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SUPPORTING LOCAL AIR SERVICE: The Benefits, Rewards & Investment In Your Community KICK-OFF MEETING May 11, 2011

SUPPORTING LOCAL AIR SERVICE: The Benefits, Rewards & Investment In Your Community KICK-OFF MEETING May 11, 2011 . The Benefits. The Benefits of Daily Hub Service. No More Driving to Cleveland or Pittsburgh Use YNG To Go Anywhere Easy Connections To Hundreds of Destinations

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SUPPORTING LOCAL AIR SERVICE: The Benefits, Rewards & Investment In Your Community KICK-OFF MEETING May 11, 2011

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  1. SUPPORTING LOCAL AIR SERVICE:The Benefits, Rewards & Investment In Your CommunityKICK-OFF MEETINGMay 11, 2011

  2. The Benefits Slide

  3. The Benefits of Daily Hub Service • No More Driving to Cleveland or Pittsburgh • Use YNG To Go Anywhere • Easy Connections To Hundreds of Destinations • Fast Check-In and TSA Processing • Shorter Travel Times • Increased Convenience • Did I Mention No More Driving the Cleveland or Pittsburgh • No Long Drives in Snow or Rain • Much Easier to Get Someone to Pick You Up • Gas is Over $4/Gallon… • Cheaper Parking • YNG = $30/week • CAK, CLE & PIT… much more Slide

  4. Where could Delta fly you from YNG? Served by Air France Slide Source: Official Airline Guide Schedules for the week of May 9-15, 2011 (May 2011 American Express SkyGuide)

  5. How about US Airways? Slide

  6. What about United? Served by South African Airways Served by SAS Served by Austrian Slide Source: Official Airline Guide Schedules for the week of May 9-15, 2011 (May 2011 American Express SkyGuide)

  7. The Rewards Slide

  8. The Rewards of Daily Hub Service • Business Travel Becomes Easier • Choice of Travel Times @ YNG Provides Greater Flexibility • You Can Work On the Plane… You Can’t Work While Driving • No More Arriving at CLE 3 Hours Before Your Flight Just to Avoid Traffic • Local Economic Development • Increased Access to Air Service Attracts New Employers • New Employers Hire New Employees • Local Businesses Can Grow Faster with Increased Access to Customers Abroad • New Jobs Will Be Created at the Airport • More Money Stays In the Community • Visitors will rent cars at YNG not PIT, CAK or CLE • Local Concessioners Will Profit From Passengers (Not the Hudson News or Subway at PIT) • You Can Get There From Here • Public Perceptions of the Mahoning Valley Will Change When Air Service is Available Slide

  9. Potential Changes To Surrounding Air Service Options Slide

  10. Closure United’s Cleveland Hub • Prediction: Cleveland Hub Will Close • Why? • Served as a “Relief Valve” to Continental • Alternative to Newark (EWR) for passenger flow in/out of the Northeastern United States • Strategically Unnecessary to the Merged United/Continental • Chicago – O’Hare (ORD): Will handle East-West passenger flow • Washington – Dulles (IAD): Will handle North-South passenger flow • Airport Facility Not Built for Hub Operations • Single runway operations limits growth • Terminal facility limits the number of mainline departures per connecting bank • More Lucrative Uses of Available Aircraft • Merger creates many opportunities for growth in other United hubs requiring the use of aircraft currently being flown in Cleveland. Slide

  11. United Airlines’ Cleveland Hub • Effects on Youngstown/Warren/Sharon • Fewer Nonstop Flight Options • Local travelers will need to connect via another hub more often when using CLE • CLE becomes a less attractive option for flying • YNG No Longer Located Within United’s “Kill Zone” • “Kill Zone” comprises a 75 mile radius around any airline hub • In recent years United has had no success when starting service to airports located with this zone. • Daytona Beach, FL (DAB) – 57 Miles from Orlando Int’l Airport • Palmdale, CA (PMD) - 67 Miles from LAX • Rockford, IL (RFD) – 75 Miles from O’Hare Airport • Stewart/Newburgh, NY (SWF) – 71 Miles from LaGuardia Airport • Demand for Daily YNG Air Service Grows • Passengers will need to connect via a hub when flying from YNG, CLE or PIT Slide

