Northeast Florida Regional Airport, St. Augustine, Florida

Transcription

1 Northeast Florida Regional Airport, St. Augustine, Florida Proposal under the Small Community Air Service Development Program Docket: DOT-OST Before the Office of the Secretary of Transportation U.S. Department of Transportation A Proposal to Support New Air Service Development with Marketing Funding Sponsor: Northeast Florida Regional Airport at St. Augustine St. Augustine, Florida Edward R. Wuellner, AAE Executive Director Congressional Code: FL-07 Dun & Bradstreet Number: August 27, 2010

2 Table of Contents Description Page number Table of Contents 2 Airport Letter 3 Summary Information (Appendix B) 4 Introduction and Proposal Objectives 7 NE Florida and St. Augustine Location and Population 9 The Best Airport location to Serve the Region 12 NE Florida Lodging Infrastructure 13 St. Augustine and NE Florida Area Profile 14 NE Florida Air Service and Traffic 22 The First Air Service at the NE Florida Regional Airport 26 NE Florida Average Fares 27 Alternative Airports and Traffic Leakage 29 Air Service Needs and Deficiencies 30 Local Air Service Development Efforts 30 Detailed Explanation of Proposal 32 A Strategic Plan for Success 35 Public/Private Partnership 35 Grand Funding 36 Target Audience & Marketing Plan 37 Grant Timeline, Milestones and Monitoring 38 Performance Measurements 39 Financial Controls and Program Oversight 39 Return on Investment, Use of Funds & Route Self Sufficiency 40 Alternative Timeline & Plan and Legal Sponsor 41 Airport Information 42 NE Florida Regional Facilities & Handling Package 43 Summary 44 2

3 Introductory Letter 3

4 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: Expiration date of Grant: B. Public/Private Partnership Public: 1. Northeast Florida Regional Airport, St. Augustine 2. St. Augustine St Johns County Airport Authority 3. City of St. Augustine 4. St. Johns County Private: 1. Galaxy Aviation 2. St. Augustine Chamber of Commerce 3. St. Augustine Economic Development Council 4. Ponte Vedra & Beaches Visitors and Convention Bureau 4

5 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 Start Up Cost Offset Study Launch New Carrier First Competitive Service 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: $ 100, State cash financial contribution: $ 0 3. Local cash financial contribution: $ 25,000 3a. Airport cash funds: $ 25,000 3b. Non-Airport cash funds: $ 0 3c. Total local cash funds: $ 25, TOTAL CASH FUNDING: $ 125, 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: $ 25, Airport In-Kind contribution: $ 167,535 estimated savings per daily turn per year Description: Airport fee waivers and reduced rate ground handling 8. Other In-Kind contribution: $ 0 9. TOTAL IN-KIND CONTRIBUTION: $ 167,535 per new daily flight 10. TOTAL PROJECT COST: $ 292,535 5

6 F. Enplanements at Airport 2000: : : : : : : : 21,251 (SkyBus) 2008: 32,889 (SkyBus) 2009: 0 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 6

7 Introduction and Proposal Objectives The Northeast Florida Regional Airport at St. Augustine, Florida is actively recruiting various airlines to provide air service at the Airport. The Northeast Florida Regional Airport facility is ideally located for airlines to access the vast tourism and leisure time activities of northeast Florida. The Airport is located just south of Jacksonville and just north of Daytona Beach along Florida Highway 1 and only five miles from Interstate I-95. Its location is almost right on top of the center of population distribution for all of northeast Florida and it is closer to more hotels, motels and leisure activities than either Jacksonville International or Daytona Beach. The Airport is also an ultra low-cost facility, having in place the infrastructure to handle several hundred thousand annual passengers at costs well below Jacksonville and Daytona Beach. In short, if the Airline Industry were to first arrive at northeast Florida today, instead of decades ago, most air service would logically be placed at Northeast Florida Regional, not Jacksonville International or Daytona Beach. The Northeast Florida Regional Airport, supported by the St. Augustine St Johns County Airport Authority, is working hard to bring low fare air service to the Airport. Low fare air service at Northeast Florida Regional will have a significant positive economic impact on tourism in the region. Right now other regions of Florida enjoy markedly superior air service and lower fares than are offered in northeast Florida. This means that tourists intent on a trip to Florida are more than likely to fly to central Florida (Orlando), southeast Florida (Miami, Fort Lauderdale or West Palm Beach) or the west coast (Tampa, Sarasota or Fort Myers) than they are to northeast Florida, simply due to lower fares and more flights. A key element of recruiting low-cost carriers to serve Northeast Florida Regional is the availability of significant marketing funding, for use both in northeast Florida and in northern tier and mid Atlantic markets that generate significant Florida tourism visits. 7

8 Therefore, in this Small Community Air Service Development Grant application the Northeast Florida Regional Airport requests $100,000 in Grant funding to support new low-cost air service expected to start at the airport in The Airport and its regional and community partners will match the $100,000 Grant with $25,000 in cash funding, for a total Grant funding of $125,000. The Airport and its partners also have an ultra low-cost ground handling and terminal facility package to offer to prospective airlines. Depending on the size of aircraft and frequency of operation, this ground facilities package can be worth hundreds of thousands of dollars in savings compared to landing and turning an aircraft at any other airport in northeast Florida. This proposal document will provide detailed information on the Airport s prime location, outstanding low-cost facility, ambitious marketing and promotional support plans, and comprehensive ground facilities package. All of these elements combined will make new lowcost air service at Northeast Florida Regional a success and a significant positive economic contributor to the region. Objectives for Proposal: Bring low-cost air service to the Northeast Florida Regional Airport Lower average airfares for travel to northeast Florida Benefit northeast Florida tourism by bringing low fare air service to region that is comparable to existing low fare service at Orlando, southeast and southwest Florida. Means to Achieve Objectives: Use SCASD Grant and local match to provide a large pool of marketing and promotional funding for new air service Compliment marketing funding with a comprehensive ground facilities and handling package that will provide significant cost savings for prospective airlines Course of Action to Support Means: Continue aggressive recruiting of new low fare air service Provide an aggressive multi level marketing program to support the new flights 8

