Proposal of Mississippi EAS Airport Consortium • July 2013 APPLICATION UNDER
SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 2013

- 0120

SUMMARY INFORMATION

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 http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/SCASDP

A. P ROVIDE THE LEGAL SPO NSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL NUMBE RING S YSTEM (DUNS)

NUMBER , INCLUDING +4, EMPLOYEE IDENTIFICAT ION NUMBER (EIN) OR TAX ID

. Legal Sponsor Name: Tom Williams
, Meridian, Mississippi
DUNS Number: 155690262 EIN/Tax ID: 64

- 0820692

B. L IST THE N AME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING : 1. M ERIDIAN , M ISSISSIPPI 2. G REENVILLE , M ISSISSIPPI 3. H ATTIESBURG , M ISSISSIPPI 4.____________________________________________________

C. P ROVIDE THE FULL AIRP ORT NAME AND 3

- L ETTER IATA A IRPORT C ODE FOR THE APPLICAN T ( S ) AIRPORT ( S ) (O NLY

PROVIDE CODES FOR TH E AIRPORT ( S ) THAT ARE ACTUALLY SE EKING SERVICE ).
1. Meridian Regional Airport MEI 2 . Mid

- Delta Regional Airport GLH
3. Hattiesburg

- Laurel Regional Airport PIB 4.Proposal of Mississippi EAS Airport Consortium • July 2013

D. L IST THE 2

- DIGIT CONGRESSIONAL DISTRICT CODE APPLIC ABLE TO THE SPONSORI NG ORGANIZATION , AND IF A

CONSORTIUM , TO EACH PARTICIPATIN G COMMUNITY

. 1. Meridian MS

- 03 2. Greenville MS

- 02
3. Hattiesburg

- Laurel MS

- 04 4.

E. A PPLICANT I NFORMATION : (C HECK A LL T HAT A PPLY )
Not a Consortium Interstate Consortium Intrastate Consortium Community now receives subsidized Essential Air Service Community (or Consortium member) previously received a Small Community Air Service Development Program Grant
If previous recipient: Year of grant(s): MEI 200 2, GLH 2007

F. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES ) D ETAILS ON PAGE 19
PUBLIC PRIVATE
1. Meridian 9 public entities 1. Meridian 6 private entities
2. Greenville 15 public entities 2. Greenville 11 private entities
3. Hattiesburg

- Laurel 10 public entities 3. Hattiesburg

- Laurel 9 private entities
4. 4.
5. 5.

G. P ROJECT P ROPOSAL : ( CHECK ALL THAT APPLY ) Marketing Upgrade Aircraft New Route
Travel 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 below)

H. E XISTING L ANDING A IDS AT L OCAL A IRPORT : Full ILS Outer/Middle Marker Published Instrument Approach
Localizer Other (specify) 

### xProposal of Mississippi EAS Airport Consortium • July 2013

I. P ROJECT C OST : D O NOT ENTER TEXT IN SHADED AREA
L INE D ESCRIPTION S UB T OTAL T OTAL A MOUNT
1 Federal amount requested $ 120 ,000
2 State cash financial contribution $ 18,000
Local cash financial contribution
3a Airport cash funds $0
3b Non

- airport cash funds $ 18,000
3 Total local cash funds ( 3a + 3b ) $ 18 ,000
4 TOTAL CASH FUNDING ( 1+2+3 )
In

- Kind contribution
5a Airport In

- Kind contribution** $0
5b Other In

- Kind contribution** $0
5 TOTAL IN

- KIND CONTRIBUTION ( 5a + 5b ) $0

6 TOTAL PROJECT COST ( 4+5 ) $ 156 ,000 Note: $6,000 from each of the three cities and $6,000 in matching funds from the state for each of the three cities. Each city is envisioned to receive $40,000 in Federal funding.

J. 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.Proposal of Mississippi EAS Airport Consortium • July 2013

K. I S T HIS A PPLICATION S UBJECT T O R EVIEW B Y S TATE U NDER E XECUTIVE O RDER 12372 P ROCESS ?

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.

