SHENANDOAH VALLEY REGIONAL AIRPORT, VIRGINIA

Transcription

1 Docket: DOT-OST Before the Office of the Secretary of Transportation US Department of Transportation SHENANDOAH VALLEY REGIONAL AIRPORT, VIRGINIA Proposal Under the Small Community Air Service Development Program An Integrated Program of Air Service Development via: An Enhanced Marketing and Advertising Campaign In Support of Current Essential Air Service to/from Washington Dulles Sponsor: Shenandoah Valley Regional Airport Weyer s Cave, Virginia Greg Campbell, Airport Director Congressional Code: VA-006 Dun & Bradstreet Number: August 27, 2010

2 TABLE OF CONTENTS Section Page Introductory Letters of Support 3 Summary Information 7 Introduction 10 Primary Objectives of Proposal 11 Executive Summary 12 Detailed Explanation of Proposal 17 Letters of Support 20 Current Air Service 31 Air Service Deficiencies 36 Extenuating Factors Affecting Air Service 41 Availability of Alternate Airports 43 Use of Local/Federal Funds 44 Public/Private Partnerships 45 Implementation Timeline 46 Air Service Advisory Groups 47 Local Air Service Development Efforts 48 In-kind Services from the Community 49 Performance Measures 50 Legal Sponsor 51 Financial Controls 52 Return on Investment 53 DOT Exit Strategy 54 Airport Information 55 Community Profile 56 Conclusions 67 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

3 INTRODUCTORY LETTERS OF SUPPORT Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

4 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

5 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

6 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

7 SUMMARY INFORMATION Small Community Air Service Development Program Docket DOT-OST A. Applicant Information Not a Consortium Community now receives EAS subsidy Interstate Consortium Intrastate Consortium Community previously received a Small Community Grant If previous recipient, date of Grant: 2003 expiration date of Grant: October 28, 2006 B. Public/Private Partnership Public: 1. Shenandoah Valley Regional Airport 2. Shenandoah Valley Regional Airport Commission Private: 1. Shenandoah Valley Partnership 2. Harrisonburg-Rockingham Chamber of Commerce 3. Greater Augusta Chamber of Commerce Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

8 C. Project Proposal Marketing Upgrade Aircraft New Route Personnel Increased Frequency Low Fare Service Travel Bank Service Restoration Subsidy Surface Transportation Regional Service Other (Specify) Revenue Guarantee Launch New Carrier Start Up Cost Offset First Competitive Service Study Secure Additional Carrier D. Existing Landing Aids at Airport Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other: E. Project Cost 1. Federal amount requested: $ 150, State cash financial contribution: $ 0 3. Local cash financial contribution: $ 20,000 3a. Airport cash funds: $ 20,000 3b. Non-Airport cash funds: $ 0 3c. Total local cash funds: $ 20, TOTAL CASH FUNDING: $ 170, Local funds contributed from already existing Programs of projects included in line 3c: $ 0 6. Local funds contributed from new commitments Or new resources included in line 3c: $ 20, Airport In-Kind contribution: $ Various Description: Additional In-Kind Marketing 8. Other In-Kind contribution: $ Various Description: Advertising and marketing match money 9. TOTAL IN-KIND CONTRIBUTION: $ Undetermined 10. TOTAL PROJECT COST: $ 170,000 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

9 F. Enplanements at Airport 2000: 19, : 17, : 6, : 7, : 6, : 4, : 3, : 3, : 6, : 7,890 G. Is Application Subject to Review by State Under Executive Order Process? This application was made available to the State on. Program is subject to review, but has not been selected by the State. Program is not covered. H. Is Applicant Delinquent on any Federal Debt? No Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

10 INTRODUCTION Just ten years ago the Shenandoah Valley Regional Airport was busy with eight departures a day from two airlines to two regional hubs. Much has changed since the year 2000, when the Airport generated 52.3 passengers per day each way (PDEW). By 2006, with EAS service provided only by US Airways Express to and from Dulles, passengers fell to just 8.8 per day each way (PDEW). The Airport has worked hard to reverse this trend. First, it was able to convince its air service provider, Colgan Air, and its codeshare carrier, United Airlines, to place the UA code on local flights to Dulles. Then, it spent more than $100,000 of its own money in publicizing this change in service. In the three years since then the Airport has seen passengers grow to 21.6 per day each way (PDEW) an increase of 146% since the lows from the middle part of the decade. The Airport has partnerships with more major media outlets in the Valley, and it is able to leverage those partnerships for extensive ad space and air time. The challenge is that the Airport s budget is small, so it is unable to sufficiently blanket the area in such a way [The Airport] spent more than $100,000 of its own money in publicizing [service changes] [causing a passenger] increase of 146% since the lows from the middle part of the decade. as to better discourage passenger leakage. Due to the real, or in some cases perceived, inconvenience of using the Shenandoah Valley Regional Airport, many travelers from the immediate Shenandoah Valley catchment area don t even check fares and schedules on local service before booking out of other airports in the region. The Airport believes the best way to reduce the Department of Transportation s current Essential Air Service (EAS) burden at the Shenandoah Valley Regional Airport is to increase the number of passengers flying through the Airport, spreading out the federal government investment over more passengers. As passenger traffic increases at the Airport, revenues will grow, and the federal subsidy required to support the air service will be reduced. The best way to grow passengers in the short term in the Shenandoah Valley will be to promote the current service to potential local travelers. The Department of Transportation has a unique opportunity to invest a small amount in this grant proposal, that could help save it millions of dollars in Essential Air Service (EAS) funding in the years to come. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

11 PRIMARY OBJECTIVES OF PROPOSAL Objectives for Program: Bolster performance of an Essential Air Service (EAS) route Increase enplanements through increased awareness Lower fares in the market through increased enplanements Decrease leakage to other regional airports in the region through lower fares Long term service improvements due to increased viability of local air service Means to Achieve Objectives: Build a larger budget for marketing and advertising efforts in the Shenandoah Valley Target segments of the population in the region most likely to use local air service Work with businesses to increase usage of current air service through increased awareness Course of Action to Support Means: Develop targeted marketing and local advertising campaign for potential airport users in the Shenandoah Valley Ensure campaign saturates the market with the message that local air service is competitive with service offered at other airports in the region Ensure campaign has funding to run for a significant period of time at least 12 consecutive months Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

12 EXECUTIVE SUMMARY For the first time in almost 20 years, the Shenandoah Valley Regional Airport has seen passenger growth for three years in a row. This is an excellent indicator that the market s Essential Air Service (EAS) is finally performing well, once again. Still, the market s total passengers are down 59% from the passenger peak seen in The Shenandoah Valley Regional serves the heart of one of the most famed valleys in all of America. While the Airport isn t located in any one large city, it draws passengers from a number of large cities throughout the Valley. In fact, the Airport was located in the center part of the Valley in order to be able to attract and serve passengers from a number of cities, instead of just one city. The majority of passengers who fly in and out of the Shenandoah Valley Regional Airport come from the immediate area, of which the Airport sits at the center. This immediate catchment area includes the communities of Staunton, Harrisonburg, Waynesboro, Augusta, and Rockingham. The 30 minute drive Shenandoah Valley Regional FIGURE 1: Shenandoah Valley Regional Airport s immediate (30 minute) and extended (60 minute) catchment areas Airport catchment area (seen inside the dotted line in Figure 1) is home to 153,094 people as of the latest US Census estimates, while the one hour drive catchment area (seen inside the solid line in Figure 1) is home to 334,421 people. The Shenandoah Valley Regional Airport has the ability to draw from an even larger area due to its relative isolation located between two ranges of the Appalachian Mountains. Since the Airport joined the ranks of those receiving Essential Air Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

