Springfield-Branson National SGF Springfield,

Small Community Air Service Development Program Proposal

Docket DOT-OST-2020-0231

Dun & Bradstreet DUNS Number: 24-706756 Tax Identification Number: 44-6000268 Two-Digit Congressional Code: MO-7

Table of Contents LETTER OF INTRODUCTION ...... 2 AMERICAN AIRLINES LETTER OF SUPPORT ...... 3 SPRINGFIELD CONVENTION AND VISITORS BUREAU LETTER OF SUPPORT ...... 4 MISSOURI DEPARTMENT OF TRANSPORTATION LETTER OF SUPPORT ...... 5 CITY OF SPRINGFIELD LETTER OF SUPPORT ...... 6 AIR SERVICE OVERVIEW ...... 10 Catchment Area and Access to Alternate ...... 10 Existing Air Service ...... 14 Air Service Development Efforts ...... 15 Marketing and Promotion of Air Service ...... 15 AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES ...... 16 Capacity Trend ...... 16 Traffic and Fare Trends ...... 17 Domestic Fare and Yield Trends Relative to Other U.S. Airports ...... 18 Leakage to Other Airports in the Region ...... 20 STRATEGIC PLAN ...... 21 Proposed New Route ...... 21 Self-Sufficiency of the Proposed New Route ...... 22 Goals and Objectives ...... 22 Target Airline Support ...... 23 Springfield-Washington Reagan Traffic and Fare Trends ...... 23 Connecting Traffic Opportunities on American at Washington Reagan ...... 24 Grant Amendments/Alternate Strategies ...... 25 PROJECT IMPLEMENTATION, MONITORING AND FUNDING ...... 25 Public/Private Partnerships ...... 25 Project Funding ...... 26 Implementation Timeline ...... 26 PROJECT MONITORING AND FINANCIAL CONTROL ...... 27 Success Metrics ...... 27 Previous SCASDP Funding ...... 28 Legal Sponsor ...... 28 Financial Controls ...... 28 APPENDIX A: REQUIRED SUMMARY INFORMATION ...... 29 APPENDIX B: LETTERS OF SUPPORT ...... 34

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LETTER OF INTRODUCTION

January 26, 2020

Brooke Chapman Associate Director Small Community Air Service Development Program U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590

Dear Ms. Chapman,

Springfield-Branson National Airport serves the residents and visitors to Springfield, Missouri metropolitan area and the region surrounding Springfield. The Airport is submitting the attached proposal for a Small Community Air Service Development Grant in the amount of $750,000 for nonstop service to Washington Reagan National Airport on American Airlines.

Our case for SCASD funding meets the Department’s key selection criteria, including high air fares, locally-sourced supplemental funding, a public-private partnership, a benefit to a large segment of the traveling public, use of funding in a timely manner and support for the application from the targeted airline.

An important component of our business case is our public-private partnership. The Springfield- Branson National Airport, the Springfield Convention and Visitors Bureau, the Springfield Area Chamber of Commerce, and the Missouri Department of Transportation are partnering in this project and will provide funding totaling $150,000 to supplement SCASD funding for the proposed minimum revenue guarantee.

Springfield has a successful SCASDP track record, so the Department can award the funds we are requesting with a high degree of confidence the funds will be used for the requested project. The Airport and the community partnered with American in 2014 to provide a minimum revenue guarantee for Springfield-Charlotte service, service American continues to operate today with two daily flights. In addition to Charlotte, American serves its Dallas/Ft. Worth and Chicago hubs from Springfield; new service from Springfield to Washington would be a natural extension of American’s service in Springfield.

We appreciate your consideration of our proposal.

Sincerely,

Brian C. Weiler, A.A.E. Director of Aviation Springfield-Branson National Airport

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AMERICAN AIRLINES LETTER OF SUPPORT

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SPRINGFIELD CONVENTION AND VISITORS BUREAU LETTER OF SUPPORT

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MISSOURI DEPARTMENT OF TRANSPORTATION LETTER OF SUPPORT

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CITY OF SPRINGFIELD LETTER OF SUPPORT

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SPRINGFIELD AREA CHAMNBER OF COMMERCE LETTER OF SUPPORT

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EXECUTIVE SUMMARY

Springfield-Branson National Airport (the Airport) is seeking SCASDP grant funding in the amount of $750,000 under the Small Community Air Service Development Program to fund a minimum revenue guarantee for service from Springfield to Washington Reagan National Airport on American Airlines. In addition to the amount requested from the Department, the Springfield Convention and Visitors Bureau, Springfield Area Chamber of Commerce, City of Springfield, and the Missouri Department of Transportation have pledged $150,000 in cash that can be applied to the minimum revenue guarantee. The Airport will provide $25,000 in cash for marketing and promotion of the new service, and waive landing fees, estimated at $90,277 over two years, for the proposed service.

The Springfield-Washington/Baltimore market is relatively large. Based on U.S. Department of Transportation data, the Springfield-Washington/Baltimore market size (to include DCA, IAD and BWI) was 40.4 passengers per day each way (PDEW) at an average one-way fare of $230 prior to the COVID-19 pandemic in 2019. Based on a recently completed leakage study using 2019 data, the true Washington/Baltimore market size was 104.1 PDEW at an average fare of $202, but 61.2% of the Washington/Baltimore traffic generated in Springfield’s catchment area leaked to other airports in the region. In addition to serving the local Springfield-Washington/Baltimore market, the proposed service would also enable on-line connections on American beyond Washington. The proposed Washington Reagan service will enable Springfield to recapture some of the traffic leaked to other airports, and put downward pressure on air fares.

