January 6, 2012 Proposal of Hyannis Air Service, Inc. dba “Cape Air” to provide subsidized Essential Air Service for: 

# Bar Harbor, Maine DOCKET DOT- OST-2011 - 0185 

### Non -stop to/from Boston 3x Daily in Winter; 1x Daily in Summer

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 2011 flew almost 700,000 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

• 2011 revenue approached $100M • Consistently profitable

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

# Cape Air began service in 1989 with three aircraft...5 

# ...And one route: Boston – Provincetown

Provincetown Boston Original Cape Air route map

November 1989 schedule6 

# Today, Cape Air serves 16 communities in the Northeast... Northeast route map

Nantucket Martha’s Vineyard Provincetown Boston Hyannis New Bedford Rockland Lebanon Saranac Lake

Rutland Albany Ogdensburg Massena

January 2012 route map (including summer-seasonal service) White Plains Providence Augusta7 

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

Florida Keys Ft. Myers

Key West Florida Mid -Atlantic

January 2012 route maps; Maps not to scale Kirksville Micronesia

Guam Rota Saipan Anguilla

Nevis St. Croix Vieques Mayaguez Tortola St. Thomas San Juan Caribbean

Quincy

Ft. Leonard Wood Cape Girardeau Marion Owensboro Kentucky Missouri Illinois St. Louis8 

# The Cessna 402 is the workhorse of Cape Air’s fleet9 

# Over more than 20 years in business 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 program

# AIR SERVICE FOR BAR HARBOR Thriving in Maine

10

# Since Cape Air entered the Maine market in late 2008 with service at Knox County Regional Airport, their ridership has increased above historical highs

11 13,808 12,768 12,316 11,119 11,744 14,286 14,234

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

2005 2006 2007 2008 2009 2010 2011 Rockland passengers

Source: US DOT RFPs and Cape Air

# When Cape Air started serving Augusta in late 2010, ridership also increased to modern highs

12 9,178 8,460 8,177 6,569 7,061 8,035 11,034

0 2,000 4,000 6,000 8,000 10,000 12,000

2005 2006 2007 2008 2009 2010 2011 Augusta passengers

Source: US DOT RFPs and Cape Air

# The popularity of Cape Air’s Maine service is due to complex, inter- related contributions by Cape Air and our community partners Low fares Reliable service

Convenient schedule and high frequency Interline ability with all network carriers Special relationship with Fully-functioning global distribution Community partnership

13 

## Popular service Low fares are a powerful tool to increase ridership. Cape

Air proposes fares averaging just $60!

# Cape Air’s partner at Boston, jetBlue, is the largest airline at Boston, with 25% of capacity; Cape Air also interlines with all of the other legacy airlines

14 JetBlue

25%

American 13% Delta 13% United 9% US Airways 7% Other

33% Boston available seat miles March 2012

Source: OAG15 

# Cape Air cities connect seamlessly within Logan’s Terminal C with JetBlue, and now United, too

Source: Massport

# JetBlue serves most major markets from Boston non - stop, with a total of 100 daily departures Rank Destination Daily Departures Rank Destination Daily Departures 1 Fort Lauderdale, FL 8.0 21 Los Angeles, CA 1.8 2 Orlando, FL 7.0 22 Richmond, VA 1.8 3 New York-JFK, NY 6.8 23 Aruba, AW 1.6 4 Washington - National, DC 6.7 24 Cancun, MX 1.2 5 Fort Myers, FL 5.9 25 Austin, TX 1.0 6 Baltimore, MD 5.0 26 New Orleans, LA 1.0 7 West Palm Beach, FL 5.0 27 Nassau, BS 1.0 8 Tampa, FL 5.0 28 Phoenix, AZ 1.0 9 Newark, NJ 3.9 29 San Diego, CA 1.0 10 Washington - Dulles, VA 3.8 30 Seattle/Tacoma, WA 1.0 11 Raleigh/Durham, NC 3.7 31 Sarasota/Bradenton, FL 1.0 12 San Juan, PR 3.0 32 St. Thomas, VI 0.8 13 Buffalo, NY 2.8 33 Long Beach, CA 0.6 14 Pittsburgh, PA 2.8 34 Santo Domingo, DO 0.6 15 San Francisco, CA 2.8 35 Punta Cana, DO 0.5 16 Charlotte - Douglas, NC 2.0 36 Santiago, DO 0.4 17 Jacksonville, FL 2.0 37 St. Maarten, SX 0.4 18 Chicago - O'Hare, IL 2.0 38 Montego Bay, JM 0.3 19 Denver, CO 1.8 39 Providenciales, TC 0.3 20 Las Vegas, NV 1.8 40 San Jose, CA 0.1 16 JetBlue Airways’ daily flights from Boston March 2012

