Northwest Regional Air Service Initiative Handbook

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Northwest Regional Air Service Initiative Handbook Northwest Regional Air Service Initiative Handbook Small Community Air Service Development empowering pacific northwest communities Northwest Regional Air Service Initiative Handbook These materials are sponsored by Oregon Department of Aviation Washington Department of Transportation – Aviation Oregon Airport Management Association Washington Airport Management Association US Department of Transportation © Mead & Hunt, Inc. 2006 Table of contents Section 1 Section 4 An overview of the Northwest Regional Airline types and their potential for air Air Service Initiative (NWRASI) service development Introduction . 1 Legacy airlines . 11 Background . 1 Low-cost airlines . 12 NWRASI goals . 2 Select airlines . 13 NWRASI plan . 2 Regional airlines . 13 Phase I . Small Community Air Service Other airlines . 14 Development Tool Kit . 2 Summary of main points . 14 Phase II . Small Community Air Service Market Analysis . 3 Section 5 Phase III . Oregon–Washington Small The importance of airline partnerships Community Air Service Strategies . 3 Marketing Agreements . 15 Summary of main points . 3 Codeshares and their role . 15 Interline Agreements . 16 Section 2 Contract and at-risk agreements . 16 Air service contributions to economy and lifestyle Summary of main points . 17 Contribution to the overall economy . 5 Contribution to local businesses . 6 Section 6 Contribution to quality of life . 6 Kinds of aircraft and their fit with small communities Summary of main points . 6 Aircraft economics . 19 Matching aircraft to markets . 20 Section 3 Jet versus turboprop orders and replacements . 20 e v i Industry status and impact on air service t Regional airline fleet trends . 21 a i An industry struggling financially . 7 t i Service providers and aircraft . 21 n I The 9-11 hangover . 8 e c Northwest regional carrier fleet trends . 21 i The cost of fuel . 8 v r Summary of main points . 23 e Industry results (2000-2005) . 8 S r i Bankruptcies . 9 A l a Airport and air traffic congestion . 9 Section 7 n o The airline hub and spoke route system i g Summary of main points . 10 e Hubs and secondary airports serving R the Northwest . 26 t s e Strengths and weaknesses of airlines w h t across regions . 27 r o N Summary of main points . 28 Table of contents Section 8 Section 11 General aviation alternatives to Essential Air Service airline service Eligibility . 43 Air travel regulations . 29 Bidding . 44 Alternatives to airline service . 29 Program status and trends . 44 Summary of main points . 31 EAS eligible communities in the Pacific Northwest . 45 Summary of main points . 45 Section 9 Airport factors in transitioning to commercial air service Section 12 Air carrier airports . 33 Air service development in small communities Post 9-11 environment and competition for Regulatory requirements . 34 air service . 47 Airline and passenger requirements . 34 US Department of Transportation Small Community Airport facilities – transition from general aviation to Air Service Development Program . 48 commercial service . 35 Barriers-to-entry . 48 Airfield . 35 Proximity to a larger competing airport . 48 Passenger Terminal Building and Aircraft Gates/ Travel habits . 49 Apron . 36 Frequent Flyer programs . 49 Airline space . 36 Name or service awareness . 49 Public space . 36 Air service development process . 49 Concessions . 38 Market analysis . 49 Support space . 38 Identification of service gaps and opportunities . 50 Aircraft gates/apron . 38 Community education and involvement . 50 Airport Access, circulation, and parking . 38 Airline management presentation/proposal . 50 Airport access . 38 Airline negotiations and agreement on service . 50 Airport circulation . 38 Implementation of service and the Airport parking . 39 community support program . 50 Summary of main points . 39 Performance tracking . 50 Summary of main points . 50 Section 10 How airlines make decisions Process . 41 Considerations and timeline . 42 Summary of main points . 42 Table of contents Section 13 Section 15 Community influence on air service decisions Next steps: Getting involved in solutions to Community role . 51 air service development Airline risk mitigation . 52 Phase II . Small Community Air Service Market Analysis . 59 Types of airline incentives . 53 Phase III . Oregon-Washington Small Community Air Airline revenue guarantee . 53 Service Strategies . 60 Cash payment/subsidy . 53 Summary of main points . 60 Marketing support . 53 Airport fee waivers . 53 Appendix A Pledges of support . 53 Aircraft designator codes and seats Travel bank . 54 Ground handling services . 54 Appendix B Regional Airline codeshare and Facility improvements . 54 marketing partners Examples of airline incentive programs . 55 Modesto, CA – SkyWest Airlines . 55 Appendix C Glossary Redding and Eureka/Arcata, CA – Horizon Air . 55 Redmond, OR – Delta Air Lines . 55 Eugene, OR – Delta Air Lines . 55 Market Analysis . 55 Purpose of market analysis in an air service initiative . 55 Description of resources and process . 56 e Funding . 56 v i t a Summary of main points . 