APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET DOT-OST-2014-0113 SUMMARY INFORMATION A. PROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER, INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN) OR TAX ID. Legal Sponsor Name: Montgomery Airport Authority Name of Signatory Party for Legal Sponsor: Chip Gentry, VP Air Service Development DUNS Number: 155618283 EIN/Tax ID: 63-0638943 B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING: 1._MONTGOMERY, ALABAMA_ C. PROVIDE THE FULL AIRPORT NAME AND 3-LETTER IATA AIRPORT CODE FOR THE APPLICANT(S) AIRPORT(S) (ONLY PROVIDE CODES FOR THE AIRPORT(S) THAT ARE ACTUALLY SEEKING SERVICE). 1. Montgomery Regional Airport (Dannelly Field), (MGM) DOES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE ISSUED BY THE FEDERAL AVIATION ADMINISTRATION UNDER 14 CFR PART 139? (IF NO, PLEASE EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR WHETHER AN APPLICATION UNDER PART 139 IS PENDING.) Yes No (explain) Proposal of Montgomery Regional Airport Montgomery, AL July 2014
D. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY. 1. AL-07 E. APPLICANT INFORMATION: (CHECK ALL THAT APPLY) Not a Consortium Interstate Consortium Intrastate Consortium Community now receives subsidized Essential Air Service Community (or Consortium member) previously received a Small Community Air Service Development Program Grant If previous recipient: Provide Year of grant(s): 2005 and, the text of the Grant agreement section(s) setting forth the scope of the grant project: Recruit Northwest Airlines service to Detroit; market the new service to Detroit F. PUBLIC/PRIVATE PARTNERSHIPS: (LIST ORGANIZATION NAMES) PUBLIC PRIVATE 1. Montgomery Regional Airport 1. Montgomery Chamber of Commerce 2. City of Montgomery, AL 2. Imagine a Greater Montgomery Coalition G. PROJECT PROPOSAL: 1. GRANT GOALS: (CHECK ALL THAT APPLY) Launch New Carrier Secure Additional Service Upgrade Aircraft First Service New Route Service Restoration Regional Service Surface Transportation Professional Services Other (explain below) Marketing and Advertising funds to promote the Airport and Airport service opportunities Proposal of Montgomery Regional Airport Montgomery, AL July 2014
2. FINANCIAL TOOLS TO BE USED: (CHECK ALL THAT APPLY) Marketing (including Advertising): promotion of the air service to the public Start-Up Cost Offset: offsetting expenses to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration) Revenue Guarantee: an agreement with an air service provider setting forth a minimum guaranteed profit margin, a portion of which is eligible for reimbursement by the community Recruitment of Air Carrier: air service development activities to recruit new air service, including expenses for airport marketers to meet with air service providers to make the case for new air service Fee Waivers: waiver of airport fees, such as landing fees, to encourage new air service; counted as in-kind contributions only Ground Handling Fee: reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers Travel Bank: travel pledges, or deposited monetary funds, from participating parties for the purchase of air travel on an air carrier, with defined procedures for the subsequent use of the pledges or the deposited funds; counted as in-kind contributions only Other (explain below) H. EXISTING LANDING AIDS AT LOCAL AIRPORT: Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify) Proposal of Montgomery Regional Airport Montgomery, AL July 2014
I. PROJECT COST: DO NOT ENTER TEXT IN SHADED AREA LINE DESCRIPTION SUB TOTAL TOTAL AMOUNT 1 Federal amount requested $200,000 2 State cash financial contribution $0 Local cash financial contribution 3a Airport cash funds $0 3b Non-airport cash funds $60,000 3 Total local cash funds (3a + 3b) $0 4 TOTAL CASH FUNDING (1+2+3) $260,000 In-Kind contribution 5a Airport In-Kind contribution** $0 5b Other In-Kind contribution** $1,000 5 TOTAL IN-KIND CONTRIBUTION (5a + 5b) $1,000 6 TOTAL PROJECT COST (4+5) $261,000 J. IN-KIND CONTRIBUTIONS** For funds in lines 5a (Airport In-Kind contribution) and 5b (Other In-Kind contribution), please describe the source(s) of fund(s) and the value ($) of each. Media company will offer a 10% added value to any placement K. IS THIS APPLICATION SUBJECT TO REVIEW BY AN AFFECTED STATE UNDER EXECUTIVE ORDER 12372 PROCESS? a. This application was made available to the State under the Executive Order 12372 Process for review on (date). b. Program is subject to E.O. 12372, but has not been selected by the State for review. c. Program is not covered by E.O. 12372. L. IS THE LEAD APPLICANT OR ANY CO-APPLICANTS DELINQUENT ON ANY FEDERAL DEBT? (IF YES, PROVIDE EXPLANATION) No Yes (explain) Proposal of Montgomery Regional Airport Montgomery, AL July 2014
