# Proposal Under the Small Community AirService Development Program, Docket DOTOST-2012-0069

Consortium: Puerto Rico Tourism Company (PRTC) Rhode Island Airport Corporation (RIAC)

DUNS: 883727786 EIN: 050471772

Congressional District Codes: Island of Culebra = PR-98 Island of Block Island = RI-02SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 2012

- 0069

SUMMARY INFORMATION
All applicants must submit this information with their proposal, a long with a completed form SF424 on www.grants.gov

.

A. A PPLICANT I NFORMATION : (C HECK A LL T HAT A PPLY )

Not a Consortium Interstate Consortium Intrastate Consortium
Community now receives EAS subsidy
Community (or Consortium member) previously received a Small Community Grant

If previous recipient: Date of grant: Expiration date of grant: Federal Funds Requested: Carr ier(s) Service Obtained: Destination(s) Served:

B. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )

PUBLIC PRIVATE

1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

C. P ROJECT P ROPOSAL : ( CHECK ALL THAT APPLY )
Marketing Upgrade Aircraft New Route

Travel Bank Service Restoration Subsidy
Surface Transportation Regional Service Revenue Guarantee

Launch New Carrier Start

- up Cost Offset First Service
Study Secure Additional Service Other (explain below)D. E XISTING L ANDING A IDS AT L OCAL A IRPORT :

Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other (specify)

E. P ROJECT C OST : D O NOT ENTER TEXT IN SHADED AREA

L INE D ESCRIPTION S UB T OTAL T OTAL A MOUNT

1 Federal amount requested

2 State cash financial contribution
Local cash financial contribution

3a Airport cash funds

3b Non

- airport cash funds

3 Total local cash funds ( 3a + 3b )

4 TOTAL CASH FUNDING ( 1+2+3 )

In

- K ind contribution

5 a Airport In

- Kind contribution **

5b Other In

- Kind contribution **

5 TOTAL IN

- KIND CONTRIBUTION
( 5

a + 5b )

6 TOTAL PROJECT COST ( 4+ 5 )

F. IN

- KIND CONTRIBUTIONS **

For funds in lines 5 a (Airport In

- Kind contribution) and 5 b (Other In

- Kind contribution), please
describe the source(s) of fund(s) for each.F

. I S T HIS A PPLICATION S UBJECT T O R EVIEW B Y S T ATE U NDER E XECUTIVE O RDER 12372

P ROCESS ?

a. This application was made available to the s tate under the Executive Order 12372
Process for review on (date) _____________.

b. Program is subject to E.O. 12372, but has not been selected by the s tate for review.

c. Program is not covered by E.O. 12372.

G. I S T H E A PPLICANT D ELINQUENT O N A NY F EDERAL D EBT ? (I F “Y ES ”, P ROVIDE

E XPLANATION )

No Yes (explain)

______________________________________________________________________________

______________________________________________________________________________

# TABLE OF CONTENTS

1. Executive Summary

2. Existing/Historical Air Service

3. Air Service Needs

4. Strategic Plan

5. Public/Private Partnership

6. Funding

7. Ensuring funds are allocated properly & monitor ing progress of project

8. Long-term sustainability

## 1. Executive Summary

1.1 Block Island
Block Island, located 12 miles off the southern coa st of Rhode Island, offers the vacationer what does not seem possible anymore - si mple relaxation in a startling beautiful place. The Island is famous for its mile s of free public beaches, sparkling clear waters, dramatic bluffs, preserved open spaces, and fun-filled activities for visitors of all ages. Block Island has long been a haven for resi dents and visitors who have found here a quality of life that recalls the pleasures o f a life that is simpler, slower, and somehow, more carefree. It's no wonder that the Na ture Conservancy has designated Block Island "One of the 12 last great places in th e Western Hemisphere."

