Docket DOT-OST-2000-7881With codeshare of

EAS Proposal of Hyannis Air Service, Inc. dba Cape Air for:

Marion, IL

Hyannis Air Service, Inc., dba Cape AirAttn: Andrew Bonney, SVP Planning

660 Barnstable Road, Hyannis, MA 02601 (508) 862-9719

June 26, 2019

Cape Air has been honored to serve Marion since late 2009; ridership is strong, with 2018 being Cape Air’s second best year ever in Marion!

Cape Air Marion PassengersSum of both directions

13,855 

18,674 19,558 

20,339  19,904 18,876  18,295 

19,853  20,239 

0

5,000

10,000

15,000

20,000

25,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

10,000!Cape Air has enplaned more than 10,000 passengers per year, which entitles Veterans Airport of Southern Illinois to $1M per year in FAA Airport Improvement Program funds

Joseph Wadas, Cape Air’s 10,000th MWA enplanement of 2018December 14, 2018

Reliability has been superb, with company-controllable completion rate averaging 98.4%

Company controllable completion rate MWA-STL

By objective measures Cape Air is serving Marion well!

99.5% 98.5% 99.0% 99.0% 100.0% 97.0% 95.0% 96.0% 99.0% 100.0% 99.0% 98.5%

0%

20%

40%

60%

80%

100%

Jun‐18 Jul‐18 Aug‐18 Sep‐18 Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19

Cape Air Fast Facts

• Serving Marion since November 2009

• 86 aircraft in the fleet

• 34 cities served

• 750 employees

• Flying 500,000+ passengers per year

• Employee-owned and empowered workforce

Dan WolfFounder & CEO

Linda MarkhamPresident

San Juan

MayaguezSt. CroixVieques

TortolaSt. Thomas

ProvincetownHyannisNantucket

New  BedfordMartha’s Vineyard

Augusta

LebanonRutland

White PlainsManhattan

Rockland

Bar Harbor

Boston

Cape Air Routes2Q19

Kirksville

St. Louis

Owensboro

Havre GlasgowWolf Point

SidneyGlendive

Billings

Denotes seasonal service

Cape Air serves 34 cities

Marion

Decatur

Chicago O’Hare

New York (JFK)

Virgin Gorda

Culebra

Saranac Lake

Featuring

World class distribution Codeshare with American Airlines for St. Louis Interline with all the legacy airlines Distribution through major online travel agencies City ticket office in Marion Cape Air controls its own fares

Airline PartnersCape Air connects with:

Cape Air codeshares with American Airlines on the Marion – St. Louis route

With Cape Air service, Marion is an American Airlines city

Connecting itineraries are also available on united.com…

Cape Air participates in TSA’s PreCheck program

Cape Air includes a ramp-side inter-terminal shuttle for St. Louis, facilitating seamless connections between terminals without having to re-clear security

No TSA rescreening to connect between

terminals at St. Louis!

Cape Air’s St. Louis inter-terminal shuttle

Reservations: 1-800-CAPE-AIR

Cape Air Reservations Department

No fee to speak with a reservations 

agent!

TravelPassElectronic 10-ticket discount program

Commitment To Safety

Safety firstCore of our culture

• Multi-engine aircraft• Safety audits annually by:

– American Airlines– United Airlines – JetBlue Airways

• SMS program approved by FAA• 30 years experience

– 100,000+ flights per year

• FAA certified under Part 121 + 135• All captains have an Air Transport Pilot

Certificate– 1,500 hours minimum

• Director of Safety– Department of 3 safety professionals

• WAAS-enabled GPS navigation

Safety mantra:“Make the tough call in the name of safety, and we will

support you”

Cape Air’s #1 priority is the safety of our operation

Tecnam P2012 Traveller

Brand New AircraftProposed for Marion

• Two engines, for safety

• 9 passenger seats• 2 pilot seats, and 

certificated for single pilot operations

• Italian leather seats• Air conditioning• LED lighting• USB ports

Taxi‐out of Cape Air’s first production Tecnam P2012 TravellerMarch 19, 2019

Features 

Cape Air proposes Marion service in our fleet of brand new twin-engine Tecnam P2012 Travellers

• The first new purpose-designed commuter aircraft in 40 years

• Brand-new design

• Electronically controlled engines

• Glass cockpit• Garmin G1000 Nxi avionics

• Luxurious cabin with 9 single seats

Highlights

The “Traveller” was custom designed by Cape Air and Tecnam with communities like Marion in mind

Cape Air’s Tecnam P2012 Traveller: Flying soon to Marion!