13 Service (EAS) subsidies, its total passengers have dropped precipitously. The problems have been exacerbated by the fact that Airport has seen numerous changes in its Essential Air Service (EAS) provider, including airline and destination changes. The Airport s long standing service to US Airways Pittsburgh hub was cancelled at the end of 2004 (see Figure 2). Colgan Air, the EAS provider in the Shenandoah Valley, elected to move service to Washington Dulles, but retain the US Airways affiliation in This caused a lack of connectivity, due to the limited number of US Airways flights at Dulles that dramatically suppressed local passenger traffic and revenue. FIGURE 2: O&D Passengers and Average One Way Fares at SHD CY2000 CY2009; Source: US DOT Table DB1A 40,000 35, PDEW International Domestic $231 30,000 25,000 $193 $187 $190 $188 $195 $199 20,000 37,250 $148 34, ,000 4/Day PIT (US) + 4/Day IAD (UA) $ ,000 5, $ ,950 14,000 13, ,660 11,880 2/Day PIT (US) 8,470 6,430 6,540 2/Day IAD (US) 3/Day IAD (UA) Only recently has this problem been solved, as Colgan switched the affiliation on its Dulles service to United Express, allowing for connections through United s Dulles hub in spring of The increased connectivity with Dulles service on a United-affiliated airline began to become apparent in 2008, as passengers jumped by 56% over 2007, despite the fact that the average fare in the market also increased (see Figure 2). As of calendar year 2009 the market s average one way fare sat at $199 up 107% since Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

14 In the early 2000s, when the Airport had four flights a day to each Pittsburgh and Dulles, with service on both the US Airways and the United Airlines codes, the Shenandoah Valley generated as many as 52.3 passengers per day each way (PDEW) (see Figure 2). By 2006, with EAS service provided only by US Airways Express to and from Dulles, passengers fell to just 8.8 per day each way (PDEW). In the three years since then the Airport has seen passengers grow to 21.6 per day each way (PDEW) an increase of 146% since the lows from the middle part of the decade. The Airport s extensive marketing campaign has been part of the reason for the passenger gains. The Airport has partnerships with more major media outlets in the Valley, and it is able to leverage those partnerships for extensive ad space and air time. The challenge is that the Airport s budget is small, so it is unable to sufficiently blanket the area in such a way as to better discourage passenger leakage. Another challenge to curbing leakage is the fact that the Shenandoah Valley Regional Airport is among the most expensive, in terms of average fare, among the airports in its immediate region. FIGURE 3: Average Domestic One Way Fares at Regional Airports YE1Q10; Source: US DOT Table DB1A Shenandoah Valley Charlottesville Washington Dulles Roanoke As of the year ended first quarter 2010, the average domestic one way fare at Shenandoah Valley was $193 (see Figure 3). Average fares in the Shenandoah Valley are 10% higher than the regional average domestic one way fare of $175 (see Figure 3). Moreover, the Shenandoah Valley s average one way domestic fare is $ higher each way than the average fare at Richmond, of $146 each way as of the year ended first quarter This causes a large number of passengers who live in the SHD catchment area to make the drive to Richmond which is 124 miles each way with a roundtrip drive time of 4:44 in order to access lower priced air service. $174 $182 $180 $193 Richmond $146 Regional Average: $175 $125 $135 $145 $155 $165 $175 $185 $195 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

15 Despite high average fares in 2008, the Shenandoah Valley air service market was able to reverse its passenger traffic downward trend, growing total passengers in each of the last two years. This growth was largely due to the increased convenience of service on the United Airlines code to the Washington Dulles. Month over month growth has also been noted so far in January passengers in 2010 were up 79% over January passengers in 2008 (see Figure 4). At the same time March 2010 passengers were up 11% over the last two years, and April 2010 passengers were up 33% over the same time period. Only February saw a decrease in passengers, and much of that was due to the fact that many flights were cancelled due to the four consecutive snowstorms that hit both the Shenandoah Valley and the United hub at Dulles. FIGURE 4: O&D Passengers at Shenandoah Valley Regional Airport January, February, March, and April ; Source: Shenandoah Valley Regional Airport East Coast Storms Caused Cancellations in February January February March April Now is the time for the Airport to capitalize on this success, by marketing the availability of additional seats in a more aggressive way. The Airport cannot undertake a wide ranging advertising campaign on its own its revenues simply cannot cover that kind of expense. It needs a federal partner for financial assistance in this case. The Airport believes a federal Small Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

16 Community Air Service Development Grant will not only help it publicize its flight availability, but that it will also limit leakage, and capture more local passenger traffic, eventually leading to lower fares. The Airport has a comprehensive plan to achieve its air service goals in line with the SCASDG Program. The Airport s marketing and advertising program includes many media platforms, and will blanket the region, ensuring widespread outreach. The program is the best for the DOT to ensure its EAS funding is being put to its best possible use in the Shenandoah Valley. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

17 DETAILED EXPLANATION OF PROPOSAL The United Airlines hub at Washington Dulles has been, and continues to be, a key connecting point for many cities in the mid Atlantic region. The Shenandoah Valley Regional Airport s access to the Dulles hub is an essential key to its economic success. The Airport currently has three daily flights on Colgan Air, dba United Express, to Dulles, on 34 seat Saab SF340 aircraft (see Figure 5). While the breadth of service at SHD cannot compete with the service found at other regional airports, it plays an essential role in connecting the isolated Shenandoah Valley to the national air transportation system. FIGURE 5: Current Service at the Shenandoah Valley Regional Airport August 2010; Source: Airline Schedules The Airport seeks a Small Community Air Service Development Grant in order to provide marketing and advertising support for Colgan s service to Dulles. With the support of advertising and marketing provided by the grant, Colgan should continue to see passenger increases, allowing it to lower fares in the market to levels closer to those found at Richmond. At the same time, the Airport would hope the increased enplanements from a marketing and advertising program would reduce the burden on the Essential Air Service (EAS) program to provide subsidies in the market. The long term goal under the program would be to increase enplanements to a level where the community s Essential Air Service funding is no longer needed. One of the main reasons for the continued passenger leakage from the Shenandoah Valley Regional Airport, even with lower fares than its competing airports in some cases, is the lack of local knowledge about available air service at SHD. Those who live in the Airport catchment area are not conditioned to check local fares first, before booking flights from other airports throughout Virginia. Local area travelers immediately book flights from Charlottesville, Roanoke, and Richmond, without ever checking to see if fares would be cheaper in the Shenandoah Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

18 Valley itself. This lack of general air service awareness is draining the local economy of valuable travel dollars, as travelers spend more than they would locally by flying from other airports. In order to counteract this harmful trend, which, in effect, wastes valuable Essential Air Service (EAS) dollars, the Airport plans a wide-ranging marketing campaign, saturating the entire Shenandoah Valley. The campaign will include frequent radio, television, and billboard, newspaper advertising, along with FIGURE 6: Current Website Banner Advertising giveaways. The Airport seeks $150,000 in federal funds, to be paired with $20,000 in local funds, which is above and beyond the current Airport marketing budget, to support this marketing and advertising campaign. The campaign is planned to last for at least 12 months, and possibly as long as 18 month depending on the in-kind matching donations made by local media companies. The Airport has already developed a comprehensive marketing and advertising placement plan, which will include large buys on local and regional radio stations, along with local and regional newspapers and magazines (see Figures 6, 7, and 8). The campaign will be focused in the immediate Shenandoah Valley MSA, however it will also have limited ad placement in bordering counties. It will not include any placement in the immediate Charlottesville and/or Richmond airport catchment areas. FIGURE 7: Current Print Advertising Other types of marketing will include new website materials for ease of booking and better awareness of specific flight schedules (see Figures 6, 7, and 8). The Airport also plans specific outreach to area businesses, through Airport-affiliated employees, to meet with those who travel most frequently and ensure they are aware of the benefit of using local air service. The actual advertising will build upon the targeted campaigns that the Airport has been running for the last 18 months. These campaigns push local catchment area residents to check the fares at the local airport before booking their flights, and to think about the time and expense of driving to other airports in the region to access air service (see Figures 6, 7, and 8). Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