9 Northeast Florida & St. Augustine: Location & Population The Florida State Tourism Board defines northeast Florida as the region from the Georgia state line along the Atlantic Ocean and extending some forty miles inland and running south to the northern fringe of the Daytona Beach area. The region encompasses six counties and has an estimated population of 1,439,421. Northeast Florida Two major interstate highways meet just north of St. Augustine. Interstate 10 ends its long run from California at Jacksonville while Interstate 95 runs north south on its path from Miami to Maine. Three counties make up the ocean side of northeast Florida. Duval County is essentially Jacksonville, a city of over 800,000 (proper) and an MSA of over 1.3 million in population. Jacksonville is the largest city in Florida in terms of both population and square miles. It is also the 13 th largest city in the United States. 9

10 St Johns and Flagler counties extend south of Duval County. The Northeast Florida Regional Airport is in St Johns County. Tourism and ocean side leisure activities such as boating or fishing are major activities in this area. St. Augustine was the first European settlement in the Americas in 1565 and the remains of the settlement are a major historical site and tourist attraction. The inland counties of Nassau, Clay and Putnam are mostly rural or suburban in nature. There is a mix of agriculture or tree farming and suburbs extending out from the Jacksonville metro area. The entire six county area has seen significant growth in population since 2000 with each county recording an increase, notably Flagler (63%) and St Johns (47%). Overall the region s population grew 16% in nine years. NE FLORIDA COUNTY POPULATION Population County Change Clay 166, , % Duval 778, , % Flagler 49,852 81, % Nassau 57,663 69, % Putnam 65,304 73, % St. Johns 123, , % Total 1,241,034 1,439, % Most of the population is clustered around Jacksonville and then south near Interstate 95 and Florida Highway 1 and the Atlantic Ocean beaches. 10

11 The geographic center of the six county area s population is actually south of downtown Jacksonville and about equal distant from Northeast Florida Regional Airport and Jacksonville International Airport. The chart below is a zoom in on the previous chart to show just the area between Northeast Florida Region Airport and Jacksonville International Airport. Center of Population The over 1.4 million residents of northeast Florida have two air service choices, Jacksonville International to the north or the relatively limited services offered by a few airlines at Daytona Beach to the south. Northeast Florida lacks the reputation as a tourism Mecca that more famous areas like Orlando or Fort Lauderdale have, despite having fabulous beaches, incredible sights and all the activities typical of a Florida vacation. The region is the major Florida tourism area that no one thinks of. One of the reasons no one thinks of it is a relative lack of low fare air service access for tourists to use. 11

12 The Best Airport Location to Serve the Region The Northeast Florida Regional Airport at St. Augustine is perfectly located and has in place the low-cost infrastructure needed to draw low fare air service to Northeast Florida. Included within a 60 minute drive of Northeast Florida Regional Airport is all of Jacksonville, the northern fringe of Daytona Beach, and a population of 1.45 million. This compares with a population within 60 minutes from the Jacksonville International Airport of 1.28 million. So the Northeast Florida Regional facility has over 13% more Florida residents within an hour s drive. This same superior position applies with lodging infrastructure. Northeast Florida Regional is within an hour s drive of 122,326 lodging units while Jacksonville International is within an hour of units, a difference of 2.2%. 12

13 Northeast Florida Lodging Infrastructure There are approximately 1.6 million lodging units in the state of Florida. Over 177,000 of them (11%) are in northeast Florida. FLORIDA HOTEL/MOTEL PROPERTIES BY REGION Total # Share of Average Units Region Rental Units State Per Property Northeast 177,207 11% 72 East 223,215 14% 45 Southeast 208,351 13% 30 Central 412,520 26% 40 Southwest 108,639 7% 50 West 267,479 17% 38 West Central 101,230 6% 25 Northwest 117,138 7% 44 State Total 1,615, % 41 The northeast region also has the highest average number of lodging units per Lodging Establishment or facility. 13

14 St. Augustine and Northeast Florida Area Profile The City of St. Augustine The nation's oldest city is a wonderful place to live and boasts of having some of the most beautiful real estate in the world. While expansion and progress happen around the city, the city itself is largely unchanged, preserving the rich history and legacies of the Spanish, French, and English, making this the most unique small town in America. Beautiful beaches, blue skies, fine dining and unique shopping set in a romantic Spanish influenced atmosphere await exploration by visitors and residents alike. The St. Augustine area is known for rich history and friendly people, as well as a great place to raise a family. Great boating, fishing, sailing & kayaking are available year round. Every option exists, from the salty Atlantic Ocean and Intra-Coastal Waterway rich with creeks and flats, to the fresh water of the St. Johns River on the west side of the county. St. Augustine also has communities with special venues just for Golf, such as World Golf Village with the Hall of Fame. Tennis and equestrian pursuits are also supported in many venues and communities. Things to see and do here are just as varied. Museums, art, history and culture are everywhere. There are blocks of "pedestrian only" shopping, horse drawn carriage rides, pristine beaches and a historic charm steeped in tradition. 14

15 Tourism in the St. Augustine Area The city of St. Augustine has more than 50 attractions, historic sites, and points of interest; drawing more than 2 million visitors annually. Founded in 1565 by the Spanish, St. Augustine is a city of carefully preserved historic sites, attractions, and neighborhoods. The Spanish influence is seen in the architecture, street names, food, and art. Historic landmarks include the Castillo de San Marcos National Monument, the oldest stone fort in the United States; the Spanish Quarter Village, a living history museum which interprets life in colonial St. Augustine circa 1740; The Fountain of Youth Discovery Park, where it is said Ponce de Leon sought everlasting youth; and the Mission of Nombre de Dios, where Pedro Menendez de Aviles first set foot on Florida s shore in Still other landmarks are the Ponce de Leon and Alcazar hotels, built by Standard Oil magnate Henry Flagler in the late 19th Century. Today these grand Victorian structures house Flagler College and the Lightner Museum, a Victorian collectibles museum. Planning for the future In April 2010, St. Johns County commissioners laid out an action plan to guide the growth and development of tourism for the next several years. St. Johns "has authenticity in spades," he said, identifying historical, romance, golf, family, arts and culture and outdoor recreation as specific areas of interest for tourists. According to the report, a great untapped market in African-American and Hispanic tourism exists. Citing the study as a road map to St. Augustine's 450th [birthday celebration in 2015]," plans include improving Fort Mose s visitor s center; continuing public-private cooperation that brings in tourists while also benefiting locals; packaging room stays with, for example, amphitheater tickets, resulting in potentially longer vacations here and eliminating downtown ordinances that hamper the arts. The study also cited lack of commercial air access to county as one of the area s weaknesses. 15

