# August 2010 

# Tri
- Cities Regional Airport Blountville, TN Servi ng the Tri

- Cities of Bristol, VA; Johnson City and Kingsport, TN Proposal Under the Small Community Air Service Development Program Docket DOT

- OST

- 2010

- 0124 Dun & Bradstreet Number: 106201270 Congrressional District Number: 01

-

## T ABLE OF CONTENTS

SUMMARY INFORMATION

................................ ................................ ................... 4
A. Applicant Information

................................ ................................ ................................ ................................ ....... 4 B. Public/Private Partnerships

................................ ................................ ................................ ............................... 5 C. Project Proposal

................................ ................................ ................................ ................................ .................. 5 D. Existing Landing Aids at Local Airport

................................ ................................ ................................ ............. 5 E. Project Cost

................................ ................................ ................................ ................................ ......................... 6 F. Enplanements

................................ ................................ ................................ ................................ ..................... 6 G. Is this appli cation subject to review by state under Executive Order 12372 Process?

......................... 6 H. Is this applicant delinquent on any federal debt?

................................ ................................ ...................... 6 

## INTRODUCTORY LETTER

................................ ................................ ........................ 7 INTRODUCTION

................................ ................................ ................................ .... 8 LOCATION AND CATCHME NT AREA

................................ ................................ 10 HISTORICAL AIR SERVICE IN TRI
- CITIES

................................ ............................. 11 AIR SERVICE DEVELOPMENT EFFORTS

................................ ............................... 12 Airline Meetings

................................ ................................ ................................ ................................ ........................ 12 Airport Marketing

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

## AIR SERVICE DE VELOPMENT NEEDS

................................ ................................ .. 14 EXISTING AIR SERVICE IN TRI
- CITIES

................................ ................................ . 15 Current Nonstop Routes

................................ ................................ ................................ ................................ .......... 15 Near Term Schedules and Capacity at Tri

- Cities

................................ ................................ ............................... 16 Traffic, Capacity and Revenue Trends at Tri

- Cities

................................ ................................ ............................ 17 High Air Fares

................................ ................................ ................................ ................................ ............................. 19 

## THE CASE FOR TRI
- CITIES
– DALLAS/FT. WORTH SERVICE

................................ . 26
The Local Tri

- Cities

– Dallas/Ft. Worth Market

................................ ................................ ................................ ..... 27 Connecting Traffic Opportunities at American's Dallas/Ft. Worth Hub

................................ ......................... 30 Alternate Service in the Event the Proposed Service is Not Implemented

................................ ................... 32 

## STRATEGIC PLAN

................................ ................................ ................................ 32 Target Audience, Marketing and Promotion

................................ ................................ ................................ ..... 32 Proposed Implementation Timeline

................................ ................................ ................................ ...................... 34Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 3 Start

- Up Period and Sustainability of the Market

................................ ................................ ............................... 34 Goals and Objectives of the Grant

................................ ................................ ................................ ...................... 35 Differences from Previous Grant Awards

................................ ................................ ................................ ............ 35 

## PUBLIC/PRIVATE PARTNERSHIPS

................................ ................................ ........ 36 Air Service Advisory Groups

................................ ................................ ................................ ................................ ... 36 

## FUNDING

................................ ................................ ................................ ............ 37 Federal Funding

................................ ................................ ................................ ................................ ........................ 37 Local Funding

- Cash

................................ ................................ ................................ ................................ ............... 37 Local Fundin g

- In

- Kind Services

................................ ................................ ................................ ............................ 37 

## PROJECT MONITORING AND PROGRESS

................................ .......................... 38 Success Metrics

................................ ................................ ................................ ................................ ........................ 38 Financial Controls

................................ ................................ ................................ ................................ ..................... 38 Return on Investment

................................ ................................ ................................ ................................ .............. 38 

## EXPIRATION O F GRANT FUNDING PRIOR TO SELF SUSTAINABILITY

.................. 39 TRI
- CITIES REGIONAL AIRPORT

................................ ................................ .......... 40 The City of Bristol

................................ ................................ ................................ ................................ ....................... 41 The City of Kingsport

................................ ................................ ................................ ................................ ................ 41 The City o f Johnson City

................................ ................................ ................................ ................................ ......... 42 Tri

- Cities Economic Overview

................................ ................................ ................................ ................................ 43 Select Company Profiles

................................ ................................ ................................ ................................ ......... 44 Higher Education

................................ ................................ ................................ ................................ ..................... 46 Points of Intere st

................................ ................................ ................................ ................................ ....................... 48 

## LETTERS OF SUPPORT

................................ ................................ .......................... 51Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 4 

## S UMMARY INFORMATION A. Applicant I nformation

Not a Consortium
Interstate Consortium
Intrastate Consortium Community now receives EAS subsidy Community (or Consortium member) previously received a Small Community Grant If previous recipient: Date of Grant: September 26, 2002 Expiration Date of Grant: September 25, 2005 Community Name: Tri

- Cities, TN/VA Address: 2525 Highway 75, Suite 301 City, State, Zip Code: Blountville, TN 37617

- 1055 Point of Contact: Melissa Thomas Director of Marketing and Air Service Development Phone: 423

- 325

- 6032 Fax: 423

- 325

- 6037 E

- Mail: mthomas@triflight.com County: Sullivan Dun & Bradstreet Number: 106201270 Designated Legal Sponsor:
Name: Ken Maness , Jr. Title: Chairman Organization: Tri

- Cities Airport Commission Address: 2525 Highway 75, Suite 301 City, State, Zip Code: Bountville, TN 37617

- 1055 Phone: 423

- 325

- 6001 Fax: 423

- 325

- 6060 E

- Mail: khmaness@charter.netTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 5 

## B. Public/Private Partnerships

Public

 Tri

- Cities Airport Commission
Private

 Regional Alliance for Economic Development, TN/VA

 Johnson City/Washington County Chamber of Commerce

 Kingsport Chamber of Commerce

 Bristol TN/VA Chamber of Commerce

 Other Regional Economic Development Groups 

## C. Project P roposal

Marketing Upgrade Aircraft New Route Personnel Increase Frequency Low Fare Service Travel Bank Service R estoration Subsidy Surface Transportation Regional Service Other (specify) Revenue Guarantee Launch New Service Start

- Up Cost Offset First Service Study Secure Additional Carrier


## D. Existing Landing Aids at Local Airport

Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 6 

## E. Project Cost

1. Federal amount requested: $750,000 2. State cash financial contribution: 3. Local cash financial contribution: $150,000 3a. Airport cash funds: $50,00 3b. Non

- airport cash funds: $100,000 3c. Total local cash funds (3a + 3b): $150,000 4. TOTAL CASH FUNDING (1 + 2 + 3c) : $900,000 5. Local funds contributed from already

existing programs or projects included in line 3c amount: $25,000
6. Local funds contributed from new commitments or new resources included in line 3c amount: $125,000
7. Airport in

- kind contribution: ( waived landing fees ) $30,000 8. Other in

- kind contribution: (amount & description) 9. TOTAL IN

- KIND CONTRIBUTION (7 + 8): $30,000 10. TOTAL PROJECT COST (4 + 9): $930,000 

## F. Enplanements

2000 222,832 2004 203,980 2008 195,630 2001 207,791 2005 235,675 2009 214,921 2002 203,274 2006 202,140 2003 191,585 2007 202,175


## G. Is this application subject to review by state under Executive Order 12372 Process?

a. This application was made available to the State under the Executive Order 12372 Proces s 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



## H. Is this applicant delinquent on any federal debt?

No Yes (explain)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 7 

## INTRODUCTORY LETTERTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 8 

## INTRODUCTION

Tri

- Cities Regional Airport is proposing a Small Community Air Service Development Grant in the amount of $750,000

. In addition to grant funding, the community and the airport will contribute cash and in

kind funding valued at $180,000 toward the project. The total amount of the project, $930,000, would be offered for a minimum revenue guarantee and an accompanying ma rketing plan for American Eagle for regional jet service to American's hub in Dallas/Ft. Worth. The Airport seeks some flexibility in the final allocation of funding between the minimum revenue guarantee and the marketing plan based on negotiation with th e carrier and the agreement with the Department.

