APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET DOT-OST-2016-0037 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: Millington Airport Authority Name of Signatory Party for Legal Sponsor: Roy Remington, Executive Director DUNS Number: 0081302180000 EIN/Tax ID: 62-1534081
B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING:
1. City of Millington, TN
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).
1. Millington Regional Jetport, NQA
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
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)
Proposal of Millington Regional Jetport • Millington, Tennessee • May 2016 1
D. SHOW THE DRIVING DISTANCE FROM THE APPLICANT COMMUNITY TO THE NEAREST:
1. Large hub airport: Atlanta Hartsfield-Jackson International (ATL), 400 miles 2. Medium hub airport: Nashville International (BNA), 204 miles 3. Small hub airport: Memphis International (MEM), 31 miles 4. Airport with jet service: Memphis International (MEM), 31 miles
E. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.
1. TN-09
F. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)
Not a Consortium Interstate Consortium Intrastate Consortium
Community currently receives subsidized Essential Air Service, or receives assistance under the Alternate Essential Air Service Pilot Program
Community (or Consortium member) previously received a Small Community Air
Service Development Program Grant
If previous recipient: Provide year of grant(s): _____; 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
1. Millington Airport Authority 1. Millington Industrial Development Board 2. City of Millington, TN 2. Millington Chamber of Commerce
H. PROJECT PROPOSAL:
1a. GRANT GOALS: (CHECK ALL THAT APPLY)
Launch New Carrier Secure Additional Service Upgrade Aircraft
First Service New Route Service Restoration
Regional Service Surface Transportation Professional Services
Other (explain)
Ground handling and fee waiver assistance, marketing and promoting new scheduled air service.
1b. GRANT GOALS: (SYNOPSIS)
Concisely describe the scope of the proposed grant project.
Millington Regional Jetport seeks its first Grant for marketing and ground handling assistance to recruit service to New York/Newark, Washington, DC/Baltimore, or another major East Coast destination. The Airport has developed more than $37,500 in local community support for the project. This Grant is the final piece of funding needed for service inauguration.
2. FINANCIAL TOOLS TO BE USED: (CHECK ALL THAT APPLY)
Marketing (including Advertising): promotion of the air service to the public
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
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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 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
Ground Handling Fee: reimbursement of expenses for passenger, cabin, and ramp (below
wing) services provided by third party ground handlers
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
Localizer Other (specify) GPS
J. PROJECT 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 $250,000 2 State cash financial contribution $0 Local cash financial contribution 3a Airport cash funds $0 3b Non-airport cash funds $37,500 3 Total local cash funds (3a + 3b) $37,500 4 TOTAL CASH FUNDING (1+2+3) $287,500 In-Kind contribution 5a Airport In-Kind contribution** $80,000
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5b Other In-Kind contribution** $0 5 TOTAL IN-KIND CONTRIBUTION (5a + 5b) $80,000 6 TOTAL PROJECT COST (4+5) $367,500
K. IN-KIND CONTRIBUTIONS
For funds in lines 5a (Airport In-Kind contribution) and 5b (Other In-Kind contribution), please describe the source(s) of fund(s) and the value ($) of each. The Jetport will waive terminal rent and landing fees for the first two years of new service. The Jetport in-kind contribution is estimated based on a fee of $1.90 per one thousand pounds and an $80 ramp fee per turn. The estimate assumes the airline will operate a minimum of two regional jet departures per week for the two-year incentive period.
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.
M. IS THE LEAD APPLICANT OR ANY CO-APPLICANTS DELINQUENT ON ANY FEDERAL DEBT? (IF “YES”, PROVIDE EXPLANATION)
No Yes (explain)
______
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Contents
LETTER OF SUPPORT ...... 7
LEGAL SPONSOR ...... 8
LETTER FROM MILLINGTON AIRPORT AUTHORITY ...... 9
INTRODUCTION ...... 10
AIR SERVICE OVERVIEW ...... 11
Catchment Area and Alternate Airports ...... 11
AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES ...... 12
Capacity Trends ...... 12
Traffic Trends ...... 13
The Relationship of Capacity, Domestic Traffic and Domestic Fare Trends ...... 15
Memphis Fares versus Fares at Other Airports in the Region ...... 16
Memphis Fares versus Fares at Other Airports in the Lower 48 United States ...... 17
STRATEGIC PLAN ...... 18
Ground Handling and Marketing Assistance for Low-Cost or Ultra-Low-Cost Carrier Service ...... 18 Marketing of New Service: ...... 20
Goals ...... 22
PARTNERSHIPS, FUNDING, IMPLEMENTATION, SUCCESS METRICS AND FINANCIAL CONTROL ...... 23
Public / Private Partnerships ...... 23
Project Funding ...... 23
Implementation Timeline ...... 23
Success Metrics ...... 24
Financial Controls ...... 25
CONCLUSION ...... 26
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LETTER OF SUPPORT
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LEGAL SPONSOR The Millington Airport Authority is the legal sponsor responsible for administering the proposed air service development grant. The Authority is a government agency. Mr. Roy Remington, the Executive Director will be responsible for ensuring all aspects of the grant requirements, if awarded, are executed.
