EssentialAirService at 

### BEFORETHE DEPARTMENTOFTRANSPORTATION WASHINGTON,D.C. ) ) ) 

### HAGERSTOWN,MARYLAND LANCASTER, PENNSYLVANIA ) OST-2006-25228 )OST-2002-11450 ) 

### Under49 U.S.C. §41731 

### etseq. )



### SUNAIRINTERNATIONALPROPOSAL TOPROVIDE SUBSIDIZEDESSENTIALAIRSERICE 

## '\ II· r; n ,., • t..U

By Order 2012-3-16, the Department requested proposals for Essential Air Service to Hagerstown, Maryland and Lancaster, Pennsylvania. Pursuant to that order, Sun Air Express, LLC. ("Sun Air") cordially submitsthis proposal to provide subsidized air serviceto both ofthese cornmunitiesthrough September30,2015. Correspondence with regard tothisdocument shouldbe addressed to: Thomas L. Cooper President & CEO Sun AirExpress, LLC. dba Sun Air International 320I Griffin Road, Ft. Lauderdale, FL 33312 Telephone: 954-660-9865 Fax: 954-894-0367 E-Mail: tlcooper@gosunair.com


### Bid Summary Sun Air hereby offers a proposal to provide service to the communities ofHagerstown, MD and Lancaster, PA. Sun Air'sproposed operations will be operated with nine-passenger twin-engine Piper Chieftain aircraft. Flights will be displayed in majortravel agent systems including Online Travel Agencies. Sun Airhasconstructed its' proposal to incorporatethefollowing essential elements ofproviding successful, quality airtransportation in theseproposed markets: 1. LOW FARES: Sun Air will market its flights with a simple, low unrestricted price structure, ranging from $39 to 

### $59each way. The company is projecting net average fares approximately$40 each way. Sun Air strongly believes that low unrestricted fares are essential to facilitating passenger flight connections. Sun Air's prices will largely match those currently available; however Hagerstown fares will be lower than currently offered to more closely match those available in Lancaster, which Sun Air believes will leadto increased ridership for Hagerstownpassengers. 2. FREQUENT FLIGHTS: Sun Air will provide five (5) weekday round trip flights from Lancaster and four (4) weekdayround trips from Hagerstown. Thecommunitieswillthus be able to maintainthe degree ofconvenience thattheircurrent schedules providethem. 3. INTERLINE E-TICKETING AND BAGGAGE AGREEMENTS: Sun Air has provided for a significant investment in reservations and distribution systems to acquire access to industry interline and baggage agreements with most major airlines. This capability would be available from the first day of operations. Southwest Airlines is the dominant carrier at Baltimore, however since that carrier does not generally enter into interline ticketing and baggage agreements with othercarriers, passengers would be responsibletorechecktheirbags, unlessthey arecarry-onbags, tomake connections with Southwest. 5. A COMMITMENTTORELIABILITY: Sun Air'soperations include investment in aregional maintenance base, staffed by a full complement of technicians, as well as a full-time backup aircraft. Sun Air has established an enviable track record of operational performance, experiencing only a single controllable flight cancellation so far in 2012, and has earned a reputation in 

### its existingmarketsfor consistentpunctuality. 

## ServiceProposal Sun Air is providing the communities with two options for service: Option I provides flights to Baltimore-Washington Airport, and Option 2 would provide flights to Washington-Dulles Airport. Both Service Option I and Service Option 2 are for operating to both Lancaster and Hagerstown. Thebidproposal isforboth markets only, inseparable. Sun Airbelieves thatthis is necessarytocoverthe relativelyhigh fixed costsfrom establishingaregionalbase. Both Service Options provide for five (5) weekday round trip flights from Lancaster, and four (4) weekday round trip flights from Hagerstown. Two (2) round trip flights from each airport would be operated on Saturdays, and two (2) round trip flights would be operated from Hagerstown on Sundays. Lancasterwouldoperatethree (3) roundtripflights on Sundays. A representative flight schedule.is attached tothis proposal. The schedule offered to BaltimoreWashington replicates for the most partthe schedule operated by the incumbent carrier. SunAir is in discussions with potential providers offacilities and ground handling services there, and has assumed continuation ofthe current flight schedules to BWI to provide for accommodatingthe existing ground handling airline's operations. Final discussions may allow inore flexibility in aircraftdeparture and arrivaltimes. Similarly, the flightschedule to Washington Dulles was designed to utilize gate space during periods where gates were expected to be available, however this will be subject to final discussions and negotiations with potential service providers. Sun Air 