16 Golf Golf is easily one of the most popular and economically beneficial attractions in St. John s county. With over 50 courses in or near St. Augustine, golf is a vital part of the local economy. Golf enthusiasts come from around the world to play at the area s world-courses. But they also come to watch the pros play in some of the nation s major tournaments, increasing tourism to the area. The Player's Championship has been consistently hosted at Sawgrass in Ponte Vedra Beach, just north of St. Augustine, since The Ginn Championship at Hammock Beach (held each year from March 30th through April 5th) is also a short drive from St. Augustine in Palm Coast, Florida. The World Golf Foundation, located in St. Augustine, is a nonprofit organization that develops and supports initiatives that positively impact lives through the game of golf and its traditional values. It s impressive World Golf Village, which opened in 1998, includes an IMAX theater and two golf courses featuring design collaborations by four World Golf Hall of Fame members. However, its sigmature landmark is the World Golf Museum. In this museum, visitors can have their picture taken atop the famous Swilcan Burn Bridge at The Old Course at St. Andrews. Wander among golf's most important trophies. See what it's like to putt on an old-time putting green with a hickory club. Get up close and personal with some of the most prized possessions of many of the Hall's members in the Member Locker Room, which contains over 2,000 items. The economic impact of this sport to the region is great. A 2006 study showed that the World Golf Village, the result of a public-private partnership, pumped in $2.46 billion to the economy of St. Johns county from The study said that the World Golf Village had stimulated the growth of 34,000 jobs (full-time, part-time and seasonal), including 26,000 in St. Johns. 16

17 Beaches The St. Augustine beaches boast miles of luxurious sand with beautiful weather year-round. Barrier islands naturally create the island waterway and miles of gorgeous coastline with many public areas for beach recreation and relaxation. Anastasia State Park welcomes visitors from all over the world to enjoy its beautiful beach. Anastasia Island has 4 miles of pristine beach, a tidal salt marsh, and maritime and upland hammock, as well as nature trails that wind through the dunes shaded by hammock trees. It is a protected bird sanctuary and consists of 1,700-acres and five miles of beautiful, sandy beaches. It features swimming, lifeguards, a bath house, hiking, nature trails, a boat ramp, fishing, a volleyball court, beach equipment rentals such as umbrellas and beach chairs, canoes, nature trails, grills and picnic areas, concessions, a covered pavilion, gift shops, playgrounds, and camping. Crescent Beach is a stretch of beach just south of the City of St. Augustin e Beach and North of Marineland. It is notable for its white sand beach and gentle dunes. St. Augustine Beach is located on Anastasia Island where you can enjoy sandy beaches, the St. Johns County Pier, a playground, pavilion, fishing pier, volleyball courts, bait shops, fine restaurants, shopping and more. St. Augustine Beach receives an estimated 5 million visitors per year. Guana River State Park, located in nearly by Ponte Vedra is a 2,000 acre sanctuary for endangered species. Recreational activities are many and varied. It features two public beach access facilities, consisting of parking lots and associated dune crossover boardwalks, along a 4.2 mile stretch of otherwise undeveloped beach on the Atlantic Ocean. The serene Vilano Beach, is a local "best-kept secret" offering a wide variety of vacation rentals, lodging, waterfront restaurants, the Vilano Beach Fishing Pier, parasailing and Sea Doo rentals, and many parks. Visitors may even choose to charter a deep sea fishing boat or a sailboat. 17

18 Old St. Augustine Village An entire city block of history experience, Old St. Augustine Village is a coll ection of 10 authentic houses dating from 1790 and their centuries-old courtyards and gardens. Historic sites and archaeological ruins on the property date to 1572 and include a Spanish Colonial defense line, remnants of a 16th century hospital and cemetery, and the site of St. Augustine s earliest bridge. The Village features the historic houses, a museum store, a host pavilion, a visitor s center and 10 exhibition galleries on St. Augustine s and the nation s history. Inside Old St. Augustine Village, interpreters give history a voice and a story. Economic Impact and Importance of Tourism to Northeast Florida According to a 2005 study Tourism in Paradise: The Economic Impact of Florida Beaches the northeast region of the state sees the following economic impact from tourism; Annually an estimated $1 billion in direct and $1 billion in indirect economic impact An estimated 11.2 million annual tourist visits An estimated $2.8 billion in tourist spending An estimated 79,000 jobs in the region directly or indirectly the result of tourism Clearly a healthly flow of tourism into the northeast Florida region is essential to economic health and growth. Covenient and low-cost air service is a fundamental component of ensuring the region captures its fair share of Florida tourists and their leisure dollars. 18

19 Saint Augustine Economic Overview As of 2010, St. Johns County's population is 184,345 people, which is remarkable because since 2000, it has had a surging population growth of percent. The median household income is $64,028 and the median home cost in St. Johns County is $209,480. Compared to the rest of the country, St. Johns County's cost of living is 5.90%, only slightly higher than the U.S. average. The unemployment rate in St. Johns County is 9.10 percent (U.S. avg. is 10.20%). Future job growth over the next ten years is predicted to be 19.96%. Professions that will grow include: health services, education, and professional and business services. St. Johns County will see improvements in 2010 in personal income, retail sales and auto sales, according to a study by the University of Central Florida. A snapshot of economic activity in St. Johns County by Florida Trend magazine said, "Economic development officials (in St. Johns) say they are focusing on the short-term. They are working to increase the inventory of 'shovel-ready' commercial and industrial sites for business prospects who want to move now -- not five years from now." And a number of economic studies say St. Johns may see faster growth than surrounding counties. "More businesses are looking to locate or expand here. We've noticed a significant uptick in the number of (businesses) that are looking to make decisions on expansion," said Nick Sacia, vice president of the Economic Development Council, Prospects for relocations or expansions are up 40 to 50 percent. Employer # of Employees St. Johns County School District 3,357 Flagler Hospital 1,503 St. Johns County 1,416 US Army National Guard 1,300 Ponte Vedra Inn & Club 950 Northrop Grumman 900 Florida School for the Deaf and the Blind 767 Tree of Life 636 PGA Tour/TPC 625 Marriott at Sawgrass 550 Hydro Aluminum North America 500 Vicar's Landing