Millington Airport Authority 8182 Hornet Avenue Millington, TN 38053 Roy Remington, Executive Director (901) 873-5792 [email protected]
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LETTER FROM MILLINGTON AIRPORT AUTHORITY
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INTRODUCTION Millington Regional Jetport (NQA) herein submits its application for a 2016 Small Community Air Service Development Grant. NQA is seeking a moderate grant funding of $250,000 for marketing and ground handling assistance to aid in securing the first scheduled air carrier. Millington Regional Jetport is pursuing a carrier such as ViaAir, National Airlines or Spirit Airlines for less-than- daily scheduled service as an alternative to the flights operated by airlines at Memphis International Airport (MEM). Unable to absorb the higher operation costs at MEM, the air carriers listed can look to Millington Regional Jetport to successfully serve the Memphis, TN region. Millington Regional Jetport can offer airlines lower rates and charges than those experienced currently by air carriers at Memphis International Airport.
The Millington Regional Jetport, home to 1.3 million people within a 60-minute drive, trusts it can best serve the community and catchment region by providing the public with less-than-daily, leisure service with a low-cost or ultra-low cost carrier partner. With the third longest commercial service runway in the State of Tennessee, as well as an Aircraft Rescue and Fire Fighting Index E, the airport needs little improvement to handle commercial service. Because of these strengths, discussions with several carriers including ViaAir, National Airlines and Spirit Airlines have been progressing. ViaAir has potential to expand their current scheduled network to additional domestic cities including New York/Newark and/or Washington, DC/Baltimore. Additionally, Spirit Airlines could offer potential nonstop service to destinations such as Fort Lauderdale and Orlando. The proposed service, if initiated at Millington, is comparable to Spirit Airline’s successful and growing service at Latrobe, Pennsylvania, where Spirit Airlines serves the region as a low- cost alternative to Pittsburgh International Airport. Scheduled air service by any or all of the identified carriers would be economically beneficial to the entire region.
Without current air service, NQA area passengers utilize the Memphis International Airport for most of their travel needs. Memphis International Airport has experienced significant declines in both capacity and traffic over the last ten years. Capacity at Memphis International Airport is down nearly 70% since its peak in 2006. In 2015, the average domestic one-way fare at Memphis was $203, 12.2% higher than the typical domestic one-way fare at the average Lower 48 airport. Millington Regional Jetport, with extremely low airport operating costs, is best suited for attracting and retaining a low-cost or ultra-low-cost carrier. Together with community support and the Department’s favorable review of the application, the Millington Regional Jetport would be able to offer key incentives to a low-cost or ultra-low-cost carrier to assist in achieving the goal of securing scheduled air service.
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AIR SERVICE OVERVIEW Catchment Area and Alternate Airports Millington Regional Jetport serves southwest Tennessee and is located approximately 25 miles north of Memphis International Airport. Based on a recently updated leakage study and traffic at Memphis International Airport, nearly 4,900 daily passengers originated or ended in the region around Memphis, with most of these passengers using Memphis International Airport. Approximately 79% of the traffic originating within a 60-minute drive of Millington Regional Jetport uses Memphis International Airport, and approximately 21% uses Nashville International Airport. The map in Exhibit 1 below illustrates the location of Millington Regional Jetport, the 30-, 60- and 90-minute drive times from the Jetport, and the locations of other airports in the region with commercial service. The population within a 60-minute drive of the Jetport is just over 1.2 million. The economy is strengthened by the presence of the Naval Support Activity Mid-South, a naval base calling Millington, TN, home. This base supports over 8,000 staff and personnel.
