 i--------------------------·----------

-------- 

### 1400 'i 

### 1200 _ ......-- - ......--.---. 

### 1000 - - - - !---- 

### ,--_.

;------ -- - 1------ I----- :

- -- '--- -- f--- '-- !---- !---- I '-'- --- I------ -- - -- 1------ 1---- 

### 800 -NewYork

# ~ - - - - - r------ '-- r------ 1----- r------ !---- !---- !---- r------ 1------ I----- - ----. 1------- f---- I----- 

### 600 - Boston



## +-- - - - - - - - - - c---- c---- !---- !---- r------ I---- I---- - 

## - r----- I---- - 

### 400

I---- - - - -- - - - 

### -- -- 

## - - !---- 1---- r--- I---- I----- -- ---- -- 

### 200



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# #~#~#~###~~~#~#~#~###~ 3

# Enplanements are growing at a 26% annual rate
LEB passengers Year ending 

## 16,000 14,000 12,000 10,000

8,000 6,000 4,000 2,000 

# o**~\:)Oj** 

# aU 2>

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# ),s 

# 1

Projected

,,\:)

## ~v($ 4

# Now two years in, for comparable months, Cape Air is out-enplaning our predecessor
Lebanon enplanements

900**II------------------------------------------------------------~** 

### 800 

## I. ,'"""'---**~** 

### 700 

# I**~** 

# =::: CapeAir .'"-, 

# ><:::==- 600 I

### ~ 

## Predecessor**~** 

### 500 I 

### .......-= -+-2008 

### 400 

### I -- I ---2010 

### 300**+I--------------------------------------------------------------~** 

### 200

## tl------------------------------------------------------~ 100**+I----------------------------------------------------------------~** 

# o Jan Feb Mar 

### Apr May 

### Jun Jul Aug Sources: Lebanon Airport and Cape Air 

## 5

# Cape Air is keen to work with the UpperValley to continue to grow enplanements Enplanementgrowth highlights • Enplanements are presently 

## growing ata 26% annualized rate
• Cape Air continues to build 

## a constituencyforthe relatively new Boston service

- In Summer

## 2010 Cape Airflew an additional unsubsidized Boston round trip each Friday
• Enhanced 

## JetBlue connectivitywill be enabled by are-launchedjetblue.com
• Cape Air added new 

## serviceto NewYork City in March 

## 2010

- The NewYork City market potentiallywill be strong enough to support additional unsubsidized flying in the future
• Robust 

## annual marketing budget: $62,835
• Email databasefortargeted marketing



# .. Growingtrafficthe old fashioned way: winning repeat passengers one ata time 

## 6

# Cape Air now provides great access to NewYork City UpperValley to Midtown Manhattan in just 2**~** 

# hours How it works**.~\**/:>Rl&ililE"
t;**~**

",. 

## At Lebanon Airport, skip TSAscreening
Fly 1:19 to White Plains

Arrive at our private VIP terminal
Complimentary ground transportation to Manhattan ensures stress-free connections

Arrive Midtown at 35th St. and 8th Ave. near Penn Station


## Fare: $109 with a commuter book, or$159 each way Includes all taxes and fees 

## 7

# Lebanon - NewYork City Schedule 

# Down and back in the same day

with a full day forwork in NYC

Schedule, including complimentary groundtransportation



# To NewYork 

# City From NewYork 

# City Depart LEB Arrive 35th 

# &8th 

# Depart 35th 

# &8th 

# Arrive LEB 6:45AM 9:15AM 7:20AM 9:50AM 4:20 PM 6:50 PM 4:45 PM 7:15 PM Saturday morning flights are one hour later, Sunday morning flights are two hours later



# 866-Cape-Air Capeair.com 8

# The new LEB-NYC service is catching on CapeAir LEB-NYC passengers 400

- 

## 370 350 

## 328 

# - 300 

## 282 250 

## 248
200 

## 189 150 100 '

50 

## 43



# o " 1
.....'L'
.....""...,'.LI 

## Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 

## 9

# Boston has service to 95 non-stop destinations, including 25 international destinations and comprehensive transcon service
Boston destinations served

