APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET DOT-OST-2014-0133 SUMMARY INFORMATION 1 All applicants must submit this Summary Information schedule, as the application coversheet, a completed standard form SF424 and the full application proposal on www.grants.gov. For your preparation convenience, this Summary Information schedule is located at http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/SCASDP A. PROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER, INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN) OR TAX ID. Legal Sponsor Name: Name of Signatory Party for Legal Sponsor: DUNS Number: EIN/Tax ID: B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING: 1.____________________________________________________ 2.____________________________________________________ 3.____________________________________________________ 4.____________________________________________________ C. PROVIDE THE FULL AIRPORT NAME AND 3-LETTER IATA AIRPORT CODE FOR THE APPLICANT(S) AIRPORT(S) (ONLY PROVIDE CODES FOR THE AIRPORT(S) THAT ARE ACTUALLY SEEKING SERVICE). 1. 2. 3. 4. 1 Note that the Summary Information does not count against the 20-page limit of the SCASDP application.
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APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM
DOCKET DOT-OST-2014-0133
SUMMARY INFORMATION1
All applicants must submit this Summary Information schedule, as the application coversheet, a completed standard form SF424 and the full application proposal on
www.grants.gov.
For your preparation convenience, this Summary Information schedule is located at http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/SCASDP
A. PROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL
NUMBERING SYSTEM (DUNS) NUMBER, INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER
(EIN) OR TAX ID.
Legal Sponsor Name:
Name of Signatory Party for Legal Sponsor:
DUNS Number:
EIN/Tax ID:
B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING:
D. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING
ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.
1. 2.
3. 4.
E. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)
Not a Consortium Interstate Consortium Intrastate Consortium
Community currently receives subsidized Essential Air Service
Community (or Consortium member) previously received a Small Community Air Service Development Program Grant
If previous recipient: Provide year of grant(s):_______________________________; and, the text of the grant agreement section(s) setting forth the scope of the grant project: _________________________________________________________________________ _________________________________________________________________________
New Grants.gov users must register with www.grants.gov. Existing Grants.gov users must verify existing www.grants.gov account has not expired and the Authorized Organization Representative (AOR) is current.
For Submission by 5:00 PM EDT on July 31, 2014
Communities with active SCASDP grants: notify DOT/X50 of intent to terminate existing grant in order to be eligible for selection in FY2014
Complete Application for Federal Domestic Assistance (SF424) via www.grants.gov
Summary Information schedule complete and used as cover sheet (see Appendix B)
Application of up to 20 one-sided pages (excluding any letters from the community or an air carrier showing support for the application), to include:
• A description of the community’s air service needs or deficiencies.
• A strategic plan for meeting those needs under the Small Community Program.
• A detailed description of the funding necessary for implementation of the community's project.
• An explanation of how the proposed project differs from any previous projects for which the community received SCASDP funds (if applicable).
• Designation of a legal sponsor responsible for administering the program.
• A motion for confidential treatment (if applicable) – see Appendix D below.
Proposal under the Small Community Air Service Development Grant Program
Golden Triangle Regional Airport Under 49 U.S.C. 41743 et seg
DUNS # 075457010
Congressional District # MS-01
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Table of Contents
SUMMARY OF PROPOSAL 3
The Proposed Solution 4
INTRODUCTION: THE GOLDEN TRIANGLE MARKET 7
Circuitous Routings = Higher Fares 10
Sizing The Traffic Loss 12
THE GRANT SOLUTION 13
The Market Is Ready - And Will Be Profitable 13
GRANT ADMINISTRATION PLAN 15
General Application of Grant Funding 15
Carrier Negotiations & Agreement 15
Program Fund Allocation 16
Marketing & Advertising Support 17
Post-Grant Support 17
SUMMARY OF APPLICATION 19
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Summary of Proposal
Golden Triangle Regional Airport (GTR) serves a wide region, including Columbus, Starkville, and West Point, comprising a population area in excess of 220,000. Over the past decade, Golden Triangle Regional Airport has become the gateway and the center of $5.5 billion in major industrial development and investment. This includes:
• Mississippi State University: Located approximately 14 miles west of Golden
Triangle Regional Airport, Mississippi State University has over 20,000 students
enrolled and over 1,200 faculty members. Growing relationships with points in Asia. • Airbus Helicopters:. Over 400 employees and headquarters in the DFW Metroplex.,
plus strong traffic generation to Asia and Latin America. • PACCAR: Manufacturer of Peterbilt and Kenworth trucks. The firm has major
facilities in the DFW Metroplex as well as in the Northwest US. Because of the
extensive back-tracking over ATL, and the higher fares attendant to this routing, this major industry faces significant travel constrictions.
