PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM
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1 PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM Docket DOT-OST Gulfport-Biloxi Regional Airport Authority DUNS Congressional District Code MS 05
2 Table of Contents Contact Information Executive Summary MS Gulf Coast Economy Air Service Development Evaluation Criteria Project Proposals and Costs Community Assurances Acknowledgements
3 Gulfport-Biloxi International Airport L Airport Road Gulfport, MS Bruce Frallic, A.A.E. Executive Director Phone: (228) Fax: (228) bfrallic@flygpt.com
4 EXECUTIVE SUMMARY The economic condition of the MS Gulf Coast has yet to recover from the devastating effects of Hurricane Katrina in August The April 2010 BP Oil Spill in The Gulf of Mexico delivered a second blow, adversely effecting the economy on the MS Gulf Coast for both the short and long term. As a result of the relentless national and regional media coverage, passenger, airline, business and industry perceptions in all air markets have been, and will continue to be adversely impacted. The $1.6 billion tourism industry on the Mississippi Gulf Coast, which directly employs over 25,000 people, has been impacted as a result of the oil spill. In an effort to prevent or mitigate a major decline in passenger traffic, and revenues, GPT must effectively and quickly define market changes resulting from the oil spill. GPT must assess the impact of the disaster, and formulate solutions to the problems presented. With funds made available through the Small Community Air Service Development Program, GPT plans to conduct a series of strategic studies from which we will use to compose an action plan. This plan will help identify appropriate marketing efforts which are essential to prevent a catastrophic economic loss. Gulfport Biloxi International Airport has the support of a citizen-based public-private partnership that is dedicated to sustaining air service levels in their community.
5 MS GULF COAST ECONOMY
6 MS GULF COAST ECONOMY BP OIL SPILL IMPACT The oil spill resulting from the explosion of the Deepwater Horizon drilling rig operated by British Petroleum (BP) has left a lasting adverse effect. GPT At this juncture, it is unknown how the oil spill will ultimately impact the economy. We know that leading up to the event, and even as the event unraveled, the economy on the MS Gulf Coast was making real progress towards recovery. Job sectors connected to the seafood industry face immediate and sizeable losses. Negative national perceptions of oil inundated beaches have and will continue to adversely effect the MS Gulf Coast Tourism Industry.
7 MS GULF COAST ECONOMY ESTABLISHMENT JOBS Source: Gulf Coast Business Council
8 MS GULF COAST ECONOMY SALES TAX COLLECTIONS Two preliminary observations about oil spill impacts in May Though it is generally agreed that tourism related visitation onthe Mississippi Gulf Coast is down because of the oil spill, the number of people in the region working with the oil spill has likely grown overall hotel sales when comparedto prevailing trends (Chart 3). 2. Prevailing trends for restaurants on the Mississippi Gulf Coast have worsened, as sales were actually down in May after increasing leading up to the oilspill (Chart 4). Source: Gulf Coast Business Council
9 MS GULF COAST ECONOMY TOURISM Looking ahead, and taking into consideration ongoing impacts of the oil spill, the following will influence the progress of the Mississippi Gulf Coast in its efforts to establish itself as a premier travel destination. Perceptions of potential visitors on how the oil spill has impacted the region will continue to be a challenge. Though short term aggregate impacts have not been substantial, it is likely that BP related travelers have offset otherwise lost business. Many outward indicators, such as inquiries for golf packages andadvance hotel bookings, are down. Additional marketing campaigns will be needed to address negatively impacted perceptions. GPT Air Service is directly impacted by declines in leisure visitors. Inbound traffic from ATL, TPA, and other key markets is a critical revenue source.
10 AIR SERVICE DEVELOPMENT
11 AIR SERVICE DEVELOPMENT AIRLINE MEETINGS Airport officials continue to meet with new and existing air carriers in an effort to secure additional service Continental Airlines Northwest Airlines Delta Airlines American Eagle Delta Airlines US Airways American Eagle Airtran Airways Continental Airlines Frontier Airlines Delta Airlines American Eagle Skybus Allegiant Air United Airlines US Airways Delta Airlines US Airways United Airlines Airtran Airways Continental Airlines Delta Airlines American Eagle United Airlines Allegiant Air Continental Airlines Delta Airlines Spirit Airlines US Airways Branson Air Express Vision Airlines United Airlines
12 AIR SERVICE DEVELOPMENT PUBLIC / PRIVATE PARTNERSHIPS Airport officials target demand for new air service through public / private partnerships.
