AIRCRAFT

The aircraft of primary choice, is the Fairchild Dornier 328 Jet. This aircraft carriers 32 passengers with a full load and is currently operated within the United States for Great Plains Airlines and Wisconsin Air, a regional carrier for United Airlines. Advantages of this aircraft include cost effectiveness, short field capabilities and the ability to service passengers through Executive Terminals rather than the main terminals required by larger capacity aircraft. This advantage allows unhindered passenger access from delays and congestion of the major airports. Negatives are that there are a limited number of Aircraft available with approximately 86 airframes in service and the company is in receivership (in Germany). This aircraft has been used for the cost and profit calculations utilized in this document.

Other options include the Embraer 170 that carries 70-72 passengers (issues include limited quantities of airframes as it came into production in 2002) and the Bae 146-100/200 that carries 70-82 passengers (Many airframes available with 221 manufactured and 25 currently available for sale and others available for lease). Irregardless of which aircraft is chosen for service, there are a number of issues present with operating from Friedman Memorial Airport, Hailey, Idaho, that include runway length, altitude and winter weather.

None of the current competition operate Jet Aircraft that can operate out of Friedman Memorial Airport due to field length and altitude.

Initiation of service is predicated upon the following: Financing the operation, procuring the appropriate licensing, slots and landing rights, aircraft, personnel and seasonallity. It would be unfortunate to begin service during what is known as the slack season, when tourism is at it’s ebb and operations would be solely supported by resident traffic.

MARKET PRESSURES

Market pressures to foster competition are non-existent. The lack of public information as to the performance and profitability of the existing routes has hindered any serious attempts at quantifying the potential of the existing market. The incumbent carriers would prefer to keep it that way. No competition equals greater yields, to a captured populace without alternatives.

TIME TABLES

Time Tables will be established that will allow service to accommodate the primary reasons for travel: Business, Leisure and Vacations. Much of the primary market is considered to be the local business traveler. It is our attention to accommodate these individuals, where it will be possible to travel to the major centers of business, for trips as short as the same day. Leisure activities will be initiated with an emphasis on the ability for the local populace to visit points of interest on demand, for such pastimes as an evening out or shopping. The importance of tourism cannot be denied and will be a seasonal source of income. These individuals will be accommodated through packaging year round activities with the local service providers. The current market data supports up to 20 flights per day during the high season.

TALOA, INC.

Taloa, Inc. will be the corporate entity to manage operations. This corporation is a closely held corporation, incorporated in the state of Delaware in 1997, and domiciled in Ketchum, Idaho. It is the intent of the corporation to raise initial capital through stock sales, warrants and options, that it can use to leverage through local institutions into a capital base sufficient for the organization and commencement of operations, along with reserves as stipulated by FAR Part 135 The government regulations governing the operations of scheduled air service) and prudent business practices.

PRIMARY MARKET

The primary market is the greater Wood River Valley Area (Sun Valley, Ketchum, Hailey, Bellevue and the Sawtooth National Forest). All flights will originate from/to major metropolitan areas throughout the west that are not currently served with direct flights from Friedman Memorial Airport, Hailey, Idaho.

The defined market is under served and under utilized. The incumbent Air Carriers appear to a) consider the market saturated with the current schedules, or b) the expansion of existing routes are not supported by their current business plan, or c) they consider any expansion to be uneconomical.

It is our contention that there is a large portion of the market that is under served and that there does exist a financial reward great enough to warrant further investigation. Of the 134,680 passengers that arrived by air to the Wood River Valley during the year of 2000, only 61,442 arrived at the Friedman Airport in Hailey, Idaho. The remainder of these arrived through either 1) Boise (150 miles), or 2) Twin Falls (80 miles). Transfers to the Wood River Valley were accommodated through other means, principally Scheduled Bus Service, Rental Cars or personal means of transportation.

The Air Service in to Friedman Airport represents a monopoly. The two incumbent carriers, Horizon and Sky West, serve two different markets and do not compete on the existing routes. This lack of competition allows them to set the market price, with complete disregard for the consumer. Routes such as Friedman Memorial Airport (SUN), Hailey, Idaho, offset the lower revenues resulting from the markets where healthy competitive forces exist.

Without a competitive Air Transport system serving the area, local commerce suffers. Bleed off to competing markets that are better served, gain market share and tourist dollars. Examples of this would include the resort areas of Colorado (Vail, Steamboat Springs, etc.), New Mexico (Santa Fe), Utah (Park City) and Wyoming (Jackson Hole). Clearly without adequate Air Service, the economy cannot grow and flourish at the rate that it deserves. Primary Industries (activities that bring capital and cash into the market place from without) allow expansion of the local economy, without the necessity of uncontrolled or unwanted growth to accommodate the local populace and work force.

TALOA intends to serve all of the major markets within the Western United States with convenient consistent service.

These Markets include the cities/areas of San Francisco/San Jose/Oakland, Phoenix, San Diego/Orange County, Los Angeles/Ontario/Burbank, Boise, Portland and Las Vegas. Seattle/Tacoma, WA and Salt Lake City, UT are currently served by Horizon Air and Sky West respectively.

Time tables will be arranged to best accommodate the local populace to support their business and leisure activities, as well as the visitors to maximize their time within the greater Wood River Valley area.

OPERATIONS

As soon as primary financing is secured, TALOA will obtain the required certificates, permissions, landing rights, aircraft and operational facilities require to begin operations. As an option to filing for a Part 135 Certificate, TALOA may opt to purchase a small regional carrier to obtain operating rights by prescription. Regulatory requirements include certain key positions be filled by professional staff including, Chief Pilot, Chief of Operations and Chief of Maintenance. Monetary requirements are 6 months of financial reserves.

