http://www. .gov/policy/aviation-policy/small-community-rural-air- service/SCASDP

1 Note that the Summary Information does not count against the 20-page limit of the SCASDP application. ______

______a

2 (explain below)

b.

2 plan, study, air carrier proposal, etc.

promotion of the air service to the public offsetting expenses to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration) 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 air service development activities to recruit new air service, including expenses for marketers to meet with air service providers to make the case for new air service waiver of airport fees, such as landing fees, to encourage new air service; counted as in-kind contributions only reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers travel pledges, or deposited monetary funds, from participating parties for the purchase of air travel on a U.S. air carrier, with defined procedures for the subsequent use of the pledges or the deposited funds; counted as in-kind contributions only (explain below)

Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify) 1 Federal amount requested 2 State cash financial contribution Local cash financial contribution Airport cash funds Non-airport cash funds 3 Total local cash funds (3a + 3b) 4 TOTAL CASH FUNDING (1+2+3) In-Kind contribution Airport In-Kind contribution** Other In-Kind contribution** 5 TOTAL IN-KIND CONTRIBUTION (5a + 5b) 6 TOTAL PROJECT COST (4+5)

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.

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. No Yes (explain) ______APPENDIX C

APPLICATION CHECKLIST

INCLUDED? ITEM For Immediate Action Determine Eligibility New Grants.gov users must register with www.grants.gov. Existing Grants.gov users must verify existing www.grants.gov account has not expired and the Authorized Organization Representative (AOR) is current. For Submission by :00 PM EDT on Communities with active SCASDP grants: notify DOT/X50 of intent to terminate existing grant in order to be eligible for selection Complete Application for Federal Domestic Assistance (SF424) via www.grants.gov Summary Information schedule complete and used as cover sheet (see Appendix B) Application of up to 20 one-sided pages (excluding any letters from the community or an air carrier showing support for the application), to include: A description of the community’s air service needs or deficiencies. The driving distance, in miles, to the nearest large, medium, and small hub , and airport with jet service. A strategic plan for meeting those needs under the Small Community Program, including a concise synopsis of the scope of the proposed grant project. For service to or from a specific city or market, such as New York, Chicago, Los Angeles, or Washington, D.C., for example), a list of the airports that the applicant considers part of the market. A detailed description of the funding necessary for implementation of the community's project. An explanation of how the proposed project differs from any previous projects for which the community received SCASDP funds (if applicable). Designation of a legal sponsor responsible for administering the program.

Taos Regional Airport Taos,

Proposal under the Small Community Air Service Development Program Docket DOT-OST-2020-0231

Dun & Bradstreet DUNS Number: 122866882 Tax Identification Number: 85-6000178 Two-Digit Congressional Code: 03 Town of Taos Daniel R. Barrone Mayor 400 Camino de la Placita, Taos, NM 87571 575-751-2002 575-751-2026

Table of Contents EXECUTIVE SUMMARY ...... 2 AIR SERVICE OVERVIEW ...... 5 Catchment Area and Access to Alternate Airports ...... 5 Existing Air Service ...... 6 Air Service Development Efforts ...... 8 Marketing and Promotion of Air Service ...... 8 AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES ...... 9 Underserved Market Dynamics ...... 9 Regional Fare Trends ...... 10 STRATEGIC PLAN ...... 13 Proposed New Route ...... 13 Goals and Objectives ...... 13 Target Airline Support ...... 13 PROJECT IMPLEMENTATION, MONITORING, AND FUNDING ...... 17 Public/Private Partnership ...... 17 Project Funding ...... 17 Implementation Timeline ...... 18 PROJECT MONITORING AND FINANCIAL CONTROL ...... 19 Project Goals and Measuring Success ...... 19 Financial Controls...... 19 APPENDIX A: LETTERS OF SUPPORT