TABLE OF CONTENTS Legal Sponsor 1 Introduction 2 Overview of Montgomery Air Service 3 Catchment Area 3 Current Air Service 4 Capacity Trends 5 Air Service Development Efforts and Air Service Marketing 6 Top 25 Origin and Destination (O&D) Average Fares 6 Regional Comparisons 8 Seats per Capita 10 Passengers per Capita 11 Strategic Plan to Improve Air Service through Marketing 12 Public Private Partnership 18 Previous Small Community Air Service Development Grant 18 Conclusion 20 LEGAL SPONSOR The Montgomery Regional Airport is the legal sponsor responsible for administering the proposed air service development program. Montgomery Airport Authority. The Airport is a government agency, operated by the Montgomery Regional Airport 4445 Selma Hwy. Montgomery, AL 36108 Chip Gentry, VP Air Service Development (334) 318-1918 cgentry@montgomerychamber.com Proposal of Montgomery Regional Airport Montgomery, AL July 2014 1
INTRODUCTION The Montgomery Regional Airport is seeking a modest Small Community Air Service Development (SCASD) Grant for promoting, marketing and advertising the benefits of supporting the regional airport. The Airport is requesting $200,000 in federal funds matched with local, non-airport funds of $60,000 to aid in this endeavor. The Montgomery Regional Airport has had continued air service reductions over the last decade. The primary goals for the Airport are to expand the current customer base, increase local awareness on the ease of traveling from MGM and to attract additional air service. Montgomery Regional Airport, up until this point, has not received federal aid through the SCASD Grant. The air service climate has changed dramatically, with carriers now expecting Airport partners to assist in marketing of the service without aid from the Airline directly, leading to an environment where additional air service development will be extremely difficult without the help of a SCASD Grant. The Airport serves a large catchment area throughout the Montgomery, Alabama region. The area is home to more than 1.2 million people within a 90 minute drive. Montgomery Regional Airport currently has just three scheduled non-stop routes; Delta Air Lines to Atlanta and American/US Airways to Charlotte and Dallas/Fort Worth. Over the past year the capacity at Montgomery Regional Airport has been relatively stagnant, down 0.2%. Due to.. The Airport s passenger airfare has increased to an average of $298 each way which ranks Montgomery as one of the highest average fares in the Southeast. limited air service the Airport s passenger airfare has increased to an average of $298 each way which ranks Montgomery as one of the highest average fares in the Southeast. Montgomery Regional Airport has limited non-stop service to three destinations. Due to the lack of travel options and awareness over the existing abilities of the carriers serving MGM, the majority of the Montgomery catchment area passengers use alternate airports in the region. Just 24% of the area passengers currently use Montgomery Regional Airport based on a recent leakage study on data ending in calendar year 2013. The Airport has assembled a coalition of local businesses to assist with the SCASD project by providing matching dollars and outreach assistance within the community to ensure that current and additional air service is supported. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 2
OVERVIEW OF MONTGOMERY AIR SERVICE The Montgomery Regional Airport (Map 1) has a catchment area encompassing over 1.2 million people. The Airport is positioned at the intersection of IH-65 between Birmingham and Mobile, and IH-85 to Atlanta. The Airport currently has nonstop service with Delta Air Lines to Atlanta and American/US Airways to Charlotte and Dallas/Fort Worth. The Airport has a vital role in connecting dozens of communities to the national air transportation system. The nearest competing airports are Birmingham/BHM, just under two hours drive by car, and Atlanta/ATL, which is nearly three hours away. MAP 1: Montgomery Regional Airport Catchment Area Source: Sixel Consulting Group Proposal of Montgomery Regional Airport Montgomery, AL July 2014 3