Rank Destination Wklll DQts Rank Destination Wklll DQts Rank Destination Wklll DQts Rank Destination Wklll DQts 1 New York-La Guardia, NY 228 25 Buffalo, NY 42 49 Memphis, TN 20 73 Santo Domingo, DO 8 2 Washington-National, DC 176 26 Miami, FL 42 50 Augusta, ME 19 74 Austin, TX 7 3 Chicago-O'Hare, IL 147 27 Minneapolis/St. Paul, MN 39 51 Paris-De Gaulle, FR 19 75 Dublin, IE 7 4 New York-JFK, NY 142 28 Montreal-PET, QC, CA 39 52 Presque Isle, ME 19 76 Rome-Da Vi nci, IT 7 5 Baltimore, MD 137 29 Lebanon, NH 38 53 Syra cuse, NY 19 77 Jacksonville, FL 7 6 Atlanta, GA 113 30 Houston-Intercontinental, TX 36 54 Columbus, OH 18 78 NewOrleans,LA 7 7 Philadelphia, PA 103 31 Fort Lauderdale, FL 34 55 Rochester, NY 17 79 Munich, DE 7 8 Washington-Dulles, VA 96 32 Chicago-Midway, IL 34 56 Ottawa, ON, CA 17 80 Portland, OR 7 9 Na ntucket, MA 94 33 Toronto-City, ON, CA 31 57 Bermuda, BM 14 81 San Jose, CA 7 10 Charlotte-Douglas, NC 83 34 Richmond, VA 29 58 Las Vegas, NV 14 82 Zurich, CH 7 11 Martha's Vineyard, MA 75 35 Rockland, ME 28 59 Newport News, VA 14 83 Ka n sasCity, MO 6 12 San Francisco, CA 73 36 Cleveland, OH 26 60 Fort Myers, FL 14 84 Myrtle Beach, SC 6 13 Raleigh/Durham, NC 72 37 Cincinnati, OH 25 61 St. Louis, MO 14 85 Aruba, AW 4 14 Toronto, ON, CA 71 38 Indianapolis, IN 25 62 Atlantic City, NJ 13 86 Ca ncun, MX 4 15 Newark, NJ 70 39 West Palm Beach, FL 24 63 Ba r Ha rbor, ME 13 87 Madrid, ES 4 16 Los Angeles, CA 69 40 Sa n Jua n, PR 24 64 Akron/Ca nton, OH 13 88 Sha nnon, IE 4 17 Provi ncetown, MA 61 41 Hyannis, MA 21 65 Fra nkfurt, DE 13 89 Oakland, CA 3 18 Dallas/Fort Worth, TX 58 42 Plattsburgh, NY 21 66 Sa n Di ego, CA 13 90 Ponta Delgada, PT 3 19 Denver, CO 56 43 Phoenix, AZ 21 67 Sa It La ke City, UT 13 91 Montego Bay, JM 2 20 Orlando, FL 52 44 Rutland, VT 21 68 Albany, NY 12 92 Praia, CV 2 21 london-Heathrow, EN, GB 49 45 Seattle/Tacoma, WA 21 69 Long Bea ch, CA 12 93 Lisbon, PT 1 22 Detroit, MI 48 46 Sa ra nac La ke, NY 21 70 Harrisburg, PA 11 94 Punta (ana, DO 1 23 Milwaukee, WI 45 47 Tampa, FL 21 71 Amsterdam, Nl 10 95 Terceira, PT 1 24 Pittsburgh, PA 45 48 Halifax, NS, CA 21 72 Reykjavik, IS 10 Total 3,310 Shadingdenotes internationaI Source: OAG June 2010


## 11

# Cape Air has been an interline carrier since 1993 enabling connectivity with most major airlines, now including 

# jetBlue AIRWAYS



## Interline highlights • Twenty-five interline agreements are in place, with almost all legacy airlines
• Cape Air has completed migration to interline e-ticketing, the updated industry norm
• Cape Air operates flights in Micronesia as 

# Ccontinent.tal • onnec Ion**~"** 

## • Flights in the Caribbean have a

# Conti!le.ntallBl code 

# AirlInes**~.** • Five Boston routes have a

# jetBlue code, and Cape Air can interline with JetBlue AIRWAYS 

## • Flights in the Midwest operate with the code of

# AmericanAiriines'

12

# Cape Air's partnership with Continental Airlines enables Lebanon to show and sell on continental.com Continental

# mw Airlines**~.** Select YourDeparting FlightforTue., Sep. 14,2010:

"rc,r.' $254 hnlltl!d':lch,,::::

mI 7:10 a.m. Tue., Sep. 14,2010 Boston, MA (BOS) Change Planes. Connect time in Boston, MA (BOS) is 1 hour 20 minutes. Depart: 8:30 a.m. Tue., Sep. 14, 2010 Boston, MA (BOS) Cape Alrfllght 1870 operated by C",pe Air. Arrive: 9:48 a.m. Tue., Sep. 14,2010 New York/Newark, NJ (EWR - Liberty)

