June 23, 2014 Proposal of Hyannis Air Service, Inc., dba Cape Air to provide subsidized Essential Air Service for:



# Augusta/Waterville and Rockland, Maine

Docket DOT

- OST

- 1997

- 2784



## Each Non

- Stop To/From Boston

For a two

- or four

- year term

Hyannis Air Service, Inc., dba Cape Air

Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 , ( 508) 862

- 9719 NB : DOT refers to the Knox County Regional Airport as “Rockland”,

so this proposal uses both names interchangeably

# OVERVIEW Cape Air

12 

# Cape Air has grown from a single aircraft and route in 1989

to America’s largest commuter airline today

 First route was Boston

– Provincetown,

begun in October 1989 with one aircraft

 Today’s fleet

 76 Cessna 402s in four regions

 Three Britten

- Norman Islanders

 Two ATR

- 42s in Micronesia

 Operating up to 550 flights daily

 In 2013 flew 728,000 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 2014

• Annual revenue of $120M

• Financially stable

• 44 airports served, 20 in EAS

• 83 aircraft

3

Captain Krista Poppe

Augusta basedSan Juan

Mayaguez

St. Croix Vieques Tortola St. Thomas

Anguilla

Nevis Virgin Gorda Culebra Provincetown Hyannis

Nantucket

Providence

New Bedford Martha’s Vineyard Augusta

Lebanon Rutland Saranac Lake Ogdensburg Massena

White Plains Albany

Manhattan Rockland Bar Harbor

Boston



# Cape Air Routes

June 2014 Ft. Leonard Wood

Cape Girardeau Quincy Kirksville

St. Louis

Owensboro Marion Havre Glasgow

Wolf Point

Sidney

Glendive

Billings

Map inset not to scale Rota Saipan

Guam Micronesia Denotes seasonal service 

# Proud to be America’s

finest commuter airline!

# One of Cape Air’s best features is interline connections

with all of the legacy airlines plus JetBlue, giving Rockland

and Augusta access to the world

5

# Itineraries connecting between Cape Air and United are

available on united.com

6

# At joint cities Cape Air’s connecting destinations

appear on jetblue.com

7

# Through Expedia and other OTAs, Cape Air connects EAS

communities with most network airlines

89 

# 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

# Cape Air proposes continued service

with our fleet of 76 Cessna 402s

10

# Cape Air takes environmental sustainability seriously by

investing in fuel

- saving aircraft technologies and

powering its offices with solar panels

1112 Cape Air’s Reservations Call Center 

# Cape Air has its own internal reservations center

800

- CAPE

- AIR

(Where there is 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

# AUGUSTA AND ROCKLAND Community Air Service for

15

# Cape Air has been privileged to serve Rockland since 2008

and Augusta since 2010

16 Ceremonial ribbon cutting at Augusta, Maine

December 1, 2010

# Cape Air’s ridership at Knox County Regional Airport

continues to soar

17 13,808

12,768 12,316 11,744 14,286 15,212 15,883

14,393

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

2005 2006 2007 2008 2009 2010 2011 2012 2013Transition year Knox County Regional Airport Enplanements

Predecessor

# Augusta State Airport ridership is at modern highs

189,5816,2796,0338,1506,6988,4778,1837,9615,7928,2238,9068,9708,0456,6297,1057,67157211,0269,28911,000

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

Cape Air

PredecessorAUG closedMay & Jun Augusta ridership

# Access Boston for connections to the world

19 

# Boston Logan:

Access to the world for Rockland and AugustaNote: Includes Seasonal Service, Source: OAG & Innovata Schedules 

# Boston Logan has Nonstop Domestic Service

to 75 DestinationsNote: Includes Seasonal Service, Source: OAG & Innovata Schedules 

# Boston Logan has Nonstop International Service

to 35 Destinations

# MARKETING & CTO S Community Presence

22

# Cape Air had a robust marketing program for Rockland and

Augusta run by a full

- time regional marketing manager

Downeast Magazine ad

# Cape Air’s marketing efforts for the Maine communities are

increasingly focused online and in broadcast channels,

which we find most cost

- effective

Mainebiz.biz ad

# Cape Air’s unique city ticket office program puts an airline

and airport presence in the downtown business district

• Remote reservation office

• Routes local calls from Rockland and

surrounding area codes

• Serves as a downtown billboard and

reminder to locals and visitors alike

that there is a commercial airport up

the road!

• Brings jobs to Rockland Key features Rockland ticket office

# Augusta’s city ticket office is located

in the beautiful historic Post Office buildingPenobscot Bay, Kennebec Valley, Waterville, Mid

- Maine,

Penobscot Bay, Bar Harbor, Blue Hill, & Ellsworth

Chamber Members

City Ticket Office Open House

Hosted EDC Meeting at Airport

Friends of Rockland Harbor Lights Pen Bay Chamber Annual Meeting Sponsor

Pen Bay Chamber Annual Dinner Sponsor

ASTA Maine Trade Show Exhibitor

Co

- created a survey and distributed to passengers to identify

trends in travel from airport

City Ticket Office Open House

Airport Wings & Wheels

Pen Bay Chamber Festival of Lights

Maine ASTA Travel Agent Expo

Rockland Blues Festival

Camden Film Festival

Maine Home, Boats, and Harbors Trade

Show Exhibitor/Donate Tickets

Rockland Lobster Festival 

# Since inception we have donated over $30,000 to the

Rockland area; We also sponsor a ton of local events!Dube Travel 50 th Anniversary