Hub Options

36x weekly to/from St. Louis Lambert International Airport (STL) 29x weekly to/from STL + 7x weekly to/from Nashville 24x weekly to/from STL + 12x weekly to/from Nashville

Options:

Cape Air is delighted to offer Marion the option to have flights to both St. Louis and Nashville

• Population (2017): 691,243; MSA: 1,903,045

• Hosted 15.2 million visitors in 2018

• Gaylord Opryland Resort & Convention Center is the largest non-gaming hotel property in the United States with 2,888 rooms and more than 700,000 square feet of meeting space

• Ranked lowest for cost of living in comparable cities across the nation

Nashville fast facts

Source: Nashville Convention & Visitors Corp.

Rank Destination Seats Rank Destination Seats Rank Destination Seats Rank Destination Seats1 Atlanta, GA 65,847 20 Houston, TX (Hobby) 18,118 38 Pittsburgh, PA 9,201 56 Syracuse, NY 2,1242 Denver, CO 41,209 21 Phoenix, AZ 16,980 39 San Diego, CA 8,966 57 Cedar Rapids/Iowa City, IA 1,8723 Chicago, IL (O'Hare) 36,526 22 Raleigh/Durham, NC 16,571 40 San Antonio, TX 8,934 58 Cancun, Mexico 1,6154 Dallas/Ft. Worth, TX (DFW) 36,507 23 New Orleans, LA 16,112 41 Milwaukee, WI 8,629 59 Allentown, PA  1,4165 New York, NY (LGA) 35,830 24 Las Vegas, NV 16,064 42 Columbus, OH 8,597 60 Grand Rapids, MI 1,4166 Boston, MA 33,489 25 Seattle, WA 15,162 43 Toronto, ON 7,796 61 Harrisburg, PA 1,4167 Charlotte, NC 33,115 26 Kansas City, MO 14,940 44 London, UK (Heathrow) 6,480 62 Sarasota/Bradenton, FL 1,4168 Detroit, MI 31,603 27 Cleveland, OH 13,908 45 Charleston, SC 6,388 63 Tampa, FL 1,4049 Los Angeles, CA 31,546 28 St. Louis, MO 13,888 46 Salt Lake City, UT 5,592 64 Richmond, VA 1,40410 Philadelphia, PA 31,453 29 Houston, TX (Bush) 13,660 47 Oakland, CA 4,928 65 Fayetteville, AR 1,35311 New York, NY (EWR) 29,322 30 Miami, FL 13,452 48 Burbank, CA 3,274 66 Orlando, FL (Sanford) 1,24812 Chicago, IL (Midway) 29,144 31 Austin, TX 12,934 49 San Jose, CA 3,274 67 Savannah, GA 1,23913 Orlando, FL 29,097 32 Jacksonville, FL 12,473 50 Providence, RI 3,111 68 Norfolk, VA 1,00114 Washington, DC (DCA) 28,788 33 San Francisco, CA 11,983 51 Portland, OR 2,928 69 Sacramento, CA 89015 Minneapolis/St. Paul, MN 24,820 34 Washington, DC (Dulles) 10,590 52 Trenton, NJ 2,418 70 Oklahoma City, OK 71516 Baltimore, MD 24,805 35 Panama City, FL 10,234 53 Tupelo, MS 2,310 71 Omaha, NE 57217 Fort Lauderdale, FL 24,077 36 Pensacola, FL 9,233 54 Calgary, AB 2,150 72 Fort Myers, FL 28618 Dallas, TX (Love) 22,043 37 New York, NY (JFK) 9,204 55 Punta Gorda, FL 2,124 73 Memphis, TN 27619 Tampa, FL 20,521 Total 974,011

Nashville cities served

In addition to being a world-class destination, Nashville has non-stop air service to 73 destinations

Source: OAG June 2019 Cape Air has existing American Airlines codeshare on St. Louis service; if Nashville service is selected, Cape Air would invite American Airlines to codeshare