19 The campaigns also advertise larger aircraft, as Colgan Air has replaced the 19-seat Beechcraft 1900D with the 34-seat Saab SF340 on the Shenandoah Valley Washington Dulles route. Airport leaders believe the marketing and advertising campaign will dramatically increase awareness of the service offered at the Shenandoah Valley Regional Airport, thus increasing enplanements, and helping, in the long-term, to lower fares in the market, making the Airport more competitive with other airports in the region. Moreover, the Airport believes the marketing and advertising campaign will have an immediate impact. FIGURE 8: Current Print Advertising Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

20 LETTERS OF SUPPORT Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

21 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

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27 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

28 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

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30 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

31 CURRENT AIR SERVICE IN THE SHENANDOAH VALLEY The Shenandoah Valley Regional Airport currently has three daily flights on Colgan Air, dba United Express, to Washington Dulles, on 34 seat Saab SF340 aircraft, operated under the Essential Air Service (EAS) program. The flights operate under an annual subsidy of $1.9 million. This air service is preferable to previous service, provided by Colgan under the US Airways Express brand, offering few onward connections at Dulles. This current service has caused an increase in passengers over the last three years the first such increases in the last decade. Current Passenger Traffic in Shenandoah Valley From the year ended first quarter 2001 to the year ended first quarter 2008, the Shenandoah Valley Regional Airport recorded origin and destination passenger declines of 79%, from 42,650 total origin and destination passengers, or 58.4 passengers per day each way (PDEW), to just 8,930 total passengers, or 12.2 passengers per day each way (see Figure 9). But in the year ended first quarter 2009 and in the year ended first quarter 2010 the Airport finally saw the trend reverse. FIGURE 9: O&D Passengers and Average One Way Fares, Shenandoah Valley Regional Airport YE1Q01 YE1Q10; Source: US DOT Table DB1A ,620 PDEW International Domestic 40,000 $246 35,000 $219 30,000 $ $210 $195 $203 25,000 $182 $178 20,000 15,000 10,000 5,000 41,030 28, ,160 11, , , ,130 $ ,870 $ , ,310 15, ,370 16,120 0 YE 2001-Q1 YE 2002-Q1 YE 2003-Q1 YE 2004-Q1 YE 2005-Q1 YE 2006-Q1 YE 2007-Q1 YE 2008-Q1 YE 2009-Q1 YE 2010-Q1 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

32 In the year ended first quarter 2009 passengers grew by 83% over the year ended first quarter 2008, with an increase of 10.2 passengers per day each way (PDEW) (see Figure 9). Passengers again grew from the year ended first quarter 2009 to the year ended first quarter 2010 up slightly by 6.8%, or 1.5 passengers per day each way (PDEW). Much of the passenger growth in the last two years can be attributed to the re-timing of flights on the Shenandoah Valley Washington Dulles route. In the year ended first quarter 2008, flights from Shenandoah Valley to Dulles did not connect to the early morning bank, and the return flights did not connect from the last evening bank. Colgan made major changes to its SHD schedule in the year ended first quarter 2009, allowing for an aircraft to overnight at Shenandoah Valley Regional Airport, connecting to the two most important banks of the day at Dulles on United Airlines. This new schedule allowed total enplanements to grow despite average airfares that jumped by 31%, to almost $420 roundtrip as of the year ended first quarter 2010 (see Figure 9). Previous passenger declines were also due to the fact that the Shenandoah Valley Regional Airport had seen numerous changes in its Essential Air Service (EAS) provider, including airline and destination [A] new schedule allowed total enplanements to grow despite average airfares that jumped by 31%, to almost $420 roundtrip changes. The Airport s long standing service to US Airways Pittsburgh hub was cancelled in Colgan Air, the EAS provider in the Shenandoah Valley, elected to move service to Washington Dulles, but retain the US Airways affiliation. This caused a lack of connectivity, due to the limited number of US Airways flights at Dulles that dramatically suppressed local passenger traffic and revenue. As of the year ended first quarter 2008 that problem was solved, as Colgan switched the affiliation on its Dulles service to United Express, allowing for connections through United s Dulles hub. But the re-timing of the flights was the key ingredient to allow Shenandoah Valley travelers to use their hometown airport more efficiently. An interesting trend emerged in 2008 in terms of the ranking of origin and destination cities for Shenandoah Valley travelers and it continues in the year ended first quarter For the first time since 2004 a market other than Washington, DC was ranked as the number one passenger destination. As of the year ended first quarter 2010, Chicago O Hare ranks as SHD s number one origin and destination passenger airport, as Washington Dulles continues its fall down to number 13 on the list (see Figure 10). Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

33 As of the year ended first quarter 2010, the SHD ORD market saw 1,200 total origin and destination passengers (see Figure 10). Boston, Denver, and Orlando were the next largest FIGURE 10: Top 25 O&D Passenger Markets, Shenandoah Valley Regional Airport, YE1Q01 YE1Q10; Source: US DOT Table DB1A Chicago O'Hare Boston Denver Orlando Dallas/Ft. Worth San Francisco Seattle Hartford Phoenix New York LaGuardia Newark Houston Washington Dulles Los Angeles Kansas City Cleveland Indianapolis Tampa Columbus San Diego Sacramento St. Louis Atlanta Nashville Austin passenger markets, each averaging around a passenger per day each way (PDEW) as of the year ended first quarter Washington Dulles local traffic fell to just half a passenger per day each way (PDEW) as average fares in the market continued to increase. This passenger traffic shift is indicative of the fact that, in the year ended first quarter 2008, the number of passengers connecting beyond Washington Dulles was low largely due to the fact connections required a change of airline, with Colgan service operating under the US Airways Express name, instead of the current United Express service. Moreover, connections beyond Dulles were difficult, suppressing origin and destination passenger numbers, due to the poorly timed schedule. 1, ,000 1, Annual Passengers PDEW 1.64 With more conveniently timed schedules and better connectivity directly to United Airlines destinations on the same ticket, connecting traffic grew in the year ended first quarter 2009, allowing Chicago to become the top passenger destination. This connectivity also allowed Shenandoah Valley to grow total passengers despite some of the highest average fares in the mid-atlantic region. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