Tri

- Cities Regional Airport is targeting service to Dallas/Ft. Worth on American Eagle because Dallas/Ft. Worth is the carrier's largest hub, and service from Tri

- Cities would connect the community with not only Dallas/Ft. Worth, but to at least 80 other destinations served by American from Dallas/Ft. Worth. Furthermore, American Eagle already operates as station at Tri

- Cities with service to Chicago, so the hurdle of opening a station to operate service in the Tri

- Cities

- Dallas/Ft. Worth market is not an issue.
Tri

- Cities Regional Airport is the primary airport in a catchment area that includes Northeastern Tennessee, Southwestern Virginia and Northwestern North Carolina. The population of the catchment area of Tri

- Cities Regional Airport is approximately 639,000 residents. The merger of Delta Air Lines and Northwest Airlines had an adverse impact on air service at Tri

- Cities Regional Airport . Since the merger was announced, service from Tri

- Cities to th e Memphis and Cincinnati hubs has been discontinued and makes travel to major markets in the western United States circuitous from Tri

- Cities. US Airways has also reduced its capacity from Tri

- Cities to its hub in Charlotte. American Eagle entered the Tr i

- Cities market in July 2010 with two daily nonstops on 44

- seat regional jets to its hub in Chicago. Allegiant Air also serves Tri

- Cities, but Allegiant's service is less

- than

- daily point

- to

point service to Orlando International Airport and St. Petersbur g/Clearwater International Airport; Allegiant does not offer connecting service to points beyond Orlando or St. Petersburg.
Domestic air fares at Tri

- Cities are among the highest in the United States. In the year

- end first quarter 2010, the average domest ic fare at Tri

- Cities was $200 each way, or $400 roundtrip (This number excludes Allegiant Air data because Allegiant operates only point

- to

- point service to leisure destinations; including the Allegiant data, the average fare at Tri

- Cities was $170 in the year

- end first quarter 2010)

. Quarterly data indicates domestic fares are trending up. After reaching a high of $268 in second quarter 2008, the average fare fell to a low of $184 in second quarter 2009, but the averageTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 9 fare in first quarter 2010 increa sed to $229

– a level approaching the second quarter 2008 level when airlines increased fares to offset the cost of oil approaching $150/barrel in July 2008. The average fare at Tri

- Cities in the year

- end 2010 was the highest among airports in the region. At $200, Tri

- Cities had the highest domestic fare each way among airports in the region in year

- end 2010. Analysis of traffic within the primary catchment area of Tri

- Cities Regional Airport indicates 52% , or 384,000 origin and destination passengers, le aks to other airports. Most of the traffic leaks to Knoxville, an airport served by more airlines to more destinations.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 10 

## L OCATION AND CATCHMENT AREA

Tri

- Cities Regional Airport is the primary commercial airport serving Northeastern Tennessee, Southwestern Virginia and Northwestern North Carolina. The Airport provides the only commercial air
s ervic e within 90 highway miles; the next closest airport is in Asheville, North Carolina

. The Tri

- Cities Regional Airport catchme nt area, illustrated with the bold black line on Map 1 , draw s the majority of its traffic from a drive

- time radius of approximately one hour from the airport. The airport's primary catchment area has a population of 639,000 residents. Map 1: Primary Catc hment Area of Tri

- Cities Regional AirportTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 11 

## HISTORICAL AIR SERVICE IN TRI
- CITIES

Tri

- Cities Regional Airport has been one of the more aggressive regional airports in the country in terms of its air service development efforts over the last decade. The Airport has had success in recruiting no fewe r than ten new routes since 1997. In many cases, the routes performed well

– and still exist today. Although in some cases airline restructuring, and the move away from smaller turboprops and regional jets, h as led to the loss of Tri

- Cities service. Here is a quick summary of the Airport’s success es and challenges in the last 14 years:

 1996

– Delta Air Lines replaced mainline service with Delta Connection.

― Community expresses great concern when TCRA experienc es a decline in passengers and customer satisfaction.

― The Airport soon began actively marketing the Airport to both passengers and prospective airlines.

 1997

– Corp orate Airlines began Nashville service.

 1999

– Un ited Express began Chicago O’Hare service

.
 2000

– Northwest Airlink began Memphis service

.
 2000

– Corporate Airlines discontinue d Nashville service

.
 September 200 1

– US Airways replac ed its mainline service with Express service

.
 September 2001

– United Express discontinued Chicago service

.
 Spring 2001

– Corporate Airlines reinstated Nashville as American Connection.

 May 200 3

– Northwest Airlink began Detroit service as result of SCASD grant.

 October 200 4

– US Airways discontinued Pittsbu rgh service.

 Dec. 2004

– Delt a Connection began Orland o service as result of SCASD grant

 Aug. 2004

– D elta and US Airways la unch competitive fares in Tri

- Cities in response to Independence A ir beginning service in Knoxville

 Aug. 200 5

– Corporate Airlines , doing business as RegionsAir, discontinues Nashville s ervice

.
 Dec. 2005

– Delta , Northwest and US Airways reduce flight frequencies

 Aug. 2005

– Independence Air leaves nearby competing airport, fares begin to increase. Passenger numbers begin to decline.

 May 2007

– Airport launches ground handling program, Al legiant Air launches low fare jet service to Orlando Sanford.

 2008

– Allegiant expands service to include Ft. Lauderdale.

 2009

– Delta discontinues Detroit and Memphis service

.
 2009

– Allegiant again expands service to include St. Petersburg/Tampa.

 2009

– Allegiant discontinues Ft. Lauderdale service.

 2010

– Allegiant shifts its Orlando service from Sanford/Orland International Airport (SFB) to Orlando International Airport (MCO).

 February 2010

– Delta discontinues Cincinnati service and reinstates Detro it service

.
 July 2010

– American Eagle begins Chicago O'Hare service.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 12 

## AIR SERVICE DEVELOPMENT EFFORTS
Airline Meetings

Tri

- Cities Regional Airport has an active Air Se rvice Development program. Three full

- time employees, a Director of Marketing and Air Service Development, a Communications Manager and an administrative support position focus on marketing and promotional activities within the communities served by the airport and on promoting new routes to both incumbent airlines serving Tri

- Cities and a irlines not serving Tri

- Cities. Over the past year, Tri

- Cities Regional Airport has met with representatives from AirTran, Allegiant, American, American Eagle, Branson Air Express, Continental, Delta, Frontier, Pinnacle, SkyWest , Southwest and Unite d at both headquarters meetings and at air service development conferences. Tri

Cities Regional Airport attended both the Network USA 2010 and the JumpStart conferences this year, and scheduled 11 airline meetings between the two conferences.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 13 

## Airport Marketing

In addition to marketing the Tri

- Cities market to airlines, the Airport is also actively marketed within the community. Marketing and promotion includes building both general awareness of the airport and awareness of specific destinations serve d from the airport via print, radio, television and the internet. Exhibit 1: Examples of Tri

- Cities Regional Airport Print and Onlin e Marketing and PromotionTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 14 