Springfield meets the Department’s primary and secondary selection criteria for SCASDP funding:

• Air fares are higher than the national average air fares for all communities. In 2019, Springfield’s average domestic air fare was $198 and $155 in the first three quarters in 2020; the average domestic air fare for all communities in the U.S. was $172 in 2019 and $144 in the first three quarters in 2020. Additional air service on a network carrier in Springfield will likely put downward pressure on Springfield’s fares. • The community will provide a portion of the project cost from community-based organizations. The Airport has partnered with the Springfield Convention and Visitors Bureau, Springfield Area Chamber of Commerce, City of Springfield, and the Missouri Department of Transportation and these organizations will contribute a combined $90,000 in cash to be applied toward the proposed minimum revenue guarantee. The Airport has also partnered with the Missouri Department of Transportation (MODOT), and MODOT will contribute $60,000 to be applied to the proposed minimum revenue guarantee. • The community has established a public-private partnership. Springfield-Branson National Airport has partnered with the Springfield Convention and Visitors Bureau, Springfield

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Area Chamber of Commerce, City of Springfield, and the Missouri Department of Transportation for this project. • The assistance will provide material benefits to a broad segment of the traveling public. The proposed service to Washington on American will benefit business, government and leisure travelers in both the local Springfield-Washington/Baltimore market and markets with connections via American’s hub at Washington Reagan. • The assistance would be used in a timely manner. Depending on when SCASD awards are announced and how quickly demand for air travel returns, the proposed service could be announced as early as summer 2021 for a fall 2021 start date. • Innovation. While Springfield’s proposal for a minimum revenue guarantee isn’t necessarily innovative, minimum revenue guarantees have proven to be the most effective tool for establishing and maintaining new air service in other communities. • Community Participation. In addition to Springfield-Branson National Airport, the Springfield Convention and Visitors Bureau, Springfield Area Chamber of Commerce, and the Missouri Department of Transportation are participating in this project with funding for the proposed minimum revenue guarantee. • Location. Springfield-Branson National Airport is the primary commercial service airport for Southwestern Missouri and is relatively isolated. Although is the closest alternate airport to Springfield, air service at Branson is not year-round and service at Branson is extremely limited when service is operated. The closest alternate airport with year-round service is located 72 miles away in Joplin, but Joplin has service only to Dallas/Ft. Worth. Northwest Arkansas National Airport, located 126 miles from Springfield, is the next closest airport.

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AIR SERVICE OVERVIEW

Catchment Area and Access to Alternate Airports

Springfield-Branson National Airport serves the Springfield Metropolitan Statistical Area (MSA) in Southwestern Missouri. The Springfield MSA is the third largest MSA in Missouri and had an estimated population of 470,300 in 2019. As illustrated in Exhibit 1, the MSA consists of five counties: Green County, Christian County, Webster County, Polk County and Dallas County.

Exhibit 1. Counties included in the Springfield Metropolitan Statistical Area.

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The table in Exhibit 2 illustrates the distance, drive time, the number of airlines, number of destinations and average seats per flight at Springfield-Branson and seven other airports in the region prior to the pandemic in 2019. Based on 2019 leakage study data, these airports captured 98.0% of the traffic generated in Springfield’s catchment area.

The closest airports to Springfield are Branson Airport and ; however, the air service at both airports has been limited and were each served by just one airline in 2019. Branson has not had year-round service since 2014 (when Southwest ended service). Frontier’s Branson service in 2019 was seasonal, with less than daily service to Denver, Dallas/Ft. Worth and Chicago from mid-April through early November. Joplin was served only by American to Dallas/Ft. Worth and Chicago in 2019, and American permanently discontinued Joplin-Chicago service in May 2020. The next closest airport to Springfield is Northwest Arkansas National Airport, but it is located 126 miles away with a published drive time of two hours and eight minutes. Like Springfield, Northwest Arkansas is also a small hub airport, and had service on five airlines. The remaining airports in the table – Tulsa, City, St. Louis and Dallas/Ft. Worth – each have more airline service than Springfield-Branson, but they are located much further away.

Exhibit 2. Full-Year 2019 number of airlines, number of destinations and average seats per flight at Springfield and other airports in the region. (Airline Data Inc. data: January 10, 2021).

Airport Location Hub Size Distance Drive Time Airlines Destinations Seats/Flight Springfield Small N/A 0 4 12 63.6 Branson Non-Hub 62 1:05 1 3 180.3 Joplin Non-Hub 72 1:07 1 1 54.7 Northwest Arkansas Small 126 2:08 5 19 78.4 Tulsa Small 173 2:34 7 19 107.4 Kansas City Medium 190 2:59 10 53 129.7 St. Louis Medium 225 3:31 12 71 115.5 Dallas/Ft. Worth Large 419 6:48 24 257 127.8

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In 2019, Springfield-Branson was served by Allegiant, American, Delta and United to 12 destinations. During the COVID-19 pandemic, United suspended service to Houston in early May 2020; the Airport currently has service to 11 destinations. United has indicated the Houston service will be reinstated once industry demand begins to strengthen. Exhibit 3 illustrates the 2019 routes flown by airline.

Exhibit 3. Routes flown at Springfield-Branson National Airport in 2019.