L. I S T HE A PPLICANT D ELINQUENT O N A NY F EDERAL D EBT ? (I F “Y ES ”, P ROVIDE E XPLANATION )
No Yes (explain)

_____________________________________________________________________________________________

_______________________________________________________________Proposal of Mississippi EAS Airport Consortium • July 2013 

## 1

TABLE OF CONTENTS AND LEGAL SPONSOR

Legal Sponsor 1 Airline Letter of Support 2
Introduction 3
Communit y Locations, Population s and Economy 4

- 5
Current Air Service and Traffic 6

- 9
Air Service Deficiencies and Needs 1 0

- 1 2 Air Service Development Efforts and Air Service Marketing 1 3

- 14
A Strategic Plan to Retain O ur Air Service 15

- 1 8 Public Private Partnership s 19
Previous Grant Awards and Summary 2 0

- 21

The legal sponsor of this Grant Application is the Meridian Airport Authority. M r

. Tom Williams, President of the Authority
, will administer this Grant

. Tom Williams President
, Meridian Airport Authority 2 811A Airport Blvd South Meridian, Mississippi 39307 Phone: 601

. 482

. 0364 Fax: 601.482.5899 Email: twilliams@meridianairport.com

Other consortium representatives are :

Mr. Draylan Gant, Airport Director, Greenville Mid

- Delta Airport 662

. 334

. 3121 dgant@greenvillems.org

Mr. Tom Heanue, Executive Director, Hattiesburg

- Laurel Regional Airport 601

. 545

. 3111 tom.heanue@flypib.com

This document is 2 5 pages in length, consisting of four pages of Summary Information (cover), a one page carrier letter of support and 20 pages of application information. 

### Section Page NumberProposal of Mississippi EAS Airport Consortium • July 2013 

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CARRIER LETTER OF SUPPORTProposal of Mississippi EAS Airport Consortium • July 2013 

## 3

I NTRODUCTION

A consortium of the Mississippi communities of Greenville, H attiesburg

- Laurel and Meridian
, herein make application for a Small Community Air Service Development (SCASD) Grant. These cities are in the Essential Air Service (EAS) program and
, a ccordingly
, propose to use modest Federal Grant funding, matched by both local non

- airport cash and funding from the State of Mississippi, to develop and implement an aggressive air service marketing program, designed to raise enplanements at all three air ports and thus, in the long term, reduce EAS subsidy needs.

For decades, Delta Air Lines, or its predecessor carriers Northwest or Republic or Southern Airways, had provided high quality network carrier air service at all three airports. However , on July 15, 2011
, Delta filed to terminate EAS service at twenty

- four airports, including Greenville and Hattiesburg. In the summer of 2012
, Meridian’s EAS contract came up for renewal and Delta
chose not to bid to retain that service. Delta made a network strateg y decision to exit the EAS program and many small communities nationwide

. At the same time that Delta has cut its ties with much of rural America, it is also eliminating its Memphis hub operation and drastically reducing operations at that airport. Unfortu nately, these two network strategy decisions have left the critically important air service of Greenville, Meridian and Hattiesburg adrift. There are only two practical connecting hubs for small cities in Mississippi, the giant Atlanta hub
, and Memphis.
De lta declined to provide a code sharing agreement for Atlanta service to any prospective replacement carrier for these three cities
, and Memphis is essentially a collapsed former hub to which any EAS service would find almost nothing with which to connect.

Silver Airways began independ ently branded EAS service to Atlanta from these three airports on October 1, 2012. The service is provided with well

- appointed SF340 aircraft at competitive fares. However, for the first nine months of Silver service traffic has collapsed ; Greenville down 49%, Hattiesburg 57% and Meridian 60%. EAS city transitions from network service to independent carrier service are usually painful and this one has been particularly so. The new service needs marketing support to regenerate traffic at these three airports. This SCASD proposal calls for DOT funding of $40,000 per city ($120,000 total) matched by $6,000 from each city ($18,000) and $18,000 from the State of Mississippi . Total marketing funding would equal $156,000 or $52,000 pe r city. This funding would enable a n aggressive multi

- phased marketing program to bring rural Mississippi travelers back to their home airports. This marketing program will rejuvenate rural Mississippi air service. The Mississippi EAS Airport Consortium ur ges the Department to give this proposal favorable consideration.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 4

COMMUNITY LOCATION S , POPULATION S AND ECONOMY

The three Mississippi cities are located in different parts of the state. Greenville is located in the northwestern part of the state, about 117 road miles northwest of Jackson. Hattiesburg

- Laurel is located in southeastern Mississippi, about 88 miles from Jackson. Meridian is located in east central Mississippi, about 93 miles from Jackson.