EXECUTIVE SUMMARY Located in the Sangre de Cristo Mountains, the Town of Taos is part of the Enchanted Circle region consisting of two counties, six municipalities and three ski resorts. Tourism is the #1 economic driver with over 1,000,000 visitors annually who come to experience the incredible outdoor recreation, history, music, art and distinct cultures of the region. Concluding a thirty-year initiative, the opened an 8,600’ cross- wind in August 2017. At the ribbon cutting ceremony, then Administrator of the FAA Michael Huerta, said he had to attend this historic event because it was the longest running application in the history of the FAA! While this $24 million improvement to the airport was a tremendous accomplishment for all involved, its value will only be realized when the Town of Taos is able to utilize it to position the airport as an economic driver for Northern New Mexico. After working together on traditional air service development initiatives, the Town and Taos Ski Valley developed the innovative idea of forming their own air service to begin utilizing the airport. In the early fall of 2018, was launched with winter service connecting Taos with Austin and , for the 2018-19 ski season. This winter program was an enormous success, generating load factor above 70% in both markets, exceeding first year forecasts by some 20 points. An economic impact study showed that the resorts of Taos Ski Valley, Red River, and Angel Fire all saw an increase in visitation from the new air service. In addition, the Enchanted Circle region saw a quantifiable increase in spending and Lodger’s Tax, gross receipts (sales) tax, as well as non-ski related tourism, business, and family visits. Positive reviews of the service by residents of the region demonstrated that Taos Air was used by locals and visitors. With the success of the first year, Taos Air was expanded into Southern California for the 2019-20 ski season. Regional airports in Los Angeles and San Diego counties were added to the offered services. Prior to shutdowns driven by the Covid-19 pandemic, the new California services were meeting more aggressive expectations, and the Texas services demonstrated year-over-year growth. The Taos Air service over the last two winters has generated significant momentum towards the long-term goal of expanded service and new destinations. In time, the Taos Regional Airport will be a major economic driver for northern New Mexico opening the door to film, technology, and other industries. Support of the Taos Airport initiative has come from all levels of government and a wide range of private businesses in New Mexico. To expand upon these initiatives, the Town of Taos is seeking a federal grant in the amount of $750,000 under the Small Community Air Service Development Program. The

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grant award would be paired with a cash match of $400,000 and in-kind contributions of $25,000 by the State, local public, and private community. This grant would fund a minimum revenue guarantee for year-round service from Taos to an airport in the Dallas/Ft. Worth metroplex, most likely either Dallas-Love Airport (DAL) or Dallas-Ft. Worth International Airport (DFW). Taos Air would provide this service by operating under DOT Part 135 regulations as a Section 380 public charter utilizing a 30-seat Dornier 328Jet. Because the ski season service is already successful, the funds created through this program would only be utilized as a minimum revenue guarantee for periods outside of ski season, specifically from April 1st through December 15th.

The project described meets all the eligibility criteria outlined in the Order Soliciting Proposals, including:

• Communities Without Existing Air Service: Until 2018, the Taos community had no regularly scheduled air service. Even with the Taos Air service, the airport only maintains service for approximately 16 weeks each year. • Project Type: The project is a minimum revenue guarantee for a market without other airline service. The Taos Air services will be operated by Advanced Airlines, a Part 135 Scheduled Commuter Air Carrier, which is also provides Essential Air Service in New Mexico, in coordination with the Department. • Eligibility Limitations: None of the eligibility limitations apply to this project. Taos Regional Airport has no FAA hub designation according to the FAA website cited in the Order and has not been the subject of a SCASDP grant within the last ten years. The community is not part of the Department’s Essential Air Service program and this project does not include any capital improvements.

The Taos Regional Airport proposal meets 5 of the priority selection criteria outlined in the Order Soliciting Proposals:

• Insufficient air service with regional air fares that are higher than the national average: Until December 2018 Taos Regional Airport did not offer any regularly scheduled air service to its community. Currently, the service is limited to four winter months and two markets. The nearest commercial airport for the Taos community is in Santa Fe, New Mexico (92 miles away/ 100-minute drive). Santa Fe only offers access to three markets and the average domestic air fare was $236 in the year-end fourth quarter 2018, 40% higher than the average domestic air fare for all communities in the U.S., which was $168 in the same time frame.

