August 2010

Tri-Cities Regional Airport

Blountville, TN

Serving 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

-
 

TABLE 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 application 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 CATCHMENT AREA ................................................................ 10

HISTORICAL AIR SERVICE IN TRI-CITIES............................................................. 11

AIR SERVICE DEVELOPMENT EFFORTS ............................................................... 12

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

Airport Marketing ..................................................................................................................................................... 13

AIR SERVICE DEVELOPMENT 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...................................................................................................................... 34
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 Funding - In-Kind Services............................................................................................................................ 37

PROJECT MONITORING AND PROGRESS.......................................................... 38

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

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

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

EXPIRATION OF GRANT FUNDING PRIOR TO SELF SUSTAINABILITY..................39

TRI-CITIES REGIONAL AIRPORT..........................................................................40

The City of Bristol....................................................................................................................................................... 41

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

The City of Johnson City ......................................................................................................................................... 42

Tri-Cities Economic Overview ................................................................................................................................ 43

Select Company Profiles......................................................................................................................................... 44

Higher Education ..................................................................................................................................................... 46

Points of Interest ....................................................................................................................................................... 48

LETTERS OF SUPPORT .......................................................................................... 51
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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SUMMARY INFORMATION

A. Applicant Information

 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.net
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 Proposal 

 Marketing Upgrade Aircraft New Route

 Personnel Increase Frequency Low Fare Service

 Travel Bank Service Restoration 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 

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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 alreadyexisting 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 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

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 

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INTRODUCTORY LETTER
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 inkind 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 marketing 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 the 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 the 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 Tri-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-topoint service to Orlando International Airport and St. Petersburg/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 domestic 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 average 
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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fare in first quarter 2010 increased 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, leaks 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 

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LOCATION 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 

service within 90 highway miles; the next closest airport is in Asheville, North Carolina. The Tri-Cities 

Regional Airport catchment area, illustrated with the bold black line on Map 1, draws 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 Catchment Area of Tri-Cities Regional Airport
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 

fewer 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, has led to the loss of Tri-Cities service. Here is a quick summary of the Airport’s successes and 

challenges in the last 14 years:

 1996 – Delta Air Lines replaced mainline service with Delta Connection.

― Community expresses great concern when TCRA experiences a decline in passengers and 

customer satisfaction. 

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

airlines. 

 1997 – Corporate Airlines began Nashville service.

 1999 – United Express began Chicago O’Hare service.

 2000 – Northwest Airlink began Memphis service.

 2000 – Corporate Airlines discontinued Nashville service.

 September 2001 – US Airways replaced its mainline service with Express service.

 September 2001 – United Express discontinued Chicago service.

 Spring 2001 – Corporate Airlines reinstated Nashville as American Connection.

 May 2003 – Northwest Airlink began Detroit service as result of SCASD grant.

 October 2004 – US Airways discontinued Pittsburgh service.

 Dec. 2004 – Delta Connection began Orlando service as result of SCASD grant

 Aug. 2004 – Delta and US Airways launch competitive fares in Tri-Cities in response to 

Independence Air beginning service in Knoxville

 Aug. 2005 – Corporate Airlines, doing business as RegionsAir, discontinues Nashville service.

 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, Allegiant 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 Detroit service.

 July 2010 – American Eagle begins Chicago O'Hare service.
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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AIR SERVICE DEVELOPMENT EFFORTS

Airline Meetings

Tri-Cities Regional Airport has an active Air Service 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 airlines 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 United at both headquarters meetings and at air service development conferences. TriCities 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 

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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 served from the airport via print, radio, television and the internet.

Exhibit 1: Examples of Tri-Cities Regional Airport Print and Online Marketing and Promotion

 
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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AIR SERVICE DEVELOPMENT NEEDS

Like most other markets in the Southeast, 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 connections 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 can 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 highest 

non-discount fares. Service via an alternate hub would increase the probability 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-way 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 average domestic Ex-Allegiant Tri-Cities fare 

reached $268 in second quarter 2008 when the cost of oil peaked at close to $150/barrel. While TriCities 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 probability 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 

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EXISTING AIR SERVICE IN TRI-CITIES

Current 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 operated 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 St. 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 Airport
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 flights per day to Charlotte with 50-seat regional jets. TriCities 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. 