Exhibit 1: 30-, 60- and 90-Minute Drive Times from Millington Regional Jetport and Locations of Other Airports in the Region Relative to Millington Regional Jetport.
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AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES Capacity Trends Although Millington Regional Jetport has no current commercial passenger service, capacity at the primary airport in the region, Memphis International Airport, has declined 69.6% from more than 21,341 seats per day each way to just 6,486 seats per day each way in 2015. Exhibit 2 illustrates the average number of seats scheduled at Memphis International Airport over the last ten years.
Northwest Airlines operated a hub at Memphis International Airport for many decades. Northwest subsequently merged with Delta Air Lines in 2008 and as the Delta/Northwest merger evolved, Delta continued to reduce capacity and eliminate multiple nonstop routes from Memphis as aircraft were retired and capacity shifted to other Delta Air Lines hubs. The region and catchment area passengers have been severely impacted by the reduction. Other airlines have not added sufficient service to fill the capacity lost during this time period.
Exhibit 2: Seats per Day Each Way at Memphis International Airport; 2006-2015 (OAG Data).
Seats per Day Each Way
25,000
21,341 21,250
20,388 18,793 20,000 18,145
15,000 15,704
10,000 11,922
8,540 5,000 6,271 6,486 Seats per Day Way Each Day per Seats
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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Traffic Trends With no current commercial passenger air service, the data for air carrier traffic at NQA is not directly available. However, data for Memphis International Airport, located approximately 31 miles to the South of NQA, provides statistics regarding what is occurring as a whole in the region. While capacity at Memphis International Airport peaked in 2006, traffic did not peak until 2007. Today, traffic is still down significantly from 2007 levels; 24% from 4,780,060 O&D passengers in 2007 to 3,630,830 O&D passengers in 2015. Domestic only traffic is down 25% since 2007 to 3,313,270 O&D passengers for calendar year 2015, and international traffic is down 12.2% since 2007 to 317,560 O&D passengers in 2015.
Exhibit 3: Annual Origin and Destination Passengers at Memphis International Airport; 2006-2015 (DOT DB1B Data).
Domestic PDEW International PDEW
5,000,000 361,550
4,500,000 348,990
4,000,000 332,570 301,690 317,560 3,500,000 295,810 296,160 289,860 296,250 3,000,000 4,418,510 300,510 4,160,810 3,612,730 2,500,000 3,226,310 3,313,270 2,000,000 3,182,140 3,070,300 3,032,660 1,500,000
Annual Passengers O&D Annual 2,913,840 1,000,000 2,969,810 500,000
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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The annual 2015 O&D Memphis traffic data translates to 4,539 domestic and 435 international passengers per day each way (PDEW) as illustrated in Exhibit 4.
Exhibit 4: Passengers per Day Each Way (PDEW) at Memphis International Airport; 2006-2015 (DOT DB1B Data).
Domestic PDEW International PDEW
7,000 495 6,000 478
456 5,000 406 435 412 405 406 413 397 4,000 PDEW ) ( 3,000 6,053 4,949 4,359 4,539 2,000 5,700 4,420 4,206 3,992 4,068 4,154
Passengers per Day Each Way per Passengers Day Each Way 1,000
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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The Relationship of Capacity, Domestic Traffic and Domestic Fare Trends Exhibit 5 illustrates the relationship between capacity, domestic traffic and the average domestic one-way fare at Memphis International Airport. As capacity and traffic have trended down, the average domestic one-way fare has increased and stood at $203 in calendar year 2015. The 2015 fare of $203 represents an average fare 13.4% higher than 2006 when capacity peaked and 19.4% higher than 2007 when traffic peaked. The addition of increased air carriers, service levels and lower fares into the region is expected to not only lower airfares, but boost customer demand, thereby stimulating the market. NQA is uniquely qualified to be the airport of choice given the extremely low cost of operation.
Exhibit 5: Seats per Day Each Way, Domestic Passengers per Day Each Way (PDEW) and Average Domestic One-Way Fare at Memphis International Airport; 2006-2015 (DOT DB1B Data).