## AIR SERVICE DEVELOPMENT NEEDS

Like most other markets in the Sout heast, Tri

- Cities has service to the Delta hub in Atlanta and the US Airways hub in Charlotte. Atlanta provides good connections to other markets in the Southeast, the Caribbean and some markets in Latin America. Like Atlanta, Charlotte provides good con nections to the Southeast, and fewer markets in the Caribbean and Latin America. Tri

- Cities also has service to Delta's hub in Detroit and American's hub in Chicago; however, a deficiency exists in service to the West. While Delta's service to Atlanta c an provide connections to the West, Delta's load factors to markets in the western U.S. are very high and often the only fares available from Tri

- Cities to major markets such as Dallas/Ft. Worth, Los Angeles, Phoenix, San Diego and San Francisco are the hi ghest
non

- discount fares. Service via an alternate hub would increase the probab i l ity of lower fare availability to western markets.
In addition to a western hub, Tri

- Cities also has a need for service from a low

- cost carrier. The average domestic one

- wa y Ex

- Allegiant fare in the Tri

- Cities market was $200 ($400 roundtrip) in the year

- end first quarter 2010. In first quarter 2010, the average fare was $229 ($458 roundtrip) and has increased in three of the past four quarters. For comparison, the averag e domestic Ex

- Allegiant Tri

- Cities fare reached $268 in second quarter 2008 when the cost of oil peaked at close to $150/barrel. While Tri

Cities Regional Airport is not requesting a grant for low

- cost carrier service, the Airport believes its request for service to Dallas/Ft. Worth is more likely to result in new service versus the probab i l ity of new service from a low

- cost carrier. The Airport also believes service to Dallas/Ft. Worth and the additional competition will help suppress fares, even if the service would be operated by a legacy airline.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 15 

## EXISTING AIR SERVICE IN TRI
- CITIES

Curren t Nonstop Routes

Tri

- Cities is served by Delta to Atlanta and Detroit, US Airways to Charlotte and by American to Chicago. The Delta, American and US Airways service is operated by regional airline code

- share partners. The Delta and American service is o perated exclusively with regional jet aircraft, and the US Airways service is operated with a mix of regional jets and Dash

- 8 turboprop aircraft. Allegiant Air also serves Tri

- Cities with service on MD

- 80 aircraft to Orlando International Airport and to S t. Petersburg/Clearwater International Airport. The Allegiant service operates twice a week to both destinations during most of the year (although Allegiant occasionally increases frequencies to three or four times a week during periods of peak demand). See Map 2. Map 2 : Current Routes Operated from Tri

- Cities Regional AirportTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 16 

## Near Term Schedules and Capacity at Tri
- Cities

As illustrated in Table 1, network carriers will operate 17 1/7 flights per day at Tri

- Cities in November 2010. American/American Eagle will operate two daily regional jets to Chicago; Delta/Delta Connection will operate 7 3/7 flights per day to Altanta and two daily flights to Detroit with 50

- seat regional jets; US Airways/US Airway Express will operate 5 5/7 flig hts per day to Charlotte with 50

- seat regional jets. Tri

Cities is also served by Allegiant Air, and Allegiant will operate two flights per week to both Orlando and St. Petersburg/Tampa using MD

- 80 aircraft.

T able 1 : Frequencies, Seats per Depar t ure and Total Seats per Day by Market and Carrier at Tri

- Cities Regional Airport

– No vember 2010Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 17 

## Traffic, Capacity and Revenue Trends at Tri
- Cities

Chart 1 illustrates d omestic Ex

- Allegiant traffic at Tri

- Cities Regional Airport peaked in the year

- end first quarter 2006 and has declined 29.9% or by 128,090 O&D passengers since the peak. International traffic peaked in the year

- end first quarter 2008 and has declined 11.5% or by 3,730 O&D passengers since the peak. Allegiant began serving Tri

- Cities i n 2007, and Allegiant traffic first appears in Tri

- Cities year

- end 2008 annual traffic data. Although Allegiant generates substantial traffic in the market and has prevented overall traffic from falling even further, Allegiant's service caters to leisure traffic traveling only to Central Florida and the Tampa Bay area. Allegiant's service does not connect traffic to destinations beyond Orlando and St. Petersburg.
Chart 1 : Annual Domestic Ex

- Allegiant, Allegiant and International Origin and Destination Pa ssengers at Tri

- Cities Regional Airport

– Year

- End First Quarter 2001

- 2010 (DOT T

- 100 and DB1B data)

Note A bout Allegiant Data Allegiant data is segregated from network carrier data throughout this document. Because Allegiant operates less

- than

- daily p oint

- to

- point service without connections to a larger network and because the service is targeted to leisure travelers, combining the Allegiant data with the network c arrier data would distort the degree of change in capacity, traffic and average fares in the Tri

- Cities market. While the community appreciates Allegiant's service, the community is focused on adding network carrier service at Tri

- Cities Regional Airport.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 18 The Ex

- Allegiant traffic at Tri

- Cities is down largely because airlines serving Tri

- Cities have reduced their capacity at Tri

- Cities, as illustrated in Chart 2. Capacity p eaked in year

- end first quarter 2005 at 1,087 seats per day each way. In the most recent year, capacity stood at 740 seats per day each way, a reduction of 347 sea ts per day each way, or 31.9%. Over the same period, domestic Ex

- Allegiant traffic declined by 132 PDEW or by 24.3%.
Chart 2 : Domestic Seats per Day Each Way and Passengers per Day Each Way (Excludes Allegiant Data) at Tri

- Cities Regional Airport

– Year

- End First Quarter 2001

- 2010 (DOT T

- 100 and DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 19 

## High Air Fares

As airlines serving Tri

- Cities have reduced capacity in the market since year

- end first quarter 2005 , the average domestic Ex

- Allegiant fare at Tri

- Cities increased from $173 in 2005 to $234 in 2008 and fell to $200 in the most recent year (Chart 3). Chart 3: Seats per Day Each Way and Average Domestic Fare (Excludes Allegiant Data) at Tri

- Cities Regional Airport

– Y ear

- End First Quarter 2001

- 2010 (DOT T

- 100 and DB1B data)



### -Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 20 While the decline in annualized fares from 2008 to 2009 seems encouraging, quarterly data in Chart 4 indicates Tri

- Cities domestic fares have increased from a low of $184 in second quarter 2009 to $229 in first quarter 2010, so fares are trending back up . Further analysis of quarterly data also indicates both capacity and traffic declined to all

- time low s in first quarter 2009. Airlines serving Tri

- Cities operated just 644 seats per day each way in first quarter 2010 and carried just 330 passengers per day each way. The reduced capacity enabled airlines to increase their fares (or at least make fewer di scount seats available for sale) and suppress demand for air service in Tri

- Cities. Chart 4: Passengers per Day Each Way, Seats per Day Each Way and Average Domestic Fare (Excludes Allegiant Data) at Tri

- Cities Re gion al Airport

– First Quarter 2008 throug h First Quarter 2010 (DOT T

- 100 and DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 21 With an average domestic Ex

- Allegiant fare of $200 in the most recent year, Tri

- Cities Regional Airport has the highest fare among the eight other airports surrounding Tri

- Cities with commercial air service. Fares at surrounding airports range from a low of $140 at Nashville to $190 at Knoxville. The closest alternate airport to Tri

- Cities Regional Airport, Asheville Regional Airport, had an average domestic one

way fare of $166, $44 lower than the average one

- way fare at Tri

- Cities. While this differenc e may not seem significant, for a family of four, it equates to $352 roundtrip. See Chart 5.
Chart 5 : Average Domestic Fare at Airports Surrounding Tri