During the winter of 2018-2019 to Austin and Dallas Taos Air offered fares that were substantially lower than the national average for local Taos originating

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travelers. The local population was able to enjoy fares as low as $139 each way during off-peak days.

• The community or consortium will provide a portion of the cost of the activity from local sources other than airport revenue sources: As mentioned above, the local community has committed a cash match of $200,000 and $25,000 of in- kind contributions comprised of the following:

Cash Match

o $100,000 from Town of Taos for Marketing support o $100,000 from Taos Ski Valley, Inc. for Marketing support

In-Kind Contributions

o $25,000 from Town of Taos (terminal and airport parking waivers)

Please note these contributions reflect the commitments of the local community. It does not include the $200,000 marketing grant approved by the New Mexico Department of Transportation Aviation Division to support promotion of expanded air service. This robust portfolio of financial support on the marketing side will ensure an effective awareness program is developed. The more quickly the Taos region can build awareness the less likely the region will need to rely on revenue guarantees and become more self-sufficient.

• The community or consortium has established or will establish a public-private partnership to facilitate air carrier service to the public: The Town of Taos, the Taos Ski Valley, Inc. (TSVI) and its affiliate TSVA Holdings, Inc. (TSVA), have a formal memorandum of agreement to develop air service and marketing, as well as address maintenance and operation responsibilities of the Taos Regional Airport.

Additionally, the community and region are working towards developing an overall air service mitigation program that will be used to develop air service at a local level. With the impact of Covid-19 and prolonged strict quarantine restrictions at the State level, the region has not yet developed the program or funding. Support from SCASD will help bridge the time required to jump start air service development and create a funding mechanism for growth.

• The assistance will provide material benefits to a broad segment of the traveling public: Year-round service to the Dallas/Ft. Worth metroplex would provide access to one of the most important markets for the Taos region.

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• The assistance will be used in a timely manner: The Town of Taos has confirmed that, subject confirmation of a SCASDP grant, Taos Air can commence year-round air service to the Dallas/Ft. Worth metroplex as soon as July 15, 2021. No other airport or operator certifications would be necessary to provide this service.

The proposal meets 3 the following secondary criteria:

• Innovation: The Town of Taos has been incredibly innovative to solve their air service challenge by collaborating with the private sector (Taos Ski Valley, Inc) to create their own branded airline service (Taos Air). This initiative has received press recognition by industry (National Ski Area Association) and national publications (New York Times).

• Community Participation: Each year, the Town of Taos works on the Infrastructure Capital Improvement Project (ICIP), a five-year plan that prioritizes all infrastructure projects. The ICIP requires public participation and is submitted to the State. The Town hosts anywhere from 3-6 public meetings to get input from our citizen and the airport consistently ranks at the top of the priority list.

Taos Air initiative has brought the regional community together in working towards a shared common goal. The broad participation enthusiasm and large financial commitment among the public and private sectors has been remarkable.

• Location: Taos is in a remote location in Northern New Mexico with no immediate access to a major metropolitan market. Access to the nearest Interstate highway is about 1.5 hours away. Santa Fe is the nearest airport with jet service located 92 miles away with fares that are 40% higher than the national average. Albuquerque is the nearest airport with low fare competition located 136 miles from Taos.