• Severstal International: Russian owned company, with over 650 employees at
Columbus, MS location. Total investment in region is $1.8 billion. Growing Asian business relationships.
• Aurora Flight Sciences: Global Aerospace defense contractor that designs and
produces Unmanned Aerial Vehicles. US headquarters in Washington, DC, with ties to Dallas market driven by Gulfstream production
• Yokohama: Tire company building a $1.2 billion dollar facility. Very strong Tokyo & Osaka traffic potential.
These expansions have outstripped the levels of air service at GTR. Most cogently, this economic growth is now threatened by three air service deficiencies:
GTR capacity today is 31.4% below the levels in 2004 – over 100,000 arriving and departing seats annually.1
There is no direct westbound access to and from GTR. All travel to points in the Western United States requires lengthy – and expensive – back tracking connections over Atlanta.
Current fares – based on nonstop mileage to key destinations, are between 18% and 20% higher than competing airports that have omni-directional connectivity over multiple hubs.
Today, despite the influx of this global business, GTR market has only three daily flights – totaling only 150 seats each way – to the Delta hub at Atlanta. Because capacity has
1 Source: airline schedules filed for year 2004 v year 1014.
Due to mergers & airline consolidation, GTR now
finds itself with insufficient air service to
support its growing global-based economy
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not matched the explosion in the region’s global economic expansion, these flights tend to be full and result in both spillage of traffic, as well as high fares. Meetings with Delta to increase service to ATL have been unsuccessful, as the carrier claims to have a shortage of available lift. But even with more capacity to ATL, the GTR market will still have the major air service deficiency of no consumer-convenient access from the Western United States, which is where most of the new industries in the region have the majority of their business. This is the challenge which represents a growing and economically-threatening air service deficiency. Because of mergers, cutbacks in fleets and changes in airline strategies, GTR today is connected to the globe via a very thin and tenuous three flights per day to Atlanta. This makes access to and from the US west a very time-consuming back-track process. It also leaves the region with only one airline system – Delta. Discussions have been held with carrier systems that have the ability to address this set of deficiencies – lack of capacity and lack of westbound access. However, risk-abatements that will be necessary far outstrip the ability of the community to raise such funding. It is here where the grant will be necessary.
The Proposed Solution This situation is specifically what the Small Community Air Service Development Program was created to address. GTR and the region it serves today require additional air service access to satisfy, support, and maintain the economic growth that this region of Mississippi has experienced. To that end, the Airport and community are requesting a grant in the amount of $750,000, with a substantial local match, to recruit service to a westbound air gateway. This would be branded service on the American system to Dallas/Ft.Worth International, the United system to Houston Intercontinental, or the United system to Denver. A minimum of two daily round-trip flights are the goal.2 The grant funds will be matched by $500,000 in local cash (for a total of $1.25 million) plus fees and waivers representing another $200,000 of in-kind support. Of the total funding – DOT and local match, $50,000 is intended for hard marketing of the service, with the remainder being in reserve within a risk-offset mechanism. As shown in this document, the very high demand represents a low risk for the grant funding. This Grant Is Designed To Provide Immediate Results
The traffic demand is in place. The higher fares and lack of air service access that the SCASD program is in place to alleviate are material. This grant will allow the airport to
2 As the Department knows, the American and United brands consist of a combination of certificated carriers, such as ExpressJet, Mesa, Piedmont, Air Wisconsin, TranStates, Chautauqua, SkyWest, Envoy, GoJet and Republic, which operate significant portions of the AA and UA systems. In this proposal, one of these certificated carriers will be the likely operator, and the targeted recipient of the revenue risk-offset proposed.
