April 23, 2010 Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 9719 Please direct media inquiries to Michelle Haynes, Communications Director: (508) 862 - 9714 Proposal of Hyannis Air Service, Inc., dba Cape Air to provide subsidized Essential Air Service for: 

# Kirksville, MO

Docket DOT- OST- 1997 -2515 

## Three daily non - stop flights to/from Lambert - St. Louis International Airport with codeshare expected1 

# Cape Air is a small but robust commuter airline, operating and growing since 1989  First route was Boston – Provincetown, begun in October 1989 with three aircraft  Presently flying 59 Cessna 402s in five regions, and two ATR -42s in Micronesia  Operating up to 550 flights daily  In 2009 flew more than 610,000 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 ) *Kirksville service with the American code would have two pilots, and therefore eight passenger seats2 

# For smaller communities and niche markets, Cape Air’s nine - seat * 

# planes have proven to be a great fit  High -frequency, non -stop service  Interline eticketing and baggage agreements  Complete GDS sales channels  Reliability  Subsidies used to lower fares  MOCHA HAGoTDI culture and community investment Cape Air highlights “Key West Express”

*Eight seats with the American Airlines codeshare3 

# Cape Air began service in 1989 with three aircraft...4 

# ...And one route: Boston – Provincetown

Provincetown Boston Original Cape Air route map

November 1989 route map5 

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

Nantucket Martha’s Vineyard Providence Provincetown Boston Hyannis New Bedford Rockland Lebanon Plattsburgh Saranac Lake
Rutland Albany Watertown Ogdensburg Massena

April 2010 route map White Plains6 

# ...And has developed niches along the East Coast, in the Caribbean, Midwest and Micronesia Caribbean Florida Keys Micronesia Continental Connection Ft. Myers

Key West Florida Mid -Atlantic Ponce Mayaguez San Juan Vieques St. Croix St. Thomas Tortola

Apr 2010 route maps; Maps not to scale Midwest Quincy

Cape Girardeau Marion St. Louis Illinois
Missouri7 

# Cape Air is developing a track record of growing enplanements in EAS markets; in the first year of service at Rutland, Cape Air more than doubled enplanements

0 100 200 300 400 500 600 700 800 900 1,000

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Beech 1900 Predecessor Cape Air Rutland, Vermont passengers Cape Air’s first year of service YE10/08

Sources: Rutland Airport and Cape Air8 

# Enplanements in Saranac Lake are up 45% and climbing vs. our predecessor’s best year
5,574 5,571 8,119 9,384 6,468

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

2005 2006 2007 2008 2009 Saranac Lake passengers Sum of inbound and outbound 

## +45%

Partial yearCape AirCape Air

Sources: DOT and Cape Air’s Revenue Report9 

# Cape Air is an experienced community airline

with the features smaller communities need Feature Established Tickets sold through Expedia, Orbitz, Travelocity Sabre reservations system Interline eticketing Checked luggage transfer TSA security program

# Cape Air’s Lambert- St. Louis service began operations on November 8, 2009, and is off to a good start

10 Cape Air’s St. Louis region route map April 2010 Cape Air’s first St. Louis arrival taxis in! November 8, 2009; Sandi Dorrin, STL Asst. Station Manager

# In the first full quarter of operations, 1Q10, Cape Air increased enplanements compared with the predecessor’s service at each of the airports served to St. Louis...

11 1.3 7.0 5.8 9.4 15.1 14.9

0 2 4 6 8 10 12 14 16

Cape Girardeau Marion Quincy YE1Q09 Cape Air 1Q10 St. Louis routes’ passengers daily each way

Sources: DOT and Cape Air

# ...And the enplanement trend is positive

12 567 885 763 856 1066 539 914 805 884 1034 285 536 523 486 688

0 500 1,000 1,500 2,000 2,500 3,000

Nov- 09 Dec- 09 Jan - 10 Feb - 10 Mar- 10 Cape Girardeau Marion Quincy St. Louis routes’ passengers Sum of both directions, since inception of Cape Air service Nov. 8, 2009