Table 1: Frequencies, Seats per Departure and Total Seats per Day by Market and Carrier at Tri-Cities 

Regional Airport – November 2010

Carrier Destination

Departures 

per Day

Seats per 

Departure

Seats 

per Day

American ORD 2 44 88

Total 2 44 88

Delta ATL 7 3/7 50 373

DTW 2 50 100

Total 9 3/7 50 473

US Airways CLT 5 5/7 50 285

Total 5 5/7 50 285

Network Carrier Total 17 1/7 49 846

Allegiant MCO 2/7 150 40

PIE 2/7 150 50

Allegiant Total 4/7 150 90

Grand Total 17 4/7 53 936
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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Traffic, Capacity and Revenue Trends at Tri-Cities

Chart 1 illustrates domestic 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 in 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 Passengers at 

Tri-Cities Regional Airport – Year-End First Quarter 2001-2010 (DOT T-100 and DB1B data)

Note About Allegiant Data

Allegiant data is segregated from network carrier data throughout this document. Because Allegiant operates 

less-than-daily point-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 carrier 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.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

410,110

367,710 381,120

353,080

398,050

428,750

363,330 348,740

288,840 300,660

35,820 

67,440 

71,450 

26,750 

23,730 

25,380 

25,270 

32,290 

31,080 

32,180 

32,410 

30,860 

28,680 

Annual Domestic O&D (Ex-Allegiant) Annual Domestic O&D (Allegiant) Annual International O&D
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 peaked 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 seats 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)

1,115

686

825

1,028

1,087 1,064

919

879

826

740

562

502 522

484

544

587

498 476

396 412

0

200

400

600

800

1,000

1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Seats and Passengers per Day Each Way

Seats per Day Each Way (Ex-Allegiant) Domestic PDEW (Ex-Allegiant)
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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 – Year-End First Quarter 2001-2010 (DOT T-100 and DB1B data)

-

1,115

686

825

1,028

1,087 1,064

919

879

826

740

$204

$185

$177

$194

$173

$184

$221 $224

$234

$200

$100

$150

$200

$250

$300

0

200

400

600

800

1,000

1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Average One-Way Fare

Seats per Day Each Way

Seats per Day Each Way (Ex-Allegiant) One-Way Domestic Fare (Ex-Allegiant)
 

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 lows 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 discount 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 Regional Airport – First Quarter 2008 through First Quarter 2010 (DOT 

T-100 and DB1B data)

853 851

825 830

795 791 799

725

644

423

401 405 406

370

438

471

408

330

$236

$268

$256

$214

$193

$184 $191

$203

$229

$0

$50

$100

$150

$200

$250

$300

0

100

200

300

400

500

600

700

800

900

2008-Q1 2008-Q2 2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1

Average One-Way Fare Seats and Passengers per Day Each Way

Seats per Day Each Way (Ex-Allegiant) Domestic PDEW (Ex-Allegiant) One-Way Domestic Fare (Ex-Allegiant)
 

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 oneway fare of $166, $44 lower than the average one-way fare at Tri-Cities. While this difference 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)

$ 0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200

TRI

TYS

ROA

GSP

CHA

AVL

GSO

CLT

BNA

$200

$190

$189

$188

$177

$166

$159

$155

$140
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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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. The 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 

Data) – First Quarter 2010 (DB1B data)

$ 0 $50 $100 $150 $200 $250

TRI

TYS

GSP

ROA

CHA

GSO

CLT

AVL

BNA

$229

$221

$217

$199

$196

$176

$175

$165

$152
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

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The disparity in Tri-Cities fares is apparent when the fare in the 30 largest Ex-Allegiant domestic markets 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, $154 in Asheville and $182 in Knoxville. 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, Asheville and Knoxville in the 30 Largest Domestic Ex-Allegiant TriCities Markets – Year-End First Quarter 2010 (DB1B data)

TRI vs.