- Cities Regional Airport (Excludes Allegiant Data)

– Year

- End First Quarter 2010 ( DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 22 Not only did Tri

- Cities have the highest domestic Ex

- Allegiant fare among airports surrounding Tri

- Cities in the year

- end first quarter 2010, at $229, Tri

- Cities also had the highest fare in first quarter 2010. While fares at most airports were higher in first quarter 2010 relative to the year

- end first quarter fare, fares at Asheville (the closest alternate airport to Tri

- Cities) declined by $1 to $165, and the gap between the average fare at Tri

- Cities and Ashville increased to $66 or $128 roundtrip. Th e roundtrip difference for a family of four from Tri

- Cities increased to $512 versus Asheville. See Chart 6. Chart 6: Average Domestic Fare at Airports Surrounding Tri

- Cities Regional Airport (Excludes Allegiant Dat a)

– First Quarter 2010 ( DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 23 The disparity in Tri

- Cities fares is apparent when the fare in the 30 largest Ex

- Allegiant domestic market s is compared with the average fare at both Asheville and Knoxville, the two closest markets to Tri

- Cities with commercial air service. In the year

- end first quarter 2010, the average Tri

- Cities fare in these markets was $185, $1 54 in Asheville and $182 in Knox ville. Among the 30 largest markets, the fare was lowest in Tri

- Cities in just four markets

– Dallas/Ft. Worth ($179), Tampa/St. Petersburg ($159), Jacksonville ($150) and Manchester ($133). The difference in fares ranges from no difference in the four markets where Tri

- Cities has the lowest fare, to $61 in the Detroit market (Asheville).
Table 2 : Average Fare at Tri

- Cities, Ashe ville and Knoxville in the 30 Largest Domestic Ex

- Allegiant Tri

Cities Markets

– Year

- End First Quarter 2010 ( DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 24 Many of the traditional largest business markets in the United States have the highest fares in Tri

- Cities. These markets include Memphis ( $257), Los Angeles ($239), Detroit ($22 9), San Francisco ( $2 25 ) and Minneapolis/St. Paul ($219). Among the ten most expensive markets in Tri

- Cities' 30 largest markets, service from Tri

- Cities to Dallas/Ft. Worth would provide connecting service and introduce more competition in the Los Angeles, San Francisco, San Diego, Houston, Seattle and San Antonio markets, among others
Table 3 : Passengers per Day Each Way (PDEW) and Average Fare in the 30 Largest Domestic Ex

Allegiant Tri

- Cities Markets (Sorted in Descending Order of Fares)

– Year

- End First Quarter 2010 ( DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 25 A lthough Asheville is the closest alternative airport to Tri

- Cities, it is a 90 mile drive, and Knoxville is a 113 mile drive ; yet many residents and visitors to the primary catchment area drive to or from other airports to take advantage of reasonable airfares and/or less circuitous service to reach their destinati ons. The presence of lower fares within a two

- hour drive of Tri

- Cities leads to significant passenger leakage to services at these other airports. It has been difficult for the Airport to recruit additional airlines to Tri

- Cities because this leakage di lutes the Airport’s traffic data. Due to weaker traffic data, the Airport must be able to offer some kind of risk mitigation to persuade an airline to consider the Tri

- Cities market. And airfares will only come down in Tri

- Cities once additional airlines have entered the market and provided competition. Tri

- Cities is stuck in a situation where it must recruit additional airlines in order to ensure the market’s continued viability, but it cannot recruit that competition without some kind of federal suppor t to reduce a new airline’s barriers to entry into the market.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 26 

## THE CASE FOR TRI
- CITIES
– DALLAS/FT. WORTH SERVICE

Tri

- Cities Regional Airport is proposing a Small Community Air Service Development Grant in the amount of $75 0,000 to offer American Eagle a minimum revenue guarantee for at least one daily nonstop between Tri

- Cities and Dallas/Ft. Worth u sing either 44 or 50

- seat regional jets

. The federal funding will be supplemented by a local community match of $180,000

– or 19.4% of the total project c ost. In addition to the minimum revenue guarantee, t he community an d the airport will provide $150,000 of cash for marketing and airport in

- kind funding valued at $30,000 to waive American Eagle's Dallas/Ft. Worth landing fees for the first year of servic e. In order for the Airpor t to remain compliant with the F ederal Aviation Administration’s Policy and Procedures Concerning the use of Airport Revenue, the local cash financial contribution provided directly from Airport funds will need to be used for mar keting efforts.
Service between Tri

- Cities and Dallas/Ft. Worth would provide not only service for local travelers in the market, but it would also provide travelers with the ability to connect to markets beyond American's Dallas/Ft. Worth hub . Currently, travel from Tri

- Cities to many of the destinations served by American from Dallas/Ft. Worth is circuitous and expensive. Service to a new hub would reduce leakage and competition increase competition with service via other hubs.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 27 

## The Local Tri
- Cities
– Dallas/Ft. Worth Market

Although Dallas/Ft. Worth is the fifth largest market at Tri

- Cities Regional airport and generated 16.1 PDEW (Chart 7) in the year

- end first quarter 2010 , there is no nonstop service in the market. With an average one

- way fare of $179 each way in the most recent year, the fare is high . Versus the prior year, traffic increased fro m 12.9 PDEW , and the average one

- way fare fell from $275. Over the last ten years, traffic peaked in 2005 with 19.7 PDEW at a n average fare of $194. Capacity at Tri

- Cities is down 32.9% since 2005, and the decline in traffic in the Dallas/Ft. Worth market is likely correlated with decline in Tri

Cities total capacity since 2005. New nonstop service in the Tri

- Cities

– Dallas/ Ft. Worth market would likely stimulate the local market size and put downward pressure on the average local fare.
Chart 7 : Tri

- Cities

– Dallas/Ft. Worth Passengers per Day Each Way (PDEW) and Average Fare

– Year

- End First Quarter ( DB1B data)

While an nualized traffic in the Tri

- Cities

– Dallas/Ft. Worth market increased 24.1% in the year

- end first quarter 2010, quarterly data indicates the increase was larger in some quarters (Chart 8) . Traffic increased 69% to 18.4 PDEW in third quarter 2009 and inc reased 45% to 18.0 PDEW in fourth quarter 2009 versus the same quarter in the prior year . These quarterly increases in traffic came as the average fare fell 47% to $162 in third quarter 2009 and 25% to $183 in fourth quarte r 2009. The amount of traffic, evenTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 28 without nonstop service, indicates Tri

- Cities

– Dallas/Ft. Worth is a large mar ket with even more potential; the market simply needs the benefit of nonstop service and the lower average fares nons top service would bring to grow even larger.
Chart 8 : Tri

- Cities

– Dallas/Ft. Worth Passengers per Day Each Way (PDEW) and Average Fare

– Year

- End First Quarter ( DB1B data)

The Tri

- Cities market is one of the largest Dallas/Ft. Worth markets under 1,000 miles not served by American or Amer ican Eagle (or any other carrier) with nonstop ser vice to Dallas/Ft. Worth . In fact, Tri

Cities is the fifth largest market less than 1,000 miles from Dallas/Ft. Worth without nonstop service (1,000 miles is used as the maximum distance because it is the outer edge of the range of the smaller regional jets). As illustrated in Table 4 , several markets smaller than Tri

- Cities have nonstop service to Dallas/Ft. Worth. Furthermore, American Eagle began service to four of the markets on the list, Brownsville, Rapid City , Sioux Falls and Augusta , within the last 14 months (Augusta was the most recent new market added in July 2010). The Sioux Falls and Augusta local Dallas/Ft. Worth market sizes are smaller and Augusta is slightly further from Dallas/Ft. Worth than Tri