The Island is home to the town of New Shoreham and has approximately 1,000 yearround residents but swells to as high as 15,000 – 2 0,000 seasonal visitors per day during the peak summer season. With over 600 hotel rooms and 1,200 rental units, the island has become a hidden gem for those that have discovered its beauty. To access global travel via air, residents and visitors on th e island must travel by ferry to Narragansett, RI, which is a 30 – 55 minute voyage and then a 45 minute taxicab ride just to get to T.F. Green Airport in Warwick, RI. Although being only 38 miles away, it currently takes over 90 minutes to simply get to an airport with commercial service that is connected to the world (PVD). The ferry service is prone to cancellation in certain
wind and surf conditions and is often sold out with out prior reservations in the peak season. The cab ride is also subject to severe del ays during the southern Rhode Island summer beach commute leading to a high percentage o f uncertainty in keeping a travel itinerary intact. The one-way trip will also cost close to $100.00 after the ferry ticket and
cab fare.

The peak visitor season starts at Memorial Day week end and visitor patterns tend to be focused on getting to the island on Friday and depa rting Sunday evening or Monday morning. This pattern also holds true during the l atter part of the peak season which is typically Labor Day weekend through Columbus Day we ekend. The high point of the peak season runs during the months of July and Augu st. Visitation comes from several geographic areas. The largest percentage is from t he greater Rhode Island area, which is anchored by its largest city, Providence and its suburbs. The greater New York City area stretching east along the shoreline to New Hav en is the next largest producer ofBlock Island visitation. The greater Boston area w ould be next, followed by the greater

Philadelphia and surrounding Pennsylvania areas.

In addition to the tremendous benefits that new air service would bring to travelers seeking to use T. F. Green Airport (PVD) for onward flights, residents and visitors would have new and convenient access to ground transporta tion options. Commuter rail
service now connects PVD with downtown Providence a nd Boston with stops in between into various communities. High frequency p ublic bus service runs to and from
Providence as well. Direct air service between Blo ck Island and PVD would open a plethora of mobility options for Block Island resid ents to access government services, business and employment opportunities as well as re tail and social needs not currently available along the southern shore of RI. Block Is land would be better linked to the state capitol in Providence, which is also the econ omic center of the region. The enhanced accessibility to PVD with the new air serv ice would also provide better access to Block Island for workers, contractors, and visit ors to the island.



## 1.2 Culebra Island

The island of Culebra lies 17 miles east of mainlan d Puerto Rico and nine miles north of Vieques. Besides the tiny town of Dewey and a small airport, Culebra is mostly a smattering of private homes, green hills and beache s. The island is home to a few thousand year-round residents, a seasonal destinati on for nesting turtles, and a low-key Eden for tourists who seek something different.

Culebra is Puerto Rico’s resplendent “diamond in th e rough.” A miniscule seven miles long by four miles wide, Culebra is the way the Car ibbean used to be: undeveloped except for a few roads, small hotels and local eate ries, and beautiful beaches! Visitors won’t find resort hotels here, or name-brand restau rant chains. On this island, people come to get away from city crowds, urban bustle and the world they know.

It also boasts Flamenco Beach, recognized by many a s one of the World’s most beautiful beaches. A picture-perfect horseshoe of w hite sand framed by green rolling hills, Flamenco Beach is one of the most beautiful places in all of Puerto Rico. This is a large beach that comfortably accommodates the sun s eekers who come for its tranquil, multi-hued water and wide beachfront. Walk along th e western shore and you’ll come to an unusual monument: a brightly painted rustic tank , one of two in the area.Culebra offers visitors a wide range of activities from sighting turtles, to diving and

snorkeling. Leatherback and Hawksbill turtles are a common sight in Culebra during nesting season. Culebrenses take special care to protect their friends, who co me in droves from March to July and August to October. Vi sitors can inquire about turtlewatching efforts and be part of this magnificent ex perience. Culebra’s reefs and keys make for excellent diving and snorkeling. Just off Carlos Rosario Beach is a healthy coral reef teeming with fish, and the keys of Cayo Norte, Luis Peña and Culebrita offer numerous dive and snorkel spots. Visitors can take a water taxi to Culebrita, the tiny islet close to Culebra, for a chance to explore its lovely beaches. There is only one manmade structure on Culebrita, a small lighthouse that is no longer operational.

This new air service would bring tremendous benefit s to travelers and residents seeking to use Luis Munoz Marin International Airport (SJU) for onward flights to the island of
Culebra. Direct air service between Culebra and SJU would open a plethora of mobility options for Culebra Island residents to access gove rnment services, business and employment opportunities as well as retail and soci al needs not currently available in the island of Culebra. The enhanced accessibility t o SJU with the new air service would also provide better access to Culebra for workers, contractors, and visitors to the island.