Greenville has the only air service airport in northwest Mississippi and in southeastern Arkansas. The 2012 micropolitian MSA population is 49,750 . The one hour drive radius population is 128,677 and the two hour drive radius population is 453,328.

Key economic sectors include agriculture , casinos and manufacturing, anchored by a US gypsum factory, a Mars Candy factory and a major agricultural research center

.

Meridian is only 20 miles from the Alabama border and the airport serves east central Mississippi and
west central Alabama. The 2012 micropolitan MSA population is 107, 111 . The one hour drive radius population is 174,290 and the two hour drive radius population is 1,216,851, as it includes the Jackson
metro area.

Key economic sectors of the Meridian economy include the Meridian Naval Air Station and Mississippi National Guard facilities
, and four major healthcare
centers
, while Peavey Electronics and Lockheed
Mart in headline an extensive list of manufacturing and distribution companies.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 5

Hattiesburg

- Laurel

– T he Hattiesburg

- Laurel Regional Airport is adjacent to I

- 59 between Hattiesburg and Laurel. The 2012 metropolitian MSA population is 146,766. The one hour drive radius population is 273,425 and the two hour drive radius population is 1,216,851, as it encompasses part of the Gulfport, Jackson and
New Orleans metro areas.

Key economic sectors for the Hattiesburg

- Laurel region include education (University of Southern Mississippi with 18,000 students), healthcare and Camp Shelby (the largest National Guard facility east of the Mississippi with up to 100,000 annual troop training events). Top private sector employers include Halliburton, Marshall Durbin Corporat ion, BAE, Georgia Pacific , GE Aviation
, Kohler
, and Johnson Controls.

By most economic measures, Mississippi is the poorest state in the union. The chart lists US Census Bureau data that shows the relative standing of the State and the three EAS communiti es that are party to this application.

In terms of per capita income (PCI) the Greenville area is one of the poorest in Mississippi and in the nation. Hattiesburg

- Laurel and Meridian PCI are about at the state level. In terms of median
Household Income (MHH) Greenville is again one of the poorest areas in the state and nation while Hattiesburg

- Laurel and Meridian rank modestly below the State levels.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 6

CURRENT AIR SERVICE AND TRAFFIC

Current Air Service

– Silver Airways provides EAS service at all three of the Mississippi Airports that are party to this application. Service is to Atlanta onboard newly refurbished 34

- seat SF

- 340B aircraft. Ironically, some of the 25 SF340Bs in the Silver fleet were formerly flown by Mesaba Airlines on Delta Connection flights serving these same cities.

Silver service is operated
under the Silver brand and 3M airline code. The carrier
has no code

- sharing agreements at this time in
Atlanta.

Greenville service is one

stop via Tupelo. Service is three times per weekday, once per Saturday and twice per Sunday.

Meridian and Hattiesburg both have twice per day nonstop service to Atlanta, with Hattiesburg
service reduced to one trip per day on Saturday and Sunday while Meridian has one trip per day on Saturday and two on Sunday.

A Difficult Transition

– Delta, or its predecessor carriers Southern, Republic or Northwest, had
served each of these cities for decades and
, until 2008
, without EAS subsidy. On October 1, 2012
, Silver assumed service at all three cities, plus at Tupelo, Muscle Shoals and Lewisburg, WV. Prior to that Silver had assumed EAS service at six Colgan Air EAS cities around Washington Dulles on August 1, 2012. And Silver had only initiated SF

- 340 operations in March of 2012. For a small airlineProposal of Mississippi EAS Airport Consortium • July 2013 

## 7

like Silver the operational and logistical challenges of 2012 are massive. A significant number of a new aircraft type had to be placed on line, with all the implied flight operations, station and
maintenan ce infrastructure and employment. A dozen new small city station s had to be opened as well as hub station operations in Dulles and Atlanta. The timeline for this transition was driven by Colgan’s (Pinnacle) bankruptcy and Delta’s desire to exit these marke ts they had served for
decades.

The result was an uneven transition. Any transition from a global airline to a n independent regional carrier will be difficult. This one was very difficult. Delta did not agree to allow Silver to use its code on Mississip pi flights, nor were frequent flyer mile credits extended. Silver had to start Mississippi operations with a convoluted GDS display structured around the reservations and booking engine capability of Island Air, a small Hawaiian airline. This was confusing to Mississippi travelers. Full GDS display across all online venues took several months. A Delta.com booking display did not become operational until December. And flight operations were uneven, given the scope of operational responsibility Silver took on August 1 and then October 1. So the initial months of Silver service at these Mississippi airports were operationally weak and GDS poor.

