Northwest 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 Department of Transportation – Aviation Airport Management Association Washington Airport Management Association US Department of Transportation

© Mead & Hunt, Inc. 2006

Northwest Regional Air Service Initiative Industry statusandimpactonairservice Section 3 and lifestyle Air service contributions toeconomy Section 2 Air Service Initiative (NWRASI) An overview ofthe Northwest Regional Section 1 Table ofcontents Summary ofmainpoints Airport andairtrafficcongestion Bankruptcies Industry results(2000-2005) The costoffuel The 9-11hangover An industry strugglingfinancially Summary ofmainpoints Contribution toqualityoflife Contribution tolocalbusinesses Contribution totheoveralleconomy Summary ofmainpoints NWRASI plan NWRASI goals Background Introduction Phase III.Oregon–Washington Small Phase II.SmallCommunityAirService Phase I.SmallCommunityAirService Community AirService Strategies Market Analysis Development Tool Kit ......

10 1 9 9 8 8 8 7 6 6 6 5 3 3 3 2 2 2 1 small communities The airlinehuband spoke routesystem Section 7 Kinds ofaircraftandtheirfitwith Section 6 service development typesandtheirpotentialforair Section 4 The importance of airlinepartnerships Section 5 Summary of mainpoints across regions Strengths and weaknessesofairlines the Northwest Hubs andsecondary airports serving Summary ofmainpoints Service providersandaircraft Regional airlinefleettrends Jet versusturbopropordersandreplacements Matching aircrafttomarkets economics Summary ofmainpoints Legacy Marketing Agreements Summary ofmainpoints Other airlines Regional airlines Select airlines Low-cost airlines Northwest regionalcarrierfleettrends Contract andat-riskagreements Interline Agreements Codeshares andtheirrole ......

......

...... 28 27 26 23 21 21 21 20 20 19 17 16 16 15 15 14 14 13 13 12 11 Table of contents Section 8 Section 11 General aviation alternatives to 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 Northwest Regional Air Service Initiative NWRASI MentorProgram Section 14 Community influenceonairservice decisions Section 13 Table ofcontents Market Analysis Airline riskmitigation Community role Introduction Summary ofmainpoints Funding Description ofresourcesandprocess service initiative Purpose ofmarketanalysisinanair Eugene,OR–DeltaAirLines Redmond,OR–DeltaAirLines ReddingandEureka/Arcata,CA–HorizonAir Modesto,CA–SkyWestAirlines Examples ofairlineincentiveprograms Facilityimprovements Groundhandlingservices Travelbank Pledgesofsupport Airport feewaivers Marketingsupport Cashpayment/subsidy Airlinerevenueguarantee Types ofairlineincentives ......

...... 51 57 56 56 56 55 55 55 55 55 55 55 54 54 54 53 53 53 53 53 53 52 air service development Next steps:Gettinginvolvedinsolutionsto Section 15 Glossary Appendix C marketing partners Regional Airlinecodeshareand Appendix B Aircraft designatorcodesandseats Appendix A Phase III.Oregon-Washington SmallCommunityAir Phase II.SmallCommunityAirService Summary ofmainpoints Service Strategies Market Analysis ......

60 60 59

Northwest Regional Air Service Initiative Section 1 (NWRASI) Air Service Initiative Northwest Regional An overview ofthe port Management Association,andtheUS Management port Association,Washington Management Airport Air Transportation –Aviation, Oregon of Department Aviation, Washington of Department the Oregon Introduction Initiative partners Exhibit 1.1Northwest RegionalAirService canbedone?AviationWhat professionalsin markets arenotisolatedtothePacific Northwest. insmaller airservice that aredriving thedeclineof theairlineindustry trendsanddynamicsof The have unrewarded. gone tosecureairservice efforts andvibranteconomies, populationgrowth spite of west. Inothersthathave in never hadairservice, decline inmanycommunities inthePacific North issues.ton withlocalairservice andWashingassist smallcommunities inOregon ( Transportation (DOT) of Department Exhibit 1.1 Transportation –Aviation Washington Department of The NWRASI is a regional program createdby NWRASIisaregionalprogram The Air service hasdeclinedandcontinues to Air service ). The purpose of the program isto theprogram of purpose ). The Management Association Washington Airport US Department ofTransportation NWRASI

- - - Association Oregon Airport Management of Aviation Oregon Department has declinedinsmallermarkets. include These areseveral There reasonswhycoming true. service tions thatsmallmarkets would sufferappeartobe benefited fromincreasedcompetition,earlypredic continued toevolve. publichas thegeneral While has theUSairlineindustry of in 1978,thestructure Background must beaddressedthrougharegionalapproach. andWashingtonOregon believe thattheproblem Since the deregulation of the airline industry theairline industry Since thederegulationof

turnaround. bode well foraquick the futuredoesnot these markets, and reductionsin service fallout hasproduced airlines.larger The and regional carriers lationships between carriers, andthere low-fare impact of to regionaljets, the aircraft the transitionfrom page  - - page 

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. More specifically: Phase 1 . Air Service Phase II . Air Service service issues. Development Tool Kit Market Analysis • To provide all secondary communities in Oregon and Washington that desire air service improvements with self-help tools to understand, evaluate, and Phase III . Air Service Strategy Northwest Regional Air Service Initiative it, community leadershave notions unsupported development efforts.successful airservice Without Market Analysis Phase II.SmallCommunityAirService a mentorbeyond out-of-pocket travel expenses. communities. isnocostfortheassistanceof There theNWRASIinindividual with thecoordinationof with localpresentations, fieldquestions, andassist requested,assist will,if mentorgroup ment. This develop experience insmallcommunity airservice professionalswhohave assistance fromairport DVD provides andhandbook,theMentorProgram ple who have questions that are not answered by the in thePacific Northwest. the airlineindustry, market analysis, andairservice step. ontheissues, intobackground Itdigsdeeper Development DVD, the handbook isthenext presented intheSmallCommunity AirService beyondties thatwant theinformation togo opment Handbook ult aktifraini h er fall of istheheart Quality market information NWRASI MentorProgram Devel Small CommunityAirService – For thosecommuni –For thosepeo - - Exhibit 1.3NWRASITool kit - - DVD and strategies for securing air service improvements.and strategies for securing air service the two-state regionandevaluate alternative options smallercommunities in needsof overall airservice improvements.service PhaseIIIwillconsiderthe and have air community commitmenttosupport that theirrespective airservice markets cansupport Washington. communities These must demonstrate vice improvements and forcommunities inOregon research andevaluate strategiesforsecuringairser Community AirService Strategies Phase III.Oregon-Washington Small topic andassociatedcosts. Development GettingInvolvedinSolutionstoAirService Next Steps: Decisions nity InfluenceonAirService on localtravel needs. Refer to initiative,air service adatabaseshouldbedeveloped tained. Beforeacommunity canproceedwithan thatcanbesus airservice idea aboutthetypeof an needsandeven lessof about localairservice h neto ti hs ftheprojectisto thisphaseof intentof The o thishandbookfordetailson of NWRASI Tool kit Handbook Section 13 and Section 15 Mentor Program , Commu - , - - communities inbothstates. of is increasedby thewidespreadparticipation theregionalapproach successof probabilityof The most smallcommunities inthePacific Northwest. issuesthatface as aregionalapproach toairservice andWashingtonaviation professionalsinOregon fulfilled. However, theNWRASIwas createdby needswillbe any community thattheirairservice Participation intheNWRASIdoesnotguarantee improvements.tic strategiesforachieving airservice and work withothercommunities toidentifyrealis issues, evaluate theirrespective airtravel markets, in thesetwo stateswiththetoolstounderstand the

vice issues. Itprovides smallercommunities andWashingtonties inOregon withairser designedtoassistsmallercommuni program Summary ofmainpoints In summary, theNWRASIisaself-help page  - - -

Northwest Regional Air Service Initiative Section 2 economy and lifestyle contributions to Air service foundation the economic ing block in vital build isa service local economy than many other types of businesses. local economy thanmany other typesof businesses. adds moretothe Inthisway airservice an endby many individuals, organizations, and ers. isalsoused asameanstowards Butair service fromsuppli andservices goods as thepurchase of individuals employed by aswell airlines andairports, overall economy directlythroughthenumber of overall economy Contribution tothe theAmericanlifestyle. of part integral ish acrossboundaries. Airtravel hasbecomean expand beyond localclientele, andculturetoflour distance, businessmarkets to despite geographic the world we live in,allowing familiestoconnect andtourism.Itflattens to education,government withemployees andsuppliers, anditisanaid itself how businessdoesbusiness. in Itisanindustry than that,it’s much more to there, and from here public toget way forthe is thefastest citizens. It its lifestyle of nity andthe acommu of Air Like contributes tothe allindustries, airservice - -

- - rely heavily onairlinestomove customersinand rental cars, travel agencies, andresorts. Skiresorts industries. includeWeb These siteportals, hotels, manytravel related inthesuccessof ingredient ties decreases, tradeincreases. Timereallyismoney. link. Additionally, astravel timebetween communi communities wherethereisavitaltransportation linked by railroads. Commercetakes placebetween cities developed first,followed by communities activities. isareasonthat,historically, There port collaborationof businesses toallow forgreater and governments It expandsthepotentialreach of marketplace inhoursratherthandays andweeks. employees toreach theglobal andorganizations efficientlyandeconomicallyby enabling to run Efficient air transportation istheessential Efficient airtransportation Most importantly, allows businesses airservice page  - page  Time really is money. There is a reason that, historically, Summary of port cities developed first, followed main points by communities linked by railroads. • Air service contributes directly Commerce takes place between to a community’s economy communities where there is a vital the same as most businesses, transportation link. Additionally, through employees and purchases as travel time between communities from suppliers. decreases, trade increases. • Air service is different from other businesses in that it also air service is typically ranked third to contributes indirectly. It provides fifth on the shopping list of most site efficient linkage between a location teams. Companies realize community and other areas: that convenient access to clients and vendors is important to their success. – Expanded markets. – New revenue streams. Contribution to – Greater collaboration between quality of life teams located distant from Air service improves the quality each other. of life for residents in a community out of isolated areas. Entire states portation allows businesses to gener- by providing the connections essen- – Opportunities for cultural and such as and have ate new revenue streams by servicing tial to a mobile society. Air transpor- educational exchange. developed their economies based on areas that would otherwise not be tation often determines where people the accessibility of air service. accessible. Thousands of small com- • Air service is essential for many can live. Many people will put down travel related industries, including Cities such as , Orlando, munities are now open to business roots in one area if they can still con- and Phoenix flourish, in part, be- representatives because they are able Web site portals, hotels, rental cars, nect with distant places for vacations, travel agencies, and resorts. cause of the access provided by air to fly in and out in a short period of family functions, culture, education, transportation. time. Businesses need the mobility and personal emergencies. When • Easy access to air service and flexibility to compete in today’s travel requires unreasonable time determines where many people can Contribution to global marketplace and air service and expense, people risk becoming and want to live. local businesses provides the means for doing this. isolated, and those communities may Access to convenient air service For this reason, companies that cease to thrive. creates many opportunities for local are scouting for new site locations businesses to survive and thrive. Air place air service high on their list service opens up new trade routes of criteria, along with the available and expands market areas wherever labor pool, state and local taxes, and sales teams can be efficiently de- incentives, to name a few. In fact, ployed. As an end result, air trans- Northwest Regional Air Service Initiative Section 3 impact onairservice Industry statusand hlegs Tefloto alo theseproblems allof challenges. falloutof The have air trafficcongestion addedtotheindustry and (9-11), spiralingfuelcostsandincreasedairport 11,2001 September attack of 2000andterrorist of recent years. Inadditiontotheeconomicdownturn onuno 2000,airlinesfaltered. of downturn the surgingfinancialmarkets. Withtheeconomic In thebullish1990s, airlinesreapedthebenefitsof can economy andlogprofitslossesaccordingly. theAmeri thecyclesof protection, airlinesmirror since deregulationin1978.Withoutgovernment financially An industry struggling needs.service they candevelop strategiesthataddress theirair faces, likelihood theindustry challenges thegreater ing force. bettercommunities The understandthe aboutprofitabilityremainsadominat uncertainty airlines have seensomeimprovements. However, and mergers. tonotethatin2006 Itisimportant reorganizations, liquidations,has beenbankruptcy The airline industry hastaken abeatingin airlineindustry The The current state of air service hasevolved airservice stateof current The

- - term solutionsinsight. term redink,withno near the 1990swas hemorrhaging of travel market promisedbullishby thelasthalf poisedtoaccommodatetheair that anindustry making raisingfaresimpossible. netresultwas The asuddenlymuch smallermarket, shareof a larger to offsetlostrevenues. Airlinesbattledtocapture there were fewways forairlinestocutcostsquickly and skilledlabor, crew, flight andmaintenance), (aircraft andfacilities)semi-fixed costs(trained trafficplummeted.Withhighfixedpassenger costs days andonlyslowly cameback online. Airline on theairlines. airsystemwas The shutdown for thecyberbust,hadadevastating effect heels of h errs tak f9-11,comingonthe attacks of terrorist The page  page 

Graph 3.1 Cost per Barrel of The 9-11 hangover Industry results $90 (2000-2005) The impacts of 9-11 have been slow to dis- $90 sipate. Only now, five years later, is air travel It is a fact that airlines have never enjoyed large $80 $75 returning to pre 9-11 levels. People slowly regained profits or sustained profitability. Most recently, the confidence in our national security and economic $70 combination of depressed air travel demand and l

e higher costs has produced financial losses which well being. The fact that the attack was launched r $60 $51 r from the air, with passenger airlines as instruments a have been sustained over a longer period of time b $50

of destruction, magnified the impact on the airline r $38 $37 than previous downturns. Industry results tumbled e

p $40 $32 $30 from a modest $2.4 billion profit in 2000 to a industry. In addition to the problem of confidence, t s $30 almost immediately the industry and its customers o projected loss of $5.6 billion in 2005. The cumula- C had to deal with heightened security requirements $20 tive losses for the period from 2000 to 2005 are and ticket surcharges. $10 projected to be $34.7 billion. Year by year financial results for the airline industry in these years are The costs of heightened security in our nation’s $0 depicted in Graph 3.2 (below). air system were primarily borne by the government. 2000 2001 2002 2003 2004 2005 2006 However, the greatly expanded security system Source: Air Transport Association Most recently, the industry has cut capacity required the airlines to revise their procedures and (seats in the market) and seen improved passenger add training, marginally increasing costs. Surcharg- The cost of fuel demand allowing for modest increases in airfares. es were added to airline tickets to pay for airport The escalating cost of fuel is a problem airline Still, uncertainty remains as to when sustained prof- security screenings, adding to the customers’ cost as companies have struggled with over time. In the itability will be achieved. well. Though screenings were accepted as neces- growth oriented 1990s, they were able to absorb cost increases with added revenues from more sary, they negated two of the most important assets Graph 3.2 US Airline Industry of air travel: convenience and speed. All of these ticket sales. The 9-11 crisis sparked uncertainty Financial Results factors added to the struggles of the airline industry about oil supplies from the Middle East, and oil Billions and in some ways worsened its plight. prices surged. A wary traveling public and a strug- $4

gling economy eliminated the option of passing the s $2 s

higher costs on to the consumer. o l / $0 t i

In the past, airlines have hedged against fuel f o ($2) r

price increases by pre-purchasing future supplies p

g ($4)

at the current price. The cost of aviation fuel in- n i t

creased from $38 per barrel in 2000 to $90 in 2006, a ($6) r e

an increase of 137 percent. Graph 3.1 (above) p

O ($8)

shows the sharp rise in the price of jet fuel since t e ($10) 2000. At the same time, the number of airlines that N

could afford to pre-purchase fuel decreased. Higher ($12) fuel prices became another cost the airlines had to 2000 2001 2002 2003 2004 2005 subtract from the financial bottom line. Year Source: Air Transport Association Northwest Regional Air Service Initiative $34.7 billion. from 2000to2005are projected tobe The cumulative lossesfortheperiod projected loss of$5.6billionin2005. $2.4 billionprofit in2000toa Industry results tumbledfrom amodest Financial slump • • • • • • • • • between 2000and2005: bankruptcy reorganization. bankruptcy have moved intotheprotectionof through automation,manyairlines costsavings ties, andemphasisof ameni benefits cuts, of the pruning layoffs, and wage brink. Inspiteof riod have pushedmanyairlinestothe the2000through2005pe woes of economy evolved. economic The and astheindustry come andgone lation in1978,manyairlineshave Bankruptcies US Airways (twice) TWA (twice) Airlines Northwest Delta AirLines ATA Airlines The following airlines filedfor The deregu Since theairlineindustry

- - - the industry inrecentyears.the industry highlight thefinancialturbulenceof purchased TWA. examples These with USAirways. AmericanAirlines ness. AmericaWest Airlinesmerged inbusi Airlines arealsonolonger east AirlinesandTrans-Meridian operatorsSouth Charter and gone. and GreatPlainsAirlines, have come smaller niche carriers, HootersAir Airlines alsoceasedoperations. Two , andNational has beenliquidated.Midway Airlines, much but fanfareasalow-fare carrier AirwasIndependence launched with withotherairlines.period ormerged ceased operationsduringthistime regional jetsorturbopropaircraft. jetaircraftwith larger of replacement meant higherfaresandthecertain seats. Insomeinstancesithasalso this meanssmalleraircraftandfewer beingprofitable. Usually capable of over to regional airlines thought more thesemarkets marginal, orturning inmarkets considered service of istheelimination with smallerfleets size.in fleet Goinghandin isareduction reorganizations ruptcy The usual result of airlinebank usualresultof The ubro airlineshave A number of - - - demand. Congestion occursprimar demand. Congestion increase capacity. impossible. Thus, itisdifficultto available landmakes expansion of planning. lack Atsomeairports, expensive andinvolves longrange is andgates runways Expansion of facilities, andgates. namelyrunways ground air trafficcapacityandairport limitationson tion isafunctionof cases, throughouttheUS. Conges munities intheregionand,some forcom opportunities tating service but theyplay asignificantroleindic financialwoes, theairlines’current of problemsarenotattheroot gestion landscape. Con the airlineindustry of areastandardpart some airports traffic congestion Airport andair It isequallydifficult todecrease at Problems withcongestion - - - - - been eliminated. even though“slots”have officially duringpeaktimes erations permitted op there arecapsonthenumber of O’Hare, forexample,at and arenoturbopropoperations There ed inother, lessobvious, limitations. over-scheduling, however, hasresult slots amidmuch criticism.Industry allocated andairlinescompetedfor planes intheair. government The landings andcontrolthenumber of takeoffsthe demandforairplane and “slots”was developed to manage of examples. Attheseairports,asystem Kennedy arethebest Guardia, Washington National,and ity. O’Hare, NewYork/La Chicago Section 7 and spoke routesystem(referto wherethehub ily athubairports, ) placesthemostactiv page  - - - page 10 Skyrocketing prices At present –Tacoma In- affect the bottom line ternational Airport is in the process In the past, airlines have “hedged” of adding a third runway to address against fuel price increases by pre- airfield capacity and congestion is- purchasing future supplies at the sues. Of the hub airports that serve current price. The cost of aviation communities in the Pacific North- fuel increased from $38 per bar- west, International rel in 2000 to $90 in 2005, an Airport has long been a bottleneck increase of 137 percent. for air traffic. The combination of bad weather and limited airfield ca- to the economic performance pacity at San Francisco International of all markets and limited Airport will continue to constrain patience with markets perceived airline operations. Previous efforts as under-performing. to establish north-south hubs at Reno/Tahoe International Airport • It is not likely that a new hub will () and San Jose International develop that is geographically Airport () failed, situated to serve the Pacific rendering the development of an ad- Northwest. ditional hub unlikely.