Seats per Day Each Way Domestic PDEW Average Domestic One-Way Fare
25,000 $300
21,341 21,250 20,388 20,000 $230 $218 $250 18,793 18,145 $214 $218 15,000 Fare Way $198 $203 $199 15,704 $200
Way $179 $180 10,000 $170 11,922 6,486 6,271 8,540 $150 5,000 - One Average 5,700 6,053 4,539 4,949 4,420 4,359 4,206 3,992 4,068 4,154
Seats and Passengers per Day Each Day per Passengers and Seats 0 $100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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Analysis of capacity, traffic and the average domestic fare by quarter for the last nine quarters shows Memphis capacity declined 11.2% from 7,608 seats per day each way in fourth quarter 2013 to 6,757 seats per day in fourth quarter 2015 (see Exhibit 6). The Memphis International Airport high average fares, along with reduced capacity, continues to affect the growth opportunity of air service within the region.
Exhibit 6: Seats per Day Each Way, Passengers per Day Each Way (PDEW) and Average Domestic One-Way Fare at Memphis International Airport; Fourth Quarter 2013 through Fourth Quarter 2015 (DOT DB1B Data).
Seats per Day Each Way Domestic PDEW Average Domestic One-Way Fare
8,000 $300
6,463 7,000 6,406 7,608 6,280 6,284 5,825 6,857 6,865 6,757 6,000 $250 4,996 $226 $222 $208 $220 4,832 4,835 5,000 $216
$203 Fare Way 4,000 $200 4,356 4,246 $208 4,392 4,497 $199 3,749 3,744 3,000 $190
2,000 $150 - One Average
Seats and Passengers DEW per Passengers and Seats 1,000
0 $100 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4
Memphis Fares versus Fares at Other Airports in the Region The average domestic one-way fare at Memphis International Airport was $203 in 2015. Among the larger airports in the region – Nashville and St. Louis – Memphis had the highest average domestic fare. In fact, the average domestic Memphis fare was 11.5% or $21 higher than the next highest fare, Nashville, as illustrated in Exhibit 7. The higher than average airfares compared to those in the region provide support for our assertion: the demand for less-than-daily low-fare air service would be received phenomenally by the consumer.
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Exhibit 7: Average One-Way Domestic Fares in 2015 at Memphis, Nashville and St. Louis (DOT DB1B Data).
$203 Memphis
$182 Average Fare Nashville
$177 St. Louis
$0 $100 $200 $300
Memphis Fares versus Fares at Other Airports in the Lower 48 United States In 2015, the average domestic Memphis fare of $203 was 12.2% higher than the average domestic fare of $181 at the average Lower 48 airports. Exhibit 8 illustrates the average domestic fare trend over the last ten years at Memphis relative to the average domestic fare at the average lower 48 airport. The trend clearly demonstrates the need for lower fares and additional competition in the Memphis region, as the trend line is consistently well above the Lower 48 average. It is the intent to have NQA become the low fare airport providing a viable option to the region’s passengers.
Exhibit 8: Average One-Way Domestic Fares at Memphis International Airport Versus the Average One- Way Domestic Fare at the Average Lower 48 Airport ; 2006-2015 (DOT DB1B Data).
Memphis Average Domestic One-Way Fare Average Lower 48 Airport Domestic One-Way Fare $300
$250 $230 $218 $214 $218 $198 $199 $203
Way Fare Way $200 $179 $180 - $170 $188 $150 $177 $181 $181 $159 $171 $149 $157 $149 $143 $100
$50 Domestic One Domestic
$0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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STRATEGIC PLAN Ground Handling and Marketing Assistance for Low-Cost or Ultra-Low-Cost Carrier Service All requested funding will be used to provide ground handling and marketing to the carrier operating the proposed ultra-low-cost service, as well as to market and advertise the ultra-low- cost service within the Memphis Metropolitan Statistical Area. The distribution of funding would be as follows: 80% funding used for ground handling (up to $100,000 per year) and 20% of SCASD funding would be used for marketing and advertising (up to $25,000 per year). The same ratios would apply to community cash matching funds (up to $15,000 per year for ground handling and up to $3,750 per year for advertising and marketing). The proposed budget and sources of funding for the project are summarized in Exhibit 9. Ground handling includes services such as above and below wing activities integral to successful, efficient flight operations at the NQA station.
Exhibit 9: Proposed Sources and Uses of Project Funds*
Ground Handling Marketing Year 1 Year 2 Total Year 1 Year 2 Total Total SCASD Funding $100,000 $100,000 $200,000 $25,000 $25,000 $50,000 $250,000 Community Funding $15,000 $15,000 $30,000 $3,750 $3,750 $7,500 $37,500 Total Project Funding $115,000 $115,000 $230,000 $28,750 $28,750 $57,500 $287,500
*Does not included airport in-kind incentives in the form of fee waivers valued at $80,000.