Through a shared-risk approach, the consortium has structured a plan to market and promote the new service, provide a reduced-airport cost environment for the aircraft operator, and maximize the use of airline assets in a manner that accounts for complimentary seasonal fluctuations in two separate but similar markets which should in turn reduce the dependency on the revenue guarantee being sought and to provide the highest likelihood of long-term sustainability.


## 2. Existing/Historical Air Service

2.1 Block Island
Block Island is currently served by New England Air lines with nonstop service to Westerly, RI, and has done so since 1970. Air serv ice options at Block Island are very limited primarily due to the length of its runway, which is 2500 feet long. The runway length poses a barrier of entry to commercial servi ce for carriers that do not operate specifically designed aircraft for that length of r unway. New England Airlines is not interested in expanding their scheduled operations to include PVD, thus the need to partner with Cape Air. Cape Air’s willingness to p rocure new aircraft to serve the BlockIsland and Culebra markets offers an extremely uniq ue and rare opportunity to greatly

improve access to these communities.

New England Airlines’ only route operates daily, ye ar-round between Westerly, RI and
Block Island. The route is 17 miles and takes abou t 15 minutes. The number of flights fluctuates by day of week as well as seasonally. N ew England Airlines’ service provides an important link for year-round island residents t o provide access to the mainland of RI
as well visitors from southern Rhode Island and alo ng the Connecticut shoreline. Their service also facilitates the ability to access good s and services that might not be readily
available on the island or when needed in a time cr itical manner. Westerly service does not provide a convenient means to access the global aviation grid because it is a “deadend” route. New Cape Air service is viewed as prov iding a key compliment to the existing service to Westerly. Annual enplanements at Block Island are listed below:

Block Island CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 Enplanements 7,595 9,383 10,384 8,516 9,821

* Data source: www.FAA.gov Passenger Boarding (Enplanement) and All-Cargo Data



## 2.2 Culebra
Culebra Island is currently served by Air Flamenco and Vieques Air Link with nonstop service to Isla Grande’s regional airport and Ceiba ’s regional airport. Air service options at Culebra Island are very limited primarily due to the length of its runway, which is 2,600 feet long. The runway length poses a barrier of entry to commercial service for carriers that do not operate specifically designed aircraft for that length of runway. For this reason, Culebra currently does not have any ai r service that is connected to the national air transportation system or any service p rovided by airlines with codeshare or interline agreements.

The other alternative to reaching Culebra from the mainland is through a ferry service from Fajardo, a municipality in the eastern coast o f Puerto Rico. This service, specifically during the high season is not very rel iable because the demand is much larger that the supply and many times visitors or r esidents cannot get tickets. Therefore, an expansion of air services is essential in order to maintain proper access to Culebra for the wellbeing of visitors and residents alike.New service from Luis Munoz Marin International Air port is viewed as a compliment to

current services to Culebra from regional airports. Annual roundtrip passengers (reported metric) at Culebra Island are listed belo w:

Culebra CY 2006 CY 2007 CY 2008 CY 2009 CY 2010
Total Passengers N/A 34,751 75,964 69,579 70,595

* Data source: Puerto Rico Ports Authority

## 3. Air Service Needs

3.1 Block Island

The need for a direct air link between Block Island and PVD is evident. The island, by nature, is geographically constrained making surfac e transportation time-consuming, unpredictable, and cumbersome. The need for multip le modes of transport just to access PVD and its carrier mix, commuter rail servi ce, and other regional transportation options is far less than ideal. Existing air servi ce, while filling an important role by providing a local link, falls short in truly connec ting Block Island to the rest of the world. Nonstop service to PVD would bring seamless connect ions for a broad base of users, both business and leisure. Island residents, worke rs and service providers from the greater Providence area, greater Boston area visito rs, and interline air passengers
would all benefit from this new service.

The economic benefits for Block Island would also b e enhanced. The new connectivity would allow Block Island to introduce and promote i tself to a much broader audience. Tourism plays a key role for the island’s economy a nd improving the ease of access would clearly be a benefit. The Inn and Hotel indu stry, as well as retail, food and beverage, and other tourism-related enterprises wou ld also benefit from their ability to expand their customer base.