As shown in Exhibit 4, Springfield generated 1,473 domestic PDEW at an average one-way fare of $198 and 113 international PDEW at an average one-way fare of $512 for a total of 1,586 PDEW at an average one-way fare of $221. The airports in Branson and Joplin generated significantly less traffic than Springfield-Branson in 2019. Branson’s low average one-way of $32 is a function of Frontier’s ultra-low cost business model, and Joplin’s average domestic one-way fare $221 was a function of only network carrier service at the airport.

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Exhibit 4. 2019 domestic and international passengers per day each way (PDEW) and average one-way fare at Springfield and other airports in the region (DOT DB1B data)

Road Miles Domestic International Domestic+International Airport Location from SGF PDEW Fare PDEW Fare PDEW Fare Springfield N/A 1,473 $198 113 $512 1,586 $221 Branson 62 32 $32 32 $32 Joplin 72 119 $221 8 $513 127 $239 Northwest Arkansas 126 2,128 $236 210 $556 2,338 $265 Tulsa 173 3,697 $187 312 $470 4,008 $209 Kansas City 190 13,764 $169 1,120 $442 14,883 $189 St. Louis 225 14,902 $172 1,394 $438 16,296 $195 Dallas/Ft. Worth 419 37,659 $195 7,366 $601 45,025 $262

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Existing Air Service

In third quarter 2020, airlines operated an average of 1,351 seats per day each way at Springfield, a decline of 36.4% versus third quarter 2019, and a result of the weak demand for air travel caused by the COVID-19 pandemic. In third quarter 2020, Springfield had American service to Charlotte, Dallas/Ft. Worth and Chicago; Delta service to Atlanta, United to Denver and Chicago and Allegiant service to Phoenix/Mesa, Las Vegas, Los Angeles, Tampa/St. Petersburg, Orlando/Sanford and Ft. Walton Beach/Destin. American operated 42.7% of the scheduled capacity, Delta operated 14.9% of the scheduled capacity, United operated 14,2% of the scheduled capacity, and Allegiant operated 28.2% of the scheduled capacity in third quarter 2020. Exhibit 5 illustrates the number of flights per day each way, seats per flight, seats per day each way and seat share by carrier and market based on published capacity for third quarter 2020.

Exhibit 5. Springfield third quarter 2020 departures per day, seats per departure, seats per day and percent of total capacity and year-over-year change by airline and market.

Third Quarter 2020 Flights per Day Seats per Seats per Day 3Q 2020 YOY Seat % YOY Seat Airline Destination Each Way Flight Each Way Seat Share Change Change American CLT 2 44.8 87 6.5% -81 -48.2% DFW 5 4/7 60.4 334 24.7% -125 -27.2% ORD 3 1/7 50.0 156 11.5% -112 -41.8% Total 10 4/7 54.5 577 42.7% -318 -35.5% Delta ATL 2 5/7 76.0 202 14.9% -113 -35.8% Total 2 5/7 76.0 202 14.9% -113 -35.8% United DEN 2 50.0 98 7.3% -99 -50.3% IAH 0.0% -100 -100.0% ORD 1 6/7 50.0 93 6.9% -117 -55.7% Total 3 6/7 50.0 192 14.2% -317 -62.3% Network Carriers 17 1/7 56.8 971 71.8% -747 -43.5% Allegiant AZA 2/7 183.8 64 4.7% -7 -10.2% LAS 2/7 158.3 45 3.3% -10 -17.5% LAX 2/7 156.0 37 2.8% -14 -26.6% PIE 4/7 182.9 93 6.9% 15 18.4% SFB 3/7 179.6 78 5.8% 0 0.0% VPS 3/7 176.3 63 4.7% -10 -13.5% Total 2 1/7 175.1 381 28.2% -26 -6.3% All Carriers 19 2/7 70.2 1,351 100.0% -773 -36.4%

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Air Service Development Efforts

Springfield-Branson National Airport has an active air service development program, and airport officials met in-person with Allegiant, American, Delta, SkyWest, Southwest and United on nine occasions in the two year period from January 2019 through December 2020. The number of meetings with each airline is summarized in Exhibit 6.

Exhibit 6. Summary of Springfield-Branson National Airport airline meetings in 2019 and 2020.

Discussion/Meeting Forum and Number of Contacts Jumpstart TakeOff Air line Total Conference 2019 Conference 2020 Allegiant 1 1 2 American 1 1 2 Delta 1 1 SkyWest 1 1 Southwest 1 1 United 1 1 2 Totals 5 4 9

Springfield has been successful in attracting new air service over the last seven years. In 2014, SCASD funding was used for a minimum revenue guarantee agreement with American for Charlotte service, United service to Houston in June 2017, and Allegiant began service to Ft. Walton Beach/Destin in June 2017.

Marketing and Promotion of Air Service

The Airport’s incentive program enables the airport to provide up to $25,000 for marketing and promotion of each new route. The Airport and its community partners understand a critical component to ensuring a successful start-up period for new service will be a comprehensive marketing and advertising plan. The elements for Springfield-Washington plan will include:

• Extensive usage of social media, including Facebook, Twitter, and Instagram • Coverage of new service on SGF’s blog • Community networking events, including public speaking to civic and other groups • Over-the-top (OTT) video advertising on streaming video services • Video advertising on YouTube • Video “pre-roll” advertising on targeted websites • Native advertising on target websites • Targeted display advertising on websites • Broadcast and cable TV and radio

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AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacity Trend

As shown in Exhibit 7, Springfield’s air service was increasing prior to the COVID-19 pandemic. In the nine year period from 2011 through 2019, total capacity increased 40.7% from 1,379 seats per day each way to 1,941 seats per day each way in 2019. While capacity fell slightly from 2011 through 2013, both the network and Allegiant carriers began adding capacity in 2014, and the Airport experienced significant capacity growth from 2014 through 2019. As airlines reacted to the downturn in demand caused by the pandemic, capacity declined an additional 28.8% to 1,382 seats per day each way in 2020 as network carriers reduced capacity 32.5% and Allegiant reduced capacity 13.2%. Allegiant’s capacity declined less than the capacity of the network carriers because demand has been more robust to Allegiant’s leisure oriented destinations throughout most of the pandemic.

