Rutland, Vermont To/From Boston Docket DOT-OST

Transcription

1 Proposal of Hyannis Air Service, Inc. dba Cape Air to provide subsidized Essential Air Service for: Rutland, Vermont To/From Boston Docket DOT-OST With codeshare of: May 8, 2017

2 Cape Air is delighted to have served Rutland for more than nine years Overview Cape Air started serving Rutland on October 31, 2007 Rutland ribbon cutting Since 2007 we have flown 100,000 passengers to or from Rutland! Cape Air serves Rutland three times daily to/from Boston Logan International Airport Cape Air is co-located with JetBlue in Terminal C at Boston Logan JetBlue is the largest airline at Logan Cape Air is the nation s largest and most mature small-community airline 1

3 In the 9 years Cape Air has served Rutland, ridership has increased materially compared with the prior era 14,000 12,000 10,000 8,000 6,000 4,000 Predecessor Cape Air Predecessors 2,000 3,559 4,540 4, ,

4 Cape Air continues to offer the features Rutland needs for successful Essential Air Service Cape Air features Proven partner for Rutland Interline e-ticket agreements with: Alaska American Delta United JetBlue Airways codeshare Global Distribution System (Amadeus) Expedia, Orbitz, Travelocity Full TSA program Including TSA Pre-Check! Large fleet key to reliability Robust marketing capability Low fares Downtown ticket office Multi-engine aircraft All Cape Air captains required to have an ATP Stable and mature airline 3

5 Cape Air REVIEW 4

6 After completing three terms in the Massachusetts Senate in January 2017 Dan Wolf returned full time to Cape Air as CEO 5

7 Cape Air has grown from a single aircraft and route in 1989 to America s largest commuter airline today Key facts Cape Air: Leading the pack nine at a time First route was Boston Provincetown, begun in October 1989 with one aircraft Today s fleet 83 Cessna 402s in four regions Four Britten-Norman Islanders Three ATR-42s in Micronesia Operating up to 550 flights daily In 2016 flew 670,000 passengers Stable and mature company 6

8 Cape Air began service in 1989 with three aircraft 7

9 And one route: Boston Provincetown Original Cape Air route map Boston Provincetown November 1989 schedule 8

10 Havre Glasgow Wolf Point Sidney Glendive Billings Ogdensburg Saranac Lake Augusta Bar Harbor Rutland Lebanon Rockland Today Cape Air serves 39 cities Kirksville Ft. Leonard Wood Quincy St. Louis Marion Owensboro Cape Girardeau Albany White Plains Manhattan Boston Provincetown Hyannis Nantucket Martha s Vineyard New Bedford Cape Air Routes 2Q17 Denotes seasonal service Micronesia Saipan Guam Rota San Juan St. Thomas Culebra Tortola Virgin Gorda Mayaguez Vieques St. Croix 9 Map inset not to scale

11 Cape Air 2017 Revenue of $127M Consistently profitable 39 airports served, 19 in EAS 960 employees 10

12 Cape Air revenue has grown steadily since 1989 Cape Air revenue $140 $124 $127 $119 $120 $108 $99 $103 $100 $85 $77 $80 $71 $57 $57 $52 $60 $41 $40 $35 $35 $34 $36 $30 $22 $24 $20 $16 $13 $11 $5 $6 $0 $1 $1 $ Millions

13 Cape Air is the only commuter airline to have interline connections with all of the legacy airlines plus Alaska and JetBlue 12

14 Cape Air codeshares with JetBlue at Rutland Codeshare highlights Cape Air operates flights in Micronesia as Flights in the Caribbean have code Flights in the Midwest operate with the code of Flights at connecting airports operate with the codeshare of including at Rutland, Vermont 13

15 Itineraries connecting between Cape Air and United are also available on united.com 14

16 On American Airlines website Rutland is displayed after selecting All Carriers 15

17 At joint cities Cape Air s connecting destinations appear on jetblue.com 16

18 JetBlue at Boston serves 55 destinations, providing great connectivity for Rutland JetBlue at Boston, Summer

19 Boston Logan has Nonstop Domestic Service to 75 Destinations 18 Note: Includes Seasonal Service, Source: OAG & Innovata Schedules

20 Boston Logan has Nonstop International Service to 54 Destinations 19 Note: Includes Seasonal Service, Source: OAG & Innovata Schedules

21 Of the 129 Total Nonstop Destinations Served from Boston Logan, Low-Cost Carriers Provide Competing Service to 84 Destinations Note: Includes Seasonal Service, Source: OAG & Innovata Schedules 20

22 Cape Air s service at Rutland is part of the Cape Air JetBlue codeshare agreement 21

23 Cape Air is pleased to operate a City Ticket Office in downtown Rutland 22

24 Cape Air uses Amadeus as its reservation system and has its own internal reservations center Cape Air s Reservations Call Center CAPE-AIR 23

