APPENDIX B Page 1

APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET DOT-OST-2017-0155 SUMMARY INFORMATION1

All applicants must submit this Summary Information schedule, as the application coversheet, a completed standard form SF424 and the full application proposal on www.grants.gov. For your preparation convenience, this Summary Information schedule is located at https://www.transportation.gov/policey/aviation-policy/small-community-rural-air- service/SCASDP

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: Fairbanks International Name of Signatory Party for Legal Sponsor: Jeffery Roach, Airport Manager DUNS Number: 61 4141 646 EIN/Tax ID: 92-6001185

B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING: 1.______Fairbanks International Airport, Fairbanks, 2.______3.______4.______

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. Fairbanks International Airport (FAI) 2.

1 Note that the Summary Information does not count against the 20-page limit of the SCASDP application. APPENDIX B Page 2

3. 4.

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) ______

D. SHOW THE DRIVING DISTANCE FROM THE APPLICANT COMMUNITY TO THE NEAREST: 1. Large hub airport: ______Seattle-Tacoma International Airport, 2,164 Miles

2. Medium hub airport:______Ted Stevens Anchorage International Airport, 365 Miles

3. Small hub airport:______Juneau International Airport, 725 Miles

4. Airport with jet service:______Prudhoe Bay/Deadhorse Airport, 495 Miles

Note: Provide the airport name and distance, in miles, for each category.

E. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING

ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.

1. AS-01 2. 3. 4.

APPENDIX B Page 3

F. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)

Not a Consortium Interstate Consortium Intrastate Consortium Community currently receives subsidized Essential Air Service, 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 Development Program Grant

If previous recipient: Provide year of grant(s):______;2006 and, the text of the grant agreement section(s) setting forth the scope of the grant project: ______$500,000 in revenue guarantee and marketing support for air service to ______

G. PUBLIC/PRIVATE PARTNERSHIPS: (LIST ORGANIZATION NAMES) PUBLIC PRIVATE

1. Fairbanks International Airport 1. Explore Fairbanks

2. Fairbanks North Star Borough 2. Greater Fairbanks Chamber of Commerce 3. 3. 4. 4. 5. 5.

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 Services2 Other (explain below)

2 “Professional Services” involve a community contracting with a firm to produce a product such as a marketing plan, study, air carrier proposal, etc. APPENDIX B Page 4

1b. GRANT GOALS: (SYNOPSIS) Concisely describe the scope of the proposed grant project. (For example, “Revenue guarantee to recruit, initiate, and support new daily service between ______and ______;” or “Marketing program to support existing service between _____ and _____ by _____ .”) Revenue______guarantee and marketing funds to secure and support new service between Fairbanks______and Los Angeles ______

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 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) ______APPENDIX B Page 5

I. EXISTING LANDING AIDS AT LOCAL AIRPORT: Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify)

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 $750,000 2 State cash financial contribution Local cash financial contribution 3a Airport cash funds

3b Non-airport cash funds $70,000

3 Total local cash funds (3a + 3b) $70,000

4 TOTAL CASH FUNDING (1+2+3) $820,000 In-Kind contribution

5a Airport In-Kind contribution** $5,450

5b Other In-Kind contribution** $122,000 5 TOTAL IN-KIND CONTRIBUTION (5a + 5b) $127,450

6 TOTAL PROJECT COST (4+5) $947,450

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.

FAI Landing Fee Abatement $5,450; Explore Fairbanks Marketing up to $35,000 per year; Premier

Alaska Tours $5,000; Alaska Railroad $5,000; iHeartMedia 50/50 on all advertising (est value up to

$18,000 per year for 2 years); Alaska Channel up to $8,000 per year; Greater Fairbanks Chamber of Commerce $1,000; Skylar Travel $3,000 APPENDIX B Page 6

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) ______

APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2017-0155

Legal Sponsor: Fairbanks International Airport

6450 Airport Way, Ste 1 907.474.2529 Angie Spear Fairbanks, Alaska 99709 [email protected] www.dot.state.ak.us/faiiap TABLE OF CONTENTS

1. Legal Sponsor 1 2. Project Summary 3 3. Unique Factors in the Alaska Market 4 4. Fairbanks Air Service Needs and Deficiencies 8 5. Air Service Development Plan 13 Fairbanks-Los Angeles 14 Fairbanks-Phoenix 16 6. Required Funding for the ASD Plan 17 7. Public-Private Coalition for Grant Administration 19 8. Summary 20

Attachments: Letters of Support 1) 2) 3) Holland America Line /Princess Cruises (Carnival Corporation & Plc) 4) Greater Fairbanks Chamber of Commerce 5) City of Fairbanks 6) Fairbanks North Star Borough 7) Explore Fairbanks 8) Skylar Travel 9) U.S. Army Garrison, Fort Wainwright 10) Golden North Motel of Fairbanks 11) The Pump House 12) Alaska Aerofuel 13) Petro Star Inc. 14) Premier Alaska Tours 15) Northern Alaska Tour Company 16) 1st Alaska Tours 17) Alaska Railroad 18) Fountainhead Development, Inc. 19) iHeart Media Fairbanks 20) Alaska Channel 21) GoNorth Alaska Travel Center 22) Twigs Alaskan Gifts 23) Riverboat Discovery, Gold Dredge 8 24) San Francisco Travel 25) City of Phoenix Aviation Department Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 2 PROJECT SUMMARY

Fairbanks International Airport (FAI) is seeking a Federal Small Community Air Service Development (SCASD) grant for a revenue guarantee and marketing for a new service and/or new carrier to enter the market. FAI had been awarded a grant before (2006) and was successful in utilizing the grant to secure new air service to Denver on .

The timing for this proposal comes on the heels of the cancellation of the Denver service by both Frontier and United Airlines and service to Portland, OR by , the subsequent limitation of the non-stop offerings to only three routes in the contiguous , and a dramatic cut to the State marketing fund due to the challenges in the oil industry.

The Fairbanks air service market is heavily dependent on the tourism and cruise industry operating in the region. The remote location, exceptionally high fares, and limited non-stop air service are primary deterrents in enhancing inbound tourism. Fairbanks is viewed as a high-risk market by airlines due to a number of reasons: long stage distance, therefore high operating costs; a small originating catchment; few large businesses located in the region; and extreme seasonality that cannot support a year-round, daily service in most markets.

FAI and local stakeholders work hard to promote the market to both domestic and international tourists through various industry fairs, events, and marketing campaigns. FAI has an incentive policy developed to encourage the launch of new scheduled air service and support partners during the start-up process, however, the drop in oil prices has had the adverse effect of harming the local economy and reducing State budgets for business development.

When the Fairbanks Airport was awarded their first SCASD grant in 2006, FAI utilized only $70,000 out of the $500,000 SCASD fund, 83.3% of which was paid by the grant, with the remainder paid by contributions from the Fairbanks community. The grant was aimed at securing a non-stop connection to Denver. When FAI recruited Frontier Airlines with a Denver service in 2010, the route was a success and no risk abatement funds were expended.