56 i t i n I e c i v Section 14 r e NWRASI Mentor Program S r i Introduction . 57 A l a n o i g e R t s e w h t r o N Section 1 page 1 An overview of the Introduction Northwest Regional The NWRASI is a regional program created by Air Service Initiative the Oregon Department of Aviation, Washington Department of Transportation – Aviation, Oregon (NWRASI) Airport Management Association, Washington Air- port Management Association, and the US Department of Transportation (DOT) (Exhibit 1.1). The purpose of the program is to assist small communities in Oregon and Washing- ton with local air service issues. Oregon and Washington believe that the problem Air service has declined and continues to must be addressed through a regional approach. decline in many communities in the Pacific North- west. In others that have never had air service, in Background spite of population growth and vibrant economies, Since the deregulation of the airline industry efforts to secure air service have gone unrewarded. in 1978, the structure of the US airline industry has The trends and dynamics of the airline industry continued to evolve. While the general public has that are driving the decline of air service in smaller benefited from increased competition, early predic- markets are not isolated to the Pacific Northwest. tions that small markets would suffer appear to be What can be done? Aviation professionals in coming true. There are several reasons why service has declined in smaller markets. These include the transition from Exhibit 1.1 Northwest Regional Air Service turboprop aircraft Initiative partners to regional jets, the impact of low-fare US Department of Transportation carriers, and the re- e v i lationships between t a i t regional carriers and i Washington Department of Oregon Department n I NWRASI of Aviation larger airlines. The e Transportation – Aviation c i v fallout has produced r e S service reductions in r i A Washington Airport these markets, and l Oregon Airport Management a n Management Association Association the future does not o i g bode well for a quick e R t turnaround. s e w h t r o N page 2 Where many small communities become actively engaged in air Phase I . Small Community Air are concerned, the systemic nature service solutions at the local level. Service Development Tool Kit of these problems has made it dif- The Small Community Air Service • To identify secondary communities ficult for individual communities Development Tool Kit (Exhibit 1.3 on in Oregon and Washington that to successfully influence air service page 3) consists of three informa- can support enhanced or new improvements. Part of the problem tion sources on air service and air air service. is that within these communities service development: • To develop strategies for there is a lack of information about Small Community Air Ser- implementing broad air service the issues and the right course of ac- vice Development DVD – This improvements across the tion. Simply put, the issues are often 25-minute DVD is designed to two states. complex and “finding the handle” is provide communities with basic sometimes difficult. The NWRASI The NWRASI proposes to information on air service and air takes a regional and/or collec- accomplish the goals by implement- service development. The informa- tive approach to the issues. It also ing a creative three phase action tion is presented from the perspective provides information and resources plan (Exhibit 1.2 below). The first of smaller communities, those that that smaller communities can use to Air service – a critical phase is the development of a Small are attempting to achieve air service evaluate their air service landscape. Community Air Service Development Tool improvements and those that have issue for communities Kit. The second phase, the Small succeeded in getting service improve- NWRASI goals Commercial air service supports Community Air Service Market ments. Most importantly, the DVD The NWRASI goals are to: the local economy and passenger Analysis, is a program to jointly fund looks at air service development in activity generates the bulk of airport the collection of critical information smaller communities from an airline • Improve air service to a broad revenue. If the market is under- section of the Oregon and served and overpriced, the airport on air travel needs in individual com- viewpoint. This production is intend- Washington traveling community. and the community suffer. munities. The third and final phase ed as a first step for audiences who is the development of a cooperative want information about air service • Provide better access from regional approach to air service in development in small communities. secondary markets in Oregon and Oregon and Washington. Washington to the national air NWRASI plan transportation system. The NWRASI approach is to empower local communities through Exhibit 1.2 Northwest Regional Air Service Initiative • Engage small communities in education and to develop an overall Northwest Regional Air Service Initiative Oregon and Washington in Northwest Regional Air Service strat- finding solutions to regional air egy.
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