MAP 2: Current Service at Montgomery Regional Airport Source: Sixel Consulting Group; OAG Schedule Data, July 2014 The current route map for Montgomery Regional Airport (Map 2) geographically details the nonstop service on Delta Air Lines to Atlanta and American/US Airways to Charlotte and Dallas/Fort Worth. These two air carriers serving Montgomery Regional Airport will offer 0.2% fewer seats in 2014 than offered for the same period last year (Figure 1). FIGURE 1: Scheduled Service at Montgomery Regional Airport, 8/13 vs. 8/14 Source: Sixel Consulting Group; OAG Schedule Data, July 2014 Aug-13 Aug-14 Carrier Non-Stop Destination Departures Per Day Seats Per Day Departures Per Day Seats Per Day Capacity Change American / US Airways CLT 2.7 134 2.6 132-1.2% DFW 3.0 147 2.9 147 0.1% American / US Airways Total 5.6 281 5.6 279-0.5% Delta ATL 5.6 566 5.6 566 0.0% Delta Total 5.6 566 5.6 566 0.0% Total for Montgomery Regional Airport 11.2 847 11.2 845-0.2% Proposal of Montgomery Regional Airport Montgomery, AL July 2014 4
Delta offers almost two-thirds of Montgomery Regional Airport s available seats as of August 2014 while American/US Airways provide just over 33% of the available seats (Figure 2). FIGURE 2: Montgomery Seat Capacity Share by Carrier Airline capacity at the Montgomery Regional Airport has steadily decreased over the last decade, as have the origin and destination passengers. In 2013 Montgomery passengers decreased by 21.9%, an average of 120 less passengers per day each way (PDEW), as compared to 2005 (Figure 3). FIGURE 3: O&D Passengers and Average One Way Fares, Montgomery Regional Airport Source: US DOT OD1A, Calendar Year 2005 Calendar Year 2013 The Montgomery Regional Airport s average fares continue to increase, with 2013 reaching the highest level over the last nine years. With limited service through Delta and American/US Airways, the overall average one-way fare for 2013, was $298. This equates to an increase of 15.5% or an average of $40 each way, as compared to $258 in 2010 (Figure 3). Proposal of Montgomery Regional Airport Montgomery, AL July 2014 5
AIR SERVICE DEVELOPMENT EFFORTS AND AIR SERVICE MARKETING The majority of the top 25 origin and destination (O&D) markets are business-centric routes for Montgomery Regional Airport. This is a major factor for the high average one-way fares for the airport. Of the three non-stop destinations (Atlanta, Charlotte and Dallas / Ft. Worth), Atlanta is lowest on the top 25 O&D list (Figure 4). This is due to the drive-time proximity from Montgomery of less than 3 hours. The Montgomery Regional Airport generated an average of 29.2 PDEW to and from Washington, DC in 2013, 28.6 PDEW to and from Dallas / Ft. Worth, and 23.1 PDEW to and from New York City. FIGURE 4: Top 25 O&D Passenger Markets at Montgomery Regional Airport Source: US DOT OD1A, Calendar Year 2013 There is currently no low-cost airline alternative for leisure travel at Montgomery Regional Airport. Based on the recent leakage study for the Montgomery catchment area, the vast majority of leisure customers use alternate airports for their travel needs. As an example Central and South Florida traffic from the Montgomery region exceeds 100 PDEWs, yet, over 80% of the Florida passengers fly via alternate airports in the region. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 6
With just two network carriers operating at Montgomery Regional Airport, the average one-way fare for the top 25 markets was $254 during 2013 (Figure 5). Due to limited connecting opportunities through only 3 non-stop markets, low fares to leisure markets are limited. The Montgomery Regional Airport travelers pay a high average price for access to the national air transportation system due to a lack of competition. FIGURE 5: Average One Way Fares at Top 25 Markets at MGM Source: US DOT OD1A, Calendar Year 2013 As of the 12 months ended in April 2014, the Montgomery market filled an average of 64.8% of its available seats (Figure 6). Load factors in the market are continually in the low to mid 60% range. FIGURE 6: Passengers and Seats per Day Each Way, and Load Factor at Montgomery Regional Airport Source: US DOT T100; January 2012 April 2014 Proposal of Montgomery Regional Airport Montgomery, AL July 2014 7
During the 12 months ended in April 2014, Delta posted a 68% load factor. For the same period American/US Airways reported 63% load factors. December holidays and Spring Break travel periods help boost the Montgomery Regional Airport s load factors during those strong travel times. Montgomery Regional Airport s lower than system average load factors indicate the immediate need to market and promote local community support of the Airport. FIGURE 7: Average One Way Domestic Fare in Southeast Markets Source: US DOT OD1A, Calendar Year 2013 The Montgomery Regional Airport has seen continued capacity cuts over the last decade. The reduction in service has made Montgomery one of the more underserved markets in the country. Based on the recent leakage study, only 435 of the daily 1,800 passengers that travel each way from the region actually use Montgomery Regional Airport. The major indicators show that the market is primed for additional passenger support. An analysis of average one-way domestic fares in Southeast markets indicates that Montgomery Regional Airport has the sixth highest average fare in the region as of 2013 (Figure 7). The oneway domestic average for Montgomery Regional Airport is $248. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 8