FAI has developed a strategic plan to seek service on American to their Los Angeles or Phoenix hub and on Delta or Alaska Airlines to their respective hubs in Los Angeles/San Francisco. In support of a revenue guarantee and marketing connected to a new competitive service, FAI has secured $70,000 in local cash and $127,450 in in-kind marketing support to match its grant request. The Holland America/Princess cruise company is willing to negotiate a seat block style arrangement with the winning carrier to demonstrate their commitment to the success of the new service.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 3 UNIQUE FACTORS IN THE ALASKA MARKET

Alaska is the largest state in the U.S. by area, the 4th least populous and the least densely populated of the 50 states. Approximately half of Alaska's residents live within the Anchorage metropolitan area. Fairbanks is the second largest population center in Alaska with a metro population of slightly over 100,000 residents.

Both Alaska’s economy and tax revenue are heavily dependent on the oil and gas industry; from 2013 to 2015 mining made up 32% of Alaska’s GDP versus only 3% for the U.S. as a whole. And, this doesn’t include all of the other service-sector jobs that exist largely due to the spending of employees and investors in the oil and gas industry. This dependence on oil and gas combined with the decline in oil prices has weakened Alaska’s economy and contributed to a $3 billion budget deficit.

According to the U.S. Department of Commerce, Bureau of Economic Analysis (BEA), in 2016 Alaska ranked 46th in state GDP, declining by 5 percent from 2015 to 2016. According to BEA, mining was the largest contributor to the decline from 2015 to 2016.

Figure 1. Crude Oil, Monthly Average (Price per Barrel)

State GDP, 2016 Annual Data

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 4 The state government has been implementing a range of initiatives to diversify the local economy to gradually steer away from the detrimental over-dependence on one sector. Tourism, as a renewable source, is one of the crucial industries that helps diversify Alaska's economy.

Tourism is the second-largest private sector employer and accounts for one in eight Alaskan jobs. The most recent available data indicates that the tourism industry generates 47,000 peak season jobs, 9% of Alaska employment, and $1.39 billion in combined labor income. The industry boasts a 78% resident hire rate.

Reductions in the price of oil, stemming from global oversupply, have had a number of negative impacts on the State of Alaska. The most obvious impact has been the reduction of oil-related business traffic from and into the State. But the income impact on the State coffers, resulting from the decline, have caused a “knock-on” effect in many other areas not specifically related to oil. For example, the State's tourism promotion funds plunged to $1.5 million in the fiscal year that ended June 30, having declined 94% from the highs of recent years ($7 million in 2015 and $16 million in 2014).

Alaska’s office of tourism marketing is used to budget cuts – but not this big. Approximately half the state's visitors arrive by ship, but cruise executives are growing worried that the marketing tailwinds long provided by Alaska's marketing promotion of its fishing, mountains, wildlife, and unspoiled nature might result in cruise traffic declines as well. For 2016, many programs could no longer be funded due to the reduction in State marketing funds. For the first time, Alaska did not produce an Official State Vacation Planner; there was no television, direct mail or print advertising. All international offices were closed. However, Explore Fairbanks, the region’s destination marketing organization (DMO), is the only Alaska DMO that managed to keep representation based in Europe.

“With a marketing budget just a ghost of its former self, the visitor industry fears that fewer tourists will come to Alaska in the days ahead”.

Alaska Cruise Lines International Association (CLIA)

Alaska is competing against many states and countries that are trying to lure visitors to their destination and they far out-spend Alaska. Alaska's visitor industry is often compared to because both are long-haul destinations. Consumers spend considerably more time and money to visit Alaska or Hawaii because the states are geographically detached from the "lower 48". Even with Alaska’s 2015 budget of $7 million, it was far below Hawaii’s marketing spend (see chart on the next page). Hawaii attracts roughly 7 million visitors annually, and with their $93.2 million marketing budget, the cost to generate a visitor is roughly $13. Alaska currently welcomes 2.07 million visitors to the state annually, therefore, a $28 million budget could put the state on par with Hawaii in terms of cost per visitor, but that is unattainable at the moment.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 5 Therefore communities like Fairbanks have to take matters in their own hands and look for alternative sources of funding to effectively compete with other destination markets both domestically and abroad.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 6 Alaska is closely tied to the cruise industry. Over half of all visitors coming to Alaska arrive by cruise ship.

The tourism industry is composed of several transportation components: cruise lines, air service, and highway/ferry traffic to Alaska. There are also thousands of businesses that depend on the cruise and air passengers coming to Alaska to take their tours, dine in their restaurants, and stay in their guest rooms. Visitors benefit a multitude of Alaskans in different ways. Unlike the higher volume roundtrip cruise passengers in Southeast Alaska, the visitor to Fairbanks, whether on a cruise land tour or traveling independently, relies on air travel.

Direct visitor spending is more than $1.94 billion annually, excluding fares paid for travel (air, cruises, etc.). One in three Alaska visitors are repeat travelers to the state. Many of those who return are independent travelers who first came to Alaska on a cruise ship. The State of Alaska collected $187.8 million in visitor related revenues in Year Ended September 2015 (State of Alaska Department of Commerce, Community, and Economic Development).

Alaska’s tourism industry invests heavily in the state, spending hundreds of millions of dollars on capital expenditures, construction, operating equipment, marketing, and contributions to non-profit organizations.

With tourism being so vital for the state’s economy and with current economic hurdles related primarily to the drop in oil prices, it is essential for the state to further develop tourism income. The cruise industry and air services are the two core components.

The most recent Alaska tourism marketing research (December 2014), conducted by the Alaska Department of Commerce, Community and Economic Development, showed that the marketing potential of promoting tourism in Alaska is large, but prospective tourists name cost, distance and time as main deterrents for their trip to Alaska (see Figure 2 below).

With just three non-stop destinations in the peak season (May-September) to the lower 48 and one non-stop route throughout the rest of the year, it will be an enormous challenge for the Fairbanks community to advertise the “ease of getting to Alaska”, let alone enhance inbound tourist numbers.

Figure 2. Alaska Marketing Research Findings. Images of Alaska

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 7 FAIRBANKS AIR SERVICE NEEDS AND DEFICIENCIES

Air service in Alaska is not a convenience, it’s a necessity.

Most US ’ catchment areas are based on driving times, local service levels, and proximity to other airports. Fairbanks, as a gateway to the Interior and Arctic regions of Alaska, has a catchment that is based not on highways, but on the commuter airline systems that, like highways in the Lower 48, feed passengers into the airport gateway.

Map 1. Fairbanks Intra-Alaska Air Service (Innovata, YEOct2018)

The Fairbanks Metro Statistical Area (MSA) has a population of over 104,000. FAI’s effective catchment area, extending beyond the MSA, includes sixteen communities (shown on the map above) that only have air service to Fairbanks as their gateway to the lower 48 and the world. Most of them are entirely dependent on feeder airlines for access to Fairbanks as they have no roadway access. Of the 42 communities in the Interior served by the Fairbanks-based Tanana Chiefs Conference, only six have road access; the rest rely on air connectivity to FAI and beyond.

FAI serves a market with no other alternate airports within easy driving distance.A negligible number of people drive to the Anchorage Airport, located seven hours away. 8 Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 FAI provides a critical transportation link to (EAFB), located 25 miles from Fairbanks, which has recently been selected as the base for two squadrons of F-35 aircraft. The military's F-35 stealth fighter is designed to replace almost every fighter jet flown by the Air Force, the Navy and the Marine Corps. It is the most expensive military project in the history of the Pentagon.