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continue to grow. In the absence of this assistance, this region of Mississippi will see stagnation of economic investment in the future. The grant requested will successfully accomplish the following:
Resolve Clear Air Service Deficiencies. The grant herein will allow GTR to
recruit service to a major westbound air service gateway. Specifically, the aim is the American Airlines hub at DFW, the United Airlines hub at Denver, or the United Airlines hub at Houston Intercontinental. All of these would represent fundamental relief from the current air service deficiency.
Engender New Investment. GTR is the site of substantial investment by
companies such as Airbus Helicopter, with large facilities in Texas. Expansion of their GTR facilities will be dependent on air service access to the West, without the necessity of a four-hour (at minimum) back-track over Atlanta.
The Golden Triangle community has worked tirelessly to attract and retain business partners over the last several years. These businesses provide a boon to the local economy, offering good paying jobs and benefits for the local residents. The air service that this grant will engender will allow these companies reassurance that their decisions to establish a presence in the GTR region was the correct one. Need For Grant Support The Department is well aware of the current difficult situation in the airline industry. Carriers today seek to avoid risk, and that includes situations that involve initiation of new service, even in markets where the traffic demand is high and the potential for success great. Today, in light of the enormous financial challenges facing the airline industry, some form of economic risk-reduction must be in place to attract new service such as that which is proposed in this document. Preliminary discussions with the carriers have made clear that such would be necessary to attract this service. The Risk-Abatement Program The Airport and Community plan to apply $1.2 million of the total program cash toward a clearly-defined and agreed-upon revenue guarantee program for the first year of the proposed service. The remaining $50,000 will be in the form of a well-targeted marketing program within the GTR air service region. It is noted that westbound access is not service that needs to
US Airline fleets are not expanding in total
numbers of aircraft. Therefore, GTR will need
strong financial incentives to resolve this
air service deficiency.
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be strongly promoted – the local industries currently have strong demand for efficient westbound access, and the new service will see rapid traffic build. The revenue guarantee will be drawn upon only if reasonable, pre-determined traffic and revenue generation goals are not met. At the end of the 12-month period any DOT revenue-guarantee funds not used will be relinquished to the Department. The community believes that this request fills both the intent and the spirit of Congress in implementing this program. The community has a pressing air service deficiency that drives fares higher than competing airports, and is threatening to slow the strong economic growth in the Golden Triangle region. The unique community enthusiasm for business development that will support this new service is showcased by the growing investment in the region by diverse manufacturing companies such as Severstal Steel, Weyerhaeuser Corporation Printing Paper, Airbus Helicopter, PACCAR, and Baldor Electric Company. These companies, and ones like them, have many options as to where to establish facilities. The fact that they did so in the Golden Triangle region speaks volumes about their vision for the future in the area, and increased air service would certainly reinforce those expectations. Grant Administration This application is submitted by the Golden Triangle Regional Airport Authority and will be the organization responsible for the administration of the grant funds. The community support for this application is broad and encompasses the entire business base of the region. Project Sponsors & Community Partner The official sponsor of this project is the Golden Triangle Regional Airport Authority. The community partnership will be directed by the Columbus-Lowndes Community Development LINK The community and the Airport appreciate the time and efforts of the Department in reviewing this application, and look forward to a favorable decision. Please direct any correspondence regarding this matter to: Mr. Michael P. Hainsey Executive Director Golden Triangle Regional Airport 2080 Airport Road Columbus, Mississippi 39701 662-327-4422
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Introduction: The Golden Triangle Market The Golden Triangle catchment area comprises all or parts of 12 counties, with a population base of approximately 220,000 people. Golden Triangle’s stature as a developing commercial and industrial center is strengthened by its location at the junction of two major Interstate highway arteries. From an air service perspective, however, these highways facilitate access to Jackson, Birmingham, and even now-“dehubbed” Memphis, where lower fares and nonstop service to both DFW and IAH are still in place. This grant will substantially reduce that leakage and allow for more convenient service for the GTR market area.
