For an airline that only flies small, 19-passenger turboprops, Gulfstream International Airlines has carved out a large niche for itself in Florida, the Bahamas and Cuba. It now ranks 19^th in size among regional carriers in terms of passengers carried; it has over 200 daily departures out of seven Florida cities and five Bahama Island destinations; and it is the second busiest airline in terms of arrivals and departures at Miami International Airport with 175 weekly flights. It also has the highest frequency of any airline flying out of Florida to the Bahamas.

Like many commuter/regional airlines today, Gulfstream began as an air taxi service providing "on-demand" charter services throughout south Florida, Cuba and the Bahamas. The air taxi service was started in 1988 by Thomas L. Cooper, a captain for Eastern Airlines. It was granted permission to start scheduled charter service in 1990, operating under FAR Part 135 rules.

In January 1991, Eastern shut down its operations, and Captain Cooper suddenly found himself without an airline to fly for after almost 30 years.

"When Eastern shutdown, I started Gulfstream International with a single Cessna 402B, flying between Miami and Cap Haitien in Haiti," Cooper said. "Then we picked up some more 402Bs and Cs and expanded into the Bahamas."

By 1993 Gulfstream had expanded to nine Cessna 402s and began to acquire Beechcraft C99s. "We grew to about eight or nine of those, then in 1994 took delivery of the first [Beech] 1900s," he said. As the 1900s arrived, the airline started selling off the 402s, then the C99s. By 1995 it had gotten rid of its last Cessna 402 and had an all turboprop fleet. Today, Gulfstream operates a fleet of 21 Beech 1900Ds. The airline moved up to FAR Part 121 in 1995 under the Federal Aviation Administration's (FAA) "single level of safety" mandate.

In 1994 Gulfstream signed a codeshare agreement with United Airlines and started new service between Tampa, Miami and Nassau. That agreement was followed in 1997 by a codeshare agreement with Continental.

Today Gulfstream's major codeshare partner is Continental, although it still has its agreement with United, as well as codeshare agreements with Northwest and COPA Airlines. All of Gulf-stream's routes now codeshare with Continental, with about 20 percent also codeshared with United and Northwest, Cooper said. The COPA route connects COPA's passengers from Miami to Tampa, Orlando and Nassau.

Gulfstream is one of about six operators certified to fly from the U.S. into Cuba. During his air taxi days, Cooper flew into Cuba on a regular basis and has been involved in the Cuban operation "for about 25 years," he said. "I was the first American to start flying regular scheduled charters to Cuba after the revolution. For a brief period during the Carter administration, travel to Cuba was open for the American public. I had a Friday-Monday-Friday tour there flying DC-3s."

Today, there is a "robust business" between Havana and Miami, primarily for the Cuban-American community in south Florida. "They have humanitarian privileges to go back and visit their families," Cooper said. "And Cubans are allowed to come to the U.S. for visits. It goes both ways." The Cuban-Americans have a general license issued by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC). Any American citizen can apply to the OFAC for permission to visit Cuba, although it is not granted automatically. "You have to qualify and meet certain criteria. Then, even if you have a license from the U.S. government, you still have to get approval from the Cubans," he said.

In 1999 Gulfstream began operating jets, primarily 727s, between Miami and Havana using wet lease agreements with a variety of jet operators. "These included Continental, Mexicana and some local ad hoc jet operators in the Miami area," Cooper said.

In 2001 Cooper was instrumental in solidifying the Cuban market under the Continental banner. Continental now flies 19 scheduled charter flights a week between Miami and Havana, as well as Holguin in the southeast of Cuba and Camaguey in the center of the island. "Continental is doing a robust business there, and we operate five of those flights weekly.

"One of the most curious things about the Cuban operation is that it runs so smoothly," Cooper said "For one thing, Continental does an excellent job. They have put an air of professionalism in the business between Miami and Havana that has not been there since the old pre-revolution days of Pan American World Airways, so it really runs nice."

The second thing "is that the Cubans are very, very easy to work with, including the Cuban government. The people we deal with, oddly enough, are very fond of Americans and bend over backwards to help us. I find it a real treat when I have occasion to go down there and conduct business. It's very enjoyable. They are keenly aware of our laws and never ask me to violate any American laws, and certainly we would never violate any of their laws, so we have a very clean, well-run operation."