More than 5,000 people, which is about 10% of the city’s current population, are estimated to come to the Fairbanks area over the next four years as part of the move to base two squadrons of F-35 fighters at EAFB. Most of the military families will be relocated from other states, therefore, it is even more crucial for the airport to provide reliable air service to the rest of the country at competitive fares.

In addition to being a hub for Interior and Arctic Alaska, Fairbanks is a major tourist market. The catchment area has a population of over 104,000, but the number of visitors is more than three times that: 385,000 each year.

Point of Sale zip-code analysis of FAI’s O&D data shows that 70% of all air fare bookings are made outside of the state of Alaska, demonstrating the importance of the inbound traffic flows for the Fairbanks’ market.

Over half of all visitors arriving in Fairbanks in the summer are on a cruise-land tour. The cruises begin or end in Vancouver, with Fairbanks land tour packages offered prior or subsequent to a cruise. Visitors coming to Fairbanks utilize FAI to join the cruise or depart after its completion. Any limitation in air service or substantial fare difference with Anchorage has the potential to severely damage the ability to sell these packages to cruise passengers, which in turn may cause great damage to the local economy.

Fairbanks peaks in the summer season in sync with the cruise season resulting from the land tour packages. This summer season FAI offered only three non-stop options to the lower 48 (see Map 2). In 2015, both Frontier (F9) and United Airlines (UA) dropped their Denver service. Frontier launched the FAI-DEN route in 2010 and was operating with an average load factor of 91%. After United entered the market in 2012, it appeared that neither could operate profitably as the market size was not large enough for both players. Frontier’s performance declined, and coupled with the changes in the carrier’s business model and de-hubbing at Denver, Frontier left the market. United could have remained as the only carrier in the market and seen vastly improved route performance, but instead chose to not give the market a chance as a single carrier market.

In 2015, Alaska Airlines, citing resource constraints, cancelled a summer–only daily Portland service as well. The only year-round service that Fairbanks currently has outside the state of Alaska is Seattle.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 9 Map 2. Fairbanks Summer Seasonal Long-Haul Service (2017)

Despite limited nonstop options, FAI’s passenger numbers continued to grow, primarily due to additional cruise capacity in the summer and increased demand from Asia, in particular China, in the winter season (see Figure 3). Figure 3. FAI’s Total Annual O&D Passengers (DOT DB1B, FAI’s charter statistics)

2017 was a record breaking year for the cruise industry in Alaska. 33 ships made 498 calls to Alaska, carrying 1,060,000 cruise visitors. In 2018, an estimated increase of 18% in cross-Gulf Alaska capacity is expected, due to the following reasons: Princess Cruises adding an additional cross-Gulf sailing; Windstar Cruises entering the Alaska cruise market with a Fairbanks component to their land tour; Holland America adding a larger ship, and Celebrity extending the season by two sailings. In 2019, Azamara Cruises, the luxury line of Royal Caribbean, enters the Alaska market, with 75% of pre- and post tours including Fairbanks; Viking River Cruises will also enter the market with Fairbanks included in their pre/post land tours. Cunard is back to Alaska for the first time since the 1990s.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 10 Air service capacity, however, is lagging behind, and judging by the available schedule data though October 2018, Fairbanks summer seat capacity is going to be reduced by 2.5% compared to the same period in June through August 2015, see Figure 4 below. Despite the fact that Delta’s load factors have been in the upper 80 percentile for the past few seasons, in particular, on FAI-MSP, they have been reluctant to add capacity/additional frequency to preserve the higher margins (see Figure 5).

Figure 4. FAI’s Summer Capacity, 2015-2017, Figure 5. Average Load Factors at FAI (Directional Seats, Innovata) (DOT T100, June-Aug 2017)

Limited air service and lack of competition drives Fairbanks’ air fares up. The average roundtrip fare at FAI to the lower 48 in the summer season 2016 was $454, which ranks as the second highest average fare in the country (see Figure 6).

Figure 6. Average Roundtrip Fare to the Lower 48 (DOT O&D, Q32016) Even though Fairbanks has been closing the gap with Anchorage in terms of average air fares, due to additional competition from Delta in Seattle, Fairbanks’ fares in some of the crucial markets were higher than ANC in 2016: FAI-LAX 26% higher vs ANC; FAI-SFO 13% higher, even though ANC is located only 260 statute miles away.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 11 The decline in oil prices has had some effect on the Fairbanks average fares, but not as dramatic as was demonstrated by the industry. The comparison of average fares over the summer season of 2017 showed that the fares at Fairbanks grew by an average of 2.2% compared to the same period last year; whereas, the other U.S. markets saw a 3.7% decline in air fares (see Figure 7). Even more remarkable was the analysis of “Discount Economy Fares”, often preferred by price-conscious leisure travelers, which showed that Fairbanks has the tenth highest leisure fare in the top 100 U.S. airports ranked by revenue (see Figure 8). Figure 7. Difference in Average Air Fares in Summer Season 2017 vs 2016 The loss of Denver, on FAI vs Other U.S. Airports (DOT O&D, Sabre MI, June-Aug 2017/2016) both Frontier and United, and Portland Fairbanks on Alaska Airlines meant the loss of the cheapest connecting options out of Fairbanks. The average one-way fare from Fairbanks beyond Denver on Frontier was $274, which was 23% cheaper than Industry Average other connecting options. Average fare Figure 8. Highest “Discount Economy” Fares at Top 100 U.S. Airports beyond Portland on Ranked by Revenue in Summer Season 2017 (Sabre MI, June-Aug 2017) Alaska Airlines was $283, which was 21% cheaper than other connecting options.

The Fairbanks community knows how crucial reliable nonstop service is for tourism growth, in particular with long- haul markets, which can convert latent tourism demand into actual tourists, and are ready to work with the airport to secure new routes and bring more competition.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 12 AIR SERVICE DEVELOPMENT PLAN

Fairbanks competes for airline resources, not only with the airports “next door”, but also with other seasonal leisure markets, both domestically and internationally. In Fairbanks’ region, those are primarily Mexico, Hawaii, and “ski markets” which utilize their hotel associations, state marketing budgets, unrestricted airport incentives (in the case of Mexico) to provide marketing and very often a profit guarantee. Given this strong disadvantage, Fairbanks realizes it is imperative to offer, at a minimum, a competitive package of airport funded incentives in the areas of landing fees, terminal rents, and marketing funds, but that alone won’t push them closer to the offerings of other airports. Mexico and the “ski markets” primarily utilize winter capacity, although both are aggressively seeking to expand their season with spring and summer adventure tour products aided by those same incentives. Fairbanks, on the other hand, must compete for expansion resources first during its strong summer season, which is the highest utilization time for the airlines. Finding available aircraft and crews becomes a challenge to the airlines and further increases the performance hurdle necessary to convince a carrier to start service. As with any seasonal route, airlines need to see short-term economic benefit, as they don’t equate strategic value to seasonal leisure markets. Fairbanks is also prepared to expand their efforts by including work with cruise companies to support airline service. Efforts to coordinate with cruise companies are inherently complicated because of the intricate schedules airlines and cruise companies must work with, but Fairbanks is ready to leverage their cruise line relationships to facilitate cooperation between the two. These efforts coupled with the Revenue Guarantee and Marketing funds that the airport hopes to secure through the DOT SCASD program will help erase disadvantages born out of Alaska’s remote geography and bring FAI on par with their competitors.