20 Select Company Profiles Flagler Hospital Since its founding in 1889, this private, not-for-profit facility has grown into a 316-bed, acute care center that is consistently recognized nationally for overall clinical excellence. The hospital, which employs 1,503 staff, has been ranked among the top 5% in the nation for clinical excellence for the past 6 consecutive years. Northrop Grumman Northrop Grumman Corporation is a leading global security company whose 120,000 employees provide innovative systems, products, and solutions in aerospace, electronics, information systems, shipbuilding and technical services to government and commercial customers worldwide. The St. Augustine manufacturing center is the production element for the company's Airborne Early Warning and Electronic Warfare Systems business unit. With headquarters in Los Angeles and national and global offices and manufacturing facilities, this is a company with significant travel needs. Tree of Life Headquartered in St. Augustine, Tree of Life partners with suppliers, manufacturers, and retailers around the world to bring customers a complete line of natural, organic, multicultural, specialty and gourmet foods, supplements, health and beauty Tree of Life products. They are part of the health and environmentallyconscious business arena and were one of the industry pioneers, helping usher in a new idea that started nearly 40 years ago - that healthier eating coupled with environmental responsibility can make the world a better place for us all. PGA Tour/TPC Located in Ponte Vedra, Florida, The Tournament Players Club at Sawgrass is home to the annual Player s Championship, professional golf s richest tournament. Travel and Leisure Golf Magazine rated TPC-Sawgrass one of the Top Ten Best Golf Resorts in the World. Completed in 2007, TPC's new 77,000 square foot Mediterranean styled clubhouse opened to rave reviews. The club attracts members and nonmembers alike, as visitors come to tour the club house, shop at the pro shop or dine at the club without having to become a member. The club also operates a golf school, where golfers come from around the nation to improve their golf game at this top course. 20

21 Higher Education Flagler College Flagler College is an independent institution serving over 2,500 students in the historic, seaside city of St. Augustine, Florida. As the college marked its 40th anniversary in 2008, it celebrated a remarkable heritage and a nationally recognized reputation for offering a rich, personalized liberal arts education at a relatively low-cost. Flagler C ollege offers baccalaureate degrees in twenty-two majors and twenty-nine minors, in both liberal arts and pre-professional programs. Flagler College s historic and picturesque campus is nestled in the heart of St. Augustine, the Nation s Oldest City. Its main building is a National Historic Landmark. The campus has blended its new buildings, a Student Center and renovated art building, to fit in with its historic buildings. The college engages in quite a bit of travel through its athletic program, which is part of the National Collegiate Athletic Association (NCAA) Division II; through its study abroad program and with faculty participating in research in many areas of the country and the world. Additionally, family and friends require a convenient way to visit students. Military Presence St. Augustine is the state headquarters for the Florida National Guard. The Florida National Guard traces its heritage back to 1565, the year the Spanish founders of St. Augustine organized their first company of citizen-soldiers. Florida s militia has defended local communities for over 440 years. Consistent with Article I, Section 8 of the U.S. Constitution, Florida's Citizen-Soldiers and Airmen continue to serve in units from the Panhandle to the Keys. Today, Florida Guardsmen are involved in hundreds of community service projects across the state each day. Many serve in disaster relief operations, helping residents recover from natural disasters. Others train or serve in critical national defense positions throughout the nation and overseas deploying to Iraq and Afghanistan supporting operations in the war on terrorism. The Florida National Guard has been headquartered in St. Augustine since 1907 and has a membership of more than National Guard personnel and more than 2,000 Air National Guardsmen. Additionally, there are nearly 350 employees of the Florida Department of Military Affairs. 21

22 Northeast Florida Air Service and Traffic There are currently two airports in the northeast Florida region with scheduled air service; Jacksonville and Daytona Beach. Jacksonville Jacksonville International is classified as a medium hub by the FAA. It enplaned nearly 2.8 million passengers in 2009 and is served by eight airlines. Jacksonville has nonstop service to 28 domestic cities. There are approximately 100 departures per day from the airport. About 30% of departures are performed with regional jet equipment. Jacksonville Domestic Traffic: 12 Months 3/31/2010 Domestic Market Carrier Traffic Share Avg Fare American 409, % $ jetblue 243, % $ Continental 275, % $ Delta (Northwest) 1,411, % $ AirTran 312, % $ United 292, % $ USAirways 801, % $ Southwest 1,208, % $ TOTAL 4,953, % $

23 Daytona Beach The Daytona Beach Airport is a much smaller airport on the southern fringe of the northeast Florida region. Daytona Beach has two airlines; Delta and USAirways. Delta offers nonstop service to Atlanta and USAirways to Charlotte. The Airport enplaned 211,631 passengers in Daytona Beach air service varies greatly by season. However, on an annual average about six departures per day are scheduled to Atlanta and three per day to Charlotte. About 80% of total Daytona Beach flights are performed with regional jet equipment. Daytona Beach Domestic Traffic: 12 Months 3/31/2010 Domestic Market Carrier Traffic Share Avg Fare Delta (Northwest) 301, % $ USAirways 95, % $ TOTAL 397, % $ In summary Northeast Florida generated just over 3 million enplanements in 2009 Service is provided by eight airlines to 28 cities, about 109 daily departures About 93% of traffic is generated at Jacksonville, the balance at Daytona Beach The average domestic one-way net fare paid in 2009 was $137 23