AIR SERVICE OVERVIEW Catchment Area and Access to Alternate Airports

Taos Regional Airport is the closest most accessible airport to 71,244 residents within a 60-minute drive. Beyond the 60-minute drive radius, the catchment begins to overlap with Santa Fe Regional Airport and becomes less relevant. Santa Fe is located 92 miles (100 minutes) from Taos and Albuquerque International Airport located 136 miles (160

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minutes) away. Santa Fe only offers service to three markets and fares are 40% higher than the national average, so most travelers use the more distant Albuquerque International Airport. Exhibit 1 illustrates the catchment area within a 30, 60- and 90- minute drive time from Taos Airport. Exhibit 1: 30, 60, 90-minute drive times to Taos Regional Airport

Existing Air Service

Until December of 2018, regularly scheduled air service from Taos Regional Airport has been dormant for over a decade. With the completion of several airport projects, the Town of Taos and Taos Ski Valley, Inc. partnered to help attract airline service to the region. Since the airport is not yet certified for FAA Part 139 operations, air carrier options were limited. Because no air carrier proved to be an economical and sustainable model for air service in Taos, the partnership took an innovative approach

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and created their own branded airline – Taos Air. Taos Ski Valley, Inc. procured a 30- seat Dornier 328Jet and entered into an aircraft management agreement with a DOT Part 135 Commuter Carrier. Taos Air flights operate as Part 380 public charters, similar to several Alternative Essential Air Service programs.

Seasonal service from Taos Regional Airport to Austin and Dallas, Texas was initiated in December 2018 with flights three days a week (Thursday, Saturday, and Sunday) and operated through the end of March 2019. Because Taos is not a certified Part 139 airport, Taos Air flights operated at Fixed Based Operators in Austin and Dallas and the public terminal at Taos. The resort developed an innovative, seamless travel experience that included free transfers from plane to slope for passengers destined for the Village of Taos Ski Valley. During the first season, Taos Air transported nearly 2,000 passengers – significantly exceeding forecasted expectations. As Exhibit 2 illustrates, load factors exceeded 70% for the duration of the season.

Exhibit 2 – Taos Air Load Factor Performance December 2018 – March 2019

85%

80%

75%

70% LoadFactor

65%

60% December January February March

Austin Dallas

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Air Service Development Efforts

Taos Ski Valley, Inc. has long been an advocate for aviation activities in the region. It has supported the Town’s efforts to add the crosswind runway and otherwise improve the Taos Regional Airport. As the airport improvements were completed, the partnership strengthened as air service alternatives were studied. Because the airport has not yet achieved Part 139 status, the air carrier options are limited to Part 135 operators. Operators with 9-seat aircraft business models showed little interest in Taos without long-term subsidies, like their Essential Air Service operations elsewhere in New Mexico. Operators who combine small regional jets with Part 380 public charters were not operating in the target markets, nor offered the right economics to make service to Taos successful.

Thus, Taos Air was formed as a collaborative public/private partnership led by the TSVI with the strong support of the Town. In addition to procurement of aircraft, TSVI contributes use of its brand which has become linked with region. The Town contributes with low airport fees and waivers in line with air service regulations. Flights are operated by Advanced Airlines, a Part 135 On Demand carrier, with commercial aspects of flights managed by an airline planning and management company. The goals of this collaboration are to: 1) Increase regional tourism – the economic driver of the region; 2) Immediately improve connectivity and convenience for both visitors and residents of the Enchanted Circle region; 3) Demonstrate long-term passenger potential of the airport; and 4) Encourage new business and investment in the region.

With the success of the first season, the partners turned attention towards growing air service from Taos Regional Airport. Two primary objectives have emerged: 1) Grow air service to additional destinations, and 2) Increase air service to year-round. Although ultimately disrupted by travel restrictions related to the Covid-19 pandemic, the first initiative was achieved with the addition of Taos Air service to two airports in Southern California in December 2019, for the 2019-20 ski season. The second objective, achieving year-round air service, is the subject of this application for SCASDP funds.

Marketing and Promotion of Air Service

The Town and Taos Ski Valley, Inc. invested substantially in marketing the Taos Air program in 2018-2019 and continued to do so for the 2019-20 season. Since the airline brand is an extension of the region itself, the airline messaging was integrated into all marketing efforts targeting the Austin and Dallas geography. In addition to local support, the State of New Mexico Department of Transportation provided an air service grant to amplify marketing efforts and match spend up to $200,000.