Rank Market (Metro Area) TRI PDEW TRI AVL TYS Lowest Fare

1 LGA/JFK/EWR 23.2 $183 $130 $176 $54

2 MIA/FLL/PBI 18.9 $158 $155 $165 $2

3 ATL 16.5 $185 $183 $194 $3

4 LAS 16.5 $184 $169 $186 $15

5 DFW/DAL 16.1 $179 $191 $187 $0

6 ORD/MDW 16.0 $171 $123 $166 $48

7 LAX/SNA/ONT/BUR/LGB 14.0 $239 $197 $198 $42

8 MCO/SFB 13.7 $161 $86 $89 $75

9 DCA/IAD/BWI 13.1 $207 $168 $254 $39

10 IAH/HOU 12.7 $203 $173 $161 $42

11 DEN 10.8 $175 $154 $210 $22

12 PHL 10.1 $171 $165 $199 $6

13 TPA/PIE 9.9 $159 $161 $169 $0

14 SFO/OAK/SJC 9.1 $225 $204 $214 $21

15 BOS 8.4 $164 $150 $149 $15

16 PHX/AZA 7.9 $180 $170 $177 $10

17 SEA 7.6 $203 $190 $205 $13

18 DTW 6.5 $229 $168 $220 $61

19 SAN 6.0 $214 $192 $192 $22

20 STL 5.8 $187 $185 $182 $4

21 MCI 5.6 $171 $173 $148 $22

22 MSP 5.2 $219 $164 $206 $55

23 JAX 4.8 $150 $161 $184 $0

24 MEM 4.7 $257 $273 $233 $24

25 BDL 4.5 $176 $152 $155 $25

26 RSW 4.5 $166 $192 $156 $10

27 SAT 4.3 $187 $161 $163 $26

28 AUS 4.2 $175 $166 $144 $32

29 PVD 4.0 $158 $148 $185 $10

30 MHT 3.8 $133 $149 $199 $0

288.6 $185 $154 $182 $25

Lowest fare among the three airports is shaded in green

Average One-Way Fare
 

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 ($229), San Francisco ($225) 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 ExAllegiant Tri-Cities Markets (Sorted in Descending Order of Fares) – Year-End First Quarter 2010 (DB1B

data)

Rank Market (Metro Area) PDEW Average Fare

1 MEM 4.7 $257

2 LAX/SNA/ONT/BUR/LGB 14.0 $239

3 DTW 6.5 $229

4 SFO/OAK/SJC 9.1 $225

5 MSP 5.2 $219

6 SAN 6.0 $214

7 DCA/IAD/BWI 13.1 $207

8 IAH/HOU 12.7 $203

9 SEA 7.6 $203

10 SAT 4.3 $187

11 STL 5.8 $187

12 ATL 16.5 $185

13 LAS 16.5 $184

14 LGA/JFK/EWR 23.2 $183

15 PHX/AZA 7.9 $180

16 DFW/DAL 16.1 $179

17 BDL 4.5 $176

18 AUS 4.2 $175

19 DEN 10.8 $175

20 PHL 10.1 $171

21 MCI 5.6 $171

22 ORD/MDW 16.0 $171

23 RSW 4.5 $166

24 BOS 8.4 $164

25 MCO/SFB 13.7 $161

26 TPA/PIE 9.9 $159

27 PVD 4.0 $158

28 MIA/FLL/PBI 18.9 $158

29 JAX 4.8 $150

30 MHT 3.8 $133

288.6 $185
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

25

Although 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 destinations. 

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 dilutes 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 support 

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 $750,000 to offer American Eagle a minimum revenue guarantee for at least one daily nonstop 

between Tri-Cities and Dallas/Ft. Worth using 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 cost. In 

addition to the minimum revenue guarantee, the community and 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 service. In order for the Airport to remain compliant with the 

Federal 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 marketing 

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 from 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 an 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 TriCities 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 annualized 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 increased 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 quarter 2009. The amount of traffic, even 

18.5

16.6

18.2 18.3

19.7

15.0 14.6

12.6 12.9

16.1

$215

$201

$171

$198 $194

$227

$246

$225

$275

$179

$0

$50

$100

$150

$200

$250

$300

$350

0

5

10

15

20

25

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Average One-Way Fare

Passengers per Day Each Way (PDEW)

TRI-DFW PDEW TRI-DFW Average One-Way Fare
 

Tri-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 market with even more potential; 

the market simply needs the benefit of nonstop service and the lower average fares nonstop 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 American Eagle (or any other carrier) with nonstop service to Dallas/Ft. Worth. In fact, TriCities 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-Cities, so service from Tri-Cities to Dallas/Ft. Worth 

is within American Eagle's network strategy.