Exhibit 7. Springfield network carrier and Allegiant published seats per day each way 2011 – 2020. (Airline Data Inc. data as of January 10, 2021)

Ex-Allegiant Allegiant All Carriers

2,500

1,941 2,000 1,779 1,738 1,643 1,569 1,483 1,500 1,393 1,409 1,379 1,351 1,382 1,295 1,318 1,248 1,219

1,077 1,048 1,059 997 1,007 1,000 Seats per Day Way EachDay Seats per

500 345 370 372 302 298 292 323 241 270 264

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Capacity, Traffic and Fare Trends

As capacity increased at Springfield over the period from 2011 through 2019, domestic and international passenger traffic at Springfield also increased. Exhibit 8 illustrates domestic traffic increased 76.1% from 836 PDEW in 2011 to 1,473 in 2019; international traffic increased 38.5% from 82 PDEW in 2011 to 113 PDEW in 2019. Combined domestic and international traffic was up 72.8% over the same period of time. The average domestic fare increased slightly from $205 each way in 2011 to a peak of $218 in 2017, declined to $211 in 2018 and declined below $200 to $198 in 2019 – the additional capacity and competition that capacity created put downward pressure on air fares. The impact of the COVID-19 pandemic on the entire industry’s demand had a devastating impact on traffic Springfield through the first three quarters of 2020. Domestic traffic declined 49.6% from 1,472 PDEW in 2019 to 742 PDEW in 2020, and international traffic declined 67.7% from 113 PDEW in 2019 to 37 PDEW in 2020 combined domestic and international traffic was down 50.9%. The average domestic fare declined 21.7% from $198 in 2019 to $155 in the first three quarters of 2020 as fares fell and the industry experienced a severe downturn in business travel.

Exhibit 8. Springfield published seats per day each way 2011-YTD 3Q 2020, domestic and international PDEW and average domestic one-way fare – 2011-YTD 3Q 2020. (Airline Data Inc. and DOT DB1B data).

Seats per Day Each Way (All Carriers) Domestic PDEW (All Carriers) International PDEW (All Carriers) Average Domestic One-Way Fare (All Carriers) 2,200 $250

2,000 $218 1,941 $213 $212 $208 $211 $205 $204 $206 1,800 $200 1,779 1,738 $198 1,600 1,483 1,643 1,426 1,379 1,318 1,400 1,295 1,280 1,473 1,248 $150 1,167 $155

1,200 1,114 Fare Way 1,077 - 997 1,000 881 836 862 $100 800 742

600 One Average

$50 400 Seats and Passengers per Day Way EachDay Passengersper Seatsand 117 200 82 87 93 97 100 108 114 113 37 0 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD 3Q 2020

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Domestic Fare and Yield Trends Relative to Other U.S. Airports

Springfield’s average domestic fare has exceeded the U.S. average domestic fare for all airports in the United States from 2011 through 2019 and for the first three quarters in 2020. Exhibit 9 illustrates the average Springfield domestic fare of $198 in 2019 exceeded the average U.S. domestic fare of $172 by $26 or 15.7%. While the impact of the COVID-19 pandemic caused fares to decline in both Springfield and at the national level, Springfield’s average domestic fare was still higher than the average U.S. domestic fare. For the first three quarters in 2020, the average Springfield domestic fare of $155 exceeded the average U.S. domestic fare of $144 by $11 or 7.7%.

Springfield’s domestic yield has also exceeded the average U.S. domestic yield for Lower 48 communities by a wide margin in each of the last nine years and the first three quarters in 2020, as illustrated in Exhibit 10. Although Springfield’s domestic length of haul of 1,039 miles in 2019 was only 11.0% shorter than the average U.S. length of haul of 1,168 miles, Springfield’s domestic yield of $0.191 was 29.9% higher than the U.S. average domestic yield of $0.147 in 2019. Likewise, Springfield’s domestic length of haul of 1,100 miles in the first three quarters in 2020 was 6.4% shorter than the average U.S. length of haul of 1,175 miles, but Springfield’s domestic yield of $0.141 was 15.1% higher than the U.S. average domestic yield of $0.123.

Exhibit 9. Average domestic one-way fare at Springfield and average U.S. airports domestic one-way fare 2011-YTD 3Q 2020 (U.S. DOT data).

All U.S. Airports Average Domestic One-Way Fare SGF Average Domestic One-Way Fare

$250

$218 $213 $212 $208 $211 $205 $204 $206 $198 $200

$188 $182 $182 $178 $155

Way Fare Way $172 $172 $172

- $170 $170 $150

$144

$100

Average DomesticOne Average $50

$0 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD 3Q 2020

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Exhibit 10. Springfield and average U.S. airport domestic yield and Springfield and U.S. airport length of haul: 2011-YTD 3Q 2020 (U.S. DOT data).