13 AIR SERVICE DEVELOPMENT AGGRESSIVE INCENTIVES GPT offers incentives to help lower risks with the intention of creating an environment of aggressive support to grow existing routes and secure new routes. Consolidated seat block programs and cooperative marketing with area casino properties and attractions. AirTranAirways (Jan 2010) secured service to ATL / TPA through consolidated casino seat block agreement. Branson Air Express (May 2010) secured nonstop service to Branson, MO through casino marketing support and seat commitment with private entity. GPT aggressively markets air service to area businesses. GPT provides airlines with short term abatement of airport fees 12 month fee waivers for new destinations. Aggressive marketing support in local area and in destination markets is provided to all carriers, not limited to new service. Awarded Small Community Air Service Grant (2005) for revenue guarantee for nonstop service to ORD with American Eagle in
14 AIR SERVICE DEVELOPMENT SCASG 2005 Small Community Air Service Grant awarded on September 6, Grant funds awarded in the amount of $750,000 $700,000 Revenue Guarantee $50,000 Marketing / Promo / Market Assessment American Eagle began nonstop service from GPT ORD on December 13, The revenue guarantee funds were depleted on April Due to increased operational costs associated with a significant increase in fuel costs, AE discontinued the nonstop ORD service on November 2008.
15 AIR SERVICE DEVELOPMENT 2005 SCASG vs SCASG The 2010 SCASG application definitively reflects a new project as the goals and objectives are considerably different in comparison to the 2005 SCASG awarded SCASG AWARD TOTAL $750,000 REVENUE GUARANTEE - $700,000 MKTG / PROMO / ASSESSMENT - $50,000 FEDERAL AMOUNT- $750, SCASG PROPOSAL TOTAL $455,000 ECONOMIC IMPACT / ACTION PLAN - $30,000 AIR SERVICE DEVELOPMENT CONSULTANT- $30,000 MARKETING SUPPORT - $395,000 FEDERAL AMOUNT- $280,000
16 EVALUATION CRITERIA
17 EVALUATION CRITERIA CATCHMENT AREA DRIVE TIME MATRIX 1 HOUR 1 M.5 HOUR 300,000
18 EVALUATION CRITERIA CURRENT SERVICE AUG 2010
19 EVALUATION CRITERIA CURRENT SCHEDULE SEP ,812, , TOTAL 150, Aug TPA GPT FL 340, , Aug MEM GPT DL 620, , Aug IAH GPT CO 698, , Aug DFW GPT AA 732, , Aug CLT GPT US 72, Aug BKG GPT 1X 123, Aug ATL GPT FL 1,074, , Aug ATL GPT DL ASM/Week Seats/Dep Seats Deps Sun Sat F T W T M Date Miles Dst Org Al
20 EVALUATION CRITERIA ENPLANEMENT PASSENGER TREND 15, , , , , , , , , , , , Charter Scheduled
21 EVALUATION CRITERIA GPT TOP O&D AIRPORT MARKETS CY 2009 Rank Market Nonstop PAX REV Miles PDEW PDEW Avg Fare Nonstop 1 ATL $ 9,786 $ 124 Y 2 IAH $ 4,856 $ 118 Y 3 DCA $ 4,814 $ 160 N 4 BWI $ 3,840 $ 134 N 5 LAS 1, $ 3,859 $ 160 N 6 LGA 1, $ 2,871 $ 128 N 7 PHL 1, $ 3,048 $ 153 N 8 TPA $ 2,652 $ 136 Y 9 DFW $ 3,458 $ 181 Y 10 SAN 1, $ 3,707 $ 201 N 11 LAX 1, $ 3,720 $ 219 N 12 FLL $ 2,301 $ 147 N 13 ORD $ 2,417 $ 157 N 14 CLT $ 2,469 $ 166 Y 15 JAX $ 2,245 $ 152 N 16 MCO $ 2,326 $ 159 N 17 MSP 1, $ 2,511 $ 177 N 18 ORF $ 4,076 $ 289 N 19 BOS 1, $ 2,242 $ 163 N 20 RDU $ 1,756 $ 133 N 21 PHX 1, $ 2,092 $ 161 N 22 SFO 1, $ 2,136 $ 174 N 23 DTW $ 2,208 $ 181 N 24 SEA 2, $ 2,827 $ 233 N 25 DEN 1, $ 2,058 $ 172 N Source: U.S. DOT, Origin Destination Passenger Survey, via Data Base Products, Inc.
