SBY Regional Airport; Salisbury, Maryland Regional Airport; Salisbury, Maryland Application Under...

SBY Regional Airport; Salisbury, Maryland Application Under the Small Community Air Service Development Program; Docket DOT-OST-2017-0155

3

The Salisbury – Ocean City: Wicomico Regional Airport (SBY) has identified the need for year around, non-stop service to Florida, specifically targeting Orlando (MCO) and the South Florida area (MIA, FLL). We seek to inaugurate direct air service with American Airlines. Alternatively, a low cost airline, such as JetBlue Airways, will be our ideal partner that could provide non-stop service to Florida. Our present service is insufficient. It does not offer direct routes to any of the top ten destinations identified in our leakage study. The two destinations presently served have unreasonably high fares thereby causing our community to choose other airports, rather than using SBY, and driving lengthy distances for their air travel needs. We respectfully request an SCASDP Grant in the amount of $750,000 to fund our media and incentives programs to attract, implement, and sustain direct or new service. In addition, the Salisbury Wicomico Economic Development, the Salisbury Chamber of Commerce and many of our neighboring communities have collectively pledged $200,000 cash and $150,000 of in-kind contributions to support our effort. SBY Regional Airport is also committing an additional $250,000 of in-kind contributions bringing the total project support to $1,350,000.

The SBY Regional Airport serves as the primary commercial airport for Eastern Maryland, Delaware and Eastern Virginia (“the Delmarva Peninsula”). Our geographic characteristics present a unique circumstance because we are an “island” inhabited by 750,000 people working in tourism, agriculture, aquaculture, renewable energy and academics. Our population swells to over a million people seasonally due to our popular resorts, beaches and conventions. People travel to the Eastern Shores of Maryland, Delaware, and Virginia from Washington DC, Baltimore and other locations to enjoy the pristine beaches, the casinos and the wildlife. These tourists are joined by their family and friends who would prefer to fly into SBY from Florida and other locations. The Delmarva Peninsula is noted for being headquarters to many businesses, such as poultry processing (see Perdue’s letter of support). It has also become a very attractive retirement location. These characteristics clearly demonstrate the need for obtaining grant assistance from the Small Community Air Service Development Program.

We have United States Congressional support for our project: from Maryland, we have Senator Chris Van Hollen and Senator Ben Cardin, and US Congressman Andy Harris; from Delaware we have US Senators Coons and Carper, and US Congresswoman Rochester-Blunt. Maryland Governor Larry Hogan and Delaware Governor John Carney back us as do our local legislative representatives: Maryland State Delegates Chris Adams and Johnny Mautz, Maryland State Senators Addie Eckardt and James Mathias, and Delaware Delegates Stephen Smyk and Tim Dukes. And, finally, the multitude of support letters from our schools, businesses, chambers, organizations and economic development leaders clearly show total community support and demonstrated commitment to our proposed project.

Introduction

Salisbury Wicomico Economic Development, the Salisbury Chamber of Commerce, The

Greater Salisbury Committee and our community have

collectively pledged $200,000 cash and $150,000 of in-kind

contributions


4

The SBY Regional Airport has not previously received a grant under the SCASD Program. In fact, no Maryland airport has received a Small Community Air Service Development Program grant in the last eight years. Our community, our region and our three states will reap the benefits that will materialize by being awarded this SCASDP grant.

The Delmarva Peninsula is an island surrounded by the waters of the Delaware Bay, the C&D Canal, the Chesapeake Bay and the Atlantic Ocean. It is 183 miles long and 71 miles wide. We are a community of businesses, schools, agriculture, fishing, tourism and medicine. The only primary commercial airport with schedule airline service on the Delmarva Peninsula is the Salisbury Regional Airport. Air travelers who want to use an airport other than SBY must drive to Philadelphia (PHL) for 2 hours and 30 minutes crossing the C&D Canal Bridge; to Baltimore (BWI) for 2 hours and 16 minutes crossing the Chesapeake Bay Bridge; or to Norfolk (ORF) for 2 hours and 31 minutes by going through the Chesapeake Bay Tunnel system. Despite our “ruralness” we have over 750,000 people living and working here. The pristine beaches, resorts, convention centers and parks along our eastern shore bring over a million visitors annually to the Delmarva Peninsula. Our community needs an alternative to the existing air service and high air fares.

The Delmarva Peninsula is home to many national and international events that will benefit greatly from enhanced and more affordable air service.