The western US business travel base at GTR is sensitive to the fact that traveling through Atlanta to connect to points west is a major inconvenience and drain on valuable time. The additional alternative access to the DFW, DEN or IAH hub will be a major upgrade to address this deficiency.
Golden Triangle: The Case for Westbound Service
Given the economic development in the GTR region, the need for westbound connectivity – which this grant will make possible - is of the utmost importance to the
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economic future of Mississippi. The following entities have difficulty in expanding and attracting new business with the current air service, which requires expensive back-haul flying over Atlanta.
While the Delta service to Atlanta has excellent connectivity to the east coast and Europe, the route leaves a major deficiency in access to the western US. PACCAR, a truck manufacturer, has extensive operations in the US Northwest, with its Kenworth and Peterbilt factories. Airbus Helicopters has major facilities and their headquarters in the DFW region. Yokohama, a global tire manufacturer is building a plant in the GTR region, and access to and from Asia and Japan is now limited to the 50-seat Delta flights that are not only typically booked full, but involve substantially more travel time and expense than accessing connecting opportunities from DFW, IAH, or DEN. A factor often not fully recognized is the competitive situation among major universities such as Mississippi State. MSU competes nationally and globally for the best staff, research teams, and students. The difficulty in accessing GTR puts this top-tier center of learning at a major disadvantage.
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GTR Today Is Only “Half Served” Today, the need for US and global access for GTR is more critical than ever. The growth in the local economic and industrial base represents demand for service across the nation and to international points as well. Much of the industrial growth has been with companies with roots in the EU. The current Delta service – at a bare-bones three daily 50-seat RJ flights – only partially addresses this need. However, the community is partially cut off from the nation west of the Mississippi by virtue of lack of access to a western airline hub gateway. The result is that western access to and from GTR involves substantially more flying –at least six hours per round trip in additional travel time.3
For example, the flying travel distance today between GTR and DFW (where there is substantial demand from PACCAR and Airbus Helicopter, among others) is almost 50% more than a nonstop flight would be to American’s DFW hub. Access to Houston represents 60% more flying.
3 This is 1.2 hours to Atlanta, at least one hour for connect time, and retracing the miles west.
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Circuitous Routings = Higher Fares Because the current and deficient air service requires consumers to and from the Western United States to connect over ATL and then backtrack, the total miles flown are much higher than at other airports with more adequate access. Therefore, when we compare GTR to other regional airports, based on the fares per mile based on the nonstop great-circle distance, it is apparent that GTR has materially higher costs of air travel.
Because of the air service deficiency at GTR, consumers suffer much higher airfares that at other airports in the region. A review of the average one-way fare paid at GTR v other points in the region underscores this:4
4 Full Year 2013, fares reported to DOT, and expressed as one-way averages, including federal fees and taxes.
GPT HSV
$314.19 $259.58 $245.13 $273.45 $302.90
$ Variance: $54.61 $69.06 $40.75 $11.29
GTR Percent Premium 21.0% 28.2% 14.9% 3.7%
GTR JAN BHM
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It is noted that the average one-way fare paid at GTR in 2013 was even higher than Huntsville, which is often reported by the media as having among the highest fares in the nation. To key western destinations, particularly some that have strong current or growing business ties with the GTR region, the variance in average fares paid by consumers is often astronomically higher than the averages shown above. Reviewing average one-way fares paid in 2013, including taxes and federal fees, it is clear that the lack of direct access to the west is resulting in higher travel costs and depressed demand.5
Note that two key destinations that have strong military-related communities of interest with Columbus Air Force Base – Colorado Springs and San Antonio – have very wide fare disparity with Jackson. The Airport and the community would respectfully submit that these data clearly demonstrate the air service challenge that Golden Triangle Regional Airport is facing, particularly as it continues to compete for industrial investment in the area.
5 Average one-way fares paid, including federal fees and taxes for full year 2010. Source: DB1B data analyzed by Aviation DataMiner.