All U.S. Airports Average Domestic One-Way Yield SGF Average Domestic One-Way Yield All U.S. Airports Average Domestic Length of Haul SGF Average Domestic Length of Haul $0.220 3,000 $0.202 $0.200 $0.193 $0.200 $0.189 $0.191 $0.191 $0.187 $0.185 $0.186

$0.180 2,500

$0.160 $0.141 $0.158 2,000 $0.140 $0.151 $0.153 $0.152 $0.146 $0.145 $0.145 $0.146 $0.147

$0.120 $0.123 1,500 $0.100 1,175 1,178 1,185 1,189 1,194 1,187 1,174 1,167 1,168 1,175

$0.080 of Haul Length 1,096 1,099 1,098 1,108 1,115 1,096 1,100 1,000 1,080 1,055 1,039 Average Yield Domestic Average $0.060

$0.040 500

$0.020

$0.000 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD 3Q 2020

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Leakage to Other Airports in the Region

The primary catchment area of Springfield-Branson National Airport is illustrated in the Exhibit 11. The catchment area includes 258 zip codes in 32 counties in Southwestern Missouri and thee counties in North Central Arkansas.

Exhibit 11. Zip codes included in the catchment area of Springfield-Branson National Airport.

Springfield leaks 55.3% of the traffic generated in its catchment area to other airports in the region, and the average fare paid by most of the traffic leaked to other airports is lower than the fare paid by passengers captured at Springfield. The table in Exhibit 12 illustrates the airports in the region, the distance from Springfield, the domestic + international passengers per day each way (PDEW)

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captured from Springfield’s catchment area, the share of passengers captured from Springfield’s catchment area and the average fare paid at the airport where the passengers were captured. The data shows the true market size of the Springfield catchment area is 3,544.8 PDEW, but Springfield- Branson National Airport captured only 1,585.8 PDEW or 44.7% of the traffic generated in its catchment area. The average fare paid at Springfield was $221 (the average domestic fare was $198, and the average international fare was $511).

Kansas City International Airport captured 736.8 PDEW or 20.8% of the traffic at an average fare of $191, St. Louis Lambert International Airport captured 649.3 PDEW at an average fare of $205, Northwest Arkansas Regional Airport captured 162.2 PDEW at an average for of $255, and Tulsa International Airport captured 151.3 PDEW at an average fare of $192.

Exhibit 12. Springfield catchment area domestic and international passengers per day each way (PDEW), airport share and average one-way fare by airport. (2019 leakage data).

Road Miles Airport One-Way Airport Name Airport Code from SGF PDEW Share Fare Springfield-Branson National Airport SGF N/A 1,585.8 44.7% $221 Kansas City Int'l Airport MCI 190 736.8 20.8% $191 St. Louis Int'l Airport STL 225 649.3 18.3% $205 Northwest Arkansas National Airport XNA 126 162.2 4.6% $255 Tulsa Int'l Airport TUL 173 151.3 4.3% $192 Joplin Regional Airport JLN 72 114.9 3.2% $253 Dallas/Ft. Worth Int'l Airport DFW 419 43.3 1.2% $300 Others (BLV/DAL/HRO//LIT/MEM) 101.2 2.9% $169 All Airports 3,544.8 100.0% $213

STRATEGIC PLAN

Proposed New Route

Springfield is applying for SCASD funding for a minimum revenue guarantee for service to Washington Reagan Airport. Prior to the pandemic, the Washington/Baltimore market (to include DCA, IAD and BWI) was Springfield’s largest origin and destination (O&D) market without nonstop service and ranked as the tenth largest market. The market size was 40.4 PDEW at an average one-way fare of $230 in 2019. The table in Exhibit 13 ranks Springfield’s 15 largest O&D markets in 2019.

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Exhibit 13. 2019 nonstop service indicator, PDEW and average one-way fare in the 15 largest Springfield-Branson National Airport origin and destination markets.

Nonstop 2019 2019 Rank Market in 2019 PDEW Fare 1 Orlando/Sanford Yes 99.0 $116 2 Chicago Yes 97.3 $177 3 Phoenix/Mesa Yes 86.0 $111 4 Tampa/St. Petersburg Yes 83.2 $93 5 Los Angeles Basin Yes 83.0 $184 6 Denver Yes 69.4 $187 7 Dallas/Ft. Worth Yes 64.6 $207 8 Las Vegas Yes 63.5 $133 9 Atlanta Yes 58.8 $213 10 Washington/Baltimore No 40.4 $230 11 Houston Yes 36.0 $213 12 New York/Newark No 35.6 $252 13 Destin/Ft. Walton Beach Yes 34.3 $67 14 South Florida No 29.5 $236 15 Charlotte/Concord Yes 25.6 $255

Self-Sufficiency of the Proposed New Route

Springfield-Branson National Airport believes the proposed Springfield-Washington route will become self-sufficient during the revenue guarantee period and continue to operate beyond the revenue guarantee period. American began Springfield-Charlotte service in late 2014 using SCASD funding for a minimum revenue guarantee, and that service has continued to operate successfully since service began. Service to Washington Reagan is a natural extension of the routes flown by American from Springfield.

Goals and Objectives

Springfield has four goals and objectives for its Small Community Air Service Development Grant proposal for service to Washington Reagan.

• Nonstop access to Washington Reagan Airport. • Additional connecting service to markets served via Washington Reagan, particularly large O&D markets in the Northeast. • More competition and lower fares in the local Springfield-Washington/Baltimore market and the connecting markets beyond Washington Reagan. • Recapture catchment area traffic leaked to other airports in the region.