The Senior Softball Little League World Series is held each summer in Roxana, Delaware – Sussex County, just north of the Maryland/Delaware line on the Eastern Shore. The White Marlin Open Tournament (THE WORLD’S LARGEST BILLFISH TOURNAMENT) is held each summer in Ocean City, Maryland. The US Softball Association Eastern World Series is held in Wicomico County each year. The Governor’s Challenge Basketball Tournament is the largest holiday basketball tournament in the world. All of these events are supported and promoted by our local community sponsors. It is time for SBY Airport to help facilitate these events by offering affordable, convenient travel to the thousands of participants.

As can be seen from the following graphic, Salisbury Regional Airport’s catchment area is essentially the Delmarva Peninsula. If our community chooses not to use SBY they must travel more than 2 hours crossing a bridge to arrive at their alternate airport. Based on our leakage study completed in September 2017, using passenger traffic data for the first quarter of 2017, Salisbury Regional Airport retains just 8% of the traffic generated in this catchment area.

Over a third of the traffic is lost to the airport in Philadelphia, despite a distance of 131 miles. Baltimore Washington International Airport, a distance of 116 miles, takes 29.1% of the local catchment area traffic that might otherwise use Salisbury Regional Airport.

The proposed new direct or non-stop service and additional seat capacity in Salisbury will assist in lowering the price points and average fares to travelers in the area. It will enable SBY to

Community Description


5

recapture some of the passenger traffic that continues to leak and use the airports in Philadelphia, Baltimore, and Washington DC.

Catchment Area of Influence: Delaware, Maryland, Virginia (Delmarva) Peninsula

The Delmarva Peninsula’s growth is increasing. It is not only an ideal location for tourism, businesses, schools, medical industry, fishing and high-tech agriculture – it is becoming a favorite retirement location. The June 2017 issue of Forbes Magazine describes us as being the “new Hamptons.” As reflected in the table below, over half of the people that presently use SBY are from Delaware, notwithstanding that SBY is located in Maryland. This demonstrates that SBY is truly a regional airport serving the needs of a vast community. A broad range of consumers are needed to sustain, support and continue to expand air service at SBY. Therefore, SBY’s air service marketing effort will be primarily focused on positioning SBY as a ‘first choice’ option for traveling families, business and leisure travelers who have historically chosen other airports.

SBY

SBY’s air service marketing effort will be primarily focused on positioning SBY as a ‘first choice’ option for traveling families, business and leisure travelers who have historically chosen other airports.

Demographics


6

Origination of Passengers in SBY Catchment Area by County

Rank County Passengers Share 1 Sussex, DE 398,749 28.8% 2 Kent, DE 318,224 23.0% 3 Wicomico, MD 186,150 13.5% 4 Worcester, MD 119,271 8.6% 5 Queen Annes, MD 103,772 7.5% 6 Talbot, MD 85,242 6.2% 7 Accomack, VA 48,012 3.5% 8 Caroline, MD 42,958 3.1% 9 Dorchester, MD 40,262 2.9% 10 Somerset, MD 23,248 1.7% 11 Northampton, VA 14,825 1.1% Others 2,190 0.2% Total 1,382,902 100.0%

Unfortunately, the average annual household income for the eleven Delmarva Counties identified above is $51,862. The national average household annual income is $53,889. So while residents of more affluent counties near BWI, PHL and DCA are able to enjoy lower airfares, residents of our counties must pay higher airfares underscoring the unreasonableness of the airline pricing scheme. We will use our SCASDP grant to mitigate high airfares through MRGs and incentives that will kick-start competition, show carriers that we do have a lucrative market (as identified in our leakage study), and be truly sustainable when the grant funds expire.

The SBY Regional Airport now has scheduled air service to and from American Airlines hubs at Charlotte and Philadelphia. American Airlines promotes that “one can go anywhere in the world” from SBY, but the fact is there are no direct flights from SBY to anywhere other than these 2 destinations. The connections provided to and from SBY are inconvenient. Fares to these two destinations are extremely high. The major destinations, as indicated by our leakage study, not directly served to/from SBY include:

• South Florida • Orlando • New York • Boston

Additionally, the Salisbury community lacks air service to the Baltimore Washington International Airport. As indicated below, our catchment area has 92%

Our catchment area has 92% of air travelers who

live in our community but bypass our airport to

depart from another airport

Air Service Deficiencies


7

of our air travelers bypass our airport to depart from another airport. Over one-third of these are going to BWI for access to low-cost carriers such as Southwest Airlines and one-third are going to PHL for access to Spirit, JetBlue and Frontier.