Percent
Market AVG Fare AVG Fare Variance
DFW $271.04 $200.63 35.1%
IAH $328.71 $179.00 83.6%
LAX $386.30 $340.53 13.4%
DEN $310.43 $268.74 15.5%
SFO $395.45 $342.64 15.4%
SEA $429.71 $348.38 23.3%
SAN $400.97 $338.03 18.6%
SAT $350.75 $237.33 47.8%
AUS $326.05 $220.10 48.1%
ELP $382.04 $324.75 17.6%
OKC $307.13 $245.63 25.0%
COS $708.98 $256.91 176.0%
HNL $666.81 $544.45 22.5%
GTR JAN
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Sizing The Traffic Loss To size the loss in traffic demand that this grant can help recapture, key destinations in the western US to/from JAN/GTR region were listed, based on year 2013 traffic.
This was then related to the passengers-to-population for each airport:
Without question, GTR is not capturing the westbound traffic it is now generating. Service to DFW, DEN or IAH, as outlined in this application, will not only capture this traffic, but can also stimulate new traffic demand. (Note that the analysis covers only the largest western destinations.)
GTR JAN Region
Market O&D O&D TOTAL PSGR
DEN 1,549 22,608 24,157
HOU/IAH 1,510 121,155 122,665
DFW 1,358 54,382 55,740
LAS 1,112 19,532 20,644
LAX 1,373 27,844 29,217
SAN 846 10,917 11,763
SAT 1,142 15,368 16,510
SEA 1,913 12,589 14,503
SFO 1,292 13,300 14,592
SJC 226 3,630 3,856
SLC 882 8,335 9,216
SMF 469 5,758 6,228
SNA 587 6,687 7,274
Total 14,260 322,105 336,365
JAN Estimated Catchment Population 629,000
GTR Estimated Catchment Population 220,000
Total Region Population 849,000
Jackson - Western US O&D - Key Markets 322,105
GTR - Western US O&D - Key Markets 14,260
Total Western O&D - Key Western Cities 336,365
Ratio of Western O&D to Population 0.40
GTR Population - Est. Generation To Key Cities 87,162
Current GTR Capture (2013) 14,260
GTR Lost Traffic Due Lack of WB Service 72,902
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The Grant Solution In the new consolidated airline industry, there are only a limited number of gateway options open to GTR in regard to attaining westbound access. These are the branded systems of United/DEN, United/IAH, and American/DFW.
Any of these three access gateways would satisfy the current air service deficiency at GTR, and open the region to new economic opportunities in the Western United States. In this proposal, data for access to DFW are show as examples of the very high potential for this service to be successful. A pattern of two daily round-trip flights with 50-seat jet airliners is the baseline service level proposed.
The Market Is Ready - And Will Be Profitable Based on leakage reviews shown in the prior section, GTR today is losing at least 72,000 annual O&D passengers due to the lack of efficient access to and from the Western United States. GTR-DFW represents a huge opportunity not only for the region, but for the American Airlines system. To be conservative, the GTR projections were based on the known and established DFW service operated by American Airlines from much larger Jackson. Adjustments were made for market size and the longer length of haul to DFW. Traffic projections were then adjusted to assume an 80% capture rate. No adjustment was made for expected market stimulation due to the entry of nonstop flights, nor the expected levels of new Asian traffic generated by Yokohama Tire.
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In addition, no adjustment was made for the expected major increase in Asian traffic demand with the completion of the Yokohama Tire factory.
These data are very conservative, and are clear indications that the grant dollars invested in GTR will not only provide a strong increase in air service, but will do so at very low risk to the DOT. Analyses of United/IAH produced a similar result. United/DEN is also a potentiality, but the longer stage length makes it more problematic.