Montgomery Regional Airport reported a load factor of 65.7% for calendar year 2013 (Figure 8). The results are well-below Atlanta and Birmingham average load factors for 2013. Atlanta and Birmingham captures the majority of the traffic that is leaked from Montgomery Regional Airport. FIGURE 8: Southeast Markets Ranked by Load Factor Source: US DOT T100, Calendar Year 2013 Code City Passengers Available Seats Load Factor ATL Atlanta 40,586,453 50,074,222 81.1% PNS Pensacola 747,240 947,664 78.9% AGS Augusta 264,868 339,468 78.0% GTR Columbus, MA 41,043 53,520 76.7% SAV Savannah 801,663 1,054,944 76.0% BHM Birmingham 1,436,553 1,899,560 75.6% TLH Tallahassee 337,554 446,580 75.6% VPS Valparaiso 352,616 467,755 75.4% JAN Jackson 614,778 817,910 75.2% GPT Gulfport/Biloxi 362,481 483,537 75.0% MOB Mobile 288,831 387,784 74.5% ECP Panama City 396,498 550,292 72.1% VLD Valdosta 36,876 51,481 71.6% DHN Dothan 48,104 68,474 70.3% HSV Huntsville 513,445 747,775 68.7% MGM Montgomery 160,014 243,413 65.7% BQK Brunswick 32,365 50,838 63.7% CSG Columbus, GA 61,546 100,658 61.1% ABY Albany 31,047 51,408 60.4% AHN Athens 2,074 5,475 37.9% PIB Laurel/Hattiesburg 8,690 26,184 33.2% MEI Meridian 6,449 22,259 29.0% MCN Macon 5,112 22,003 23.2% TUP Tupelo 11,396 60,993 18.7% MSL Florence/Sheffld/Tusc. 2,232 20,654 10.8% GLH Greenville 3,012 30,790 9.8% Based on the most recent leakage study Atlanta captures 56.2% of the traffic leaked from Montgomery Regional Airport. Birmingham captures 13.6% of the leaked traffic. Rank Airport Passengers PDEW Avg Fare Share 1 Montgomery Regional Airport 317,820 435 $279 24.1% 2 Hartsfield-Jackson Atlanta Airport 742,119 1,017 $234 56.2% 3 Birmingham International Airport 179,509 246 $193 13.6% 4 Pensacola Regional Airport 38,950 53 $225 3.0% 5 Fort Walton Beach Airport 19,177 26 $287 1.5% 6 Mobile Regional Airport 14,530 20 $291 1.1% 7 Columbus Regional Airport 7,149 10 $352 0.5% Total Montgomery Area Passengers 1,319,418 1,807 $241 100.0% Proposal of Montgomery Regional Airport Montgomery, AL July 2014 9
For similarly sized markets in the Southeast, Montgomery Regional Airport is one of the most underserved in terms of available airline seats. An analysis of Southeast markets shows the Montgomery Regional Airport has an average of just 0.6 airline seats per capita (Figure 9). FIGURE 9: Seats per Capita in Southeast Markets Sources: US DOT T100, Calendar Year 2013; 2011 US Census Proposal of Montgomery Regional Airport Montgomery, AL July 2014 10
Subsequently, the Montgomery Regional Airport market generated a very low number of passengers per capita within the Southeast, at an average of just 0.4 passengers in 2013 (Figure 10). FIGURE 10: Passengers per Capita in Southeast Markets Sources: US DOT T100, Calendar Year 2013; 2011 US Census Proposal of Montgomery Regional Airport Montgomery, AL July 2014 11
Marketing Efforts The Airport has had a minimalistic approach to marketing over the past several years. A number of factors lead to this approach including limited funds coupled with the lack of a strategic marketing plan and adequate staff support. The lack of a strategic marketing plan meant the Airport was placing ads without knowing the true return on this approach. On average, the airport marketing budget ranged from $50,000-$80,000 a year over the last three years, though more recently included a supplement provided by the local Chamber of Commerce. A recent Airport Board initiative to increase enplanements noted a direct correlation between MGM s lack of advertising and a high leakage rate to alternative airports with advertising programs. In 2013, with no official airport marketing or advertising plan, the airport spent less than $4,000 on airport advertising. Of the limited advertising undertaken by the airport, digital outdoor advertising (billboards) were the medium of choice. While the ad was tastefully done, it did not build upon the Airport brand in conjunction with marketing the actual service. A sample ad is included below. STRATEGIC PLAN TO IMPROVE AIR SERVICE THROUGH MARKETING Montgomery Regional Airport (MGM) has limited non-stop service to three destinations on two network carriers. Due to limited departure options as well as minimal flight frequencies, the majority of the Montgomery catchment passengers use alternate airports in the region. Just 24% of the area passengers currently use Montgomery Regional Airport based on a recent leakage study. The urgent task of the airport is to continue to develop traffic demand and route utilization from the airport, and stop leakage to other nearby airports. Funding Plan This grant application proposes to use a modest amount of SCASD funding ($200,000), coupled with $60,000 in non-airport cash matching funds from the Imagine a Greater Proposal of Montgomery Regional Airport Montgomery, AL July 2014 12
