Augusta/Waterville and Rockland, Maine Docket DOT-OST

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1 Proposal of Hyannis Air Service, Inc., dba Cape Air to provide subsidized Essential Air Service for: Augusta/Waterville and Rockland, Maine Docket DOT-OST Each Non-Stop To/From Boston: RKD: 5 daily round trips Jul-Aug, 4 Jun + Sep, 3 Oct-May AUG: 4 daily round trips Jun-Sep, 3 Oct-May For a two- or four-year term Cape Air proposes to serve both Augusta/Waterville and Rockland, but is willing and able to operate either route without the other. Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601, (508) Media inquiries to Chuck Ferrara, VP Corporate Affairs: (617) July 22, 2010

Cape Air is delighted to have served Rockland since 2008, and would be honored to serve Augusta, too Key points Cape Air s Rockland Boston service commenced November 1, 2008 Cape Air Boston service,

2 Cape Air is delighted to have served Rockland since 2008, and would be honored to serve Augusta, too Key points Cape Air s Rockland Boston service commenced November 1, 2008 Cape Air Boston service, with Augusta Annualized passengers carried YE2Q10 are 12,691, and growing at a 28% rate! As promised, Cape Air has kept fares low, averaging just $69 Cape Air proposes exclusively non-stop service to/from Boston Cape Air offers interline connectivity with most major airlines including both US Airways and JetBlue Thank you, Knox County, for a fabulous first two years serving your community! 1

Cape Air is a small but robust commuter airline, operating and growing since 1989 Key facts First route was Boston Provincetown, begun in October 1989 with three aircraft Cape Air: Leading the pack

3 Cape Air is a small but robust commuter airline, operating and growing since 1989 Key facts First route was Boston Provincetown, begun in October 1989 with three aircraft Cape Air: Leading the pack nine at a time Presently flying 59 Cessna 402s in five regions, and two ATR-42s in Micronesia Operating up to 600 flights daily In 2009 flew more than 610,000 passengers Stable, mature and growing company Photo courtesy Mark Garfinkel (August 7, 2000, Boston) 2

For smaller communities and niche markets, Cape Air s nine-seat planes have proven to be a good fit Cape Air highlights Key West Express High-frequency, non-stop service Interline e-ticketing and

4 For smaller communities and niche markets, Cape Air s nine-seat planes have proven to be a good fit Cape Air highlights Key West Express High-frequency, non-stop service Interline e-ticketing and baggage agreements Complete GDS sales channels: 866-Cape-Air In-house Sabre reservations office Reliability Subsidies used to lower fares MOCHA HAGoTDI culture and community investment Make Our Customers Happy And Have A Good Time Doing It 3

5 Today, Cape Air serves 16 communities in the Northeast Northeast route map Ogdensburg Massena Saranac Lake Watertown Rockland Rutland Lebanon Albany Boston Provincetown New Bedford Providence Hyannis White Plains Martha s Vineyard Nantucket July 2010 route map 4

6 And has developed niches along the East Coast, in the Caribbean, Midwest and Micronesia Caribbean Florida Keys Mayaguez San Juan Vieques Tortola St. Thomas Ft. Myers Florida Micronesia Continental Connection Ponce St. Croix Mid-Atlantic Midwest Key West Kirksville Quincy Illinois St. Louis July 2010 route maps; Maps not to scale Marion Missouri Cape Girardeau 5

7 Cape Air has been an interline carrier since 1993 enabling connectivity with most major airlines, now including Interline highlights Twenty-five interline agreements are in place, with almost all legacy airlines Cape Air has completed migration to interline e-ticketing, the updated industry norm Cape Air operates flights in Micronesia as Flights in the Caribbean have a Five Boston routes have a for Augusta and Rockland code code, and Cape Air can interline with JetBlue Flights in the Midwest operate with the code of 6

8 Cape Air participates in the global distribution systems (GDS), giving Augusta and Rockland access to the world, and the world access to Augusta and Rockland Cape Air is sold through: 7

9 You can fly anywhere from Augusta or Rockland via Cape Air With Cape Air, the world is your oyster lobster! Cape Air s interline agreements allow single-ticket connecting itineraries and through-check of luggage with other airlines Purchase interline tickets via: Any legacy airline s reservation center can book interline with Cape Air (including US Airways!) 800-JetBlue (JetBlue s website coming soon, too!) Cape Air is the only regional airline that can interline with JetBlue 866-Cape-Air Any travel agent 8