Time of Travel for our citizens to travel to other airports:

It takes passengers 2 hours and 30 minutes to drive between SBY and PHL:

It takes 2 hours and 16 minutes for passengers to drive between SBY and BWI:

Delmarva air travelers who choose to bypass SBY to drive to BWI or PHL for flights typically go the day before their flight because of the congestion on the bridges and the uncertainty of missing their flights. Once they arrive at BWI or PHL they encounter long rides from the expensive parking lots to the congested ticket counters and long lines at TSA. Therefore, if the traveler leaves their home the day of their flight, it is necessary to leave 6-7 hours before departure time. We offer these passengers a fantastic alternative of low cost parking, short

Air Travel Challenges


8

walks to the terminal, short lines at the ticket counter and TSA, and uncongested relaxed boarding for their flights. At SBY, air travel is, again, a treat and enjoyable. However, even with these attractive features, we can’t keep passengers from driving to BWI and PHL because of our high fares and limited destinations! When airfare increases $150-$200 per passenger to fly from SBY, this becomes an additional $600-$800 for a family of four - much too expensive for the average family to fly. So, they opt for the hectic and stressful way to start and end their vacations by flying out of BWI, DCA, or PHL – not much fun for anyone in the family. The down-home, calm atmosphere of SBY can make people enjoy flying again. Few of the larger airports, who leak our passengers from us, can provide these advantages. If we are awarded this grant we will give our community better options for their air travel.

True Market Passenger Analysis:

The Salisbury study area averaged 1,894 PDEW (passengers per day each way) from Apr. 2016 through Mar. 2017, with only 151 - 8.0% - of those passengers using SBY. Philadelphia International Airport captured 702 domestic and international PDEW from the Salisbury study area. Baltimore

Salisbury study area averaged 1,894 PDEW

with only 151 passengers – that is, 8.0% - of those

passengers using SBY.

Air Service Studies


9

Washington International Airport captured 638 domestic and international PDEW from the Salisbury study area.

True Market Passenger Shares:

Airport Passengers PDEW Share

Salisbury-Ocean City Wicomico Regional Airport 110,400 151 8.0% Philadelphia International Airport 512,787 702 37.1% Baltimore/Washington International Airport 465,392 638 33.7% Washington Dulles International Airport 128,813 176 9.3% Ronald Reagan Washington National Airport 119,623 164 8.7% Norfolk International Airport 43,364 59 3.1% Richmond International Airport 2,542 3 0.2%

1,382,902 1,894 100.0%

The tables are staggering. They clearly show that, despite our remote location, the vast majority (92%) of our community air travelers are driving from the Delmarva Peninsula, over the three bridges that link us, to the mainland to catch flights at other airports. These potential SBY passengers are not using SBY because of the lack of air travel options and affordability. The high percentage of traffic leaked to BWI and PHL, in particular, is not surprising given the high fares and the limited nonstop destinations served at SBY. The Salisbury Regional Airport requires additional air service to reduce the need to drive to alternate airports and lower air fares to compete with other airports.

Our recent leakage study identified Florida as being our community’s number one destination:

Largest True O&D Passenger Markets to/from the Salisbury Area Year End First Quarter 2017

Approximates 100% Sample - Directional Journeyed Passengers

Airport / Multiple SBY Leaked True True Rank Airport Metro Area Airport(s) PDEW PDEW PDEW O&D Pax 1 South Florida MIA / FLL / PBI 13.2 105.7 118.9 86,828 2 Orlando / Sanford MCO / SFB / LAL 8.6 98.3 106.9 78,035 3 Chicago ORD / MDW 3.7 87.5 91.2 66,554 4 Los Angeles Basin LAX / BUR / SNA / ONT / LGB 5.6 74.4 79.9 58,357 5 Atlanta ATL 6.3 64.4 70.7 51,623 6 Dallas / Ft. Worth DFW / DAL 4.0 56.3 60.2 43,978 7 Boston BOS 3.9 55.4 59.3 43,319 8 San Francisco Bay Area SFO / OAK / SJC 3.1 54.5 57.6 42,038 9 Las Vegas LAS 3.0 47.4 50.4 36,803 10 Tampa / St. Petersburg TPA / PIE 4.2 42.4 46.6 33,984

These potential SBY passengers are not

using SBY because of the lack of air travel

options and affordability


10

True Market Passenger Distribution of Salisbury

South Florida and Orlando remain our largest true passenger markets. SBY has a daily passenger trip count of 21.8 for South Florida and Orlando whereas we leak 214 Florida passengers each day to other airports. So there is truly a need for a Florida route to/from SBY. We have not always been without service to Florida. Allegiant Air began twice a week service to Orlando-Sanford International Airport in February 2012, using its McDonnell Douglas MD-80 jets, but ended the route less than a year later on January 5, 2013. The media stated that this was due to the route's relatively small amount of passengers but, in fact, it was because Allegiant moved its Sanford, Florida to SBY flight departure time to 7:30 AM. Disney tourists returning home simply didn’t want to get their kids up at 3:30 AM to catch this flight when they could take a flight from MCO to BWI at any time of the day – and Allegiant’s low fares were not enough to pursuade travelers to accept this outrageous time schedule.