Summary of main points • Airlines are managing risk very carefully in an environment where financial stability and corporate profitability are primary goals. • Fuel costs have a disproportionate impact on smaller capacity aircraft flying shorter stage lengths. This is the dominant air service in the Pacific Northwest. • The legacy of massive financial losses during the 2001 to 2005 period will be heightened attention Northwest Regional Air Service Initiative Section 4 development for airservice their potential Airline typesand airlines, network airlines, localservice evolved over like trunk time, withterms have categories airlines areused.The differences between themaintypesof thathighlightsimilaritiesand categories Note: BoldfontindicatesaPacific hubairport. Northwest region. the Northwest in classificationsystembutprovide service category thatdonotfitintothefour to includecarriers isalsopresented An “othercategory” lines, selectairlines, andregionalairlines. toaslow-fare) air (sometimes referred ries. airlines, arelegacy low-cost These past. Today therearefourmajorcatego airlines, andcommuter airlinesusedinthe Table 4.1Legacyairlinehubs US Airways United Airlines Airlines Northwest Delta AirLines American Airlines Legacy airlines To understandtheairlineindustry, Phoenix Charlotte O’Hare Chicago New York Newark Intercontinental /Ft. Worth O’Hare Chicago Major hubs - - Las Vegas Washington Dulles San Francisco Memphis Secondary hubs aggregate andexchange passengers, andtheyoper aggregate Legacy airlines In all cases, legacy airlines use hub airports to In allcases, airlinesusehubairports legacy l,o theirhubsand the all, of between most,butnot have nonstopservice tive hubairports. airlines andtheirrespec 4.1 and USAirways. Airlines, UnitedAirlines, Air Lines, Northwest tinental Airlines, Delta American Airlines, Con the bignamecompanies: day, airlinesare thelegacy (refer to point-to-pointservice of limitedamount ate avery depicts the six legacy thesixlegacy depicts Legacy airlines Legacy Section 7 page 11 Table ). To - - - - page 12

major Pacific Northwest airports at Portland and Low-cost airlines Though there can be some expectation of mar- Seattle. Spokane also has service to Chicago and Low-cost carriers rank high on every commu- ket stimulation, low-cost carriers have little interest Minneapolis, but service to secondary Northwest nity’s wish list because they provide cheaper airfares. in market development, since this can be a costly cities like Eugene, Pasco, Spokane, Bellingham, and It is widely accepted that AirTran Airways, ATA activity and is counter to their operating philosophy Redmond, when available, is based on their distance Airways, , Jet Blue Airways, South- of minimizing costs. Market stimulation refers west Airlines, and be- to generation of new airline passenger traffic by long to this category. America West people who otherwise would not choose to travel Airlines claimed membership to or would make a trip in another way. In general, this category prior to their merger low-cost carriers make money by attracting existing with the US Airways, passengers from other airlines (often from other and although the merged carrier airports) and modest market stimulation created by category is uncertain, it is generally low fares. Carriers that operate conventional hub treated as a legacy carrier. systems and, in the process serve smaller markets, find it difficult to compete with the lower cost Among the low-cost carriers, structure of the low-fare airline. only AirTran Airways and Frontier Airlines operate a hub and spoke In the Pacific Northwest, city pairs with the system, with hubs at Atlanta and high volume, point-to-point demand needed to sup- Denver, respectively. The other port low-cost carrier operations are in short supply, carriers essentially operate point-to- hence the limited presence of low-cost carriers in to a specific airline’s nearest hub. In these smaller point service (simple origin to destination) though the area. has service at Portland, communities, any service is limited to airline hubs at they may connect a limited amount of traffic. Low- Spokane, and Seattle. Frontier Airlines serves only Denver, Phoenix, Salt Lake City, and San Francisco; cost carriers focus on major markets or secondary major Pacific Northwest markets from their Denver all are 1,000 miles distant or less. airports near major markets, where costs are lower. hub and Jet Blue Airways flies routes between Because of the distant location of their hubs, They pay lower airport operating fees at secondary Portland and New York and from Seattle to both American Airlines and Continental Airlines are not airports, for example, and passengers pay less for and New York. This situation is not expect- a factor in air service options for the Northwest. parking. Southwest Airlines’ service in the Boston ed to change in the foreseeable future and low-cost The same is true for , except market is a good example of how a low-fare airline carriers are unlikely players in new service develop- that its historical presence in the area gives it some competes for passengers in a metropolitan area ment in the Pacific Northwest. limited weight. As a result, any legacy airline discus- while keeping its costs down. Instead of using sion of Pacific Northwest air service must focus on Boston’s Logan International Airport, Southwest (Salt Lake City) and United Airlines Airlines operates at the smaller –Bos- (Denver and San Francisco) and to a lesser extent ton International Airport, located on the northern US Airways (Phoenix), since they have edge of the metro area, and Providence’s TF Green accessible hubs. Airport which draws traffic from the southern and southwestern parts of the metro area. Northwest Regional Air Service Initiative their own names, butinsteadare theseairlines operateunder Few of to 90seatsandturbopropaircraft. capacitiesrangingfrom32 passenger lines operateregionaljetaircraft with the country. Generally, regionalair are manyregionalairlinesthroughout provider isregionalairlines. There Regional airlines in thePacific Northwest. provider airservice remain aprimary network. AlaskaAirlines isandwill tively feeder haul,Northwest short pointsviaarela selected eastern Seattle, and connections to of points, connectionstopointssouth offering connectionstoAlaskan Seattle-Tacoma Airport, International destinations. Ithasaquasihubat toMexican inLosAngeles service it alsoofferslimitedconnecting although and point-to-pointservice, Airlinesprovides north-south provider. airservice most important Alaska Airlinesisperhapstheregion’s to thePacific because Northwest However, isimportant thiscategory they donotfittheothercategories. with fewdefiningcriteria,except that . isagroup This Airlines, Hawaiian Airlines, and AlaskaAirlines, Aloha consists of and toasselectcarriers referred Select airlines The next level of air service airservice nextlevelThe of is Another airlinegrouping - - Northwest. RegionalNorthwest. airlineequip development inthePacificservice for air opportunity the greatest Pacific Northwest. inthe used by regionalcarriers airlines,partner andthehubairports lines, theirrespective codeshare shows regionalair theNorthwest and Pacific Northwest. theWesta fewregionalairlinesserve acrossthenation,only gional carriers may be. partner’slegacy hubs, wherever that now operatearoundtheir carriers regional codeshare arrangements, area. However, duetotheirfrequent within arelatively limitedgeographic focused to theirtitle, withairservice regional airlinestraditionallylived up codeshare partners. Historically, orfullyowned byare partially their whileothers airlines areindependent, works totheirhubs. Someregional asfeedernet name, andserving Section 5 (referto carriers withlegacy partners marketed andoperateascodeshare trip inanotherway. choose totravel orwouldmakea wouldnot by peoplewhootherwise tion ofnewairline passengertraffic Market stimulationrefers togenera market stimulation? What ismeantby Regional airlinesrepresent Although therearemanyre ), using the legacy carrier carrier ), usingthelegacy Table 4.2

- - -

- - (non-competitive service) Airlines, Airlinescodeshares with Northwest Note: BigSky USAirways, and and marketingpartners Table 4.2Northwest regionalcarriers for regionaljetsand/ortoofarfrom the Pacific aretoosmall Northwest region. However, somemarkets in manysmallermarkets inthe to serve turboprop aircraft,aretherightsize ment, eithersmallerregionaljetsor Recently therehasbeenaloosening provide theappropriatecapacity. airline turbopropequipmentwould region,regional within theNorthwest between points service will support aircraft. To theextentthatdemand forturboprop Airport) International (except Seattle-Tacomahub airports Big Sky Airlines Atlantic Southeast Skywest Airlines Regional carriers N/A United Airlines Frontier Airlines Delta AirLines Delta AirLines United Airlines US Airways Delta AirLines United Airlines Frontier Airlines Alaska Airlines Marketing airline ible aircraftanissue. compat may make theavailability of to operatelimitedaircrafttypes. This the airlineslistedin out olderturbopropequipmentand is inorder. isatrendtophase There caution providers,service anoteof regionalairlinesare promising While ment inmarkets attheirown risks. allowed tooperateturbopropequip ships, with regionalairlinesbeing thecodesharerelation on someof N/A Denver Denver Salt Lake City Salt Lake City Denver Las Vegas Phoenix Salt Lake City Portland Denver San Francisco Denver Seattle Hub

Table 4.2

page 13 tend - - - page 14

Other airlines • There are a number of regional The “other” category is a catchy airlines operating in the Northwest name for carriers that provide air region, typically in codeshare service in the Northwest and do not agreements with legacy carriers. fit the other categories. , Deployment of , Northwest , equipment is at the discretion USA 3000, and of the legacy partner. In the are the carriers included here as past, the situation has been other airlines. similar with turboprop type equipment. Recently, there has Allegiant Air operates a sched- been a loosening on some of uled quasi-charter service on a less the codeshare relationships, with than daily basis with a primary focus regional airlines being allowed to on the Las Vegas and Orlando leisure operate turboprop equipment in markets. This airline provides some markets at their own risk. secondary service for select Pacific Northwest communities. USA 3000 • The other carriers provide service Summary of • Low-cost carriers have limited and Sun Country Airlines provide to specific leisure markets and main points presence in the Pacific Northwest, similar service in other markets in are not expected to be significant • The legacy carriers dominate the and this is not likely to change the Midwest and eastern parts of the players in air service development hub and spoke route systems. in the foreseeable future. Their country. Kenmore Air and North- in our area. However, Allegiant Delta Air Lines at Salt Lake City, potential for new service west Seaplanes provide air service Air may provide opportunities for United Airlines at Denver and is negligible. focused on the of a select number of communities San Francisco, and US Airways Washington. Unless there is a change • Alaska Airlines is a select carrier with high travel demand for at Phoenix are the major legacy in the corporate strategy of these that serves many markets in the Las Vegas. airlines in the Northwest and airlines, they are not likely to be a Pacific Northwest. It uses Seattle may provide opportunities for significant factor in new or expanded as a quasi hub, or jumping off air service development. All of Pacific Northwest air service. point, not only to markets in the legacy carriers serving the Alaska but also south and east of Pacific Northwest have declared Seattle. It will continue to be a bankruptcy in the past five years primary carrier for the region. and therefore carefully calculate all risks associated with new service. Northwest Regional Air Service Initiative Section 5 airline partnerships The importance of hycntk h omo codeshare of cantake theform They businessrelationships.and support cooperationamong airlines levels of Agreements Marketing more detailinthe sectionsbelow. arekey.interline agreements areexplainedin They forsmallcommunities,air service codeshare and facilities,gate andequipment.Inthisdiscussionof airport programs, inventory allocation, useof flyer handling,frequent ing, pricing,ticketing, sharedairlineresourcesinclude:schedul amples of more effectively intheglobalmarketplace. Ex memberstocompete ments allow participating andassetsthatcomefrommarketing agree service of integration The growth. internal required of withoutthecapitalinvestment typically service of is toincreaseanairline’s market presenceandlevels Airlines, KLM,andKorean Air. Aeromexico,Aeroflot, AirFrance, ,Czech Lines, ContinentalAirlines, Airlines, Northwest SkyTeam Alliance, forexample, includesDeltaAir seamless travel members. amongparticipating The airlinesandprovide worldwide networks of ings of involve multiple airlines. Alliancescreategroup ticketing whentrips tohavegers asinglesourceof each otherstickets, makingitpossibleforpassen isdifferent.Itallows airlinestohonor agreement system.Aninterline in thecomputerreservation whenlistingitsflight another carrier to adoptthetwo-letter identifierof allows onecarrier its simplestform, and globalalliances. Codesharing,in agreements, interlineagreements, Marketing agreements formalize formalize Marketing agreements The goal of all types of marketing agreements marketing agreements alltypesof of goal The

A benefitoftheseagreements isthe cally required growth. ofinternal without thecapitalinvestment typi market presence andlevels ofservice agreements istoincrease anairline’s The goalofalltypesmarketing Partnering forsuccess effectively in the global marketplace. allowing memberstocompetemore combination ofassetsandservices, - - - - - financial support. facilities, traffic,passenger constrained airport and regional airlinealsobenefitsthrough accesstomore smaller proximates The singleairlineonlineservice. thatcloselyap time, itcanprovide seamlessservice atalowernot equippedtoserve cost.Atthesame its network footprintintosmallermarkets thatitis airlinecanextend and theirpassengers. larger The arebeneficialtobothairlines partnerships These through acodesharewithmajorairlinepartner. boprop andregionaljetoperatorsprovide service tur medium-sized communities. majorityof The insmallerand airservice key roleinthequalityof and mergers. throughbankruptcy restructures ing astheindustry compatible withtheirphilosophy, butthisis chang have foundcodeshareagreements notgenerally theirroutenetworks. Low-cost carriers reach of airlines andforeigncarriers, expandingtheglobal plans. alsoexistbetweenand fleet US Agreements decisions controlovergiving themgreater service outright, cases whereairlinesown regionalcarriers in additiontoothermajorairlines. aresome There carriers, inmostcaseswithseveral regionalpartners Codeshare agreements amongairlinesplay a Codeshare agreements - sharing agreements withother sharing agreements the majorairlineshave code cated partnerships. Today, all have developed intosophisti but regional airlinepartners airlinesandtheir major legacy between ing arrangements assimplemarket began their role Codeshares and Codeshare agreements Codeshare agreements page 15 -

- - - - - page 16

Travelers from small com- Contract and at-risk munities benefit from codeshare agreements agreements since these agreements Legacy airlines that serve small usually tie in each airline’s pricing, communities operate hub and spoke scheduling, inventory allocation, and networks (refer to Section 7) that frequent flyer programs, and they connect passengers in key city air- improve hub airport connections ports to their final destination. This between carriers. The largest benefit demand aggregation model allows to small communities, however, is the airline to serve many smaller that codesharing usually involves markets that would otherwise not publishing through-fares in most support service. Regional airlines or all of larger carriers markets at play an important role in major air Appendix B for a list of codeshare between Delta Air Lines and United a lower price than what is available carriers’ networks by feeding traffic and marketing partners. Airlines allows passengers to fly from through a combination of local fares. into these key hubs from secondary Billings, , to Incheon, Korea, In addition, codeshare partners often communities. Most regional airlines Interline Agreements with intermediate stops at Salt Lake have gates near each other making fly under contract, also known as seat Where more formalized code- City and San Francisco. purchase agreements, for their major connections as convenient as pos- sharing agreements or alliances do Under interline agreements the airline partner. sible. Passenger processing not exist, interline agreements are first carrier transfers a passenger to (e.g., reservations, check-in, seat as- often in place to efficiently move Under this arrangement the leg- the second carrier to get the passen- signment, and ticketing) is handled as passengers and cargo throughout acy airline partner assumes all of the ger to a destination the first car- if a single airline were involved. the world. These are multilateral risk and essentially contracts the fly- rier does not serve. For such travel Typically, the agreements within the industry that ing out to its regional partner. These itineraries, the passenger buys a single adopts a variation of the legacy airlines participate in to avoid making seat purchase agreements allow the ticket, and the airline issuing the carrier’s name (e.g., American Eagle, separate agreements with individual major airline to outsource some of ticket makes the flight reservation for , ), a airlines. Interlining makes it possible its flying while maintaining control the passenger on the second airline. similar paint scheme, for passengers and cargo shippers over the growth of its route network, However, flight schedules are not uniform, and product branding. to purchase multi-flight itineraries minimizing the cost associated with necessarily well-timed, frequent flyer This practice has become known as involving any number of different expansion, and retaining the revenue programs do not overlap, and there franchising. Since most air service in operating airlines. Travel may be flown by the operator. The major is no sharing of airline designator smaller markets and many medium- on several participating airlines us- airline can expand into new markets codes in flight reservation systems. sized markets is provided by regional ing one ticket, but it is experienced and grow its network footprint more Interline agreements are a much airlines, the importance of codeshare as travel on just one carrier. Also, quickly than if that same growth older industry practice and today are agreements to those markets is evi- baggage can be checked to its final were funded internally. viewed as “entry-level” arrangements dent. Lack of a destination without the need for that are less valuable than codeshare with a major carrier at a large city the passenger to transport it be- or alliance relationships. can be a detriment to the long- tween each airline being flown. For term success of new service. See example, an interlining agreement Northwest Regional Air Service Initiative efits the major airline partner because efits themajorairlinepartner beyond thecity-pair.flying ben This forpassengers major airlinepartner pairs butsharestherevenue withits betweening passengers thetwo city operator keeps alltheprofitfromfly theregionalairline this arrangement, Under flight. carriers’ trip onamajor beyond thehubcity, continuing their travelingmajor airlineforpassengers a revenue-sharing witha agreement or failure. involves Oftentheflying success and assumesalltheriskof expense withnoguaranteedpayment acity-pairrouteatitsown flies exists whentheregionalairline flying isat-riskflying.agreements At-risk Table 5.1Regionalairlinepartnerships Regional Airlines Horizon Air Pinnacle Airlines Mesaba Airlines American Eagle Mesa Airlines Skywest Airlines An alternative toseatpurchase Airlines United x x x - -

