# 11 June 2012 

# Tupelo Regional Airport Tupelo, MS

Proposal for the Small Community Air Service Development Program Docket DOT

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Sponsor: Tupelo Regional Airport, Tupelo, MS

Joshua Abramson, Air port Executive Director
Congressional Code: MS

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Dun & Bradstreet Number: 101809887
Tax Identification Number (EIN): 64

- 0631825Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
2 TABLE OF CONTENTS

SECTION PAGE

INTRODUCTORY LETTERS OF SUPPORT

................................ ................................ ................................ ................................ 3

APPENDIX C

- SUMMARY INFORMATION

................................ ................................ ................................ ............................ 5

GRANT PROPOSAL AN D MAJOR OBJECTIVES

................................ ................................ ................................ ....................... 7

AIR SERVICE AREA FOR TUPELO

................................ ................................ ................................ ................................ ........... 7

Toyota Motor Manufacturing, Mississippi, Inc

................................ ................................ ................................ ........... 7

Other Tupelo Businesses

................................ ................................ ................................ ................................ ............. 8

TUPELO’S CURRENT AIR SERVICE & TRENDS

................................ ................................ ................................ ........................ 8

Current Scheduled Air Service

................................ ................................ ................................ ................................ ..... 8

Background on Essential Air Service Subsidy

................................ ................................ ................................ .............. 9

An Analysis of Air Service Needs or Deficiencies

................................ ................................ ................................ ....... 10

TUPEL O AIRPORT’S STRATEGIC PLAN:

................................ ................................ ................................ ............................... 11

Implementation Timeline

................................ ................................ ................................ ................................ .......... 12

Community Development Foundation Partnership

................................ ................................ ................................ .. 13

Marketing Material

................................ ................................ ................................ ................................ ................... 13

Performance Measures and Financial Controls

................................ ................................ ................................ ........ 14

LEGAL SPONSOR

................................ ................................ ................................ ................................ ................................ . 14

CONCLUSIONS

................................ ................................ ................................ ................................ ................................ .... 14

LETTERS OF SUPPORT

................................ ................................ ................................ ................................ ........................ 16Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
3 INTRODUCTORY LETTERS OF SUPPORTDocket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
4Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
5 APPENDIX C

- SUMMARY INFORMATION

A. Applicant Information: (Check All That Apply)

 Not a Consortium  Interstate Consortium  Intrastate C onsortium

 Com munity now receives EAS subsidy

 Community (or Consortium member) previously received a Small Community Grant

If previous recipient: Date of grant: _

_ October 2005 _ Expiration date of grant:

_ _ A ugust 200 7

_ Federal Funds Requested:

__ $475,000 for start

- up, personnel, new carrier launch

____ __________ Carrier(s) Service Obtained: ____ Delta Airlines

_____________________ ____ __________________ Destination(s) Served: _____ ATL

_____ _______________ ___________ ___ ____________________

B . Public/Pr ivate Partnerships: (List Organization Names)

C. Project Proposal: (Check All That Apply)

 Marketing  Upgrade Aircraft  New Route

 Trave l Bank  Service Restoration  Subsidy

 Surface Transportation  Regional Service  Revenue Guarantee

 Launch New Carrier  Start

- up Cost Offset  First Service

 Study  Secure Additional Service  Other (explain bel ow)

D. Existing Landing Aids at Local Airport:

 Full ILS  Outer/Middle Marker  Published Instrument Approach

 Localizer  Other (specify) PUBLIC PRIVATE

1. Tupelo Regional Airport 1. Community Development Foundation

2. City Of TupeloDocket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
6 E. Project Cost: Do Not Enter Text in Shaded Area

F. 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) for each. A donation of expertise on mark et ing material and dissemination strategy has been provided by a local marketing professional fi rm. The Airport staff is stretching each dollar by shopping out publishing and production. The Airport will utilize its staff to manage the purchasing of all print and other media distribution.

G. Is Application Subject To Review By State Under Executive O rder 12372 Process?

 This application was made available to the state under the Executive Order 12372 Process for review on (date) _____________.

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

 Program is not covered by E.O. 12372.