We have been in discussions with American Airlines to provide a direct, low cost service to Florida. American Airlines has an existing connecting service that, when converted to a direct, low cost, service, will win back some of our customers. As stated below, our customers want the reliability and convenience of a direct flight. When paired with low-cost we are confident the market will increase dramatically. Our leakage studies certainly indicate this.

We are also working with JetBlue to establish new air service and are confident that this reputable carrier will work with us on establishing a schedule that will meet our community’s needs. We are excited about JetBlue’s exploration of using SBY for its logistical needs. The partnership that we are establishing with JetBlue will benefit both parties as well as our air travelers. We are well into the process of negotiating with JetBlue to provide a low cost direct non-stop service to MCO and FLL. The discussions are going well and we realistically expect that service will begin in accordance with our timetable. Negotiations include a minimum route guarantee, landing fee waivers, waived terminal rent and promotion/advertising. In the remote event that we are unable to complete our plans with JetBlue we request that we be able to use


11

the grant to establish air service to and from Florida using another low cost air carrier such as Shamrock Express.

Our airport’s other air service objective is to initiate new service to/from BWI. In the distant past SBY had air service to BWI with US Airways and other carriers. Many people loved this air travel option. Unfortunately, this service ended with recent acqusition of the airline. Presently, we do not have air service directly to BWI. If people want to fly out of BWI they must drive over the Chesapeake Bay Bridge to Baltimore to begin their flights. But, increased automobile traffic has made it increasingly more difficult to drive to BWI for flights. Our community now wants the option of starting their air travel here at SBY – with shorter TSA lines and easier access to their aircraft – and then seemlessly connect in BWI to a multitude of carriers such as Southwest Airlines. One of our goals, therefore, is to have new air service to BWI. There are no leakage study numbers for possible flights to BWI – as a destination – because no one presently flies directly from SBY to BWI. But our leakage study does indicate that 29 percent of our community uses BWI rather than SBY for their air travel needs. We are confident that most of these people would initiate their flights from SBY rather than BWI, PHL or DCA if offered more affordable and better connections. We are, therefore, requesting this grant in order to establish new air service between SBY and BWI. We have been in detailed discussions with a Commuter Airline to initiate air service. We are negotiating with that Commuter Airline to operate six flights total daily between BWI and SBY with aircraft that carry at least 15 passengers. The carrier is optimistic that the route will be profitable given that the ground passenger bus service presently serves approximately 150 people per day average and that the leakage study indicates 261 people are driving daily to BWI. If awarded this grant we would promote and advertise the new air service, and we would set up minimum route guarantees, landing fee waivers and terminal rent waivers for the first year to solidify the market and then allow the established service to sustain itself.

The Salisbury community has long suffered from extremely high airfares due partly to its geographic isolation and partly to the lack of competition. During Q2 2017, SBY’s average one way gross fare was approximately 35% higher than the national average ($483.47 vs. $355.91). Additionally, SBY’s fares were 25-55% higher during Q2 2017 than its closest airports (BWI, PHL, DCA, IAD). As the table below indicates, Q2 2017 was not an isolated episode. The trend of higher airfares at SBY has been continual and is expected to continue in the absence of increased air service and competition. It is the hope of the community that this grant will provide additional air service to alleviate some of the upward fare pressure at SBY.

During Q2 2017, SBY’s average one way gross fare was

approximately 35% higher than the national average

Fare Levels


12

The following graph clearly illustrates the increasing trend of higher air fares (the Origin City on the graph being Salisbury Regional Airport):

The preceding table demonstrates our problem. The national average air fare for flights from Salisbury Regional Airport ($483.47) is $92.92 higher than that of the Philadelphia International Airport ($390.55) – that is 23% higher. Our air fare is $136.87 higher than that of Washington-Reagan National Airport ($346.60) – that is 39% higher. And our air fare is $160.28 higher than that of the Baltimore Washington International Airport ($323.19) – that is 49% higher! Again, it is the hope of our Community that DOT award the SCASDP grant to SBY to provide incentives to airlines to lower air fares. It is our expectation that the incentives will create a momentum that will be sustainable in the long run.

Approximately three years ago Allegiant Airlines discontinued service (including its lucrative South Florida service) to/from SBY. This left a huge hole in destination choices for the Delmarva community as well as vacant terminal counter and ramp space at SBY. When this low-cost service left us air fares went up. SBY has endeavored for the past three years to fill this void. SBY worked with American Airlines, with no success thus far, to reduce air fares. SBY has actively tried to recruit other airlines to bring low air fares to Salisbury. We anticipate that a

BTS Average Domestic Airline Itinerary Fares By Origin City

360

380

400

420

440

460

480

500

Q4 Q1 Q2 Q3 Q4 Q1 Q2

2016 2017

Year

Dolla

rs

Our air fare is 49% higher

than that of the Baltimore

Washington International

Airport.