ViaAir, National Airlines or Spirit Airlines will be the initial air carriers targeted to operate the less- than-daily service at Millington Regional Jetport. The Jetport would pursue routes to business and leisure destination markets served, or proposed, by each carrier and work with them to establish the best incentive package possible, staying within the rules of the grant and airport grant assurances. The need to offer incentives such as ground handling and marketing assistance has become somewhat of an industry norm; Millington seeks to reduce as many barriers to entry as the law allows, while providing a positive economic benefit to the region.
For ViaAir, New York/Newark or Washington, DC/Baltimore may be targeted. Examples of the previously mentioned routes are visually depicted in Exhibit 10. For Spirit Airlines, Ft. Lauderdale (FLL) and Orlando (MCO) may be pursued as Spirit already operates a significant number of flights from each of these markets. The targeted Spirit Airlines routes are illustrated in Exhibit 11.
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Exhibit 10: Initial Routes ViaAir Could Operate from Millington Regional Jetport.
Exhibit 11: Initial Routes Spirit Airlines Could Operate from Millington Regional Jetport.
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Marketing of New Service: The Millington Regional Jetport has done a respectable job of showcasing the airport as an economic asset, given the circumstances. However, new air carrier scheduled service would be an airport and economic game changer and would necessitate an aggressive marketing program designed to sustain and grow the new route. It is with this in mind that, should the department award NQA with our grant request, we would develop an aggressive and multi-layered marketing, promotional and community outreach effort in coordination with the new carrier.
The plan will be carrier and route dependent, but would include a combination of traditional advertising methods and new media methods to advertise the new service, while using the brand identity of the airline and the lower fares to resonate with local travelers. Advertising would also reflect the national consumer shift to online travel planning while simultaneously working to advance familiarity with NQA in the region. The airport will use social media to create awareness of the new service. Again, this would all be coordinated with the air carrier to ensure synergies are achieved.
At the date of this submission, the Jetport is currently in the midst of a rebranding/renaming process, with an end goal of resonating deeper with both potential passengers and with airline and community partners. The renaming/rebranding effort will include the launch of a new airport logo and website. Both of these items will be completed prior to the award of the proposed grant but, once completed, will allow the airport to better resonate and reach its advertising and marketing potential.
Further components of the marketing and advertising program may include:
Market Research: In an effort to understand the catchment area passenger behavior, research may be undertaken to ensure the correct platform for advertising is being utilized. This can include online research, focus groups with the help of local businesses, and/or online surveys.
Traditional Advertising and Marketing Methods: A comprehensive, carrier specific advertising and marketing plan will be developed once service is announced. Components of the traditional advertising section of the plan may include: Radio advertising, TV advertising, Out-of- Home (billboard) advertising, and local online (local online news banner and pre-roll) advertising. On-air/TV spend may be focused on premium placement such as weather and traffic sponsorships to ensure maximum value and the largest audience reach available. The inclusion of traditional media placement will allow the airport to support local media outlets while enhancing relationships with local media partners. This may lead to additional earned media and provide coverage for events later on. The described traditional advertising elements will be timed around specific objectives including route announcements and the incorporation of airline fare sales.
Digital Media and Targeting Online Advertising Methods: The plan will also include a comprehensive digital media strategy, complete with targeted online and new media advertising methods to ensure all consumers are engaged. These efforts could incorporate a combination of: Advanced Keyword Targeting, Flight Path Advertising (targeted advertising on Online Travel Agencies), Search Engine Marketing and Social Media. These advertising methods will focus on targeting the potential passenger when they are in the mindset to travel. Targeting
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online advertising will help the airport reach travelers by incorporating airport / travel related keywords and search patterns paired with geographical and behavioral targeting. When a geo-targeted traveler searches for specific airport defined words they will be redirected to an airport or airline related ad while surfing on common news sites.
Once the new carrier/route details are determined, the airport will put together a full promotions plan in an effort to provide digital/social promotion exposure through online contests. This effort will provide the airport with trade and enhanced digital exposure and offer the airport the opportunity to partner with the carrier and with local tourism entities for promotion packages.
Social Media Integration and Website Enhancements: By building an online brand presence through social media and website enhancements, the airport can forge a stronger connection with the traveling public and inexpensively provide information on air service. Going forward, open communication on these channels can help to foster a trust within the online travel community. This social media program would allow the airport to have a conversation with past, present and future travelers, rather than simply allowing travelers to have a conversation about the airport, with no airport involvement. The program will also research website enhancements that will help to highlight the airport and airline offerings such as real time flight information displays.