  12. Southwest Airlines’ – AirTran Acquisition • Predictions: AirTran’s Akron/Canton Operations Close • Southwest Grows Its Cleveland Operation • Why? • CAK Operations Will No Longer Be Necessary • CAK is the Low-Fare Less-Congested Alternative to CLE • Southwest will lower fares in CLE and United’s departure will eliminate congestion • Split Operations Are Not Cost Efficient • Southwest’s lowerfares will cut into United’s bottom line • One Man’s Trash Is Another Man’s Treasure • Southwest routinely fills voids left by legacy airlines Slide

  13. Southwest Airlines’ – AirTran Acquisition • Effects on Northeastern Ohio • Fares at CLE Will Fall • Additional service by Southwest will provide lower fares • Alienated CAK Passengers – Where Will They Go? • Not every current CAK passenger is willing to drive to CLE for flights • New air service options to meet this demand will be introduced, either in CAK or YNG • Southwest Will Attract More Leisure Passengers @ CLE • Families from Toledo to Youngstown seeking lower fares and nonstop flights to popular leisure destinations will be more likely to choose CLE • Southwest Will Attract Fewer Business Passengers @ CLE • Without the large assortment of nonstop destinations currently offered by Continental, business travelers will prefer to use the closest airport to their home or business providing a boost to local airports. Slide

  14. Youngstown/Warren/Sharon Air Service Market Slide

  15. Youngstown/Warren/Sharon & Allentown/Bethlehem/Easton Geographically Similar Air Service Markets CLE YNG – CLE 77 Miles 1:15 Drive YNG EWR ABE ABE - EWR 80 Miles 1:33 Drive YNG – PIT 58 Miles 1:03 Drive ABE - PHL 75 Miles 1:25 Drive PIT PHL Slide Source: Driving Directions & Times from Google Maps

  16. Similar Catchment Areas Catchment Area Catchment Area & MSA Overlap MSA Excluded from Catchment Area 25 mi 25 mi 25 km 25 km Slide Source: Air Service Partners 2010 Zip Code Database (based on December 2010 zip code data provided by Datasheer, LLC)

  17. Similar Populations Population Population YNG MSA Population is: 10.3% Larger YNG Catchment Population is: 37.7% Smaller Slide Source: Air Service Partners 2010 Zip Code Database (based on December 2010 zip code data provided by Datasheer, LLC)

  18. Personal Purchasing Power Is Similar Too… Average Personal Purchasing Power Average Personal Purchasing Power YNG MSA Personal Purchasing Power is: 1.9% Smaller YNG Catchment Area Personal Purchasing Power is: 3.5% Smaller Slide Source: Air Service Partners 2010 Zip Code Database (based on December 2010 zip code data provided by Datasheer, LLC) purchasing power - U.S. Census Bureau American Community Survey

  19. YNG Market Should Be 60% the Size of ABE Today % of ABE Market YNG Population is 37.7% Smaller (Chart 23) YNG Personal Purchasing Power is 3.5% Smaller (Chart 24) Slide

  20. If ABE Can Support This Much Airline Service? ABE – YYZ 2 Daily Beech-1900 38 seats Total 2 Daily 38 seats ABE – MCO 2 Daily 717-200 234 seats Total 2 Daily 234 seats ABE – MCO/MYR/PIE 8 Weekly MD-80 150 seats Total 8 Weekly 150 seats ABE – ORD 3 Daily EMB-145 150 seats Total 3 Daily 150 seats ABE – ATL 2 Daily CRJ-200 100 seats ABE – DTW 4 Daily CRJ-200 200 seats Total 6 Daily 300 seats ABE – CLT 1 Daily A319 124 seats 2 Daily CRJ-200 100 seats ABE – PHL 1 Daily Dash-8-200 37 seats 2 Daily Dash-8-300 100 seats 2 Daily CRJ-200 100 seats Total 8 Daily 461 seats ABE – IAD 4 Daily Saab-340 136 seats ABE – ORD 4 Daily EMB-145 200 seats Total 8 Daily 336 seats Grand Total 30 Daily 1,669 Daily Seats Slide Source: Official Airline Guide Schedules for the week of January 10-16, 2011 (American Express SkyGuide – January 2011Edition)