13

more determined effort (aided, in part, by this grant) will answer these deficiencies. We conducted an extensive leakage study this past September that identified these problems and our needs. Our next step is to put our strategic plan into effect to address the problems of high fares, reliability and lack of service.

The following chart was taken from our 2017 Q1 Leakage Study. It compares the fares to select locations with SBY and our adjacent airports. Most noticeably is that ALL of the fares for SBY are higher and in most cases significantly higher. In the case of fares to Chicago, SBY’s fares are over 48% higher than those at BWI. This increased cost, coupled with the low income level of Delmarva residents, makes it impossible for our community to afford air travel in many cases.

Average Fares by Airport at 10 Largest True O&D Markets to/from the Salisbury Area Year End First Quarter 2017

Approximates 100% Sample - Directional Journeyed Passengers

Rank Airport / Multiple Airport Metro Area

Salisbury Avg Fare PDEW

Philadelphia Avg Fare PDEW

Baltimore Avg Fare PDEW

Total Avg Fare

1 South Florida $189 13.2 $140 39.7 $120 43.1 $142 2 Orlando / Sanford $181 8.6 $131 44.1 $116 33.4 $132 3 Chicago $251 3.7 $167 40.1 $130 35.3 $158 4 Los Angeles Basin $274 5.6 $262 21.1 $218 39.0 $244 5 Atlanta $198 6.3 $139 33.1 $132 21.5 $146 6 Dallas / Ft. Worth $270 4.0 $203 14.7 $152 23.4 $183 7 Boston $189 3.9 $157 21.2 $100 23.2 $137 8 San Francisco Bay Area $331 3.1 $318 18.5 $278 21.6 $302 9 Las Vegas $270 3.0 $197 27.7 $179 12.9 $204 10 Tampa / St. Petersburg $198 4.2 $143 18.8 $132 13.3 $149

Average True Fare / PDEW $249 151.2 $243 702.4 $209 637.5 $242

Our specific goals are to:

• Establish new direct service to Florida by American Airlines through its hub at CLT. • Fill the newly added seats of the EMB-145 through low cost air fares. • Obtain new non-stop service to/from Central and South Florida using a low cost carrier. • Obtain air service to/from BWI using a commuter or other airline for connection to low

cost carriers. • Write and use an air service development plan to attract passengers to SBY. • Develop media and advertising to promote new air service and establish low airfares.

Solid Strategic Plan


14

• Execute our Public/Private Partnership Agreement with the members of Salisbury-Wicomico Development Corporation, Salisbury Chamber of Commerce, and The Greater Salisbury Committee to conduct joint media ventures and market studies.

SBY has a detailed plan to achieve our specific goals as set out in this Strategic Plan. The time-table for accomplishing this plan is illustrated in the table below.

Activity/Project Milestone Estimated Dates SCASDP Grant Award Announcement January 2018 Execute Grant Agreement with DOT January/February 2018

Airline negotiation March 2018 Airline Notification March 2018 Announce Service April 2018 Publish Schedule June 2018

Market Route (Pre-Launch) June – September 2018 Monitor Advance Bookings June – September 2018

Adjust Marketing Plan Based on Advance Bookings June – September 2018 Begin Service October 2018

Market Route (Post-Launch) October 2018 – December 2021 Operate Service with MRG October 2018 – October 2019 Monitor Route Performance October 2018 – October 2021 and beyond

Submit Grant Status Reports to DOT Quarterly 2018 - 2021

As indicated from this time-table, the SCASDP grant will be used in an efficient and timely manner. This is a well-defined strategic plan and a reasonable timetable for use of the grant funds. It is somewhat abbreviated from the time-table example set out in the Order - less time is needed because we have already recently conducted an extensive leakage study that has identified our deficiencies and our needs. The two years to complete studies proposed by the Order have been completed. SBY has planned for three years of marketing and promotion (including advertising and public relations) of the airport, community, carrier, or destination as proposed by the Order. SBY plans to implement revenue guarantee, subsidy, and other financial incentives over a period of one year with an option to continue for another three years. We believe that our projects can be accomplished within this timetable, because SBY, American and JetBlue already have the requisite authorities and certifications necessary to carry out the proposed projects. (Route approval will take minimal time according to our FAA/DOT representatives). Regarding new service to BWI, we are working with a Commuter Airline who, again, already serves that location. Adding new service would simply be a matter of route approval. Funds will be used in a timely manner. As stated above, SBY can support the new service because it has six positions on our terminal ramp, two gates, a sufficiently large departure lounge, adequate TSA screening facilities and personnel/baggage processing, terminal counter space, and parking facilities. Jet Blue and the Commuter Airline, the proposed new carriers, already meet all Department requirements for air service certification, including safety and economic authorities.