PVD service would improve access and connectivity t o all of the primary geographic
areas that Block Island’s visitors come from. Loca l regional passengers can take advantage of the easy access to T. F. Green Airport . PVD is centrally located in RI off of Interstate 95. It is also only a few miles away from I-295, I-195, which provides access to southeastern Massachusetts, and RT-146, w hich provides access to central
Massachusetts. The commuter rail service at T. F. Green Airport offers service to Providence, Boston, and several places in between. PVD also currently has nonstop
airline service to the New York/Newark area and Phi ladelphia. Collectively, those are the places that make up the vast majority of visito r traffic to and from Block Island.Current nonstop air service map from T. F. Green Ai rport – PVD (Spring/Summer 2012)



## 3.2 Culebra

The need for a direct air link between Culebra Isla nd and SJU is evident. Culebra currently has less than 2,000 residents according t o the 2010 US Census and has 260 hotel rooms. Demand for air services is high for bo th residents and visitors.

Culebra does not currently have direct service to t he Luis Munoz Marin International Airport, where visitors can directly connect to onw ard flights. The new connectivity would allow Culebra Island to introduce and promote itself to a much broader audience. Tourism plays a key role for the island’s economy a nd improving the ease of access would clearly be a benefit. The Inn and Hotel indu stry, as well as retail, food and beverage, and other tourism-related enterprises wou ld also benefit from their ability to expand their customer base.

Culebra residents that wish to travel outside of Pu erto Rico currently have to fly to a regional airport and then use transportation to the Luis Munoz Marin International Airport, or use the ferry to Fajardo and drive to S JU. Residents in Culebra need access to the mainland for medical, shopping, professional reasons. A direct service to the LuisMunoz Marin International Airport would provide ano ther alternative for residents to

reach the mainland for their everyday necessities.

Connecting air service map from Culebra via Luis Mu noz Marin International Airport – SJU
(Spring/Summer 2012) 

## 4. Strategic Plan

The goal of this project is to provide scheduled ai r service between Block Island, RI (BID) and Providence, RI (PVD) as well as between C ulebra, PR (CPX) and San Juan, PR (SJU) with complimentary service in a similar pa ttern as shown below.

The funding from the Small Community Air Service De velopment Program and the commitment of Cape Air Airlines (See attached lette r of commitment) will allow this project to commence in the summer of 2013.Hyannis Air Service Inc. d/b/a Cape Air is an airli ne that specializes in markets like BIDPVD and CPX-SJU and is interested in providing serv ice in these markets. Cape Air is one of the largest independent airlines operating i n North America and has built a very successful business by providing schedule airline s ervice in island communities such as Block Island and Culebra. Cape Air currently opera tes a fleet of nine seat Cessna 402’s and a smaller fleet of ATR-42 aircraft. Cape Air c urrently operates in several geographic locations including New England, Florida , Micronesia, upstate New York,
and the Caribbean.

Cape Air was founded in 1989 by Dan Wolf and has gr own steadily since. Cape Air serves markets that it has a clear understanding of and is known for offering consistently reliable and friendly service. The ai rline thrives in providing vital air transportation in markets that other airlines have no interest in. Cape Air plans to continue to focus on this strategy and is currently undergoing the process to procure a new aircraft type that will allow it to enter simil ar markets that it cannot operationally do now with the Cessna 402. This will undoubtedly str engthen the airline’s core business model and bring much needed scheduled air service t o Block Island and Culebra that links those islands with larger airports that offer onward connections. Cape Air is a code share partner with United Airlines and JetBlue Airways. Cape Air flights are listed in national global distribution systems, which allo ws travel agents to book passengers on the scheduled flights, and they also participate in interline agreements with all of the other major airlines. These interline agreements a llow connecting passengers’ baggage to be transferred from their Cape Air flight from B lock Island or Culebra to most other airlines when they connect though Providence or San Juan, respectively.

With the assurance of grant funding, Cape Air, with the assistance of the consortium,
will be able to enter these new markets with a shar ed-risk and start-up cost reduction approach. The process and costs involved in introd ucing a new fleet type is consuming and expensive but this project will help mitigate t he initial phases (first two years) of starting new service in these new markets with a ne w aircraft. The consortium feels strongly that by using the new Cape Air aircraft du ring two-separate but complimentary seasons, the total amount of grant money needed is reduced and the initial service revenues maximized. Focusing on the two markets’ p eak seasons will also maximize the use of promotional funds and related efforts to make the service sustainable sooner, therefore further reducing the necessary funding ne eded later in the project.