34 As of the year ended first quarter 2010, the overall average one way fare at the Shenandoah Valley Regional Airport was $219 each way, or $418 roundtrip (see Figure 11). Fares on even short itineraries were much higher than the same fares at other airports in the region. For example, the average fare to Washington Dulles was $137 each way before taxes and fees. At the same time, the average one way fare to New York LaGuardia was $197 each way almost $400 roundtrip. High average fares in the Shenandoah Valley market have the effect of, not only, suppressing overall passenger traffic, but also causing much of the region s passenger traffic to leak to other airports. With fares at Charlottesville, Richmond, and the Washington, DC airports all lower than the fares at the Shenandoah Valley Regional Airport the majority of local passengers access air FIGURE 11: Average One Way Fares at Top 25 O&D Markets, YE1Q01 YE1Q10; Source: US DOT Table DB1A Chicago O'Hare Boston Denver Orlando Dallas/Ft. Worth San Francisco Seattle Hartford Phoenix New York LaGuardia Newark Houston Washington Dulles Los Angeles Kansas City Cleveland Indianapolis Tampa Columbus San Diego Sacramento St. Louis Atlanta Nashville Austin $159 $133 $207 $184 $189 $210 $204 $136 $270 $197 $166 $153 $137 $193 $165 $162 $186 $124 $156 $223 $217 $161 $251 $171 $216 SHD Average: $219 $0 $50 $100 $150 $200 $250 transportation from these other airports. Another effect is that local travelers become conditioned not to check fares at SHD booking tickets directly from these other airports without ever looking at the local fare. The Airport must use this Grant opportunity to educate its catchment area to, at least, check local fares first. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

35 Current Aircraft Serving the Shenandoah Valley In 2007, Colgan operated two different turboprop aircraft at the Shenandoah Valley Regional Airport. However, in 2008, Colgan concentrated all operations on 34 seat Saab SF340 turboprops (see Figure 12), eliminating all service in 19 seat Beech B1900s. This move was encouraged by Airport leaders, as it offers all service on larger aircraft, with flight attendants and lavatories. The Airport had long pushed for the end of service on B1900s, due to the cramped cabin and the lack of amenities. The Airport did find, with all flights now on larger aircraft, it was in a better position to compete with the service at other airports in the region. Moreover, the larger aircraft resulted in a net gain of available seats that allowed passengers to find additional low fare seats in the market. FIGURE 12: Colgan Air Saab SF340 In United Express Color Scheme The biggest challenge, however, has been the general lack of knowledge about the size of the aircraft serving the market. Most in the market still believe flights are provided on cramped 19- seaters, so they don t bother to check local service before choosing other airports in the region. The Airport still hopes to overcome this perception by launching its advertising campaign will the help of a Small Community Air Service Development Grant. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

36 AIR SERVICE DEFICIENCIES IN THE SHENANDOAH VALLEY Although the Shenandoah Valley Regional Airport catchment area represents a relatively small proportion of the population of the larger region, the Airport does not come close to retaining the number of passengers equal to its share of the regional population. In other words, the Airport is leaking a large percentage of its passengers to other airports even though those airports are not particularly close. The Shenandoah Valley Regional Airport metropolitan area had a population of 235,579 as of the latest US Census estimates (see Figure 13). The larger region comprised of the metro areas of Washington, DC (through Dulles Airport), Richmond, Roanoke, and Charlottesville has a current population of 10,249,101. The Shenandoah Valley s share of the regional population is 2.3%. FIGURE 13: Regional Population Distribution Source: US Census Estimates Regional Population SHD IAD RIC ROA CHO Population Share Washington Dulles (IAD) 8,295, % Richmond (RIC) 1,225, % Roanoke (ROA) 298, % Charlottesville (CHO) 194, % Shenandoah Valley (SHD) 235, % Source: US Census Share of Population of Combined SHD/IAD/RIC/CHO/ROA Catchment Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

37 In many markets, an Airport draws a number of passengers proportional to its overall population in the region. If that were to be the case in the Shenandoah Valley market, one could reasonably expect the Airport to retain about 2.3% of the total passengers using all five airports in the larger region. However, in the case of the Shenandoah Valley, the Shenandoah Valley Regional Airport does not retain anywhere close to that percentage of the region s passengers. While the Shenandoah Valley metro area is home to 2.3% of the region s total residents, its airport retains just 0.12% of the region s total origin and destination passengers (see Figures 14 and 15). In the region, the Shenandoah Valley has the lowest share of passenger retention of any airport. As of the year ended first quarter 2010, the Shenandoah Valley Regional Airport saw a total of 17,490 passengers. If the Airport had been able to retain the number of regional passengers proportional to its share of population in the region, it would have been used by another 329,940 passengers. In effect, the Shenandoah Valley Regional Airport leaked these passengers to other airports in the region a leakage rate of 95%. The Shenandoah Valley Regional Airport only retains about 5% of the passengers that should be expected based on its share of the regional population. The largest beneficiary of the Shenandoah Valley s passenger leakage is Richmond which is two hours and 20 minutes away by car. Richmond had reverse leakage as of the year ended first quarter 2010, when it drew 50% more passengers than its proportion of the regional population. While the Richmond area makes-up 12% of the region s population, it boards almost 21% of the region s total origin and destination passengers (see Figures 14 and 15). If Richmond retained a number of origin and destination passengers proportional to its regional population share, it would be expected to generate 1.8 million passengers annually. As of the year ended first quarter 2010, Richmond saw a total of 3.2 million O&D passengers 50% above its regional share. At least 250,000 of those passengers likely came at the expense of the Shenandoah Valley Regional Airport. FIGURE 14: Regional Population Share Source: US Census Estimates ROA 2.90% RIC 12.00% CHO 1.90% SHD 2.30% CHO 2.28% IAD 80.90% FIGURE 15: Regional O&D Passenger Share Source: US DOT Table DB1A RIC 20.93% ROA 3.76% SHD 0.12% IAD 72.91% Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

38 Another way of determining passenger leakage from the Shenandoah Valley market to other airports in the region is by comparing the economy of the Shenandoah Valley to the economies of the nearest four cities with commercially-served airports. The easiest way to gauge each catchment area s contribution to the economy of the region is to compare the gross metropolitan products (GMP) of each. A GMP is much like a gross national product an overall gauge of economic activity in a specific area, measured in dollars earned. The United States Council of Mayors reports the Shenandoah Valley metro area produced a GMP of $7.7 billion, which represented 1.6% of the total gross regional product (GRP) of the area including the Washington, DC (through Dulles Airport), Richmond, Roanoke, and Charlottesville metro areas (see Figure 16). FIGURE 16: Regional Gross Metropolitan Product (GMP) Distribution Source: US Council of Mayors Gross Metropolitan Product (GMP) SHD IAD RIC ROA CHO GMP Share Washington Dulles (IAD) $383.4 Billion 81.0% Richmond (RIC) $61.2 Billion 12.9% Roanoke (ROA) $8.7 Billion 1.8% Charlottesville (CHO) $12.4 Billion 2.6% Shenandoah Valley (SHD) $7.7 Billion 1.6% Sources: United States Council of Mayors, June 2008 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

39 The Washington, DC/Dulles area generated the largest portion of the GRP, with $383.4 billion, or 81.0%, while Richmond produced a GMP of $61.2 billion good for 12.9% of the GRP (see Figure 16). Charlottesville, despite a smaller population than Roanoke, produced a larger GMP, with $12.4 billion in economic activity or 2.6% of the region s GRP. Roanoke produced 1.8% of the GRP on total economic activity of $8.7 billion. Despite producing 1.6% of the total gross regional product (GRP), the Shenandoah Valley Regional Airport retains just 0.12% of the region s total origin and destination passengers (see FIGURE 17: Regional GMP Share Source: US Council of Mayors Figures 17 and 18). In the region, the Shenandoah Valley has the lowest share of passenger retention relative to its gross metro product (GMP), of any airport. CHO 2.60% SHD 1.60% RIC 12.90% ROA 1.80% IAD 81.00% FIGURE 18: Regional O&D Passenger Share Source: US DOT Table DB1A RIC 20.93% ROA 3.76% SHD 0.12% CHO 2.28% As of the year ended first quarter 2010, the Shenandoah Valley Regional Airport generated a total of 17,490 origin and destination passengers. If the Airport had been able to retain the number of regional passengers proportional to its share of the GRP, it would have been used by another 224,200 passengers. In effect, the Shenandoah Valley Regional Airport leaked these passengers to other airports in the region a leakage rate of 93%. The Airport only retains about 7% of the passengers that should be expected based on its share of the gross regional product. IAD 72.91% There appears to be a large beneficiary of the Shenandoah Valley s passenger leakage: once again, it s Richmond. Richmond experienced reverse leakage as of the year ended first quarter 2010, when it drew almost 50% more passengers than its proportion of the gross regional product (GRP). While the area surrounding Richmond generates 12.9% of the GRP, Richmond s Airport boards more than 20.9% of the region s total origin and destination passengers (see Figures 17 and 18). If Richmond retained a number of origin and destination passengers proportional to its GRP share, it would be expected to generate 1.9 million passengers annually. As of the year ended first quarter 2010, Richmond saw a total of 3.2 million O&D passengers nearly 50% above its projected GRP share. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