The results of this painful transition were dreadful traffic results at the three Mississippi airports.

Traffic His tory

– A t Greenville traffic has declined 49% in the first nine months of Silver service

. The chart shows estimated 2013 year end traffic against actual for 200 0 to 2012.
GREENVILLE ANNUAL TRAFFIC 2000

– 2013 (2013 estimated)

Greenville service for years 2000 to 9/30/2012 was Delta (Northwest) to Memphis, operated with SF340s
until the last few months of operations in 2012 when CRJ equipment was used. With the exception of a few months in 2002, 2003 and 2004 where three daily trips were offered, Memphis s ervice was two daily trips. With two daily trips
, annual traffic was 2 0
, 1 2 0 i n 2 0 0 5 a n d a v e r a g e d 1 2
, 0 0 0 o r

m o r e f r o m 2 0 0 6 u n t i l D e l t a ’ s e x i t i n 2 0 1 2

.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 8

At Hattiesburg traffic has declined 57% in the first nine months of Silver service. The chart shows estimated 2013 year end traffic against actual 2000 to 2012.
HATTIESBURG ANNUAL TRAFFIC 2000

– 2013 (2013 estimated) Hattiesburg service in years 2000
to 9 /30/2012 was Delta (Northwest) to Memphis, always two daily trips and operated with SF340 aircraft until CRJ equipment was used from July
2011 until 9/30/2013

.

2013 total Hattiesburg traffic is projected to be half that of the average for the past five years.

At Meridian traffic has declined 60% in the first nine months of Silver service. The chart shows estimated 2013 year end traffic against actual 2000 to 2012.
MERIDIAN ANNUAL TRAFFIC 2000

– 2013 (2013 estimated) Unlike Greenville and Hattiesburg, Meridian service for the period 2000 to 9/30/2013 was always Delta and always Atlanta. Furthermore, Meridian saw regional jet service beginning in 2006. The market’s annual traffic
numbers reflect access to the more powerful Atlanta hub, higher frequency levels and a longer period of regional jet service.

Top Markets

– The top market list for each of these airports has changed significantly from th e shift from Delta network service to Silver independently branded service. Thus the chart compares top markets for the last six months of Delta service to top markets for the first six months of Silver service.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 9

With Silver Airways Atlanta service it is logical that Atlanta would become the top O&D market for all three markets. At Meridian it already was the top market owing to Delta
service to Atlanta.

So with the exception of Atlanta, and LGA for Meridian, the top five
markets for each city ha ve turne d over completely due to the transition from Delta network service to Silver Airways independent branded
service.

Average Fares

– Greenville, Hattiesburg and Meridian have historically been high fare markets, especially Hattiesburg and Meridian. GREENVILLE, HATTIESBURG, MERIDIAN AVERAGE FARE The 2012 fare shown is for the Delta service for the year ended 9/30/2013. The 2013 fare shown is for Silver service for the six months
October 2012 to March 2013.

The Silver average fares shown reflec t the ver y high percentage of Silver passengers that were reported as local Atlanta. No doubt some of these passengers were not true local Atlanta but
instead were connecting to other carriers on the sum of two local pricing and combined point to point bookings.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 10

AIR SERVICE DEFICIENCIES AND NEEDS

Air Service Deficiencies

– In the past year, these Mississippi airports have experienced the shock of losing reliable network air service that they had depended on and counted on and supported with significant traffic at high fares for a span of several decades. Therefore the air
service deficiencies and n eeds are significant.

Current air service lacks;

- A network carrier brand

- A network carrier code

- Integrated network carrier online connect market pricing

- Brand identity across the broader domestic network

- Brand identity across the broader international global air service network

- Brand identity in Mississippi or in Atlanta

- Brand loyalty or frequent user program for Mississippi or Atlanta residents

These deficiencies are responsible for the dramatic drop in traffic at all three airports starting last
Octo ber when Delta exited the market and Silver entered the market.