Note: FlIght 1870 is serl/iced by a non-jet equipmenttype, Wheelchairs cannot be accommodilted in the c.argo hold on flight 1870 due to the equipmenttype being used. DEipart: 5:05 p.m. Tue., Sep. 14, 2010 lebanon, NH (lEB) Arrive: 6:00 p.m. Tue., Sep. 14,2010 Boston, MA (BOS) Change Planes. Connect time in Boston, MA (BOS) is 1 hour**1~** minutes. Depart' 7:15 p.m. Tue_, Sep. 14,2010 Boston, MA (BOS) Capl!: Alrfllght 1878 operat@dbyCapeAIL Arri
...e: 8:50 p.m. Tue., Sep. 14,2010 Nell' York/Newark, NJ (EWR - Liberty)

Not@: Flight 1878 is ser...icl!:d by <II non-jet equipm@nttype. Flight Time: 1 hr 18 mn Trill.'el Time: 3 hr 33 mn

Flight Time: 55 mn

Flight Time: 1 hr 35 mn Tra
...el Time: 3 hr 45 mn

Wheelchairs cannotbe accommodated if) th@ cargo hold Of) flight 1878 due to the @quipm@n':type being us@d. tr,_"lro $254 l,mlt,;r:itICk",r",

mI Depart: 10:20 •.m. Tue., Sap. 14,20ID lebanon, NH (LEB) Arn
...e: 11:15 a.m. Tue., Sep. 14,2010 Boston, MA (BOS) Chilnge plilnes. Connect time In Boston, MA (BOS) IS 1 hour 25 minutes. Depart: 12:40 p.m. Arrive: 2:20 p.m. Flight Time: 55 mn

Flight Time: 1 hr 40 mn OnePass Miles! Elite Qualiflcabon*': 201/100% Total Miles: 201

OnePass Miles/ Elite Quallflcatlon*:

OnePass Mil@s/ Elite Qualiflcation*: 201/100% Total Miles: 201

OnePass Miles/ Elite Qualification*:

OnePass Mlle:>/ Elite Qual,flcatlon***~** Flight: CO 1123 Aircraft: Boeing 737-:;00 Fate Class: Economy (N) M@al' None**~~r I~'-~:.t_~**  _

Flight: 9K 1818 Aircraft: Cessna 402 Fare Class: Economy (V) M@al: None T ",-, ":**~'-,** t _'_r,
__**~'** Flight: C01101 Aircraft: Boeing 131-500**Fatl~** Class: Economy (N) Meal: None

Flight: 9K 1874 Aircraft: Cessna 402 Fate Class: Economy (V) Me
..l: None**~~!"~-** ...:=.- Flight: COIU4 Alruaft: Boeing 717-'jOO


## 13

# Lebanon can connect seamlessly within Logan's Terminal C with Boston's largest low-cost carrier

Boston Logan Terminal 

# "e" jetBlue jetBlue jetBlue AIRWAYS AIRWAYS AIRWAYS 

### jetBlue AIRWAYS 

### jetBlue AIRWA/S Customerservice center 

### jetBlue jetBlue AIRWAYS AIRWAYS 

### jetBlue 

# -- .... 

# " 

# "
AIRWAYS

# t~u \ 

# " 

# "

....

# -- lebanon 

### jetBlue AIRWAYS 

# ..----------, 1

__

# ISi\**§~cl!!"i!y**

## __ 1 

### Ticket counters Note: Not to scale 

## As an interline carrierfor 15 years, CapeAirfacilitates through ticketing and bag transferto most major airlines JetBlue is Boston's largest low-cost carrier by either departures or ASMs, July 2010 OAG 

## 14

# Connectivity with JetBlue is valuable to Lebanon because from Boston, JetBlue has 535 weekly departures to 33 cities, and...