Nashville route map

Source: OAG June 2019

Southwest54%

American15%

Delta14%

United8%

Allegiant2%

Frontier2%

JetBlue1%

Alaska1%

Sun Country1%

British Airways1%

Other1%

Nashville seat share by airline

Source: OAG June 2019 Cape Air has existing American Airlines codeshare on St. Louis service; if Nashville service is selected, Cape Air would invite American Airlines to codeshare

Also, St. Louis continues to be a great destination and connect point for Marion

St. Louis skyline

St. Louis Lambert cities served

St. Louis features non-stop service to 68 destinations

Source: OAG June 2019

Rank Destination Seats Rank Destination Seats Rank Destination Seats Rank Destination Seats1 Atlanta, GA 55,354 18 Newark, NJ 17,783 35 Raleigh/Durham, NC 8,755 52 Washington, DC (Dulles) 4,5202 Denver, CO 44,858 19 Baltimore, MD 17,593 36 Milwaukee, WI 8,473 53 Sacramento, CA 4,4503 Chicago, IL (O'Hare) 39,616 20 Seattle, WA 15,515 37 Oklahoma City, OK 8,326 54 San Jose, CA 4,3864 Dallas/Ft. Worth, TX (DFW) 31,780 21 Boston, MA 15,465 38 Austin, TX 8,296 55 Cincinnati, OH 2,6805 Minneapolis/St. Paul, MN 31,474 22 Kansas City, MO 14,206 39 Des Moines, IA 8,025 56 Punta Cana, DR 2,4186 Chicago, IL (Midway) 30,766 23 San Francisco, CA 13,113 40 Salt Lake City, UT 8,008 57 Fort Leonard Wood, MO 1,5007 New York, NY (LGA) 29,991 24 Omaha, NE 12,315 41 Wichita, KS 7,993 58 Marion/Herrin, IL 1,3508 Orlando, FL 26,833 25 Nashville, TN 12,283 42 Tulsa, OK 7,897 59 Charleston, SC 1,1449 Washington, DC (DCA) 25,899 26 San Diego, CA 11,474 43 Little Rock, AR 7,865 60 Pensacola, FL 85810 Phoenix, AZ 25,568 27 Cleveland, OH 11,186 44 Fort Myers, FL 7,410 61 Kirksville, MO 81011 Dallas, TX (Love) 24,760 28 Tampa, FL 11,145 45 Miami, FL 6,448 62 Owensboro, KY 81012 Detroit, MI 22,814 29 Houston, TX (Bush) 10,713 46 Portland, OR 6,211 63 Decatur, IL 49513 Philadelphia, PA 22,667 30 Fort Lauderdale, FL 10,524 47 Panama City, FL 5,530 64 Fort Dodge, IA 47014 Los Angeles, CA 22,572 31 Columbus, OH 9,427 48 Toronto, ON 5,400 65 Montego Bay, Jamaica 42915 Las Vegas, NV 22,367 32 Cancun, Mexico 9,045 49 Hartford, CT 5,186 66 Jonesboro, AR 30816 Charlotte/Concord, NC 19,692 33 San Antonio, TX 8,996 50 Pittsburgh, PA 5,005 67 Burlington, IA 20017 Houston, TX 18,587 34 New Orleans, LA 8,772 51 Oakland, CA 4,770 68 Jackson, TN 200

Total 851,779

St. Louis route map

Source: OAG June 2019

Source: OAG June 2019

Southwest61%

American14%

Delta11%

United7%

Frontier4%

Alaska1%

Air Canada1%

Other1%

St. Louis seat share by airline

Cape Air’s codeshare partner American Airlines flies to nine non-stop destinations from St. Louis

Source: OAG June 2019

American Airlines’ route map at St. LouisJune 2019

St. Louis

MarketingAnd Community Engagement

MarketingCape Air’s marketing for Marion, with a $65,000 budget, is active, targeted and ongoing

• Targeted online/digital marketing

• Advanced SEO and SEM• Outdoor• Radio: FM/AM and

streaming digital• TV• Social• Print• Community engagement• Contesting• Event sponsorship

In addition to advertising, engagement with local organizations is core to Cape Air’s service for Marion