40 It has been established that the Shenandoah Valley Regional Airport is losing a significant number passengers from its catchment area. Attention then turns to the reasons why travelers are driving to other airports airports that aren t particularly close. As is the case with many other airports experiencing leakage, it all The Shenandoah Valley Regional Airport could make the case that the time savings of avoiding Dulles on the ground would make up for the lack of flight frequencies and non-stop destinations. comes down to the availability of flights on the right airlines at the right times and the fares on those flights. It appears that travelers in the region s smaller airport catchment areas don t necessarily have a realistic idea of the air service available at their hometown facilities, versus what s available at larger airports. The Shenandoah Valley Regional Airport could make the case, with its flight schedule, that the time savings of avoiding Dulles on the ground would more than make up for the lack of specific flight frequencies and non-stop destinations. At this point, it appears the airports in the region, including the Shenandoah Valley Regional Airport, aren t doing a sufficient job of educating the public about the availability of local air service, despite fewer available seats and higher fares. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

41 EXTENUATING FACTORS AFFECTING AIR SERVICE Due to Shenandoah Valley Regional Airport s status as an Essential Air Service (EAS) market, the Airport is only allowed to have service on one airline. This manifests itself in the form of no local competition for air service, which leads to local fares that have been demonstrated to not be competitive with the other airports in the region. Due to the fact that the EAS program only allows for certain flight activity to be maintained, the Airport can have no more than three daily weekday departures. This limits, not only, connectivity beyond the Dulles hub on United, but also the convenience of the scheduled departure and arrival times. Moreover, airlines that serve the Shenandoah Valley Regional Airport offer far fewer seats available for sale in the Shenandoah Valley than they do at other adjacent airports in the region. Airlines offered just 45,680 total available seats in the Shenandoah Valley as of the year ended first quarter 2010, or 63 departing seats per day (see Figure 19). As of the year ended first quarter 2010, airlines offered six times the available seats in Charlottesville that they offered in the Shenandoah Valley, nine times the available seats in Roanoke, FIGURE 19: Available Departing Seats at Regional Airports Source: US DOT T100 Data 14, ,000,000 SDEW Departing Seats 8,000,000 6,000,000 4,000,000 2,000, ,665,359 2, ,167, , ,216 45,680 more than 47 times the available seats in Richmond, and 234 times the available seats at Washington Dulles as they offered in the Shenandoah Valley (see Figure 19). The lack of sufficient available seats for sale in the Shenandoah Valley market forces many travelers to drive to other airports to access the national air transportation system. The small number of available seats at the Shenandoah Valley Regional Airport as of the year ended first quarter 2010 is Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

42 partially responsible for the Airport s inability to retain a number of origin and destination passengers proportional to its population and gross metropolitan product. It must be noted that straight available departing seat data doesn t necessarily fairly compare subject markets. A better way to determine how underserved a market really is, is to compare the number of available departing seats per capita or per resident of each airport s immediate catchment area. Airlines serving the Shenandoah Valley Regional Airport offered just 0.19 departing seats per capita as of the year ended first quarter 2010 (see Figure 20). That was, by far, the lowest FIGURE 20: Available Departing Seats Per Capita Source: US DOT T100 Data, US Census Estimates Richmond Roanoke Charlottesville Washington Dulles Shenandoah Valley Regional Average: 1.33 Seats number of departing seats of any airport in the immediate region. By comparison, airlines serving Washington Dulles offered 1.29 seats per capita as of the year ended first quarter 2010, airlines serving Charlottesville offered 1.42 seats per capita, airlines serving Roanoke offered 1.47 seats per capita, and airlines serving Richmond offered 1.77 seats per capita as of the year ended first quarter With fewer available seats and higher average fares, there isn t much incentive for Shenandoah Valley travelers to fly from their hometown airport, other than its convenience. In many cases, the convenience does not outweigh the greater flight offerings and lower fares at other airports in the region even though the closest of those other competitive airports is a two and a half hour drive away. The only proven way to get more people to use local airline service is to better market its benefits. As seen in the detailed explanation of this proposal, the Airport has a creative, eyecatching, and focused advertising and marketing program ready to go, to promote its local air service and to boost local enplanements. All the Airport needs to make the program a reality is the assistance of federal funding, to help spread the message on a wide scale, and ensure the best possible advertising distribution. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

43 AVAILABILITY OF ALTERNATE AIRPORTS The Shenandoah Valley Regional Airport serves the geographically isolated Shenandoah Valley, which is surrounded on all sides by mountains in the Appalachian Range. As such, the region is not well served by alternate airports, even though there are a number of airports nearby. The closest alternate airport is Charlottesville, which lies 58 miles away, a drive of an hour and 15 minutes (see Figure 21). Access to Charlottesville is more difficult than it would appear due to steep topography and the lack of interstate access. A number of Shenandoah Valley travelers fly in and out of Washington Dulles, which is 132 miles to the northeast of the area (see Figure 21). The drive from the Shenandoah Valley to Dulles takes more than two hours and 30 minutes. FIGURE 21: Airports in the Same Region as Shenandoah Valley Regional Airport Other alternates include Richmond, Roanoke, and Washington Reagan National, but none of these airports is close enough to the Shenandoah Valley to offer true air service access. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

44 USE OF LOCAL FEDERAL FUNDS Marketing and Advertising The Shenandoah Valley Regional Airport proposes to spend a total of $170,000 on marketing and advertising promotions in support of United Express service to Washington Dulles. This funding should be sufficient to blanket the market with the message that local service is more convenient than service provided at other airports in the region. The campaign will be developed so that it targets specific segments of the population who are most likely to fly locally. For examples, see the detailed explanation of the proposal section of this application. Additional Costs As part of this program, the Shenandoah Valley Regional Airport understands that additional expenses will be incurred, such as monitoring the results of the program and reporting those results back to the US DOT. The Airport will pay for these additional expenses out of other airport sources and will not incorporate these fees and charges into this proposal. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