H. Is The Applicant Delinquent On Any Federal Debt?

 No  Yes (explain) LINE DESCRIPTION SUB TOTAL TOTAL
AMOUNT
1 Fede ral amount requested $ 75,000 2 State cash financial contribution $ 0 Local cash financial contribution 3a Airport cash funds $ 0 3b Non

- airport cash funds $ 25,000 3 Total local cash funds ( 3a + 3b ) $ 25,000
4 TOTAL CASH FUNDING ( 1+2+3 ) $ 100,000
In

- Kind contribution 5a Airport In

- Kind contribution** $ Various 5b Other In

- Kind contribution** $ Various 5 TOTAL IN

- KIND CONTRIBUTION ( 5a + 5b ) $ Various 6 TOTAL PROJECT COST ( 4+5 ) $ 100,000Docket DOT

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Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
7 GRANT PROPOSAL AND MAJOR OBJECTIVES

Grant Proposal Amount: $ 75,000 .00

Major Objectives: ( 1) Boost Airport performance to the level that an Essential Air Service subsidy is no longer required.

(2) Develop a new campaign which will market Silver Airways for Tupelo Regional Airport, putting the emphasis on their upcoming changes to the air service being provided and customer convenience.

(3) Introduce the “FLY LOCAL” commitment to local businesses that
educates on how they may support Tupelo’s air service.

( 4 ) Reduce passenger leakage through an aggressive marketing campaign to publicize and market Tupelo’s air service area at a better dollar value by flying locally rather that driving to Memphis, TN.

AIR SERVICE AREA FOR TUPELO

The Tupelo Regional Airport air service a rea has a population of approximately 345,482, average per capita income of $17,389, and average household income of $44,900. These are 2009 estimates for the specific census tracts
illustrated in the Air Service A rea. The 2010 U.S. Census data shows population growth of one percent
between 2000 and 2010 within Tupelo city limits. However, with the opening of Toyota’s manufacturing plan t in nearby Blue Springs, Mississippi (discussed below)
, a significant population increase is likely. A similar situation occurred when the population of Georgetown, Kentucky
, more than doubled after Toyota opened its plant there in
1988.

TOYOTA MOTOR MANUF ACTURING, MISSISSIPP I, INC

In Tupelo’s Air Service Area, the largest economic development project and expected major driver of demand for ai r transportation is the new Toyota Motor Manufacturing, Mississippi, Inc., plant in Blue Springs, Mississippi. This facility is located approximately 12 miles northwest of the TupeloDocket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
8 Regional Airport, along Highway 78 . The plant, which represents a total investment of over $1.3 billion, has begun annual production at a maximum capacity of approximately 150,000 Corolla sedans. Toyota is expected to employ approximately 2,000 people . An additional 17,000 indirect and direct jobs are estimated to be added to northeast Mississippi through a general trickle

- down effect.

Toyota’s presence in the region is expected to drive de mand for air service access to both Cincinnati (nearest large airport to the Georgetown, Kentucky
, facility) and Los Angeles (nearest major airport to Toyota’s US headquarters in Torrance, California).

Other Tupelo Business es
Tupelo focuses on the future, allocating resources for business and job development. In the past several years, Tupelo has successfully created thousands of new jobs and increased wages for its hard workers. North Mississippi Health Services is the largest rural hospital in North Ameri can and employs 4,286 medical professionals. They are joined by two regional banks, BancorpSouth and Renasant Bank , headquartered in downtown Tupelo. Other employers include: Lane Furniture Industries, Cooper Tire and Rubber Company, MTD products, Philips Day

- Brite, Hancock Fabrics,
and many more top notch businesses that require dependable air service.