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Based on the past successful marketing model, Taos and Taos Ski Valley, Inc. have committed to a $400,000 market budget as part of a SCASDP-funded year-round service initiative. This includes local and State support. Exhibit 3 highlights marketing expenditures.

Exhibit 3: Marketing expenditures for Taos Air Service

Investment Media Element

$150,000 Digital: Paid Search, Social, and Display

$130,000 Traditional: Print, Out of Home, Radio

$100,000 Events, Travel, Creative Asset Development

$20,000 Public Relations

Market research was conducted to estimate the economic impact the flights had on the region. Respondents with flights from Texas were asked to estimate their entire party’s spending while in New Mexico during the study period in six categories: lodging, food/meals/beverages, transportation/fuel, outdoor recreation (including skiing), attractions/entertainment, and shopping/miscellaneous/other. Total spending for all categories combined was $814,166. Indirect impact of direct spending was estimated at $325,666 for a total economic impact of $1,139,832 from Texas fliers – over just a 16-week period. Establishing year-round service could easily have an impact of well over $3.5 million – a substantial return on the SCASD grant request.

The availability of direct flights between Austin/Dallas and Taos had an influence on respondents’ decisions to visit communities in the study area, influencing their decision to visit Taos Ski Valley the most (78.2% of respondents); this was followed by Taos (54.4% of respondents), Angel Fire (10.7% of respondents), and Red River (9.1% of respondents). Most respondents (77.6%) indicated they would fly Taos Air again if the service were offered outside the Winter months.

AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES Underserved Market Dynamics

As noted in the introduction, Taos is the gateway to the remote Enchanted Circle region of northern New Mexico consisting of two counties, six municipalities and three ski resorts. With over 1,000,000 annual visitors, Tourism is the #1 economic driver in the region. With most visitors arriving outside the Winter ski season.

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Prior to the introduction of service by Taos Air, the Taos Regional Airport had no scheduled service for over a decade. Before to that, service was occasionally provided by under-capitalized airlines with aircraft whose economics were not suitable for the market and little to no marketing. Even when most smaller communities in New Mexico supported 19-seat turbo-prop service to Albuquerque in the 1980’s and 1990’s, Taos had none. As previously discussed, Taos Air introduced in December 2018 have operated only during the ski season, roughly from mid-December through late-March. This is driven by the fact that any losses generated by the service are funded by Taos Ski Valley, Inc. By consequence, the region and its many non-winter tourism businesses are left without access to air service for almost nine months each year, despite the success of Taos Air. Extending air service into a year-round program is an important goal for both partners. Despite the focus on ski season access, tourism activities peak during the summer months. The Town and surrounding region are likely to see further positive economic impacts with air access throughout the year. Leveraging the fixed costs of the Taos Air program for year-round service will lower the cost of providing the service and is beneficial to both partners and passengers. To gauge the potential for Taos air service, our region is compared to Sun Valley, Idaho and Gunnison/Crested Butte, Colorado. Those regions are similarly isolated from alternative air service and lack low-fare alternatives, yet each maintains year-round access to air service. Exhibit 4 helps illustrate the potential for establishing air service in Taos. Not only does the air service support winter operations, but summer peaks also indicate a similar result in Taos is possible. Exhibit 4: Peer Community Performance

Winter Season (Q1) Summer Season (Q3) Airline Region Population Income/Capita Airline Seats/Day Load Factor Load Factor Seats/Day Taos 27,372 $22,958 25 72% 0 N/A Sun Valley 20,320 $34,774 486 70% 496 75% Crested Butte 15,012 $25,179 296 64% 120 79% Population based on a 30-mile drive radius around the airport. Regional Fare Trends

The nearest airport with jet service is in Santa Fe, with fares that are nearly 40% higher than the national average. Exhibit 5 compares fares from Santa Fe (SAF) and Albuquerque (ABQ) versus the national average.

