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1 HHH / Hilton Head Island Airport Page | 1 HHH / Hilton Head Island Airport Page | 2 HHH / Hilton Head Island Airport Page | 3 HHH / Hilton Head Island Airport Page | 4 HHH / Hilton Head Island Airport Page | 5 HHH / Hilton Head Island Airport Page | 6 HHH / Hilton Head Island Airport Page | 7 HHH / Hilton Head Island Airport Page | 8 HHH / Hilton Head Island Airport Page | 9 HHH / Hilton Head Island Airport Page | 10 HHH / Hilton Head Island Airport EXECUTIVE SUMMARY Commercial passengers dropped 42 percent at Hilton Head Island Air Service Deficiencies Airport last year Served by one airline BY ZACH MURDOCK Service to one hub [email protected] Service by turboprop aircraft JANUARY 21, 2016 Major destinations not served The total number of commercial passengers flying in and out of Hilton Head (ranked by size) Island Airport declined more than 42 percent last year, according to new New York metro statistics released this week. Washington / Baltimore Although the airport's passengers have declined steadily since the Chicago economic downturn, the steep slide in 2015 is the biggest single-year drop Boston in more than a decade. Philadelphia The decrease is due to new limits last year on the number of flights available to and from Hilton Head as its sole carrier, U.S. Airways, merged Fare Levels with American Airlines, said airports director Jon Rembold. HHH Average $273 As effects of the merger crept across U.S. Airways' flight schedules last year, CHS Average $230 however, planes were redirected to other routes and Hilton Head Island US Average $228 secured only four or five daily flights throughout the summer, he said. The 78,486 passengers who flew into and out of Hilton Head last year is Recent Air Service Developments more than 71 percent fewer than a decade ago, statistics show. And that Loss of Delta Air Lines number is a more than 119 percent decrease from the airport's 172,000- (cessation of turboprops) passenger peak in 2007, when Delta Airlines also served the airport. Loss of Reagan National More than $13.6 million in ongoing and pending airport improvements will (merger of US with AA) increase how many passengers American Airlines can put on each plane and could attract new service to the airport, Rembold said. The projects include Air Service Development Efforts tree trimming, relocating a taxiway along the runway and eventually Runway and Taxiway extensions to extending the runway, with 95 percent of the cost to be paid for with state and federal grants. allow regional jet flights "It's about the ability to have dependability," Sells said of the Strategic Plan improvements. Commercial traffic "will absolutely grow. I have no doubt. Competitive service We keep active communication will all our contacts in the airline industry and they agree this a resort community they want to have access to." MRG $750,000 Marketing $185,000 Final designs to extend the airport's runway from 4,300 feet to 5,000 feet are expected to be complete in March 2017, Rembold said. Construction of Grant Request the estimated $9.25 million project is expected to take 18 month. DOT funds $750,000 "To me, it's impossible to be anything but hopeful," Rembold said. "We're Local cash $185,000 finally embarking on these improvements that we've been talking about for a decade. I really believe you're going to see passengers increase once we can get these projects complete." Designation of a legal sponsor Hilton Head Island Airport Beaufort County, SC Page | 11 HHH / Hilton Head Island Airport Strategic Plan The airport serving Beaufort County and the Hilton Head Island area is served by one airline – American – and has been served by either American or US Airways for at least the past decade. Hilton Head Island has never enjoyed competitive major carrier airline service or service to more than one hub. The strategic plan calls for the introduction of competitive service to the region and / or the addition of service to a hub other than Charlotte. With consolidation there are only a few options that make sense for an airport the size of Hilton Head Island. Even though the region contains nearly three-quarters of a million people, the airport and its facilities are not large enough to sustain carriers with narrow body aircraft only or narrow body aircraft airlines that require multiple daily flights to feasibly operate. In addition to incumbent American Airlines, the plan includes the remaining three carriers operating in the region with regional aircraft; Delta, jetBlue and United. Carriers such as Southwest, Spirit, Allegiant and Frontier cannot operate on the runway that exists at Hilton Head Island. Target(s) 1. A northeastern hub / large O&D market a. New York / Newark (JFK or LGA on American -or- EWR on United) b. Philadelphia on American c. Washington (DCA on