22 EVALUATION CRITERIA GPT TOP O&D PASSENGER MARKETS Q Rank Market PAX PDEW Avg Fare Nonstop 1 ATL 50 $ 142 Y 2 TPA 39 $ 68 Y 3 DCA 25 $ 152 N 4 BWI 23 $ 152 N 5 IAH 22 $ 219 Y 6 LAS 22 $ 179 N 7 LGA 22 $ 134 N 8 DFW 21 $ 189 Y 9 PHL 18 $ 165 N 10 SAN 17 $ 230 N 11 CLT 16 $ 167 Y 12 MSP 16 $ 169 N 13 BOS 15 $ 168 N 14 MCO 15 $ 182 N 15 ORF 14 $ 235 N 16 DTW 14 $ 165 N 17 LAX 13 $ 258 N 18 SAT 13 $ 204 N 19 ORD 13 $ 175 N 20 FLL 11 $ 189 N 21 DEN 11 $ 189 N 22 MCI 11 $ 157 N 23 SEA 10 $ 273 N 24 SFO 10 $ 194 N 25 PHX 10 $ 165 N Source: U.S. DOT, Origin Destination Passenger Survey.
23 EVALUATION CRITERIA ANNUAL CAPACITY 70,000 60,000 50,000 40,000 30, ,000 10,
24 PROJECT PROPOSAL
25 PROJECT PROPOSAL OBJECTIVES To ensure effective mitigation of the negative impacts on air service levels at the Gulfport- Biloxi International Airport as a direct result of the BP Gulf Oil Spill catastrophe, the project proposal identifies the following vital support initiatives. Employ a consultant to conduct a detailed market assessment todefine countermeasures to the changing economic conditions, passenger propensities, performance analysis, and viable markets in the post-bp disaster environment. The study will ultimately result in an action plan which will guide a proactive program to mitigate negative revenue impacts as it directly relates to air service. Employ a consultant to provide expertise and support in communicating and presenting the information to new and existing air carriers. Through the action plan derived from the market assessment, the establishment and funding of a strategic marketing campaign to implement countermeasure marketing in target markets will act as the vehicle to offset the negative effects on air service levels on the MS Gulf Coast due to the BP oil spill.
26 PROJECT PROPOSAL FUND ALLLOCATION Deliverables GPT Contribution Community Investment Grant Funds Consultant Services Market Assessment Study / Strategic Plan $ 30,000 Air Service Development Support Agreement $ 30,000 Ad Campaign Print $ 50,000 $ 25,000 $ 200,000 Radio $ 10,000 $ 25,000 $ 25,000 Internet $ 10,000 $ 25,000 Other Media In airport advertising $ 25,000 Total $ 125,000 $ 50,000 $ 280,000
27 PROJECT PROPOSAL REGIONAL SUPPORT FOR AIR SERVICE To ensure the success of air service initiatives, Gulfport-Biloxi and the Mississippi Gulf Coast area businesses through a public / private partnership are working together to support initiatives to counteract the negative effects of the BP Oil Spill. The public / private partnership includes the Gulf Coast Business Council, Harrison County Tourism Commission, The Gulf Coast Chamber of Commerce, Mississippi Development Authority, and Gulf Coast Casino Operators. Through the Gulf Coast Business Council and the Gulf Coast Chamber of Commerce air service task force, valuable information derived from economic data will be used to formulate the action plan. Financial support through marketing efforts will then be implemented to counteract the negative impacts of the BP Oil Spill. Together, their support of committing financial resources allows GPT to sustain existing air service and help attract new air service.
28 PROJECT PROPOSAL CRITICAL MILESTONES The effectiveness of the grant proposal objectives will be gauged through closely monitoring existing air service levels and ultimately through improvements in passenger volume and service levels. The Gulfport-Biloxi International Airport proposes its Small Community Air Service Development Program be evaluated based on the following milestones. At a minimum, maintaining existing air service levels to key leisure markets BKG, ATL, and TPA. 10% - 15% increase in passenger enplanements over three years The airport, as the sponsor of this grant application, will be responsible for overall administration of this program. The Gulfport-Biloxi International Airport will provide quarterly reports to U.S. D.O.T. regarding the progress of our ACTION PLAN as well as an accounting of funds used in pursuit of our objectives. The airport will also advise U.S. D.O.T. as the objectives of the program are achieved.