Maine ASTA Trade Show

Mid Maine Chamber Golf Tourney

Augusta Kiwanis Club

Ladies Expo Waterville Chamber

Mid Maine Chamber of Commerce Super Raffle

St. Lawrence High School Cheer Team

Kennebec Valley Humane Society

Chandler Melason Benefit

Augusta Downtown Alliance Events

Whatever Family Festival Kennebec Valley Annual Chamber Dinner

- Major Sponsor

Mid Maine Chamber of Commerce Business Expo Sponsor

ASTA Maine Trade Show Exhibitor 

# Our community calendar has been equally busy at Augusta!

# PROPOSAL Essential Air Service

29

# Cape Air proposes to continue seasonally

- adjusted

frequency to right

- size capacity with demand

30 

## Seasonal Frequency Proposal

Season Defined AUG RKD RKD w 6x

Winter January

- Wed. before Memorial Day 3 3 3

Spring Thu. before Memorial Day

- Independence Day Weekend 4 4 4

Summer Independence Day Weekend

- Tue. after Labor Day 4 5 6

Fall Wed. after Labor Day

- Tue. after Columbus Day 4 4 4

Winter Wed. after Columbus Day

- December 3 3 3 Standard Optional

# Special Rockland Consideration

Given the strong peak seasonality at Rockland,

Cape Air proposes an option for 6 daily summer round trips

31 Rockland load factor

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Nov-08Feb-09May-09Aug-09Nov-09Feb-10May-10Aug-10Nov-10Feb-11May-11Aug-11Nov-11Feb-12May-12Aug-12Nov-12Feb-13May-13Aug-13Nov-13Feb-14May-14 

## 85% 85% 85% 83% 79%

# Conforming Proposal

Cape Air is delighted to propose continued

Essential Air Service at Rockland and Augusta

32 Notes:

• Cape Air prefers a four

- year reselection

• See note on slide 34 regarding annual escalation factor

• Cape Air proposes to serve both Augusta/Waterville and Rockland, but is

willing and able to operate either route without the other. AUG RKD

Stage (naut. miles) 129 135

Seats per Dpt 9 9

Sched. RTs/Day 3.3 3.6

Annual Actual Dpts 2,325 2,537

PDEW 16.0 20.3

Pax/Dpt 4.9 5.7

Load Factor 54% 63%

Annual Passengers 11,647 14,828

Avg. Net Fare $73 $83

Passenger Rev $824,746 $1,193,801

4

- year option

preferred Drivers Economics

— Year 1 (see note)

See seasonal schedule on previous slideYear 1Year 1 AUG RKD

Fuel $714,351 $792,722

Maintenance $731,060 $811,959

Pilots $215,268 $234,608

Ownership $175,973 $175,973

Stations $451,456 $545,577

Marketing $65,906 $68,648

Law enforcement officer $17,000 $72,000

De

- icing $23,537 $25,684

General & Admin./Other $166,138 $197,179

Operating Expense $2,560,689 $2,924,350

Return of 5% $134,773 $153,913

Economic Expense $2,695,463 $3,078,263

Passenger Revenue $824,746 $1,193,801

Profit ($1,870,717) ($1,884,462)

Subsidy Required $1,870,717 $1,884,462

Per Departure $805 $743

Per Passenger $166 $131

4

- Year discount

Subsidy Required $1,818,106 $1,831,464

Per Departure $782 $722

Per Passenger $161 $127

# Rockland Alternative Option: 6x Peak Summer

Because Rockland’s summer load factors have been in the

mid

- 80s, Cape Air proposes a summer increase to 6x daily

33 4

- year option

preferred Drivers Economics

— Year 1 (see note)

See seasonal schedule on previous slide RKD (6x summer only)

Stage (naut. miles) 135

Seats per Dpt 9

Sched. RTs/Day 3.8

Annual Actual Dpts 2,657

PDEW 21.4

Pax/Dpt 5.9

Load Factor 65%

Annual Passengers 15,586

Avg. Net Fare $85

Passenger Rev $1,265,789 RKD (6x summer only)

Fuel $836,942

Maintenance $857,252

Pilots $247,303

Ownership $185,495

Stations $552,772

Marketing $68,648

Law enforcement officer $72,000

De

- icing $25,684

General & Admin./Other $204,757

Operating Expense $3,050,853

Return of 5% $160,571

Economic Expense $3,211,425

Passenger Revenue $1,265,789

Profit ($1,945,636)

Subsidy Required $1,945,636

Per Departure $732

Per Passenger $125

4

- Year discount

Subsidy Required $1,890,918

Per Departure $712

Per Passenger $121Year 1Year 1

Notes:

• Cape Air prefers a four

- year reselection

• See note on slide 34 regarding annual escalation factor

• Cape Air proposes to serve both Augusta/Waterville and Rockland, but is

willing and able to operate either route without the other. Independence Day Weekend through Labor Day Weekend only

# To align revenue with costs over time

Cape Air proposes a 4% annual escalation factor

34 Annual subsidy including escalation



### Two

- year reselection AUG RKD RKD (6x summer only)

Year 1 $1,870,717 $1,884,462 $1,945,636

Year 2 $1,945,545 $1,959,840 $2,023,462

Four

- year reselection

Year 1 $1,818,106 $1,831,464 $1,890,918

Year 2 $1,890,830 $1,904,723 $1,966,555

Year 3 $1,966,463 $1,980,912 $2,045,217

Year 4 $2,045,122 $2,060,148 $2,127,02635 

# Cape Air would be honored to be reselected at

Rockland and Augusta!

 High

- frequency non

- stop service to/from Boston Logan; seasonally appropriate schedule

 Full interline connectivity, allowing same

- ticket connections with the world

 Global distribution

 Ample fleet of back

- up aircraft

 Robust marketing and local ticket offices in the downtown business districts Cape Air offers the airline amenities small communities need:



## Cape Air: Your Community Wings!36 

# Thank you!

Hyannis Air Service, Inc., dba Cape Air

Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601 , ( 508) 862

- 9719