Air Lines of its major partner. These types of itsmajorpartner. typesof These of underthebrand usuallyflying service the becomestheoperatorof partner by themajorairline. contract The inventory allocationareallhandled schedules, flight served, pricing,and routes aircraftflying, number of airline, orcontractpartner. The theregional controls theactionsof major airlines. betweenhave regionaland formed that thecontractpartnerships of added atalmostnoexpense. beyond thecity-paircanbe going incremental revenue fromtravelers Delta x x x Table 5.1 In mostcases, themajorairline

Airways illustratessome US x x x Major Airlines

American Airlines x x

Northwest Airlines x x service beingflown. service the thesuccessorfailureof less of regard profit marginsarenegotiated the contractcarrier,asguaranteed contracts areessentiallyrisk-freefor travel experience. combining itineraries, andaseamless tivity athubcities, lower pricesthan more coordinatedschedule connec network,to theglobaltransportation includeimprovedagreements access small communities frommarketing decisions.the airservice Benefitsto ship inplacedictateswhomakes partner ships andthatthetypeof thevarious existingpartner aware of Small communities shouldbe

Airlines Alaska x

Frontier Airlines x

- - - - • • • • main points Summary ofthe seamless travel. prices, improved schedules, and in several ways, includinglower airline marketing agreements Small communities benefitfrom orregionalairline). (major partner decisions who makes airservice dictates agreement typeof The potential customers. airlines moreappealingto experience andmake participating designed toimprove theairtravel from each other, butallare contracting, andalliancesdiffer Codesharing, interlining, contracting, andalliances. include codesharing,interlining, exist between airlines. These agreements Various typesof page 17

Northwest Regional Air Service Initiative Section 6 communities their fitwithsmall Kinds ofaircraftand tial markets, length thestage demand inexistingandpoten costs, operatingcosts, passenger considerpurchase orlease They factors. based onavariety of haul flights. turboprop aircraft thatarelessefficientonlong- lengthincreases,stage airlinesarereluctant touse lengths. stage not efficientonshort Likewise, asthe boprop aircraft.Jets, even smallerregional jets, are by tur distancestohubairports,areserved short is onereasonthatsmallercommunities,This with lengths.erating atlower stage altitudesandshorter prop aircraftaremoreefficientthanjetop lengths(distances).Turbo stage altitudes onlonger Jet aircraftaremostefficientoperatingathigher jetversus turbopropaircraft. erating economicsof development efforts. reality forcommunity driven airservice measure of decisionsprovides perspectivein airservice anda ets. Understandingtheroleaircrafteconomicsplay profitability and how the airline will price its tick of itschances extent,determines in amarket, toalarge Aircraft economics theireconomics. of overview ties today andabrief are beingusedinsmallcommuni aircraftthat reviews thetypeof section enue maximization.This look fortherightmixrev other factors. Generally, they frequencies, among number of are willing to pay,sengers and the between city-pairs, thepricepas Airlines build their fleets Airlines buildtheirfleets First, thereisasignificantdifferenceintheop aircraftthatanairlineelectstouse typeof The ------the type and size aircraft that can profitably serve the type andsizeaircraft thatcanprofitably serve ties needtocarefully considerwhich airlines have critical toairlineprofitability. even oncosts. Right-sizingaircrafttothemarket is tobreak itsseatsfilledonaflight to 70percentof costs, itistypicalforanairlinetoneed65percent aircraft. Intoday’s environment withhighfuel larger marketsIn anutshell, cansupport larger perday) operatedbyfrequency (flights anairline. theaircraftand theseatingcapacityof determines seating capacities. aircraftandhigher markets withbigger to larger turboprop, willnot realizetickets pricescomparable withsmalleraircraft,jetor markets thatareserved on aircraftwithlower seatingcapacities. Smaller unit costbasis, airlinesmust morefortickets charge where ticket Simplyput,ona pricingisconcerned. point isanespeciallyimportant seat mile).This seats anaircrafthas, thelower unitcost(costper seatingcapacities.passenger themore Ingeneral, When shopping for airline service, communi shopping forairlineservice, When themarket To thesizeof degree, alarge Second, differentaircrafttypeshave different page 19 - page 20

Table 6.1 Regional airlines future aircraft orders/ their market. Also, smaller com- options (new aircraft) On the community side, runway Aircraft Type 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total munities that have regional jet or length, airport altitude, and season- CR7 RJ 7 35 27 32 21 2 0 0 0 0 124 turboprop service are not going to ally high temperatures may impact CR9 RJ 5 7 5 0 0 0 0 0 0 0 17 realize the “cheap tickets” that are whether or not a particular type of CRJ RJ 2 7 19 24 43 26 19 18 18 19 195 especially attractive to local leisure aircraft can serve the market. This E70 RJ 1 12 12 13 12 12 2 8 8 9 89 travelers. Understanding the realities issue has been especially problem- E90 RJ 18 26 26 26 26 27 26 26 18 18 237 of aircraft economics goes a long atic for smaller airports that transi- ER3 RJ 0 0 0 0 0 0 0 0 0 0 0 way in identifying service options and tion from turboprop to regional ER4 RJ 4 3 6 1 0 0 0 0 0 0 14 crafting an effective business case for jet service. Many types of regional ERD RJ 3 6 7 6 6 6 6 0 0 0 40 air service initiatives. jets require more runway length FRJ RJ 0 0 0 0 0 0 0 0 0 0 0 and are more operationally sensitive Total RJ 40 96 102 102 108 73 53 52 44 46 716 Matching aircraft BEH TP 0 0 0 0 0 0 0 0 0 0 0 to higher temperatures than their to markets D38 TP 0 0 0 0 0 0 0 0 0 0 0 turboprop predecessors. As mentioned above, numer- DH4 TP 2 5 6 4 4 1 0 0 0 0 22 ous factors affect the type of aircraft DH8 TP 0 0 0 0 0 0 0 0 0 0 0 Jet versus that is ultimately placed in a market. EM2 TP 0 0 0 0 0 0 0 0 0 0 0 turboprop orders and replacements Airline managers making service de- J41 TP 0 0 0 0 0 0 0 0 0 0 0 Regional airlines, once referred cisions must consider their available SF3 TP 0 0 0 0 0 0 0 0 0 0 0 to as , have become aircraft, distance between city pairs, Total TP 2 5 6 4 4 1 0 0 0 0 22 the primary air service providers for competition, operational constraints All TP 42 101 108 106 112 74 53 52 44 46 738 of airports, as well as passenger Source: BACK Aviation Solutions, April 4, 2006 smaller markets and many medium- demand and other elements. Note: See Appendix A for aircraft codes sized markets. Regional airlines are the sole operators of turboprop Maximizing passenger revenue Airlines operates a mix of 17 smaller To achieve cost efficiencies, aircraft and the primary operators and minimizing operating costs for aircraft, with nearly half the capacity regional airlines limit the number of of regional jet aircraft with less than any market can be a delicate balanc- of a 747, to accommodate aircraft types in their fleet. Where 100 seats. Current orders are for ing act requiring right-sized aircraft. passenger demand for frequency. In new service is concerned, potential larger regional jet aircraft and a few Densely populated markets can ac- smaller markets, an airline may weigh service providers may not have the large (e.g., the 74-seat commodate larger aircraft. However, the benefit of operating two daily optimum aircraft or even an accept- de Havilland Dash 8-Q400). Table passenger preference may be spread 70-seat regional jets versus three able aircraft to serve a particular 6.1 shows a timeline of US regional out throughout the entire course 50-seat regional jets (or two daily market. In other instances, they may aircraft orders and options between of a day limiting the size of aircraft 74-seat turboprops versus four daily have the appropriate aircraft, but the calendar years 2006 and 2015. to be used at any given time. For 37-seat turboprops). Depending on market is detached from the rest of example, theoretically it would be The message in Table 6.1 is the market’s demand for frequency, its service (route system) and can not most profitable for United Airlines that, with the exception of 22 de an airline tries to find the right air- be operationally supported. to operate six or seven daily Boeing Havilland Dash 8-Q400 turboprop craft mix to maximize revenue. 747 aircraft between San Francisco aircraft on the order/option books and . Instead, United Northwest Regional Air Service Initiative technology 74-seatdeHavilland technology 40- to50-seatregional jetsandnewer haveremain. They by beenreplaced turboprops with40ormoreseats turboprop fleets. By2006,few marked decline inregionalairline since themid-1990s. hasbeen There dramatically haschanged airline fleets fleet trends Regional airline 70- and90-seataircrafttypes. orders forregionaljetsfavors larger aircraft through2015.Also, future orders and/oroptionsforturboprop for HorizonAir, therearenoother Source: BACK Aviation Solutions, April2006 order trends Exhibit 6.1Regionaljetandturboprop 100 150 200 250 50 0

h opsto fregional compositionof The

1997

1999 2001

Regional Jets

2003

2005 2007 regional airline industry. shows theaircraftordertrends inthe options.service air outof demand arerunning ger communities withlimitedpassen ter economics. Asaresult,smaller with higherseatingcapacityandbet aircraft larger dropped infavor of 50-seat regionaljetsarealsobeing regional airlinefleets. Smaller37-to aredominantin or morepassengers regional jetaircraftseating40to50 being manufactured. Atthistime, fleets, therearenonewreplacements been rapidlyretiredfromairline turboprops (lessthan40seats)have Dash 8-Q400turboprops. Assmaller

Turboprops

2009 2011

Exhibit 6.1

2013 2015 above - - many aircraftinthiscategory. Each regional airlinestoday. are There than 100seatsareoperatedby and aircraft Service providers Southeast Airlines, Comair, and Airlines. Additionally, Atlantic Air, MesaAirlines, andSkyWest markets: Airlines, BigSky Horizon airlines thatoperateinNorthwest carrier fleettrends Northwest regional ignator codesandseatingcapacities. theaircraftdes provides alistingof regional jetequipment. provides asimilarbreakdown for April2006. of as aircraftinthefleet and number of equipment by typeof prop fleets summarizes regionalairlines’turbo Appendix B isprovided in codeshare partners regionalairlinesandtheir A listof (referto arrangement a majorairlineundercodeshare inconjunctionwith aircraft areflown these to fourtypes. Nearlyall of regional airlinetypicallyoperatesone Virtually allaircraftwithless Virtually There arefourmainregional There . Table 6.2 Table 6.3 Section 5 Appendix A (next page) (nextpage) (page 23) (page ). - -

de Havilland Dash8-Q200seriesand Horizon Air’s turboprops are37-seat April2006). Twenty-eight of (as of 48 turbopropsand21regionaljets Alaska AirGroup, Inc. andoperates AlaskaAirlinesunderthe of carrier isasister erator intheNorthwest, June 2006information. bers have beenupdatedtoreflect num and wherepossiblefleet regional airlinesisdescribedbelow Pacific Northwest’s fourmain Lines’ routenetwork. DeltaAir of Coast andotherparts airlines’ operationsareontheEast these Lines; however, themajorityof DeltaAir of Salt Lake Cityonbehalf inthePacificflights to Northwest Shuttle Americaoperateoccasional Horizon Air, op thelargest the each of of fleets The page 21 - - page 22

the other 20 are 74-seat de Havilland Dash 8-Q400 Horizon Air’s transition from 37-seat series aircraft. All of Horizon Air’s regional jets are to 74-seat turboprop aircraft may adversely 70-seat CRJ-700s. Horizon Air is in the process of impact smaller markets that cannot support phasing out their 37-seat de Havilland Dash 8-Q200 the greater seating capacity. However, the aircraft and replacing them with 74-seat de Havil- higher speed of the 74-seat de Havilland land Dash 8-Q400 aircraft. Aside from 22 de Havil- Dash 8-Q400 aircraft allows it to efficiently land Dash 8-Q400s, and one CRJ-700 Horizon Air operate longer distances which may open op- currently has no other aircraft on order. portunities for service between larger markets

Table 6.2 Regional Airline turboprop fleets – April 2006 Turboprops Operator AT7 BEH BES CNC DH4 DH8 DHT EM2 J31 J32 J41 SF3 SWM Total Air Midwest 19 19 American Eagle 28 28 in the Pacific Northwest and Los Angeles. Horizon Southeast is not expected to increase the use of regional jets in the 12 12 Airlines Pacific Northwest. Big Sky Airlines 9 5 14 As of June 2006, Big Sky Airlines operated a fleet Boston- 20 20 of 10 Beechcraft 1900D aircraft with 19 seats. In the Airways near term, Big Sky Airlines plans to add 10 aircraft of 11 37 48 Commutair 18 18 the same type to their fleet. This growth along with Great Lakes Aviation 22 5 27 Big Sky Airlines’ focus on smaller markets in the Pacific Gulfstream Northwest appears to provide opportunities for service 25 7 32 International Airlines improvements in smaller communities. Horizon Air 20 28 48 SkyWest Airlines primarily operates as United 6 6 Express and Delta Connection in the Northwest. As of Mesa Airlines 16 16 June 2006, SkyWest Airlines operated 62 120 Mesaba Airlines 52 52 turboprop aircraft with 30 seats. Fifty Embraer 120s are 59 59 operated as United Express into United Airlines’ hubs, RegionsAir 12 12 and 12 are operated as SkyWest Airlines out of Salt Scenic Airlines 2 1 12 15 Lake City with a Delta Air Lines’ codeshare agreement. 1 1 Recently, United Airlines relinquished control over some 11 11 Embraer 120s being flown as United Express. SkyWest Skywest Airlines 64 64 Airlines will begin flying those aircraft as SkyWest Airlines 11 11 while maintaining a codeshare with United Airlines in Total 12 117 1 6 20 103 12 76 20 12 11 118 5 513 most markets (refer to Section 5). At present, SkyWest Source: BACK Aviation Solutions, April 4, 2006 Note: Carriers serving Pacific Northwest markets are highlighted in dark blue. See Appendix A for aircraft codes. Airlines has no plans to acquire additional turboprops. Northwest Regional Air Service Initiative Francisco, LosAngeles, andSaltLake primarily attheir hubsinDenver, San United AirlinesandDeltaAir Lines, aircraftareoperatedfor These 57 CRJ-700aircraftwith70seats. CRJ-200 aircraftwith50seats and SkyWest Airlines operates123 See AppendixAforaircraftcodes. Pacific markets Northwest serving arehighlightedindarkblue. Note: Carriers Source: BACK Aviation Solutions, April4,2006 Table 6.3RegionalAirlineRJfleets–April2006 Total US Airways Trans StatesAirlines Skywest Airlines Skyway Airlines Shuttle America Republic Airlines PSA Airlines Pinnacle Airlines MidAtlantic Airways Mesaba Airlines Mesa Airlines JetBlue Airways Horizon Air GoJet Airlines Expressjet Airlines Comair Atlantic Southeast Airlines American Eagle Air Operator In additiontotheturboprops, 202 CR7 55 14 15 21 10 27 35 25 CR9 38 38 656 126 121 139 107 CRJ 35 56 70 2 ments. However, sinceUnited improvewest may realizeservice communities inthePacific North larger their regionaljetfleet, to grow additional 70-seatregionaljets. City. SkyWest Airlinesplanstoorder E70 Regional Jets 76 38 15 10 As SkyWest Airlinescontinues 9 4 ER3 15 39 84 30 108 494 239 ER4 63 48 36 ERD 15 59 74 FRJ 10 10

Total 1634 - 142 231 181 121 145 269 166 - 93 70 48 10 38 49 15 10 21 10 9 4 2 onr. tpeet l fSkyWest country. Atpresent,allof with othermarkets throughoutthe west willcompetefortheseaircraft communities inthePacific North decisionsontheseaircraft, all service Airlines andDeltaAirLinescontrol the Northwest. forsmallermarkets in be toolarge these 70-and90-seataircrafttend to for theseairlines. Unfortunately, CRJ-700 andCRJ-900aircrafttofly Mesa Airlinesisorderingadditional jets inPacific markets. Northwest Airlines’ 50-seatand70-seatregional Mesa lines isusingacombinationof Phoenix andLasVegas. UnitedAir MesaAirlines’50-seatCRJ-200sin of US Airways isusingasmallnumber aircraft and90-seatCRJ-900aircraft. Airlines operates50-seatCRJ-200 From markets, Northwest Mesa UnitedAirlines. of Denver onbehalf merly AmericaWest Airlines)andto USAirwayscodeshare partner (for their of nix andLasVegas onbehalf from thePacific toPhoe Northwest reductions.service may experience from thatservice communities thatnowfleet, benefit are eliminatedfromSkyWest Airlines’ to UnitedExpress. Astheseaircraft tivity inPacific islimited Northwest Airlines’ Embraer120turbopropac Mesa Airlines operates flights Mesa Airlinesoperatesflights - - - - - • • • • • main points Summary of development initiatives. small community airservice may posechallengesfor thePacific Northwest serving Fleet trendsforregionalcarriers constraints.and airport demand/preferences,passenger available aircraft types, stage length, include used inamarket. These aircraft thetypeof influence factorsthat areahostof There come withregionaljets. theextraseatsthat cannot support capacity. Manysmallmarkets regional jetswithhigherseating turboprop aircraftinfavor of Regional arephasingout carriers with lessthan100seats. turboprop andregionaljetaircraft thatoperate by regionalcarriers Most smallcommunities areserved theirmarket. profitably serve type andsizeaircraftthatcan consider which airlineshave the Communities needtocarefully

page 23

Northwest Regional Air Service Initiative Section 7 system and spokeroute The airlinehub Exhibit 7.1Primary airlinehubsintheUS United S F O United L ing from one airline to another airline at secondary ing fromoneairlinetoanotheratsecondary onthesameairline),routesconnect another flight to connectfromoneflight (where passengers three differentcomponents:hubandspoke systems airlineroutes. arebasically There anetwork of of does not apply in this context. The airlinehuband does notapplyinthiscontext.The (non-hub, smallhub, mediumhub, hub) andlarge Administration’s airports (FAA) classificationof airline’s Federal distributionsystem.The Aviation is thedesignationforacentralpointinmajor nonstop routes. Inthisdiscussion,ahubairport like BoiseorSpokane, andpoint-to-point airports A X S Alaska E A The national air transportation systemconsists nationalairtransportation The Airways US L A S P H X S Delta L C Frontier United D E N American - D F W I A Continental American H multiplier orlaminationeffectessentiallyallows for totheirdestination.This andflown multiple flights center orhubcitywheretheyarere-distributedto population communities toalarger (spoke cities)fly fromoutlying passengers simple. Smallnumbers of in manycases, is competitive concept The service. est communities tohave and, scheduled airservice airlinesandhasenabledallbutthesmall most large qualityservice. communities get theindustry, andaccesstoahubishow small of centers” spoke the“nerve routesystemsrepresent M S American P The hub and spoke structure isemployed hubandspoke by structure The United S Northwest T L M E O Continental M R M midwest D K E Northwest Delta AirTran C D V T G W C Delta A L T E L United P I T C Airways I L A T US D M P I A H American page 25 Airways L US E W R Continental - page 26