Source: OAG

# JetBlue connections stretch from coast to coast

17 JetBlue Airways’ Boston route map March 2012

Source: OAG

# As with all Cape Air cities served from Boston, Bar Harbor connections would appear on Jetblue.com

18

# Itineraries connecting between Cape Air and Continental are available on continental.com

19

# At Boston Cape Air interlines with all of the big airlines; we sell joint e -tickets, and connect checked luggage

2021 

# Participation in the global distribution system gives Cape Air’s communities access to the world Cape Air is sold through:22 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!23 

# The key to Cape Air’s success is our friendly people... Daffodil “Daffy” Day at Cape Air reservations24 

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

# Cape Air takes its environmental responsibility seriously, and now powers its headquarters with a rooftop solar array

25

# Cape Air’s economical Cessnas can provide 3 daily round trips during the off-season, and can be complemented by summer- seasonal service in larger aircraft

26 0 1 2 3 4

1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 10/1 11/1 12/1 Proposed daily Bar Harbor – Boston round trips by Cape Air
Memorial Day Weekend through Labor Day Weekend Cape Air’s service drops to 1 daily round trip in deference to service by larger aircraft that can more efficiently

meet peak summer demand. Cape Air’s single daily summer round trip keeps open the Cape Air pilot base.

Cape Air’s summer reduction would run 102 days from the Friday before Memorial Day through Labor Day Monday27 

# Nominal Bar Harbor – Boston schedule To Boston From Boston Departure Arrival Departure Arrival 6:00 AM 7:24 AM 10:00 AM 11:18 AM 11:38 AM 1:02 PM 2:00 PM 3:18 PM 3:38 PM 5:02 PM 5:27 PM 6:45 PM To Boston From Boston Departure Arrival Departure Arrival 6:00 AM 7:24 AM 5:27 PM 6:45 PM Winter: Tuesday after Labor Day through the Thursday before Memorial Day

Summer: Memorial Day Weekend through Labor Day Weekend

# Cape Air proposes Bar Harbor service at an annualized rate of $1.67M

28 Drivers Economics

Frequency note: To accommodate the unusually strong seasonality of the Bar Harbor market Cape Air proposes 3x daily service from the Tuesday after Labor Day through the Thursday before Memorial Day. From the Friday before Memorial Day through Labor Day Cape Air proposes one daily round trip. This service pattern can be complimented by summer- seasonal service in a larger aircraft.

Sched. RTs/Day 2.37 Annual Sched. Dpts 1,784 Completion Rate 97% Annual Actual Dpts 1,730 PDEW 10.5 Pax/Dpt 4.4 Load Factor 49% Annual Passengers 7,631 Fuel $583,246 Maintenance $581,803 Pilots $171,640 Ownership $88,969 Stations $269,239 Marketing $56,015 De - icing $29,341 ARFF $156,891 General & Admin./Other $85,256 Operating expense $2,022,401 Return of 5% $106,442 Economic Expense $2,128,844 Passenger Revenue $458,912 Profit ($1,669,932) Two-year contract Subsidy Required $1,669,932 Per Departure $963 Four-year contract discount Subsidy Required $1,631,223 Per Departure $94129 

# Cape Air would be a great air service provider for Bar Harbor  Low fares  Improved non -stop frequency  Ample fleet of back- up aircraft available at Boston and Hyannis to ensure reliability  Same terminal connections to JetBlue, Boston’s largest airline  Full interline connectivity, allowing same -ticket connections with the world  Global distribution Cape Air offers the airline amenities Bar Harbor needs:



## Cape Air is a great choice for Bar Harbor Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 971930 

# Thank you!

## Appendix 

# Interline Examples on Online Travel Agencies32 

# Cape Air is on Expedia.com Screenshot from Expedia.com showing Cape Air LNS- PHX search for travel 22SEP0933 

# Cape Air is on Travelocity.com Screenshot from Travelocity.com showing Cape Air ATL- MAZ search for travel 22SEP0934 

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

## Appendix 

# Boston Air Service Route Maps from MassportNote: Includes Seasonal Service, Source: OAG & Innovata Schedules 

# Boston Logan has Nonstop Domestic Service to 72 DestinationsNote: Includes Seasonal Service, Source: OAG & Innovata Schedules 

# Boston Logan has Nonstop International Service to 29 Destinations