A Travel Cost Calculator may also be incorporated into the marketing and advertising program. A true cost calculator provides an objective approach to choosing an airport and air service for a consumer. It educates the consumer on the true cost involved with traveling from one airport; in this case, NQA verses the cost of driving and parking at a competing airport. A sample of what the verbiage might look like on the NQA website is included.
All of the above components may be expanded further, depending on mutual goals of the airline and Jetport.
Community Outreach: In an effort to increase awareness of the potentially new service, the proposed marketing plan will also include grass-roots, community outreach efforts. This program will allow the airport to connect face-to-face with potential users and spread the marketing dollars out for more efficiency and greater airline/airport exposure. Outreach efforts will depend on the specifics of the service/route but may include items such as: Travel agencies blitzes, collaborative trade show efforts, business and corporate meetings, sports and community sponsorships and promotions.
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Goals Millington Regional Jetport has three primary goals for carrier recruitment:
• Establish service on a less-than-daily carrier to at least one destination market; • Generate and expand passenger traffic to maintain an on-going load factor of at least 90% within the first 90 days of the start of service; • Generate at least 10,000 total passenger enplanements in the first full calendar year of service.
The traffic and enplanement goals are based on standard measurements and targets ultra-low- cost carriers target for market-by-market success and profitability. As the initial Millington Regional Jetport non-stop markets succeed and grow, continued expansion will allow for added non-stop destinations to locations throughout the country.
The Millington Regional Jetport is located in the fast-growing Northeast section of the Memphis Mid-South catchment region. This region currently has limited ultra-low or low fare air service options for their travel needs. The projected result of bringing scheduled air service to the Millington region is an increase in travel demand and economic stimulation. The expanding I-269 corridor has quick and easy access to the Millington Regional Jetport, making it the ideal locale for the service. The entire mid- and western Tennessee regions will enable the new carrier(s) a very broad base of potential customers, thus ensuring successful launch of the less-than-daily scheduled air service.
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PARTNERSHIPS, FUNDING, IMPLEMENTATION, SUCCESS METRICS AND FINANCIAL CONTROL Public / Private Partnerships The Millington Airport Authority has partnered with the Millington Industrial Development Board and the City of Millington to promote economic growth at the Jetport. The three entities meet on a regular basis to discuss potential economic development projects for the Jetport. Establishing the commercial air service is a top priority for all involved as it drives growth in other sectors as well. It is anticipated that, if awarded, the aggressive nature of the public/private partnership will be even more robust as all will have an investment in the success of the grant objectives.
Project Funding
In addition to the Small Community Air Service Development Grant of $250,000 requested from the Department, the Millington Industrial Development Board has committed a cash amount of $15,000, and the City of Millington has committed to a cash amount of $22,500. The total cash match from both sources is $37,500, or 15.0% of the total proposed federal funding of $250,000. We believe the 15% match is an important indication of the level of commitment from our private entities. While other applications may contain higher percentages, NQA’s situation is entirely different, as we are starting from scratch on air service.
In addition to cash funding, Millington Regional Jetport will waive rent and landing fees for the first two years of service. The cost of these fee waivers are valued at $80,000 based on two weekly arrivals with jet aircraft, a landing fee of $1.90/thousand pounds and a ramp fee of $80 per operation. A summary of funding sources is shown in Exhibit 12.
Exhibit 12: Summary of Sources and Types of Project Funding
Funding Source Grant Cash In-Kind Total Department of Transportation $250,000 $250,000 Community $37,500 $37,500 Airport $0 $80,000 $80,000 Total $250,000 $37,500 $80,000 $367,500
Implementation Timeline The proposed implementation timeline for the project assumes the Department will announce award recipients in late Summer/early Fall of 2016. Upon notification, Millington Regional Jetport will advise the airlines of the grant award. Based on airline planning lead times and the need for advance bookings, we agree no airline service would begin until sometime in 2017, with conservative estimates of late second quarter 2017. The first two milestones on the Jetport's timeline are to execute the grant agreement with the Department and to solidify a new route agreement with a scheduled air carrier. Once service is announced and schedules are published, the airline, the Jetport and the community would begin marketing the new route and working with the airline to monitor advance bookings. The Jetport will continue its marketing
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program and continue to work with the airline to monitor the route once service begins. The Jetport will submit grant status reports on a quarterly basis to the Department throughout the proposed two-year term of the project. The proposed project timeline is illustrated in Exhibit 13.