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Target Airline Support

Springfield-Branson National Airport has a good relationship with American and has been discussing the proposed route with American since the Springfield-Charlotte service began in 2014. American also made a recent decision to invest in its Springfield operation and to invest in Springfield’s economy when it signed an agreement with the Airport to lease a new hangar for Embraer 175 maintenance. American has also provided a letter of support for the SCASD funding for the proposed Springfield-Washington service.

Springfield-Washington Reagan Traffic and Fare Trends

There is significant demand for nonstop Springfield-Washington Reagan service, and the market size was growing prior to the COVID-19 pandemic. As shown in Exhibit 14, the Springfield- Washington/Baltimore market size (the summation of the DCA, IAD and BWI market sizes) increased 92.3% from 21.0 PDEW in 2011 at an average fare of $257 to 40.4 PDEW in 2019 at an average fare of $230, with a particularly strong increase in the final year prior to the pandemic when traffic increased from 33.0 PDEW in 2018 to 40.4 PDEW in 2019.

Exhibit 14. 2011 – YTD 3Q 2020 Springfield-Washington/Baltimore (DCA/IAD/BWI) PDEW and average one-way fare (DOT DB1A data).

SGF-DCA/IAD/BWI PDEW SGF-DCA/IAD/BWI One-Way Fare

50 $300

$267 $267 45 $257 $253 40.4 $237 $250 40 $225 $220 $218 $230 35 35.4 35.1 $187 $200 33.0 30 31.7 32.3 Way Fare Way -

25 $150

23.3 20 21.0 19.8 $100 15 One Average

Passengers per Day perWay Each Day Passengers 16.0

10 $50

5

0 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD 3Q 2020

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Quarterly traffic and fare data illustrated in Exhibit 15 shows the Springfield-Washington/Baltimore market generated more than 40 PDEW in each of the three quarters in 2019 immediately preceding the pandemic-related downturn beginning in first quarter 2020. The impact of the pandemic caused a sharp decline in traffic in the first three quarters of 2020 as demand declined 60.3% to 16.0 PDEW in first quarter 2020, 5.1 PDEW in second quarter 2020 and 15.4 PDEW in third quarter 2020. Natural stimulation of traffic when nonstop service is added in a market will help traffic recover to the pre-pandemic market size and eventually exceed the pre-pandemic market size.

Exhibit 15. Third quarter 2017 – third quarter 2020 Springfield - Washington/Baltimore (DCA/IAD/BWI) PDEW and average one-way fare (DOT DB1A data).

SGF-DCA/IAD/BWI PDEW SGF-DCA/IAD/BWI One-Way Fare

50 $287 $288 $300 $272 $264 43.8 44.1 45 $248 40.7 $236 $234 $235 $239 $250 40 $213 $210 35 36.6 36.3 35.6 $200 34.4 34.8 30 32.9 $160 Way Fare Way

$148 - 25 27.2 27.5 $150

20 $100 15 15.4 One Average

Passengers per Day perWay Each Day Passengers 10 $50 5 5.1 0 $0

Connecting Traffic Opportunities on American at Washington Reagan

American could carry traffic not only in the local Springfield-Washington Reagan market, but American could also carry traffic connecting beyond its hub at Washington Reagan hub. As shown in Exhibit 16, American could carry traffic in up to 21 non-circuitous airports beyond Washington Reagan, including large Springfield O&D markets such as New York/Newark, Boston and Philadelphia. In addition to the local market size of 40.4 PDEW in 2019, the 21 non-circuitous markets American could logically carry beyond Washington Reagan generated 118.4 PDEW in 2019. The collective market size of these 21 markets would likely increase with service from Springfield to an additional network carrier hub.

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Exhibit 16. Connecting markets at American’s Washington Reagan hub.

Grant Amendments/Alternate Strategies

If grant funding is awarded for Washington Reagan service, and the community is not successful in its effort to recruit American to Washington Reagan, the Airport would ask the Department to consider allocation of award funds for service to an alternate destination. Potential alternate destinations include Philadelphia, New York LaGuardia, New York JFK, Newark, Boston and Miami.

PROJECT IMPLEMENTATION, MONITORING AND FUNDING

Public/Private Partnerships

Springfield-Branson National Airport has partnered with the Springfield Convention and Visitors Bureau, the Springfield Area Chamber of Commerce, the City of Springfield, and the Missouri

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Department of Transportation for this project. The Springfield Convention and Visitors Bureau, the Springfield Area Chamber of Commerce and the City of Springfield have pledged a total of $90,000 in cash funding to be applied to the proposed minimum revenue guarantee, and the Missouri Department of Transportation has pledge $60,000 in cash funding to be applied to the proposed minimum revenue guarantee.

Project Funding

Springfield-Branson National Airport is requesting Small Community Air Service funding of $750,000 for its proposed minimum revenue guarantee and marketing support for service between Springfield and Washington Reagan on American. Together, the Springfield Convention and Visitors Bureau, the Springfield Area Chamber of Commerce, the City of Springfield, and the Missouri Department of Transportation have pledged cash funding totaling $150,000 for minimum revenue guarantee funding to supplement the proposed federal funding. The total community- based cash pledged for the project 20% of the requested grant amount. The Airport’s incentive plan enables the Airport to spend up to $25,000 for marketing and promotion of the new route and to waive landing fees for a period of two years. The landing fee in-kind contribution is estimated at $90,277 for two years. Total project funding is $1,015,277. The sources and uses of the project funding are summarized in Exhibit 17.