Montgomery fund, to support a broad and multi-phased marketing and advertising program in and around the region. The proposed program would be directly tied into the detailed marketing plan the Airport is currently developing with their consultant and the community team. This program would include quantitative measurements which would measure the effectiveness of any campaign initiated for the Airport. In-kind contributions from media firms include a 10% match on media placed on the Pandora network. With the Montgomery area being home to 12 different universities, the demographics of this particular medium will boost ridership as families and other relatives visit their loved one in the area during their college years. The Airport has done a respectable job within their current, limited budget of marketing and promoting local air service. The phenomenally high leakage rate to nearby airports paired with a national shift in travel planning demands a new and more complex approach to local air service marketing. An aggressive and multi-layered marketing, promotional and community outreach effort, is proposed for the airport and can be accomplished with the help of this funding. The Airport would like to utilize grant funds to implement a full air service marketing strategy and advertising plan to use as a guide for all future initiatives, and to ensure all airport marketing activities are in line with achievable goals and industry demands. The plan will identify specific objectives and tactics to achieve each of those defined goals. One of the key components of the proposed marketing strategy process will be to determine if brand development and creative exercises are necessary in order to identify the correct channels to advertise with, and to encourage more local travelers to choose to fly from MGM verses driving to a competing airport. The marketing strategy will include a full advertising campaign which will be focused on increasing awareness among travelers to choose to travel from MGM, while touting the benefits that flying local offers. The campaign would include a combination of traditional advertising methods and new media methods to advertise the current service while using the brand identity of the airport to resonate with local travelers. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 13
The advertising plan will work to refine the Airport s media strategy to reflect the national consumer shift to online travel planning, while simultaneously working to advance familiarity with MGM in the local community. The proposed program will aim to support the network carriers with retail advertising through traditional methods while also focusing on defining and communicating to the real customer, the value of flying from MGM to connect onwards as compared to driving to alternative airports. The airport will also look into incorporating a modest online travel planning calculator and using social media to create awareness and attract travelers in the region. The marketing strategy will also include a focused community outreach and corporate travel program. By further developing partnerships with local economic development, government and tourism partners, the airport can maximize related partnership marketing efforts. Partnerships will help the airport maintain a solid image and solidify their reputation as strategic air transportation leaders in the region. Corporate outreach is also an important component and will be included in an effort to connect with local businesses and identify opportunities to retain more local business traffic. Funding for the MGM marketing strategy and advertising program would be disbursed over a 24 month period, aimed at commencing during the first quarter of 2015. Using the recently updated True Market and Leakage Analysis, the Airport can begin developing specific goals and tactics to reach potential passengers. Under this proposed timeline, the detailed marketing plan should be established by the end of first quarter 2015 and media placement targeted to begin following the completion of that plan. The media placement will include launching updated Airport branded ads in the market. Components of the Proposed Montgomery Regional Airport Marketing Strategy Plan and Advertising Program Traditional Advertising and Marketing Methods: The strategic marketing and advertising plan will utilize a combination of traditional advertising and public relations methods paired with targeting online and new media methods. The goal of the program will be to connect and reconnect with potential travelers while also increasing brand awareness within the region. Components of the traditional advertising portion of the plan will include: Radio Advertising, TV Advertising, Out-of-Home (billboard advertising), and Local Online Advertising (local online news banner advertising). On-air/TV spend may be focused on premium placement such as weather Proposal of Montgomery Regional Airport Montgomery, AL July 2014 14