25 While the Cessna 402 remains the backbone of Cape Air s fleet, Cape Air is actively pursuing the next generation 9- passenger twin-engine commuter aircraft Flown as an 8 or 9 passenger aircraft with an optional First Officer 24

26 Marketing & Advertising Cape Air loves marketing our Rutland air service, and includes a robust marketing budget for local and regional media buying. 25

27 Cape Air is dedicated to supporting the Rutland and Vermont community. In 2016, we donated 65 RT tickets, sponsored 5 local events and gave more than $1,000 in cash contributions to local non-profits Community Engagement We are proud members of Rutland, Killington-Pico, Okemo and Vermont Chamber of Commerce Our downtown Rutland ticket office provides employment and business occupancy 26

28 Cape Air is proud to be a great partner for Rutland, Vermont, and looks forward to continuing the service for years to come Highlights Full interline connectivity, allowing same-ticket connections with the world Codeshare with High-frequency non-stop service Global distribution Small-airline feel, with big-airline capabilities Track record of success at Rutland! Cape Air: A proven partner for Rutland! 27

29 Air Service For RUTLAND, VERMONT 28

30 Cape Air is pleased to propose continued 3x Boston service at Rutland with a preferred option for a 4-year renewal Drivers Daily RTs 3 Pax/Dpt 5.0 LF 56% Fare (net) $78 Pax Rev $835,105 Economics Year 1 (see note) 3x Boston Fuel $565,489 Maintenance $752,743 Pilots $283,789 Ownership $127,676 Stations $326,853 Landing Fees $75,164 Marketing $46,373 General & Admin./Other $172,717 Operating expense $2,350,804 Return of 5% $123,727 Economic Expense $2,474,531 Passenger Revenue $835,105 Profit ($1,639,426) Year 1 Subsidy Required $1,639,426 Per Departure $772 Per Passenger $153 4-year option preferred Year 1 Notes: Cape Air prefers a four-year reselection, offered at a discount See note on next slide regarding annual escalation factor 4-Year Contract Discount $1,590,899 Per Departure $749 29

31 To align revenue with costs over time Cape Air proposes a 3% annual escalation factor Annual subsidy including escalation Two-year reselection RUT Year 1 $1,639,426 Year 2 $1,688,609 Four-year reselection Year 1 $1,590,899 Year 2 $1,638,626 Year 3 $1,687,785 Year 4 $1,738,418 30

32 Cape Air NEW YORK ACCESS OPTION 31

33 Cape Air also proposes an option for 2x daily Boston service and 1x daily White Plains service, with ground transportation to/from mid-town Manhattan Drivers White Plains, NY 2x Boston 1x HPN Daily RTs 2 1 Pax/Dpt LF 56% 58% Fare (net) $78 $90 Pax Rev $556,737 $332,665 Alternative service pattern option 2x BOS + 1x HPN-NYC 1x HPN Total Fuel $376,992 $270,550 $647,543 Maintenance $501,828 $306,599 $808,427 Pilots $283,789 $82,299 $366,087 Ownership $156,158 $82,188 $238,347 Stations $277,396 $198,743 $476,138 Landing Fees $50,109 $30,416 $80,526 Marketing $30,916 $4,417 $35,332 General & Admin./Other $122,405 $50,493 $172,898 Operating expense $1,799,593 $1,025,704 $2,825,298 Return of 5% $94,715 $53,984 $148,700 Economic Expense $1,894,309 $1,079,689 $2,973,997 Passenger Revenue $556,737 $332,665 $889,402 Profit ($1,337,572) ($747,023) Year 1 Subsidy Required $1,337,572 $747,023 $2,084,596 Per Departure $944 $1,055 Per Passenger $187 $202 $192 4-year option preferred Year 1 4-Year Contract Discount $1,297,980 $723,567 $2,021,547 Per Departure $917 $1,022 Notes: Cape Air prefers a four-year reselection, offered at a discount See note on next slide regarding annual escalation factor 32

34 To align revenue with costs over time Cape Air proposes a 3% annual escalation factor in the optional service pattern as well Two-year reselection 2x BOS 1x HPN Total Year 1 $1,337,572 $747,023 $2,084,596 Year 2 $1,377,699 $769,434 $2,147,133 Four-year reselection Year 1 $1,297,980 $723,567 $2,021,547 Year 2 $1,336,919 $745,274 $2,082,193 Year 3 $1,377,027 $767,632 $2,144,659 Year 4 $1,418,338 $790,661 $2,208,999 33

35 Thank you! Dan Wolf Founder & CEO Linda Markham President 34