Exhibit 17. Sources and uses of project funding.

Cash Cash In-Kind Waiver Total Funding Source Revenue Guarantee Marketing Landing Fee Project Funding Department of Transportation $750,000 $750,000 Community Organizations $90,000 $90,000 Missouri Department of Transportation $60,000 $60,000 Springfield National Airport $25,000 $90,277 $115,277 Total $900,000 $25,000 $90,277 $1,015,277 Implementation Timeline

The proposed implementation timeline for the project is illustrated in Exhibit 18 and is driven by an assumption the Department will announce SCASD award funding later than June 2021, and American would begin the proposed Washington Reagan service in September 2021. Once the award decision is announced, the Airport will advise American of the award. Assuming discussions with American are successful, the next major schedule change date which would provide sufficient time for advance bookings is likely an early September 2021 schedule change date. Once the service begins, the Airport will remain in close communication with the American operating the proposed service to monitor the performance of the route.

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Exhibit 18. Proposed project timeline.

Activity/Project Milestone Potential Dates SCASD Grant Award Announcement March/April 2021 Execute Grant Agreement with DOT May 2021 Negotiate Minimum Revenue Guarantee with Airline June 2021 Announce Service July 2021 Publish Schedule July 2021 Market Route (Pre-Launch) July-August 2021 Monitor Advance Bookings July-August 2021 Adjust Marketing Plan Based on Advance Bookings July-August 2021 Begin Service September 2021 Market Route (Post-Launch) September 2021 and Beyond Operate Service with MRG September 2021-August 2024 Monitor Route Performance September 2021 and Beyond Submit Grant Status Reports to DOT Quarterly 3Q 2021 - 3Q 2024

PROJECT MONITORING AND FINANCIAL CONTROL

Success Metrics

Four goals have been established to measure the success of the proposed project and are illustrated in Exhibit 19. The goals of the project are aimed at increased traffic and lower fares. These goals are objective and can be measured by comparing year-over-year market size changes and changes in fares on a quarterly basis as DOT traffic and revenue data is published. Another measure of success will be the load factor performance on the flights operated in the proposed market. High load factors (defined as load factors in the upper 70s or greater) will constitute traffic metric success. The amount of subsidy required by American will also provide an indication of the route’s financial success.

Exhibit 19. Project goals and success metrics.

Project Goals Success Metric • Nonstop access to Washington Reagan Airport. • Inauguration of nonstop service to Washington Reagan. • Additional connecting service to markets served • Springfield-Washington Reagan market size via Washington Reagan, particularly large O&D growth and market size growth in markets that markets in the Northeast. could connect beyond Washington Reagan. • More competition and lower fares in the local • Quarterly year-over-year declines in fares for the Springfield-Washington/Baltimore market and the local Springfield-Washington Reagan market and connecting markets beyond Washington Reagan. the largest markets connecting beyond Washington Reagan. • Recapture catchment area traffic leaked to other • Increased retention (and less leakage) of the airports in the region. traffic generated in Springfield’s catchment area.

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Previous SCASDP Funding

The Springfield-Branson National Airport received SCASD funding in the amount of $450,000 (DOT- OST-2013-0120). The funding was successfully used for a minimum revenue guarantee for American Airlines service from Springfield to Charlotte. American began service on November 5, 2015 with two daily nonstops on 50-seat Embraer 145 aircraft. With the exception of a few weeks early in the COVID-19 pandemic, American has continuously operated the service since it was launched, and it is currently operated twice daily with 65-seat CRJ-700 aircraft.

Legal Sponsor

The Springfield-Branson National Airport is the legal sponsor responsible for administering the program, and the Springfield-Branson National Airport Board of Directors is the governing body.

Springfield-Branson National Airport 2300 North Airport Blvd. Springfield, MO 65802 Brian C. Weiler, A.A.E. Director of Aviation 417-414-2468 / [email protected]

Financial Controls

As the sponsor, the Springfield-Branson National Airport will be the responsible party for all fiscal matters and the Department’s reporting requirements. The Springfield-Branson National Airport is established as a public governing body. As a public entity, the Department can be assured that proper financial controls are in place to guarantee the Department’s Grant will be used in accordance with any agreement. The Springfield-Branson National Airport understands that the Grant is a reimbursable grant, meaning the Commission is responsible for program expenditures and will submit invoices to the Department for reimbursement, based on a percentage of the total grant request.

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APPENDIX A: REQUIRED SUMMARY INFORMATION

APPLICATION UNDER

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2020-0231

SUMMARY INFORMATION

A. PROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER, INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN) OR TAX ID.

Legal Sponsor Name: Springfield-Branson National Airport Name of Signatory Party for Legal Sponsor: Brian C. Weiler, A.A.E.; Director of Aviation

DUNS Number: 24-706756

EIN/Tax ID:

B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING:

Springfield, Missouri

C. PROVIDE THE FULL AIRPORT NAME AND 3-LETTER IATA AIRPORT CODE FOR THE APPLICANT(S) AIRPORT(S) (ONLY PROVIDE CODES FOR THE AIRPORT(S) THAT ARE ACTUALLY SEEKING SERVICE).