Exhibit 7.2 Salt Lake City hub and spokes service between points that do not have enough traffic to support it on their own. It can also allow for more frequent service than would other- wise be possible. Exhibit 7.1 on RDM the previous page shows the primary airline domestic hub locations. The airline routes across Ameri- ca are essentially a series of hub and spoke networks augmented by point- SLC to-point service. This is illustrated in Exhibit 7.2, which shows Delta Air Lines’ Salt Lake City hub with its connecting routes, and Redmond, Oregon, as a spoke. In other industries this traffic consolidation method is used by freight companies to bundle small shipments into carload lots, cutting costs significantly, and by tour op- erators who assemble people in one location to launch a trip. A net result in the airline industry is that smaller communities, with a limited number of air travelers, can have connect- Hubs and secondary provide entry to the national trans- air service system. They are shown ing air service to points around the airports serving portation system for smaller com- in Table 7.2 (page 28). globe. Through the airlines hub and the Northwest munities unable to support service Both airports and route system, they have multiple con- Hub airports that serve the to primary airline hubs. For the secondary airports are essential for necting opportunities. They often Northwest region include Seattle, Salt purpose of this discussion, these air service in the Northwest. They get competitive pricing as well. Lake City, San Francisco, Denver, and non-hub airports will be termed offer different opportunities and Phoenix. Large airports like Boise, secondary airports. limitations, however, and communi- Portland, and Spokane are not used Table 7.1 (page 27) presents the ties need to consider these when by major airlines as hubs, but rather primary hubs serving the Northwest. thinking about air service improve- serve as spokes to airlines’ primary The secondary airports are also ments. Getting passengers to hub hubs. In some instances, they also very important in the Northwest airports where multiple destinations Northwest Regional Air Service Initiative ih i fdestinations andprice. right mixof offerthe when connectingflights the destinationaloneprofitable, and have tomake enoughpassengers includeswhenmarketsoption. This areabetter airports the secondary the customer. aretimeswhen There convenient andcostcompetitive for thatismore a betterqualityservice are available onlinetendstoprovide Source: OAG America,June FlightGuide–North 2006 Table 7.1Primary AirlineHubsServing theNorthwest (June2006) Phoenix Francisco San City Salt Lake Seattle Hub Denver Departures Hub Daily 858 643 448 453 483 (102 markets) United Airlines (51 markets) Frontier Airlines markets) US Airways (91 (65 markets) United Airlines (107 markets) Delta AirLines (54 markets) Horizon Air Alaska Airlines/ Hub Carriers

are reluctantto expandintoother strengthsand theirgeographic of hub airports. Airlines arewell aware their proximityer inthegeneral of may begreat theirservice quality of all majorpopulationcentersbutthe way, airlinesarelikely toserve legacy better thanothers. Statedanother the country of someportions serve regions airlines across weaknesses of Strengths and Departures Daily Hub Carriers Frontier: 160 Frontier: United: 460 Airline route systems normally Airline routesystemsnormally 282 320 320 348 Southwest Airlines nonstop service (11markets). Southwest Airlinesnonstopservice (5 markets), Transcontinental (2markets), nonstopservice (7markets), Hawaiitional nonstopservice nonstopservice tootherairlinehubs.Nonstop connectingservice Interna Important Non-HubCarrierService (2 markets), Southwest Airlines nonstop service (5markets).(2 markets), Southwest Airlinesnonstopservice (5markets), Transcontinental tional nonstopservice service tootherairlinehubs.Nonstop connectingservice Interna (39markets). Southwest Airlinesnonstopservice (2 markets), Transcontinental (2markets), nonstopservice (5markets), Hawaiitional nonstopservice nonstopservice tootherairlinehubs.Nonstop connectingservice Interna (1 market), Transcontinental (2markets). service (23markets), Hawaiitional nonstopservice nonstopservice tootherairlinehubs.Nonstop connectingservice Interna markets). (15 (1market), Southwest Airlinesnonstopservice service (1market), Transcontinentaltional nonstopservice nonstop tootherairlinehubs.Nonstop connectingservice Interna

- market development funds. are reluctantto spendthesekindsof emphasis oncostcontainment, they ing campaign.Withthecurrent must invest inaneffective market presence. To accomplishthis, airlines airlines andtoestablishamarket themoreestablished of programs overcome loyalty tothefrequentflyer vice. To dootherwise, theyhave to or thereisarelative vacuum inser where anairlinehasmarket identity tendency istoexpandonlyinareas they areknown tobeweak. The airlines’ strongholdsorareaswhere ------little competition. strengthorareaswherethereis of is forairlinestostick totheirareas which canbecostly. tendency The some cases, fromanotherairport, or,fic fromanincumbentcarrier in often reliesheavily ondiverting traf intoanewmarket Successful entry tostimulate traffic.opportunities tively maturemarket withlimited The airtravelThe market isarela page 27 - - page 28

Table 7.2 Secondary (non-airline hub) Airports in the Northwest Summary of main points (June 2006) • The airlines’ hub and route systems are highly efficient for Total Airline moving people around the world. Daily Daily Nonstop Other Notable Airport Departures Airline Departures Markets Service • There are numerous hub airports across the US. With their Hawaii service Portland 277 American Airlines 7 2 hub and route system, however, airlines do not serve all (1 market) geographic areas equally. Alaska Airlines/ International ser- 130 29 Horizon Air vice (3 markets) • Hub airports and secondary airports are not equal in terms Transcontinental of what they offer “spoke” communities. Continental Airlines 7 2 service (1 market) • Getting passengers to hub airports where they have Delta Air Lines 13 3 multiple destinations available online tends to provide better US Airways 9 3 quality service. Northwest Airlines 9 4 United Airlines 50 9 • Service to secondary airports, like Boise or Spokane, may Southwest Airlines 38 12 be preferred when there is a sufficient volume of traffic Other 14 7 to make it profitable or when it provides easy access to a Alaska Airlines/ hub airport. Boise 90 24 8 Horizon Air Delta Air Lines 9 2 Big Sky Airlines 9 7 United Airlines 16 4 Southwest Airlines 18 7 Other 14 6 Alaska Airlines/ Spokane 61 24 4 Horizon Air Delta Air Lines 5 1 United Airlines 9 3 Southwest Airlines 15 6 Other 8 4 Source: OAG Flight Guide – North America, June 2006 Northwest Regional Air Service Initiative Section 8 airline service alternatives to General aviation air travelers. Butairtravel isalsoprovided by the thebulkof unusual sincetheseairlinescarry Airlines, DeltaAirLines, orothers. isnot This thename-brandairlines:American by oneof provided one immediatelythinksaboutservice providing non-scheduled service. GAoperators FAR Part 135andincludes amixof isalsocovered passengers in of uled transportation aircraft that have less than 10 seats. non-sched The with Kenmore Air) operatingscheduled service tions applytorelatively (such as smallaircarriers seats onascheduled basis. FAR Part 135regula aircraftwith10ormore (like HorizonAir)thatfly air. FAR Part 121appliestocommercialairlines by passengers of the commercialtransportation thatgovern rules (FARs) therearetwo setsof Air travelregulations Handbook. Development Air Service the thissectionof the subjectof alternatives andtheiruseinsmallcommunities is development. airtravel These various of stages these alternatives existtoday andnewtypesarein Manyof tothestandardairlineservice. service cial operatorsthatprovide analternative passenger and aircraftoperators. aircraft broad andoftenconfusingclassificationof passengers.aircraft operatorsthattransport Itisa tocropdusterscommercial end recreationflyers aviation. fromweek Itincludeseverything military aviation and otherthanscheduled airlineflights industry. GAencompassesall Byandlarge, theairline aviation (GA)segmentof the general When discussing air service, almostevery discussingairservice, When Within theFederal Aviation Regulations Within theGAclassificationtherearecommer Small Community - - - - - ers dailythroughout theUSandworld. Charter custom tothousands of provide on-demandflights and airtaxioperations. businesses Aircraft charter includesexecutive“” charter, jetcharter, to airlineservice: foralternativesincludes botholdandnewconcepts ing publicinsmallermarkets. following list The have proved successfulforbroaduseby thetravel have hadsuccessintheirrespective niches, none thesemethods scheduled airline. Althoughsomeof ers canusefortravel notprovided by aregularly service Alternatives toairline FAR Part 121regulations. a significantincrementalcostincomplyingwith tions containedinFAR Part 135,becausethereis regula 10 seatsmay optforthe lessrigorous operations.flight Smallerairlineswithlessthan ing, aircraftmaintenance, aircraftsystems, and Part 121hashigherstandardsforcrewtrain thanFARgent Part 135.For example, FAR Part 121regulationsaresignificantlymorestrin development, tonotethatFAR itisimportant Air charter Air charter Today therearemultiple methodsairtravel For inairservice communities engaged – Generally, thecatch-all term page 29 - -

- - - - page 30

aircraft range from single-engine two passenger aircraft to transoceanic What is meant by jets. The bulk of the businesses that General Aviation? provide these services operate under General Aviation (GA) encompasses FAR Part 135. Air charter business- all aviation other than scheduled es, in some form, are found at most airline flights and military avia- airports throughout the US. High tion. It includes everything from passenger costs are the downside of weekend recreation flyers to crop dusters to commercial aircraft op- this alternative. erators that transport passengers. Fractional aircraft ownership – Over the past 25 years the air travel demands of the corpo- been working closely with NASA and rate world have fostered the develop- its Small Aircraft Transport System ment and growth of the fractional (SATS) program to reevaluate air aircraft ownership industry. Much transportation in the US. The goal like the “time-share” concept in the of the SATS program is to provide a real estate industry, fractional aircraft safe travel alternative that will reduce ownership programs normally Air taxi – Air taxi programs SkyTaxi’s plan was to bring mod- public travel time by 50 percent involve the up-front purchase of combine the idea of smaller aircraft estly priced air service, comparable in 10 years and by over two-thirds flight hours on a particular type of with a more flexible taxi approach to to regional carriers serving spoke in 25 years at equivalent highway aircraft. However, unlike time-share scheduling flights. In 2002, selected airports, to communities with small systems costs. The concept is an property owners, fractional aircraft communities in Oregon participated airports. SkyTaxi was not successful. air taxi that will allow companies to owners can use the aircraft anytime. in a nationally recognized air taxi However, the concept has merit for provide fast point-to-point air travel. They are able to use the aircraft program. SkyTaxi was a blend of small communities. By traveling on an air taxi, passengers on-demand and their flight hours an airline and a charter company are free to use small, uncrowded Very Light Jet (VLJ) are deducted from their account. that primarily served destinations in airports near their homes to reach program – Today several engine and 2 Although fractional programs have Oregon, Washington, and Northern their destinations . aircraft manufacturers are compet- had great success meeting the high- . SkyTaxi used four pas- ing to be first to market with new end travel demands of corporations, senger 414 aircraft. Individu- aircraft being termed “very light jets” businesses, and some individuals, it als, private entities, or local govern- or VLJs. Eclipse Aviation Corpora- is not a model that can be applied ments could invest in a SkyTaxi tion is one of the first manufacturing to the needs of the general public in franchise. Using a dispatch system companies to pursue this oppor- smaller communities. similar to a ground taxicab service, tunity. They are estimated to have passengers called for an aircraft to FAA-type certification for their pick them up at a given location and Eclipse 500 aircraft completed by fly them to another community1. the end of June 2006. Eclipse has Northwest Regional Air Service Initiative certified anddeliveredcertified tothemarket.are the These VLJs expected toseethreedifferent modelsof remains unclear. theseaircraft of higher costsperseat,acceptance comparatively 19-seatturbopropaircraftand larger to manypassengers long-recognized aversion of that seatapproximately fourpassengers. Given the also have capabilitiesandsmallcabins limitedrange nonstop, VLJs point-to-point,on-demandservice. control costs, whilemeetingclients’ desiresfor taxi operationscanachieve enoughdemandto iswhetherair concern remains inquestion.The By the end of 2007, the aviation industry is 2007,theaviation industry By theendof VLJairtaxiservice Overall, thesuccessof • Summary ofmainpoints entries intotheVLJmarket. and Honda’s unusual twinjetareotherserious addition, DiamondAviation’s singleengineD-Jet Cessna Mustang,Eclipse500,andAdamA700.In and airtaxis. and non-scheduled operatorsincludingcharters airlines operatingaircraftwith less than10seats 10 seats. FAR Part 135appliestoscheduled airlines operatingaircraftwithmorethan FAR Part 121regulationsapplytoallscheduled

Technology, CommercialTechnology Division, 2002 January 2003. atSmallCommunityto Improve Airports”, AirService Requestors,to Congressional “Factors AffectingEfforts 1 • • • 2 Source: USGeneralAccountingOffice (GAO) Report Source: – “Spinoff 2002”, NASA Office of Aerospace 2002”,NASAOfficeof Source: –“Spinoff opportunities forsmallercommunities.opportunities Very LightJets (VLJs)may provide limited smaller markets. for broaduseby thetraveling publicin respective niches, nonehave proved successful havetransportation hadsuccessintheir air Although somealternative methodsof FAR Part 121regulations. significant incrementalcostincomplyingwith regulations.less rigorous Second,thereisa regulations andsmallerairlinesmay optfor keep inmind.First,thereisadifferencethe there aretwo thingsthatcommunities should regulationsareconcerned airservice Where page 31

Northwest Regional Air Service Initiative Section 9 service to commercialair in transitioning Airport factors needs andtransitionstoaccommodatingcommer assessesits withnocommercialairlineservice port and guidelines. sectionaddresseshow This anair regulations compliance withrelatedgovernment and improvements infrastructure specifictoairport scheduled commercial flights andthosewhichscheduled commercialflights services. aircraft,andaircargo military are alsousedby operators, GAaircraft,charter airports, toascommercialservice referred generally each year.airline service Inadditiontheseairports, travelers whouseregularlyscheduled commercial air millionsof airlines thatcatertothehundredsof the serving However, theysharethedistinctionof aircraftthatusethem. scale, complexity, andtypeof in metropolitan communities. vary airports These large thatserve attle–Tacoma Airport International Washington. complexes, Othersaremega like Se andPullman, munities Bend,Oregon, like North insize. smallercom range Someserve airports regularly scheduled commercialaircarriers. These thatserve US thereareapproximately 508airports inthe not. Amongtheseveral thousand airports scheduled commercialairlinesandthosethatare two thosethatareusedby regularly categories: Air carrierairports cial airlineoperationsandpassengers. In general, commercial airline service requires commercialairlineservice In general, Differences between airports withregularly Differences between airports Generally, intheUSaredivided into airports - - - - cases, the airport willneed tomakecases, modifications theairport Inmost airport. toacommercialservice airport in theconversion from anon-commercialservice identify specificitemsthatneed tobeaddressed two to workThese federalagencies withairports the Transportation SecurityAdministration(TSA). the listiscoordinationwiththeFAA and the topof key tomakingthetransitionisplanning.The At regularly scheduled commercialairlineoperations. facility improvements toaccommodate necessary tomake and thechanges airport mercial service airports. commercial service thannon- trafficareconsiderablygreater passenger commercial airlineoperationsandtheassociated • • • • operators include: private,only service charter, military, and/orcargo Facilities (airfield,security, andterminal) Security proceduresandrestrictions Operational rules Requirements andstandards It ispossible, butnoteasy, foranon-com thefacilitiesrequiredtohandle In general, page 33 - page 34

and improvements to existing airfield, terminal and airport security: The formal request to transition security facilities. Additionally, airports making the a non-commercial service airport to commercial switch will be required to modify their procedures service status must come from the airline, not and operations directives and/or guidelines to con- the airport. form to federal regulations and guidelines. Airline and passenger Each airport is, to some degree, unique. Ac- requirements cordingly, the specifics and costs associated with Airlines and air travelers require specific kinds the changeover to a commercial service airport will of airport passenger terminal facilities. Airlines vary from airport to airport. It is not unusual for need offices and ticket counters, baggage han- the transition to take 12 to 24 months or longer dling spaces, ramp space for aircraft parking, and a daunting task. As a first step, contacting the FAA where facility improvements are involved. With this employee auto parking spaces. Airline passengers Certification Compliance Office is the starting point in mind, airport owners and operators interested in require processing and service areas: ticketing, secu- making the jump from a non-commercial service for learning about FAR Part 139 regulations. This airport to a commercial service airport are prudent office has FAR Part 139 responsi- to investigate the infrastructure and regulatory bility for airports in both Washing- requirements early in the process. Ideally, it should ton and Oregon, as well as other follow the air service market analysis. airports in the FAA’s Northwest Mountain Region. It is located at Regulatory requirements FAA Northwest Mountain Region, Within the US, FAR Part 139 governs the Airports Division, ANM-600, 1600 certification and operation of airports that serve Lind Avenue, SW, Renton, WA scheduled operations of commercial air carriers that 98055-4056, phone 425-227-2600. use aircraft designed for more than nine passenger The TSA controls matters seats. Also, FAR Part 139 applies to airports that related to airline passenger secu- serve unscheduled operations of air carriers operat- rity. Airports located in Oregon ing aircraft designed to carry at least 31 passengers. can contact the Federal Security Separate from airport operations (FAR Part 139), Director at TSA’s Portland office the controlling federal regulation for airport security by phone at 503-889-3071 for is the Code of Federal Regulations Part 1542 (CFR guidance. For Washington airports, Part 1542). These two regulations, along with the there are two contacts. Airports FAA’s Advisory Circular program for airports, that are located in the Seattle area should contact embody the federal regulations and guidelines for the Federal Security Director at 206-834-2433. All commercial service airports. other airports in Washington can get assistance by Wading through the regulations to determine calling the Spokane office of the Federal Security the steps necessary to move an airport into compli- Director at 509-455-3302. One final point on ance with FAR Part 139 and CFR Part 1542 can be Northwest Regional Air Service Initiative other tenants. possible. includeairlines, These TSA,FAA, and stakeholders intotheplanningprocess asearly the it is criticaltobringallof an existingstructure, space within existingbuildings, oraremodelof of contemplated arecompletelynew, an expansion facilities that fillstherole. theterminal Whether manager, butallhavedesignated property someone needs.on terminal Smallerairlinesmay nothave a thatworkshave manager withairports aproperty security topics. Ontheairlineside, mostairlines issues, as well onterminal asairfieldand formation planning consultantsareanotherresourceforin the FAA Engineers. Airport Airport with oneof DivisionMountain Region andspeaking –Airports can beaccessedby phoning theFAA Northwest investigating thetopic. Guidance fromtheFAA are anexcellent resourceforengineersandplanners requirements.terminal FAA Circulars Advisory fees seldomcover costs. end upleasedby airlinetenants, but airlinelease spacesandimprovements terminal some shareof operatorand/orthecommunity.airport Usually, providing thesefacilitiesfallsonthe burden of Nothing ontheselistsissurprising. However, the claim,bathrooms, andautoparkinglots. baggage rity screening,secureholdrooms, loadingbridges, hr r opeo routesforevaluating areacoupleof There 1 -