24 Northeast Florida Top Markets Eight of northeast Florida s top twenty markets are in the northeast United States. Four are in the Midwest, two each in the southeast and south central regions, three are in the far west and one is intra-state Florida. Jacksonville/Daytona Beach Top Twenty Domestic O&D Markets Year Ended 3/31/2010 Atlanta 247, Philadelphia 230, Baltimore 220, Fort Lauderdale 184, New York JFK 179, Newark 178, New York LGA 162, Dallas 149, Boston 144, Chicago ORD 133, Washington D.C. DCA 128, Las Vegas Nashville Norfolk Los Angeles Detroit Denver Chicago MDW Houston IAH Indianapolis 124, , , , , ,280 87,890 86,180 85, Annual O&D PDEW 0 50, , , , ,000 All of the top twenty markets have nonstop service from Jacksonville. Daytona Beach has nonstop Atlanta service. 24

25 Jacksonville Air Service Capacity After steady growth from 2002 thru 2007, Jacksonville airline capacity dropped in 2008 and In 2008 departures dropped by 8% and capacity by 5%. In 2009 departures were again down 12% and capacity down 11%. In fact 2009 capacity (seats) was barely above that of Jacksonville Annual Departures and Seats: Seats Departures 10,000,000 9,000,000 8,000,000 63,214 75,050 83,593 86,783 85,000 90,515 83,417 73,400 7,000,000 6,000,000 5,000,000 4,000,000 7,821,929 7,886,411 8,238,975 8,644,288 8,761,945 9,386,521 8,889,413 7,900,080 3,000,000 2,000,000 1,000, Daytona Beach Air Service Capacity Daytona Beach capacity has dropped even more than at Jacksonville. Capacity in 2009 was about 60% of that available in 2007 and 12% less than in Daytona Beach Annual Departures and Seats: Seats Departures 900, ,000 9,909 8,658 7,618 7, ,000 7, ,000 5,923 7, ,000 6, , , , , , , , , , , , ,

26 The First Air Service at Northeast Florida Regional Airport Skybus Airlines began operations from its Columbus, Ohio base in May of In July of that year the carrier became the first to operate at Northeast Florida Regional Airport. Skybus Monthly Data Summary: UST July 2007 thorough March 2008 Month Number of Daily Flights Total Landings On Off Total Seats Load Factor Jul ,308 1,534 2,842 3, % Aug ,360 3,245 6,605 8, % Sep ,318 3,429 6,747 8, % Oct ,385 3,384 6,769 8, % Nov ,540 3,613 7,153 8, % Dec ,340 6,655 12,995 16, % Jan ,821 10,395 20,216 30, % Feb ,136 10,381 20,517 32, % Mar ,932 13,339 26,271 35, % ,140 55, , , % By March of 2008 Skybus was operating four daily departures at Northeast Florida Regional. Northeast Florida service was a tremendous success for Skybus, with an average load factor over the nine months of operation of 74%. Unfortunately, Skybus was ill prepared for the difficult fuel cost and traffic demand environment of 2008 and the carrier shutdown April 5, Skybus provided service from Northeast Florida Regional to three northern cities; Columbus, Greensboro and Portsmouth. The tremendous traffic volumes the service generated, given an unknown airline, are proof that Northeast Florida Regional will support air service. Columbus Portsmouth Greensboro St. Augustine 26

27 Northeast Florida Average Fares Northeast Florida (Jacksonville and Daytona Beach) has had a higher domestic average fare each year 2002 thru 2009 in comparison to other key Florida airports, including Orlando, Tampa, Fort Lauderdale and Fort Myers. The only exception is that Northeast Florida was $3 less than Fort Myers in year Northeast Florida Average Fare vs. Other Key Florida Airports: NE Florida Orlando Tampa Fort Lauderdale Fort Myers $150 $145 $145 $140 $139 $137 $138 Average Fare $135 $130 $125 $120 $115 $110 $105 $125 $124 $121 $121 $121 $118 $115 $112 $111 $113 $110 $109 $110 $108 $108 $126 $117 $112 $111 $110 $130 $124 $122 $124 $128 $125 $121 $122 $130 $129 $128 $133 $127 $121 $120 $115 $ In recent years northeast Florida has been well above its peer group, as much as $15 and 12% higher than Orlando and Tampa. These average fare paid discrepancies occur despite the presence of low-cost airlines at Jacksonville, including Southwest, AirTran and jetblue. The impact of these much higher average fares on the ability of northeast Florida tourism venues and lodging facilities to compete with other regions of Florida is obvious. Especially in these austere economic times vacationers count dollars and consumer consciousness about airfare dollars is always high. 27

28 This average fare discrepancy is even more glaring given that the two northeast Florida airports are closer, being on the north end of Florida, to most of Florida s top domestic markets, especially those in the New England and the northeast U.S. Therefore, from a yield standpoint, northeast Florida travelers are paying between 20% and 30% more per mile than Orlando or Tampa travelers. Northeast Florida Yield vs. Other Key Florida Airports: NE Florida Orlando Tampa Fort Lauderdale Fort Myers PDEW Clearly the yield impact is not just from the higher average fares paid at northeast Florida airports but also reflects simple geography in that northeast Florida is closer to most of the nation s key Florida travel generators than the other major Florida markets. DOMESTIC TRIP DISTANCE: MAJOR FLORIDA MARKETS FOR Average Trip Distance Market Northeast Florida 984 1,003 1,004 1,002 1,006 1,008 1,011 1,023 Orlando 1,130 1,131 1,126 1,112 1,110 1,102 1,105 1,112 Tampa 1,083 1,087 1,098 1,091 1,091 1,084 1,088 1,097 Fort Lauderdale 1,190 1,207 1,205 1,187 1,193 1,184 1,164 1,174 Fort Myers 1,192 1,205 1,202 1,189 1,185 1,179 1,177 1,176 The average domestic trip distance chart shows that northeast Florida average passenger trips are between 10% and 20% shorter than those at other a major Florida airports. 28