According to the latest Alaska Visitor Statistics Program (summer 2016), the Southern and Western U.S. are the largest origin markets of Alaska visitors, jointly accounting for almost 60% of all Alaska visitors, both domestic and international.

Figure 9. Alaska Visitor Statistics Program 7, Sumer 2016

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 13 Based on the survey findings and other market data, Fairbanks has identified two primary targets for summer seasonal air service to: Los Angeles on American, Delta, or Alaska Airlines, or San Francisco on United or Alaska Airlines; and Phoenix on American Airlines.

Fairbanks-Los Angeles The FAI staff are working with several carriers in their effort to recruit air service to the Los Angeles market, i.e. Alaska, American, and Delta Airlines. The Los Angeles Basin is FAI’s largest unserved market in the contiguous U.S., with 683 weekly passengers each way (PWEW) in the summer season (Jun-Aug 2016). Currently, Anchorage has three carriers operating non-stop service to (Alaska and American to Los Angeles and United to San Francisco), providing competitive air fares. In 2016, in the peak summer season, Fairbanks-Los Angeles fares were 26% higher than Anchorage. The FAI-LA market has grown 70% since 2009.

Figure 10. Fairbanks Top O&D Markets in Summer Season 2016 (June-Aug), DOT O&D, Sabre MI

Figure 11. Roundtrip Fares to L.A. Basin from FAI vs ANC, DOT O&D

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 14 Figure 12. Connecting Opportunities from FAI beyond LAX on American

Both Delta and American have substantial domestic and international networks beyond LAX that could provide Fairbanks access to over 50 one-stop cities in the U.S. and other countries including Mexico, Japan, China, United Kingdom, and Australia. LAX represents one of the best gateway opportunities for Fairbanks to Asia, which is especially important since Japan, China, and Australia are the fastest growing International originating markets for Fairbanks. According to the Alaska Visitor Statistics Program (summer 2016), the Australia/New Zealand Market demonstrated an exceptionally high growth rate at 45% since 2011, with total visitor volume growing from 42,000 to 61,000 in the summer 2016. The Asian market has grown 28% since 2011.

AMS CDG

HND PVG

Figure 13. Connecting Opportunities SYD from FAI beyond LAX on Delta

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 15 Fairbanks-Phoenix Phoenix is one of Fairbanks’ largest unserved markets, with 200 passengers per week each way in the summer (2016). Service to the new American hub at Phoenix would provide the Fairbanks catchment area passengers with connectivity to over 70 one-stop cities in the U.S. and Mexico.A Phoenix service would provide easy one-stop options to most major cities and Fairbanks’ current top 20 origin and destination passenger markets (see Figure 10, page 14). FAI-PHX average fares were 20% higher than ANC in 2016 (see below).

Figure 14. Connecting Opportunities from FAI beyond PHX on American A potential schedule for the FAI-PHX service (see below) was proposed to American who agreed that the red-eye operation would fit well with the current schedule banks in Phoenix and will help increase aircraft utilization. Currently, there are very few domestic markets where customers are accepting of red-eye service and Fairbanks represents that unique opportunity. The goal of FAI is to recruit additional service that has wide-ranging connectivity to provide competition in as many origin and destination markets as possible. Air service with omni-directional connectivity would be FAI’s ideal service.A non-stop flight to Phoenix could fill the void left by the cancellation of the Fairbanks-Denver service and would provide a convenient and affordable alternative for the Western and Southern U.S. to get to Fairbanks.

O rigin: FAI PHX De stina tion: PHX FAI

De p a rt 23:11 17:00

Arrive 6:00 22:11

Blo c k Time 5h49min 6h11min

Equipme nt A319/124 se ats A319/124 se ats

Frequenc y 7/week 7/week

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 16 REQUIRED FUNDING FOR THE AIR SERVICE DEVELOPMENT PLAN

FAI is developing a strong incentive package for its recruitment of new air service to Los Angeles and Phoenix. This grant application is a major part of that package. In anticipation of applying for this grant, FAI developed a community cash match of $70,000 for the project. This cash will be used for both revenue guarantee funding, to guard against an airline’s losses in the start-up phase of new service, and marketing money. The total matching funds equal $197,450 in both cash and in-kind (advertising dollars and airport landing fee abatement) contributions for a three-year air service support project (three seasons). Due to existing state budget cuts caused by a dramatic drop in oil prices, the region’s stakeholders were limited in their ability to procure a larger amount of matching funds. Figure 12. Fairbanks Grant Funding Plan FAI is requesting a Small Source Revenue Guarantee Marketing Total Community Air Service Fairbanks 70,000 127,450 197,450 Development (SCASD) grant of DOT 700,000 50,000 750,000 $750,000 to be used as a revenue guarantee and Total 770,000 177,450 947,450 marketing support. The total project cost is $947,450. The local portion of the fund represents 21% of the total project cost, while the federal Department of Transportation portion represents the other 79% of the total project cost. FAI anticipates using 81% ($770,000) of the total funding as a revenue guarantee for the new route (for up to four seasons of operation) and plans to use $177,450 in cash and significant in-kind donations for marketing of the new service within three seasons of service operation (see Figure 12).

The anticipated timeline for the project assumes a grant would be awarded in January of 2018. If the grant agreement with the DOT is finalized in February of 2018, FAI will step up its recruitment efforts during 2018, because by the time the grant has been awarded, the prospective carriers will have finalized planning for the summer. In a best-case scenario, FAI would hope to target fall/winter of 2018 for a new service announcement in summer 2019, with creative materials ready for the marketing program shortly after a formal service announcement. New service promotion would have to start, at a minimum, within nine months of new service launch to coincide with the cruise companies’ land tour package promotion timelines. The targeted start date for service would be June of 2019, with a two-year revenue guarantee period, allowing the grant to be closed by the fall of 2020.

The primary component of the program will be risk abatement funding to support the initial phase of new air service. FAI will negotiate a detailed service agreement that is consistent with DOT guidelines for grant fund use with the prospective carrier.

The following action plan will be used to achieve this goal: 17 Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 1. The costs of operating the new service will be defined in discussions with the carrier and outlined in a contractual manner. 2. A target for overall revenue associated with the new service and the component of that revenue that will be directly credited to the new route will be agreed upon. From this, a mechanism will be established where the carrier will monitor and report all revenues that the Fairbanks route generates. 3. FAI will seek a two-season (summer 2019 and 2020) revenue guarantee agreement, whereas the marketing funds under this Program will likely be utilized during three seasons, as promotion and marketing activities would need to start early in 2018. 4. The risk abatement support will be capped at $770,000. FAI will seek a settlement plan that measures the performance of the route over the entire season of operation, including months that may need abatement support and months that generate revenue above the agreed upon revenue target. 5. The airline will agree to set fares that are competitive.

Potential Marketing Efforts To Be Provided by Explore Fairbanks to Promote New Air Service to Fairbanks

Inbound marketing support • Participate in one travel consumer show a year in the region where the is located. In conjunction with shows, Explore Fairbanks tourism staff would conduct sales calls with travel agents and tour operators in the region, with references to airline service made in those meetings. • Host and coordinate familiarization tours for key airline employees and airline tour operator partners to create better understanding of the Fairbanks market. • Refer to airline during tour operator and travel agent meetings at American Bus Association, National Tour Association, GoWest Summit, and International Pow Wow (IPW) business-to-business sales meetings. • Reference to the airline and flights in the annual Explore Fairbanks Visitors Guide and other appropriate publications. • Provide support to the promotion of a new route by hosting press trips.