11.0

15.3

10.9

12.4

13.1

14.5

18.4 18.0

13.4

$252

$307 $307

$243 $241

$175

$162

$183

$200

$0

$50

$100

$150

$200

$250

$300

$350

0

5

10

15

20

25

2008-Q1 2008-Q2 2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1

Average One-Way Fare

Passengers per Day Each Way (PDEW)

TRI-DFW PDEW TRI-DFW Average Fare Linear (TRI-DFW PDEW)
 

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 Markets 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.

Market PDEW Fare Yield Revenue per Day 

Each Way Distance Nonstop DFW Service

Mainline or 

Regional

1 GPT 19.8 $180 $0.361 $3,563 500 Yes Regional

2 BRO 19.6 $116 $0.242 $2,284 482 Yes Regional

3 RAP 18.1 $163 $0.196 $2,959 835 Yes Regional

4 FAR 17.9 $176 $0.182 $3,161 967 No N/A

5 ASE 17.3 $181 $0.258 $3,125 701 No N/A

6 HDN 16.9 $142 $0.185 $2,404 769 Yes (Seasonal) Mainline

7 DRO 16.4 $154 $0.228 $2,518 674 No N/A

8 SBN 16.3 $185 $0.219 $3,028 846 No N/A

9 TRI 16.0 $179 $0.206 $2,867 868 No N/A

10 FSD 15.8 $235 $0.319 $3,724 737 Yes Regional

11 SRQ 15.4 $138 $0.146 $2,125 945 No N/A

12 BMI 15.1 $167 $0.242 $2,523 690 Yes Regional

13 EVV 14.9 $184 $0.287 $2,754 642 Yes Regional

14 ABI 14.6 $96 $0.606 $1,400 158 Yes Regional

15 SHV 14.4 $172 $0.905 $2,482 190 Yes Regional

16 AGS 14.3 $173 $0.198 $2,476 874 Yes Regional

17 GUC 14.3 $140 $0.207 $2,003 678 Yes (Seasonal) Mainline

18 MTJ 13.9 $154 $0.213 $2,129 722 Yes Regional

19 CRW 13.8 $208 $0.220 $2,869 946 No N/A

20 CWA 13.6 $128 $0.140 $1,744 911 No N/A
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

30

Connecting Traffic Opportunities at American'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-Cities 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. The need for a mix of local and flow traffic becomes 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, California, Nevada, New Mexico, Hawaii and Mexico.

Map 2: Non-Circuitous Markets American Eagle Could Serve with Tri-Cities – Dallas/Ft. Worth Service
 

Tri-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 

138 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 local market, plus the cumulative size of 

connecting markets via Dallas/Ft. Worth at the high average fares should make Tri-Cities – Dallas/Ft. 

Worth an attractive opportunity for regional 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 Average 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)

Rank Market (Metro Area)

Annual O&D 

Passengers PDEW

Average 

One-Way Fare

1 LAS 12,020 16.5 $184

2 DFW/DAL 11,740 16.1 $179

3 LAX/SNA/ONT/BUR/LGB 10,240 14.0 $239

4 IAH/HOU 9,300 12.7 $203

5 DEN 7,920 10.8 $175

6 SFO/OAK/SJC 6,640 9.1 $225

7 PHX/AZA 5,760 7.9 $180

8 SEA 5,540 7.6 $203

9 SAN 4,370 6.0 $214

10 SAT 3,130 4.3 $187

11 AUS 3,070 4.2 $175

12 SLC 2,790 3.8 $263

13 PDX 2,780 3.8 $201

14 SMF 2,130 2.9 $213

15 HNL 1,860 2.5 $370

16 SHV 1,190 1.6 $240

17 OKC 1,140 1.6 $255

18 ABQ 1,100 1.5 $261

19 TUS 940 1.3 $245

20 TUL 850 1.2 $334

21 ICT 780 1.1 $254

22 ELP 770 1.1 $324

23 YVR 700 1.0 $365

24 RNO 680 0.9 $297

25 OGG 650 0.9 $434

26 GJT 520 0.7 $443

27 PSP 510 0.7 $252

28 COS 490 0.7 $191

29 FAT 420 0.6 $225

30 BZE 400 0.5 $364

100,430 138 $214
 

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, TriCities Regional Airport 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 market 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-second 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 advertising 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 effective 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. 