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Exhibit 5: Average Domestic Fares from SAF and ABQ (Source: US DOT O&D YE4Q2018)

300

250

200

150

100 Average Average oneway fare 50

0 YE4Q2014 YE4Q2015 YE4Q2016 YE4Q2017 YE4Q2018

TSM SAF ABQ National Average

The isolation of Taos creates additional cost burdens to access air service. There are two primary methods of transportation between Taos, Santa Fe or Albuquerque. Travelers can drive or take airport shuttle services. When factoring in mile reimbursement ($0.58/mile) and parking, driving costs total roughly $50 each way to Santa Fe or $91 to Albuquerque. An airport shuttle costs roughly $80 each way to Santa Fe or $100 each way to Albuquerque – adding up to $200 more for each round-trip journey. With the introduction of air service, Taos Air was able to provide a lower cost option while also eliminating the additional ground transportation costs. As part of the Taos Air service, guests receive complimentary transfer to the resort area. The Town and Resort or working on additional low-cost ground transportation options to the town of Taos. Other communities in the Enchanted Circle region (including Red River and Angel Fire) are also exploring new ground transportation links. Visitors generate directional peak load factors around weekends. Flights historically are very full inbound on Thursday, Friday, and Saturdays, and outbound on Saturday, Sunday, and Monday. Taos Air leveraged the counter-directional days to offer lower fares targeted to residents of the Taos region. Fares started from as low as $179 one way to both Dallas and Austin. Exhibit 6 shows the directional, average fare performance benefiting the originating Taos traveler. Fares departing Taos on Thursday, returning on Sunday, were comparable to the US industry average. This strategy was instrumental in achieving the load factor and revenue success we saw in the Texas markets.

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Exhibit 6: Directional Average Fare Performance for Season, AUS & DAL

$260

$240

$220

$200

$180

$160

Average Average Way One Fare $140

$120

$100 Thurs Sat Sun/Mon

To Taos From Taos

Exhibit 6a: Directional Average Fare Performance for Season, DFW/DAL only

$260

$240

$220

$200

$180

$160

$140 Average Average OneWay Fare $120

$100 Thurs Sat Sun/Mon

To Taos From Taos

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STRATEGIC PLAN Proposed New Route

The Town’s goal for this application is to better meet the travel needs of visitors and residents alike. In fact, despite the strong appeal of Taos Ski Valley, tourism to the Taos region peaks in the summer. Similarly, residents of the Town participate in the national peaking of travel during the warm weather months and for New Mexico, the State sees an extended peak period through Fall. Thus, year-round air service to Taos Regional Airport is critical. Through the support of the SCASDP, the Town would work with Taos Air to extend its already successful ski-season service to the Dallas-Ft. Worth area to year-round. The DFW region is a top generator of visitors and an important business center for residents of our region. Because Taos Ski Valley, Inc. already guarantees any losses produced by Taos Air during the period from December 15th until March 30th, it is envisioned that funds related to this SCASDP project would be utilized to guarantee flights from April 1st through December 14th. Similarly, marketing campaigns funded through this program will focus on non-ski related travel. Goals and Objectives

Taos has four goals for its Small Community Air Service Development Grant proposal: 1. Expand nonstop air service from Taos Regional Airport to the Dallas/Ft. Worth area, year-round. 2. Provide affordable travel options to Town and regional residents. 3. Increase utilization of the Taos Regional Airport and its related investments. 4. Demonstrate the viability of air service to the Taos region.

Target Airline Support

Taos is unique to other grant applicants given the innovative public/private partnership with Taos Ski Valley, Inc. Taos Air, who flights are operated by Advanced Airlines and managed by TSVI under the Part 380 Charter program, as our preferred carrier. The Taos Air platform has already built substantial infrastructure that can be leveraged for this program, including arrangements for ground handling and reservations, and substantial marketing mechanics. In fact, Taos Air uses the TSVI branding that has become strongly associated with the Taos region – creating instant recognition and association. As a result, Taos Air is the carrier best positioned to extend service at Taos Regional Airport year-round.