mercial service airport have beencarefullyreviewed. airport mercial service toacom fromaGAairport needed toupgrade service aviation tocommercial transition fromgeneral Airport facilities– • • airfield areasandrelatedneeds: following listpresents key The airport. cial service toacommer when switching fromaGA airport Airfield cess, circulation,andautomobileparking. ac building;andairport terminal airfield; passenger following facilitiesareincludedinthisoverview: tion isprovided asanexamplenotatemplate. The activity.carrier Keep inmindthatthisinforma demands thatwould beimposedby commercialair thevarious facilitiesneededtosupport key airport sectionprovides amoredetailedreviewof This will needlocks. forGApilots andpassengers, pedestrian gates are passingthrough them.Allgates, including must remainclosed exceptgates whenvehicles FAR Part 139standards(eightfeet).Allvehicle must meet terminal thepassenger the vicinityof fencing andgates. Ataminimum, fencingin airfieldmust becompletelyenclosedbyThe by aircraft operating onthatrunway.performed haul theyear, elevation, andthelengthof of mean hightemperatureforthehottestmonth theairport’s lengthisafactorof required runway FAAdetermining requirements. Inaddition, aircrafttobeusediscriticalin typeof The commercialairservice. the capabilitytosupport lengthmust runway beassessedtodetermine The Regulatory and air passenger requirements andairpassenger Regulatory There aremanyairfieldfactorstoconsider There

- - - - • • • • • • • • • • department staff. department orthelocalfire operations staff by eitherairport willlikely beprovided departures. ARFFservices daily aircraftandaverage numberair carrier of by thelengthof Index, which isdetermined thosefactorsistheARFF factors. Oneof basedonseveral requirements aredetermined requirements alsomust beconsidered.ARFF Aircraft rescueandfirefighting(ARFF) be required. may also Filling pondsonand/orneartheairport Tall fencingtokeep outdeermay beneeded. wildlifeimplemented. and active of management A wildlifehazardplanmay needtobeprepared andhandlethewaste mustthe fluid becreated. aircraftde-icingisanissue, facilitiestoapply If wingsorhighertailheight. longer positions may needtobemoved toaccommodate airline, existingholdlinesandaircraftparking aircraftusedby the uponthetypeof Depending need tobeadded. Security lightingforthecommercialapronmay be upgraded. Airfield signsandmarkingsmay needto lights alongtaxiways. may needtoaddsidestripesandedge airport The (threeinches). off drop- required tomeetthemaximum permitted pavement may be of Grading alongtheedge may needtobegrooved. includesjets, scheduled therunway service If Pavement strengthmay needtobeincreased. page 35 page 36

• At smaller airports, early morning departures and Passenger Terminal would require slightly more space at the 60,000 an- late arrivals are normal so that business people Building and Aircraft Gates and nual enplanement threshold than at the 20,000 and Apron can get out and back in one day. The airport may 40,000 thresholds. Several areas must be considered in the passen- need to increase the hours in which operations ger terminal building and aircraft gates and apron. staff are present. Public space The following specific areas are discussed below: A number of elements make up public space • The addition of commercial flights may have • Airline space in an airport terminal. Some of these elements are a significant effect on noise contours. Even if directly related to peak hour passenger volumes, they do not, regular early departures and late • Public space while some are a percentage of the total estimated arrivals may create a public relations issue for the • Concessions square footage of the terminal building. Public airport. Also, commercial aircraft may not fly the space within a terminal building consists of lobby same pattern as existing GA. New areas may be • Support space and waiting areas, restrooms, a meeting room, and regularly over flown. • Aircraft gates and aprons public circulation areas. FAA AC 150/5360-9 rec- • Generally, an airport can expect the FAA’s As an example, the amount of terminal space ommends 750 square feet of lobby and waiting area Part 139 inspector to be more rigorous required by functional area was estimated for an- for 34 PHEPs and 1,000 square feet for 68 PHEPs. on maintenance items than the airport has nual demand levels of 20,000, 40,000, and 60,000 Circulation space consisting of 20 to 30 percent experienced with other FAA staff. It is important passenger enplanements. These are presented in of the gross terminal area is also recommended. to get the FAA Part 139 inspector involved as Table 9.1 (next page). Factors used to estimate At annual passenger enplanement thresholds of soon as possible to minimize issues. space requirements by functional area are discussed 20,000 and 40,000, requirements of approximately in the following sections. 3,000 square feet are called for. At the 60,000 threshold, approximately 3,500 square feet of cir- Airline space culation space would be required. Restrooms and a Airline space consists of the ticket counter public meeting room could be expected to occupy and ticket counter area, airline offices, the passen- approximately 600 and 800 square feet of terminal ger queuing areas, passenger holdroom, baggage space, respectively. handling, and baggage claim area. In the example in Table 9.1 and using planning guidelines set forth in FAA Advisory Circular 150/5360-9, Planning and Design of Airport Terminal Building Facilities at Nonhub Locations, it is estimated that 12 linear feet of airline ticket counter and 1,400 square feet of airline office space would be required to accommodate 34 Peak Hour Enplaned Passengers (PHEP). At the 60,000 annual enplanement threshold, 20 linear feet of airline ticket counter and 2,000 square feet of airline office space would be required. Areas such as the passenger holdroom and baggage claim Northwest Regional Air Service Initiative air service Table 9.1Facilityrequirementsforcommercial * LF=linearfeet,SY=squareyard Terminal BuildingFacilities atNonhub Airports. Sources: FAA Circular150/5360-9, Advisory Passenger holdroom Ticket counterqueuingarea Airline offices&outboundbaggage Airline ticket counter(LF) Airline space Total peakhourpassengers Peak passengers hourdeplaned Peak hourenplanedpassengers unless notedotherwise. measurementsgivenThe areinsquarefeet inthischart Subtotal publicspace Public meetingroom Restrooms Public circulation Lobby andwaiting area Public Space Subtotal airlinespace claimarea Baggage claimconveyor (LF) Baggage Mead&Hunt,Inc., January 2004. Planning and Design of Airport Airport Planning andDesignof

Levels Annual Enplanement Requirements at requirements Functional area 20,000 5,150 3,000 2,950 1,400 800 600 750 600 750 200 34 34 22 12 68

40,000 5,150 3,000 2,950 1,400 800 600 750 600 750 200 34 34 22 12 68

60,000 5,900 3,500 1,000 4,150 1,000 2,000 800 600 750 400 136 68 68 28 20

Rental carqueuingarea Rental caroffices Rental carcounter(LF) Concessions Total parkingspaces Rental carparkingspaces Employee parkingspaces Public parkingspaces Aircraft apron(SY) Aircraft gates Total squarefeet gross Subtotal support Storage Mechanical andmaintenanceareas Security Screening TSA Offices administrationoffices Airport Support Space Subtotal concessions News, gift,andother Restaurant requirements, Con’t. Functional area 14,900 2,500 5,150 2,200 1,000 1,000 1,650 1,000 750 200 350 240 90 15 25 50 60 12

1 14,900 2,500 5,150 2,200 1,000 1,000 1,650 1,000 135 750 200 350 240 15 30 90 60 12

1 page 37 17,400 5,000 5,550 2,600 1,000 1,000 1,800 1,000 175 120 750 200 350 360 20 35 90 18

2 page 38

Concessions Airport Access, circulation, and Concessions would most likely consist of parking rental car, restaurant, and news and gift services. This section addresses surface transportation It is recommended that 12 linear feet of rental car and parking requirements based on the examples counter and 240 square feet of space for rental car of projected air service demand. The following offices be provided at the 20,000 and 40,000 annual components were analyzed: enplanement thresholds. This recommendation in- • Airport access creases to 18 linear feet of counter and 360 square • Airport circulation feet of office space at the 60,000 passenger en- planement threshold. Restaurant and news and/or • Automobile parking gift shops would occupy 1,000 and 350 square feet of terminal space, respectively. Airport access Aircraft gates/apron An airport access road should provide a direct Support space Apron requirements for regional and/or com- and uninhibited route to the airport entrance road. Support space required within the terminal muter aircraft were estimated for purposes of this It should have clear signage that directs people to building includes airport administration offices, example based on an average of 2,500 square yards the terminal building. TSA offices, security screening areas, and mechani- per gate per aircraft parking position. This area ac- cal, maintenance, and storage space. An example of counts for aircraft parking and maneuvering as well Airport circulation space requirements for these functional areas is also as extra areas for service vehicles and separation The airport entrance road should consist of a presented in Table 9.1 (previous page). FAA design between aircraft and tugs. As shown in Table 9.1, boulevard that provides air carrier passengers direct standards indicate that approximately 1,000 square with scheduled air service, an airport would require access to the front of the terminal building. Sig- feet of office space would accommodate airport a minimum of 2,500 square yards of terminal apron nage on this road should clearly indicate locations management staff. For all passenger enplanement space through the 40,000 annual passenger enplane- of the passenger terminal building, rental car, and thresholds covered in the example, it is recommend- ment threshold and a minimum of 5,000 square employee and public parking areas. A curbfront ed that the TSA be provided with 1,000 square feet yards at the 60,000 passenger enplanement thresh- should also be available for those wishing to drop of office space and 200 square feet for passenger old. This would allow adequate apron space should off and pick up passengers at the door. screening. In addition to these areas, approximately two aircraft need access to the terminal at one time. 15 percent of the gross terminal area should be set Additionally, it is recommended that loading bridges aside for mechanical and maintenance areas. This be installed for passenger convenience. equates to approximately 2,200 square feet at the 20,000 and 40,000 annual passenger enplanement thresholds and 2,600 square feet of space for the 60,000 annual passenger enplanement threshold. It is also recommended that 750 square feet of space be allocated for storage and other supplies. Northwest Regional Air Service Initiative at the60,000threshold. enplanementthresholdto20spaces nual passenger increase from15requiredspacesatthe40,000an requiredrentalcarspaceswould also number of enplanements. annual passenger The number of spaces would onthe from 25 to35,depending vary requiredemployeetively. parking number of The enplanementscenarios,annual passenger respec the20,000,40,000,and60,000 provided ineach of that 50,90,and120publicparkingspacesbe shown in As attheairport. theirflight from orterminating willbeleavingrequirements becausepassengers automobileparking experience ahighervolume of will means thattheairport tination airports. This nities inthePacific areoriginand des Northwest building.proximity totheterminal Smallercommu Airport parking Airport parkingshouldbelocatedinclose Airport Table 9.1 (page 37),itisrecommended (page - - - - • Summary ofmainpoints • • • airports thatdonotaccommodateregularly airports security, andfacilities. aredifferentfrom These operatingrequirements,standards regarding operationsmust meetaspecificsetof carrier regularlyscheduled air thatserve Airports airport to a commercial service airport. toacommercialservice airport fromaGA making thedecisiontoupgrade aremanyelementstoconsiderwhen There all stakeholders. should begintheprocessearlyandinvolve operations scheduled aircarrier toserve airport their Communities contemplatingupgrading airline operations. regularlyscheduled commercial needed toserve tomake thechanges airport commercial service It ispossible, butoftencostly, foranon- scheduled aircarriers. Design Guidance for Airport Terminal FacilitiesDesign Guidancefor Airport Facilities atNon-hublocations 1 • • • AC/1505360-9, involved assoonpossibletominimizeissues. theFAA toget It isimportant Part 139inspector numerous subsetstoconsider. theseareasincludes automobile parking. Each of access, passenger circulation,and apron, airport and/or building,aircraftgates terminal passenger Areas toconsiderincludetheairfield, availablecurrently forGA. onthefacilities depending willvary Each airport Planning and Design of Airport Terminal Airport Planning andDesign of ; 150/5360-13, Planning and page 39

Northwest Regional Air Service Initiative Section 10 decisions How airlinesmake fierce. Communities wanting competition fornewmarkets is limited aircraftresources, and ous communities competingfor Process guarantees, andmarketing programs. sharing incentives such as costabatements, revenue profile, route forecast,andanycommunity risk- market size, communitydiscussions willbeontrue these focusof director orvicepresident.The andthedepartment including airlinehubmanagers nity representatives andkey airlinedecisionmakers, may follow, headquarters corporate withcommu pursue themarket further, ameetingattheairline’s theydecideto own initialmarket assessment. If meetings occur. Airlineplannerswillmake their conferences areanotherplacewhereface-to-face have airservice beenestablished.Annual industry relationships contact airlineplannersdirectlyif airlines andbeginadialogue. Communities typically hand communities arereadytoapproach targeted the airlinesthatmay beabletofilltheneed. and opportunities inidentifyingnewservice step market studyisthefirst airservice destination. The numbers market by passenger andtrue targeted, traveling to, which markets andairlinesshouldbe travelers are areusing,wherepassengers airports Section 13 market study(referto are viable. Anairservice what destinations air travel needsanddetermining gin theprocessby analyzingtheir be new oradditionalairservice Currently, therearenumer With a completed air service market studyin With acompletedairservice ) identifies key information: the alternate thealternate ) identifieskey information: - - ment of Transportation data. consider scores ofpublishedDepart assess theprofit potential,airlines market forecast andtoaccurately potential market. To arrive ata criteria whenairlines evaluate a Profitability isthemostimportant Money talks - nity market studies to determine true market size; true nity market studiestodetermine data thatincludesdetailedtravel itineraries;commu profit potential,airlinesconsider publishedDOT at amarket forecastandtoaccuratelyassessthe when airlinesevaluate apotentialmarket. To arrive decisions.new service thekey considerationsfor illustratessomeof page) decision. the finalgo/no-go ranked amongthenewmarket considerationsetfor then internally are oftendebatedandscrutinized Newmarkets art. scienceandpart process ispart to balanceharddataandqualitative factors. The theairlineplanningteamastheystrive of the part multiple criteriaon cisions involve theevaluation of de president forfinalconsideration.Airlineservice vice to planningdirectorandthendepartment commandfromrouteplanner the airline’s chain of community topresentitscase. help theairlinesassessmarket andallow the exists.a profitableopportunity Sitevisitscanalso airlineplannersandconvince themthat influence and discussionswiththelocalcommunity canhelp needs, salesagreements. andcorporate Meetings retention,frequentflyer passenger inputs regarding andexternal which isthenrevisedwithinternal Profitability is the most important criteria Profitability isthemostimportant decisionusuallymoves up finalservice The - line routeprofitabilityforecast, an airlineplannermakingabase- New market analysisbeginswith make senseandwhich donot. which markets priceoutand requests. have They toassess often inundated withnewmarket Airline routeplannersare Table 10.1 (following page 41 - - page 42

Table 10.1 Airline new market assessment

Quantitative Inputs (science) Qualitative Inputs (art) Market profitability forecast

Department of Transportation data Strategic value to airline Internal analysis and financial modeling Community inputs Competitor’s current actions Competitor’s likely reactions Opportunity cost of alternative service Community incentives Go/no-go decision

the opportunity cost of using assets • Local community support and an airline profit or loss because new Summary of in an alternate market with potential insight on the need for new or air service improves links to the main points for more profit; internal analysis on additional service. transportation network, allowing • Know your market and what is the cost of providing the service • Tangible commitment from the commerce to thrive. Communi- realistic and sustainable. and on frequent flyer needs and the local business community to ties should be prepared to treat air ability to attract a new customer base; • Be aware that air service support the service, to minimize service development as any other the current competitive landscape; development is competitive. losses during the new market form of economic development. By and how proposed new service will • Influence decision makers by start-up phase. sharing the risk and investing in the be received by potential customers service, they ensure the continuation having credible insight and analysis. (e.g., aircraft type, convenience of of the economic benefits that come • Differentiate your market from schedule, frequent flyer program, Considerations and timeline from having convenient access to the other markets the airline assigned seating, compart- After all of the analysis and transportation system. is considering. ment, destinations offered). debate, airlines then rank potential Air service development is like • Be prepared to partner with Additional considerations markets according to their level of other types of economic develop- airlines to minimize their risk include: risk. Here, strong results from a ment in that it often takes time for during the critical start-up phase community market analysis are criti- • The strategic value of the market success. The timeline from initial of new service. based on the airline’s network cal in helping make the case for new contact to new service implementa- and whether yield premiums can service; the lower the perceived level tion can be several months or several be expected. of risk, the greater the chance of years. The lead time for new service implementing new service. implementation varies depending on • Likely reaction of incumbent each airline’s aircraft availability, strat- carriers and how those competitors Airlines make a large investment egy, and each market’s perceived risk. will react to new entrants in the in new service; the cost of purchas- The process can take many directions marketplace (e.g., is the market size ing a jet can be millions of dollars. and go through a cycling process. sufficient to ensure profitability Airlines assume all of the risk and for all carriers or will incumbent absorb any losses, but they also keep carriers retaliate to keep new any profits. The local community entrants out?). benefits immediately regardless of Northwest Regional Air Service Initiative Section 11 Essential AirService vice (EAS) program. vice (EAS)program. the EssentialAirSer established Congress lation Actin1978, the AirlineDeregu worked toimprove andincrease theEAS program nity. and the DOThave Over the yearsCongress that datewas consideredaneligibleEAScommu on carrier fromacertificated scheduled airservice ed onOctober24,1978,anycommunity receiving Eligibility shares available, andcommunity preferences. stopstothehub, intermediate code number of national network, routing,frequency, aircrafttype, through which thecommunity islinked tothe criteriaincludethehub These subsidized service. and criteriainacompetitive bidprocessforEAS munities. DOTconsidersseveral The factors toeligiblecom for providing subsidizedservice thelawDOT tointerpret andestablishprocedures system. transportation these communities retain alinktothenational a federalsubsidyadministeredby theDOTtohelp more profitablemarkets. established program The airlines electedtoshiftoperationstoward larger, as airservice loss of levels thatcouldface traffic low passenger communities with designed toprotect was program The Prior topassing When theAirlineDeregulationActwasWhen enact the instructed Congress Under thisprogram, ------suspend service until a replacement carrier begins carrier untilareplacement suspend service During theprocess, theincumbentairlinemay not selectiondecision. DOT proceedswithacarrier andthe proposals isissuedtoallinterested carriers arequest for service, subsidy-free replacement theDOTisunabletosecure If initiates service. oncetheincomingcarrier to discontinue service successful, theDOTallows theincumbentairline ing toenterthemarket onasubsidy-freebasis. If will 90-day period,theDOTtriestofindacarrier totheDOT.to suspendairservice Duringthat intent community must submita90-day noticeof the serving thelastcarrier subsidized service, 3. 2. 1.