Williamson County-area donation recipients in 2017-YTD2019

Community engagement—a Cape Air forte

Autism Society of Southern IllinoisBrehm School FoundationCobden Elementary PTOConnell BenefitDeSoto Daze Community FestivalEwing Northern Support OrganizationFinding Forever Animal RescueFrankfort Community High SchoolFriends of the Shawnee National ForestHarrisburg Elks Lodge 1058Heartland RotaryHerrin Junior High SchoolHospice of Southern Illinois InterVarsity Christian FellowshipJennings Do‐Dads AssociationLick Creek Elementary PTOLincoln Elementary PTOMakanda BenefitMarion Carnegie Library

Marion Relay for Life Organization of Black Aerospace Professionals ‐Southern Illinois University ChapterOur Lady of Mt. Carmel School Puka School IncRiver to River Residential CorporationRotary Club of Jackson/Williamson Counties SunsetRotary International ‐ Southern Illinois Chili Cook‐OffSouthern Illinois University Special Olympics Illinois Specialized Equine Services and Therapeutic Riding Center St. Francis CARESt. John the Baptist SchoolStars and Stripes Museum/LibraryTeam Barry Silent Auction The Brehm School FoundationThe Science CenterThe Women's CenterWilliamson County FOP

Marion ticket office

Cape Air’s proposal includes a ticket office in Marion

• Increases the visibility of the airport and air service within the community

• Provides a welcoming place for people to learn about the air service from a friendly Cape Air agent

• Enables the redemption of targeted promotions, providing wide latitude in marketing the air service

• Places Cape Air in downtown Marion

City ticket office highlights

Cape Air Magazine, in front of more than 500,000 passenger per year, promotes each community Cape Air serves

The Cape Air difference

• 36 flights per week—lots of flight options for travelers

• Brand new multi-engine aircraft– Proposal includes brand-new Tecnam P2012

Travellers, with 9 passenger seats plus 2 pilot seats

• American Airlines codeshare

• Options for both St. Louis and Nashville service

• Dedicated community partner– Robust marketing budget: $65,000/year

• Interline partnerships with: – Alaska– American– Delta– JetBlue– United, and more

• TSA Pre-Check

• Planes and pilots based in Marion

• A partner airline committed to Marion

High frequency, new multi-engine aircraft, connectivity

Cape Air would be honored to take Marion to the next level of service with new Tecnam aircraft and 

build on our years of success together!

EAS ProposalOptions

1. 36x weekly to/from St. Louis Lambert International Airport (STL)2. 29x weekly to/from STL + 7x weekly to/from Nashville3. 24x weekly to/from STL + 12x weekly to/from Nashville

Options:

Economics: Option AExpensesTwo‐year term; discount for 4‐year term, preferred, is noted below

Year 1

Note: See escalation factors subsequent slide

Option 1: 36x per week MWA-STL

4‐year option preferred

Year 1

Drivers

Weekly RTs 36Minimum completion rate 97%Daily RTs 5.1Pax/Dpt 5.4LF 60%Fare (average net) $37 Pax Rev/Dpt $200 Annual Sched Dpts 3,754Annual Pax 19,665

Fuel $640,558 Maintenance $635,077 Pilots, Supplies & Training $604,734 Ownership $467,006 Rents $264,183 Staff $300,221 Landing Fees $159,026 Marketing $65,000 Customer Svc. $135,138 General & Admin./Other $122,279 Operating expense $3,393,222

Return of 5% $178,591 Economic Expense $3,571,813 Passenger Revenue $728,563Profit ($2,843,250)

Proposed Subsidy $2,843,250Per Departure $781

Discount for 4-year termProposed Subsidy $2,776,673Per Departure $740

Economics: Option A

Year 1

Note: See escalation factors subsequent slide

Option 2: 29x weekly STL + 7x weekly Nashville

4‐year option preferred

Year 1

Drivers

ExpensesTwo‐year term; discount for 4‐year term, preferred, is noted below

MWA-STL BNA-MWA TotalWeekly RTs 29 7 36Minimum completion rate 97% 97% 97%Daily RTs 4.1 1.0 5.1Pax/Dpt 5.4 5.6 5.4LF 60% 62% 60%Fare (average net) $37 $70 $43 Pax Rev/Dpt $200 $391 $237 Annual Sched Dpts 3,024 730 3,754Annual Pax 15,841 3,951 19,792