Proposed number of daily roundtrip flights in each market, by month:MONTH BLOCK ISLAND-PVD CULEBRA-SJU

January 4 February 4
March 4 April 4 May 3* 4*
June 4 July 5 August 5 September 4
October 3* 4*
November 4
December 4

* Aircraft will transition from market pairs mid-mo nth

The Rhode Island Airport Corporation and the Puerto Rico Tourism Company have both identified the importance of introducing this new s ervice in their respective markets and are committed to partnering with Cape Air to make i t successful and self-sustaining. In order to ease the risk and cost of starting this ne w service and to properly promote the service to help make it self-sustaining, the follow ing strategic initiatives will take place:

Below is the summary of the various elements of our funding proposal:

Item: Infrastructure Improvements for Non-Sterile operati ons Sponsoring Organization: Rhode Island Airport Corporation Estimated Value: $96,871.00 Description:
In the effort to create a streamlined and seamless experience for connecting passengers and their luggage arriving at PVD from B lock Island, the Rhode Island Airport Corporation has included a $96,871.0 0 infrastructure plan to facilitate “non-sterile” arrivals in the airport te rminal environment. This infrastructure represents an additional investment but allows for an unrivaled customer experience. The new gate allows Cape Air to feasibly operate under their existing TSA approved Limited Security Progra m. The location of this new gate is also in the same vicinity of Cape Air’s exi sting gate and its scheduled service from PVD to Martha’s Vineyard and Nantucket

.Item: Marketing Support

Sponsoring Organization: Rhode Island Airport Corporation Estimated Value: $45,000.00 Description: The consortium recognizes the great importance of c reating awareness of the proposed new service. These efforts will increase demand and revenue, which in turn lowers the overall amount of revenue guaran tee funds required to operate the service during the first two years of operation s. As part of a broad marketing program, $25,000.00 in (airport cash) dollars will be specifically used to market and promote the new BID-PVD service. The consortiu m acknowledges that airport revenues cannot be used for revenue guarant ees per 49 U.S.C. §§ 47107, 47133 and therefore would like to clearly po int out that these specific funds will be used solely for the purpose of market ing and promoting the new
service and not

the revenue guarantee portion of the project. In addition to these funds, several in-kind efforts valued at $10,000.00 will take place to heighten public awareness. These initiatives will take plac e in both years of the project:
- Media release - Travel Agent outreach - E-newsletter (RIAC has over 15,000 subscribers) - Airport website announcement and service informat ion with live web link to Cape Air
- Social media announcement - Airport advertising (shuttle buses and in-termina l) - Co-op promotions - Inaugural event

Item: Landing fee & terminal rental/lease fee waivers Sponsoring Organization: Rhode Island Airport Corporation Estimated Value: $83,354.00 Description: The consortium also recognizes the great importance of reducing the cost and risk associated with starting air service in new m arkets. The Rhode Island Airport Corporation oversees operations at both Blo ck Island and T.F. Green Airports and is pledging to waive all landing fees at BID (estimated annualvalue of $6,130.00), the terminal rental fee (estim ated annual value of

$12,000.00), and all landing fees at PVD for BID s ervice (estimated annual value of $23,547.00) during the two-year project period. The net annual value of these fee waivers is $41,677.00 which yields a two- year project value of $83,354.00.

Item: Marketing Support Sponsoring Organization: Hyannis Air Services, d.b.a Cape Air Estimated Value: $50,000.00 Description: The consortium recognizes the great importance of c reating awareness of the proposed new service. These efforts will increase demand and revenue, which in turn lowers the overall amount of revenue guaran tee funds required to operate the service during the first two years of operation s. Cape Air’s business is small community air service, and we have a successful his tory marketing air service to niche destinations. If Cape Air is able to provide service at Block Island and Culebra through a Small Community Air Service Devel opment Grant, Cape Air commits to at least $50,000 in cash marketing annua lly for the new services.