45 PUBLIC/PRIVATE PARTNERSHIPS A number of local partners will be working with the Shenandoah Valley Regional Airport to promote and market the new service. Contacts will be made to all regional members of chambers of commerce and similar organizations, and those with an interest in growing the economic base of the community through local business growth, attraction of new businesses and the promotion of tourism and visitor traffic via the airport. Shenandoah Valley Partnership The Shenandoah Valley Partnership acts as an information bridge between the Shenandoah Valley Regional Airport and the region s businesses. The Partnership represents thousands of businesses in 16 counties across the Shenandoah Valley. As the lead marketing agency in the region, the Partnership is in a unique position to spread word about new air service in the market, and to promote its use. The Partnership is ready to use its resources to promote service to Washington Dulles. Harrisonburg-Rockingham Chamber of Commerce The Harrisonburg-Rockingham Chamber of Commerce works to promote the development of its region of the Shenandoah Valley market. As such, its leaders realize the importance of convenient air service at the Shenandoah Valley Regional Airport. The Harrisonburg- Rockingham Chamber is proud to partner with the Airport in advertising and marketing new service. Moreover, the Chamber continues to work closely with Airport leaders to ensure the success of air service in the market. Greater Augusta Chamber of Commerce The Greater Augusta Chamber of Commerce plans to partner with the Shenandoah Valley Regional Airport to help promote and market Washington Dulles service. The Chamber will communicate with all business and community members through , mailings, and events, the importance of supporting local air service at the Shenandoah Valley Regional Airport. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

46 IMPLEMENTATION TIMELINE The Airport s proposed implementation timeline for the project assumes the Department will award Small Community Grant Funding in December Once the award is announced, the Shenandoah Valley Regional Airport will begin work with private marketing and advertising firms, along with Colgan Air and United Airlines, to build the campaign materials and to finalize the placement plan. The first two milestones on the Airport's timeline are to execute the grant agreement with the Department and execute an agreement with a marketing and advertising firm to begin work. These milestones should be achieved by the end of January Additionally, the Airport will submit grant status reports on a quarterly basis to the Department throughout the proposed term of the marketing and advertising program. The specific timeline is listed below. Activity/Project Milestone Estimated Date SCASD Grant Award Announcement December 2010 Executive Grant Agreement with DOT January 2011 Executive Agreement with Marketing Firm January 2011 Develop Creative February 2011 Develop Comprehensive Placement Strategy February 2011 Launch Campaign March 2011 Sustain Campaign March May 2012 Monitor Route Performance March May 2012 Submit Grant Status Reports to DOT Quarterly Q Q Close Grant May 2012 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

47 AIR SERVICE ADVISORY GROUPS The Shenandoah Valley Regional Airport Commission oversees all air service provided at the Airport, along with efforts to increase local air service. The group is made-up of a number of community leaders, who all share the common goal of keeping the Shenandoah Valley wellconnected. The Commission will be in charge of administering the Small Community Air Service Development Grant under this program. The Commission also oversees all the marketing and advertising activities of the Airport. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

48 LOCAL AIR SERVICE DEVELOPMENT EFFORTS Over the past seven and half years, the Shenandoah Valley Regional Airport has been working diligently to restore air service and passenger traffic to pre-2001 levels. Since that time, the Airport has experienced numerous set-backs including US Airways elimination of the Pittsburgh hub in The carrier serving the market at the time switched the hub destination to Washington Dulles a large United hub but it continued to operate service as US Airways Express. The net result was high fares and poor connectivity due to the limited service US Airways provided at Dulles. The Airport, in conjunction with the incumbent air carrier, Colgan Air, made a substantial change in service in 2008, when Colgan received permission, from United, to operate the service to Washington Dulles under the United Express name. This change brought about significantly lower fares, along with significantly improved connectivity. Moreover, the 19 seat Beechcraft 1900 previously operated in the Shenandoah Valley was changed to a 34 seat Saab 340 aircraft. The Airport maximized local resources to help inform the community of the significant changes, and while substantive increases passenger traffic have been achieved, the Airport does not have the local financial resources to make the change in service widely known. After seven and half years of having service which was not competitive or attractive, the Airport needs to execute a well funded marketing and promotional program to educate the public that even though the hub destination has not changed, the fares, connectivity, schedules and equipment have improved dramatically as a result of the switch to United Express and the larger aircraft. The goal is to recapture passengers that have been lost in the past several years and lessen the region s dependence upon, or possibly eliminate the need, for Essential Air Service funding. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

49 IN-KIND SERVICES FROM COMMUNITY The following organizations will help promote the new service through their various membership groups. There is no estimated value to these services. Shenandoah Valley Regional Airport Commission Shenandoah Valley Partnership Harrisonburg-Rockingham Chamber of Commerce Greater Augusta Chamber of Commerce Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

50 PERFORMANCE MEASURES The success of the program will be based on a pair of variables. The Airport will judge the first measure of success by the increased number of enplanements on United Express service to Washington Dulles. The second measure of success will be based on how much average airfares charged in the community have gone down, with the increase in enplanements. The measurement of enplanements will include a monthly comparison, once the program begins, to past enplanements numbers. The measurement of airfares will be derived from US DOT OD1A reports. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

51 LEGAL SPONSOR The Shenandoah Valley Regional Airport is the legal sponsor responsible for administering the program. The Shenandoah Valley Regional Airport is a government entity. Shenandoah Valley Regional Airport 77 Airport Circle Weyer s Cave, Virginia Greg Campbell, Airport Director gcampbell@flyshd.com Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

52 FINANCIAL CONTROLS As the sponsor, the Shenandoah Valley Regional Airport will be the responsible party for all fiscal matters and DOT reporting requirements. The group is established as an Airport Authority, which is a public governing body. As a public entity the DOT can be assured that proper financial controls are in place to guarantee that the DOT s grant will be used in accordance with any subsequent agreement. The Airport understands that the grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will submit invoices to the DOT for reimbursement, based on a percentage of the total grant request. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

53 RETURN ON INVESTMENT The Shenandoah Valley Regional Airport has developed a cost effective and achievable strategy to increase enplanements and lower airfares at the Airport. The proposal uses proven methods of achieving air service improvements, allowing the DOT to be comfortable with choosing this proposal. The increased awareness of air service, increased enplanements on the service, and access to lower airfares with increased enplanements, is in line with the major goals of the Small Community Air Service Development Program. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

54 DOT EXIT STRATEGY The Shenandoah Valley Regional Airport has developed this proposal as a one-time grant. The advertising and marketing program will commence as soon as this grant is awarded and last for at least twelve months. It is projected that local enplanements will grow within the first few months of the launch of the advertising program. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

55 AIRPORT INFORMATION The Shenandoah Valley Regional Airport is located in Weyer s Cave, Virginia, a short drive for residents of three major regional cities and a number of smaller towns. The Airport was placed in its current location as a gateway to the region, instead of a portal to just one city, and as such, it draws passengers from a large swath of the Shenandoah Valley region. Convenient to Harrisonburg, Waynesboro, and Staunton, as well as Augusta and Rockingham counties in Virginia, and Interstates 81 and 64, the Shenandoah Valley Regional Airport serves thousands of passengers each year for both business and pleasure. SHD is constantly working to improve not only their facilities, but the services they offer to those who use them. Their goal is to make travel affordable and convenient. While the Airport has just one commercial carrier currently, it averages more than 71 operations a day, or more than 26,000 operations per year, making it one of the busier one runway airports in Virginia. That one runway is just over 6,000 feet long, with an ILS (instrument landing system) approach on one end (see Figure 22). The runway can handle virtually any regional aircraft in virtually any weather conditions. Figure 22: Aerial Photo, Shenandoah Valley Regional Airport, 2010 The Airport has a modern terminal, with plenty of room for additional passengers. The incumbent airline, Colgan, is the only tenant at the ticket counter, with plenty of space. The terminal is designed to handle additional airlines and additional passengers. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