American -or- IAD on United) d. Boston on American 2. An omni-directional southern hub (ATL on Delta) Hilton Head Island recently commissioned a True Market Study conducted by Sixel, LLC that showed that major markets unserved by American include Boston, Atlanta, Washington, Philadelphia and New York. Primary Target Proposed Year One with American to Philadelphia Route Dept. Time Arr. Time Days Aircraft Seats PHL-HHH 1030 1145 1234567 E175 76 HHH-PHL 1245 1300 1234567 E175 76 Page | 12 HHH / Hilton Head Island Airport Secondary Target Proposed Year One with United to Newark Route Dept. Time Arr. Time Days Aircraft Seats EWR-HHH 1000 1130 1234567 E175 76 HHH-EWR 1215 1345 1234567 E175 76 Minimum Revenue Guarantee The Hilton Head Island Airport would like to offer the targeted airlines an MRG sizable enough to entice interest and large enough to sustain the service through its first few months of operation. The MRG would be provided over the course of twenty four months, long enough to ensure that the service has enough time to gain traction. The airport would earmark $750,000 of the $935,000 total program cost to the MRG. Estimated Year One costs with American at 15.00¢ per seat mile Route SM Annual Flights Annual Seats Annual Cost BE RT Fare (80% LF) PHL-HHH 610 730 55,480 $5.08 m $114 Month Cost Load Factor Revenue Funds Remaining 1 $423,035 45% $237,957 $564,922 2 $423,035 50% $264,397 $406,284 3 $423,035 55% $290,837 $274,086 4 $423,035 60% $317,276 $168,327 5 $423,035 65% $343,716 $89,008 6 $423,035 70% $370,156 $36,128 7 $423,035 75% $396,595 $9,689 8 $423,035 80% $423,035 $9,689 Page | 13 HHH / Hilton Head Island Airport Marketing The remaining project funds - $185,000 - would be used to market the service to inbound passengers through a series of billboards, radio, and TV, email, social media and direct mail ads. The airport and Chamber of Commerce will use existing contacts to make residents aware of the service. Timing The demand for service is strong throughout the year; however, spring would be the optimal time to begin service. The start of service, however, is up to the discretion of the airlines. Goals The goal is to bring competitive airline service to the Hilton Head Island region. A region of 150,000+ people served only by one airline. Key Problem 1: service that is only offered by turboprop aircraft. Key Problem 2: service that is priced much higher than airports in the region. In terms of passengers, Hilton Head Island would like to see airport traffic double, from 50,000 to 100,000 passengers. In terms of airfares, Hilton Head Island would like to see average fares fall 15%. Funding Request / Uses / Local Match • $750,000 SCASD funding requested • $185,000 local cash match • Total Project Costs = $935,000 • Minimum Revenue Guarantee = $750,000 • Marketing = $185,000 Community Partnerships • U.S. Senator – Hon. Lindsey Graham (R) • U.S. Senator – Hon. Tim Scott (R) • U.S. Congressman – Hon. Mark Sanford (R) District 1 • South Carolina Governor - Hon. Henry McMaster • State Representative - Hon. Jeff Bradley • Beaufort County Commissioner – D. Paul Sommerville (Chairman) • Hilton Head Island Mayor – David Bennett • Hilton Head Island Airport - Jon Rembold (Director) Page | 14 HHH / Hilton Head Island Airport Local Cash Contributors • Hilton Head Is. / Bluffton Chamber of Commerce - Bill Miles (Pres. & CEO) $25,000 • Hilton Head Marriott Resort & Spa - $25,000 • LGCOA (Lowcountry Golf Course Owner’s Association) - $10,000 • Omni Hilton Head Resort - $25,000 • Palmetto Dunes - $25,000 • Sea Pines Resort LLC- $25,000 • Sonesta Resort Hilton Head Island - $25,000 • Westin Hilton Head Island Resort & Spa - $25,000 Project Differentiation Hilton Head Island has never applied for, nor received, a SCASDP grant. Legal Sponsor Hilton Head Island Airport via Beaufort County, SC (airport owner) Beaufort County Commissioner – D. Paul Sommerville (Chairman) Jon Rembold, Airport Director 120 Beach City Road Hilton Head Island, SC 29926 +1 843-255-2950 [email protected] Page | 15 HHH / Hilton Head Island Airport The Hilton Head Island Airport Air Service Environment The Hilton Head Airport Catchment Area consists of three counties (Beaufort, Jasper and Hampton) in the southeastern part of South Carolina. As of 2010 the population of these three counties was 210,700, with 165,000, or 78.2% of the total. Based on a True Market Study conducted in the summer of 2017 utilizing calendar year 2016 data the Hilton Head Airport generates 94 passengers per day each way, while the Catchment Area in total produces 1,211 passengers per day each way. A full 92.2% of all Catchment Area passengers use other regional airports, primarily at Savannah and Charleston. The average domestic plus international fare at Hilton Head Island Airport was $558 round trip.
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