In the unlikely event that the Taos Air operating partnership is unable or unwilling to provide flight service beyond ski season, the Town will work with TSVI to seek alternative carriers, both within and separate from the Taos Air platform.

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Demand Outside Winter Season Over 1 million visitors each year visit the Taos region, providing ample demand for sustainable, year-round service. Based on tourism statistics for visitors to Taos.org, the official destination website, the Dallas-Ft. Worth metroplex ranks as the top out-of-state origin of visitors to Taos, and second overall following drive traffic from Albuquerque. The rankings for year ending December 2019 are as follows: 1. Albuquerque 2. Dallas-Ft. Worth 3. Denver 4. Taos 5. Los Angeles Taos is confident that extending Dallas flights through the rest of the year will be as successful as the ski-season service. As a proxy for summer demand, we analyzed lodging occupancy and peer markets with demonstrated demand. Taos lodging occupancy peaks in the Summer and Fall months - roughly 20 percentage points higher than the winter period and is exclusive of the other communities in the Enchanted Circle regions. The region demonstrates similar peaking, so Taos provides an excellent proxy. Exhibit 9 illustrates lodging occupancy by Taos lodging.

Exhibit 9: Town of Taos Lodging Occupancy

80

70

60

50

40

Occupancy% 30

20

10

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Additionally, air travel in general to New Mexico has an extended peak through the Fall months as shown in Exhibit 10.

Exhibit 10: New Mexico Seasonality Index

140% 130% 120% 110% 100% 90% 80% 70% 60% 50% 40% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

ABQ CNM CVN HOB ROW SAF SVC Average

Source: DOT O&D Data YEDEC2019

Further, when compared to Taos resort peer group, each resort community exhibits the ability to maintain air service throughout the year. Our regional neighbor, Santa Fe, demonstrates trending like Sun Valley, a destination also known primarily for its skiing but maintains a similar amount of air service year-round. Given the consistent performance in our peer markets noted in Exhibit 11, we are confident that air service to Taos will be supported year-round.

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Exhibit 11: Taos Resort Peer Group Seasonal Capacity/Load Factor Performance

This winter and summer data support that there is ample demand for air service between Taos and the Dallas-Ft. Worth Metroplex year-round. The grant support for the proposed expansion to year-round service will contribute greatly towards Taos providing service to meet this demand.

Self-Sufficiency of the Proposed New Route

Both the Taos Ski Valley and Taos region have identified the Dallas-Ft. Worth Metroplex as critical to the success of their overall air service program. Given the Taos region’s relatively small size, the grant will help with the initial ramp up period until the market reaches its mature state. In three years, we expect the Taos community will have a more robust air service program with additional ski-season destinations and be considering non-ski season service to an additional location. Based on pro forma forecasting, we estimate that the Dallas-Ft. Worth program will break even in its fourth summer season and become self-sufficient. However, as year- round service will be new, it will take a couple years to achieve, requiring the support of a Minimum Revenue Guarantee.

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PROJECT IMPLEMENTATION, MONITORING, AND FUNDING Public/Private Partnership

The Town of Taos has aggressively pursued public/private partnerships critical for developing air service to the region. The community has been very innovative in its approach given the region’s smaller population base and limited funds for airport projects. With airport infrastructure being a top priority for the Governor, the SCASD grant will go a long way to establishing year-round access for the entire region and generate a return for the State and Federal investments.

