PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

Transcription

1 PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET #: OST APPLICANT: SOUTHEAST IOWA REGIONAL AIRPORT LEGAL SPONSOR: SOUTHEAST IOWA REGIONAL AIRPORT AUTHORITY DUNS #: April 27, 2007

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3 Docket OST TABLE OF CONTENTS I. Summary Information.. 4 II. Executive Summary.. 7 III. Outline of Proposal.. 8 IV. The Market Location - Population V. Air Service and Enplanements History Current Air Service - Historic Air Service VI. Challenges for the 11 - Reliability - Airfares - Leakage to Other Airports - Recent Activities to Improve Air Service VII. The Southeast Iowa Airport Grant Proposal.12 - Goals of the Proposal - Proposal Elements - Passenger Market and Leakage Analysis - Strategic Marketing Plan - Two Year Marketing and Advertising Campaign - Proposal Budget - Measuring Success - Ensuring Sustainability VIII. Project Administration Grant Administration - Project Reporting Appendix A Letters of Support. 18

4 Docket OST I. SUMMARY INFORMATION

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7 Docket OST II. EXECUTIVE SUMMARY Since 1994 the (SEIRA) has been struggling to stop the significant loss of passenger traffic. For this reason, the SEIRA is determined to increase its enplanements back over 10,000 enplanements per year and eliminate its EAS subsidies within the next three years. These goals are attainable and can happen with assistance from the Small Community Air Service Program. The (SEIRA) has seen enplanements decline approximately 70% since 1994, with a significant amount of leakage to other nearby airports. This situation has many causes including the unreliable service and higher airfares compared to nearby airports. The past two years that the airport has been served by RegionsAIr, there has been a huge problem with the reliability of commercial air service. This is very evident by the total of 100 cancellations since August of 2006 and the recent complete elimination of service at the SEIRA in March of These issues have turned many people away from SEIRA and have also attributed to other problems such as higher air fares and the leakage of passengers to other nearby airports. Airfares can be very competitive to nearby airports, but are still typically higher in price the majority of the time. In addition, a recent survey of 200 businesses found that nearly 80% perceive airfares at SEIRA to be higher than other nearby airports. So even when airfares are competitive, many travelers will not even take the time to look to fly out of SEIRA because they perceive the cost to be more to fly out of this airport. Leakage to other nearby airports will always be an issue, but has become an even greater problem due to the unreliable service and higher airfares. A 2007 Air Service study found that the SEIRA only captures 8%, or 6,380 of the total flights from the three Southeast Iowa counties that the airport serves. This is a staggering figure that shows the potential to recapture a large number of enplanements to the SEIRA. It has been determined that the best way to recapture these passengers and increase enplanements is through marketing of the SEIRA. That is why the SEIRA is proposing to use SCASP funds for the following two items: 1. Hire a consultant to perform a strategic Marketing Plan 2. Two Year Marketing and Advertising Campaign These two project elements are the best ways that the airport and its partners can see to increase enplanements and eventually wean themselves off of EAS subsidy. As SEIRA enplanements increase because of the marketing efforts, subsidies will become less necessary for the carrier. The airport and its patrons will then have the opportunity for more destination and hub choices in the future. This will lead to better and more comprehensive air service in the future for the Southeast Iowa area. The believes it can provide better air service to its service area with help from SCASP. The proposal is small enough in scope to be competitive among other grant applicants and large enough to get SEIRA on the road to better use of existing service and getting off of EAS subsidy.