They must haveThey received scheduled commercial passenger dollarlimitapplies). passenger inwhich casenoaverage per- hubairport, large 210 highway milesfromthenearestmedium or per person(unlessthecommunity ismorethan lessthan$200 must requireasubsidyof They hubairport. medium orlarge May benocloserthan70highway milestoa October1978. asof service passenger For anEASeligiblecommunity toreceive requirements. meet three general meet threegeneral 48 continentalstatesmust nities locatedinthe commu subsidized service, Today, tobeeligiblefor amajorhubairport. of within areasonabledrive for communities thatare tees andsubsidysupport guaran eliminating service its efficiency, mostlyby 1 page 43

- - - page 44

service. However, the incumbent carrier is eligible (2) solicit proposals as described above. Thus, air Over time, the program has faced numerous for compensation for being held in the market after carriers wishing to participate in the program have obstacles that prevented it from becoming success- the end of its original 90-day notice period. recurring opportunities to propose to provide EAS ful and led to its continued struggle. The following at communities of interest to them2. are current issues for the EAS program: Bidding • Increased costs to commuter airlines of If no air carrier is willing to serve an EAS Program status and trends complying with the commuter safety rules eligible community on a subsidy-free basis, the The EAS program was intended to last only contained in FAR Part 121 became effective in DOT is required to solicit proposals for subsidized 10 years; however, it was renewed for another 10 March 1997. service. Carriers interested in providing subsidized years in 1987 (scheduled to end on September 30, service must submit a proposal detailing their 1998) and made permanent in 1996. Over time, • A declining interest in smaller turboprops by subsidy needs. The DOT reviews all proposals to funding for the program fluctuated. In 2005, sub- airlines as they attempt to create a mix of aircraft ensure they include all required criteria and meets sidy levels exceeded $100 million, and 2006 bidding they need for their entire system. Airlines can with applicants to finalize each proposal. After indicates another increase in subsidy requirements. make more money and be more efficient with finalizing the proposals, the DOT provides the larger turboprop and regional jet aircraft, leaving In 1980, EAS programs assisted 400 communi- community with each proposal and solicits com- EAS markets with limited options. ties. By 2005, the number had decreased to munity comments and preference. A carrier is 150 communities. Even though costs had risen, • Increased landing fees and terminal rents at many then selected by the DOT on the trends between 1995 and 19993 large hub airports. basis of several factors, including showed the number of passen- • Spiking fuel costs, which have eroded the five community preference, the level Regional EAS status gers served by the EAS program percent profit margin EAS carriers are permitted. of subsidy required, the qual- As of March 2006, two communi- declined by four percent from ity of the proposed service (e.g., ties in the Pacific Northwest were • An influx of low-cost carriers at distant airports receiving EAS subsidy, including 617,000 to 590,0004. On average, frequency, aircraft type, available that have caused small community air passengers Pendleton, Oregon, and Moses there were approximately three codeshares), the applicant’s finan- to drive to larger airports to access improved air Lake, Washington. Pendleton’s passengers per flight, mostly cial stability, and the applicant’s service and lower airfares. subsidized service is on Horizon Air on 19-seat aircraft. Because of experience in providing reliable to Portland and Moses Lake/Eph- increased costs and fewer passen- These trends are affecting EAS markets as well scheduled air transportation. rata’s service is operated by Big Sky Airlines to both Portland and Boise. gers using the service, Congress as small communities with unsubsidized air service EAS-subsidized contracts regularly scrutinizes the program. that are also struggling to keep air service. normally last two years. At the end of the contract period, the DOT will either: (1) renegotiate a rate for continuation of ser- vice with the incumbent carrier and publish this tentative subsidy rate to show cause (which may be responded to by any interested air carriers), or Northwest Regional Air Service Initiative commercial air service. and Boise. other13communities have The notlost is operatedby AirlinestobothPortland BigSky Air toPortland andMosesLake/Ephrata’s service ton. Pendleton’s isonHorizon subsidizedservice ing Pendleton, andMosesLake, Oregon, Washing werecific Northwest receiving EASsubsidy, includ • • • • • • • • Washington • • • • • • • Oregon Washington eligibleforEASsubsidy: arecurrently the PacificNorthwest EAS eligiblecommunitiesin Yakima Wenatchee Walla Walla Tacoma Seattle Pullman Pasco/Kennewick/Richland Moses Lake/Ephrata Portland Pendleton Bend/CoosBay North Medford Klamath Falls Eugene Bend/Redmond so March 2006,two communities inthePa As of following and 15communitiesThe inOregon - - - • • Summary ofmainpoints • – – – To beeligiblefortheEASsubsidytoday, a enteredderegulation. industry astheairline fromlosingairservice carriers bysome communities certificated served was designedtoprotect EASprogram The begins service. carrier to compensationuntilareplacement notice periodexpires, theincumbentisentitled (unsubsidized orsubsidized).Afterthe90-day carrier the DOThasfoundareplacement may notleave carrier The themarket until totheDOT.intent tosuspendairservice community must submita90-day noticeof anEASeligible serving lastcarrier The community must meetthreerequirements: passenger dollarlimitapplies). passenger inwhich casenoaverage per- hubairport, large 210 highway milesfromthenearestmedium or per person(unlessthecommunity ismorethan lessthan$200 must requireasubsidyof They hubairport. from amediumorlarge must beatleast70highwayThey milesaway priortoOctober1978. service must haveThey received commercialpassenger structure, Subcommittee onAviation)structure, Representatives, CommitteeonTransportation Infra Program,” Houseof Community EssentialAirService theSmall widely by community. (Source:“Futureof 4 beyond 1999were unavailable. 3 Program Service 2 August 30,2002 Air Service, Program,” GAO-02-997REssential AirService Essential the “Options toEnhancetheLong-Term Viabilityof andpricetheiravailablemanage seatingcapacity. Source: competition inthemarket, choose andhow to aircarriers available seatsalongthatroute, points, thesupplyof factorsrelatingtothedemandfortravel between two of the EASfunds. Ticket pricinginvolves acomplexvariety apassenger’s ticket pricepaidforby of specific portion 1 • • The change in number of passengers served varied served passengers innumber change of The numbers EASpassenger thisreport, At thetimeof Aviation Analysis,Source: DOT, Essential Air Officeof

The average doesnotequatetoa The subsidyperpassenger of air service. airservice. of EASsubsidyprovides onlyaminimumThe level multiple criteria. and arebasedoncompetitive bidsthatmeet lasttwo years EAS subsidizedcontractsnormally page 45 -

Northwest Regional Air Service Initiative Section 12 communities development insmall Air service airport type Table 12.1FAA CY2004 enplanementsby ties engaged in air service initiatives onemust inairservice first ties engaged post 9-11airlineenvironment forsmallcommuni smaller communities increasing?To understandthe competition forairservice Post 9-11environmentand the total. Collectively, all of these smaller airports thesesmallerairports the total.Collectively, allof non-hub, is442or87percentof andnon-primary) fall inthelower threeclassifications(smallhub, that airports number hubairports. of The as large areclassified Seattle–Tacoma Airport International like airports whilelarger fied assmallhubairports, enplanements( ger intofive basedonpassen these airports categories airtravelers. FAA The dividesmillions of allof thataccommodate large ayeartothevery sengers thathandleseveral thousandpas small airports insizefromthe 2,500 passengers. ranged They intheUSthatenplanedatleast airports service communities? In2004therewere 508commercial by thetotalpieisgenerated smaller how much of have traffic: thebigpictureonairlinepassenger passenger_allcargo_stats/passenger Source: Total airport Non-primary Non-hub Small hub Medium hub hub Large Type Why is the competition for air service in Why isthecompetitionforairservice Airports like BoiseandSpokaneareclassi Airports www.faa.gov/airports_airtraffic/airports/planning_capacity/ Table 12.1 # of airports ). 508 134 235 73 36 30 # ofenplanements - - - 700,725,257 135,856,287 484,948,605 - 20,800,159 58,474,469 645,737 service. Inourworld,service. airtravel isthepreferred link between community economicactivity andair munities. smallercom inscoresof airservice reduction of smaller markets. resulthasbeenthelossor The that, inmanyinstances, formany aretoolarge have regionaljetaircraft withlarger beenreplaced aircraft have beenwinnowed they fromairlinefleets smallercommunities. Asthesmallerturboprop of that hasbeentheworkhorse aircraftforhundreds airlines arereducingtheturbopropaircraftfleet averse” isanunderstatement.Atthesametime, this environment, tosay thattheairlinesare“risk hasnotrecoveredindustry (referto cord losses. Even today, five yearslater, theairline alreadydeterioratingfinancialtrendsintore turned their business. airlines focusonmarketsthebulkof thatgenerate And like mostbusinesses, whentimesaretough, traffic. airlinepassenger relatively smallshareof producea passengers. smallerairports Inshort, thetotalenplaned only produce11percentof

Community leadersacrosstheUSrealize the 9-11 For theUSairlineindustry, theevents of

% oftotal 100.0 19.4 69.2 0.1 3.0 8.3 tions thathave dramati condi combination of from aircarriers. Itisthis improvements licit service so leaders toaggressively energized manycommunity have the threatthereof reductions andlosses Accordingly, service commerce. vehicle of Section 3 page 47 ). In - - - - - page 48 What is the SCASDPP? cally altered the competitive environment for air phone number is 202-366-5392. Airports and/or The Small Community Air Service Development service in smaller markets. Pilot Program was authorized to fund up to 40 communities interested in participating in this pro- air service development grants per year for airports gram can get quick information via the NWRSAI US Department of classified as small hub, non-hub, or non-primary. Mentor Program (refer to Section 14). Transportation Small Community Air Service In the first five years of the program the DOT Barriers-to-entry Development Program received 542 grant applications and awarded In all markets, but especially smaller markets, Driven by the factors mentioned in the previ- 151 grants. In 2002 there were 180 grant applica- there are barriers-to-entry that inhibit the success ous section, in 2001 the US Congress enacted the tions and, as airports that had received grants in of air service initiatives. New air service ventures Small Community Air Service Development Pilot previous years dropped out of the running, the are always risky, but more so in smaller markets. Program (SCASDPP) as part of the Wendell H. number of applications fell to 84 in 2006. Two Smaller communities have a smaller passenger base. Ford Aviation Investment and Reform Act for features of this program stand out. First, it is This makes any fragmentation of the market prob- the 21st Century (AIR 21). The SCASDPP was extremely flexible. Communities are encouraged by lematic for the airline that is attempting to capture authorized to fund up to 40 air service develop- the DOT to investigate new ways of acquiring and enough passengers to make a profit. Understand- ment grants per year for airports classified as small supporting air service initiatives. Second, pro- ing and addressing the barriers-to-entry can make hub, non-hub, or non-primary. The intent was to gram guidelines require a high level of community the difference between success and failure of an air provide cash resources to smaller communities for involvement in the funding and execution of air service project. the enhancement of air service with a supplemental service development plans. goal of generating creative air service development The following is a description of the typical air techniques and methods that could possibly be used Over the years, SCASDP grants have ranged service barriers-to-entry in small markets: by other communities. The program was, in effect, from $20,000 to $1.6 million and communities have an air service development incubator. used funds to support a wide range of initiatives. Proximity to a larger competing The outcome has been mixed, in part due to the airport Although the initial legislation authorized volatile airline environment. There have been many More often than not, smaller airports find funding from 2001 through 2005, money for the successes where communities have acquired new or themselves competing for passengers with larger program was not realized until 2002. In 2003, new improved existing air service. However, it is clear airports that have more service options and lower legislation, the Vision – 100 Century of Aviation that where small community air service develop- airfares. How far people will drive to access the Reauthorization Act, reauthorized the program ment is concerned, there is no magic bullet. Often benefits of the larger airport varies depending on through 2008 titled the Small Community Air Ser- funding for air service support programs is not a number of factors including highway conges- vice Development Program (SCASDP) effectively the key. Aircraft availability, larger financial issues, tion, presence of a low-fare carrier (e.g., Southwest removing it from pilot program status. From 2002 bankruptcy of carriers, competitive issues, and tim- Airlines and AirTran Airways), and nonstop service. through 2005, $20 million annually was appropri- ing are all part of the equation. Also, the type of travel, leisure or business, makes a ated by Congress for small community air service difference. Business flyers are more inclined to opt development, but in 2006, funding for the program A copy of the SCASDP (Docket OST-2006- for the local airport for convenience, while people was halved to $10 million. Beyond 2006, it is not 23671) can be accessed on line at http://dms.dot. who are going on vacations or personal travel will clear whether the program will continue to receive gov. Michael W. Reynolds, Acting Secretary of drive long distances to get a cheap ticket. federal funding. Aviation Internal Affairs, heads the office within DOT that is responsible for this program. The Northwest Regional Air Service Initiative happens because airlines, particularly the legacy car happens because airlines, thelegacy particularly isavailable.tomers donotknow thatservice This initiatives haveservice failedbecausepotentialcus Name orservice awareness award program. thebusinesscommunity enrolledinitsmileage of hasadominantshare competing incumbentcarrier a thebusinessflyers. isadauntingtaskif This of smaller markets, itmust captureasignificantshare thatforanairlinetobesuccessfulin is alsotrue miles thatcanbeexchanged forpersonaltravel. It accumulating purchase decisionswiththeideaof Many airtravelers, especiallybusinessflyers, make program. withalong-standingfrequentflyer carrier isprovided bykets anair wherecompetingservice an especiallyhighhurdletoclearinsmallermar award are and/ormileage programs frequent flyer everproduct loyalty created,” program airline Frequent Flyerprograms airtravel purchase decisions. driver of have always done it.Travel habitsareanimportant simplybecausethatistheway they another airport usual forlocalcitizenstodrive distancesto greater improvements,significant airservice itisnotun clients travel. Insmallmarkets that experience have howagents their bookinghabitsthatinfluence options.consider newairservice Likewise, travel manytimesanddonot airlineorflight particular community. habit,have useda may, They outof travel isinthe decisionseven afternewservice related habitsthatmay their continue toinfluence Travel habits It seemsalltoosimple, butinthepastair toas“themostpowerfulOften referred People who travel by airoftenhave developed - - - - process Exhibit 12.1Airservice development Proposal communities isacriticalelementforsuccessfulair initiatives insmaller airservice the promotionof theircustomer base resides. But, where thebulkof areaimedatlarger, high-densitymarketsbudgets insmallermarkets.mote service marketing Their anymarketing resourcestopro riers, spend littleif in smallcommunities. ventures factorinsuccessfulairservice determining ing andaddressingtheissueshead-onisoften situation, community involvement inunderstand other obstaclesthataffectsuccess. Whatever the described above, initiatives canface airservice development programs. service Involvement Airline Community In addition to the typical barriers-to-entry In additiontothetypicalbarriers-to-entry Community Support Development Air service Analysis Market Performance Tracking Opportunities Gaps and Agreements Airline - - destinations (referto time, typicallyoneyear, toall specific periodof analysis includesallairtravel The fora airport. by the local region thatcouldreasonablybe served the airtravel market forthegeographic passenger Market analysis development. as aguideforcommunity airservice Exhibit 12.1 process. Accordingly, in theprocessrepresented the successbutdetermine increase thechances of notonly exercise degree, will,toalarge air service relevant issues andconditionsassociatedwitheach Understandingthe to 36monthsrealizeservice. and itistypicalforsuccessfulinitiatives totake 12 make the“businesscase”forservice. development must inairservice munities engaged businesslike. Today, orsmall,com whetherlarge development processbecamemoreanalyticaland decisions, make theairservice service managers initiatives,sociated withairservice andhow airline totheirlocaleconomies, theriskas airservice of tounderstandtheimportance communities began Sometimes thisworked, andoftenitdidnot.As tobeseechaddservice. airlinemanagers quarters toairlinehead manager local politiciansandairport improvementswanted would airservice sendtheir communities. Intheearlyyears, communities that developmentdeveloped insmall forairservice theairlineindustry, processhas aninformal of process Air service development aktaayi saqatttv vlaino A market analysisisaquantitative evaluation of development isunique, effort Each airservice During theyearssince1978deregulation andthefollowing areprovided steps Section 13 ). page 49 - - - page 50