Because of his experience in the Cuban operations, Cooper was recently asked to facilitate the transportation of a large number of U.S. businessmen who had received licenses to show their wares at a giant food exhibition in Havana.

"There were over 700 Americans representing 266 U.S. companies during the five-day convention," Cooper said. "It was marvelous. It went off without a hitch. The companies sold millions of dollars worth of products and established business connections between the U.S. and Cuba, all perfectly legal under our laws. We can sell foodstuff there. We just cannot extend credit to the Cubans, so everything that was sold there, and continues to be sold to this day, is done on a 'cash on the barrelhead' basis."

Along with its Cuban operations, Gulfstream serves five destinations in the Bahamas, primarily Freeport on Grand Bahamas and Nassau, along with the "smaller boutique resorts" of Treasure Cay, Marsh Harbour and North Eleuthera.

"In 1999 we purchased Paradise Island Airlines and operated it for about a year," using De Havilland Dash 7s acquired with the airline, Cooper said. "Then the airport was closed at Paradise Island. When we merged the assets of the airlines together, I sold the [Paradise Island] certificate to US Airways a couple of years later." The Dash 7s were sold off after US Airways bought the operating certificate.

Gulfstream currently has two distinct customer bases, Cooper said. "If you look at the Florida market, you'll see that we're primarily a briefcase business traveler market. If you look at the Bahamas, you'll see that we're primarily a leisure market. That gives us an advantage over some other carriers. We operate a heavy schedule throughout Florida between Monday and Friday, then we redeploy many of the aircraft over the weekend to serve the tourist market."

This allows the airline to get full utilization out of the aircraft seven days a week and "drives down our cost per seat mile considerably," he said.

As for moving into larger markets, Cooper said that "from time to time" they will look at the larger markets "and have the internal debates whether bigger is better or whether we should stay where we are and continue to increase frequency." As for larger aircraft, "I suppose one of these days we will take advantage of the used aircraft market and get into something in the 30- to 40-seat range, but right now we are not very serious about that."

Gulfstream is owned by a holding company with stockholders, although all the stock is privately held and not traded. Roughly 90 percent of the stock is held directly by Cooper.

One of the biggest issues facing the airline, "and a challenge we face every day," is the additional passenger weight and baggage requirements recently handed down by the FAA following the recent Air Midwest Beech 1900D crash. Preliminary investigations indicate that the crash resulted from a combination of faulty maintenance and an overloaded/weight and balance problem.

"Although it is not really affecting our passenger loads, we are having to fuel the aircraft more often and are incurring higher costs from fuel. We're having to put fuel on at inopportune stations where the cost is higher. For example, fuel is higher in the Bahamas and we can't put roundtrip fuel on any more. We have to fuel over there and are at the mercy of the local fuelers, so we don't get bulk rates. Also, more often than not, if we run out of weight, we have to charter a smaller aircraft to carry the bags over to some of the islands. That's what I see as one of our major operational challenges right now."

Cooper said that even "in our little corner of the world, Gulfstream is affected by world events," including 9/11. But while 9/11 "impacted us severely, we bounced back pretty quickly," he said. Fortunately, the airline has not been affected as much by SARS (severe acute respiratory syndrome). "Gulfstream is now enjoying one of its better seasons and operating profitably," he added.

"I think the industry bottomed out about six months ago, and we're encouraged that it is on the upswing," Cooper said. "We're also encouraged to see the deliveries of regional jets; it bodes well for our segment of the industry and we are happy to be a part of this industry. The future looks good for us and we look forward to it with great anticipation."

Gulfstream International Airlines

1815 Griffin Road
Suite 400
Dania, Fla. 33004
(954) 266-3000
http://www.gulfstreamair.com

Code Share Agreements:
Continental, United, Northwest, COPA

Fleet: 21 Beech 1900Ds

• President/CEO -- Thomas L. Cooper
• Sr. VP-Legal Affairs - Thomas P. Cooper
• Sr. VP-Administration - Elizabeth Lerner
• Sr. VP-Maintenance - Leo Krupilis
• Sr. VP-Customer Ser. - Roy Canter
• VP/Dir. Flt Oprns - Hugh Mason
• VP-Marketing - Wendy Clements

Statistics: 2002 Jan-May 2003

• RPMs (000) - 113,468 45,926
• ASMs (000) - 181,195 75,643
• Passengers - 6,668,257 255,812
• Departures - 56,996 22,518