Outbound marketing support • Provide local marketing support for airline through radio promotions with Clear Channel with a combination of on-air commercials, DJ talking points, and web ads. • Promote airline by also offering tickets as a prize drawing at Explore Fairbanks booth at local consumer travel shows.

Explore Fairbanks Communications Department would work closely with the airline marketing contact on both inbound and outbound marketing endeavors to ensure consistency to airline branding and messaging.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 18 PUBLIC-PRIVATE COALITION FOR GRANT ADMINISTRATION

FAI and Explore Fairbanks will jointly monitor the program and assure that all expenditures will be consistent with the DOT guidelines and grant application objectives. Reports on progress of the program will be submitted on a quarterly basis.

This application for the Federal Small Community Air Service Development Grant funding is supported by a group of community partners which have pledged their support for the effort to secure new air service for Fairbanks. FAI has dozens of local partners represented by the local CVB, Explore Fairbanks, and the Greater Fairbanks Chamber of Commerce.

Explore Fairbanks is a non-profit marketing organization whose mission is to contribute to the economic well-being of the Fairbanks area by marketing to potential visitors. They market Fairbanks as a year-round destination by promoting local events, attractions and activities to independent travelers, group tour operators, travel agents, meeting planners and the media. Explore Fairbanks’ target is to maximize exposure of Fairbanks in existing markets and cultivate new markets. Explore Fairbanks is a strong supporter of additional air service at FAI. They will be administering local matching funds for this grant application.

The Greater Fairbanks Chamber of Commerce represents their members by advocating for a healthy economic environment and by building partnerships that promote the greater Fairbanks area as an attractive place for business and community. At the Fairbanks Chamber they know the marketplace and understand that the best thing they can do for their members is to create a pro-business environment that encourages private sector investment and job creation. They are focused on the betterment of all of their members by working with local, state and federal government officials. The Chamber strives to represent the membership and address the multiple needs of the business community.

The Fairbanks North Star Borough (FNSB) covers 7,361 square miles within the Tanana River Valley of the interior region of Alaska. The 2016 Borough population is 98,957 and the two first-class cities located within the Borough's boundaries, North Pole and Fairbanks. There are also two large military installations within the FNSB, U.S. Army Garrison Fort Wainwright (population 9,211) and Eielson Air Force Base (population 2,918). Due to its central location, the FNSB is the transportation, trade and service center for the vast Interior and Northern regions of Alaska. The FNSB is the northern terminus of the Alaska Railroad with southern access to the ports of Seward, Anchorage, and Nenana. The University of Alaska at Fairbanks (UAF) is the oldest and flagship campus of the University of Alaska System (UA). UAF is well integrated into the entire workforce development system in the FNSB and coordinates closely with the Community and Technical College (CTC), a part of the UA System, to assist students in finding the proper curriculum for a wide variety of needs. 19 Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 SUMMARY

FAI continues the recruitment process for new air service. Its representatives meet with prospective carriers on a regular basis, including American Airlines, Alaska Airlines, Delta, United, Allegiant Air, and Southwest Airlines. FAI’s recruitment efforts have ramped up significantly since the DEN and PDX routes have been cancelled. FAI is working with an air service development consultant, attends all major industry events offering airline-airport face-to-face meeting opportunities, both domestically and internationally (e.g. Routes events, Jumpstart, WTM), has meetings with priority carriers at their headquarters, and works with various community stakeholders, like CVB Explore Fairbanks, and cruise companies to augment their value proposition for the airline partners. FAI has developed community support for this grant application through a number of community partners who will be working with the airport to ensure the success of new service.

This grant application represents the last piece of the puzzle in bringing additional service to Fairbanks. The community has put up $197,450 in local funding in support of this effort. Fairbanks’ request for $750,000 in SCASD grant funding is consistent with the best proven uses of grant funding in the past. Grant funding is the key in reducing some of the highest fares in the nation and increasing competition in the market dominated by a single carrier (Alaska Airline’s market share by seat capacity at Fairbanks was 72.3% in 2017).

For the future oil independence of the U.S., it is important that the Government place an emphasis on a stable economy in America’s most energy rich resource state. At a time when oil prices are depressed and population migration rises due to increases in the unemployment rate, the maintaining of population levels through support of tourism, one of the largest private employers, becomes imperative.

When FAI was awarded their first (and only) SCASD grant in 2006 to support new air service to Denver, FAI utilized only $70,000 out of the $500,000 SCASD fund; 83.3% of which was paid by the grant and the remainder was covered by the Fairbanks community. This proves that the Fairbanks market can support additional air service. With the introduction of the Fairbanks-Denver service on Frontier in 2010, the market grew by 81% year over year. The new service affected not only the passenger demand, but also brought revenues up by 46%, which is a clear indicator that the market responds very well to stimulation.

FAI would like to petition DOT not to limit alternate uses of grant funding in case FAI manages to secure an alternate route with comparable connectivity through a large hub, or provide a non-stop connection to Fairbanks’ largest tourist originating markets. For example, the grant could be used for would be service to San Francisco/Oakland on United, Alaska Airlines, or Southwest.

Proposal of Fairbanks International Airport • Fairbanks, Alaska • December 2017 20

August 8, 2017

Ms. Brooke Chapman Associate Director Office of Aviation Analysis 1200 New Jersey Avenue, SE Washington, DC 20590

Subject: American Airlines’ Letter of Support – Fairbanks International Airport (FAI) Small Community Air Service Development Program (SCASDP)

Dear Ms. Chapman,

On behalf of American Airlines, I would like to lend my support to the Small Community Air Service Development Program (SCASDP) application submitted by the Fairbanks International Airport (FAI). Air service development is important for the economic health of a region and it is critical to growing economic activity in small communities.

American is considering potential service from Fairbanks International Airport to either Los Angeles International Airport (LAX) or Phoenix Sky Harbor International Airport (PHX). The availability of SCASD funds for a minimum revenue guarantee and marketing are a significant part of the business case for this service. While we cannot commit definitively to serving either the Fairbanks – Los Angeles or Fairbanks - Phoenix market, a SCASDP Grant award would greatly benefit the business case for entering into either of these new markets.

We look forward to on-going conversations about expanded service for Fairbanks International Airport and thank you for your time and consideration

Sincerely,

Marius Jasevicius Manager Domestic Network Development American Airlines, Inc.

P.O. Box 619616, MD 5544 DFW Airport, TX 75261-6916

November 21, 2017

Brooke Chapman, Associate Director Small Community Air Service Development Program United States Department of Transportation 1200 New Jersey Avenue SE Washington D.C. 20590

Dear Ms. Chapman,

I am writing to express my support for Fairbanks International Airport (FAI) in receiving a Small Community Air Service Development grant.

Carnival Corporation and its brands support the development of the Fairbanks community and its facilities. Our corporation has been in business in FAI for decades now and any improvement which will allow us to grow our business and strengthen the community is welcome and we are fully supportive of it.

Our Brands, namely Princess Cruises, Holland America Line, Seabourn and Carnival Cruise Line, offer cruise passengers with the ability to buy air transportation to and from Fairbanks. Having additional air lift at FAI will facilitate the sales of our air/sea packages and will support the development of a more desirable product which includes others parts of Alaska but will also highlight and focus on the Fairbanks community.