Cape Air s independence offers numerous benefits Benefits of independence Complete control of: Fares and fees Marketing and advertising Community philanthropy Schedule Direct relationships with the

10 Cape Air s independence offers numerous benefits Benefits of independence Complete control of: Fares and fees Marketing and advertising Community philanthropy Schedule Direct relationships with the decision makers at Cape Air Financially healthy airline Aircraft isolated on routes to provide reliability Good availability of spare aircraft Same connectivity as a network affiliate, since Cape Air has e-ticket and baggage agreements with most major airlines Independent reservations center: 866-Cape-Air Capeair.com No fees to book tickets with a live Cape Air reservations agent or at the counter No first checked bag fee; no change fees 9

11 So, how has Cape Air performed over the last two years serving Rockland? 10

12 At Rockland, passengers are up 14% compared to the predecessor and the trend is positive Rockland passengers Sum of both directions, year ending 13,000 12,750 12,691 12,500 12,250 12,000 11,750 11,564 11,744 11,840 11,833 12,028 12,205 12, % 11,500 11,333 11,250 11,000 Predecessor s last year: 11,090 10,750 10,500 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 11

13 Rockland passengers Sum of both directions On a year/year basis for comparable months, Rockland traffic is up 28% 1, , Last Year This Year Nov Dec Jan Feb Mar Apr May Jun 12

14 In June 2010, Cape Air enplaned more passengers than in any previous June back through at least 1985 Rockland June enplanements

15 Cape Air has kept Rockland fares low ensuring Rockland s air service is accessible Rockland fare, net each way Excludes government-mandated taxes and fees $100 $90 $80 $70 $60 $50 $75 $72 $71 $64 $63 $62 $61 $63 $64 $65 $66 $70 $66 $68 $66 $66 $67 $67 $68 $73 Actual Proposed $40 $30 $20 $10 $0 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09 Aug-09 Jul-09 Jun-09 May-09 Apr-09 Mar-09 Feb-09 Jan-09 Dec-08 Nov-08 14

16 Now that JetBlue has switched to the Sabre reservations system, Augusta and Rockland can connect seamlessly within Logan s Terminal C to Boston s largest low-cost carrier Boston Logan Terminal C Customer service center TSA Security Note: Not to scale Ticket counters As an interline carrier for 15 years, Cape Air facilitates through ticketing and bag transfer to most major airlines JetBlue is Boston s largest low-cost carrier by either departures or ASMs, July 2010 OAG 15

Cape Air is IS the t le only or Iy regional airline airli:1e that can car connect cor lect passengers a? seroe'rs and checked crecked luggage with JetBlue JE'tBlue...... ~~ ~ -,... -, c- Ci..Expedia.

17 Cape Air is IS the t le only or Iy regional airline airli:1e that can car connect cor lect passengers a? seroe'rs and checked crecked luggage with JetBlue JE'tBlue ~~ ~ -,... -, c- Ci..Expedia...". v 1M".. wt-''''' Wl ""'...,"0 - I -... Rockland, ME (R!';O) to Char1otte. NC (CL T) -,-,,~ =-, '- = ""... 0 " ~ ~ ~...,..~, =~, ~>- -- ~ ~ ~- "- -""-... ::J '....,.,... '~pon~ L"".om.. c,.. "".,::en!c21 pm,.. l1.sep ~ CO"" AI, 1&>6 Ou,_.,,,... ie's...!. J01Ilh.. A;",,"'f' 114l '--.'-~q''''' ) _~pon~!ioc_ L"", """" c " ~ "'.,0.. T, 11:11 pm. ;, T 21.Sep ~ C.",, ~I ' tmll ""'"... ".. i>::..::.... s.. Ai...,. 11~1.. 16

18 Cape Air has had its own reservations center, using the industry-standard, system, for more than 15 years Cape Air s Telephone Reservations Center Toll free reservations: 866-CAPE-AIR Never a booking fee! 17

Connectivity with JetBlue is valuable to Augusta and Rockland because from Boston JetBlue has 535 weekly departures, to 33 cities, and JetBlue s Boston service July 2010 schedule JetBlue s Boston