1. Partnered with Taos Ski Valley, Inc. to create the Taos Air service. Taos Ski Valley, Inc. and the Town of Taos are aligned in their mutual interest to position the Taos Regional Airport as an economic driver for the region. 2. Received commitments from State, local and private business to provide $425,000 in cash and in-kind support. 3. Recently the State invested $456,000 for a new hangar at the airport, maximizing a FAA investment of $24,000,000 for a new runway. 4. Historically has sourced $400,000 of support from the New Mexico Department of Transportation Aviation Division to date towards promotion of air service for Taos Regional Airport. 5. Secured a $3,300,000 FAA grant for taxi-way reconstruction. 6. Received $5,400,000 capital outlay from the State of New Mexico for a new terminal building. 7. Awarded $600,000 grant from New Mexico DOT for completion of a new Airport Masterplan.

Project Funding

Taos is requesting Small Community Air Service funding of $750,000 for its proposed minimum revenue guarantee for service between Taos and the Dallas/Ft Worth Metroplex on Taos Air. Funds would be utilized over a two-year period as the market reaches maturity.

Community partners have pledged $425,000 in cash and in-kind support to supplement the requested grant. The total support pledged by the community-based organizations equate to 36% of the requested grant amount. A summary of the project funding is illustrated in Exhibit 12.

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Exhibit 12: Sources of Funding

Funding Source Cash In-Kind Cash + In- % Non-Federal Kind Department of Transportation $750,000 $750,000 Town of Taos (Marketing) $100,000 $100,000 9% Taos Ski Valley (Marketing) $100,000 $100,000 9% State of New Mexico $200,000 $200,000 17% Town of Taos (Terminal Rents) - $25,000 $25,000 2% Total $1,150,000 $25,000 $1,175,000 36%

Implementation Timeline

Taos Air has indicated it can initiate service as soon as Summer 2021, subject to Covid- 19 travel restrictions. In fact, we anticipate destinations like Taos, where abundant outdoor activities make social distancing and otherwise adhering to travel restrictions easy, to be in high demand. It may be to the advantage of this program to begin service as soon as possible. Given the shortened booking windows created by the pandemic, we will ensure sufficient advance selling window for the first days of service to ensure overall program success. Exhibit 13: Implementation Timeline

Activity/Project Milestone Potential Dates SCASD Grant Award Announcement May 2021 Execute Grant Agreement with DOT May 2021 Announce Service May 2021 Publish Schedule May 2021 Market Route (Pre-Launch) Jun-July 2021 Monitor Advance Bookings May – July 2021 Begin Service Late July 2021 Market Route (Post-Launch) July – September 2021 Operate Service with MRG July 2021-December 15, 2021 April 1, 2022 – December 15, 2022 April 1, 2023 – July 2023 Monitor Route Performance July 2021 – on Submit Grant Status Reports to DOT Quarterly 3Q 2021 – 4Q 2023

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PROJECT MONITORING AND FINANCIAL CONTROL Project Goals and Measuring Success

Taos plans to use three key metrics to measure success of this program: 1. Achieving forecasted load factor and yield targets. By monitoring these key KPIs throughout the booking window, we can easily measure the success of the flights and ensure we are meeting our forecasted targets 2. Increased visitation from the Dallas/Ft Worth Metro-plex. 3. Achieve breakeven point by the third year of service.

Previous SCASDP Funding Taos was previously awarded SCASDP funding back in 2002 to provide a Revenue Guarantee and Marketing program to support Rio Grande Air service to Albuquerque. This latest grant request comes more than ten years since the first award and is eligible for consideration.

Legal Sponsor The Town of Taos is the legal sponsor responsible for administering the program, and the Town is a government entity. Daniel R. Barrone Mayor 400 Camino de la Placita, Taos, NM 87571 575-751-2002 575-751-2026 Financial Controls As the sponsor, the Town of Taos will be the responsible party for all fiscal matters and the Department's reporting requirements. The Town is established as a public governing body. As a public entity, the Town of Taos can be assured that proper financial controls are in place to guarantee the Department of Transportation's grant will be used in accordance with any subsequent agreement. The Town of Taos understands that the grant is a reimbursable grant, meaning the Commission is responsible for program expenditures and will submit invoices to the Department of Transportation for reimbursement, based on a percentage of the total grant request.

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