and traffic sponsorships to ensure maximum value and the largest audience reach available. The Airport will also work to develop brand specific television commercials which will be incorporated into the on-air placements and also used in on-line pre-roll elements of the media plan. The inclusion of traditional media placement will allow the Airport to support local media outlets while enhancing relationships with local media partners. The described traditional advertising elements will be timed around specific program objectives including the incorporation of airline fare sales and specific efforts around Airport brand building and local awareness. Recommended media outlets will be determined once the advertising program is finalized. New Media and Targeting Online Advertising Methods: The plan will also include targeting online and new media advertising methods. These efforts will incorporate a combination of: Advanced Keyword Targeting, Flight Path Advertising (targeted advertising on Online Travel Agencies), Search Engine Marketing and Social Media. These advertising methods will be aimed at targeting the potential passenger when they are in the mindset to travel. Targeting online advertising will help the Airport to reach travelers by incorporating airport / travel related keywords paired with geographical and behavioral targeting. When a geo-targeted traveler searches for specific airport defined words they will be redirected to an airport related ad while surfing on common news sites. Recommended media outlets will be determined once the advertising program is finalized. Social Media Integration and Website Enhancements: By building an online brand presence through social media and website enhancements the Airport can forge a stronger connection with the traveling public. Ongoing, open communication on these channels can help to foster a trust within the online travel community. By creating channels for one-on-one communication with airport travelers we can work to humanize the airport travel experience and create customers for life, rather than advertising acquaintances. This social media program will allow the Airport to have a conversation with past, present and future travelers, rather than simply allowing travelers to have a conversation about the airport, with no airport involvement. The proposed marketing strategy program will work to develop a stronger presence on social media sites (Twitter, Facebook, etc.). The program will also look into website enhancements that will help to highlight the Airport brand platform in conjunction with the new website the Airport currently has under design. Best practices as it pertains to airports will be suggested in order to ensure the new website meets the needs of the traveler. This will aid travelers to book flights from MGM. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 15
A Travel Cost Calculator may also be incorporated into the enhancement program and will be aimed at educating local travelers of the true cost involved with traveling from MGM verses the cost of driving and parking at a competing airport. The sample below is an example of what it may look like when finalized; final design will be determined pending the outcome of the grant. Community Outreach and Corporate Support Program: An important component of the marketing plan will be a community outreach and corporate support program. The Airport is moving forward on developing a full plan to identify major corporate travel patterns. The program will work on developing a corporate travel program and reaching out to travel planners of corporations to encourage more employees to fly from MGM. The proposed program will attempt to identify the needs of corporate travelers and allow the Airport in conjunction with airline partners, to increase offerings to better accommodate high paying business customers. The program will start with the identification of Travel Managers/Travel Contacts within top 50 corporations in the region. The next step in the program