- C ities, so service from Tri

- Citie s to Dallas/Ft. Worth is within American Eagle's network strategy.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 29 Table 4 : Dallas/Ft. Worth Passengers per Day Each Way (PDEW) , Yield, Revenue per Day Each Way, Distance, Nonstop Service Indication and Carrier Type in Mark ets Under 1,000 Miles

– Year

- End First Quarter 2010 Data ( DB1B data)

Note: All markets with more than 20 PDEW less than 1,000 miles from Dallas/Ft. Worth have nonstop service and are not included in this table.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 30 

## Connecting Traffic Opportunities at Ame rican's Dallas/Ft. Worth Hub

While Dallas/Ft. Worth is the second largest origin and destination market American Eagle could serve with nonstop Tri

- Cities

– Dallas/Ft. Worth service (Las Vegas is the largest market), the service would also connect Tri

- Cit ies with at least 80 other non

- circuitous markets American serves from its hub at Dallas/Ft. Worth. To be successful, routes operated with regional jets generally need both a mix of local and flow traffic. T he need for a mix of local and flow traffic bec omes increasingly important the further the distance from the hub and the more expensive the cost of fuel. Accordingly, American's Dallas/Ft. Worth hub provides more non

- circuitous connecting markets for Tri

- Cities traffic than any other hub not already served from Tri

- Cities. Dallas/Ft. Worth is the most logical hub for connections from Tri

- Cities to markets in Texas, Cal ifornia, Nevada, New Mexico, Hawaii and Mexico. Map 2 : Non

- Circuitous Markets American Eagle Could Serve with Tri

- Cities

– Dallas/Ft. W orth ServiceTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 31 The 30 largest markets American Eagle could serve with Tri

- Cities

– Dallas/Ft. Worth service generated 1 38 passengers per day each way at an average one

- way fare of $214 in the year

- end first quarter 2010. All markets that could flow via Dallas/Ft. Worth on American and American Eagle generated 145 PDEW at an average one

- way fare of $225 The size of the l ocal market, plus the cumulative size of connecting markets via Dallas/Ft. Worth at the high average fare s should make Tri

- Cities

– Dallas/Ft. Worth an attractive opportunity for r egional jet service on American Eagle. In the most recent year, Delta captured 74% of the traffic American and American Eagle could carry with Dallas/Ft. Worth service; US Airways captured 22% of the traffic.

Table 5 : Annual O&D Passengers, Passengers per Day Each Way (PDEW) and Averag e One

- Way Fares in the 30 Largest Markets American and American Could Serve with Tri

- Cities

– Dallas/Ft. Worth Service

– Year

- End First Quarter 2010 ( DB1B data)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 32 

## Alternate Service in the Event the Proposed Service is Not Implemented

In the event American Eagle is not willing to launch service in the Tri

- Cities

- Dallas/Ft. Worth market, Tri

Cities Regional Airpo rt would like to offer the grant funding to a network carrier for service from Tri

- Cities to an airport in the New York City area (LGA, JFK or EWR), Washington/Baltimore (DCA, IAD or BWI), Memphis or Miami (MIA)

. 

## STRATEGIC PLAN

Target Audience, Marketing and Promotion

The marketing strategy for American Eagle service to Dallas/Fort Worth (DFW) will be targeted primarily to adults between the ages of 25

- 65. The general advertising will reach both business and leisure travelers and focus on the point

- to

- point advantages as well as the ability to connect through the extensive DFW hub to other western and Latin America destinations.
Since the Tri

- Cities mar ket is geographically spread across an area with several newspapers and radio stations, advertising on morning news shows on the local CBS and NBC television affiliates is the most cost effective way to reach large numbers of people. Thirty

- seco nd spots focusing on the Dallas /Ft. Worth service would begin several weeks prior to the launch date and feature any introductory pricing or promotions provided by American Eagle . Creative would be adjusted as needed to keep the message fresh. Television a dvertising would continue for several months after the launch date with increased media weight as needed depending on bookings. Due to extensive commuting between the cities in the Tri

- Cities region, a well

- placed billboard campaign can be extremely effec tive in promoting new service. The Airport proposes to develop a 3

- month billboard campaign to introduce the new service, with boards strategically placed on main commuter connector roads, interstate highways and central streets within the cities.

Interne t advertising will also play an important roll with ads placed on major community news and leisure websites such as www.tricities.com, www.gotricities and www.kingsporttimesnews.net. In addition to paid media, the airport will work with television, radio and internet media partners to develop promotions to compliment the advertising and increase the reach of the message. Typically, these promotions provide huge returns in media exposure for little cash investment. The Airport will alsoTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 33 provide public relat ions support with newsletters and articles, interviews, social media efforts, launch events, signage and other activities designed to engage the community.
Since Tri

- Cities Regional Airport has an established marketing department and knows what works best for the region, the Airport will provide creative and place media with dollars available from grant and community funding. A detailed marketing and creative plan will be prepared if the grant is awarded and American Eagle decides to initiate service.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 34 

## Pr oposed Implementation Timeline

Tri

- Cities

– Dallas/Ft. Worth service could begin as early as June 2011 , assuming SCASD Grant awards are announced by January 2011. Based on airline planning cycle lead times, no less than six months is needed to add a new route to the network. When a route is guaranteed with a minimum revenue guarantee, a period of time is needed for the airport and the airline to negotiate the terms and conditions of an agreement and the airline requires time before service begins to sel l advance purchase tickets

– the more time provided for advance sales, the better the market will perform in its start

- up phase.
Once service is announced, Tri

- Cities Regional Airport will work with American Eagle to implement th e marketing and promotion p lan prior to the launch of service. 

## Start
- Up Period and Sustainability of the Market

Tri

- Cities Regional Airport believes American Eagle service from Tri

- Cities to Dallas/Ft. Worth would be self

- sustaining in the first three months of service if service begins in June 2011 and if the cost of fuel, competitive capacity and air fares do not change significantly between now and next summer. Because airline traffic declines beginning in August and remains week throughout the rest of the third quarter and mos t of the fourth quarter, we believe American Eagle would require a subsidy between September 201 1 and February 2012. Traffic would likely begin to increase in January 2012 with service becoming self

- sustaining and not require subsidy beginning in either M arch or April 2012. The service should remain self

- sustaining throughout the spring and summer and likely require subsidy again in third and fourth quarter 2012. By the second anniversary of service in June 2013, the service, while still subject to seas onal fluctuations in demand, should be self

- sustaining on a year

- round basis

– profits in peak months would likely outweigh losses in weak months and generate a profit on an annualized basis.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 35 

## Goals and Objectives of th e Grant

 Increase capacity and competition at Tri

- Cities Regional Airport by adding American Eagle regional jet service from Tri

- Cities to Dallas/Ft. Worth

 Make average airfares more competitive with those found at airports surrounding Tri

- Cities with the add ition of a new destination t o a large hub airport

.

 Recapture traffic in the primary catchment area of Tri

- Cities Regional Airport currently leaking to other airports

.

 Eliminate a portion the financial risk American Eagle will incur by operating Tri

- Cities

– Dallas/Ft. Worth service b y providing a minimum revenue guarantee to American Eagle during the start

- up phase of its service.

 Improve the ability of communities served by Tri

- Cities Regional Airport to expand their economies by providing improved air service and competition to exis ting service. 