GTR - DFW Mileage 491
Local GTR-DFW Yield $0.4344
Connecting Traffic Yield $0.1537
Avg Beyond DFW Segment Miles 901
Equipment CRJ-200
Service Pattern 2x Daily
Annual Segments 1,431
Completion Factor 98.0%
Annual Seats 71,540
Annual ASM 35,126,140
Estimated CASM 0.185
Estimated Route Cost - Annually $6,498,336
Traffic Revenue
Local Traffic & Revenue 15,118 $3,224,230
Flow Traffic & Revenue 39,944 $5,591,300
Onboard Traffic & System Revenue 55,062 $8,815,530
Full Year Segment Projected Operating Profit $2,317,194
Segment RPMs 27,035,426
Segment Load Factor 77.0%
Proforma Projection
Projected Operational Statisitcs
Traffic & Revenue Summary
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Grant Administration Plan
General Application of Grant Funding The grant requested in this application will be applied only to provide assurances regarding the levels of revenue the target airline will attain, based on reasonable, pre-negotiated passenger projections. Fundamentally, this is not a subsidy – if the revenue targets are met, no funds will be due the carrier. The program will simply provide a safety net to offset the airline’s legitimate initial risks in opening a new nonstop market. This approach has been used successfully at a number of other small airports with the assistance of SCASD program grants. It will also be successful at Golden Triangle Regional Airport.
Carrier Negotiations & Agreement Upon grant award, the Airport will initiate negotiations with the specific operating carriers within the American or United systems. The Airport will propose the following, with the final agreement subject to Department approval:
Provision for two daily (reduced week-end) frequencies, timed to connect with the carrier systems’ flight banks at the connecting hub – American’s system at DFW, United’s system at Denver, or United’s system at IAH;
A pre-agreed per-segment cost for the operation. This will include a fuel factor (escalator and deflator) and will be based on historical published costs for E-Jet, ERJ (or CRJ) aircraft, and will vary depending on the specific operator. The cost will include a reasonable profit hurdle to be agreed upon.
It is noted that there is considerable current and pent-up demand for the access
that the grant-supported service will provide. Therefore, the risk-offset will be for one year only.
Reliability will be crucial to the success of the service. Therefore, strict schedule
performance standards will be 98% controllable flight completion, 95% on-time (w/in 15 minutes of schedule) arrivals, based on airline-controllable factors.
The agreement will contain stipulations on reasonable pricing and availability of
discount seat inventories on the flights. The Airport will require the airline to provide updates regarding pricing and availability on the route to assure that fares approximate those in similar markets operated by the airline.
Airline operational and revenue performance will monitored monthly and reported to DOT on a quarterly basis. The final accounting of any revenue support will be made at the end of the 12-month period.
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Determination of any risk-offset dollars owed to the airline will be made at the end of the grant period, adjusted for any service failures. In no case will the carrier be due more than the total of the revenue support portion of the program.
The Airport will not make any agreement without the Department’s review and approval. The Airport will provide the Department with a complete summary of the revenue support agreement that is consummated with the air carrier that will operate the route. The Airport will provide the Department with a progress report on the revenue support program on a quarterly basis, or as the Department may otherwise specify.
Program Fund Allocation The program is intended primarily provide a revenue guarantee to reduce the carrier’s initial risk in entering and building the GTR market. In addition, there will be a local marketing effort that will engender local awareness and support for the new service.
In addition, the new service will qualify under the airport’s air service enhancement program, and will represent approximately $200,000 in in-kind and fee waivers, which are in line with the FAA’s restrictions and policies on incentive programs. Support – Negotiations & Related Activities Promptly upon approval of this application, GTR staff will initiate negotiations with the target carrier systems. These will include clear cost and revenue goals agreed-upon in advance. The proposed flight schedule will be reviewed for connectivity. The Airport will have the option of cancelling the program with sufficient notice to the carrier should the traffic and revenue not build sufficiently during the 12-month period. Revenue Guarantee Component The target carrier would be required to provide a minimum of two round-trip flights daily, using at minimum 50-seat jets. The program would establish strict standards, including a schedule completion requirement of 98%, ex-weather. The revenue guarantee will be structured based on projected local traffic as well as a mechanism for credit for beyond-hub revenues generated by the new service. With the
Application Grant Funds Local Match Total
Risk-Abatement $720,000 $480,000 $1,200,000
Marketing $30,000 $20,000 $50,000
Totals $750,000 $500,000 $1,250,000
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agreement of the Department, GTR would propose a structure similar to that used successfully at other airports that have built service with grant-funded revenue off-set. Minimum revenue goals will be established, and monitored monthly. Any variance would be computed at the end of the grant period. Based upon the traffic projections completed by the Airport, it is expected that the market will attain self-sufficiency in a reasonably quick period. The community would agree to relinquish any unused grant funds back to the Department after 12 months from start of service.