19 Connectivity with JetBlue is valuable to Augusta and Rockland because from Boston JetBlue has 535 weekly departures, to 33 cities, and JetBlue s Boston service July 2010 schedule JetBlue s Boston route map July 2010 Source: OAG City Wkly Dpts 1 New York-JFK, NY 52 2 Washington-Dulles, VA 47 3 Orlando, FL 42 4 Baltimore, MD 34 5 Charlotte-Douglas, NC 28 6 Fort Lauderdale, FL 28 7 Buffalo, NY 21 8 Chicago-O'Hare, IL 21 9 Pittsburgh, PA Raleigh/Durham, NC Tampa, FL Denver, CO Los Angeles, CA West Palm Beach, FL Richmond, VA Fort Myers, FL San Diego, CA Seattle/Tacoma, WA San Juan, PR San Francisco, CA Austin, TX 7 22 Bermuda, BM 7 23 Jacksonville, FL 7 24 Las Vegas, NV 7 25 Long Beach, CA 7 26 New Orleans, LA 7 27 Oakland, CA 7 28 Santo Domingo, DO 7 29 San Jose, CA 7 30 Aruba, AW 4 31 Cancun, MX 3 32 Montego Bay, JM 2 33 Punta Cana, DO 2 Total

20 Among the nine largest carriers at Boston, JetBlue has among the lowest yield, or fare per mile flown, meaning low total travel costs for Augusta and Rockland Boston yield by carrier YE1Q10, revenue per passenger-mile flown $0.20 $0.165 $0.15 $0.132 $0.139 $0.143 $0.102 $0.102 $0.104 $0.106 $0.112 $0.10 $0.05 $0.00 United Southwest JetBlue American AirTran Continental Delta Air Canada US Airways Wkly Dpts Cape Air s connections to JetBlue mean low total trip costs Source: US DOT O&D Survey Note: Largest carriers by departure frequency, OAG July 2010, excluding Cape Air 19

21 JetBlue serves non-stop 13 of the most popular 15 markets at Boston Top Boston markets YE1Q10passenger data, ranked by daily passengers each way; July 2010 schedule; alternative service noted Rank Daily Passengers US Airways JetBlue 1 San Francisco, CA 1255 JetBlue 2 Los Angeles, CA 1204 JetBlue 3 Orlando, FL 1152 JetBlue 4 Chicago-O'Hare, IL 1134 JetBlue 5 New York-La Guardia, NY 1072 US Airways JFK 6 Baltimore, MD 1038 JetBlue 7 Atlanta, GA Fort Lauderdale, FL 799 JetBlue 9 Washington-National, DC 781 US Airways Dulles 10 Washington-Dulles, VA 621 DCA JetBlue 11 Dallas/Fort Worth, TX Fort Myers, FL 595 JetBlue 13 Denver, CO 579 JetBlue 14 Tampa, FL 547 JetBlue 15 West Palm Beach, FL 537 JetBlue Source: O&D Survey and Official Airline Guide 20

22 While JetBlue Airways Announces Major Expansion in Boston Reuters, October 29, BOSTON, Oct. 29, 2009 /PRNewswire-FirstCall/ -- JetBlue Airways (Nasdaq: JBLU) today announces a major expansion of service from its focus city at Boston Logan International Airport. The airline, which already offers service to the most nonstop destinations of any carrier from Boston, plans to boost daily departures by 30% by summer With its expanded schedule, JetBlue and its growing base of 1,300 Boston crewmembers will offer travelers up to 78 daily flights to 33 top destinations. "Here at JetBlue we are officially declaring Summer 2010 the Summer of Boston," said Robin Hayes, Chief Commercial Officer for JetBlue. "Today's added flights represent an important next step in our commitment to offering Boston travelers the most robust schedule as well as the most destinations of any airline. 21

23 US Airways is shrinking in Boston, with capacity in the last two years down 19% US Airways available seat miles at Boston Year-ending weekly ASMs, in millions % Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09 Aug-09 Jul-09 Jun-09 May-09 Apr-09 Mar-09 Feb-09 Jan-09 Dec-08 Nov-08 Oct-08 Sep-08 Source: Official Airline Guide 22

Cape Air has had a wonderful time marketing in Knox County, and looks forward to expanding marketing efforts if selected for Augusta Marketing highlights More than $46,000 annual marketing budget

24 Cape Air has had a wonderful time marketing in Knox County, and looks forward to expanding marketing efforts if selected for Augusta Marketing highlights More than $46,000 annual marketing budget proposed for each community Experienced, professional, in-house marketing department to promote Cape Air s service Features in Cape Air s in-flight magazine, The Birds Eye View Community sponsorships, like the 2010 Wings & Wheels at the Owls Head Transportation Museum 23

