September 13, 2011 Proposal of Hyannis Air Service, Inc. dba “Cape Air” to provide subsidized Essential Air Service for: 

# Owensboro, Kentucky DOCKET DOT - OST - 2000 - 7855 

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

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  64 Cessna 402s in five regions, and two ATR - 42s in Micronesia  Operating up to 600 flights daily  In 2010 flew almost 650,000 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 flying toward our fourth consecutive profitable year
• 2011 revenue will approach $100M

• Cape Air has purchased six more Cessnas, which will bring the fleet total to 70
• 39 airports served (16 in EAS) in six regions

– Northeast/New England

– Caribbean

– Florida

– Mid - Atlantic

– Midwest

– Micronesia 2 Captain Krista Poppe Hyannis 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 began service in 1989 with three aircraft...6 

# ...And one route: Boston – Provincetown

Provincetown Boston Original Cape Air route map

November 1989 schedule7 

# Today, Cape Air serves 17 communities in the Northeast... Northeast route map

Nantucket Martha’s Vineyard Provincetown Boston Hyannis

New Bedford Rockland Lebanon Saranac Lake

Rutland
Albany Watertown Ogdensburg Massena

September 2011 route map White Plains Providence AugustaMidwest Illinois

Missouri Cape Girardeau Marion Quincy
St. Louis
Ft. Leonard Wood 8 

# ...And has developed niches along the East Coast, in the Caribbean, Midwest and Micronesia

Florida Keys Ft. Myers

Key West Florida Mid - Atlantic

September 2011 route maps; Maps not to scale Kirksville Caribbean

Ponce Mayaguez San Juan Vieques St. Croix St. Thomas Tortola Anguilla Micronesia

Guam Rota Saipan9 

# The Cessna 402 is the workhorse of Cape Air’s fleet10 

# 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 , the updated industry norm
• 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 highlights11 

# Participation in the global distribution system gives Cape Air’s communities access to the world Cape Air is sold through:12 Cape Air’s Telephone Reservations Center 

# Cape Air has had its own reservations center, using the industry - standard , system, for more than 15 years

Toll free reservations: 866 - CAPE -

AIR Never a booking fee!13 

# The key to Cape Air’s success is our friendly people... Daffodil “Daffy” Day at Cape Air reservations14 

# ...And our mantra:
H ave A Go od T ime D oing I t! M ake O ur C ustomers H appy, A nd Cape Air celebrates Valentine’s Day in the Caribbean

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

15 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 five EAS cities, eight aircraft and up to 54 flights per day

16 Cape Air’s St. Louis route map As of September 2011

# In each community Cape Air serves from St. Louis, ridership has increased dramatically

17 Passenger enplanements Year - ending

Data source: US DOT T100 database 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000Feb-08Apr-08Jun-08Aug-08Oct-08Dec-08Feb-09Apr-09Jun-09Aug-09Oct-09Dec-09Feb-10Apr-10Jun-10Aug-10Oct-10Dec-10Feb-11Apr-11 Predecessors

# July ridership in same - store markets was up 37%

18 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11Jun-11Jul-11 Cape Girardeau Marion Quincy St. Louis passengers
+37%

# The popularity of Cape Air’s St. Louis service is due to complex, inter - related contributions by Cape Air and our community partners Low fares: $49 Reliable service

Convenient schedule: Three

daily flights at

Owensboro Interline ability with all network

carriers at St. Louis Codeshare with Fully - functioning global distribution Community partnership

19 

## Popular service

# St . Louis has 1,591 weekly departures to 59 non - stop destinations — including all the major markets

20 Non - stop St. Louis service — September 2011

Source: OAG

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

21 Codeshare partners: American Airlines and Cape Air

Photo source: Jim Schnobrich ; Used with permission

# Connecting itineraries are sold on

-------------------- website

22

# St. Louis’s Concourse C was closed due to tornado damage, so Cape Air and American temporarily relocated to Concourse D

23 Cape Air

# Cape Air interlines checked luggage at Lambert - St. Louis with: American, Continental, Delta, Frontier, United and US Airways

24 A Cape Air interline bag cart in action at Lambert - St. Louis

Cape Air’s interline bag cart at St. Louis

# By year end we expect to have a ramp - side inter - terminal shuttle, facilitating seamless connections between terminals at St. Louis, without having to re - clear security

25 

## No more TSA rescreening to connect between terminals! St. Louis terminal shuttle

# Cape Air has built its business over 20 years by providing reliable service for communities like Owensboro

26 

# Planes and pilots based in Owensboro Full service Cape Air maintenance base in St. Louis Spare aircraft located in St. Louis Factors in reliability

# Cape Air’s proposal includes a city ticket office in Owensboro to enhance airline and airport awareness

• Increases the visibility of the airport and air service within the community

• Provides a welcoming place for people to learn about the air service from a friendly Cape Air agent

• Enables the redemption of targeted promotions, providing wide latitude in marketing the air service

• Enhances the central business district with a vibrant new retail space 27 City ticket office highlights A typical city ticket office

# Owensboro has the chance to partner with a prospering airline: Cape Air

• Total company revenue increased 11% in 2010

• Cape Air is consistently profitable

– Stable

– Investing in quality

– Engaged in our communities

• High frequency enabled by “right - sized” planes

• Unmatched commuter airline expertise
28 Cape Air corporate strengths Right plane at the right time

# Notional Owensboro – St. Louis schedule
Depart Owensboro Arrive St. Louis Depart St. Louis Arrive Owensboro 6:00 AM 7:10 AM 10:35 AM 11:48 AM 12:10 PM 1:20 PM 3:02 PM 4:15 PM 5:10 PM 6:20 PM 5:32 PM 6:45 PM

29 Draft schedule only

Actual schedule will be developed collaboratively with the community

# To promote ridership the fare each way will be $49

• The $49 price includes all taxes and fees
• Fare is valid on all seats on all Owensboro flights
• No advance purchase is required
• Commuter books (a 10 - pack of tickets) will be available for $469, equal to $46.90 per ticket

– Good for any seat on any flight

– No black - out dates

– No advance purchase required

– Virtually no restrictions
• Simplified pricing makes marketing Owensboro’s air service easier

30 Simple fare structure

# Cape Air proposes three daily round trips between Owensboro and St. Louis at an annual subsidy of $1.8M

31 Drivers Economics

Daily RTs 3.0 Pax/Dpt 4.3 LF 48% Fare (net) $41.00 Pax Rev/Dpt $177 Annual Actual Dpts 2,124 Annual Pax 9,177 Fuel $649,390 Maintenance $619,812 Pilots $273,661 Ownership $156,855 Rents $21,180 Staff $94,340 Landing Fees $95,634 Marketing $47,127 Customer Svc. $74,245 General & Admin./Other $63,396 Operating expense $2,095,640 Return of 5% $110,297 Economic Expense $2,205,936 Passenger Revenue $376,256 Profit ($1,829,680) Proposed Subsidy $1,829,680 Per Departure $861 Discount for 4 - year term Proposed Subsidy $1,784,898 Per Departure $84032 

# Cape Air would be honored to serve Owensboro

 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 Owensboro

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 971933 

# Thank you!

## Appendix 

# Interline Examples on Online Travel Agencies35 

# Cape Air is on Expedia.com Screenshot from Expedia.com showing Cape Air LNS - PHX search for travel 22SEP0936 

# Cape Air is on Travelocity.com Screenshot from Travelocity.com showing Cape Air ATL - MAZ search for travel 22SEP0937 

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