8 Docket OST III. OUTLINE OF PROPOSAL Airport and Community Name 2515 Summer Street Burlington, IA Official Contact: Sharon Leeper Airport Manager sharonl@brlairport.com Project Sponsor The official sponsor of this proposal is the Authority. Proposal Goals and Elements Proposal Goals: 1. Increase passenger Enplanements to a level where EAS subsidy can be eliminated within three years. 2. Increase passenger Enplanements to over 10,000 by the end of To significantly reduce the leakage of passengers to nearby airports in Moline, Peoria, Cedar Rapids, and St. Louis by the end of Identify marketing region for the by the spring of Increase the awareness of the through marketing and outreach efforts. Proposal Elements 1. Hire a consultant to perform a strategic Marketing Plan 2. Two Year Marketing and Advertising Campaign Proposal Description The focus of this proposal is to study the underutilization of the existing commercial air service by potential passengers in the Southeast Iowa region and to develop and implement a strategy to capture these potential passengers through marketing methods. The funding will be used to develop and deploy an extensive air service marketing and promotion program that will reintroduce air service to current Southeast Iowa passengers, as well as target potential passengers. This program will be very aggressive and last for a duration of two years. The proposal requests $140,000 in grant funds through the Small Community Air Service Development Program. This funding will be matched by a total of $45,000 in local funds and $15,000 of in-kind contributions.

9 Docket OST IV. THE SOUTHEAST IOWA REGIONAL AIRPORT MARKET Location The is located in the most south east portion corner of the state in Burlington, Iowa, as seen in the map below. Population A recent study done by the Iowa Department of Transportation suggests that the majority of travelers to the come from the three most southeast counties in Iowa and four counties in West Central Illinois. The total population of this area is 173, 841, as seen below. Southeast Iowa Region Airport Service Area Population State County Population Iowa Des Moines 40,885 Henry 20,405 Lee 36,338 Illinois Hancock 19,091 Henderson 7,819 McDonough 31,823 Warren 17,480 Total 173,841

10 Docket OST V. AIR SERVICE AND ENPLANEMENTS HISTORY Current Service The (SEIRA) is currently under EAS contract with RegionsAir, an affiliate of American Airlines. While under contract with RegionsAir, the airline has not flown out of the SEIRA since the beginning of March 2007 due to operational issues. This has caused severe problems at the airport, including the need to layoff seven staff members. At this same time in the beginning of March 2007, the Essential Air Service Office of the DOT conducted its biannual request for proposals to provide service for the. The EAS Office selected a change of service to Great Lakes Aviation starting June 1, It is anticipated that this will provide a huge boost to by bringing reliable air service back to the airport. Great Lakes will continue providing the current three flights a day going to and coming from St Louis Lambert International Airport. The chart below provides additional information on the incoming service from Great Lakes Aviation. Incoming Service Carrier Great Lakes Aviation Destination St Louis Lambert Aircraft Beechcraft 1900 or Jetstream 32 Weekly Frequency 18 Weekly Departing Seats 342 Codeshare Relationships Frontier, United, and American Subsidy/Year $943,793 There is no specific flight schedule set at this time, but it is anticipated to be very similar to the current service that is being provided. Below is a chart showing the current flight schedule and the anticipated schedule for Great Lakes Aviation. Anticipated Flight Schedule: Great Lakes Aviation Flights Depart-BRL Depart-STL Arrival-BRL Arrival-STL Monday-Friday :44 AM 6:44 AM :00 AM 10:56 AM :25 AM 12:25 PM :39 PM 4:30 PM :57 PM 5:55 PM :50 PM 7:50 PM Saturday :00 AM 9:00 AM :39 PM 4:30 PM Sunday :25 AM 12:25 PM :39 PM 4:30 PM :57 PM 5:55 PM :50 PM 7:50 PM