Marketing & Advertising Support The Community intends to implement an aggressive targeted program of advertising and marketing to assure that the new service builds traffic quickly and with minimum draw on the revenue guarantee. These will include:
Pre-Operations Support: It is critical that the community be made aware of the new service, but within a reasonable timeframe before it begins. As illustrated in the data herein, it is believed that the ramp period to economically-viable bookings will be short, but the local print and electronic media will be used to promote the service with a blitz 30-day before the first flight.6
Civic Contact: Community groups will be tapped to allow Airport staff to present the new service at key membership functions.
Airport Events: In conjunction with the target carrier, events at Golden triangle
Regional Airport will be planned to raise the profile of both the new service as well as the incumbent Delta service to Atlanta
Post-Grant Support Golden Triangle Regional Airport has an aggressive marketing program focused on the new emerging industries establishing facilities in the region. Direct contact with travel departments at important businesses such as Airbus Helicopter, PACCAR, and others will assure that ridership remains strong after the 12-month grant period. In addition, the Airport and community have resources to market the service within the region. Because the majority of the passenger traffic is expected to be business-driven, the Airport will continually work with the target airline to assure that the carrier’s marketing is well-focused on the key corporations that have facilities in this region of Mississippi.
6 Booking decisions are now made very close to travel date. A media blitz earlier than 30 days will not be fully effective.
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Past Air Service Development Activities The airport and the community have worked very hard to retain existing service and recruit new carriers to the market. In the very tough environment of the past five years, it has been a very difficult challenge. On a routine basis, the Airport has meetings with incumbent Delta, as well as with target new entrant carriers. As the Department is aware, however, the pull-down of hubbing levels at STL, CVG, and most recently, MEM, CLE and CVG has resulted in much-reduced opportunities to attract new service.
Prior Grant Applications The Golden Triangle Regional Airport was awarded a grant in year 2007 which was for a risk-abatement program specifically to attract a second carrier to the airport. After grant award, the Department allowed the grant to be used to underwrite additional incumbent Northwest/Delta service. The service was a success in a very short period of less than a year. It was discontinued, however, when Delta reduced and ultimately eliminated the former Northwest hub at Memphis, as a result of its merger with that carrier. This current application is different in goal and in intent. The influx of new businesses to the region in the past five years has created a pressing need for access to points in Texas and the Northwest US, as well as for points in the West
The Grant Will Create Competitive Balance Golden Triangle Regional Airport is now served by only one airline system, and only to one of that carrier’s connecting hubs. While the community is grateful for this air service, there is a greater need for the business community as well as the leisure travelers. The extensive economic growth and the expectation of future growth demands enhanced connectivity to the west, and DFW or IAH support that connectivity. Healthy competition among airline systems will help reduce fares, add greater route efficiency, and allow the consumer to make more than just one choice when going on a business trip or a vacation. The Golden Triangle Regional Airport Authority would respectfully submit that the Small Community Air Service Development Grant Program was designed to address this type of situation. It is further noted that the grant will result in materially-improved air service, with minimal risk to the scarce funds allocated by Congress to this program.
Proposal of Golden Triangle Airport 2014 Small Community Air Service Development Grant Program
Docket DOT-OST-2014-0113 Page 19
Summary of Application The Golden Triangle Regional Airport Authority believes that this application is consistent with the goals of the Small Community Air Service Development Grant Program.
It addresses a demonstrable air service deficiency – lack of western connectivity and high fares that are causing substantial leakage and lost economic impact.
It will open an entire region of Mississippi to the Western United States.
It will foster goodwill with the business community that the region has
worked so hard to build up over the last several years. The business community needs easy, affordable access to the western US.
It will help to bring fare discipline to the GTR market. In 2013, consumers
at GTR actually paid on average 21% more than consumers at nearby Jackson, (to some western destinations, as much as 80% more) resulting in significant leakage and lost economic impact to the Golden Triangle region.