The grant will be used in an efficient and timely

manner. We have a well-defined strategic plan

and a reasonable timetable for use of the

grant funds.

We Have a Detailed Plan for Attaining Our Goals


15

American Airlines has written a letter (attached hereto) indicating their strong support for our grant application. American supports our strategic plan for a revenue guarantee and marketing campaign that would enhance regional jet service to the Philadelphia and Charlotte hubs with increased frequency of service to Florida and other American Airline’s destinations. Piedmont Airlines, the American Airlines - American Eagle subsidiary, has served our community since 1983. Piedmont Airlines has just last month begun its transition from 30-seat De Havilland Dash 8 turboprop aircraft to 50-seat Embraer 145 Regional Jets to serve CLT and PHL. The change has created excess capacity and Piedmont is trying to fill those seats. We believe that a strong marketing and revenue support program would help increase traffic, provide better Florida access and allow the Delmarva community to have low cost air fare.

As indicated in our leakage study, Florida is our Community’s number one destination. Presently, our SBY passengers are able to travel to Florida through American Airline’s Charlotte or Philadelphia hubs – but these are not direct flights. These connections typically offer between 3 and 6 hours layovers and have on-time performance only 58% of the time. The fares are over $400 one-way for non-refundable tickets and over $850 for refundable tickets. As indicated in the American Airlines Letter of Support we are following our detailed plan for attaining the first goal of our solid strategic goal - to work with American Airlines to establish new direct service from SBY to Florida at affordable fares. We are negotiating with American Airlines to provide direct service for one flight a day between SBY and MCO via CLT. We anticipate that this new direct service will offer our Community an alternative to driving to PHL, BWI and DCA in order to fly to Florida. We are confident that the incentives provided to American Airlines in the form of MRGs and waived landing fees will produce a momentum allowing this service to continue well past the expiration of the grant funds. Our long range goal is to inaugurate SBY to Miami service with American Airlines.

Our leakage study indicates that we will be able to provide a sufficient number of passengers to American Airlines for a direct flight between SBY and Florida and, at the same time, establish new air service provided by JetBlue. We have meetings set up in the next two weeks to discuss strategy and growth plans with JetBlue. We anticipate that JetBlue will agree to provide service to MCO, FLL, JFK and BOS. These routes will fit with JetBlue’s east coast strategy, reduce their costs, and provide needed low-cost flights for our community.

We plan to have six round-trip flights per day between SBY and BWI using a commuter or regional airline. We have been in discussions with a Commuter Airline to provide service using 16 passenger aircraft. Advertising and promotion fees have been calculated to inform our community that they no longer have to drive to BWI to begin their air travel.

Additionally, to date, SBY has not had a formal Air Service Development Master Plan; our ad hoc plan has simply been to collect O&D studies and watch load factors. SBY recognizes the

We anticipate that this new direct service will offer our Community

an alternative to driving to PHL, BWI

and DCA in order to fly to Florida.


16

need to develop a formal program to monitor, analyze, and utilize flight data to further implement carrier and route adjustments. This grant will assist us in these efforts.

The last detailed plan for attaining our goals – executing our Public-Private Partnership agreements to leverage the federal funds – is discussed in the last section of this application.

We are presently in discussions with our proposed carriers to formulate the following flight schedule to achieve our specific goals:

Airline Service Route Prices * Aircraft Load Pax

Low-cost major carrier 1 daily non-stop SBY to MCO $250.00 A-320 85% 153 Low-cost major carrier 1 daily non-stop MCO to SBY $250.00 A-320 85% 153 American Airlines 1 daily direct SBY to MIA $250.00 B-737† 80% 40 American Airlines 1 daily direct MIA to SBY $250.00 B-737† 80% 40 Low-cost major carrier 1 daily non-stop SBY to FLL $310.00 A-320 80% 144 Low-cost major carrier 1 daily non-stop FLL to SBY $310.00 A-320 80% 144 Low-cost major carrier 1 daily non-stop SBY to JFK $127.00 A-320 84% 151 Low-cost major carrier 1 daily non-stop JFK to SBY $127.00 A-320 84% 151 Low-cost major carrier 1 daily non-stop SBY to BOS $130.00 A-320 85% 153 Low-cost major carrier 1 daily non-stop BOS to SBY $130.00 A-320 85% 153 Commuter Airline 3 daily non-stop SBY to BWI $49.00 BE-99 95% 15 Commuter Airline 3 daily non-stop BWI to SBY $49.00 BE-99 95% 15

* Prices will be adjusted seasonally, but will remain within the range of low-cost carriers. † Aircraft equipment TBD. One stop in CLT.