Exhibit 13: Proposed Project Timeline
Activity/Project Milestone Estimated Dates SCASD Grant Award Announcement September 2016 Execute Grant Agreement with DOT November 2016 Airline Meetings October 2016 - January 2017 Announce Service March 2017 Publish Schedule March 2017 Market Route (Pre-Launch) April - June 2017 Monitor Advance Bookings April - June 2017 Adjust Marketing Plan Based on Advance Bookings April - June 2017 Begin Service June-July 2017 Market Route (Post-Launch) June 2017 and Beyond Operate Service with Incentives June 2017 - May 2019 Monitor Route Performance June 2017 - August 2019 and Beyond Submit Grant Status Reports to DOT Quarterly 3Q 2017 - 2Q 2019
Success Metrics The success of the proposed project can be measured by assessing whether the three primary goals of the project previously stated above are achieved. The goals and the success metrics are summarized in Exhibit 14. The three goals would be measured and tracked to ensure the new service is not only viable, but sustainable after the grant expires.
Once service begins, the Jetport will rely on traffic and revenue data provided directly by the airline, and the amount of ground handling reimbursements requested by the airline as indications of project success. The post-departure T-100 data reports will used as official source of data to verify load factors and passenger enplanements when measuring success metrics.
Exhibit 14: Project Goals and Success Metrics
Project Goals Success Metric • Establish service on a less-than-daily carrier • ViaAir or National Airlines begins service from such as ViaAir or National Airlines to at least Millington to at least one destination within the one destination. grant award period. • Generate enough traffic to maintain a load • Millington service generates a load factor of at factor of at least 90% within the first 90 days least 90% within the first 90 days from the date of the beginning of service. new service begins. • Generate at least 10,000 enplanements in • Airline service at Millington generates at least the first full calendar year of service. 10,000 enplanements within the first calendar year of service.
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Financial Controls As the sponsor, Millington Airport Authority will be the responsible party for all fiscal matters and the Department's reporting requirements. The Airport Authority Board 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 subsequent agreement. The Millington Airport Authority understands the Grant is a reimbursable grant, meaning the Jetport is responsible for program expenditures and will submit invoices to the Department for reimbursement, based on a percentage of the total grant request. Furthermore, the Jetport will continually strive to utilize the grant funds in a timely fashion.
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CONCLUSION Based on the traffic generated at Memphis International Airport, the capacity lost at Memphis over the last ten years, and the high domestic fares paid by travelers using Memphis International Airport, the Millington market is ripe for supporting air service to one or more destinations by an ultra-low-cost carrier. The Millington Airport Authority believes less-than-daily nonstop service with ViaAir to destinations such as New York/Newark or Washington, DC/Baltimore could be supported. In addition, service by Spirit Airlines to destinations such as Orlando (MCO) or Ft. Lauderdale (FLL) could also be supported. Low fares offered by ViaAir and Spirit Airlines would stimulate demand at sustainable levels and grow the market considerably.
The Jetport’s recruitment efforts for air service, including ViaAir, National Airlines and Spirit Airlines service to multiple destinations began two years ago, and the Jetport has continued the dialogue. The on-going discussion provided a basis for determining the amount of funding that will be required for the initial startup time period.
The anticipated timeline for the project assumes a Grant would be awarded in September or October 2016. If the Grant agreement with the DOT is finalized in October 2016, the Jetport will further its recruitment efforts in the fall, continuing to meet with ViaAir, National Airlines and Spirit Airlines through the winter. In a best-case scenario, one of the carriers would announce service from Millington beginning no later than June 2017.
Millington Regional Jetport has not been awarded a Small Community Air Service Development Grant in the past. The Jetport realizes the scheduled air service environment continues to evolve, and, in order to be competitive with other non-hub airports, it must assist with marketing and cost incentives to help recruit ultra-low-cost airline service. A Small Community Air Service Development grant application is an important element in securing scheduled flights and gaining passenger service for the Millington catchment region. Backed with community and private sector support, the Jetport believes the request for funding is a sound financial investment for the entire region. The Jetport, together with their public and private partners, respectfully urges the Department of Transportation to give this modestly priced Grant proposal a favorable review.
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