Item: Marketing Support Sponsoring Organization: Puerto Rico Tourism Company – Government of
Puerto Rico Estimated Value: $40,320.00 Description: The consortium recognizes the great importance of c reating awareness of the proposed new service. These efforts will increase demand and revenue,
which in turn lowers the overall amount of revenue guarantee funds required to operate the service during the first two years of operations. As part of a broad marketing program, $40,320.00 in non-airport (cash) dollars will be used to market and promote the new CPX-SJU service. The co nsortium acknowledges that airport revenues cannot be used for revenue gu arantees per 49 U.S.C. §§ 47107, 47133 and therefore would like to clearly po int out that these specific funds will be used solely for the purpose of marke ting and promoting the new
service and not

the revenue guarantee portion of the project. Oth er in-kind marketing initiatives will include:- Use of the Puerto Rico Tourism Company sales force to communicate to

travel agents and consumers alike the new service -Organize Fam Trips with travel agents using the n ew service -Social media announcement and promotion of the ne w service
-Public relations efforts
-Media releases -Inaugural event -Puerto Rico Tourism Company website announcement and service
information

Item: Landing fee & terminal rental/lease fee reimburseme nts Sponsoring Organization: Puerto Rico Tourism Company – Government of
Puerto Rico Estimated Value: $45,000.00 Description: The consortium also recognizes the great importance of reducing the cost and risk associated with starting air service in new m arkets. The Puerto Rico Tourism Company will reimburse Cape Air up to $25,0 00.00 for associated airport start-up costs at Culebra and/or San Juan airports. Landing fee waivers of up to $20,000 will also be reimbursed to Cape Air for operating this
new service.

Item: Landing fee & terminal rental/lease fee reimburseme nts Sponsoring Organization: Puerto Rico Tourism Company – Government of
Puerto Rico Estimated Value: $45,000.00 Description: The consortium also recognizes the great importance of reducing the cost and risk associated with starting air service in new m arkets. The Puerto Rico Tourism Company will reimburse Cape Air up to $25,0 00.00 for associated airport start-up costs at the Culebra airport. L anding fee waivers of up to $20,000 will also be reimbursed to Cape Air for ope rating this new service.Item: In-kind hotel rooms

Sponsoring Organization: Hotels of Culebra Estimated Value: $6,000.00 Description: The hotels of the community of Culebra could provid e in kind support to the service by providing hotel room nights. These room nights shall be used to bring travel agents to the island of Culebra via th e new service as well as for any media that is brought to the island for publicity purposes. The estimated value of these room nights is $6,000.00.



## 5. PUBLIC-PRIVATE PARTNERSHIP

The introduction and long-term viability of schedul ed air service that links both Block Island and Culebra to the global aviation network i s among the top initiatives by travel and tourism and key stakeholders in these communiti es. To that end, an innovative and unique partnership has been fostered between airpor t, tourism, community leaders, and an airline to make this project possible.

Below is an outline of key stakeholders that have b een identified as having a potential role and/or supporting this project:

Governor of Rhode Island
Elected Officials RI Economic Development Corporation
Hotel and Motel
Tourism
Chamber of Commerce Travel Agents Airport Board Airport Management Cape Air Northstar Aviation (PVD FBO)
Puerto Rico Hotel and Tourism Association Puerto Rico Ports Authority Department of Economic Development and Commerce of Puerto Rico Puerto Rico Tourism CompanyAsociacion Puertoriquena de Agentes de Viaje

American Society of Travel Agents Municipality of Culebra

The consortium plans to continue to work with stake holders and will forward letters of support to the USDOT as they are received.



## 6. FUNDING

The communities of Block Island and Culebra are ent husiastic that an airline is committed to starting this service if the grant is provided from the U.S. Government. Cape Air has completed its own analysis about the f uture viability of the route including a route forecast. The total funding request from t he US DOT to support this two year project is $900,000.00 ($600,000.00 in year 1 and $ 300,000.00 in year 2). This will be supplemented by $366,544 of local funding from the public/private partnership in place. The chart below identifies the breakdown of funding based on components of the project.