As stated above, in addition to partnering with JetBlue to inaugurate non-stop low-cost air service to MCO and FLL, we are working closely with American Airlines to establish new direct service to Florida with destinations such as MIA, FLL and MCO. The American Airlines direct flights will be attractive to our passengers because they will not have to change aircraft, the layovers will be minimal time and the aircraft will be larger and more comfortable compared to the service presently offered.

We anticipate that our new air service will become self-sufficient after the expiration of the grant for a number of reasons:

1. We have sought a reputable carrier with expertise established in the East coast corridor.

2. Our target airline has developed a program using SBY to augment and supplement its operation:

a. The remain-over-night (RON) plan developed by JetBlue using SBY will ensure

Specific Flight Goals


17

that we remain in JetBlue’s long term plan. b. Rather than RON its aircraft in expensive locations such as JFK, they will

terminate a late night flight from Florida at SBY and then launch its NY service early in the day from SBY.

3. The program will gain momentum through our advertising and media efforts. a. We will continue to conduct studies and monitor progress through our SBY

Airport Air Service Development Plan. 4. History – passenger counts for Allegiant Airline’s flights to/from Sanford, Florida,

were above its average of 91% until the fall of 2012 just prior to its schedule change (as noted above) and subsequent pull-out. We are confident that our new service using a low cost carrier with a reasonable flight schedule will reclaim the 150,000 Florida passengers that are leaked each quarter to other airports.

5. Increased Operating and Capital Revenue will allow for continual upgrades and community enhancements as well as economic growth for our area. Economic growth will trigger more travel because of the increase of disposable income.

The assistance will provide material benefits to a broad segment of the traveling public, including businesses, educational institutions, and other enterprises, whose access to the national air transportation system are currently limited. The proposed project would provide important benefits to a broad segment of our community’s traveling public.

Examples include service that would offer new or additional access to a connecting hub airport, (BWI); service that would provide convenient travel times for both business and leisure travelers; the avoidance of the need to drive long distances, (e.g., 2.5 hours to PHL, 2.5 hours to Norfolk, 2 hours to BWI) and service that would offer lower fares.

We are continuing our discussions with JetBlue to facilitate the implementation of these new air service routes to Florida. In addition to establishing this new service, we plan to work with American Airlines to initiate “new service” to Florida in the form of direct flights (through CLT) at prices competitive to those of low-cost carriers. This will involve Minimum Revenue Guarantees and advertising incentives.

Our Strategic Plan does not have a need to address our airport infrastructure. Our airport’s most recent expansion was modeled for a 4-airline operation – presently we have only one airline. Our modern terminal has ticket counter space for four airlines and American Airlines now occupies only a portion of the space. Baggage sort/handling, passenger processing space, and airline support (gates, equipment, etc.) will allow for the addition of two more carriers at SBY. No renovations/modifications will be required other than carrier branding. Within the past year we upgraded and replaced our baggage claim system, we installed up-to-date passenger and baggage screening, we expanded our TSA screening areas, and we have an entire new HVAC system. In addition, passenger lounge renovations and food service are already funded

The grant assistance will provide material benefits to the traveling

public whose access to the national air transportation system

are currently limited.


18

and underway. Therefore, none of the grant money will be spent on facilities to accommodate new carriers or increased passenger traffic. It will go where it is needed most and for maximum utilization – new air service incentives and advertising/media expenditures.

Salisbury Regional Airport’s Strategic Plan clearly addresses our stated problems of lack of routes and high air fares. Florida is our number one destination; American’s direct service and JetBlue’s new service will provide access to Florida for our community. Our problem of leakage to BWI will be answered by a Commuter Airline providing new service. Competition will lower fares and marketing will increase passenger traffic to a sustainable level.

Our media programs will include television, radio, newspaper, billboard, internet, and magazines. We have specifically included media and advertising in our budget as seen below.