TUPELO’S CURRENT AIR SERVICE & TRENDS

Current Scheduled Air Service

Air service at Tupelo Regional Airport is currently operated by Pinnacle Airlines dba De lta Connection providing an average of 12 weekly departure flights to Memphis, Tennessee on a 50

- passenger CRJ

- 200. The May 2012 schedule is illustrated below

.
Departs Departure

time Arrives Arrival

Time Operated by Flight # Stops Frequency

MEM 2:16p TUP 3:03p Pinnacle DBA Delta Connection 4004 0 MTWRT__

MEM 7:30p TUP 8:13p Pinnacle DBA Delta Connection 3786 0 MTWRF__

MEM 5:01p TUP 5:45p Pinnacle DBA Delta Connection 3786 0 _______SS

TUP 5:16a MEM 8:59a Pinnacle DBA Delta Connection 4071 0 _______S_

TU P 811:a MEM 8:54a Pinnacle DBA Delta Connection 4071 0 ________S

TUP 7:11a MEM 7:54a Pinnacle DBA Delta Connection 4071 0 MTWRF__

TUP 5:35p MEM 6:14p Pinnacle DBA Delta Connection 3906 0 MTWRF__Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
9 Background on Essential Air Service Subsidy

Delta’s ser vice at Tupelo Regional Airport is subsidized under the Essential Air Service (EAS) program of the US Department of Transportation. The carrier
receives an annual subsidy of $921,818.3 0.

Tupelo is relatively new to the program having previously been served on an unsubsidized basis. However, on November 15, 2009
, Mesaba Airlines (at the time a wholly owned subsidiary of Delta and since sold to Memphis

- based Pinnacle Airlines Corporation) notified the US Department of Transportation of intent to discontinue s ervice at Tupelo. Following Mesaba’s notification, DOT issued a Request for Proposals to provide replacement service, with or without subsidy. Two were received: Mesaba (Delta Connection) and Seaport Airlines. The submittal of Seaport Airlines was
dismiss ed as it proposed service with aircraft seating 9

- passengers and the Essential Air Service passengers unless a community waives that right. The Delta submittal initially requested subsidy of $1,061,068 but after negotiations

, US DOT staff agreed to the low er level that is currently in effect.

In July of 201 1 , Delta announced that they are retiring their fleet of Saab 340 aircraft and requested
to terminate air service in 24 communit ies including Tupelo.

"While Delta would prefer to continue serving these co mmunities, the new reality of mounting cost pressures faced by our industry means we can no longer afford to provide this service. As we continue to strengthen our business, Delta is retiring the Saab turboprops and some 50

- seat jet aircraft, which will hi nder the financial viability of serving these smaller markets."

Since this announcement DOT Office of Aviation Analysis has issued eight orders e xtending service obligation to Pinnacle DBA Delta Connection and requested three rounds of proposals from airl ines interested in providing Essential Air Service. In April, 2012 t wo were received: Silver Airways, formerly Gulfstream International
, and Air Choice One. A new order has been written by DOT on May 22, 2012
, selecting Silver Airways to provide Essential Air Service (EAS) at Muscle Shoals, Alabama ; Greenville, Laurel/Hattiesburg, and Tupelo, Mississippi ; and Greenbrier/White Sulphur Springs, West Virginia (Lewisburg), using
34

- passenger Saab 340 aircraft. Muscle Shoals and Laurel/Hattiesburg will each rece ive 12 weekly

non

- stop round trips to Atlanta

- Hartsfield International Airport ( Atlanta) while Greenville and Tupelo will receive 18 weekly round trips over a Greenville

- Tupelo

- Atlanta routing.Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
10 An Analysis of Air Service Needs or Deficiencies

The past fe w years have been a disorganized schedule for Tupelo’s customers to travel. This marketing grant is critical to boost airport performance and education to our local communities regarding the latest change to Silver Airways anticipated to begin in October 2 012

.

Since the Delta/Northwest merger in 2008, changes at the Tupelo Regional Airport have had the general public feel like they are flying through a fog and not knowing which air carrier will be here
and for how long. The latest changes to Silver need t o be m arketed through very strong advertising. With funding from this marketing grant, the airport plan s to implement new ways to educate and familiarize the community with Silver Airways and their practices
, s uch as ticketing services, schedules, and frie ndly agents

. The airport provides affordable parking, travel time savings, and economic be nefits for the entire community. This campaign will emphasize the direct and indirect benefits of service provided by Silver Airways and introduce the “FLY LOCAL” com mitment for local businesses

.Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
11 An average fare comparison underscores th e fact that traffic leakage to Memphis International Airport is something that cannot be reversed with fares alone and that a large percentage of consumers will likely continu e to use this airport, particularly when traveling to the limited number of 55 markets served on a nonstop basis from MEM. It also point s to the need for replacement air service at Tupelo Regional Airport being provided by Silver Airways to Atlanta that of fers a distinct difference in frequency and destinations with 171 nonstop markets, against the 55 markets available through Memphis.