## Differences from Previous Grant Awards

Tri

- Cities Regional Airport was the recipient of a Small Community Air Service Development Grant in 2002 , and the proceeds of the grant were used to provide marketing support for Northwest's Tri

- Cities

– Detroit service and Delta's Tri

- Cities

– Orlando service. This proposal differ s from the previous grant award bec ause it seeks funding for airline risk abatement, in the form of a minimum revenue guarantee , and for marketing funding to support for s ervi ce to Dallas/Ft. Worth on American Eagle

. Awarding a Small Community Air Service Development Grant for a minimum revenue guarantee provides the most efficient and measurable use of grant funding

– it results in new air service. The success of a minimum r evenue guarantee is greatly enhanced when accompanied with a well

- designed and executed marketing program as Tri

- Cities Regional Airport is proposing.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 36 

## P UBLIC/PRIVATE PARTNERSHIPS

The ro le of community partnerships is to help target the air service needs in the community, recruit additional airline service, and encourage the use of the service once implemented. Because of the importance of air service in the economic stability and growth of the region, several orga nizations in the community are providing support for this program

.

Public

 Tri

- Cities Airport Commission
Private

 Regional Alliance for Economic Development, TN/VA

 Johnson City/Washington County Chamber of Commerce

 Kingsport Chamber of Commerce

 Bristol TN/VA Chamber of Commerce

 Other Regional Economic Development Groups


## Air Service Advisory Groups

Tri

- Cities Regional Airport has established Tri

- Cities Airport Marketing Committee to help recruit new service and support incumb ent airlines. After success fully recruiting American Eagle Chicago service, the group is now pursuing A merican Eagle service to Dallas/Ft. Worth . The group also oversees advertising and marketing campaigns to promote current service offered at the Airport.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 37 

## FUNDING

Federal Fundin g

Tri

- Cities Regional Airport is requesting a Small Community Air Service Development Grant in the amount of $750,000 to provide a minimum revenue guarantee to American Eagle for service to Dallas/Ft. Worth. The project is not dependent on any other projects. 

## Local Fundin g - Cash

In addition to the federal funding requested, the Airport will provide $50,000 in cash for marketing. Half of the Airport's cash funding is available as a current incentive for any new service, and the other half is
new funding for this project. Community organizations will contribute additional $100,000 for marketing, and all of this funding is new funding for this project. The total amount of local funding available for this project is $150,000; $50,000 from the airp ort and $100,000 from other organizations in the community. 

## Local Fundin g - In
- Kind Services

Tri

- Cities Regional Airport will waive American Eagle's Dallas/Ft. Worth landing fees for the a period of one year from the date service begins. The value of the waived landing fees is estimated to be $30,000. Many other organizations in the community, including the Airport, Economic Development Agencies, Chambers of Commerce and Convention and Visitors Bureaus will help promote the new service through their vario us me mbership groups. There is no estimate of these in

- kind contributions. Table 6: Summary of Project Funding by Source and TypeTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 38 

## PROJECT MONITORING AND PROGRESS Success Metrics

Su ccess of th e program will be based on five metrics: 1. American Eagle launching service in the Tri

- Cities

– Dallas/Ft. Worth market

. 2. The total amount of traffic using the new service and the load factor of the route. 3. Growth of the Tri

- Cities

– Dallas/Ft. Worth market size. 4. The decline in average airfares in the markets serv ed via Dallas/Ft. Worth and in the local Tri

Cities

– Dallas/Ft. Worth market

. 5. The amount and the duration of minimum revenue guarantee payments

The Airport will rely on DOT T

- 100 and DB1B data, traffic and revenue data provided directly by the airline and the amount of reimbursements requested by the airline as indications of project success. The airport anticipates new service will result in market size growth and lower fares in the mark ets served via Dallas/Ft. Worth.



## Financial Controls

As the sponsor, Tri

- Cities Regional Airport and its governing body, Tri

- Cities Airport Commission, will be the responsible parties for all fiscal matters and DOT reporting requirements. The Commission is established as a public governing body. As a public entity the DOT can be assured that proper financial controls are in place to guarantee that the DOT’s Grant will be used in accordance with any subsequent agreement. Tri

- Cities Airport Commission und erstands that the Grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will submit invoices to the DOT for reimbursement, based on a percentage of the total grant request.



## Return on Investment

A minimum revenue g uarantee removes a significant portion of the risk an airline faces when launching new service. The minimum revenue guarantee provides a financial "backstop" if traffic and/or average fares do not exceed the cost of operating the service during the start

- up phase of a route. The Department can be confident its award is effective if American Eagle launches the service, andTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 39 remains in the market after the expiration of the grant period or if American Eagle remains in the market after funding is extinguished. 

## EXPIRATION OF GRANT FUNDING PRIOR TO SELF SUSTAINABILITY

Tri

- Cities Regional Airport believes the proposed service from Tri

- Cities to Dallas/Ft. Worth on American Eagle will be successful within the proposed two

- year length of the program. Beyond the se cond year of the service, when the route is at maturity/steady

- state, it will be included as part of the Airport's marketing and promotional activities at the time the grant expires.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 40 

## T RI
- CITIES REGIONAL AIRPORT

Tri

- Cities Regional Airport is the main gateway for a large area of Northeastern Tennessee, Southwest Virginia, and Western North Carolina. The airport is equipped with an 8,000

- foot primary runway, including dual ILS (instrument landing system) approache s
– which can handle virtually any aircraft in any weather conditions. The Airport also features a 4,442

- foot long crosswind runway used primarily for general aviation traffic.

The Airport’s main terminal building is almost 113,532 square feet, and inclu des the airline ticketing lobby, airline operation areas, public waiting areas, baggage claim, concessions space, security corridor and airside concourse. The airline concourse features seven aircraft gates and can immediately accommodate additional airlin e operations The Airport’s air carrier apron is 100,200 square yards, with parking space for as many as ten regional jet aircraft, or a combination of regional jet and mainline aircraft. The Airport has overnight apron space available immediately for an additional air carrier. Tri

- Cities Airport ConcourseTri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 41 

## COMMUNITY PROFILE

Tri

- Cities, Tennessee/Virginia is a region rich in history, culture and outdoor adventure. The name "Tri

- Cities" refers to the region comprising the cities of Bristol, TN; Bristol, VA; Johnson City and Kingsport along with the surrounding smaller towns and communities in Northeast Tennessee and Southwest Virginia. The City of Bristol Bristol is uniquely situated along the Tennessee and Virginia state line and offers the best of two states. With a combin ed population of 45,000, Bristol maintains a small city charm while being able to offer big city conveniences, affordable housing and low cost of living. Residents can discover a wealth of culture and performing arts. Declared by the U.S. Congress as the O fficial Birthplace of Country Music, and known as the ―Big Bang of Country Music,‖ The old

- time

mountain music and musicians of the1927 recording sessions in Bristol went on to shape what country music is today. Bristol remains true to its roots with live music performances in multiple venues throughout the year. Whether it is fishing or boating in area lakes, watching a NASCAR race at the Bristol Motor Speedway, exploring the natural caverns and trails of the area or playing a round of golf at one of six courses, Bristol sets the stage for outdoor fun and recreation. Bristol has been selected at a top 100 place to raise young people by America’s Promise and has been awarded 2008 Last Mile magazine’s Smart Community Award. Offering a wealth of higher edu cational facilities including 4 colleges, outstanding healthcare, and thriving industry, just like the sign say’s, Bristol truly is a ―Good Place to Live‖ . The City of Kingsport Kingsport has lived up to its founders' original intent of accommodating mod ern industry. Home to Eastman Chemical Company, one of the region's largest employers, the city of Kingsport is committed to keeping the city on its path of leadership for the region. The city’s thriving downtown offers many cultural opportunities with a M ain Street Arts Program, boutique restaurants, antique shops and various live music venues. Kingsport, in partnership with Northeast Tennessee Technical Community College, is committed to raising an educated workforce and shows that commitment by offering two years of college free to students graduating from the city high school.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 42 With over 50,000 residents, Kingsport offers a wealth of recreational and cultural activities, including Bays Mountain State Park, Warrior’s Path State Park, the Greenbelt walking trail system through the city and many historical sites on the Holston River, Daniel Boone Trail and Old Stage Coach road. The city's most notable festival, Fun Fest, has an annual attendance of 175,000 and has been named a Top

- 20 July event three times by the Southeast Tourism Society. Kingsport enjoys a low crime rate, in addition to a lower cost of living when compared to other cities of similar size. Kingsport offers quick access to the nation's distribution chain, and the city's workforce prides itsel f in quality and superior service.