FUNDING STREAMS Grant Request $ 750,000 PPP Contributions $ 200,000 In Kind Contributions (Community) $ 150,000 In Kind Contributions (Airport) $ 250,000 Total Funding $ 1,350,000 DISBURSEMENT PROJECTIONS Marketing & Advertising - Cash MRG $ 500,000 Airline Advertising $ 200,000 Billboards $ 67,400 Social Media $ 17,000 Local Television Stations $ 48,000 Web based advertising $ 80,000 Printed Publications $ 17,100 Air Service Development Plan $ 20,500 TOTAL MARKETING/ADVERTISING - Cash $ 950,000 Marketing & Advertising – in kind Waived Landing Fees and terminal rent $ 250,000 Local Television Stations $ 15,000 Area Chambers of Commerce $ 35,000 Wicomico Youth and Civic Center $ 10,000 Local businesses $ 16,000 Local tournaments $ 24,000 Local governments $ 50,000 TOTAL MARKETING/ADVERTISING – in kind $ 400,000 Total Disbursements $ 1,350,000

Our project budget is realistic and attainable. It accounts for income and disbursements for the grant funds, cash contributions, in-kind airport contributions and in-kind community contributions. The budget is designed for a three year period but can be accelerated should

Salisbury Regional Airport’s Strategic Plan clearly addresses

our stated problems of lack of routes and high air fares.

Project Budget


19

conditions warrant. We have set up a steering committee made up of community business leaders who will organize, monitor through cash flow analysis and advise the Airport Sponsor of the recommended current expenditures for the project.

SBY has excellent community involvement as seen by the number of letters of support. We have matching funds coming from our business leaders, tourism industry, and public and private companies totaling over $200,000 of cash contributions and $150,000 of in-kind contributions. With the airport’s in-kind contribution of $250,000 this amounts to over 44% of the total project funds. These pledges from our Community range from $1,000 to $50,000 by business and individual donors. The Community’s cash contribution comes from local sources and not from airport revenue. The contributions to supplement federal funds will be cash and non-cash amounts derived from multiple sources. We have local advertising/media contributions by WBOC (Draper Holdings), WMDT Channel 47, WRDE and other television companies. Radio advertisements will be offered by Q105, Froggy 99.9, Delaware 105.9 News/Talk, and Cat Country 97.5. Community support for newspaper articles will come from the Salisbury Independent. And SBY will offer in-kind of waived landing fees and waived terminal rent for the first year which could total over $250,000. Our Community leaders truly understand the importance of building our airport, of establishing convenient and reliable air service for our Community to travel to destinations they desire, such as Florida. This understanding compels our leaders to invest in our airport, to commit to matching and leveraging funds provided by sources such as the SCASDP. We are fortunate to have such an understanding and supportive Community. We want to reciprocate and work, as an airport, to serve our Community and to obtain funding necessary to operate a viable airport successfully. SBY has entered into a Public Private Partnership with Salisbury Wicomico Economic Development, Inc., (SWED), the Salisbury Chamber of Commerce and the Greater Salisbury Committee to facilitate air carrier service to the public. We understand that Public Private Partnership is necessary to establish permanent strategies and practices required of a successful airport. The partnerships require an investment by both the public and private sectors to create a synergism to achieve the highest goals. The Public Private Partnership that we have with our three leading Community organizations and their members create not only a monetary investment strategy but also projects to be accomplished by the entities. Projects such as surveys, cost/benefit analyses, and studies - some of which are paid with cash but many of which are either in-kind contributions or paid for with community funds - are in accordance

Our Community leaders truly understand the

importance of building our airport, of establishing

convenient and reliable air service for our Community

to travel to destinations they desire, such as Florida.

Community Involvement - Public/Private Partnership


20

with the airport’s strategic plan. Our business leaders are invested in our airport and what it takes to have our airport successfully serve our Community. The Public Private Partnerships we have with our three leading Community organizations reflect this investment. We ask the United States Department of Transportation to recognize the relationship that we have with our business leaders as evidenced by these Public Private Partnerships, agree that the partnerships are the greatest indicators of success in a Community and award the SCASDP grant to the SBY Regional Airport.

As our new Airport Manager (since February of 2017), Dawn Veatch, puts it…”SBY is a diamond in the rough.” SBY, because of its geographic location and the wonderful community it supports, has the potential to not only help Delmarva, but to help the Airline Industry and our National Airspace System as a whole. The SCASDP grant is only one part of a vast plan to enhance air service, as well as to serve the community. The economic growth, the quality of life, and the safety of our community are incorporated in the innovative plan of SBY. This project is a vital part of our overall innovative Airport plan that includes the expansion of Air Cargo facilities, Emergency Disaster Relief, and Industrial growth. We look at SBY as a community asset that will enhance the lives of our residents and visitors in many ways. Please award this grant as a vital piece of SBY’s contribution to our Community, and the National Airspace System. We thank you for your consideration.

SBY, because of its geographic location and the wonderful community it

supports, has the potential to not only help Delmarva, but to help the Airline

Industry and our National Airspace System as a whole.

Conclusion

Date post:	01-Apr-2018
Category:	Documents
Upload:	vongoc
View:	221 times
Download:	4 times

SBY Regional Airport; Salisbury, Maryland Regional Airport; Salisbury, Maryland Application Under...

Documents