Identification of service gaps and market, (3) service, passenger volume, and finan- about flagging problems and offering help. Sec- opportunities cial projections, and (4) a risk mitigation package ond, high performance numbers may indicate the An evaluation of the market analysis points out proposed by the community. need for schedule or capacity adjustments. Third, gaps in air service and market opportunities. For it is important to track the performance of all air example, if the market analysis identified that Airline negotiations and carriers not just the new carrier. Doing so will 50 percent, 30,000 passengers per year, of the agreement on service provide perspective on how new service may be af- community’s traffic to San Francisco was traveling After meeting with the airline it may take fecting incumbent airlines. The bottom line is that via auto to a competing airport to originate the air months or even years before the airline reaches a a community puts a lot of time and resources into travel portion of their trip, this would be a service decision to serve a market. During that time any a successful effort to recruit new service. It only gap and a possible opportunity. Likewise, this in- number of things may happen. The community makes sense to track performance and make sure formation would point to airlines in the region that may meet with the airline several times, have further the investment pays off. have the capability to fill the gap. By the end of negotiations regarding the community support this step, service needs and options are prioritized package, or be told that the project has been put on Summary of main points hold until the airline takes delivery of more aircraft. for further action. • Smaller airports generate a relatively small share Whatever the case, the communities should plan on (11 percent) of the total passenger traffic. It is Community education and further discussions after the initial meeting. not surprising that airlines are not focused on involvement possible opportunities in these markets. In most cases, successful air service develop- Implementation of service and the ment exercises in smaller markets take the commit- community support program • Increased risk and decreased air service options ment and involvement of community leaders and Depending on the type of service and the spe- for smaller markets have increased competition organizations like the chamber of commerce and/ cifics of the community support program, the com- for air service between communities. or an economic development corporation. Engag- munity may have its hands full prior to the service • Airline managers often view smaller markets as ing local organizations and leaders in air service start date. For example, if the community support high risk due to the size of the market and the discussions and the implications of the previous package includes a start-up marketing component, influence of barriers-to-entry. two steps will establish the community base needed advertising may begin as early as 90 days prior to to go forward with an airline presentation and, if the inauguration of service. Likewise, airports that • Communities engaged in air service development necessary, a related community support program. must make facility modifications to accommodate must make the business case for the service new or improved service need to plan accordingly. they desire. Airline management presentation/ • It is typical for community-driven air service proposal Performance tracking initiatives to take 12 to 36 months to reach a In order to make the community’s case for After the inauguration of service the task of successful conclusion. air service, two to five community representatives performance tracking begins. Here there are a attend a meeting with the responsible airline staff couple of considerations to keep in mind. First, members, usually airline planners. In making the tracking passengers, load factors, and airfares may business case for air service, the airline presentation identify a problem in time to make corrections. and/or proposal usually includes (1) a description Often, airlines do not make communities aware of the community (demographics, economics, and of a problem until the problem has gone on for business activity), (2) an overview of the air service some time, so communities need to be proactive Northwest Regional Air Service Initiative Section 13 decisions on airservice Community influence i evc otecmuiy h hneo success, tothecommunity, air service thechance of of on itsown ontheimportance usuallydepends improvementsmunity electstopursueairservice tosolve themselves.going ornotacom Whether facedbythe challenges smallercommunities arenot service decisions basedonhistoricaldata pas service ish airlineattention. First,airlinestypicallymake factsaboutsmallermarkets thatdimin important andlessrevenue.fewer passengers are lessairlineattention.There smaller markets get tive insmallermarkets. Itonlymakes sensethat the community nottheairlinethattakes theinitia Withfewexceptions,Why isitsoimportant? itis tives insmallermarkets cannotbeover emphasized. Community role need fornewservice. airline risk,andlocalmarket analysisshowing a who aremovers andshakers, incentives toaddress nity bringstothediscussion:community members community. sectionlays outwhatthecommu This more importantly, economicbaseforthe astronger and, successful, itcanresultinenhancedairservice incentives. Itcanbeanarduousprocess, butif communities, and,moreoftenthannot,entail typicallyincludecompetitionbetween to bearfruit, analysis, may take fromsixmonthstoseveral years corporations.by Bothrequireup-front recruiting ment exercises thatseektobringnewjobstown expect theprocesstoresembleeconomicdevelop improvements can status quoandseekairservice and available resources. ntecretarsrieevrnetms f environment mostof airservice In thecurrent Apart frommarket sizeissuesthereare twoApart initia thecommunity inairservice roleof The Communities thatdecidetochallenge the ------supporting the service whenthe airlinecomesto the service supporting potential butthatthecommunity iscommittedto the market andrevenue has therequiredpassenger must convince airlinedecisionmakers notonlythat Today, improvements communities seeking service didnotmaterialize.months becausethepassengers afterafew onlytopullservice fornewservice, port intosmallermarkets withoutmarketinggone sup airlinesthathave examplesof pastisfullof The devoted by airlinestothesemarkets isminiscule. overall volume, passenger themarketing dollars anairlines’ markets make upsuch asmallshareof to (refer the pieissmallerandbarriers-to-entry markets.markets higherriskthanlarger Inshort, the attentiontheywarrant. toreceive known toairlinemanagers opportunities carriers. Communities must make these new service unnoticedbyeconomic activity air frequently go inpopulationand/or significantgrowth undergone iswhy This smallercommunitiesservice. thathave data thenthecommunity isnotconsideredfor thereisnohistoricalpassenger traffic.senger If Section 12 Second, airline managers considersmaller Second, airlinemanagers ) aresignificant.Becausesmaller page 51 - page 52

Exhibit 13.1 Airline town. Examples of types of tangible community incentive goals Today, many airports in the US engage in commitments are discussed later in this section. air service development efforts and marketing. Airline incentives are a tool that can be used by a Within smaller communities, the local busi- community in an air service development pro- ness community should be the most engaged group gram, but it must be applied in the right situation in air service improvement. The participation of to be effective. What works for one community local business leaders in air service development will not necessarily work in another community. exercises is key for several reasons. In most small Airline incentive programs must bridge the communities the success of air service initiatives gap and address the needs of both the airline and depends on the support of the business commu- Influence airline service decisions the community. nity. Why? In general there are two groups of air travelers, leisure and business. In small communi- Limit startup period risk With regard to airport support for air service ties most leisure travelers drive to larger competing development efforts, it is important to understand Support long-term airports for lower airfares while business flyers will success of service the restrictions placed by the federal government use local service. Business flyers are willing to pay on the use of airport-generated funds. Federal for convenience; hence, they are the backbone of airline incentives. Generally, airline incentives regulations limit the use of airport-generated rev- the air service market in small communities. Since should have one or more of the following three enue to expenditures associated with the operation business flyers have a vested interest in local air goals: (1) influence the target airline to improve lo- of the airport. Within this limitation, an airport service, often they are willing participants in air cal air service, (2) minimize the time it takes for the can use airport-generated revenue for conducting service development programs. Additionally, since air carrier to achieve break even, and (3) support the air service related research, air service proposals, business flyers are considered high-value customers long-term success of air service improvements in and marketing the airport’s air service. However, by airlines, their participation in air service improve- the local market (refer to Exhibit 13.1). airports are restricted from using airport revenue ment efforts has a lot of sway with airline manag- The idea that communities can leverage various ers. Accordingly, all air service related meetings types of incentives for air service improvements is with airline managers should include representatives not new. Shortly after the deregulation of the air- from the local business community. line industry in 1978, communities began to dabble in attracting commercial air service. For example, Airline risk mitigation in the early 1980s, Washington Dulles International In every air service market there are condi- Airport, 19 miles from Washington D.C., hired its tions and barriers-to-entry that tend to inhibit the service marketing staff and began to court success of air service initiatives and this is especially airlines. In 1981, this airport was under-served, true for smaller communities (refer to Section 12). enplaning approximately 2.3 million passengers Limited airline resources and the need for smaller per year. Airlines responded to Washington Dulles communities to maintain or improve local air International Airport’s marketing efforts by adding service have increased competition for air service. service. At least in part because of marketing, by These factors have spurred interest in community the end of 1989, its passenger traffic had jumped to sponsored air service support programs and related 10.4 million passengers. Northwest Regional Air Service Initiative revenue fromticket salesassociatedwiththenew aspecifiedamountof guaranteed itwillgenerate Airline revenueguarantee thefollowing incentives: or moreof ofteninclude one theseprograms providing service, foranairline Inreturn the desiredairlineservice. of airlineorinsupport are provided tothetarget incentives that oftenincludeamixof programs ments, andtravel development banks. Airservice feewaivers, airport ing support, facilityimprove airline revenue guarantees, cashpayments, market Types ofairlineincentives airline incentives. Section 12 fundsand/orSCASDP(referto non-airport revenue airport is, inmanycases, thereasonthat of improvements. federalrestrictionontheuse The lated fees(e.g., forairservice landingfees)inreturn totemporarilywaive re do allow airports airport to pay forairlineoperatingcosts. regulations The With this type of incentive, theairlineis With thistypeof Airline incentives including take manyforms ) must be used to fund certain types of typesof ) must beusedtofundcertain - - - provided tolimittheairline’s riskassociatedwith widely. vary agreements Revenue guaranteesare andguaranteeperiodsassociatedwiththese terms The a cashpayment totheairlineforshortfall. enue, thelocalentityproviding theguaranteemakes rev theairlinedoesnotmeettarget If service. entity pays theassociated invoices. to Withregard andalocal advertising production and placementof Inotherinstances,program. theairlinehandles theentire ning, production,andimplementation of the localcommunity isresponsible fortheplan withsixfigurebudgets. Inmanycases,programs planned multimedia advertisingandpromotion inthelocalnewspapertowellfrom advertisements range marketing programs Community airservice provided marketingmunity support. and/orairport Marketing support the newservice. incentive doesnotmotivate thecommunity touse inthemarket. Inaddition,thistypeof performs how theairline of uponamountregardless agreed subsidies isthatthecommunity pays theairline cashpayments or perspective, thedownside of to monthlyinstallments. From thecommunity’s cashpayments fromasinglepayment canvary of number revenue The fromtheservice. generated payment isnottiedtothe The providing service. is paidaspecifiedamountby thelocalentityfor Cash paymentand/orsubsidy the community tousethenewservice. incentive isthatitdoesnotmotivate thistypeof of favor revenue guaranteeincentives. downside The provided. Generally,the service airlinemanagers By far, themostusedairlineincentive iscom With acashpayment orsubsidy, theairline - - - concerned about the amount of support theywill support abouttheamountof concerned initiatives, mostairservice airlinesarealways of Pledges ofsupport airline incentive programs. of part have andintegral becomeanimportant havethe airlineindustry evolved feewaivers airport total operatingcost,asthefinancialdifficultiesof anairline’s feesarearelatively of airport smallpart than12months.typically nolonger Although ments. Such waivers must beforalimitedperiod, improve forairservice inreturn theairport use of (e.g., rent)associatedwiththe landingfees, terminal Airport feewaivers incentive tool. comings, remainsanimportant marketing support communications. notwithoutitsshort Though intheirfrequentflyer highlighting thenewservice it isdesirabletoenlistairlineassistanceinatleast possible, When nity thathasthenewairservice. thecommu whooriginateoutsideof passengers inamarket areinbound thetotalpassengers of areas, resort typically40to60percent exception of themarket. Withthe of cally reaches onlyhalf marketing newservice. kets whereairlinesdonottypicallyspendmoneyon insmallermar public. isespeciallyimportant This awareness neededby name andservice thegeneral offerings, provide theseprograms new airservice Because businesstravel iscriticaltothesuccess canwaiveAirports airlinefeesandcharges thisincentive isthatittypi weakness of The page 53 - - - - - page 54

get from local businesses. To give the airline some promising to use the new service, local businesses Facility improvements assurance of local support, communities often deposit funds into a bank account that can only For most new air service, the airline will incur provide letters from area businesses stating they will be used for purchasing tickets on the target airline the cost of upgrading the space that it will occupy use the service if it is available. Unfortunately, there (refer to Exhibit 13.2). This has the effect of in the airline passenger terminal building. These are cases where airlines have initiated service based providing the new airline with local passengers responsibilities vary from airport to airport, but it is on these pledges of support, at least partially, only regardless of the barriers-to-entry that may exist typical for the airline to cover the cost of installing to find little follow through on the promise to use in the market. The effectiveness of travel banks at phones and computer lines, ticket counter inserts, the new service. More often than not, this happens influencing local passenger traffic in favor of the baggage handling equipment, arrival/departure because competitive forces in the market influence new airline is dependent on the number of local boards, passenger hold room counters and equip- ticket purchase decisions in favor of the incumbent businesses participating in the travel bank program ment, and company logos and signage. Depend- airlines. Factors like frequent flyer programs, travel and the total dollars committed by participating ing on the airline’s personnel requirements and/or agency relationships with incumbent airlines, and companies. Travel banks are grassroots incentive the layout of the terminal building, the airline may existing corporate purchase agreements with these programs that require a highly motivated business absorb the expense of remodeling their terminal same airlines all serve to maintain the status quo. community for success. spaces to meet its needs. These costs can be con- The upshot is that airline managers are distrustful siderable and much of the expense is a sunk cost of community promises and/or pledges of support. Ground handling services for the airline. Often, as part of an airline incentive In order to provide air service to a community, package, the airport will agree to cover all or part of Travel bank an airline must have provisions for ticketing, bag- the cost of modifying the airline passenger terminal Travel banks capitalize on the airline’s interest gage, and ground handling of aircraft. All of these facility to meet the needs of the new airline. In in business travelers. Instead of local businesses require equipment and personnel at the airport. In some cases, airports have also provided financial most cases, airlines elect to provide for these needs support for the relocation of airline equipment and with their own equipment and manpower. At personnel associated with new air service offerings. Exhibit 13.2 How a Travel smaller airports that are served by smaller regional Bank works Communities continue to investigate various airlines, these ground handling costs on a per pas- ways to attract and support local airline service Target airline senger basis may be relatively high. In some cases, improvements. The types of incentives detailed from a cost standpoint, it makes sense for a single $ above cover the most common types of incentives provider to serve all of these airlines thereby reduc- in use today. However, there is a wide mix of other Community Travel Bank ing the duplication of personnel and equipment. types of airline incentives that include community As an incentive to airlines, the trend is toward the funded training programs for airline personnel, airport providing more ground handling and airport locally provided aircraft hangars, airline designation services. Overall, the concept is to reduce airline- as a “preferred provider” by state agencies, and the operating costs at the airport in order to make the purchase of ground support equipment. Funds held by bank airport more attractive (less expensive) to airlines.

$ Company A Company B Northwest Regional Air Service Initiative omnt uddmreigpormo $81,000. community of fundedmarketing program addition totherevenue guarantee, theyprovided a forHorizon Air. package community support In the $500,000 fortherevenue guarantee elementof awarded thatprovided a2004SCASDPgrant twoDash 8-Q400aircraft.The communities were ties toLosAngeles, CAwith74-seatdeHavilland between thesetwo communi service California Horizon Air Redding andEureka/Arcata,CA– 1.2 millionpeople. morethan foracatchment areaof cisco service provides analternative totheexistingSanFran that program isanaggressive ing $45,000.This feewaivers and(3)airport keting total program, guarantee, (2)a$105,000community fundedmar components: (1)aone-year, $550,000revenue Modesto’s incentive hadthreeprimary program with the30-seatEmbraer120aircraft(turboprop). SkyWest Airlinesisoperatingfourdailyflights between ModestoandLosAngeles, Califoria. Modesto, CA–SkyWestAirlines improvements. airservice attract andsupport incentive createdby communities programs to airline incentives. following areexamplesof The include theseprograms andthemajorityof efforts development in air service communities are engaged programs Examples ofairlineincentive In April 2005, Horizon Air began twicedaily In April2005,HorizonAirbegan In June 2006,SkyWest Airlinesinitiated service America,literallyhundredsof Across North - -

- - City. community support The tween Redmond andSalt Lake be service Air Linesbegan Air Lines Redmond, OR–Delta in February 2005. in February DeltaAirLinesaddedathirdround-trip program. included arevenue guaranteeandamarketing tive. Eugene’s proposaltoDeltaAirLinesalso initia thisairservice travel of bankinsupport createditsthirdsuccessful Airport Eugene The Salt Lake City. May 1,2004. began service The between and Eugene nounced nonstopjetservice Eugene, OR–DeltaAirLines inDecember2005. to addathirdflight vice was sosuccessfulthat DeltaAirLineselected ser This Airport. and SaltLake CityInternational Redmond, Oregon, Oregon, theStateof of effort wasmarketing fundedby program acooperative and anextensive The $250,000marketing program. a$640,000travelfunded by aSCASDPgrant, bank, $500,000 revenue guaranteeof initiative includeda air service associatedwiththis program In March 2005,Delta On February 24,2004,DeltaAirLinesan On February - timedia advertising andpromotiontimedia advertising cal newspapertowell plannedmul range from inthelo advertisements marketing programsair service Community marketing support. providedtive iscommunity/airport By far, themostusedairline incen Incentives programs withsix-figure budgets. - - - from, which airlines theyareusing,andwhatthe aretravelingare using,where passengers to-and- travelers airports the studyincludewhich alternate anddestinations.air service Detailed outcomesof a community’s market sizeandviablelevels true of intheircommunity shouldbeconsidered. service existsandwhythem thataprofitableopportunity toknockprepared on theairline’s doortoconvince opportunities. Itisthecommunity thatmust be small communities inquiringaboutnewservice Airlineplannerstypicallydonotcontact service. of convince themthatamarket existsandisinneed airline plannersisthatsmallcommunities needto business development. expectation frommany The diversionto provide insightsonpassenger andlocal incumbent uponsmallercommunities particularly marketon every thatispresentedtothem.It needed resources toconducttheduediligence data. industry willnotshow upintheeasilyaccessible information ners may notseeamarket’s potential, asthat true non-existent inamarket, thenairlinerouteplan isminimal or existingairservice not beaware of. If that unlessbroughttotheirattention,airlineswould market size. arelocalissues habits affecttrue These A market analysis provides valuable insighton Airlines simplydonothave enoughinternal - - - airports andhow existingtravelairports driving toalternate passengers of munity issuessuch asthenumber cate airlineplannersonlocalcom service initiative analysis inanair Purpose ofmarket Market Analysis Market analyses serve toedu Market analysesserve page 55 - - - page 56