  21. YNG’s Air Service Development Strategy YNG Slide

  22. Top Candidates For Daily Nonstop Hub Service Detroit YNG Chicago (O’Hare) Philadelphia Washington (Dulles) Slide

  23. Hub Service Candidate Airlines Targeted Hub Frequency Aircraft Daily Seats Chicago (O’Hare) 3 Daily EMB-145 150 seats New York (LGA) 1 Daily EMB-145 50 seats Total 4 Daily 200 seats Presently Not A High Priority for American Eagle Detroit 3 Daily CRJ-200 150 seats Total 3 Daily 150 seats Discussions Continue Philadelphia 2 Daily CRJ-200 100 seats Total 2 Daily 100 seats Chicago (O’Hare) 2 Daily EMB-145 100 seats Washington (Dulles) 4 Daily Saab-340 136 seats Total 6 Daily 236 seats Slide

  24. The Investment In Your Community Slide

  25. How Does YNG Land An Airline? • Revenue Guarantees • Money given to an airline to help offset financial losses that may occur during the startup of air service. • Money is given to the airline every quarter when losses are experienced. • Credits are received every quarter excess profits are experienced which are to be used to offset future losses. • Travel Banks • Local businesses pool money to be used for air travel and give it to the airline upfront as a incentive. • As these businesses “purchase” tickets from the airline their pooled money is used as payment until it is completely exhausted. • Incentive Packages • Fee waivers & marketing assistance are now the minimum standards necessary to attract airline service. Slide

  26. The Revenue Guarantee Mechanism Annual Revenue (Millions) This chart does not represent Delta’s actual operating costs or forecasted profits. It’s purpose is to simply show how the program works and what the risk abatement payments represent. Break Even Load Factor Delta Annual Operating Revenue Line Annual Operating Cost Line Revenue Guarantee PaymentsTo Delta Potential Operating Profit Potential Operating Loss Potential Load Factor Range 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% Load Factor Slide

  27. Revenue Guarantees Are An Investment • Sharing the Risk • Airlines Take a Large Financial Risk when Serving a New City • If the service is profitable… The airline makes a little profit • If the service isn’t profitable… The airline suffers big losses • Revenue Guarantees Allow the Community to Take On this Risk • If an airline serves your airport… • The community benefits instantly • The airline might not benefit at all • If an airline doesn’t serve your airport... • There are no benefits to the community • The airline is guaranteed not to lose money • Airlines Don’t Have Many if any Extra Aircraft • Revenue guarantees help your market look more attractive than somewhere the airline currently flies Slide

  28. Revenue Guarantees Are An Investment • Airlines Vs. Public Utilities • What Do We Call Places Without Electricity or Running Water? • The Sticks, Boonies, Backwoods, etc. • Why do we do this? • Electricity & Running Water provide the minimum standard of acceptable modern living • This is not a guarantee it will be profitable for utility that provides it • The Same Can Be Said For Air Service • What air service provides to a community is often far more valuable than any profit the airline can make providing it. • In many cases daily air service is the minimum standard businesses use when deciding the invest in a region. • Revenue Guarantees ensure that this air service is profitable for the airline while ensuring the community can continue to benefit from such a valuable service. Slide

  29. ONLY YOU CAN PROVIDE THE SUPPORT NECESSARY TO BRING DAILY AIRLINE SERVICE TO YNG

  30. Thank You

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