TUPELO AIRPORT’S STRATEGIC PLAN:

The Airport seeks a Small Community Air Service Development Grant in order to assist with a widespread marketing and advertising campaign in support of new Essential Air Service (EAS) provided by Silver Airways to Atlanta.

The Airport believes a more widespread campaign, specifically targeted at passengers who are curr ently leaking to other airports in the region, will spur mo re passenger growth. At the same time, the Airport would hope the increased enplanements from a marketing and advertising program would reduce the burden on the Essential Air Service (EAS) program to provide subsidies in the market.

To reduce the leakage to Memphis
, Tupelo plans a wide

ranging marketing campaign, sa turating Tupelo’s a ir

s ervice area

. The campaign will include frequent radio, television, W eb , and newspaper advertising, along wit h giveaways. The Airport seeks $ 75 ,000 in federal funds, to $200 $250 $300 $350 $400 $450 $500 $550 $600 $650

10q1 10q2 10q3 10q4 11q1 11q2 11q3 11q4 Hartsfield-Jackson Atlanta International
Memphis International

Tupelo RegionalDocket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
12 be paired with $ 25 ,000 in local cash funds from the City of Tupelo . The local funds of $25,000 are above and beyond the airport’s current marketing budget. The Airport realizes the importance of

t he campaign as well as local participation in the SCASD program. Therefore, it has adjusted the budget accordingly to provide a 33% match to the federal funding requested . The campaign is planned to last for at least 12 months, and possibly as long as 18 m onths.

In addition to marketing, the “FLY LOCAL” commitment will be targeted to local businesses in an effort to incorporate Tupelo’s air service into their travel needs. A key component of the ‘Fly Local’ campaign will be the Business Travel Pledge, throu gh which local companies will pledge their support for the Airport’s services, in return for a range of incentives, and the promise of additional
services in the future. The Airport will take every opportunity to reach out to local business es , directly and in conjunction with the Community Development Foundation, to share the many methods t o support Tupelo’s air service provided by Silver Airways.

The leadership at the Tupelo Regional Airport believe s the marketing and advertising campaign will dramati cally increase awareness of the new service offered, thus increasing enplanements and helping mak e the Airport more competitive with other airports in the region. Additionally , the Airport believes the marketing and advertising campaign will have an impact in reducing the burden on the Essential Air Service (EAS) program in the next bid cycle that is scheduled for October , 2014

.

Implementation Timeline

The Airport’s proposed implementation timeline for the project assumes the Department will award Small Communi ty Grant Funding in September 201 2 . Once the award is announced, the Tupelo Regional Airport will begin work, along with Silver Airways , to gather the existing campaign materials and to finalize the placement plan.

Activity/Project Milestone Date SCASD Grant Award Announcement Sep. 2012 Develop Air Service Marketing Material Sep. 2012 Grant Agreement With DOT Oct. 2012 Develop “Fly Local” Material In Place Develop Comprehensive Placement Strategy Oct. 2012

Launch Campaign Nov. 2012 Monitor Perform ance On going Submit Performance Reports To DOT Quarterly

Close Grant Aug. 2014 

### The Business Travel Pledge

By taking the Business Travel Pledge, your company will commit to making Tupelo Regional Airport y our ‘first choice , ’ using us wherever possible as part of your company travel policy . The Tupelo Airport recognize s that it won’t always offer the route or type of service you require. However, by committing to those that are available, you will help us d evelop a more comprehensive range of business services in the shortest possible timeframe.Docket DOT

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Proposal from the Tupelo Airport Au thority

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13 Community Development Foundation Partnership

The Tupelo Regional Airport plans to utilize local chamber organization, the
C ommunity Development Foundation, as an informa tion bridge between the air service area businesses and the airport

. CDF is a membership organization governed by a 60

- member Board of Directors, elected by the members, with a 15 member Executive Committee, composed of officers,
division leaders and othe r professionals. Currently CDF has in excess of
1
, 400 members. Utilizing a professional staff and experienced volunteers, CDF presents the positive points of the Tupelo

- Lee County region to business, industry and professional leaders who bring jobs to the region. CDF's membership assumes the leadership role in developing a ten year strategy plan, an annual program of work designed to enhance agricultural, business, educational, industrial, private/public partnership and support efforts such
as skills and te chnology enhancement, improved transportation and health care.