### will seek to maximize the connectivityofflights to othercarriers in orderto make connections as convenientaspossiblefor passengers,Sun Air representatives plan to work closely with the communities to increase awareness about the destinations available as well as the substantial benefitsresulting from these regional airports. Sun Air will seek to assist community leaders in any economic development initiatives they are · undertaking. Schedule I, included with this Proposal, provides an illustrative schedule for both Service Options. Schedule2 provides projected operatingrevenues, expenses, and subsidyproposal calculations. Sun Airproposes a subsidy of $769 per departure from LNS-BWl, and $705 for HGR-BWI, for a maximum total subsidy level of$4.075 million annually. Sun Airproposes a subsidyof $819 perdeparture from LNS-IAD, and $730 for HGR-lAD, for a maximum total subsidy level of$4.290mill.ion annually

.. Sun Air has proposed subsidy compensation at levels that are less than what would be necessary to achieve a projected 5% profit margin. The expected costs to operate to Hagerstown would require a subsidy that is greaterthan $200 per passenger cap, and accordingly, we have kept the subsidy at a level anticipated to comply with that requirement. Higher expected enplanements from service to IAD (but still within historical levels) allowed for a somewhat higher proposed subsidy for Hagerstown. Sun Air has also kept its proposed subsidy for Lancaster to Dulles below the 5% profit margin level, opting instead for maintaining the projected fixed dollar profit amount calculated for Baltimore. The higher costs for operating to Dulles from Lancaster thus result in a lower percentage margin for Sun Air; but Sun Airis aware ofcommunity interest in IAD tlights anddid not want well-recognized DOT budget pressures to unduly influence the options available to the communities.

### About SunAirInternational Sun Air Express, LLC is a Fort Lauderdale, FL based air taxi operation serving Florida and the Bahamas, and offers**on~demand** air cargo services within Florida and the Bahamas, as well as scheduled services with four orfewer weekly flights to Cat Island, Great HarbourCay, Chub Cay, and Andros Island in the Bahamas. Sun Aircurrently has afleet ofseven PiperChieftainaircraft, and is prepared to acquire sufficient additional aircraft as needed to support proposals awarded here. The airline has access to the financial resources necessary to acquirethe additional equipment. The airline has been in operation for more than ten years, and was purchased in May, 2011 by Thomas L. Cooper. Mr. Cooper is the founder ofseveral regional airlines, including Gulfstream International Airlines, where he also founded Sun Air as a subsidiary ofGulfstream. He sold his interests in Gulfstream to a private investment group in 2006. Mr. Cooper has been involved in aviation for more than 40 years, including more than 20 years as a 727 Captain for Eastern Airlines in additionto his extensivecareerwith regional airlines. Sincehis acquisitionofSun Air in May oflast year, he has invested heavily in new aircraft, support equipment and additional support personnel. Sun Air filed a commuter air carrier application with the Department's Air Carrier Fitness Division on September 9, 2011 as part ofits plans to provide regular scheduled passenger air transportation, In addition to its original application, SunAirhas submitted all ofthe information the Department has requested, and the application is in its final stages ofreview. Tothe extent Sun Air's financial fitness compliance requirements may be changed as a result of EAS bid awards, Mr. Cooper and Sun Air are willing and able to provide evidence that the company has appropriate financial resources to meet the Department's financial fitness tests. No external capitalresourceswould be requiredto be obtained.

## SCHEDULE 1 

## Representative Timetable SERVICE OPTION l FROM TO DEPT ARR HAGERSTOWN BALTIMORE 600AM (x7) 645AM 1045AM (x7) 1130AM 315PM (x6) 400PM 515PM (x6) 600PM BALTIMORE HAGERSTOWN 945AM (x7) 1030AM li45AM (x7) 1230PM 415PM (x6) 500PM 815PM (x6) 900PM LANCASTER BALTIMORE 615AM (x7) 700AM 815AM (x7) 900AM 1215PM (x6) IOOPM 300PM (x6) 345PM 530PM (x6) 615PM BALTIMORE LANCASTER 715AM (x7) SOOAM IIOOAM (x7) 1145PM 130PM (x6) 215PM 400PM (x6) 515PM 830PM (x6) 915PM 