29 PROJECT PROPOSAL CONCLUSIONS GPT sproposal will result in: maintaining passenger levels for the airport, infrastructure development and potentially air service growth, resulting in millions of dollars in economic impact for the Mississippi Gulf Coast. It is vital that GPT take the necessary steps to study the short and long term effects on air service levels as a direct result of the BP Oil Spill. We must understand, act, and continue to monitor the econometric indicators in an effort to mitigate loss. Through an aggressive marketing initiative, GPT will have the tools needed to counteract the negative impacts on the local economy and air service. Airlines require low risk opportunities in these economically uncertain times. The volatility of our market has been increased significantly by theimpacts of the BP Oil Spill. By empowering and utilizing regional support to help off-set risk, the Small Community Air Service Grant will support the investment through enhanced / expanded marketing and advertising.
30 COMMUNITY ASSURANCES Assurances that the grant money would be spent in accordance with the grant program stipulations and the proposal outline would be in the form of an independent annual audit, transaction recording standards, functional oversight of transactions by Airport Authority Staff,reporting to elected and appointed officials (not on the Authority staff), and a contractual obligation that designates proper use and expected outcomes of the marketing efforts. Since the primary partners for the airport are municipalities, the reporting and audit requirements are stringent. An annual audit is required to be performed by an outside audit firm. The airport transactions are subject to all sampling, testing, and audit standards applied bythat audit firm to ensure that the information fairly and materially states the financial condition of the entity. All transactions are recorded using Generally Accepted Accounting Principles (GAAP) as established by the Governmental Accounting Standards Board. Compliance testing is performed to ensure that grant funds (considered restricted) are being used as designated by the awarding entity. The Finance Department has an Accountant specifically assigned to monitoring grants and reporting their status quarterly. The Executive Director is responsible for approving all transactions on a day-to-day basis and reviewing the expenditures and performance measurement results. Monthly financial reports are delivered to the elected officials (Airport Board) and the Airport Steering Committee (advisory committee for the operations of the airport). These reports are available for public review. A contract for marketing services will be written to include performance standards. These standards are intended to ensure that the grant money (should we be granted the opportunity) would be spent in a manner consistent with the requirements of this program and our proposal. The Airport Authority is traditionally very successful with monitoring grant programs, given the tools and processes in place as standard operating procedure.
31 Acknowledgements The Gulfport-Biloxi International Airport and its partner communities are grateful for the opportunity to apply for this grant. It isour belief that these funds are critical to the future of our airport and region. We believe the opportunities to serve the public are substantialgiven the growth specific to our regional market.
32 APPENDIX B Page 1 SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET DOT-OST SUMMARY INFORMATION All applicants must submit this information with their proposal, along with a completed form SF424 on A. APPLICANT INFORMATION: (CHECK ALL THAT APPLY) X Not a Consortium Interstate Consortium Intrastate Consortium Community now receives EAS subsidy X Community (or Consortium member) previously received a Small Community Grant If previous recipient: Date of grant: September 6, 2005 Expiration date of grant: September 6, 2008 B. PUBLIC/PRIVATE PARTNERSHIPS: (LIST ORGANIZATION NAMES) Public Private 1. Gulfport-Biloxi Regional Airport Authority 1. Gulf Coast Business Council 2. Harrison County Convention and Visitors Bureau 2. Casino Operators Association 3. Mississippi Development Authority 3. Gulf Coast Chamber of Commerce C. PROJECT PROPOSAL: (CHECK ALL THAT APPLY) X Marketing Upgrade Aircraft New Route Personnel Increase 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 Service X Study Secure Additional Carrier
33 APPENDIX B Page 2 D. EXISTING LANDING AIDS AT LOCAL AIRPORT: X Full ILS X Outer/Middle Marker X Published Instrument Approach X Localizer Other (specify) E. PROJECT COST: 1. Federal amount requested: $280, State cash financial contribution: 3. Local cash financial contribution 3a. Airport cash funds: $125,000 3b. Non-airport cash funds: $50,000 3c. Total local cash funds (3a. + 3b.): $175, TOTAL CASH FUNDING ( c.): $455, Local funds contributed from already-existing programs or projects included in line 3c. amount: 6. Local funds contributed from new commitments or new resources included in line 3c. amount: $50, Airport In-Kind contribution: (amount & description) 8. Other In-Kind contribution: (amount & description) 9. TOTAL IN-KIND CONTRIBUTION ( ): 10. TOTAL PROJECT COST ( ): $455,000
34 F. ENPLANEMENTS: APPENDIX B Page , , _488, , , _403, , , , ,866 G. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER PROCESS? a. This application was made available to the State under the Executive Order Process for review on (date). b. Program is subject to E.O , but has not been selected by the State for review. X c. Program is not covered by E.O H. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? (IF YES, PROVIDE EXPLANATION) X No Yes (explain)
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