• The cruise industry ‘one-way, cross-Gulf’ cruises are expected to increase capacity by a minimum of 16% in summer 2018.

• Our operating brands are in negotiations with airlines to possibly create a seat guarantee arrangement for the summer 2018

• Los Angeles represents Fairbanks’ greatest opportunity marked and provides an important international connection hub. With Anchorage currently offering service to Los Angeles, fares from Fairbanks are substantially higher than Anchorage which make FAI less attractive to clients.

• San Francisco, being yet another underserved market, is similar to Los Angeles. San Francisco also offers the opportunity for connectivity to critical international markets.

• The Fairbanks air service market is heavily dependent on the tourism industry in the area. The remote location, exceptionally high fares, and limited non-stop air service are primary deterrents in enhancing inbound tourism.

• In the summer season FAI offers only three non-stop options from Delta, Alaska and United. Some of these routes are too circuitous for visitors coming from the Western U.S (specifically Chicago and Minneapolis)

In closing, expanding service in FAI will be a great development for the region and a welcome change to the businesses selling and promote this great community. We are supportive and encourage any effort made in improving the current air schedule situation.

Sincerely,

Clecio Primo Head of Global Travel Sourcing - Carnival Corporation & VP, Travel Services - Holland America Group

EXECUTIVE PARTNERS

• DIAMOND Alaska Airlines ExxonMobil Fairbanks Memorial Hospital November 1, 2017 Lockheed Martin Mt. McKinley Bank Vivlamore Companies Ms. Brooke Chapman Small Community Air Service Development Program PLATINUM Alyeska Pipeline Service Co. United States Department of Transportation ConocoPhillips 1200 New Jersey Avenue SE Denali State Bank Washington, DC 20590 Doyon, Limited Fred Meyer Stores GCI Dear Ms. Chapman, Golden Heart Utilities Kinross Fort Knox Mine The Greater Fairbanks Chamber of Commerce represents over 700 business members from Interior Alaska; the region of Alaska served by the Fairbanks International Airport. GOLD One of our primary advocacy focus areas is transportation issues that impact our region Alaska Communications with a goal to enhance Interior and Northern Regions as a transportation hub. BP Exploration Carlson Center Design Alaska The businesses that make up our membership base could benefit from an increase in Doyon Utilities LLC travelers into, and connections out of Alaska in many ways. Any business that serves First National Bank Alaska tourists as part of their business model has the biggest and most obvious benefit from MAC Federal Credit Union Sumitomo Metal Mining Pogo LLC these increases. Our members include hotels, restaurants, small retail establishments, TOTE Maritime Alaska destination excursions, jet fuel suppliers, rental car companies, arts & cultural venues Usibelli Coal Mine and so many more! Alaska has long been a coveted vacation destination and our WAL-MART Stores, Inc. community is ready to receive more tourists excited to see our beautiful state and learn Wells Fargo Bank Alaska Westmark Fairbanks Hotel & about its rich history through our many educational opportunities designed to be fun and Fairbanks Princess Riverside Lodge engaging for our guests. SILVER Fairbanks has many other businesses that would benefit from the increase in flights and connection options out of Alaska as well. Whether traveling to corporate Alaska USA Alaska Railroad headquarters locations, educational seminars/conferences, or other types of Caelus Energy Alaska professional development opportunities, employers are often looking for ways to get Cargo, Everts Air AK their employees to these locations that are often outside of Alaska. The summer tourist Exclusive Paving/University Redi-Mix season has most of our flights in and out of Alaska filled to capacity which can Fairbanks Daily News-Miner Fairbanks Natural Gas complicate booking corporate travel. Being connected to different regions of the Flowline Alaska country that are not served by our current air service would increase the options and Gene’s Chrysler, Jeep & Dodge possibly lead to more corporate travel during this peak tourist season. Golden Valley Electric Association Hale & Associates, Inc. Hilcorp Alaska, LLC The Fairbanks Chamber is prepared to support this grant with a contribution of up to JL Properties, Inc. $10,000 in financial support as well as $1000 of in-kind marketing support. The Key Bank Chamber is committed to seeking community and economic development opportunities Lynden for our region and works closely with many community partners that share a common Northrim Bank Personnel Plus goal of seeing growth for Fairbanks. Thank you for your consideration of the grant Sam’s Club application for Fairbanks International Airport. Seekins Ford Lincoln Sourdough Fuel Sincerely, Spirit of Alaska Federal Credit Union State Farm Insurance Tammy Randolph, Agent Ed Randolph, Agent Tanana Valley Clinic Marisa Sharrah Garry Hutchison TDL Staffing Tower Hill Mines-Livengood Gold Project President & CEO Board Chair University of Alaska Fairbanks Greater Fairbanks Chamber of Commerce Greater Fairbanks Chamber of Commerce Verizon Wireless Yukon Title Company

101 Dunkel Street, Suite 111 Fairbanks, Alaska 99701-4806 (907) 457-3282 • Fax (907) 459-3787 November 30, 2017 www.explorefairbanks.com

Ms. Brooke Chapman, Associate Director Small Community Air Service Development Program United States Department of Transportation 1200 New Jersey Avenue SE Washington D.C. 20590

Dear Ms. Chapman:

Explore Fairbanks enthusiastically supports the Fairbanks International Airport (FAI) in their application for a Small Community Air Service Development Program grant to lure additional domestic air service here. As the air hub for Alaska’s Interior and Arctic, Fairbanks plays a critical role in many travel patterns that include major attractions such as Denali National Park and Preserve as well as villages without road access.

As the destination marketing and management association for the Fairbanks region, securing more robust air service is critical to our success as a long-haul, year-round destination. For decades, Explore Fairbanks has been a pro-active collaborator with FAI in securing and retaining air service both domestically and internationally.

According to the Summer 2016 Alaska Visitors Statistics Program (AVSP), 41 percent of Fairbanks visitors were on a cruise land tour. This number has the opportunity to increase in upcoming summers. One-way, cross-Gulf of Alaska cruise capacity will increase by 19 percent in summer 2018 with an added weekly Princess ship and several sailings from Windstar; summer 2019 will herald Viking and Azamara. Historically 18 to 24 percent of guests on one- way sailings opt for land tours which typically begin and/or end in Fairbanks. Added airlift is critical to the success of expanded capacity and is of high interest amount our cruise ship partners as well as receptive operators who provide the land-based tours.

Additionally, the AVSP documents that Fairbanks leads the way in growth of international travel, especially driven by late-summer aurora tourism. For Fairbanks, 16 percent of summer 2016 guests originated from international destinations (other than Canada) as compared to nine percent for the state as a whole. Key to this connectivity are domestic carriers with passengers accessing the United States through major U.S. hubs.

Explore Fairbanks commits $40,500 in cash toward the grant as well as in-kind support. Depending on the airline and hub, in-kind support would vary, but Explore Fairbanks intends to promote the flights to both inbound and outbound markets in our sales and marketing activities both domestically and internationally. These efforts include trade shows, sales missions, travel trade B2B meetings, publicity efforts and paid-space advertising. We estimate this in-kind support to be around $35,000 per year (see attachment for an outline of this in-kind commitment.)

