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Intrastate Commercial Air Service Committee

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Intrastate Commercial Air Service Committee Intrastate Commercial Air Service Committee Sen. Dan Johnson Rep. Caroline Nilsson Troy Co-Chair Co-Chair 2020 FINAL REPORT Members of the Committee Senator Dan Johnson, Co-Chair Representative Caroline Nilsson Troy, Co-Chair Jeff Marker, Idaho Div. of Aeronautics Bill Connors, Boise Metro Chamber Jeff Newgard, Bank of Idaho Scott Turlington, Tamarack Resort Gary Peters, Lewiston Airport Carol Waller, Fly Sun Valley Alliance Scott Kennedy, Alaska Airlines Rebecca Hupp, Boise Airport Rick Cloutier, Idaho Falls Airport Staff Ryan Bush, Principal Legislative Research Analyst Christine Otto, Principal Budget and Policy Analyst Jennifer Kish, Secretary February 1, 2021 I. Committee Charge The Intrastate Commercial Air Service Committee was authorized in 2020 by SCR 125. The purpose of the committee is to undertake and complete a study of intrastate commercial air service in Idaho and to develop a long-term, sustainable strategy for intrastate commercial air service. II. Meetings The committee held meetings on August 7, September 23, October 21, December 11 and January 25. III. Updates Provided to the Committee At its first meeting on August 7, the committee members each discussed their experience in the air service industry and what they hoped the committee could achieve for Idaho. They also discussed the prospect of hiring a consultant to conduct a study on intrastate air service in Idaho, as authorized in SCR 125, and what the consultant’s scope of work might entail. Ultimately, the committee decided to solicit requests for proposal from various firms with air service consultant experience. The committee agreed that they would hear from applicants who submitted a proposal at their next meeting. On September 23, the committee heard presentations from six applicants for the consultant position, and after the committee members discussed amongst themselves the experience and qualifications of the applicants, they selected the firm of Mead and Hunt (“Consultant”) to conduct an intrastate commercial air service study on behalf of the committee and agreed upon a payment amount not to exceed fifty thousand dollars ($50,000). On October 21 and December 11, the committee received an update from the consultant on the progress of its work and a roadmap of the work still to be conducted. On January 25, the consultant presented its findings and discussed the contents of their Intrastate Passenger Air Service Study submitted to the committee on January 12. (See attached). The study contained analysis of the following subject areas: • An analysis of current and historical air service throughout the region and an analysis of intrastate air service in other states. • A passenger demand assessment including an estimate of the number of visits to and from Boise by persons from other towns in Idaho and a model on the propensity to fly for those visitors. • An analysis of potential routes, types of aircraft, potential regional or startup airlines, and potential fares to be charged. • Conclusions on potential intrastate air routes in Idaho. The consultant identified 2 routes to and from Boise that were projected to be profitable in a mature market, Idaho Falls and Pullman-Moscow. The consultant also determined that if an airline received long-term subsidies, Pocatello or Lewiston could be potential future routes. • Next steps on securing intrastate commercial air service. These steps should include discussions with targeted airlines, further analysis on the anticipated level of support needed for each market during start-up, and the pursuit of federal grants and other funding sources. A copy of the consultant’s Intrastate Passenger Air Service Study is attached to this report, and a link to all of the committee’s materials and presentations is below: https://legislature.idaho.gov/sessioninfo/2020/interim/icas/icas-materials/ INTRASTATE COMMERCIAL AIR SERVICE COMMITTEE Idaho Intrastate Passenger Air Service Study JANUARY 2021 TABLE OF CONTENTS INTRODUCTION .............................................................. 1 ROUTE FORECASTS AND AIRLINES ........................... 28 Methodology ..................................................................................... 28 EXECUTIVE SUMMARY .................................................. 3 Regional Aircraft Availability ............................................................. 30 CURRENT AND HISTORICAL AIR SERVICE .................. 5 Types of Aircraft Analyzed ............................................................... 31 Current Air Service ............................................................................ 5 Route Forecasts ............................................................................... 33 Historical Air Service .......................................................................... 6 Regional Airlines .............................................................................. 37 Seasonality ........................................................................................ 9 Route Conclusions ........................................................................... 40 Domestic Revenue and Fare Trends ................................................10 Domestic Load Factor Trends ...........................................................12 AIR SERVICE COMPARISONS ..................................... 41 Existing Regional/Intrastate Service ................................................. 41 Revenue Per Available Seat Mile Trends .........................................13 Historical Regional/Intrastate Service............................................... 43 Historical Intrastate Service ..............................................................14 AIR SERVICE DEVELOPMENT BEST PRACTICES ...... 44 PASSENGER DEMAND ASSESSMENT ........................ 18 Community Role ............................................................................... 44 Methodology and Data Sources ........................................................18 Barriers To Entry .............................................................................. 45 Factors Affecting Travel Demand .....................................................19 Airline Risk Mitigation ....................................................................... 46 True Visitation Estimate To Boise .....................................................20 Airline Incentive Summary ................................................................ 52 True Visitation Estimate From Boise .................................................22 Combined True Visitation Estimate ...................................................23 CONTENTS CONCLUSIONS AND NEXT STEPS .............................. 53 Proxy Market Analysis ......................................................................24 Propensity to Fly Model ....................................................................25 GLOSSARY .................................................................... 55 1 INTRODUCTION INTRODUCTION The Idaho Legislature created the Intrastate Commercial Air Service Committee (Committee) through Senate Concurrent Resolution 125 in 2020. The Committee's objective is to study intrastate commercial air service and develop a long-term, viable strategy for sustainable intrastate commercial air service in the state of Idaho. The Committee consists of a diverse group of leaders in commercial air service, travel and the business community. The Committee was granted approval to hire a consultant who is familiar with commercial airline service and with the capability to provide economic or additional research. Mead & Hunt was selected to complete the Idaho Intrastate Passenger Air Service Study (Study). Convenient access to the national air transportation system is a top priority for many businesses and tourists across the U.S. It is important that Idaho's major population, business and tourism centers have commercial airline service to meet the needs of urban and rural users. Idaho businesses rely on the commercial airline industry to support day-to-day activities, and Idaho's tourism industry relies heavily on commercial airline service. Idaho's rural landscape needs safe, efficient, reliable and accessible passenger air service. This Study focuses on the state of passenger air service throughout Idaho, an assessment of intrastate air service passenger demand, potential routes/airlines for intrastate commercial air service and best practices to recruit new air service. The following airports/communities are included in the Study: • Boise Airport (BOI) – Boise, Idaho • Magic Valley Regional Airport (TWF) – • Coeur d'Alene Airport (COE) – Hayden, Idaho Twin Falls, Idaho • Friedman Memorial Airport (SUN) – • McCall Municipal Airport (MYL) – McCall, Idaho Hailey-Sun Valley, Idaho • Pocatello Regional Airport (PIH) – Pocatello, Idaho • Idaho Falls Regional Airport (IDA) – • Pullman-Moscow Regional Airport (PUW) – Idaho Falls, Idaho Pullman-Moscow, Washington-Idaho • Lewiston-Nez Perce County Regional Airport (LWS) – Lewiston, Idaho 1 1 INTRODUCTION Achieving intrastate air service success requires thoroughly understanding the market and the needs of local stakeholders, airlines, and trends impacting the state and aviation industry. Air service development efforts are most effective when they follow a plan consistent with industry trends, the air service needs of communities and specific strategies of target airlines for additional air service. The Study airports are subject to several trends that impact air service
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