29 Alternative Airports & Traffic Leakage Northeast Florida Regional Airport is perfectly positioned, both geographically and from a infrastructure cost standpoint, to draw new low-cost air service to the northeast Florida region. This new service will help mitigate the significantly higher average fares that northeast Florida passengers are paying in comparison to average fares at other major Florida airports. The significant average fare differential between northeast Florida airports and nearby Orlando (106 road miles and 1:44 drive time) certainly would suggest that some travelers, both local residents and inbound tourists, use the Orland airport in lieu of Jacksonville or Daytona Beach. NE FLORIDA vs. ORLANDO: TOP TWENTY MARKETS AVERAGE FARE NE Florida Orlando Difference Market Avg Fare Avg Fare Dollars Percent Atlanta $117 $120 ($3) -2.5% Philadelphia $111 $100 $ % Baltimore $106 $88 $ % Fort Lauderdale $95 $72 $ % New York JFK $124 $117 $7 6.0% Newark $141 $127 $ % New York LGA $124 $116 $8 6.9% Dallas $149 $122 $ % Boston $126 $123 $3 2.4% Chicago ORD $150 $116 $ % Washington D.C. DCA $179 $118 $ % Las Vegas $139 $159 ($20) -12.6% Nashville $112 $120 ($8) -6.7% Norfolk $103 $99 $4 4.0% Los Angeles $161 $190 ($29) -15.3% Detroit $135 $93 $ % Denver $133 $140 ($7) -5.0% Chicago MDW $108 $105 $3 2.9% Houston IAH $157 $146 $11 7.5% Indianapolis $91 $89 $2 2.2% In fifteen of northeast Florida s top twenty markets the Orlando average fare paid is lower, in eight of the fifteen markets the percentage lower is double digits. Given the close proximity of Orlando and the low-cost of rental cars in Florida, these average fare differentials certainly suggest significant leakage of northeast Florida traffic to Orlando. 29

30 Air Service Needs and Deficiencies Northeast Florida has significantly higher average fares than other major cities in Florida. This discrepancy puts the entire region at a disadvantage when competing with other regions of Florida for tourists and recreational visitors. Most especially in these difficult economic times consumers are careful with their dollars, especially those discretionary dollars allocated to leisure activities and vacation getaways. Northeast Florida tourism suffered double digit losses of traffic and dollars spent starting the summer of 2008 and extending thru So far in 2010 the tourism traffic volume is up, in many cases significantly. Some of this increase is due to economic recovery; another factor is the tragic oil spill in the Gulf of Mexico, which is driving some tourism visits and dollars to the Atlantic side of Florida. But even as the economy recovers and tourism rebounds modestly, northeast Florida remains at a significant disadvantage when it comes the quantity and price of its air service, as compared to other Florida gateways like Orlando. Local Air Service Development Efforts The Northeast Florida Regional Airport at St. Augustine has only been active in air service development since 2007, after the tremendous potential of the airport was illustrated by the SkyBus service of Accordingly, we have only a four year history of air service development effort however; we have put a lot of effort in those four years; 2007 SkyBus begins service at Northeast Florida Regional in July. Airport assists carrier with ground handling support and works on additional routes that start in Developed Presentations and Marketing Material for Pittsburgh ACI Jumpstart Meetings and met with Gulfstream, Spirit, Alaska/Horizon. Southwest, and Vision. Follow-up Material Development and Contacts with Jumpstart Meeting participants and had Air Service Development Consultant Meetings with United Airlines and Southwest. On-site Meeting with Allegiant Airlines. 30

31 2009 Developed Presentations and Marketing Material for ACI Jumpstart Meetings in Montreal. Met with Republic, Southwest, Spirit, Gulfstream and Pinnacle Airlines at ACI Jumpstart. Air Service Development Consultant Meetings with United Airlines, AirTran and Southwest. Follow-up Material Development and Contacts with Jumpstart Meeting participants Developed Presentation and Marketing Materials for Allegiant Airlines. Met with Allegiant Airlines at their corporate headquarters in Las Vegas, NV. Air Service Development Consultant Meetings with United Airlines and Southwest. Developed Presentation and Marketing Materials for Network USA Meetings. Met with AirTran, Spirit, Gulfstream, Southwest and Republic Airlines at Network USA, In Ft. Lauderdale, FL. Follow-up Material Development and Contacts with Network USA participants. Developed Marketing Materials for pre-conference contact to all Jumpstart participant airlines. Developed Presentations and Marketing Material for ACI Jumpstart Meetings in San Diego, CA. Met with Frontier, Southwest, AirTran, Vision at ACI Jumpstart. Gold Sponsorship and Display and Booth at ACI Jumpstart Event. Follow-up Material Development and Contacts with Jumpstart Meeting participants. Conference Call with GPT about NE Florida service potential with Vision or ExpressJet. Conference Call with Locair. Developed Presentation Materials for Sky King Airlines. On-site Meeting with Allegiant. 31

32 Detailed Explanation of Proposal The Northeast Florida Regional Airport at St. Augustine, Florida proposes to use Grant funding, with a healthy local match, to provide powerful marketing support for new service that various airlines have under consideration for the Airport. One very significant challenge in recruiting airlines to serve the Airport is an understandable airline fear that prospective customers in northern and central U.S. cities will not understand where the Airport is and the region it serves. It is likely that consumers will readily identify Orlando or Tampa or Jacksonville as gateway cities in Florida. It is likely that the same consumers would struggle to identify St. Augustine as such and it is likely that most have never heard of the Northeast Florida Regional Airport. This concern has been expressed to the Airport by several airlines in face to face meetings. So while the Airport has an outstanding location and excellent and low-cost facilities to offer, one thing it does not have is name recognition among prospective users in the northern and central United States. A good price and a nonstop flight are powerful tools to draw traffic but lack of name recognition means lost sales in the critical first year of new service at the Airport. In response to this legitimate airline concern the Airport is seeking Grant funding, combined with a local cash match, to ensure that new air service will have very powerful and enduring marketing and promotional support during the critical start up phase. All Airport marketing and promotional efforts will be collaborative, involving the Airport, the Airline, the St. Johns County Tourism Development Council (TDC) and various lodging and leisure activity entities. The Airport will coordinate the use of Grant funded marketing and promotional dollars, both with the Airline and with the existing marketing and promotional efforts of the TDC. At the same time, and separate from this Grant application, the Airport has developed a complete airport facility and ground handling package for the Airline. This package of long term fee waivers and reduced cost ground handling support will save hundreds to over a thousand dollars per flight turn for the Airline, as compared to landing at Jacksonville or Daytona Beach or just about any other airport in Florida. The exact amount of savings per flight depends on the specific aircraft type involved and the frequency of operations. 32