Based on these data, the Airport would ask the department for favorable consideration to this application.
August 1, 2014
Brooke Chapman Associate Director Small Community Air Service Department Office of Aviation Analysis U.S. Department of Transportation 1200 New Jersey Ave., SE Washington, DC 20590 Room W86-307 Dear Ms. Chapman, On behalf of Mississippi State University, I am writing in support of the Small Community Air Service Grant application that has been submitted by the Golden Triangle Regional Airport (GTR). The purpose of the airport’s application is to address air service deficiencies and increase access to the national transportation system for the region. Specifically, the grant proposal addresses the lack of available capacity to/from the western United States. As an organization who utilizes GTR as its primary airport for travel purposes, we support additional capacity and an increase in nonstop destinations for the greater GTR community. We also believe that increased capacity and a new destination will allow for healthy competition among carriers at GTR. Mississippi State University is the largest user of the GTR airport, and has faculty, staff and students flying every direction worldwide. As a top-tier research university, we have meetings, conferences, and research endeavors in every state, and many countries. Currently to travel west, we are required to fly first to Atlanta, which adds time and inconvenience to these trips. Our university is growing in terms of both students and research programs, thus this limitation will be even more so in the future. We urge the Department of Transportation to give the Golden Triangle Regional Airport’s application favorable consideration. Please feel free to contact me with any questions. Sincerely,
David R. Shaw, Vice President for Research and Economic Development
Airbus Helicopters, Inc. 1782 Airport Road Columbus, MS 39701 (662) 327-6226 www.airbushelicoptersinc.com
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July 21, 2014 Brooke Chapman, Associate Director Small Community Air Service Department Office of Aviation Analysis U.S. Department of Transportation 1200 New Jersey Ave., SE Washington, DC 20590 Room W86-307 Dear Ms. Chapman, On behalf of Airbus Helicopters, Inc. – Columbus Mississippi, I am writing to request U.S. Department of Transportation approval of the Small Community Air Service Grant application submitted by the Golden Triangle Regional Airport (GTR). The purpose of the airport’s application is to address air service deficiencies and increase access to the national transportation system for the region. Specifically, the grant proposal addresses the lack of available access and capacity to/from the western United States from GTR. Airbus Helicopters – Columbus, Mississippi, is located on the GTR airport and utilizes GTR as its primary airport for commercial travel purposes, when we are able. Westbound access, significantly relevant for this grant application, is a substantial problem for Airbus Helicopters. Our U.S. company headquarters is located in the greater Dallas/Fort Worth area, and the lack of service to/from western destinations is a deficiency which threatens to limit future economic expansion here in Mississippi, increases operating costs and reduces the productivity of my workforce. Based on analysis of Airbus Helicopters travel data (utilizing a quarter-based sampling methodology) since January 2012, the deficiency of access to/from western destinations is significant. Our analysis indicates, on average, we experience over 408 western-related commercial flight segments annually. Many, if not most, of these segments require employees to drive via personally operated vehicles to departure cities with western access. Most frequently, these departure locations are Birmingham, Jackson or Memphis. Return segments require similar use of personally operated vehicles or rental cars via these same locations. Lastly, as I look forward at future workload, I anticipate a greater than 10% growth in air travel requirements to western destinations due to the addition of a commercial helicopter assembly line in Mississippi which begins production in September of this year. The impact of this deficiency in western air service access to/from GTR is not unique to Airbus Helicopters. The entire region suffers from this deficiency. Increased economic investment in the Golden Triangle Region over the past several years has added thousands of industrial jobs, but commercial air service, in general, has not kept pace with this growth. Additionally, this growth is exacerbated by the lack of western access via GTR. The region’s air travel needs exceed the current level of air service. In addition to western access and capacity, an increase in nonstop destinations for the greater GTR community is severely needed. For these specific and empirical reasons, I urge the Department of Transportation to give the Golden Triangle Regional Airport’s application favorable consideration. If I can answer any additional questions, I can be reached via 662-244-6300. Very respectfully,