will be to use relationship building tactics and identify ways to encourage travel managers to modify travel policies so that all travelers check MGM first before booking from another airport. Outreach is essential to the success of the program. The proposed marketing program will also identify community partnerships and advertising opportunities including local colleges, sports leagues and events. According to the City s website, Montgomery is home to twelve colleges and universities allowing for ample opportunity to partner via sponsorships of sporting events and/or concerts. Simply including MGM as the home airport for each of these universities would provide college students and their families with the knowledge that MGM is thee airport to use for easy access into the region. The Proposal of Montgomery Regional Airport Montgomery, AL July 2014 16
sample marketing plan is briefly listed in the following chart. It is not meant to be all inclusive, but provides a framework from which MGM will work from. Montgomery Regional Airport Sample Marketing Plan Develop online travel planning site presence Promote Air Service to existing routes based on the current passenger leakage analysis Focus on Overall Cost of Travel in Comparison to Driving to Alternative Airports Look at Developing Incentive Program for Corporations to Utilize Montgomery Regional Airport Incorporate Retail Advertising and Airline Specific Promotions Tactics to Implement the Montgomery Regional Airport Plan Traditional Advertising to create a standardized brand position that fits in the market: radio, online, outdoor, TV Begin specific advanced online retargeting campaign Implement social media campaigns to target educational institutions and their audience Corporate outreach through grant partners database information Direct corporate incentive program for Airport utilization Sports/Community Sponsorships including 12 Universities in the region Total Marketing Budget Including Video Creative: $261,000 If awarded the modest grant amount requested, it would be the intent of the Airport to fully utilize the grant prior to the end of 2017, with grant close out documents submitted for approval late third quarter 2017, well before the government deadline. Activity/Project Milestone Estimated Date Grant Award Late September 2014 Documents Fully Executed Early November 2014 Detailed Marketing Plan Development Late 1st Qtr. /Early 2nd Qtr. 2015 Execution of Marketing Plan Late 1 st Qtr. /Early 2 nd Qtr. 2015-1 st Qtr. 2017 Community Sponsorships/Corporate Outreach 1 st Qtr. 2016-1 st Qtr. 2017 Grant Close out Submitted to DOT 3 rd Quarter 2017 The detailed marketing plan would include future media campaign considerations to provide a continued pathway for passenger growth once the modest grant amount was expended. Overall, the strategic plan for utilizing the modest grant funding as outlined above is set up to ensure that the economic value of the Airport is known in the region through increased awareness and outreach. As it stands, that value is essentially not known regionally given the large amount of passenger leakage. Increasing enplanement levels is a primary goal and the metric that will be behind each step of the marketing program. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 17
PUBLIC / PRIVATE PARTNERSHIPS Montgomery Regional Airport has a number of entities that support the goal of improving air service through increased marketing activities. The Montgomery Area Chamber of Commerce fully supports the Airport and the Airport s initiatives. The Chamber realizes the economic value of the airport to the region and as such, has made their commitment to the success of the Airport known. They have gone so far as to hire an Air Service Development liaison within their own organization to ensure all is being done that can be done, to grow the Airport. The local, non-airport match of $60,000 is a combination of multiple entities contributing to the grant effort through the Imagine a Greater Montgomery fund administered by the Montgomery Chamber of Commerce. Imagine a Greater Montgomery fund is an economic development strategy aimed at creating jobs while providing better quality of life for Montgomery and the River Region. It is a collaborative effort between the City of Montgomery, Montgomery County Commission and numerous private investors. Each of the more than 50 investors in the fund contributes varying levels of support, but all believe in the local leadership, commitment and influence required to affect sustainable economic progress. Air service is a key component of such progress as recognized by this group. It is through this fund that the local, non-airport matching funds for the