The City of Johnson City For almost two centuries, Johnson City has been a center for tourism and business in Northeast Tennessee. Originally a train depot, Johnson City is now a metropolitan melting pot with a population of 61,102. Home to East Tennessee State University, the Jam es H. Quillen College of Medicine, Bill Gatton School of Pharmacy, Freedom Hall and the Carnegie Hotel, the city flourishes with tradition, heritage, and hospitality. Its natural beauty and fresh mountain air make Johnson City the perfect location to live, work or visit. Located in Washington County the area is also home to Historic Jonesborough, Tennessee’s oldest town and the International Storytelling Center.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 43 Tri
- Cities Economic Overview

Tri

- Cities Catchment Are a is home to approximately 1.2 millio n people within a one

- hour drive of the Airport. The median family income in Tri

- Cities area was $50,948 in 2008, but that income translated to the purchasing power of more than $63,000 due to the low cost of living in Tri

- Cities area (16.9% lower than th e national average). The low cost of living is partially due to the extremely low cost of housing as Tri

- Cities median home price in 2010 was just $113,060, which is more than $70,000 less than the national median. Tri

- Cities residents spend an average of $6,814 on vacation each year. The population is also relatively well educated, with 57 percent of adults having attended at least some college

Employer # of Employees K
- V
- A
- T Food Stores, Inc. 10,700 Eastman Chemical Co. 7,000 Mountain States 5,178 Wellmont Health System 4,535 NN Inc. 2,300 East Tennessee State University 2,105 Citi Commerce Solutions 2,000 Berkline LLC 1,609 Century Link 1,464 MAHLE, Inc. 1,423 James H. Quillen VA Medical Center 1,265 AGC Industries 1,241 Frontier Health 1,228 A.L. Smith (American Water Heater) 1,190 DTR Tennessee, Inc. 1,150 General Dynamics 1,010 Koch Foods 950 Plus Mark, Inc. 940 Exide Technologies 900 Royal Mouldings, LTD 860 Utility Trailer MFG 850Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 44 Select Company Profiles

Eastman
Founded in 1920 and he adquartered in Kingsport, Eastman manufactures chemicals, fibers and plastics materials which are used as key ingredients to make the products that people use every day. Eastman is a FORTUNE 500 company with 2009 sales of $5 billion, approximately 7,000 employees and offices and f acilities throughout the world. The company is investing $1.3 billion in its Kingsport headquarters and new product line. Food City Headquartered in Abingdon, Virginia , this popular and affordable U.S. supermarket chain has stores located in Kentucky, V irginia, and Tennessee with a variety of brands. The K

- VA

- T Food Stores, Inc. offers the house labels "Food Club," "Top Crest," "ValuTime," "Food City Fresh!," "Food City Premium," "Full Circle," "Domestix," "Electrix," "Academix," "Pet Club," and "World Classics" many of which are part of the Topco corporate brand program. Food City is also the exclusive distributor of regional favorites such as "Kay's Ice Cream", "Terry's Snacks", "Kerns Bread", "Lay's Meats," and "Farmbest Milk.‖ K

- VA

- T Food Stores, Inc . ranked 40th on the latest (2008) Progressive Grocer's list of America's 50 Largest Supermarket Chains, 55th on Supermarket News ―Top 75 North American Food Retailers‖ (January, 2008) with over 1.6 billion dollars in sales and 269th on Forbes Magazine’s ― List of the largest privately

- held companies in 2007‖.

K ing Pharmaceuticals King Pharmaceuticals, Inc., located in Bristol, Tennessee, focuses on the development and promotion of branded pharmaceutical products and technologies. King has a market cap of $2.1 billion and is an established leading specialty pharmaceutical company, with brands such as Avinza® CII, Skelaxin®, Flector® Patch, Thrombin

- JMI® and Levoxyl®.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 45 NN, Inc. NN, Inc. is a leading global manufacturer of engineered high precision components and assemblies and a recognized leader in the development and design of bearing component products including balls, rollers, seals and retainers. NN, Inc. had 2010 revenue o f approximately $320 million in revenue.

Koyo and Nakatetsu Two Japanese companies, Koyo and Nakatetsu, have opened new plants in the Washington County Industrial Park. Parent company JTEKT Corporation is headquartered in Japan with head offices in Nag oya and Osaka. Annual global sales are approx $10 Billion and employs 30,000 worldwide. JTEKT (Koyo) is one of the world’s largest automotive component suppliers. Koyo USA is a supplier to Toyota, Honda, Ford, and BMW.

TRW Automotive
TRW Automotive has a Rack and Pinion Steering Division Factory in Rogersville, TN and ranks among the world's largest and most diversified suppliers of automotive systems, modules and components to global vehicle manufacturers and related aftermarkets. $ 11.6 billion annual sales in 2009.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 46 Higher Education

East Tennessee State University (ETSU) An accredited American university founded October 2, 1911 and located in Johnson City, Tennessee. It is part of the Tennessee Board of Regents system of colleges and universities. ETSU has small off

- campus centers in nearby Kingsport, Elizabethton, and Greeneville, Tennessee.

Graduate programs include a fully accredited medical school, the Quillen College of Medicine, named in honor of U.S. Congressman Ja mes H. Quillen who successfully fought for its creation in the 1970s. In 2005, the College of Pharmacy was approved which further augmented the medical specialties at ETSU. Classes in the ETSU College of Pharmacy began in January 2007. The Princeton Review lists the university in their 2007 edition of America’s Best Value Colleges. ETSU has the only master's degree in the United States in storytelling, and has been increasingly noted for its Appalachian Studies programs featuring a nationally acclaimed and accredited program in Bluegrass and Country Music. Walters State Community College (WSCC, Walters State)Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 47 A state

- supported community college operated by the Tennessee Board of Regents. It was established in 1970 in located Morristown, Tennessee and was nam ed in honor of former United States Senator Herbert S. Walters. This comprehensive community college serves ten predominantly rural East Tennessee counties in the area of the Clinch and Great Smoky Mountains with four campuses totaling approximately 5,900 degree

- seeking, commuting students. Northeast State Technical Community College The third largest institution for higher learning in the Tri

- Cities area, wi th approximately 5,500 students, is Northeast State Technicaly Community College and offers associate degrees in more than 50 programs of study, which can be transferred to a number of local and regional four

- year colleges and universities. The school also offers associate of applied science degrees in more than 30 programs of study, such as busi ness management, nursing, computer science, criminal justice, and office administration technology that prepare students for immediate entry into the workplace. In addition, Northeast State offers academic and technical certificates in more than a dozen ar eas of study. Tusculum College Tusculum College is a private college affiliated with the Presbyterian Church (USA). Its main campus is in Tusculum, Tennessee, a suburb of Greeneville. It is Tennessee’s oldest college and the 23rd