33 Specifically, the Northeast Florida Regional Airport plan involves; A collaborative effort to market new Northeast Florida air service in the cities and regions where the new air service will originate. This will involve working closely with the Airline which is likely to have some marketing and promotional infrastructure in place at the origin city and has a vested interest in the success of marketing efforts in that market. A tightly coordinated joint effort with the TDC and various resort and venue entities to steer existing tourism marketing resources to focus on the cities or regions where the new air service will originates. Depending on the carrier and type of service pattern and origin city, the Airport will undertake marketing and promotion of the service in northeast Florida. This effort will be scaled to the potential for traffic capture and will involve lower cost media outlets like billboard, radio and mass or postal mail. A comprehensive airport facility and ground handling program that will ensure that the Airline will benefit from the lowest airport and turn costs in Florida. While this element of the plan does not involve Grant funding, it is complimentary. Successful Airlines today are very cost focused and the Airport s complete ultra low-cost facility and ground handling package has already drawn positive response from airlines it has been presented to. With a favorable decision on this Grant application the Airport and its partners will have all the pieces in place to bring low-cost air service to Northeast Florida Regional Airport. For a modest expenditure of Grant and local funds (and then combined with the locally developed and funded Airport facility and ground handling program) a very significant positive economic impact will occur and the Airport will be on its way to becoming a gateway to the region and a driver of low fare air service for the region. 33

34 Extenuating Factors Affecting Northeast Florida Air Service At some point along the evolutionary path of domestic air service the Northeast Florida Regional Airport at St. Augustine got left behind. The Airport clearly has the best location of any in the region for serving both local residents and inbound tourists. The Airport has all the infrastructure in place to handle several hundred thousand passengers per year. The Northeast Florida Regional Airport did step back into connection to the national air transportation system with the Skybus service that started in May of The service generated a huge consumer response and proved the adage fly it and they will come does apply to Northeast Florida Regional. But Skybus Airlines failed in April of 2008, the victim an overall weak business plan and extreme and unanticipated fuel price spikes in the spring of that year. The Airport has a solid plan to restore low fare air service, this time with a complete facility and ground handling program and a significant Grant and locally funded marketing and promotional program. 34

35 A Strategic Plan for Success The Northeast Florida Regional Airport and its air service development partners see clearly that low-cost air service is a driver of economic activity and growth. The Airport and its partners have a comprehensive plan for ensuring that new air service at the Airport will succeed and grow. To this group this effort is an economic imperative. Public / Private Partnership The Airport s government and private sector partners in air service development include; The St. Augustine St Johns County Airport Authority The Airport Authority was established in 1964 and has overseen the growth and evolution of the Airport facility since that time. The Authority is active in the economic development of Airport land, the oversight of Airport tenants, air service development and planning for the growth of the Airport and the region around it. St Johns County Chamber of Commerce The Chamber and its county wide membership is the most influential business and commerce organization in the county. The Chamber is dedicated to promoting economic growth and sound business practices. St. Johns County Economic Development Council A branch of the Chamber, the Economic Development Council s mission is to bring new business and industry into the community, and to help existing business and industry to prosper. St Johns County Tourism Development Council The TDC promotes tourism in St Johns County. The TDC is funded by a local bed tax on rental units that generates about $5 million per year. St. Augustine Ponte Vedra & Beaches Visitors & Convention Bureau (VCB) - The mission of the VCB is to brand and market the destination globally as a premier leisure, convention and business destination; to communicate the area's assets and inherent benefits to consumers, meeting planners, travel trade, media, local community and constituents; and to facilitate the opportunity for partners to promote their individual businesses within that framework. 35

36 Galaxy Aviation Galaxy is a full service Fixed Based Operator with six locations, five of which are in Florida. Galaxy provides complete on ground service to general aviation and corporate aviation customers and provides airline ground handling services. Grant Funding Grant Funding Allocation The Airport requests in this Grant document $100,000 in Grant funding for the purpose of supporting the marketing and promotion of new air service at the Northeast Florida Regional Airport. The Grant funding of $100,000 would be supported by $25,000 in local cash match funding for a total Grant funding of $125,000. GRANT FUNDING BREAKDOWN NE Florida NE Florida Allocation DOT Share DOT Percent Airport Share Airport Percent Marketing & Promotion $125,000 $100,000 80% $25,000 20% The total Grant funding of $125,000 then splits out as 80% Department funding and 20% Northeast Florida Airport funding. All Grant related expenditures will be paid in that formula. The Airport and its partners understand that the Small Community Program is a reimbursable program therefore communities are required to make advance payments for funds expended in association with the project implementation under the program and then seek reimbursement. 36

37 Target Audience and Marketing Plan The primary target audience for the Grant funded marketing and promotional efforts will be consumers interested in visiting Florida that reside in the city and region near the airport that will receive nonstop flights to Northeast Florida Regional Airport. As was explained earlier in this document, one of the hesitations of airlines that the Airport has spoken to is related to consumer perception of gateway airports in Florida and that places like Orlando or Tampa are likely well known in that regard and Northeast Florida Regional at St. Augustine is most likely not known at all. Thus a focused program to promote the new air service in the northern tier or central U.S. city and region that will receive the new Northeast Florida Regional air service is a priority. The Airport will have many allies in this effort including; The Airline, which has a vested interest in the success of the new service and also will want all marketing & promotional efforts to conform to its brand & advertising protocols. The Tourist Development Council of St. Johns County, which is strongly motivated to nurture low fare air service at Northeast Florida Region, as a successful low fare service at this Airport is a huge boon to county tourism. The resort and lodging entities and the tourism venues of the St. Augustine area, all of which have suffered a loss of business activity due to the recession and are hungry for methods to expand visitor events. While exact marketing and advertising plans cannot be determined until the carrier and route are known, the Airport envisions that a typical new air service to a northern or central U.S. city will use some or all of the following marketing and promotional methods in the origin city; 1) Radio promotions and ticket/hotel package giveaways 2) Billboards, advertising the destination as much as the airline 3) s and postal mailings to consumers that are identified as previous visitors from zip code and address retention programs at northeast Florida lodgings and leisure venues. 37