This chart shows the month by month enplanements at the three airports for the period October 2011 to June 2012 (Delta’s last nine months) in comparison to the period October 2012 to June
2 013, which was Silver’s first nine months.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 11

From day one of Silver service there is no traction for that service. Furthermore, there appears to be no gradual buildup of patronage.

Should this weak traffic pattern continue air service at these three cities will continue to decline and may, in some instances, end. The impact of weak un

- patronized air service, or worse
, the loss of air service on rural Mississippi cities is significant. It is well established that rural communities
with more or better t ransportation infrastructure outperform peer cities with less or inferior transportation infrastructure. This is true for highways and freeways, railroads, port facilities (in the case of cities on major bodies of water) and it is true of airports and air service. Now all three of these communities have excellent airports; in one case a former Air Force base (GLH), in another a current Naval Air Station (MEI joint use). The third airport (PIB) was built in 1975 specifically to be the regional air service ai rport for the surrounding area. Until Delta left
, all three had quality air
service from a Global Network carrier.

The economic impact of lost air service, or service that declines to the point that it is in name only and without measurable patronage, is significant. The contrast between documented inbound visitors

- by

- air to each Mississippi City, per DOT reports, for the last 12 months of Delta service compared to the number of visitors

- by

- air on Silver, even at the same Point

- Of

- Origin percentages, is si gnificant.

Even if half the visitor traffic still arrives in some manner at the three Mississippi cities, about 3,600
annual visitors would still be lost.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 12

If each visitor averaged even a modest 3 day

- visit and spent $150 per day

, the economic loss
for the three cities totals $1, 620 ,000 per year (3,600 visitors x 3 days stay each x $150). There is also the intangible damage that lack of viable air service does when rural communities seek to retain existing local businesses/industry or recruit new bus iness/industry to a local site or office/industrial park. Proximity to scheduled air service is almost always a critical factor in rural site selection evaluations by companies.

Alternative Airports

– None of the three Mississippi Airports has a low fare airport in close proximity. Greenville is the most isolated with 2.5 hour plus drives to any alternative airport. Hattiesburg has modest viable other air service options at Jackson (1:50 drive) and significant other options at New Orleans (2:03 drive depe nding on traffic ) . Meridian has close proximity to any options at Jackson but is 2.5 hours or more from any other airport with distinctive other air service options.

Traffic Leakage

– In the summer of 2012 the Mississippi Transportation Department Aerona utics Division funded a comprehensive leakage study at three Mississippi airports , with Greenville and Hattiesburg being two of the study areas. The analysis period was April 2011 to March 2012, during which time both cities had Delta service twice daily t o Memphis.

The study concluded that
, at that time
, the Greenville catchment area produced 113
PDEW and t he local airport only captured 17% of that demand. At Hattiesburg true demand was 443 PDEW with the local airport capturing 10%. A study was not done a t Meridian ; at this time
, given similar Delta service and a location similar to that of Hattiesburg, it is reasonable to assume similar results. By these measures Greenville and Hattiesburg (and by extension Meridian) air service was inadequate at that tim e, which was prior to Delta’s withdrawal and Silver assuming local air service.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 13

AIR SERVICE DEVELOPMENT EFFORTS AND AIR SERVICE MARKETING

Air Service Development Efforts

– The three consortium cities have been in the EAS program for some years and for most of those years the EAS carrier was Delta. Service to Memphis (Greenville & Hattiesburg) and Atlanta (Meridian) was the best possible combination of carrier and route for each city. Therefore, air service development, in the sense of recruiting “new” air service, was not necessary. During these years each city’s airport management did have ongoing phone conversations with Delta, especially as each two year EAS bid cycle came.

When it became clear in 2010 that Delta intended to leave all three cities an active and cooperative effort began to find replacement service. In addition to the three cities in the consortium, Tupelo and Muscle Shoals also participated in replacement carrier recruitment
efforts. An air service consultant was hired and active recru itment of viable replacement carriers began. This was a long process. There are fewer and fewer regional carriers and some have had financial difficulties. Like the network carrier sector, the regional carrier sector was in turmoil in
the 2010

– 2012 perio d. After multiple EAS RFP bid cycles did not yield a viable replacement carrier, Silver Airways, fresh from Chapter 11 re

- organization, stepped up in 2012 to bid to serve the five cities. The recruitment of Silver Airways involved face

- to

- face meetings and dozens, if not more, conference or phone conversations. Significant study and data research was undertaken by the air service consultant to help Silver become familiar with the markets. Silver replacement of Delta service in all five cities began on Octob er 1, 2012.