- oldest operating college i n the United States. In addition to its main campus, the institution maintains a regional center for Graduate and Professional Studies in Knoxville, and additional satellite campuses across East Tennessee. King College King College is a private, comprehen sive college located in Bristol, Tennessee. Founded in 1867, King is independently governed with covenant affiliations to the Presbyterian Church (U.S.A.)and the Evangelical Presbyterian Church (EPC). The College was built on 25 acres of land in Bristol t hat had been donated by Reverend James King, in whose honor it is named. The first classes were offered in August 1867. When the college outgrew its small campus, King's grandson Isaac Anderson donated land on a hillside east of Bristol and in 1917 the c ollege moved to its present location.*Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 48 Points of Interest

Family fun abounds in Tri

- Cities and the surrounding areas. Local festivals include the Blue Plum Festival, Fun Fest, the Apple Festival and the Rhythm & Roots Reunion. Enjoy outdoor adventure on the many lakes in the Tennessee Valley Authority lake system, rivers, National and state parks, and nearby Roan Mountain State Park with the second highest point East of the Missiappi River. Other family

- friendly activities include hiking the Appalachian Trail and biking trails and some of the best trophy trout fishing in the country. Great Smoky Mountain National Park The Great Smoky Mountain National Park is approximatley 1.5 hour drive from Tri

- Cities Regional Airport. World

renowned for its diversity of plant and animal life, in 2009 the park saw 9,491,437 visitors. The beauty of ancient mountains, and the Southern Appalachian mountain culture help make Great Smoky Mountain National Park America’s most visite d national park. Great Smoky Mountains National Park is a hiker's paradise with over 800 miles of maintained trails ranging from short leg

- stretchers to strenuous treks that may require backcountry camping. Car camping, fishing, picnicking, wildlife viewi ng and auto touring are also popular activities. In addition, the park has one of the best collections of log buildings in the eastern United States. Nearly 80 historic structures

— homes, barns, churches, schools, and grist mills

— have been preserved in the park.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 49 Bristol Motor Speedway Bristol hosts nearly 1 million tourists each year, with more than 160,000 race fans visiting the city twice a year to attend NASCAR races at Bristol Motor Speedway. The Bristol Chamber estimated the speedway brings in more than $450 million a year, between all its major events, as fans occupy hotel rooms and spend their dollars on food, gas and souvenirs. Bruton Smith, who bought Bristol Motor Speedway in 1996, said NASCAR runs here are bigger events than any NFL Super Bowl and have put the city of Bristol on the national map. The charities associated with the Speedway also generate a significant help for children’s agencies in Northeast Tennessee and Southwest Virginia.

Andrew Johnson National Historic Site
This National Historic Site in Greeneville, Tennessee was established to honor Andrew Johnson, 17th President of the United States . The site includes two of Johnson's homes, his tailor shop, and his grave site within the Andrew Johnson National Cemetery.

Barter Theatre Located in Abingdon, Virginia and opened on June 10, 1933, Barter Theatre is one of the longest running professional theatres in the nation. In 1933, when the country was in the middle of the Great Depression, most patrons were not able to pay the full ticket price. Robert Porterfield, founder of the theatre, offered admittance by letting the local people pay with food goods, hence the name "Barter". The original ticket price for a play was 40 cents, or the equivalent in goods. In 1946, Barter Theatre w as designated the State Theatre of Virginia. Today, Barter is one of the last year

- round professional resident repertory theatres remaining in the United States.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 50 Birthplace of Country Music Alliance and Museum The Birthplace of Country Music Alliance, base d in Bristol, is dedicated to calling attention to the crucial role played by artists from East Tennessee, Southwest Virginia, and the southern Appalachian region in country, bluegrass, and other musical avenues which have been nurtured by this region. Bri stol is considered to be the "Birthplace of Country Music," according to a resolution passed by the U.S. Congress in 1998 recognizing its contributions to early country music recordings and influence.Tri

- Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal

– 2010 

### 51 

## LETTERS OF SUPPORT Tuesday, August 24, 2010 The Honorable Raymond H. LaHood Secretary of Transportation U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590 Docket DOT

- OST

- 2010

- 0124 Dear Mr. Secretary: On behalf of the Kingsport Tennessee Area Chamber of Commerce and its nearly 1,000 business members, thank you for the opportunity to express this organization’s support for the application of Tri

Cities Regional Airport and the proposed air service development project with American Airlines for regional jet service to American’s hub in Dallas/Ft. Wroth (DFW). Dallas is TRI’s 5th largest market with more than 16 passengers each way, each day. In addition to gaining nonstop service to a highly desired city, gaining Dallas service would provide additional western and south American connections through American Airline’s extensive DFW hub. This service will also provide an alternate to Chicago in case of weather or service disruption for American passengers. In addition, it will add overall capacity and put downward pre ssure on average fares. The Kingsport Chamber and the regional chambers of commerce will support the effort of Tri

- Cities Regional Airport in raising the matching funds from the community.
After discussions with our Tri

- Cities Regional Airport officials , we encourage the Department of Transportation to approve this application. Approval for the proposed air service to DFW would have a significantly positive impact on air travel by offering customers more service, scheduling and pricing options and will help to ensure that customers continue to benefit from having more options from which to choose. I urge you to quickly approve this application. Sincerely,

Miles A. Burdine President & CEO Kingsport Area Chamber of CommerceTri

- Cities Regional Airport, Blountville, TN

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- Cities Regional Airport, Blountville, TN

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### August 23, 2010

The Honorable Raymond L. La Hood Secretary of Transportation 1200 New Jersey Ave., SE Washington DC, 205090

SUBJECT: SCASD Application, Tri Cities Regional Airport; DOT

- OST

- 2010

- 0124

Dear Mr. Secretary: The Johnson City/Jonesborough/Washington Economic Development Board is pleased to endorse our regional airport’s application for a Small Community Air Service Development Grant. Air service is one of the most critical needs in economic developm ent. Every Request for a Proposal that we send to a prospective employer requests a breakdown of air service to this area. Professional economic development site selectors that we work with are from Atlanta, Chicago, and Dallas. Therefore, direct air se rvice to these three cities is vitally important to economic development in the Upper East Tennessee Area. Thanks for considering the funding request from the Tri

- Cities Airport. The Economic Development Board and area businesses certainly recognize the r ole that the airport has in the economic vitality of our region. Sincerely,

P.C. Snapp Executive DirectorTri

- Cities Regional Airport, Blountville, TN

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### August 23, 2010

The Honorable Raymond L. LaHood Secretary of Transportation United States Department of Transportation 1200 New Jersey Avenue, SE Washington D.C. 20590

Re: Tri

- Cities Regional Airport (TRI) Small Community Air Service (SCASD) grant Dear Secretary LaHood, The Regional Alliance for Economic Development supports the Tri

- Cities Airport Commission’s application for a Small Community Air Service Development (SCASD) grant. The Regional Alliance is a public/private partnership that promotes the development and growth of the Tri

- Cities region. The Alliance feels that the SCASD Grant, that will be used to offer a minimum revenue guarantee to American Airlines in return for their offering direct jet service to their hub in Dallas/Ft. Worth, would be extremely important to our economic development efforts by opening up travel to and from the Tri

Cities to more than one hub. We s upport the application of the grant, and in doing so, the Alliance will provide support in the effort to raise $100,000 in community matching funds towards the grant.

Sincerely,

K. Newton Raff Chairman The Regional Alliance for Economic DevelopmentTri

- Cities Regional Airport, Blountville, TN

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- Cities Regional Airport, Blountville, TN

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