Internet 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 also 
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

33

provide public relations 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

Proposed 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 sell 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 the 

marketing and promotion plan 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 most of the fourth quarter, we believe American Eagle would require a subsidy between 

September 2011 and February 2012. Traffic would likely begin to increase in January 2012 with service 

becoming self-sustaining and not require subsidy beginning in either March 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 seasonal 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 the 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 

addition of a new destination to 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 by 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 existing 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 differs from the previous grant award because it seeks funding for airline risk abatement, in 

the form of a minimum revenue guarantee, and for marketing funding to support for service 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 revenue 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

PUBLIC/PRIVATE PARTNERSHIPS

The role 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 organizations 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 incumbent airlines. After successfully recruiting American Eagle Chicago service, 

the group is now pursuing American 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 Funding

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 Funding - 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 airport and $100,000 from other organizations in the community.

Local Funding - 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 various membership groups. There is no estimate of these in-kind contributions.

Table 6: Summary of Project Funding by Source and Type

Grant Cash In-Kind Total

Department of Transportation $750,000 $750,000

Community $100,000 $100,000

Tri-Cities Regional Airport $50,000 $30,000 $80,000

Total $750,000 $150,000 $30,000 $930,000
 

Tri-Cities Regional Airport, Blountville, TN

Small Community Air Service Development Program Proposal – 2010 

38

PROJECT MONITORING AND PROGRESS

Success Metrics

Success of the 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 served via Dallas/Ft. Worth and in the local TriCities – 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 markets 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 understands 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 guarantee 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, and 
 

Tri-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 second 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

TRI-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) approaches – 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 includes 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 airline 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 Concourse
 

Tri-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 combined 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 

Official Birthplace of Country Music, and known as the ―Big Bang of Country Music,‖ The old-timemountain 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 

educational 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 modern 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 Main 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.
 

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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 itself 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 James 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. 
 

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Tri-Cities Economic Overview

Tri-Cities Catchment Area is home to approximately 1.2 million 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 the 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 850
 

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Select Company Profiles

Eastman

Founded in 1920 and 

headquartered 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 facilities 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, Virginia, 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‖.

King 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®.
 

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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 of 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 Nagoya 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. 
 

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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 James 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)

Institution Total 

East Tennessee State University

& Quillen School of Medicine 13,841

Walters State Community College 5,919

Northeast State Technical Community College 5,507

Southwest Virginia Community College 3,750

Mountain Empire Community College 3,048

Virginia Highlands Community College 2,624

University of Virginia’s College at Wise 1,911

King College 1,703

Southwest Virginia Higher Education Center 1,535

Tusculum College 1,115

Milligan College 1,026

Emory & Henry College 978

Virginia Intermont College 560

Appalachian School of Law 356

University of Appalachia College of Pharmacy 196

Total Enrollment 44,069

Source: National Center for Education Statistics, U.S. Department of Education

Higher Education Enrollment in the Tri-Cities Area
 

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A state-supported community college operated by the Tennessee Board of Regents. It was established 

in 1970 in located Morristown, Tennessee and was named 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, with 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 

business 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 areas 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 in 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, comprehensive 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 that 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 college moved to its present location.* 
 

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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. Worldrenowned 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 visited 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 viewing 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.
 

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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 was designated the 

State Theatre of Virginia. Today, Barter is one of the last year-round professional resident repertory 

theatres remaining in the United States.
 

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Birthplace of Country Music Alliance and Museum

The Birthplace of Country Music Alliance, based 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. Bristol 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.
 

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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 TriCities 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 pressure 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 Commerce
 

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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 development. 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 service 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 role that the airport has in the economic vitality of our 

region. 

Sincerely, 

P.C. Snapp

Executive Director
 

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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 TriCities to more than one hub. We support 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 Development
 

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