Current Air Service Marketing

– Each of the three communities has had ongoing air service marketing and promotion efforts, during the era of Delta service and even more so with the abrupt and traumatic shift from Delta to Silver Airways, which in two of the three markets also
involved a shift in hub served.

At Greenville the local airport manager works closely
with the Airport’s community partners in efforts to ensure a high level of local awareness of air service.

Given difficult economic conditions in northwest Mississippi, Greenville’s city, county and airport budgets are very tight. Nevertheless, nearly $12,000 per year has been spent on air service promotion.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 14

At Hattiesburg

- Laurel t he Airport has spent an average of $16,012 per year o n marketing and support of the local air service. Annualized spending has been at a consistent rate. Primary media venues include TV, radio and University of Southern Mississippi ( USM ) print venues.

Hattiesburg had a complete reversal of the schedule
timi ng of its Sil v er Airways schedule after the first six months of service. The carrier also changed its GDS display in June of 2013 from one coded with Island Air of Hawaii to one coded with Silver Airways. For these reasons Hattiesburg believes that
future marketing and promotional efforts will have a more effective message.

At Meridian the Airport has had a modest ongoing marketing effort involving local talk radio ads and local Symphony and Theater program ads.

The shift of air service from Delta to Sil ver Airways generated significant additional airport marketing efforts in the second half of 2012. The Airport has met with Silver Airways in person twice in the past nine months and has maintained constant phone contact in between. The Airport also is in constant contact with the Naval Air Station and its transportation management office. The Airport has spent about $12,000 per year on local advertising for each of the past three years.

In summary, all three airports and the communities they serve realize the importance of their local air service. In the EAS program “air service recruitment” is a once every other year exercise and when Delta is the incumbent carrier there is not a lot of recruiting. All three airports and communities moved aggressively to retain viable air service when it became clear that Delta was leaving. All three have worked hard, within the budgetary constraints they have, to promote the new Silver Airways service. But they are essentially starting from scratch or from zero
in terms o f brand identity and new air service features. This has been a significant challenge.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 15

A STRATEGIC PLAN TO RETAIN OUR AIR SERVICE

The loss of Delta Air Lines service at the Mississippi consortium airports has had a devastating impact on traffic. This would be of significant concern at any airport but is even more so since all three Mississippi airports are in the EAS program. It is essential that all three cities work to recover from the loss of Delta and move forward with Silver Airways.

Th is will be difficult. Delta has not agreed to a code

- sharing arrangement with Silver, nor ha s the carrier extended any frequent flyer affinity program features to the Silver flights. This application
has outlined the challenges these three cities face without Delta; a lack of network carrier brand, code and integrated pricing. Then there are all the implied obstacles of an unknown brand, Silver Airways, trying to establish itself in each city, in Atlanta, and across the domestic and global air service networks and in the global distribution systems.

There are positives in this air service situation. All three cities have service to Atlanta, the largest airline hub in the world. Service is provided on re

- furbished SF340B aircraft, the proper gauge of
aircraft for mark ets these sizes and routes of these distances. And Silver Airways is committed to being a successful small community carrier. So while Silver Airways continues to establish itself as a national brand serving small cities and while it continues to seek freq uent flyer and other business arrangements with network carriers the urgent task of the Mississippi consortium airports is to develop traffic demand for Silver services at Greenville, Hattiesburg and Meridian.

Funding Plan

– This Grant application propose s to use modest SCASD funding, coupled with non

airport cash matching funds from each city and further cash matching funds from the Mississippi Department of Transportation, to fund a broad and multi

- phased marketing and advertising program in and around e ach of the Mississippi cities and also, via low cost methods, in the Atlanta area (targeting Atlanta area local traffic demand to Mississippi).

In recognition of the potential Grant eligibility issues related to Greenville, the funding plan is
summarize d by community so a partial Grant award is a Department option.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 16

New Service Marketing Plan

– All three cities have done a good job, within their limited budgets, of marketing and promoting local air service in the past three years. The sudden shift from household name Delta (and its powerful frequent flyer affinity in Mississippi) to the unknown Silver Airways demands a new and more complex approach to local air service marketing. With the aid of Grant funding an aggressive and multi

- layered marketing and promotional effort is proposed for each of the three cities, coupled with a modest online travel planning venue and social media effort targeted at consumers in the Atlanta metro area with interest in travel to Mississippi.