Thank you for your consideration. If you have any questions, please feel free to contact me at (907) 459-3770 or [email protected].

Warm Regards,

Deb Hickok President and CEO ATTACHMENT – EXPLORE FAIRBANKS IN-KIND SUPPORT

Explore Fairbanks In-Kind Support for SCASDP Grant (LAX-FAI) Total Amount of In-Kind: $35,000

Explore Fairbanks will provide:

• Promotion of route in Los Angeles region through participation on an annual basis in region domestic consumer shows combined with local travel agent and cruise ship sales calls: $5,000

• Sponsorship of familiarization (FAM) tours consisting of travel trade representatives from the region to help educate them on the route and the destination: $5,000

• Promotion of route in China and Japan market in annual travel trade sales missions to those regions. Route would be referenced in presentations and collateral material: $8,000

• Promotion of route in B2B meetings with travel trade representatives at domestic travel trade shows to include GoWest Summit*, American Bus Association Marketplace, National Tour Association Travel Exchange, and IPW*: $3,000

• Promotion of route in the Australia/New Zealand market (the #1 international market for Alaska) on bi-annual sales missions as well as other forms of outreach throughout the year: $1000

• Advertising outbound flights in local Fairbanks market: $5,000

• Promotion of route via press release to over 1,000 domestic travel journalists and over 3,000 newspapers, magazines, news aggregator and radio and television stations: $3,000

• Promote route by soliciting journalists from Los Angeles (or originating city) to participate in FAM/media tour of Fairbanks via this route: $5,000

*GoWest Summit and IPW are domestic shows attended by international operators and agents, many of which rely on Los Angeles as an entry point into the United States from their respective markets.

Ms. Brooke Chapman, Associate Director Small Community Air Service Development Program United States Department of Transportation 1200 New Jersey Avenue SE Washingt on, DC 20590

December 1st 2017

Dear Ms. Chapman,

Alaska Skylar Travel is the largest Mandarin-speaking targeted receptive tour operator in Alaska. We have more than a hundred of wholesale clients around the world selling itineraries only featuring Alaska. On average, 60% of our clients come from the contiguous U.S, and 40% come from mainland China, Taiwan, and other area.

Our company’ s headquarter is Anchorage, however, our operation is based in Fairbanks from August to the next April every year. Fairbanks is the world-famous aurora viewing city, in the tourism world we call Fairbanks the Aurora Capital. Unfortunately, our clients have very limited choices when it comes to air routing. The Greater LA and Bay Area have a large mandarin speaking population, based on our guests’ cell phone numbers provided to us, over 70% of the contiguous U.S guests come from those area. Currently, guests from those area can only choose t o stop over in Seattle before making to Fairbanks. There is a huge lack of air services for both leisure and business travelers from western U.S. We see ov

We understand the Small Community Air Service Development Program grant is a program designed to provide financial assistance to small communities in order to help them enhance their air service by enticing an airline to start new service to the airport by offsetting potential losses. This is the exact support Fairbanks community needs right now. To show our support, Alaska Skylar travel is committed to contribute $3,000 in kind support.

Thank you for giving the Fairbanks community this opportunity.

Jin Chen COO

Golden North Motel of Fairbanks 4888 Old Airport Road Fairbanks, Alaska 99709

November 13, 2017

Brooke Chapman, Associate Director Small Community Air Service Development Program U.S. Department of Transportation

Dear Ms. Chapman,

My brother, Paul, and I have owned the Golden North Motel of Fairbanks for many years. As I’m sure you can imagine, summer tourism is the lifeblood of our small business. Additionally, tourism is one of the largest sectors of the overall Fairbanks economy; as such it makes a big impact on the lives of many others who call the Interior their home.

Our region has an incredible amount to offer: unbelievable aurora viewing in the winter, the midnight sun in the summer, gateways to the Arctic and many beautiful national parks year round.

Something else that we have that’s less remarked upon, though, is our sense of remoteness. Fairbanks is an outpost before the awe-inspiring vastness of Alaska—one of the world’s last frontiers.

But traditionally our outpost status has served as an entry barrier for visitors even while it has enticed them.

Direct flights, however, change that equation. Previously, our small motel saw an impact from direct flights when Condor began offering such flights from Germany for a limited time.

Visitors from highly urbanized overseas markets, like China, cannot help but look much more favorably on traveling to our city when the time, cost, and inconvenience factors are reduced, because these tourists are already sinking a huge amount of time and money coming to our state.

The overall trend for Alaska tourism is up, and Fairbanksans have responded to this trend by providing increased opportunities for many different kinds of visitor experiences. “If you build it, they will come,” so the saying goes.

Without a doubt, direct flights help us “build it.”

Thank you very much for your time and consideration of this letter.

Sincerely,

Daniel Scot Baer Golden North Motel of Fairbanks

October 27, 2017

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

Ms. Chapman

Premier Alaska Tours is the largest receptive tour operator in Alaska. Our company packages group programs to Alaska for major cruise line and tour operators from around the world. Fairbanks is one of our most important hubs to start or end these programs and during the summer of 2017, our company transferred nearly 20,000 guests between the Fairbanks Airport and local hotels.

Unfortunately, our programs are limited in Fairbanks. I often hear from Tour Operators that they cannot find enough airline capacity to effectively use the Fairbanks Airport without incurring additional fees and/or inconvenient schedules. There is limited flights in the summer into the Fairbanks airport with only three non-stop options to/from the Continental US – Seattle with Delta and Alaska; Chicago with United; and Minneapolis with Delta. Visitors to Fairbanks are limited to these flights (which are often at capacity) or they must make an additional stop in Anchorage which adds costs and time to the trip.

These issues will continue as Alaska is currently growing the tourism industry with several new cruise lines and tour operators entering the market. For example, in 2018 Windstar Cruise Line is coming across the Gulf of Alaska and will feature several new land programs that start or end in Fairbanks. In 2019, Azamara Cruises and Viking Ocean Cruises also have new land programs featuring Fairbanks to align with their inaugural Alaska sailings.

The community of Fairbanks has experienced past success with SCASDP Grant program by bringing Frontier Airlines from 2010-2014. The community now seeks to alleviate our capacity issues and build on the past success with another grant. Premier Alaska Tours is committed to assist in marketing of the new air service to our cruise line and tour operator clientele by contributing up to $5,000 of in-kind marketing to support this effort.

We appreciate the opportunity and look forward to your favorable decision.