11 Docket OST Historical Service SEIRA is currently experiencing its lowest enplanement levels in the last 20 years. Calendar year 2006 did show an increase at the SEIRA with 7,756 enplaned passengers, a 16% change from While Enplanements did increase, the 2006 enplanements were still down over 70% from the highest enplanement total in 1994, when SEIRA had its highest nearly 30,000, enplanements. Enplanements 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Historical Enplanements Year SEIRA has historically been served with multiple carriers until recent times. In 1996, American Eagle was lost going to STL. Since then, other carriers have continued providing SEIRA with a steady connection to STL. SEIRA then lost a connection to O Hare on United Express in A steady trend of decreasing passenger enplanements is attributable to the volatile airline industry and relatively small market that SEIRA serves. Currently, with one carrier, SEIRA is proportionate in terms of Enplanements, to what it had with three carriers: approximately 7,000 enplanements per carrier. VI. CHALLENGES FOR THE SOUTHEAST IOWA REGIONAL AIRPORT Reliability Reliability of service has been a major issue at the SEIRA for the past few years with the current carrier RegionsAir. Sometimes, this is due to matters beyond the control of the airline, such as the poor weather conditions, but more often than not it has been an issue with maintenance or shortage of planes. Since August of 2006, RegionsAIr has canceled 100 flights, as the airline was providing service to six communities with only fiver aircrafts. Even more recently, as of March 2007, the airline has had a full stoppage of service due to operational issues, which has caused SEIRA to severely struggle. In addition to the statistics above, a 2007 survey of over 200 local businesses asked what the main reason was for not flying out of the SEIRA. 26.4% of the respondents chose Other- Explain, with the overwhelming majority of explanations citing reliability of service as the main cause for not using the airport. This further supports why the reliability of service is a major challenge for the airport and the vulnerability of only offering air service to only one destination.

12 Docket OST Leakage to Other Airports Similar to many smaller EAS supported airports, SEIRA leaks many potential travelers to nearby larger hub airports that may offer lower fares or more flight choices. A 2007 Air Service study done by the Wilbur Smith Associates, for all of Iowa s commercial service airports, showed that there is a demand for approximately 81,000 enplanements in the three southeast Iowa counties of Des Moines, Lee, and Henry. Despite the majority of the SEIRA s passengers coming from these three counties, the airport only capture an estimated 6,380 or 8% of the total flights. This study estimated that of the 74,620 enplanements, 20,280 were leaking to Cedar Rapids, 34,090 to Moline, 9,620 to St. Louis, and 10,630 to Peoria. From this, we see that the commercial air service in the SEIRA service area is deficient, but can be better served by implementing a targeted marketing program through this grant program to recapture passengers who are choosing other nearby airports. Airfares SEIRA typically has higher average ticket prices than area airports and this reality causes leakage to other airports. In January 2007 the SEIRA average ticket price was $134 higher than the lowest available price from either Cedar Rapids, Moline, or St. Louis. This number was arrived at by analyzing the most current Leisure and Business fares from the Iowa Department of Transportation Office of Aviation fare studies. The fare difference can mostly be attributed to these airports being larger than BRL and allowing air carriers to operate more profitably. The graph below shows that SEIRA is not very competitive compared to the three nearby airports. Fares highlighted in red are the highest fare amongst the four airports, while the highlighted black is the lowest fare amongst the four airports. As seen, SEIRA does not have one ticket price that is the lowest fare to any of the top twelve destinations Airfare Comparison of Business and Leisure Travel - January 2007 Burlington Cedar Rapids Moline Saint Louis Difference in BRL and Lowest Fare Atlanta ATL $ 348 $ 538 $ 310 $ 352 $ 39 Chicago/O'Hare ORD $ 365 $ 341 $ 321 $ 154 $ 211 Dallas/Fort Worth DFW $ 377 $ 394 $ 379 $ 149 $ 228 Denver DEN $ 476 $ 432 $ 438 $ 318 $ 159 Las Vegas LAS $ 480 $ 387 $ 349 $ 255 $ 225 Los Angeles LAX $ 405 $ 396 $ 361 $ 220 $ 185 New York City LGA $ 288 $ 300 $ 210 $ 303 $ 78 Orlando MCO $ 378 $ 368 $ 290 $ 208 $ 171 Phoenix PHX $ 366 $ 402 $ 314 $ 245 $ 122 San Francisco SFO $ 448 $ 426 $ 410 $ 386 $ 62 Seattle SEA $ 387 $ 402 $ 321 $ 267 $ 120 Washington DCA $ 303 $ 305 $ 290 $ 309 $ 13 Average $ 385 $ 391 $ 333 $ 264 $ 134