56 SHENANDOAH VALLEY COMMUNITY PROFILE The Shenandoah Valley of western Virginia and eastern West Virginia is nestled between the Blue Ridge Mountains to the east and the Appalachian Mountains to the west and is a part of the Great Appalachian Valley that runs though Virginia and North Carolina. The Valley is home to the large cities of Staunton, Harrisonburg, and Waynesboro. It encompasses seven counties in Virginia and two in West Virginia. The Valley was named by the Native Americans who first settled it thousands of years ago. The word Shenandoah means beautiful daughter of the stars in their native language. The Valley has long been a major migratory path, first for the Delaware and Catabwa tribes, and later for the European settlers who formed the United States. Today the Shenandoah Valley has grown beyond is transitory and agricultural roots to become the economic and tourist center of the northern Appalachian Mountains. The Valley is home to a number of major resorts including the world renowned Homestead, which is a nationally recognized golf and ski resort. The region is also home to a number of cultural attractions, as it is situated just 153 miles from the Nation s capital. The Valley is the birthplace of the Blue Ridge Parkway arguably the most famous drive in the eastern US winding through the majestic Blue Ridge Mountains. Tourism services is the largest sector of employment in the Shenandoah Valley, with more than 41,000 people working in the field. The region also has major investment in food processing, with worldwide companies such as Coors, Hershey, Perdue, Tyson, and Pilgrim s Pride operating large processing facilities in the region. The Shenandoah Valley economy has grown more diversified, and more high-tech in the last decade, with Merck operating a large pharmaceutical plant and Wayn-Tex opening a major operation developing new age plastics and resins. With new economic development, per capita personal income in the Shenandoah Valley is at an all-time high, keeping pace with the Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

57 major urban areas of the mid-atlantic region, at $32,229 according to statistics from the Virginia Economic Development Partnership. The Valley is home to no fewer than 15 colleges and universities, including such well known schools as the University of Virginia, Virginia Military Institute, James Madison University, and Liberty University. Together, these schools enroll more than 75,000 full-time students within a two-hour drive of the Shenandoah Valley Regional Airport. What s New in the Shenandoah Valley The Shenandoah Valley is growing in the diversity of its economic interests. The colleges and universities located in the region have become incubators for new, high-tech ideas, allowing companies located in the area to make great strides in research and development. The Shenandoah Valley partnership offers a number of grants and research sponsorships, allowing universities to recoup the cost of the development of new technologies, then transfer those technologies to new companies that can market the ideas. At the same time, the Airport has seen significant new development, as detailed in this recent press release: Shenandoah Valley Regional Airport and Dynamic Aviation Announce Agreement for Future Development The Shenandoah Valley Regional Airport Commission announced today that Dynamic Aviation of Bridgewater, Va. has agreed to a long-term ground lease agreement with the Airport Commission for future Corporate Hangar construction at Shenandoah Valley Regional Airport. Dynamic Aviation through its affiliate, Shenandoah Hangar, LLC., has agreed to a ground lease in the Airport s North Corporate Hangar Development Area for potentially the next 40 years. This will allow Dynamic Aviation the opportunity to construct Hangar space to support their growing flight operations. Dynamic Aviation Group, Inc. is a leading supplier of aerial platforms throughout the world. The company was founded in 1967 and has enjoyed continued growth and diversification in their business since that time. They are headquartered in Bridgewater, Virginia and now employ approximately 400 aviation professionals. According to Michael Stoltzfus, President and Chief Executive Officer of Dynamic Aviation, "We are excited about the growth opportunities this agreement provides. The Shenandoah Valley Regional Airport provides the necessary infrastructure, facilities and all weather capabilities that will be required to support a portion of Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

58 our growing operation in the years to come. We look forward to growing our business in the Shenandoah Valley." Gerald Garber, Chairman of the Shenandoah Valley Regional Airport Commission commented, "We are extremely pleased that Dynamic Aviation has decided that Shenandoah Valley Regional Airport will be a part of their continued growth. We look forward to partnering with Dynamic Aviation to meet their future aviation needs here in the Valley." The Interstate 81 corridor is now known as the Education and Technology Corridor, which runs the length of the Shenandoah Valley Universities in the Corridor are currently working on a number of new research projects, with more than $100 million in grants and start-up capital. The projects range from the pharmaceutical field to improving the internet and preventing terrorist attacks. James Madison University received $25 million in external funding to improve laboratory facilities with new high-tech research instruments. The money came from various sources, including the federal and State government, private industry, and foundations. The Shenandoah Valley Technology Council is working with James Madison University on a full-scale study of broadband internet access and connectivity. The study will likely lead to major changes in the availability of broadband in the State, connecting many more residents to reliable internet access. Researchers at James Madison University are developing new strategies to protect the nation s high-tech infrastructure from acts of terrorism. The University is one of the few in the US names as a center for excellence by the National Security Agency. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

59 The Shenandoah Valley is a center for biofuels, as both James Madison University and the City of Harrisonburg were noted for their outstanding research and development of an alternative fuel refinery in the region. Shenandoah Valley Economic Overview The Shenandoah Valley has long been a center for trade, transportation, and agriculture. The region s good growing climate and easy access has made it a center for processing facilities producing everything from chocolate to chicken. These facilities form a strong, stable economic base. But today, the economy of the region has grown and diversified from its roots. More people in the Shenandoah Valley work in sales and office support jobs than in any other occupation (see Figure 23). Managerial and administrative jobs also make up a large portion of current employment by occupation in the Valley. Altogether, 50.1% of job in the region are considered white collar business services and administrative positions with very high relative pay. This is the reason why the Shenandoah Valley s per capita income tops $32,229 annually. The Harrisonburg area also has an unemployment rate of only 6.7% (June 2010), quite a bit lower than the national average of 9.5% Figure 23: Employment by Occupation, Shenandoah Valley, 2009 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

60 The Shenandoah Valley s high quality of life has drawn many major companies to locate facilities in the area. The Valley is currently home to five Fortune 1000 companies. These companies employ more than 10,000 people in the Shenandoah Valley Regional Airport s catchment area many in highly mobile sales and administrative positions. Figure 24: Top Employers in the Shenandoah Valley Source: Virginia Economic Development Partnership, 2010 Employer Approx. # of Employees James Madison University 4,000 Augusta Medical Center 2,000 Merck Pharmaceuticals 1,300 INVISTA 1,250 Lee s Carpets 1,250 McKee Foods 1,250 Pilgrim s Pride 1,200 Target Stores 1,200 The Homestead Resort 800 Hershey Chocolate 750 Marshall s Stores 750 Coors Brewing 500 Graham Packaging 500 American Safety Razor Company 500 Perdue Farms 400 Tyson Foods 400 Mohawk 400 Figure 25: Fortune 1000 Companies in the Shenandoah Valley Source: Fortune Magazine, 2009 Firm Rank Revenues Target 28 $64.9 Billion Tyson Foods 89 $28.1 Billion Merck 103 $23.9 Billion Pilgrim s Pride 304 $ 8.5 Billion Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

61 Select Company Profiles Merck Pharmaceuticals Established in 1891, Merck is one of the country s oldest pharmaceutical firms, producing a number of drugs used to treat hundreds of ailments. Merck is also one of the world s largest companies, employing more than 50,000 people worldwide. With markets in 100 countries, Merck is based in New Jersey. Its Shenandoah Valley operation draws upon the research and development of a number of area colleges and universities to develop new medical solutions. INVISTA INVISTA is a pioneering firm in the manufacturing of synthetic fibers and polymers. INVISTA s best known brand is Lycra, the stretchy material used in a number of clothing applications. INVISTA is one of the Shenandoah Valley s largest employers, with a major research and manufacturing facility in Waynesboro. The company is based in Wichita, Kansas. Target Stores Based in Minneapolis, Target is one of the world s largest and most recognized retailers. With annual sales topping $59 billion, Target is listed as the 33 rd largest company in the US. Target operates its largest east coast distribution center in the Shenandoah Valley, sending products to all of its stores in the northeastern and mid-atlantic corridors. Pilgrim s Pride The largest poultry producer in the US, Pilgrim s Pride has operated farms in the Shenandoah Valley for more than 60 years. The company has 54,000 worldwide employees, with major farms and processing facilities in Alabama, Arkansas, Florida, Georgia, Kentucky, North and South Carolina, Iowa, and Tennessee. The company is based in Texas. The company exports chicken products to more than 80 countries. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