Vendors will be utilized to minimize the cost and time of building infrastructure within the company. Such services may include Gate Personnel, Reservations Personnel, Baggage Service, Catering, De Icing Service, Maintenance, Fuel, Aircraft, Scheduling and Aircrews. Each service and/or vendor will be defined by a) economic benefit to the corporation from a cash flow basis, b) economic benefit to the corporation from an equity perspective, and c) economic benefit to the community and it’s core business members.

Operations will be based out of Friedman Memorial Airport, Hailey, Idaho, space permitting. There currently is a hangar for sale that would accommodate an operation of the size and breath that is contemplated. As many employment opportunities as possible will be offered to the local populace, with those requiring expertise not in evidence in the Valley going to those most qualified, with a desire to build a world class operation in a world class environment.

INVESTOR RETURNS

Investor returns will include monetary benefit estimated to be 12-15% ROI and travel benefits.

TALOA QUALIFICATIONS

During the heydays after the Second World War there were over 2,000 airlines founded by Air Force and Air Transport Command veterans. The vast majority of these entities were unable to become established and compete in the regulated world of the CAB (Governing body of that time, the Civil Aeronautics Board), the governing body of the time. Transocean Air Lines (cable address TALOA) was one of the few. Operating from 1946-1961 and founded by Orivis Nelson, Transocean had operations and relationships worldwide. Tansocean was instrumental in the startup and managed or owned interests in Philippine Air Lines, Japan Airlines, Lufthansa, Pak Air, Air Djibouti, Saudi Arabian Airlines and many other aircarriers and aviation related activities. Taloa operated close to 150 aircraft and employed more than 5,000 employees.

Taloa ceased operation in 1961 due to CAB restrictions on its authorities and competitive pressures with the dawn of the jet age.

Taloa was instrumental in paving the way for the low cost airline model, allowing for the formation of such airlines as Southwest, Air Trans and Jet Blue. Many of the "Grandfathered" Airlines such as United and American have followed suit and created subsidiaries to compete within these economic models (United Express and American Eagle). These carriers are considered "B Scale" carriers, or carriers that do not have the restrictions imposed on them by seniority systems, unions and archaic debt structures.

Taloa has been the subject of a number of books written by editors of the Saturday Evening Post, curators of The Smithsonian Air Museum and currently by a professor from one of the leading Aviation colleges in the United States.

Jeffrey Nelson is President of Taloa, Inc. and son of Orvis Nelson, founder and President of Transocean Air Lines. As a second generation "Taloan", he grew up in the world of aviation. Jeffrey currently is the Chairman of the Taloa Alumni Association and counts on this august body for support and operational expertise and has more than 20 years of Management experience with Private and Public companies. Jeffrey holds a Private Pilots License.

LOCATION

The Greater Wood River Valley encompasses the cities of Sun Valley, Ketchum, Hailey and Bellevue, Idaho. A year round resort area, the primary attractions are winter sports with the ski areas of Sun Valley, Dollar and Roto Run, cross country skiing trails from Galena Pass to Bellevue, Snow Mobiling, Ice Skating and a myriad of other winter sports. Summer time pursuits include golf, hiking, fishing, river rafting, biking, hunting and many others. Year round there are cultural events including the symphony, drama and arts on a continual basis. With the largest non-motorized parade in the United States, Wagon Days recreates the glory of times past. All in all there is something for every visitor.

The Airport Catchment Area (ACA) is estimated at 19,982 people and includes the populations of Bellevue, Hailey, Ketchum, Sun Valley, the remainder of Blaine and Camas Counties. Additional draw is expected from the surrounding cities of Idaho Falls, Pocatello and Twin Falls, Cities currently served by Sky West with connections to Salt Lake City, UT.

Weather is beautiful through out the year with each season as glorious as the last. Summer highs are in the mid 80’s to the occasional low 90’s. Fall brings the change of colors and occasional snow showers. Winter arrives mid to late November with the first snows that build to an average depth of xxx inches per year. The snows begin to melt as spring arrives in late March or early April. The trees begin to bud and the grass greens up and begin again the summer season.

The area was founded by emigrants looking to tap the wealth of the high dry meadows, ample water and mineral wealth contained in the broken peaks that surround the valley. Many of the early mines remain, allowing a glimpse of the glory that was the Triumph mine and many others. Through out the valley floor there are a number of the old ranches, still operating, raising hay, cattle and horses. Traditions begun by the Basque sheepherders in the early days continue, as herds of sheep are passed through the valley in the spring for the highlands and return in the fall with the celebration of the Running of the Sheep.

Early in the last century, the ideal location to locate America’s first downhill skiing resort was sought. A combination of fair weather, blue skies, deep dry snow and lower altitudes were the criteria. With most of the valley between 5,000 and 6,000 feet, the ideal location was found, one that did not have the discomforts of altitude sickness of the higher areas in the Rockies. The first chair lift was designed and adapted for use in the valley, and remains of it can still be seen on Proctor Hill. Today, the Wood River Valley is home too many former and surely many soon to be Olympians.

Golfing is a major activity through out the summer months with courses such as Sun Valley, Bigwood, Valley Club, Elkhorn and many others with meticulously maintained fairways and greens.

Fishing in the area includes the pursuit of many species of Trout, including Steelhead Trout in the Salmon River Valley just over Galena Pass in the Sawtooth Wilderness Area. The Wood River, Lost River and the world re-known Silver Creek provide a variety of experiences for the novice and experienced angler.

Hiking trails abound throughout the valley and surrounding mountains. From strolls along the paved walking/bike paths to strenuous hikes to the top of Hyndman Peak, the terrain allows the enthusiast to pick their pleasure. In the mountains, glades of Tamarack and Spruce frame the silvery movements of the Aspens and Red Willows. Game is abundant with local herds of Elk, visible in the valleys and mountain slopes.