MWA-STL BNA-MWA TotalFuel $516,005 $195,121 $711,127 Maintenance $511,590 $198,730 $710,320 Pilots, Supplies & Training $487,147 $117,587 $604,734 Ownership $376,200 $146,137 $522,337 Rents $212,814 $20,529 $233,343 Staff $241,845 $106,502 $348,347 Landing Fees $128,104 $23,804 $151,908 Marketing $52,361 $12,639 $65,000 Customer Svc. $108,862 $26,277 $135,138 General & Admin./Other $98,503 $29,539 $128,042 Operating expense $2,733,429 $876,866 $3,610,295

Return of 5% $143,865 $46,151 $190,016 Economic Expense $2,877,294 $923,017 $3,800,311 Passenger Revenue $586,898 $276,584 $863,482 Profit ($2,290,396) ($646,433) ($2,936,829)

Proposed Subsidy $2,290,396 $646,433 $2,936,829Per Departure $781 $913 $782

Proposed Subsidy $2,236,764 $631,296 $2,868,060Per Departure $740 $865 $764

Economics: Option A

Year 1

Note: See escalation factors subsequent slide

Option 3: 24x weekly STL + 12x weekly Nashville

4‐year option preferred

Year 1

Drivers

ExpensesTwo‐year term; discount for 4‐year term, preferred, is noted below

MWA-STL BNA-MWA TotalWeekly RTs 24 12 36Minimum completion rate 97% 97% 97%Daily RTs 3.4 1.7 5.1Pax/Dpt 5.4 5.6 5.5LF 60% 62% 61%Fare (average net) $37 $70 $48 Pax Rev/Dpt $200 $391 $264 Annual Sched Dpts 2,503 1,251 3,754Annual Pax 13,110 6,773 19,883

MWA-STL BNA-MWA TotalFuel $427,039 $334,494 $761,533 Maintenance $423,385 $340,680 $764,065 Pilots, Supplies & Training $403,156 $201,578 $604,734 Ownership $311,338 $250,521 $561,858 Rents $176,122 $35,193 $211,315 Staff $200,147 $182,575 $382,722 Landing Fees $106,017 $40,807 $146,825 Marketing $43,333 $21,667 $65,000 Customer Svc. $90,092 $45,046 $135,138 General & Admin./Other $81,519 $50,638 $132,158 Operating expense $2,262,148 $1,503,199 $3,765,347

Return of 5% $119,060 $79,116 $198,176 Economic Expense $2,381,209 $1,582,315 $3,963,524 Passenger Revenue $485,709 $474,144 $959,852 Profit ($1,895,500) ($1,108,171) ($3,003,671)

Proposed Subsidy $1,895,500 $1,108,171 $3,003,671Per Departure $781 $913 $800

Proposed Subsidy $1,851,115 $1,082,222 $2,933,337Per Departure $740 $865 $781

EscalationsTo align revenue with costs, Cape Air proposes annual escalation factors

Annual subsidy including escalation

Preferred

Option 1 Option 2 Option 3Two-year reselection MWA-STL MWA-STL BNA-MWA Total MWA-STL BNA-MWA Total

Year 1 $2,843,250 $2,290,396 $646,433 $2,936,829 $1,895,500 $1,108,171 $3,003,671 Year 2 $2,928,547 $2,359,108 $665,826 $3,024,934 $1,952,365 $1,141,416 $3,093,781

Four-year reselectionYear 1 $2,776,673 $2,236,764 $631,296 $2,868,060 $1,851,115 $1,082,222 $2,933,337 Year 2 $2,859,973 $2,303,867 $650,235 $2,954,102 $1,906,648 $1,114,689 $3,021,338 Year 3 $2,945,772 $2,372,983 $669,742 $3,042,725 $1,963,848 $1,148,130 $3,111,978 Year 4 $3,034,145 $2,444,172 $689,835 $3,134,007 $2,022,763 $1,182,574 $3,205,337

Thank you!

Hyannis Air Service, Inc., dba Cape AirAttn: Andrew Bonney, SVP Planning

660 Barnstable Road, Hyannis, MA 02601 (508) 862-9719