62 Coors Brewing Company A subsidiary of Molson-Coors, Coors Brewing Company is the second largest brewer in the US, and one of the oldest as the company was founded in The company has two major brewing facilities in the country in Golden, Colorado, and in the Shenandoah Valley of Virginia. Coors produces products that are sold in all US states, along with Canada, Mexico, and the Caribbean. Shenandoah Valley Tourism In recent years, the Valley s economy is has also grown to accommodate the tourist trade. Shenandoah is a well known destination around the country. The Valley s beautiful mountain setting draws more than two million annual visitors. The region offers outdoor activities for all seasons, with many ski resorts, and golf resorts. Moreover, the Valley is located in the cultural heartland of the country, as many of the nation s founders lived and worked in the region. Today their homes, businesses, and communities draw tens of thousands of tourists seeking historical pursuits. In 2008 the Shenandoah Valley saw total travel expenditures of nearly $800 million. The Shenandoah Valley stretches for nearly 200 miles, along the Shenandoah River, between the Blue Ridge and Allegheny Mountains both ranges in the Appalachian chain. Nicknamed the big valley, Shenandoah has been immortalized in a number of films, songs, and television shows. The Valley was first settled by Europeans in the mid-1700s. It has some of the oldest and most significant historical sites in the country, many of which relate to the founding of the United States, and its early leaders. During the Civil War the Shenandoah Valley was nicknamed the breadbasket of the Confederacy due to the wide swaths of agricultural lands and the fertile soil that grew crops to help feed Confederate soldiers. Later, the Valley was home to President Woodrow Wilson who s family has established a library and museum in the Valley today. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

63 The Shenandoah Valley features picture-postcard farms and inns along country roads and the popular Skyline Drive and Blue Ridge Parkway, probably the most beautiful parkway in the nation. One of the natural wonders of this world is the 100-million-year-old Natural Bridge. The region also has many caverns, which include Shenandoah Caves, with an elevator to take you underground. The region is home to dozens of hiking trails, paddle sports, and horseback riding in the Blue Ridge Mountains. Moreover, there are a number of popular resorts in the Shenandoah Valley, including Bryce, the Homestead, and Massanutten. Shenandoah National Park Appropriately, the Shenandoah Valley Regional Airport is the gateway to Shenandoah National Park, which draws more than 1.2 million visitors to the region per year. The Park is located along the crest of the Blue Ridge Mountains, with hiking trails that lace the hillsides. The Park also has the largest wilderness area on the east coast 40% of its area is designated as wilderness that cannot be developed. Blue Ridge Parkway The famed Blue Ridge Parkway runs along the ridge of the Blue Ridge Mountains from Shenandoah National Park all the way to the Great Smoky Mountains National Park in North Carolina and Tennessee. The Parkway hosts more than three million vehicle trips per year. The Parkway runs a total of 469 miles, with the Shenandoah Valley Regional Airport located at its north end the perfect gateway for a drive from north to south. The Homestead Resort The Homestead, as its known locally, is Virginia s most well-known and spectacular mountain resort. The Homestead features a huge, red brick resort hotel, with hundreds of rooms and a number of restaurants. But the real attraction is what lies outside. The Homestead features three championship golf courses, equestrian facilities, a fly fishing school, a European-style spa, skiing, snowboarding, ice skating, and a conference center. The Homestead has long been considered one of the world s finest getaways. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

64 Natural Bridge Considered one of the seven natural wonders of the world, the Shenandoah Valley s Natural Bridge is a 215 foot tall and 90 foot wide rock formation that created a bridge over a valley in the Appalachian Mountains. The Bridge has been visited by historical figures such as Thomas Jefferson and George Washington it is initialed by both. Today, the Bridge draws more than a million annual visitors. Shenandoah Caves Located in the heart of the Valley, the Shenandoah Caves are considered the most spectacular on the east coast. But the real attraction is the fact that the Caves are the only ones in the east that have an elevator descending into the depths, instead of a long hike, making them the most accessible caves in the US. New Market Battlefield The 300 acre New Market Battlefield marks the site, near Virginia Military Institute (VMI), where VMI cadets joined the fight, helping to defeat the North in a pivotal battle. Today, the battlefield is also home to the Hall of Valor Civil War Museum. The site is often the first visited on the Civil War trip from Virginia through Maryland and Pennsylvania. Shenandoah Folk Art and Heritage Center The Folk Art and Heritage Center has the region s foremost collection of artifacts from the 1700s, when the Shenandoah Valley was first settled by European immigrants. Located in Harrisonburg, the Center is also known for its fine collection of folk art from the region, ranging from the early years of settlement through current times. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

65 Higher Education in the Shenandoah Valley The Shenandoah Valley is home to one of the largest and most prestigious collections of colleges and universities in the world. There are no less than 15 universities, colleges, and community colleges in, and immediately surrounding, the Valley. Together, these institutions enroll almost 100,000 full-time students (see Figure 26), and employ more than 20,000 highly skilled and educated full-time faculty members. The institutions of higher learning in the Shenandoah Valley are among the most highly respected in the world, truly training the leaders of tomorrow. Figure 26: Virginia s Higher Education Facilities Source: Virginia Economic Development, 2008 Shenandoah Valley Regional Airport Small Community Air Service Development Grant August

66 James Madison University Long considered one of the finest public research universities in the country, James Madison University (JMU) provides research in emerging fields that helps fuel the economy of the Shenandoah Valley. Located in Harrisonburg, JMU provides more than 100 courses of studies in science and liberal arts fields. The school launched its School of Engineering in Kiplinger s Magazine ranks JMU the 21 st best buy in higher education in the US. Virginia Military Institute Also located in Lexington, Virginia Military Institute is best known as VMI. It is the oldest military college in the US, founded in VMI cadets going through a strenuous selection process before admission, and the Institute draws the best students from the top of their classes around the country. VMI is considered the West Point of the South, as it served that purpose during the Civil War. Liberty University Located in Lynchburg, Virginia, Liberty University is the largest institution of higher education in the Shenandoah Valley. The University is a Baptist college, modeled after the theological education offered at Notre Dame and Brigham Young. Liberty s current chancellor is Rev. Jerry Falwell. Liberty offers 71 programs of study for undergraduates, and 36 programs from graduate students. Mary Baldwin College Founded in 1842, Mary Baldwin College has long been one of the nation s premier women s liberal arts institutions. US News and World Report ranks the College as a top tier master s level university. Today, the highly-selective school enrolls more than 2,000 full-time students from all 50 states and around the world. Washington and Lee University Located in Lexington, Virginia, Washington and Lee University was founded in 1749, making it one of the oldest private universities in the US. The University is currently ranked as one of the top 15 private liberal arts universities in the country by US News and World Report. As a highly selective institution, the University enrolls some of the best and brightest students from around the country, and around the world. Shenandoah Valley Regional Airport Small Community Air Service Development Grant August