25 To better serve these seasonal markets, Cape Air proposes increased frequency in summer months Augusta daily non-stop round trips Rockland daily non-stop round trips Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 24

26 Cape Air proposes service at the following subsidy rates, including a preferred, discounted four-year selection option Expenses Drivers AUG RKD Stage (naut. miles) Seats/Dpt 9 9 Sched. Dpts/Day Annual Actual Dpts 2,328 2,481 PDEW Pax/Dpt Load Factor 41% 53% Annual Passengers 8,856 12,202 Avg. Net Fare $64 $69 Passenger Rev. $549,780 $816,657 Selection term 2-year AUG RKD Fuel $645,672 $705,675 Maintenance $516,338 $553,830 Pilots $166,667 $183,105 Ownership $100,590 $134,046 Stations $205,989 $374,748 Marketing $46,154 $49,192 De-icing $24,175 $25,767 General & Admin./Other $148,650 $138,030 Operating Expense $1,854,235 $2,164,393 Return of 5% $97,591 $113,915 Economic Expense $1,951,826 $2,278,308 Passenger Revenue $549,780 $816,657 Profit ($1,402,046) ($1,461,651) Subsidy Required $1,402,046 $1,461,651 Per Departure $602 $589 Per Passenger $163 $123 4-year Preferred Subsidy Required $1,362,616 $1,420,545 Per Departure $585 $573 Per Passenger $159 $120 25

27 Cape Air is proud to be a great air service provider for Rockland, and would be honored to serve Augusta, too Cape Air offers the airline amenities Augusta and Rockland need: A thriving, growing, successful air service, increasing enplanements at Rockland Full interline connectivity, allowing same-ticket connections with the world on most major airlines Seamless connectivity with Boston s largest low-cost airline High-frequency, non-stop service to Boston for each community: RKD: 5 daily non-stop flights in Jul and Aug; 4 in Jun and Sep; 3 Oct-May AUG: 4 daily non-stop flights Jun-Sep; 3 in Oct-May Thank you for inviting Cape Air to serve Augusta and Rockland! Hyannis Air Service, Inc., dba Cape Air Attn: Andrew Bonney, 660 Barnstable Road, Hyannis, MA 02601, (508) Media inquiries to Chuck Ferrara, VP Corporate Affairs: (617)

28 Appendix Interline Examples on Online Travel Agencies

29 Cape Air is on Expedia.com Screenshot from Expedia.com showing Cape Air LNS-PHX search for travel 22SEP09 28

30 Cape Air is on Travelocity.com Screenshot from Travelocity.com showing Cape Air ATL-MAZ search for travel 22SEP09 29

31 Cape Air is on Orbitz.com Screenshot from Orbitz.com showing Cape Air ART-DCA search for travel 22SEP09 30

32 And on the Continental Airlines website Ar'd on t 1e Contlnertal Airli:1es website Continental Airlines You r [.,,,.,11,,., FlIoht for w od" No" _', 2"'.: ' 0;;;... (.) r.'-,_ 1.1n._"'_ Wed., H,w.1, "....-n, '" ':"-,,),.,. ".,.. ",. "~""., c".,. ~,,,, ".. ' "" ;,.. " "oj,., ", -_. ",. _ """... ""~ 47,.," w.." ;. ;,'M' H""... ~, }"" _-.-~-'"'.. v., -' ", ~'~; b~r~/mn.",,,, " 'H" I, m,"~'_' ",., -"I',, ~...,"",,," ", '... _" '''' b>; ~,< [.. 3: ",.m. "... "w.',,... ""'_." :"':0).. ";,, ~:O",.", w... " _ ",... ""~," (om, -,~o,,.... «;"0.;,",."" '.'";'"'' To, ~ "., 1,"J; O~O."... " "" 0""'<>-0-"..,.- c.n"... I"".~, 00."'" '" In, ~.,oj,,,... (.) "" ~ ; "'~k.. ' <'~ -~ """....",-,,_ TO,.,,.('" ".. "" "", " "",.0.. ",,,"~,,._.~." r ~ " 0' ", [~~, (0) ~.",," ". 31

Non-stop to/from Lambert - St. Louis International Airport 3x Daily

Proposal of Hyannis Air Service, Inc. dba Cape Air to provide subsidized Essential Air Service for: Kirksville, Missouri Docket DOT-OST-1997-2515 Non-stop to/from Lambert - St. Louis International Airport