passenger volumes are by destination. Service gaps fliers. A business travel survey provides informa- Summary of main points and opportunities for multiple airlines are identified. tion on the travel habits, ticket prices, method of • Communities must take initiative in small markets This information is the basis for identifying air ser- purchase, and airline preferences related to air travel and be prepared to face significant competition vice opportunities and future forecasts associated in the local business community. Surveys illuminate for air service. with air service initiatives. the air travel interests and preferences which are • The group that needs to be most engaged in air important to future airline discussions. Airlines service efforts is the business community because Description of resources do not have the time or resources to conduct local its support is essential to air service success. All and process business surveys themselves and so rely on the air service related meetings with airline managers Data for analysis comes from several in- community’s input. dustry sources including Marketing Information should include local business representatives. Data Tapes (MIDT), schedule data such as Of- Funding • Small communities are high risk, and, in most ficial Airline Guide (OAG), and DOT Airline Market studies can be funded from several cases, airlines will require Northwest communities Reports. These kinds of data provide insight into sources including the local airport’s general budget, to provide an airline incentive package for air the market’s potential and may identify trends that the local municipality’s economic development service improvements. are important for airline planners in understanding budget, grants used for air service development, or • Airline incentives take many forms, and an the true air service market. Likewise, they provide unique taxing districts. Small communities typi- effective air service incentive program should context for evaluating air service needs including cally have the most need for market studies but include a mix of incentives. appropriate capacity levels and potential new ser- often have the fewest available resources to fund vice opportunities. market studies. • Airline incentives are a tool and are not one size fits all. Airline planners have access to the same Air service development can be time consum- information but often lack the time and resources ing and expensive as various market opportunities • Airline incentive programs can creatively bridge to conduct the analysis themselves on all potential need to be analyzed for different air carriers. The the gap between the needs of both the airline and markets. Route forecasters will run similar analyses opportunities that pass the initial screening then the community. on markets that they find time for, but, without lo- need to be presented to the targeted airlines for • Market studies provide airline planners with cal input, they may be unaware of the unique issues closer scrutiny (refer to Section 12). insights on local issues such as passenger that can affect the outcome of the market forecast. diversion, true market size, and business activity A negative market forecast is excluded from the that they might not otherwise be aware of. potential new market consideration set. • Airlines often lack the resources to take a detailed In addition to data analysis, surveys of local look at all possible markets. business leaders and business flyers are important sources of information. Business travelers typically • Business travel surveys also provide valuable purchase higher value tickets and generate more insights into a market’s potential and what the per passenger revenue for airlines than do leisure local business traveler desires. • Community provided market studies help communities, as well as airline planners, develop realistic solutions for air service gaps in smaller markets. Northwest Regional Air Service Initiative Section 14 Program NWRASI Mentor cludes thisHandbookand for smallcommunities Itin intheNorthwest. development aboutairservice essential information Tool Kit Introduction NWRASI Mentor Program ismadepossibleby the NWRASI Mentor Program toconsultwith anexperiencedprofessional. effort anairservice inanyphaseof communities engaged asaway withtheMentorProgram for support sented in improvements.interested inpursuingairservice can alsoactassoundingboardsforcommunities the NWRASIinindividual communities. Mentors assist withlocalpresentations, andhelpcoordinate can teach. Mentorsareavailable tofieldquestions, able lessonsthatonlyworking throughtheprocess valu andalsolearned mastered thebasicconcepts first handintheirown communities. have They developmentwho have experiencedairservice andWashingtontions inOregon usingvolunteers associa management by theprofessionalairport Tool Kit inthe a thirdinstrument andWashington.Oregon initiatives in air service sional willhave about profes member orairport all questionsacommunity two resourceswillanswer is notexpectedthatthese contained inaDVD. It overview a moregeneral The The implementation and staffing of the implementationand staffingof The theNWRASI An outlineof is A mentorprogram . Itissponsoredby NWRASIandstaffed is a self-help program designedtoprovide is aself-helpprogram Small Community Air Service Development Development SmallCommunityAirService Table 14.1 I hw h he eeso . Itshows thethreelevels of - Table 14.1Tool kitresources Mentor Program Handbook DVD Toolkit Tool Kit ispre - - - - improvements. ment, andactassoundingboardsforideasairservice developtions, offerfirst-handexperienceonairservice professionalstoanswer ques airport Provides ateamof and thecommunity’s development. role inairservice development decisions, issues, smallcommunity service ontheairlineindustry,Gives information airlineservice issues. onairservice information Provides general Purpose • • • • • • • klamathfallsairport.com 541-883-5373, Klamath Falls Airport shouldcontactAnnCrookatthe Mentor Program the Communities interestedintakingadvantage of states sothattravel costcanbekept toaminimum. Mentors arefromcommunities locatedaroundboth Association, oracombinationthereof.Management Association orWashingtonManagement Airport Airport the community Oregon usingtheservices, larly travel expenses)willbetheresponsibilityof pocket expensesformentoringactivities (particu thementors. Related out-of- volunteer of efforts Todd Woodard –Spokane, WA Robb Parish –Pullman,WA/Moscow, ID Robb –Port Angeles, WAJeff NovickCarrie –Redmond, OR Buck Taylor –Yakima, WA OR Bob Noble–Eugene, Ann Crook–KlamathFalls, OR NWRASI Mentorsare: . director@ page 57 - - -

Northwest Regional Air Service Initiative Section 15 development to airservice involved insolutions Next steps:Getting Exhibit 15.1NWRASI (Development of a regional appr ficult forsmallcommunities toaccessandimprove. increasinglydif critical factorsthatmake airservice Itlaysmore specificallyfortheNorthwest. outthe bothonanationallevel and related toairservice, Handbook and III. PhaseII following of mitment. The isanoverview in process candosoby usingthecontactinformation munities wanting hands-on into the NWRASI to get communities willneedtoactively participate. Com theprogram, finding solutions. Inthesephasesof II andIIImove intotheprocesstowards deeper Phase problemsintheNorthwest. to airservice nities understandthecomplexissuesthatcontribute Exhibit 15.1 theprocessisoutlinedin of overview A brief from here?” handbook, thelogicalquestionis, dowe “Where go this Now thatyou have tothelastsectionof gotten Section14 This This Phase Iisa threephases. NWRASIconsistsof The (Community air travel market studies) presents a broad range of information information of presentsabroadrange Small Community Air Service Development Development Small CommunityAirService Phase III. Strategize III. Phase Phase II. Analyze II. Phase (DVD, Handbook, Mentors) . Phase I.Inform o thishandbookandmakingacom of Tool Kit tohelpindividual commu oach to air service needs)

- - - - consultant. The consultant will determine the consultant will determine consultant. The data willbecollectedby theproject’s airservice market theindividual community airservice all of unifiedapproach. Toair service ensureconsistency, aregional that itcanbeusedinthedevelopment of air travel must beconsistentso market information educate andinvolve thebroadercommunity. NWRASI, andwork withaNWRASImentorto the inmeetingsandactivities of needed, participate private willassistwiththemarket studyas partner source. community The come fromanon-airport or, participation inotherwords,non-airport must market analysismust qualifyas the airservice thisproject.Fundsusedtopay for of a portion thatfunded built intotheDOTSCASDPgrant a private inthepublic-private partner partnership as toparticipate market datacollectionandagree theairservice tofundthefullcostof must agree their needsandstrengthsrelatedtoairservice. and destinations)which will beusedtoevaluate quality, volume (passenger consistentinformation ing communities tocontractforthecollectionof NWRASIprovides awaydata. The forparticipat rent (nomorethantwo yearsold)airtravel market theNWRASImust provide cur Phase IIandIIIof needs. Accordingly, in allcommunities participating munities needtodevelop adatabaseonlocaltravel travel market analysis. Asabeginningstep, com development isanair for allsuccessfulairservice Air Service MarketAnalysis Phase II.SmallCommunity o h upsso theNWRASI,community For of thepurposes intheNWRASI Communities participating As discussedin Section 13 , the starting point , thestarting page 59 - - - page 60

best data collection methods for each community overall air service needs of smaller communities in • Communities that wish to participate in the included in this analysis. the two-state region and evaluate alternative options NWRASI should contact a NWRASI Mentor and strategies for securing air service improvements. (refer to Section 14). In some cases, MIDT data will be acquired and The information and strategies generated in this used to build the air travel database. In other cases, phase will be used by members of the NWRASI in MIDT data may be judged to be insufficient and the a follow-up action plan. air service consultant will estimate passenger num- bers and destinations by using economic or other models. In cases where communities have current Summary of main points data on their air service market, the air service • Communities that want to get involved must consultant will review and determine if the data is commit to participate in Phases II and III of consistent with the program. Each community will the program. fund its air service market study, and the total cost • Phase II includes the collection and analysis of for the collection of this information is $5,000 air travel data for all NWRASI communities. The per market. cost for participation in Phase II is $5,000 for each community. Phase III. Oregon- Washington Small • Phase III utilizes the information collected Community Air Service in Phase II and supplemental industry data Strategies to evaluate the overall air service potential of The purpose of this third phase of the project the two-state region and develop options and is to research and evaluate strategies for secur- strategies for securing service to communities in ing air service improvements for communities in Oregon and Washington. Oregon and Washington that can demonstrate their respective markets can support air service and have community commitment to support air service improvements. Communities that have participated in Phase II and taken the initiative to assess their air service markets will be considered for inclusion in this evaluation. This third phase looks at the prob- lems using a regional approach. It will consider the Northwest Regional Air Service Initiative Appendix A codes andseats Aircraft designator Source: BACK Aviation Solutions, April2006 /1900C/C-12J BAE Jetstream 41(BAE4100) BAE Jetstream 32/32EP(BAE 3200) BAE Jetstream 31(BAE 3100) Aerospatiale-Alenia ATR 72-100/200 Aircraft name Swear. SA227AC/BC MIIIHIMTOW Saab 340B/340BPLUS Saab 340A Embraer ERJ145(EMB-145) Embraer ERJ140(EMB-135KE/KL) Embraer ERJ135(EMB-135ER/LR) Embraer EMB-120Brasilia Embraer 190(ERJ190-100) Embraer 170(ERJ170-100) 328JET/EnvoyDornier 3(328-300) DHC-8-400 DHC-8-300 DHC-8-200 DHC-8-100 /E-9A DHC-6 Twin Otter100/200/300 Cessna 208BGrandCaravan Cessna 208/208ACaravan Canadair CRJ900(CL-600-2D24) Canadair CRJ701(CL-600-2C10) Canadair CRJ100/200/440(CL-600-2B19) Beechcraft 1900D Code SWM DHT ERD CNC CNC BEH DH4 DH8 DH8 DH8 EM2 ER4 ER3 BES AT7 CR9 CR7 E90 E70 CRJ FRJ SF3 SF3 J41 J32 J31 Seats 19 34 34 50 44 37 30 90 70 37 74 37 37 37 19 90 70 50 19 19 30 19 19 72 9 9 page 

Northwest Regional Air Service Initiative Appendix B marketing partners codeshare and Regional Airline American Eagle Air Midwest Regional Airline Horizon Air tional Airlines Gulfstream Interna Great Lakes Aviation GoJet Airlines Expressjet Airlines Commutair Comair Air Colgan Chautauqua Airlines Boston-Maine Airways Airlines Big Sky Airlines Atlantic Southeast Mesa Airlines Kenmore Air Harbor - American Airlines US Airways Express Midwest Airlines US Airways marketing partners Code shareand Delta AirLines Continental Airlines Airlines Northwest Alaska Airlines United Connection United Connection Frontier Connection United Express Continental Connection Delta Connection US Airways Express US Airways Express United Express Delta Connection American Connection nection Pan AmClipperCon Airlines Northwest Airways America West/US Alaska Airlines Delta AirLines Delta AirLines Continental Airlines United Express ways Express America West/US Air Kenmore Air Express - - highlighted indarkblue. Pacific markets Northwest serving are Note: Carriers Official AirlineGuide Source: Regional AirlineAssociation,April 2006and Trans StatesAirlines SkyWest Airlines Skyway Airlines Shuttle America Scenic Airlines Republic Airlines RegionsAir PSA Airlines Pinnacle Airlines Piedmont Airlines MidAtlantic Airways Mesaba Airlines US Airways Express United Express American Connection United Express Delta Connection Delta Connection US Airways Express Scenic Airlines US Airways Express United Express Delta Connection American Connection American Connection US Airways Express Northwest US Airways Express US Airways Express Airlink Northwest page iii

Northwest Regional Air Service Initiative Appendix C Glossary nlssicue l i rvlfraseii eido analysis includestravelall air for aspecific period of The by thelocalairport. reasonably beserved regionthatcould market forthegeographic senger market analysis) Air service marketanalysis/study(travel security. 1542 (CFR) Code ofFederalRegulationsPart withamajorairline. sharing agreement successorfailure, ofteninvolving arevenue- risk of with noguaranteedpayment andassumesallthe acity-pairrouteatitsown expense al airlineflies At-risk flying the airlineforshortfall. providing theguaranteemakes acashpayment to revenue,does notmeetthetarget thelocalentity theairline If sales associatedwiththenewservice. revenue fromticket aspecifiedamountof generate into acommunity. airlineisguaranteeditwill The Airline revenueguarantee commercial aviation. designed toremove control from government Airline DeregulationAct time, typicallyone-year, toalldestinations. uniaieeauto ftheairtravel pas A quantitative evaluation of The controlling federal regulation for airport controlling federalregulationforairport The where a region marketing agreement A type of incentive usedtobringnewairservice Type of Act, signedintolaw onOctober 28,1978,

- - mile flown. Pointsmile flown. canbecashed inlaterforfree customer loyalty by giving them pointsforeach Frequent flyerProgram andproductbranding. attendantuniform, flight carrier’s thelegacy name, similarpaintscheme, of ners whereby theregionalairlineadoptsavariation Franchising seats.than ninepassenger thatuseaircraftdesignedformore cial aircarriers commer scheduled operationsof thatserve ports FAR Part 139 but subsequentlylostairservice. 1978, vice priortotheAirlineDeregulationActof theUSforcommunities thathadairser areas of Essential AirService Enplanement theirtrip. of originate theairportion for airtravel, to butinsteaduseacompetingairport Diversion travel agents. systemsusedby riers inthecomputerreservation share thesametwo-letter codeusedtoidentify car codeshare agreements Codeshare(s), codesharepartners, Airline marketing programs designedtowin Airline marketing programs A commonpracticeamongcodesharepart air andoperationof Governs thecertification torural Government subsidizedairlineservice boardingacommercialaircraft. A passenger Passengers whodonotusethelocalairport A marketing practiceinwhich two airlines page  - - - - - page vi

flights or upgrades in cabin service or, in some Jet aircraft Non-hub instances, non-airline services or items. Aircraft with jet engines. An airport with more than 10,000 but less than 0.05 percent of the total US annual passenger Global alliance Large hub boardings. Global airline codeshare arrangements allowing An airport with one percent or more of total a passenger to seamlessly travel around the world. US annual passenger boardings. Non-primary airport In general, airlines participating in global alliances An airport with at least 2,500 and no more attempt to coordinate schedules, share frequent Legacy airline than 10,000 annual US passenger boardings. flyer programs, transfer baggage from origin to The category assigned to the six large hub and destination, share terminal space, and allow access spoke airlines with nationwide route networks. Online to airport lounges for passengers who are a member Transferring to another flight on the same of any of the alliance carriers programs, all in an ef- Long-haul flights airline (including express affiliates). fort to provide added convenience to the individual A flight of more than four hours. traveler. The three major airline global alliances are Point-to-Point service , , and SkyTeam. Low-cost airline Nonstop service that does not stop at an A category of airlines that has emerged since airline’s hub and whose primary purpose is to carry Hub deregulation which offer low fares, minimal ameni- local traffic rather than connecting traffic. An airport used by an airline as a transfer point ties, and serve primarily high volume markets. to get passengers to their intended destination. It Regional airline is part of a hub and spoke model, where travelers Major markets Airlines that specialize in serving smaller moving between airports not served by direct flights Densely populated cities or regions that sup- markets with smaller aircraft normally in association change planes en route to their destination. Also an port service to large hub and medium hub airports. with a larger airline. airport classification system used by the FAA (e.g., non-hub, small hub, medium hub, and large hub. Market stimulation Regional jets The generation of new airline passenger traf- A small, jet-engined designed to seat Hub and spoke system fic by people who otherwise would not choose to between 35 and 100 passengers. A system for deploying aircraft that enables travel or would make the trip in another way. a carrier to increase service options at all airports Seat purchase agreements served by the system. It entails the use of a stra- Medium hub A contractual arrangement between a regional tegically located airport (the hub) as a passenger A hub with at least 0.25 percent but less than airline and a larger airline whereby the regional exchange point for flights to and from outlying one percent of total US annual passenger airline is paid to operate (fly) a route at a predeter- towns and cities (the spokes). boardings. mined price. The major airline normally assumes all risk of success or failure but is able to maintain Interline agreement MIDT control over the schedule, network, and pricing. Contractual or formal agreements between Acronym for Marketing Information Data Seat purchase agreements allow major airlines to airlines governing such matters as ticketing Tapes provided by the Global Distribution Systems. expand quickly with lower costs than internally and baggage. funded operations. Northwest Regional Air Service Initiative rity tooversee thenation’s systems. transportation HomelandSecu of theDepartment component of Administration (TSA) Transportation Security through aconnectingairport. Through-fares annual boardings. the totalUSpassenger percent of Small hub issuesinsmallcommunities.address airservice Program (SCASDP) Small CommunityAirService Development specific airlines. times (calledslots)areallocatedforuseto Slots areas. andfrequentlylimitedtoselectgeographic service Select airline/carrier (size) limitations. veniences such aslocationorfrequencyandaircraft that market by mosttravelers incon duetocertain choice for of airport notthepreferred normally Secondary airports Agency formed immediatelyafter9-11asa formed Agency faretoadestinationreached byThe traveling withatleast0.05butlessthan0.25 An airport administeredby theDOTto Grant program landingandtake-off airports At congested airlinesproviding uniqueair of A category nearmajormarkets (cities)butare Airports

- - target airline.target Travel banksaredesignedtoover tickets onthe restricted tothepurchase of inabankaccountthatis bank fundsaredeposited fundedby localbusinesses. program port Travel Travel Bank hn hs fatypicaljet. than, thoseof ficiency atspeedsslower than,andaltitudeslower their relative ef and businessaircraftbecauseof a propeller. Turboprops areoftenusedonregional Turboprop aircraft destinations. thetotalmarket aswell asestimatesforspecific of market estimateincludesthesize true The airport. by thelocal areaserved inthegeographic airport, travelers, includingthosewhoareusingacompeting True market smaller markets. thatexistin thebarriers-to-entry come someof A travel bank is a grass roots air service sup A travel rootsairservice bankisagrass A type of engine that uses a to turn enginethatusesajettoturn A typeof air market isthetotalnumber of true The

- - - page vii Written and produced by For more information, please contact Ann Crook at Klamath Falls Airport (541) 883-5373, [email protected].