## SERVICE OPTION2 FROM TO DEPT ARR HAGERSTOWN WASH-DULLES 700AM (x7) 745AM lOOOAM (x7) 1045AM 415PM (x6) 500PM 715PM (x6) &OOPM WASH-DULLES HAGERSTOWN 800AM (x7) 845AM IIOOAM (x7) 1145AM 515PM (x6) 600PM SISPM (x6) 900PM LANCASTER WASH-DULLES 630AM (x7) 730AM IOOOAM (x7) IIOOAM IOOPM (x6) 200PM 4l5PM (x6) 515PM 715PM (x6) 815PM WASH-DULLES LANCASTER 745AM (x7) 845AM lll5AM (x7) 1215PM 215PM (x6) 315PM 530PM (x6) 630PM 830PM (x6) 930PM

## SCHEDULE2 

## Projected Operations & 

## Subsidy Proposal

OPTION 1 LNS·BWf 'HGR-BWI .. • TOTAL Passenger $583,390 $347,833 $931,223 Other Revenues 5,834 3,478 9,312 TOTAL OPERATING REVENUE 589,224 351,311 940,535 OPERATING EXPENSES

Flight Operations 495,306

. 274,278 769,584 Fuel &lntoplane 536,609 464,266 1,000,875 Maintenance 461,760 329,637 791,397 Passenger &Revenue Related 341,156 210,589 551,745 Station Operations 754,069 631,923 1,385,992 Other Fixed 210,744 139,496 350,240 Total Operating Cost 2,799,644 2,050,189 4,849,833

OPERATING INCOME/(LOSS) $(2,210,420) $(1,698,878) $(3,909,298)

Profit Element - 5% ofOperating Costs Subsidy Required Subsidy Proposed

ASMs (OOO's) RPMs (OOOs) Flight Distance (miles) Load Factor Average Fare EAS Subsidy per Departure 139,982 $2,350,403
$2,350,403

1,871,251

991,763 68 53% $40 $769 102,509 $1,801,387
$1,724,486

1,497,001

591,315 68 40% $40 $705 242,492 $4,151,790
$4,074,889

3,368,252 1,583,079 68 47% $40 $754Departures 3,058 2,446 5,504 Block Hours 2,140 1,761 3,901 Flight Hours 1,529 1,345 2,874 Available Seats 27,518 22,015 49,533 Passengers 14,585 8,696 23,281 Average Enplanements per Day 20.0 11.9

### OPTION 2 Passenger Other Revenues TOTAL OPERATING REVENUE OPERATING EXPENSES

Flight Operations Fuel & lntoplane Maintenance Passenger & Revenue Related Station Operations Other Fixed Total Operating Cost

OPERATING INCOME/(LOSS)

Profit Element • 5% ofOperating Costs Subsidy Required Subsidy Proposed (both markets only)

ASMs (OOO's) RPMs (OOOs) Flight Distance (miles) Load Factor Average Fare EAS Subsidy per Departure Departures lNS·IAD, " H§R-IAO. $681,906 $378,653 6,819 3,787 688,725 382,440

387,042 317,542 755,227 445,187 527,910 312,585 369,371 223,225 801,462 669,837 209,244 140,996 3,050,256 2,109,372 $(2,361,531) $(1,726,932)
$152,513 $105,469 $2,514,044 $1,832,401 $2,504,174 $1,785,638

2,779,358 1,188,795 1,639,821 511,182 101 54 59% 43% $42 $40 $819 $730 TOTAL $1,060,559 10,606 1,071,165

704,584 1,200,414

840,495 592,596 1,471,299

350,240 5,159,628 $(4,088,463)
$257,981 $4,346,445 $4,289,813

3,968,153 2,151,003 80 54% $41 $7793,058 2,446 5,504 Block Hours 3,058 1,957 5,014 Flight Hours 2,140 1,223 3,363 Available Seats 27,518 22,015 49,533 Passengers 16,236 9,466 Average Enplanements per Day 22.2 13.0
Jn conclusion, Sun Air believes that its proposal will provide excellent levels ofservice to the communities of Lancaster and Hagerstown, and ensure that they have proper access to the national air transportation network, offering cost-effective options that meet the requirements of the Essential Air ServiceProgram. Respectfully Submitted: April 26, 2012

Thomas L. Cooper President & CEO Sun AirExpress, LLC. 25,702