Greenville Marketing Plan

– Th e program would refine existing marketing efforts to reflect a national consumer shift to online travel planning. The program would also work to plant the Silver Airways brand in the market and retain traditional retail advertising efforts.

Greenville ar ea funding would be expended over a 12

- month period beginning in late 2013 across all the advertising tactics listed. Greenville, like each city, would contribute $5,000 to a funding pool that would target Atlanta area consumers via online travel planning site POPS. The goal of the Greenville program will be to double current traffic levels from about 571 monthly O&D to 1,142 monthly O&D by program end. This would put annual market O&D near 14,000 with momentum toward additional growth.

Hattiesburg Marketi ng Plan

– The new marketing program will refine existing marketing efforts to reflect a national consumer shift to online travel planning

. It would also focus on defining the real
customer value of local travel to Atlanta and connecting via Atlanta in comp arison to driving to alternative airports.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 17

Funding allocations are assumed to be similar to those in Greenville. A goal of the Hattiesburg program would be a 50% increase in O&D traffic to about 20,000 annual passengers.

Meridian Marketing Program

– Mer idian’s program will be like that of Hattiesburg

- Laurel’s as the
two markets are in similar geography and have similar demographics.

The goal of the Meridian marketing program would be to increase traffic to an annual rate of 24,000 O&D by program end.

Atlanta Marketing Program

– Clearly the notion of conventional advertising for modest Silver Airways flights to Mississippi in the huge Atlanta metro area is laughable. However, the pool of $5,000 from the three cities could be used for GDS POP programs th at would offer online GDS inquiries the option to check service to the three consortium airports. Furthermore, various social media venues can target, at low cost, users in the Atlanta area that match up with Mississippi
activities. The total cost of such a POP and social media program would be about $15,000.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 18

A Greater Goal

– Major airline mergers have reduced network carrier competition. No place is this more clear than between Mississippi and Atlanta. Delta’s merger with Northwest eliminated Memphis as a competitive balance in the region west of Atlanta. Southwest’s decision to remove AirTran service from the Memphis

– Atlanta city pair in August 2013 means that i n t h e

e n t i r e r e g i o n between Dallas and Atlanta t h e o n l y c i t y p a i r w i t h n o n s t o p c o m p e t i t i o n is New
Orleans

– Atl anta. But Silver Airways service from the consortium cities of this application does provide significant low fare capacity between Mississippi and Atlanta for the benefit of local O&D passengers.

The chart at right graphically shows the pricing difference between Delta at Jackson, Golden Triangle and Gulfport and Silver at the three consortium cities during the first six months of Silver service, October 2012 thru
March 2013. Note that Delta holds an
absolute lock on market share in its markets with a 98% share at $233. In contrast, Silver’s reported average fare in its three markets was $113.

The drive radius of the three consortium airports does cover a wide area of northwest and southeast Mississippi. Tupelo also has Silver
service but is no t part of this application. If the same drive radius is projected over Tupelo
then most Mississippi residents are within a one or two hour drive of Silver Airways low fare Atlanta service. Given Delta’s competitive lock and associated high local fares on
A tlanta service at Jackson, Golden Triangle and Gulfport, Silver service is of STATEWIDE value. The purpose of this Grant application is to make that value KNOWN, whereas today it
is essentially not known statewide or , for that matter, in Atlanta.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 19

P UBLIC PRIVATE PARTNERSHIPS

All three Mississippi communities have active air
service committees or task forces.

At Greenville the public private partnership for improving air service has ten public entity members and nine private sector members.

At Hattiesburg

- Laurel the public private partnership for improving air service has ten public members and nine private sector
members.

At Meridian the public private partnership for improving air service has nine public and six private sector membe rs.Proposal of Mississippi EAS Airport Consortium • July 2013 

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PREVIOUS GRANT AWARDS AND SUMMARY
Both Meridian and Greenville have received previous Grant awards. Both were pre

- EAS status and prior to the exit of network service from the market.