Springfield-Branson National Airport: SGF

THE AIRPORT SEEKING SERVICE IS NOT LARGER THAN A SMALL HUB AIRPORT:

UNDER FAA HUB CLASSIFICATIONS EFFECTIVE ON THE DATE OF SERVICE OF THE ATTACHED ORDER

AS OF CALENDAR YEAR 1997

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DOES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE ISSUED BY THE FEDERAL AVIATION ADMINISTRATION UNDER 14 CFR PART 139? (IF “NO”, PLEASE EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR WHETHER AN APPLICATION UNDER PART 139 IS PENDING.)

Yes No (explain) X D. SHOW THE DRIVING DISTANCE FROM THE APPLICANT COMMUNITY TO THE NEAREST:

1. Large hub airport: Dallas/Ft. Worth International Airport (DFW); 419 miles

2. Medium hub airport: Kansas City International Airport (MCI); 190 miles

3. Small hub airport: Northwest Arkansas National Airport (TUL); 126 miles

4. Airport with jet service: Springfield-Branson National Airport has jet service; Joplin Regional Airport (JLN) is the closest alternate airport with jet service (72 miles)

E. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.

1. MO-7

F. APPLICANT INFORMATION: (CHECK ALL THAT APPLY) Not a Consortium Interstate Consortium Intrastate Consortium X Community currently receives subsidized , receives assistance under the Alternate Essential Air Service Pilot Program, or is a participant in, and has received a grant under, the Community Flexibility Pilot Program Community (or Consortium member) previously received a Small Community Air Service X Development Program Grant If previous recipient: Provide year of grant(s): 2013 ; and, the text of the grant agreement section(s) setting forth the scope of the grant project:

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G. PUBLIC/PRIVATE PARTNERSHIPS: (LIST ORGANIZATION NAMES) PUBLIC PRIVATE Springfield-Branson National Airport Springfield Regional Air Service Alliance

H. PROJECT PROPOSAL:

1a. GRANT GOALS: (CHECK ALL THAT APPLY)

Launch New Carrier Secure Additional Service Upgrade Aircraft X First Service New Route Service Restoration X X Regional Service Surface Transportation Professional Services X Other (explain)

______

1b. GRANT GOALS: (SYNOPSIS)

Concisely describe the scope of the proposed grant project.

Springfield-Branson National Airport and the Springfield Regional Air Service Alliance are seeking nonstop service to Washington Reagan National Airport on American Airlines. Washington Reagan service would provide service not only in the local market, but would also serve as a connecting hub to other destinations on the West Coast, Hawaii, Asia and Australia.

2. FINANCIAL TOOLS TO BE USED: (CHECK ALL THAT APPLY) Marketing (including Advertising): promotion of the air service to the public X Start-up Cost Offset: offsetting expenses to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration) Revenue Guarantee: an agreement with an air service provider setting forth a minimum guaranteed profit margin, a portion of which is eligible for reimbursement by the community X Recruitment of U.S. Air Carrier: air service development activities to recruit new air service, including expenses for airport marketers to meet with air service providers to make the case X for new air service

Fee Waivers: waiver of airport fees, such as landing fees, to encourage new air service; counted as in-kind contributions only X Ground Handling Fee: reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers X

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Travel Bank: travel pledges, or deposited monetary funds, from participating parties for the purchase of air travel on a U.S. air carrier, with defined procedures for the subsequent use of the pledges or the deposited funds; counted as in-kind contributions only Other (explain below)

______

I. EXISTING LANDING AIDS AT LOCAL AIRPORT:

Full ILS Outer/Middle Marker Published Instrument Approach X X X Localizer Other (specify) J. PROJECT X COST: DO NOT ENTER TEXT IN SHADED AREA

REMINDER: LOCAL CASH CONTRIBUTIONS MAY NOT BE PROVIDED BY AN AIR CARRIER (SEE “TYPES OF CONTRIBUTIONS FOR REFERENCE).

Line Description Sub Total Total Amount

1 Federal amount requested $750,000

2 State cash financial contribution $60,000

Local cash financial contribution

3a Airport cash funds $25,000

3b Non-airport cash funds $90,000

3 Total local cash funds (3a + 3b) $115,000

4 TOTAL CASH FUNDING (1+2+3) $925,000

In-Kind contribution

5a Airport In-Kind contribution** $90,277

5b Other In-Kind contribution** $0

5 TOTAL IN-KIND CONTRIBUTION (5a + 5b) $90,277

6 TOTAL PROJECT COST (4+5) $1,105,277

K. IN-KIND CONTRIBUTIONS

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For funds in lines 5a (Airport In-Kind contribution) and 5b (Other In-Kind contribution), please describe the source(s) of fund(s) and the value ($) of each.

Springfield-Branson National Airport will waive landing fees for two years for the proposed new service. The value of this in-kind incentive is calculated based on the airport’s landing fee rate of $1.65 per 1,000 pounds multiplied by the maximum landing weight of the EMB-175 of 74,950 pounds multiplied by 365 days per year multiplied by two years ($1.65*74.95*365*2=$90,277.28).

L. IS THIS APPLICATION SUBJECT TO REVIEW BY AN AFFECTED STATE UNDER EXECUTIVE ORDER 12372 PROCESS? a. This application was made available to the State under the Executive Order 12372 Process for review on (date) ______.

b. Program is subject to E.O. 12372, but has not been selected by the State for review.

c. Program is not covered by E.O. 12372. X M. IS THE LEAD APPLICANT OR ANY CO-APPLICANTS DELINQUENT ON ANY FEDERAL DEBT? (IF “YES”, PROVIDE EXPLANATION)

No Yes (explain) X ______

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APPENDIX B: LETTERS OF SUPPORT

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