38 4) Careful coordination with the existing northeast Florida promotional efforts of the TDC, turning those efforts to focus on the region where the new air service is to originate. TDC efforts cross a wide spectrum of media venues including newspaper, internet and radio. Depending on the route and carrier business model the Airport will also market and promote the new air service in the northeast Florida region. To clarify this, if Allegiant is the carrier and the route is twice weekly to Allentown, PA, the Airport is unlikely to commit measureable promotional resources to the local northeast Florida market. If, on the other hand, the carrier is Frontier with year round three or four times weekly service to Milwaukee or Kansas City with an extension to Denver, then the Airport may commit measureable promotional resources to the local market, give that Frontier does not serve Jacksonville, operates a network type route system, and is committing significantly more frequency to the market than an Allegiant might. Timeline, Milestones and Monitoring The timeline for implementation of the marketing and promotional programs outlined in this application are controlled by two sequential events; the timeline of the award of the Grant and the Airline s service startup date. NORTHEAST FLORIDA REGIONAL AIRPORT GRANT TIMELINE Date Event Status Aug, 2010 Grant Application Done Sept, 2010 Letters of support Q Receive Grant Award Q Gain Airline commitments to serve Northeast Florida Regional Q Announce service Q Meet with stakeholders, Airline, TDC, lodging entities, to firm up marketing plan Q Begin quarterly DOT Grant status reports Q Begin marketing and promotional efforts in close coordination with stakeholders Q New service kickoff Q Evaluate first 30 days & booking curve Q Based on initial booking curve firm up Fall 2011 marketing plan Q Refine marketing program based on route performance Q Renew marketing program, targeting winter bookings Q Evaluate first six months of service, adjust marketing plan as needed Indicates Milestone This timeline represents a best case of Grant implementation. Timeline and milestone sequence would obviously slip depending on sequence of Grant award and carrier service agreement. 38

39 Performance Measures All stakeholders in the Grant implementation, the Airport, its partners, the Airline, the TDC and local lodging and leisure venue entities, will be regularly apprised of the performance of the new air service, in terms of load factor, average fare and revenue, and profitability. To the maximum extent possible, the stakeholders will reference actual market share performance and traffic mix metrics to determine if marketing and promotional efforts are successful. This will be done even if the route is performing well, since it may be performing well despite badly aimed marketing and promotional efforts, and could be doing even better with resource allocation adjustments. Financial Controls and Program Oversight The legal sponsor of this application, Mr. Edward R. Wuellner AAE and Executive Director of the Northeast Florida Regional Airport, will oversee the implementation of this Grant. This oversight will include (but not be limited to); Liaison with the Department, including the timely filing of all quarterly Grant status update reports Conclusion of all agreements with prospective airlines to serve the Airport Coordination and oversight of the implementation of Grant supported marketing and promotional efforts Oversight and coordination of the regular performance reviews of Grant supported efforts to ensure program success Approval of all expenditures of Grant funding, in close coordination with the Department and Grant program stakeholders 39

40 Return on Investment The amount of this Grant is relatively modest by Small Community Grant program standards. The type of air service that will be supported by Grand funds is envisioned to be low fare flights with mainline type aircraft. Even a twice weekly 150 seat MD80 generates 600 route seats per week or 31,200 per year. Assuming even an 85% load factor, which is modest by Allegiant Air standards for example, this one example route would 26,520 annual O&D passengers. Even if the entire $125,000 is expended on this one route the cost per passenger generated in Grant funds is a modest $4.71. Use of Local and Department Funds The Airport and the designated legal sponsor will ensure that both Department and local funds associated with this project are expended in a manner consistent with the Grant intention and the contract between the Department and the Airport. This is a straightforward marketing and promotions Grant with a clear target market and established methods of marketing and promotion that will be utilized with Grand funds. Route Self Sufficiency Marketing and promotion alone cannot make a new air service successful, nor be its downfall. However, the Airport and all Grant stakeholders recognize that marketing and promotion are one essential element of a successful new air service. The Airport has a comprehensive airport facility and ground handling package that compliments the marketing and promotional efforts this Grant will support. These two key elements, combined with a passionate local commitment to make low fare air service happen at Northeast Florida Region and a commitment to closely monitor new route performance, suggest that new low fare air service at Northeast Florida Regional will be successful or that mid course adjustments in strategy and tactics, undertaken as needed, will result in eventual success. The Airport and its local partners understand the need for success and will commit additional marketing and promotional resources, as needed, to ensure that success. 40

41 Alternate Timeline and Plan The airline industry is very volatile, witness 2008 as an example. The Airport and its partners understand that sudden fuel cost spikes, economic slowdowns, and geopolitical events or even huge off shore oil spills can wreck the best laid new air service plans. Thus, the Airport and its partners cannot predict such events or any alternative air service environment which may emerge from them. The Airport parties will remain as true as possible to the intent of this Grant application and any significant deviation from its written intent herein will be proposed to the Department for approval. Only extreme circumstances will cause such a plan shift and any shift will be subject to Department approval. Legal Sponsor The Legal Sponsor of this Grant application is the Northeast Florida Regional Airport. The designated Legal Sponsor contact is: Edward R. Wuellner, AAAE Executive Director US 1 North St. Augustine, Florida Phone Fax erw@sgj-airport.com 41

42 AIRPORT INFORMATION Northeast Florida Regional Airport is located just a few miles from historic downtown St. Augustine and serves as a focal point for the Northeast Florida region. It is publicly owned by St. Augustine - St. Johns County Airport Authority. Remodeled and expanded in 1994, the terminal offers a full airline passenger processing infrastructure, including ticket counters, gate hold areas, baggage makeup and claim and TSA security screening. The airport has three asphalt runways of varying lengths; the primary runway is 7,996 feet. Crash/Fire/Rescue capability for mainline airline aircraft on site. The airport is located adjacent to US Highway 1 and only five road miles from Interstate 95. Customer parking near the terminal is $5 per day. 42