grant are coming from. With over $1 million in private investments coupled with $1 million in public funds, the Imagine a Greater Montgomery fund is a stellar example of public-private partnerships at its finest working for the benefit of the region. Montgomery Regional Airport is proud to call them a partner, supporter and advocate for this grant application. PREVIOUS SMALL COMMUNITY AIR SERVICE GRANT The Montgomery Regional Airport was a previous grant award recipient in 2005, but there are distinct differences between the previous, winning grant application compared to the one you have before you today. The previous grant was for Minimum Revenue Guarantee (MRG) funding for the specific purpose of supporting new service to Detroit Metropolitan Airport (DTW) on Northwest Airlines. The objective of the grant application was to support implementation of nonstop service to better link the Alabama auto industry with Detroit. At the time of the application and award, there existed a deficiency between the Detroit auto hub and its supplier base which the application was attempting to address. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 18
The award was for $720,000 total funds; $600,000 of those coming from the DOT with the remaining $120,000 coming half from the private sector and half from the Airport. The grant was entirely unsuccessful and ultimately grant money returned to the DOT. Northwest Airlines found itself in Chapter 11 bankruptcy proceedings and unable to expand their operations leading the Airport to return the unspent grant funds. The grant was closed in 2007. In 2009 and 2012 the Airport applied for SCASD program funding for access into the Chicago O Hare hub on either United Airlines or American Airlines. Both of these were not selected for grant funding. The application presented today is entirely different than the previous award and previously submitted applications. The major difference is the intent: MGM has no intention of offering a minimum revenue guarantee to any carrier or entity. The sole focus of this grant application is to promote the airport and its services to retain additional passengers through an aggressive marketing program. This would be accomplished with the development of a strategic marketing plan and subsequent implementation of that plan utilizing the grant funds requested. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 19
CONCLUSION The Montgomery Regional Airport boasts a catchment area of over 1.2 million passengers within a 90 minute drive of the Airport, yet only retains 24% of these passengers. The remaining 76% of the potential passengers utilize alternate airports in the region for a variety of reasons. While MGM offers daily, nonstop flights into three network carrier hubs, the service is still limited in the amount of frequencies it offers. High local fares and less-than average load factors have reduced the total passenger enplanements at Montgomery Regional Airport. As potential customers look to alternate airports for their travel needs, there is an excellent opportunity to help market and advertise Montgomery Regional Airport to the catchment region At an average of $298 one-way, Montgomery Regional Airport has one of the highest one-way fares within the Southeast markets, and seat availability that has been on the decline over the last decade. With this combination, the Airport has been unable to increase passenger enplanements. To help improve the viability of Montgomery Regional Airport to the customer base, Airport marketing and advertising are the main targets for increased passenger improvements. Based on the recent leakage analysis, it is apparent the market could easily support low-fare service. Primarily less-than-daily non-stop service with Allegiant to several Florida leisure destinations is most prevalent. However, in order to ensure low fare service or any additional carrier service, an intense marketing campaign is necessary to strengthen the Airport brand and promote awareness in the region. MGM s application for the grant is supported by a vocal group of community partners which have pledged their support and assistance. These partners include local economic development organizations, Chamber of Commerce, and the City of Montgomery. The Montgomery Regional Airport has never had the opportunity to use a Small Community Air Service Development Grant, but believes the award of a grant can change the environment in the region; it would allow the Airport to begin an aggressive, multi-layered campaign to retain passengers. The Airport and the community partners urge the DOT to look upon the application favorably. Proposal of Montgomery Regional Airport Montgomery, AL July 2014 20