JetBlue's Boston route map

Source: OAG**-~~?~P;{U** 

# . ",. 4;-



### • I 

# .. i 

## JetBlue's Boston service July 2010 schedule Ql!y 1 NewYork-JFK, NY 2 Washington-Dulles, VA 3 Orlando, FL 4 Baltimore, MD 5 Charlotte-Douglas, NC 6 Fort Lauderdale, FL 7 Buffalo, NY 8 Chicago-O'Hare, IL 9 Pittsburgh, PA 10 Raleigh/Durham, NC 11 Tampa, FL 12 Denver, CO 13 Los Angeles, CA 14 West Palm Beach, FL 15 Richmond, VA 16 Fort Myers, FL 17 San Diego, CA 18 SeattlelTacoma, WA 19 San Juan, PR 20 San Francisco, CA 21 Austin, TX 22 Bermuda, BM 23 Jacksonville, FL 24 Las Vegas, NV 25 Long Beach, CA 26 New Orleans, LA 27 Oakland, CA 28 Santo Domingo, DO 29 San Jose, CA 30 Aruba, AW 31 Cancun, MX 32 Montego Bay, JM 33 Punta Cana, DO Total WklyDpts 52 47 42 34 28 28 21 21 21 21 21 14 14 14 14 14 14 14 14 13 7 7 7 7 7 7 7 7 7 4 3 2 2 535 

### 15

# ...JetBlue serves non-stop 13 ofthe most popular 15 markets at Boston
Top Boston markets YE1Q10 passenger data, ranked by daily passengers each way; July2010 schedule; alternative service noted 

## Rank Daily Passengers US Airways JetBlue 1 San Francisco, CA 1255 JetBlue 

## 2 Los Angeles, CA 1204 JetBlue 

## 3 Orlando, FL 1152 JetBlue 

## 4 Chicago-O'Hare, IL 1134 JetBlue 

## 5 NewYork-La Guardia, NY 1072 US Airways JFK 

## 6 Baltimore, MD 1038 JetBlue 

## 7 Atlanta, GA 1004 8 Fort Lauderdale, FL 799 JetBlue 

## 9 Washington-National, DC 781 US Airways Dulles 

## 10 Washington-Dulles, VA 621 DCA JetBlue 

## 11 Dallas/Fort Worth, TX 603 12 Fort Myers, FL 595 JetBlue 

## 13 Denver, CO 579 JetBlue 

## 14 Tampa, FL 547 JetBlue 

## 15 West Palm Beach, FL 537 JetBlue Source: "0&0" Survey and Official Airline Guide 

## 16

# Among the nine largest carriers at Boston, JetBlue has among the lowest yield, or fare per mile flown, meaning low total travel costs for Lebanon Boston yield by carrier YE1Q10, revenue per passenger-mile flown 

## $0.20-/**~** 

## $0.15-V 

## $0.102 $0.10Yl

## ~ $0.05-V1 $0.102 7#;;:;;;#'\ 

## $0.104 $0.106 $0.112**~** ,L{,,",,,,,,,'

t---- 

## $0.132

# ~~ ,c:=::j



## $0.00 I 

## H 

# ... .. United Southwest JetBlue American AirTran Continental Delta IWkly Opts 200 

### 144 535 439 137 139 

### 488 

## $0.165 $0.143**~** I---

I---

I---

## ~ Air CanadaUS Airways 

### 124 591 

## CapeAir's connections to JetBlue mean lowtotal trip costs Source: us DOT 0&0 Survey Note: Largest carriers by departure frequency, OAG July 2010, excluding Cape Air 

## 17

# "JetBlue AirwaysAnnounces MajorExpansion in Boston
..." Reuters, October29, 2009


## BOSTON, Oct. 29, 2009 IPRNewswire-FirstCalil-- JetBlueAirways (Nasdaq: JBLU) today announces a major expansion ofservice from its focus city at Boston Logan International Airport. The airline, which already offers service to the most nonstop destinations ofany carrierfrom Boston, plans to boost dailydepartures by 30% by summer2010. With its expanded schedule, JetBlue and its growing base of 1,300 Boston crewmembers will offertravelers up to 78 dailyflights to 33 top destinations
.... "Here atJetBluewe are officially declaring Summer2010 the Summer of Boston," said Robin Hayes, Chief Commercial OfficerforJetBlue. "Today's added flights represent an important next step in our commitmentto offering Boston travelers the most robust schedule as well as the most destinations ofany airline.