Meridian

– Meridian applied for and received a SCASD Grant in September of 2002, the first year of the program. The Grant was for $500,000. The goals of the Grant were securing new turboprop or jet services, either from incumbent carrier ASA or a new entrant (new hub) , increasing frequency of service on existing rout e to Atlanta, implementation of marketing programs to support new services and the gathering of market data, including airfare comparisons, parking lot surveys and passenger surveys. A Grant amendment in March of 2003 allowed Grant funding to be used for g round support equipment, carrier facility modifications and consultant fees. Grant funding was used for MRG and associated support, as listed in the Grant contract and the
Grant amendment. The Grant was closed in March of 2005 , prior to Meridian being put in the EAS program by Delta in 2007. This n e w 2 0 1 3 Grant request is for marketing funding within the scope of allowable Grant fund usage for EAS cities.

Greenville

– Greenville was awarded a SCASD Grant in 2007 for $450,000, matched by $50,000 in
local non

- airport cash. The purpose of the Grant was to recruit and provide minimum revenue guarantee (MRG) and marketing support for new nonstop service to Atlanta, with Delta Air Lines being the target carrier. At the time the Grant was applied for Greenville was NOT in the EAS
program , with service from Northwest Airlink SF340s twice daily to Memphis. In June of 2008 Northwest (Mesaba) filed notice of termination at Greenville for the purpose of bidding to
receive EAS subsidy. Thus Greenville entered the EAS program AFTER having been awarded a SCASD grant for MRG and associated marketing support but before that Grant could be used for its intended purpose. In 2010 Greenville requested permission of the Department to use the marketing portion of the Grant, $50,000, to support existing Northwest Airlines network carrier service to Memphis. Marketing funds were then expended and the Grant closed on 8/3/2011

.
There are several key distinctions between the Greenville Grant a ward of 2007 and Greenville’s participation in this Grant application. The first Grant was requested and awarded when Greenville was outside the EAS program. Greenville had no idea, when it applied for the first Grant, that it would end up in the EAS progr am and unable to use that Grant as intended. Greenville had no idea that Delta would, upon merger with Northwest, make a wholesale exit
from two dozen Northwest cities.Proposal of Mississippi EAS Airport Consortium • July 2013 

## 21

This goes to the heart of the question of what is a “same project”. Greenville won a Grant in 2007 for MRG and marketing for new service to Atlanta. Completely different market circumstances were thrust upon the community in 2008, essentially negating the entire purpose of the 2007 Grant award. Was Greenville then to simply give back its entire Grant, because Northwest Airlines made an economic decision to put Greenville in EAS? Then, in 2011, Delta, having merged with Northwest, makes a wholesale exit from rural America and will not grant the Greenville r eplacement carrier a code

- sha re, joint pricing or any frequent flyer affinity program, despite that carrier offering service to Atlanta, Delta’s largest hub. (Ironically, Silver uses many of Mesaba’s former Delta Connect SF340s that flew GLH

– MEM) This is not a “same project” Grant

r equest. It is marketing funding
, but to support totally different air service situations involving totally different airlines and service to different hubs. As the SCASD program continues the Department must recognize that EAS cities often have NO control over their air service destiny and make Grant applications in good faith based upon then current air service circumstances.

Summary

– Mississippi is the poorest state in the union. Therefore, nowhere, except perhaps Alaska, is rural air service as important to the local economy as it is in rural Mississippi. On October 1, 2012 Silver Airways was asked to do a “mission impossible” in Mississippi. The dramatic loss of traffic at these three cities threatens the long

- term viability of their service. A key reason for the traffic loss is a near complete lack of brand identity for Silver Airways in the three cities
and in the state. This application outlines a comprehensive marketing and promotional effort, using the latest in proven air service marketing techniques, to establish Silver branded service to Atlanta in these three cities and grow traffic back in the direction of the Delta service era. As the application points out, Silver is the only low fare air service competition for Delta between any regio n of Mississippi and Atlanta. But low fare competition is of little value if it has no brand identity in its service region.

The funding level requested is a modest $40,000 per city or $120,000 in SCASD funding. Each city is putting in $6,000 in non

- airpo rt local funding and the Mississippi DOT will match the local matches dollar for dollar, making the total state / local match $12,000 per city or $36,000 in total.

This Grant application outlines a creative solution to a serious and costly problem, EAS serv ice with poor passenger counts. This modest funding will enable these cities to dramatically increase traffic, therefore reducing subsidy per passenger and
, in future bid cycles
, overall subsidy need. The consortium cities, their public and private partner s , and the Mississippi DOT urge the Department to give this creative and modestly priced Grant proposal a favorable review.