Sincerely,

Joshua Howes President

3427 International, Fairbanks Alaska 99501 (888) 486-8725 toll-free (907) 279-0001 direct (907) 279-0002 fax www.PremierAlaskaTours.com [email protected]

November 8,'2077

Ms. Brooke Chapman, Associate Dir:ector Small Community Air Service Development Program United States Department of Transportation 1200 New JerseyAvenue SE Washington, DC 20590

Dear Ms. Chapman,

offer a very diverse l.tAlaska Tours is a year round tour company based out of Fairbanks, Alaska. We tours and more' A11 of selection of tours ,rr"h u, the Arctic Circle, aurora viewing, dog sledding, cily Alaska's interior with our activities depart out of the city of Fairbanks. We have the pleasure of sharing thousands ofguests every Year.

to deliver guests to Being based in Fairbanks we depencl heavily on the Fairbanks Intemational Airport and more expensive our destination. Often times guests arrive into Anchorage first due to the limited with the cruise flight options offered in Fairbanks. ltn the suflrmer months we work very closely with our injustry. Holland America Princess cruise lines offers their guests 3 different excursions climate of Fairbanks and company. The cruise industry continues to play a maj91 role in the economic that 4lYo of the summer guests Ala&a as a whole. A recent study, tJhat was conducted in2016, slhowed guests can either begin their to Fairbanks were on a cruise land package tour. While on these land tours, More direct flight options trip by flying into Fairbanks or conoludeiheir trip by flying out of Fairbanks. more cruise guests to to Fairbanks would benefit this community greatly by potentially bringing Fairbanks at the start of their land package. growing Asian tourism In addition to working with cruise lines, we are also very involved in the Fairbanks, Alaska as a premier market. We conduc lf""rty sales missions in Taiw n and China to sell to aurora viewin growing market, it and fares' IV u compete with flights ., 1-,., market in particular has^- seen^^^^ a^ connection fli s Angeles to Fairbanks Even with a continued growth, 70o/o increase since 2009 andthen a 27oh increar"iitt." 2015. is not the only hub in the South Anchorage has fares that are 26Yolower than Fairbanks. Los Angeles and Phoenix play alarge role in Western united states that brings guests to Alaska. San Francisco the South West United Alaska tourism as well. Alaska recerives about 59% of our visitor's through States.

the Golden Heart ofAlaska' Fairbanks is a very tight knit community, we are after all,referred to as here in Fairbanks' Tourism Community success ind asense of community are very important to us continues to be a beacon of hope in our economy. We are hoping to keep our community growing by receiving the SCASDP grant to further our success.

Thank you for your time and consideration.

Sincerelv.

Kasey Montoto, Administrative Manager November 8, 2017

Brooke Chapman, Associate Director Small Community Air Service Development Program United States Department of Transportation 1200 New Jersey Avenue SE Washington D.C. 20590

Dear Ms. Chapman,

I am writing to express my support for Fairbanks International Airport (FAI) in receiving a Small Community Air Service Development grant.

Fairbanks represents the northern terminus for passenger service on the Alaska Railroad, and as such is a natural place for rail passengers to arrive to or depart a trip to Alaska. One-way, cross-Gulf-of-Alaska cruises are projected to increase capacity by at least 16% next year; many of these guests will add on a rail-based land tour, driving further demand for affordable non-stop flights at the northern end of the Railbelt. Currently, in the busy summer tourist season FAI is served by only three direct flights to the Lower 48: Seattle (Alaska and Delta, both year-round), Chicago (United), and Minneapolis (Delta).

Competitive air lift in Interior Alaska is essential to the continued growth of the tourism industry, a critical bright spot on the state’s economic horizon. Fairbanks’s remote location, high fares, and limited direct air service are primary constraints in developing inbound tourism. The SCASDP grant, together with financial and in-kind support from many local stakeholders – including $5,000 of in-kind marketing committed by the Alaska Railroad – will provide much-needed resources to ensure that Fairbanks remains an accessible, competitive, and growing destination.

Sincerely,

Dale Wale Vice President, Marketing and Customer Service Alaska Railroad Corporation November 30, 2017

Brooke Chapman, Associate Director SCASD Program, U.S. Department of Transportation 1200 New Jersey Ave SE Washington DC 20590

Re: The Small Community Air Service Development Program (SCASDP) Fairbanks International Airport

Dear Ms. Chapman:

Fountainhead Development, Inc. (FDI) has been in business since 1985 in Fairbanks, Alaska. We currently own and operate 4 hotels in the Fairbanks area, as well as a portfolio of commercial real estate in Alaska and Washington. As an independent hotelier in a remote location, we understand the importance of air service to our business and community as a whole. We are fortunate to have an international airport given the size of Fairbanks, and are an important hub for rural communities in Alaska as well as international and domestic tourism and cargo traffic.

Grant programs such as the SCASDP are crucial to the growth and development of rural and remote locations across the United States. Without the additional financial assistance from USDOT, communities such as ours are unable to attract new air carriers to improve our access to the national air transportation system. Having the access to additional carriers and flights in our market would materially benefit our community and reduce the high air fares for residents and tourists alike.

FDI fully supports the efforts of Explore Fairbanks and the Fairbanks International Airport in the endeavor for the SCASDP grant. As further evidence of our support to this important public-private partnership, FDI commits to a cash contribution of $1,000.

Bobby Hanson

Operations Manager Fountainhead Development, Inc.

November 29, 2017

Ms. Brooke Chapman, Associate Director Small Community Air Service Development Program United States Department of Transportation 1200 New Jersey Avenue SE Washington D.C. 20590

Ms. Chapman,

Alaska Channel is Alaska’s market leader in travel media and video production, with over 20 years of experience. We’re also the exclusive sales concessionaire for Alaska’s four largest out-of-home advertising networks, including the Fairbanks International Airport.

We’re certainly invested in the success of the advertising program at the Fairbanks International Airport, but we’re also deeply invested in the success of the Alaska tourism industry overall.

The Fairbanks air service market relies heavily on tourism, yet fares to Fairbanks are high and non-stop air service is limited. During the summer, there are only three non-stop options to Fairbanks from the lower 48: Chicago, Minneapolis, and Seattle. This deters visitors from flying directly into Fairbanks, even if it’s the more convenient option for their itinerary. Alaska is the trip of a lifetime, and visitors choose the travel arrangement that maximizes their time on the ground.

Increased traffic through the Fairbanks International Airport would greatly benefit travel partners in Fairbanks we have worked with through the years. And, it will benefit our advertisers who rely on both visitors and locals passing through the airport.

Should this come to fruition, know that we will great partners should you wish to advertise the new air service by offering a 20% discount off of Fairbanks Airport Advertising rates or through our other media (up to $8,000 in-kind per year).

We appreciate the opportunity – and please do not hesitate to call/email to discuss or if questions arise.

Sincerely,

Yael Kaufman Owner, Alaska Channel

MAILING P.O. Box 100519 • Anchorage, AK • 99510 • (907) 777-7700 • FAX 777-7720

Ms. Brooke Chapman Associate Director Small Community Air Service Development Program United States Department of Transportation 1200 New Jersey Ave SE Washington, DC 20590

RE: Fairbanks International Airport (FAI) SCASD Grant Application

Dear Ms. Chapman,

Twigs Alaskan Gifts, and its employees, support the Fairbanks International Airport SCASD grant application for direct flights from Fairbanks to PHX, LAX, or SFO.

As a concessionaire at the airport, we know firsthand, the level of quality, service, and friendliness of those who work at the airport. FAI is a small, but dedicated, group of professionals who provide the highest level of services and convenience to the traveling public. We pay attention to detail and strive for customer satisfaction first and foremost.

An additional flight to the interior of Alaska would increase access to the rest of the nation for those who live here, do business here, or travel here. Tourism accounts for 1 in 8 jobs in Alaska and if you’ve ever visited our state you’ll understand why. Along with our letter of support, you’ll find other letters of support from community partners who are just as dedicated as we are to making those who travel to and from Fairbanks feel welcome and enjoy their stay.

We appreciate your consideration in this grant application. We know that it would greatly benefit the community of Fairbanks and the surrounding areas that it serves.

Sincerely,

Michael & Becky Poulsen Twigs Alaskan Gifts