18

# 4x daily Lebanon - Boston schedule

To Boston From Boston 

# Departure Arrival Departure Arrival 6:15AM 7:10AM 8:45AM 9:40AM 10:20AM 11 :15AM 12:00 PM 12:55 PM 1:35 PM 2:30 PM 3:45 PM 4:40 PM 5:05 PM 6:00 PM 8:15 PM 9:10 PM

19

# Cape Air's independence offers numerous benefits
Benefits of independence



## • Complete control of:

- Fares and fees

- Marketing and advertising

- Community philanthropy

- Schedule
• Direct relationships with the decision makers at Cape Air
• Independent reservations center:

- 866-Cape-Air

- Capeair.com
• No fees to book tickets with a live Cape Air reservations agent orat the counter
• No first checked bag fee; no change fees • Aircraft isolated on routes to provide reliability

- Good availability ofspare aircraft
• Same connectivity as a network affiliate, since Cape Air has e-ticket and baggage agreements with most major airlines



## 20

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

CapeAir highlights**~** 

### High-frequency, non-stop 

## service**~** 

### Interline 

## e-ticketing and baggage agreements**~** 

## Complete GOS 

## sales channels:**~** 

## 866-Cape-Air**~** 

## In-house "Sabre" reservations office**~** 

### Reliability**~** 

## Subsidies used to lowerfares**~** 

## MOCHA HAGoTDlt culture 

## and community investment

t Make Our Customers Happy And Have A Good Time Doing It 

## 21

# To best serve the Upper Valley Cape Air proposes continued service to both Boston and New York City Drivers Expenses NewYork Boston New York Boston Total Fuel $442,787 $562,999 Oaily RTs 2 4 6 Maintenance $393,064 $496,536 Stage (naut. miles) 164 97 119 Pilots $160,042 $194,452 Seats per Opt 9 9 9 $68,259 $140,740 Annual Actual Opts 1,416 2,832 4,249 Ownership Pax/Opt 4.1 4.5 4.4 Rents $36,962 $98,006 Load Factor 45% 50% 48% Staff $161,339 $219,875 Annual Passengers 5,913 13,140 19,053 Ops and Landing Fees $276,966 $261,159 Avg. Net Fare $130.00 $58.31 $80.56 Marketing $18,481 $44,354 Passenger Rev $745,629 $743,208 $1,488,837 General &Admin./Other $54,607 $96,481 $1,612,506 $2,114,602 Special note on Lebanon proposal Return of5% $84,869 $111,295

Community leaders in the UpperValley have Economic Expense $1,697,374 $2,225,897 urged Cape Airto propose continued serviceto Passenger Revenue $745,629 $743,208 both Boston andNew York City. Cape Air's Profit ($951,745) ($1,482,689) proposal for NYC requires relatively little additional subsidy per departure especially 

## Selection term considering the incremental distance (due to Subsidy Required $951,745 $1,482,689 robustticket revenue) and offers strong 

## 2-year Per Departure $672 $523 prospectsfor long-term sustainability and Per Passenger $166 $116 reduced subsidy requirements. Subsidy Required $917,854 $1,429,891 

## 4-year Per Departure $648 $505 Preferred Per Passenger $160 $112 Total $1,005,785

$889,600 $354,494 $208,999 $134,968 $381,214 $538,125 $62,835 $151,088 $3,727,108

$196,164 $3,923,272 $1,488,837 ($2,434,435) $2,434,435 $573 $128 $2,347,744 $553 $123 

## 22

# Cape Air is proud to connect the Upper Valley with the world and provide special access to New York City
CapeAir offers the airline amenities the UpperValley needs:**~** 

## Full interline connectivity at Boston, allowing same-ticket connections with the world on most majorairlines inciudingjetBlue AIRWAYS**~** 

## High-frequency, non-stop service to Boston: 4x daily at a lowfare**~** 

## The UpperValley's best access to NewYork City**~** 

## Midtown Manhattan in 2 

## % hours!**~** 

## Attractive fares and seamless service**~** 

## Commitmentto growing enplanements at Lebanon Municipal Airport
Thankyou for inviting CapeAir to serve Lebanon MunicipalAirport



## 23