13 Docket OST In a 2007 survey of over 200 local businesses, 76.6% of respondents said that they perceive fares to be higher than other nearby airports. Furthermore, this survey found that 40.5% of all respondents said that the reason they don t fly out of the SEIRA is due to higher fares. Right now SEIRA is at a severe competitive disadvantage to nearby airports that enjoy a greater choice of destination and lower airfares. SEIRA will experience continued higher airfares until enplanements increase to a point where unit costs will decrease for commercial air carriers. Recent Activities to Improve Air Service The has worked hard to improve its commercial service and regional focus within the past five years. The timeline on the following page provides a brief listing of activities related to the airport s efforts to enhance its commercial air service and regional focus over the past five years SEIRA joined in a partnership with American Airlines to provide service to BRL. A limited number of $50 travel vouchers were purchased from American by BRL as an incentive to fly and a promotion for a new air carrier. The vouchers were a temporary success due to the limited number of vouchers available SEIRA joined all other commercial air service airports in the state to form the Iowa Air Service Coalition to promote and enhance commercial air service in Iowa. Recent activities include lobbying at the state level to use economic development funds for airport promotion. - Des Moines County joined the Authority. The Authority now consists of the City of Burlington, City of West Burlington and Des Moines County. Each member pays dues into the airport which helps leverage state and local funding for airport improvements as well as garner political support for the airport Discussions were held in Phoenix, AZ with Mesa Air Group to investigate potential service options to Kansas City and Chicago. - Burlington Area Chamber of Commerce formed the Commercial Air Service Task Force to work with airport officials to identify and act upon all opportunities to maintain and enhance commercial air service at BRL. - Des Moines County, Jefferson County, and the City of West Burlington signed resolutions stating that all government employees must use the SEIRA for any work related travel SEIRA joined the Nauvoo, IL and Fairfield, IA Chambers of Commerce to actively promote commercial air services. In addition, presentations were made to both communities along with tours of the airport facilities. - SEIRA is currently participating in an Iowa Air Service Study intended to sustain and improve commercial air service in Iowa.

14 Docket OST VII. THE SOUTHEAST IOWA REGIONAL AIRPORT GRANT PROPOSAL Goals of the Proposal 1. Increase passenger Enplanements to a level where EAS subsidy can be eliminated within three years. 2. Increase passenger Enplanements to over 10,000 by the end of To significantly reduce the leakage of passengers to nearby airports in Moline, Peoria, Cedar Rapids, and St. Louis by the end of Identify marketing region for the by the spring of Increase the awareness of the through marketing and outreach efforts. Proposal Elements 1. Strategic Marketing Plan The marketing plan should focus on strategies to capture potential customers and customers using other nearby airports within the identified marketing region. In addition, the marketing plan should also include strategies to educate the public about the local air service, its history, and its economic value. Components of the marketing plan should include, but not be limited to: A multimedia advertising campaign, including local TV networks, radio stations, newspapers, and billboards. A targeted mailings campaign to key businesses that are not currently utilizing the airport. An update to the current website, including the addition of website promotions. A frequent user program that offers membership in a program and awards points for local airport use. A target campaign to key businesses that are not currently utilizing the airport, as well as those who have used the airport in the past. A joint travel promotion program with local travel agents. An outreach program that would include regional presentations and meetings with key businesses and community groups. The completion of the strategic marketing plan will lead straight into the deployment of the marketing and promotional campaign. 2. Two Year Marketing and Advertising Campaign The implementation of the marketing plan will include an extensive marketing and advertising campaign covering a two year period. This campaign will include the implementation of the strategies identified in the marketing plan. Strategies will be evaluated through the marketing process to determine their effectiveness. Through this evaluation, strategies will be adjusted to focus on what is most successful at attracting new passengers. The is confident that this marketing and advertising campaign will draw a significant amount of new Enplanements to the airport.