Component
Revenue Guarantee Marketing and Other Incentives

% of Total Local Funding % of Total 71.06% Cash (non-airport) 24.64% 28.94% In-kind (community) 1.64%

100.00% Cash (airport) 6.82%

In-kind (airport) 66.90%

Total 100.00% Source Amount

DOT SCASD Grant $900,000

Puerto Rico and Rhode Island Parties $366,544

Total $1,266,544

Program Funding

DOT Grant Local Funding

Total

## 7. ENSURING FUNDS ARE ALLOCATED PROPERLY

& MONITORING PROGRESS OF PROJECT

The funding elements of this project are meant to b e specific yet simple and straightforward at the same time. The sponsor of t he grant will require a monthly income statement from Cape Air for the two new rout es being served. If needed, reimbursement will be made every 6 months based on the financial performance of the routes. Marketing efforts will be closely coordina ted with Cape Air to ensure maximum benefit and timely outreach to the market.



## 8. LONG-TERM SUSTAINABILITY

It is the absolute goal of the consortium to have t hese new market pairs be selfsustainable by the end of the two year funding time frame of the project. We are highly
confident that this will be the case based on the s tructure of this project and the strong partnership with the public and private entities in volved.

In the effort to not rest on the confidence we have on the sustainability of this project, the consortium has identified ways to continue to m ake these markets work. The consortium intends to work closely with Cape Air on the flexibility to optimize the flight
schedule to offer both customer convenience as well as revenue opportunities. This can be done in many ways including day of week adju stments as well as weekend and monthly shifts to provide the air service during th e true peak periods. This may seem trivial, but it is vital to match supply and demand so the operating carrier can continue to provide the service.

The consortium plans to continue marketing and prom otion of the service throughout the project and will work with other major carriers to ensure they are educated on the connecting opportunities from their networks to the se island communities. This is a key reason that codesharing, interline baggage agreemen ts, and convenient “non-sterile” passenger services are an important part of this pr oject. These aspects will allow people from literally all over the globe to see tha t access is available and getting there is
seamless. Island residents will also find the serv ice invaluable as they will now have direct means to the global aviation network. Since both individual market pairs are intra-state, they are of high economic and social i mportance on that level as well. This new service will have a vested importance to the co mmunities they serve by the peoplewho live there as well as those passengers fueling the tourism and visitation aspects of

these islands.



## 9. PREVIOUS AIR SERVICE DEVELOPMENT EFFORTS

Although identified as a need to link Block Island and Culebra to Providence and San Juan respectively some time ago, these two markets share similar but specific barriers to entry. The runway lengths at both island airpor ts severely shrinks the available pool of scheduled airline operators that can physically serve these destinations. It is only now that Cape Air’s decision to procure a suitable aircraft opens the possibility to pursue the service. The number of carriers able to serve these markets that have interline agreements, existing codeshares, and the level of brand awareness is also extremely limited. The complimentary nature of Blo ck Island and Culebra from a tourism perspective and Cape Air’s new ability to p hysically be able to serve the airports on these islands and the fact they are already oper ate in very close proximity geographically makes this project extraordinarily u nique and special.



## 10. LEGAL SPONSOR

The legal sponsor responsible for administering the program is:

The Rhode Island Airport Corporation Kevin A. Dillon, A.A.E.
President & CEO
2000 Post Road Warwick, RI 02886
Phone: 401-691-2000 Email: kdillon@pvdairport.com**Andrew W. Bonney**
Vice President of Planning 660 Barnstable Rd., Hyannis, MA 02601 Direct: 508 862

- 9719 Fax: 508 862

- 9791

Email: andrew.bonney@capeair.com

June 11, 2012

To Whom It May Concern,

Cape Air hereby supports the proposal of a consortium consisting of Block Island and Culebra advocates for a Small Community Air Service Development Grant for new air service that will connect both of these outstanding destinations with the na tional air transportation system.

Cape Air now serves 40 airports with niche airline service, providing connections to the nation al air transportation system through our global distribution system participation

, interline agreements, codeshares and reliable service. Both Block Island and Culebra appear highly suited to Cape Air ’ s type of service, but heretofore we have not had a sui table type of aircraft to serve their short runways. However, Cape Air is now poised to acquire short

- field capable aircraft, which would allow service to Block Island and Culebra.

Therefore, we ardently support the consortium ’ s proposal for support of new connectable service to Block Island and Culebra.

Sincerely,

Andrew W. Bonney