In addition, CDF has been instrumental in establishing and/or supporting agencies that meet the needs of the community: Lift, Inc., a multi

- county community action agency; United Way of Greater Lee County; The Lee County Council of Governments; Big Ten Development Association; Entrepreneurs' Forum of Northeast Mississippi; Tri

- State Natchez Trace Parkway Association and Tupelo Furniture Marketing Association

.

Marketing Material

In order to maxi mize the federal and local dollars spent on this campaign, the Airport will keep a major part of mark et ing coordination in

- house. Professionals in the marketing business have agreed to donate their time and expertise to make sure the Airpo rt gets the most out of this marketing campaign. They will assist the airport in developing the overall strategy in dissemination of the material as well as provide specific guidance on forming agreements and how rights to material will be retained.

The Airport will select a marketing firm through the request for proposals process. This firm will help to build on the “ FLY LOCAL ” commitment . They will create storyboards, outlin es, and
recommend seasonal promotions for the Airport to place itself

. With these terms, t he airport will retain all rights to change and disseminate the material as it sees fit. To further stretch each dollar, the airport will utilize the competitive bidding process to shop out the video and audio production of the material.

The Airport staff will personally visit the area’s largest employers to educate travel departments and management on the importance of supporting Tupelo’s air service provided by Silver Airways. The Airport understands that supporting air s ervice is more than pricing tickets from Tupelo but also people must fly to Tupelo. Local business es need to understand that they can educate their vendors, customers, and other professionals that flying in to Tupelo is an option t hat may not haveDocket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
14 occurred to many out

- of

- town peop le . The Airport has developed material to help support this effort. Post

- it notes, email signature templates, fliers , and the airport’s Web page are already designed and ready for print and distribution.

Performance Measures a n d Financial Controls

The marketing campaign along with the “ FLY LOCAL ” commitment success will be based on a pair of metrics . The Airport will measure the e n planed passengers as a primary metric. The measurement of enplanements will include a monthly compa rison, once the program begins, to past enplanement numbers. The second measure of success will be the number of companies that register to “ FLY LOCAL ” and adopt the business travel pledge

. As the sponsor, the Tupelo Airport Authority will be the respons ible party for all fiscal matters and
submit DOT the required reporting. The Airport Authority is a public governing body and the DOT can be assured that proper financial controls are in place to guarantee that the DOT’s grant will be
used in accordance wi th any subsequent agreement. The Airport understands that the grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will submit
invoic es to the DOT for reimbursement based on a percentage of the total grant request.

LEGAL SPONSOR

The Tupelo Airport Authority is the legal sponsor responsible for administering the program

Tupelo Airport Authority 2704 W. Jackson St

. Tupelo, MS 38801 b

- 662

- 841

- 6570 f

- 662

- 841

- 6571 j oshua @flytupelo .com

CONCLUSIONS

As a smaller, Essential Air Service (EAS) airport, the Tupelo Regional Airport does not have the resources to build an air service area

- wide marketing campaign. With more funding to better spread the message, the Airport anticipates it can grow passengers up to levels seen in 2008

– roughly double the number of passengers currently using the facility

. The Airport has a sound strategy in place for its federally supported advertising campaign. The plan only needs federal funding to move forward

. T he Airport believes this marketing will reduce leakage to other airports. Then, as passenger traffic grows in the market, through the increased marketing and advertising proposed in this application, revenues will grow, and the federal subsidy required to support Essential Air Service (EAS) at Tupelo will be reduced. The Department of Transportation can invest aDocket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
15 small amount in this grant proposal, that could help save it millions of dollars in EAS funding in the years to come.Docket DOT

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- 0069 Department Of Transportation Small Community Air Service Development Program

Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
16 LETTERS OF SUPPORTDocket DOT

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Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
17Docket DOT

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Proposal from the Tupelo Airport Au thority

Issue Date: 06/11 /2012
18