15 Docket OST Proposal Budget The is seeking a Small Community Air Service Grant of $140,000 to identify a marketing region and potential customers, reduce the leakage of passengers to other airports, and to increase the number of passengers that fly through the. The project budget is outlined below (Each project element cost is an anticipated cost, is subject to minimal changes): Project Costs Strategic Marketing Plan $ 30,000 2 Year Marketing and Advertising Campaign $170,000 Total $200,000 Grant Request Amount FAA Grant Funds $140,000 Total Federal Request $140,000 Local Match Amount $ 15,000 Burlington Area Chamber of Commerce $ 5,000 Great Lakes Aviation $ 10,000 State of Iowa $ 15,000 Total Local Match $ 45,000 In-Kind - 2 Year Period Amount (Staff time and materials) $ 5,000 Southeast Iowa BUS (SEIBUS) (Providing bus service) $ 5,000 Snyder and Associates (Planning/consulting) $ 5,000 Total In-Kind Match $ 15,000 Total Project Cost $200,000 Total Match Percentage 30%

16 Docket OST Measuring Success Measuring the success of this grant will be determined by meeting the proposal goals outlined earlier in this section, as well as meeting deadlines for completing the two elements outlined in this proposal to monitor progress of the grant. The goals of the proposal listed on page 12 are time bound, and have a measurable variable attached to them. This provides an easy way to measure if the proposal has been successful. Success will be reached if these goals are met. In addition, a timetable will also be used to monitor progress and success on the grant. The timetable, seen below, will be a valuable tool to keep the project on schedule and make efficient use of federal money. Success will be achieved if the project stays on schedule. Project Timetable Strategic Marketing Plan 2 Year Marketing and Advertising Campaign 1 to 6 Months X 7 to 12 Months X X 13 to 18 Months X 19 to 24 Months X Ensuring Sustainability The is confident that a two year marketing and advertising campaign based on a strategic marketing plan will result in a greater awareness of the airport and an increase in passenger enplanements. With greater awareness and growth in passenger service it is felt that it will be possible to enlist the current airline and its code sharing partners in future marketing and outreach efforts. In addition to this, the Southeast Iowa Regional Airport plans to continue with its marketing efforts into the future.

17 Docket OST VIII. PROJECT ADMINISTRATION Grant Administration The Southeast Iowa Regional Planning Commission (SEIRPC) will administer the grant for a fee of $5,000 over the time period of the grant proposal of approximately two years. The planning commission will partner with the and Great Lakes Aviation to ensure all federal requirements are met. In addition, SEIRPC will make sure that the money is spent in a manner consistent with the proposal and within the spirit of the grant program. SEIRPC has a great deal experience administering federal and state grants and will ensure the program runs smoothly. Project Reporting The, in conjunction with the SEIRPC, will prepare quarterly reports providing the Department with progress that has been made on the implementation of the grant project. In addition, the Department will receive information such as contracts with consultants, copies of studies and plans, as well us any promotional or advertising material uses as part of the grant. Furthermore, a final report will be provided to the Department, showing what the grant funding was used for and progress made at the airport due to the grant.

18 Docket OST Appendix A Letters of Support

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20 April 27, 2007 United States Department of Transportation Office of Aviation Analysis Washington, DC To Whom It May Concern: On behalf of SEIRPC I would like to offer my support for the Southeast Iowa Regional Airport s application for assistance under the Small Community Air Service Program. The plays an important role in serving the southeast Iowa area with commercial air service. This air service has the potential to serve business and personal travel needs in our area. Currently, the airport has been without any commercial service since March, The current EAS carrier, RegionsAir, has had multiple issues that have prevented them from providing regular commercial air service that southeast Iowa needs. This lack of service and history of unreliability has hurt the airport. This is the perfect time to re-establish the airport s image through marketing efforts that will increase enplanements and make the profitable once again for commercial carriers. Southeast Iowa cannot afford to lose its commercial air service as a key part of the regional transportation system. Re-establishing the airport s image of reliable and professional service is the first key to increasing demand, and this will happen with assistance from the Small Community Air Service Program. Thank you for the opportunity to comment. Sincerely, Mike Norris Transportation Planning Director

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