Partial month

# Codeshare with XXXXXXxXXXXXX started in April 2010, and Cape Air expects to be able to offer the AA code to Kirksville

13 AA’s codeshare means this will be an eight- seat aircraft, with copilot

# To compliment the codeshare with American, Cape Air will soon be moving to Concourse C at St. Louis, steps away from American’s gates

14 Cape Air

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

15 A Cape Air interline bag cart in action at St. Louis
Cape Air’s interline bag cart at St. Louis16 

# Cape Air is already embedded in the global distribution systems (GDS) Cape Air is sold through:

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

17 

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

# Cape Air brings a time -tested approach to marketing small community air service

• A dedicated regional marketing manager just for the Midwest • Cape Air’s proposal includes $41,000 for marketing of Kirksville’s air service • Kirksville city ticket office

– To ensure that the airport and Cape Air’s service has heightened visibility in the community • The Bird’s Eye View magazine

– Feature stories about Cape Air destinations 18 Marketing highlights Costumed for Nantucket’s Daffodil Weekend19 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!20 

# Our company 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 at a Caribbean station21 

# Cape Air proposes serving Kirksville with the Cessna 402

 Right- sized to grow Kirksville enplanements  Two pilots *  Eight passenger seats * Features

* Assumes AA codeshare22 

# Cape Air proposes three daily round trips, seven days per week, with Kirksville having its own originator and terminator for best connectivity Draft 3x daily schedule—actual schedule requires connectivity analysis and community input



## To St. Louis From St. Louis Departure Arrival Departure Arrival 0615 0721 0900 1006 1045 1151 1400 1506 1630 1736 1754 1900 Note: If selected, Cape Air intends to start service in late September 2010 Weekend schedules can be adjusted for later morning flights, but would still be three round trips per day At the community’s request on 4/21/10, connectivity will be optimized for top cities like New York, Chicago, Phoenix and Nash vil le

# Cape Air proposes service for Kirksville at an annual subsidy rate of $1.4M, which is expected to result in a subsidy less than $200 per passenger

23 Lambert - St. Louis to/from: Kirksville Flt Hrs 2,117 Daily RTs 3.0 Stage (naut. miles) 130 Passenger Seats per Dpt 8 Annual Sched. Dpts 2,190 Completion Rate 97% Annual Actual Dpts 2,124 PDEW 10.0 Pax/Dpt 3.4 Load Factor 43% Annual Passengers 7,308 Avg. Net Fare $43.00 Passenger Rev/Dpt $148 Fuel $508,726 Maintenance $474,157 Pilots $229,950 Ownership $70,188 Rents $34,399 Staff $144,574 Landing Fees $42,274 Marketing $41,063 General & Admin./Other $104,190 Operating expense $1,649,520 Return of 5% $86,817 Economic Expense $1,736,336 Passenger Revenue $314,226 Profit ($1,422,110) Annual Operating Subsidy Required $1,422,110 Subsidy Per Departure $669 Per Passenger $195 Drivers Annual Expenses24 

# Cape Air would be proud to serve Kirksville  Full interline connectivity, allowing same -ticket connections and checked luggage transfer with the world on most major airlines  Expected codeshare with  A reliable airline with three flights per day each way  Global ticket distribution and sales through Expedia, Orbitz and Travelocity Cape Air offers the airline amenities Kirksville needs:


## Thank you for choosing Cape Air to serve Kirksville

Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 (508) 862 - 9719 Please direct media inquiries to Michelle Haynes, Communications Director: (508) 862 - 9714

## Appendix 

# Interline Examples on Online Travel Agencies26 

# Cape Air is on Expedia.com Screenshot from Expedia.com showing Cape Air LNS- PHX search for travel 22SEP0927 

# Cape Air is on Travelocity.com Screenshot from Travelocity.com showing Cape Air ATL- MAZ search for travel 22SEP0928 

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