OST-2010-0124 

BEFORE THE OFFICE OF THE SECRETARY 

DEPARTMENT OF TRANSPORTATION 

Proposal of The Eastern Iowa Airport 

For A Grant Under the Small Community Air Service Development Program 

Legal Sponsor: The Cedar Rapids Airport Commission 

Iowa Congressional District #2 

DUNS# 144735557 

August 27, 2010
OST-2010-0124 2

Table of Contents 

I. Proposal Introduction..............................................................................................................3 

The Identified Deficiency...............................................................................................................3

The Solution..................................................................................................................................3

The Strategy .................................................................................................................................4

II. Proposal Background.............................................................................................................5

III. The Eastern Iowa Airport Market..........................................................................................6

Primary Catchment Area...............................................................................................................6

CID Provides Air Service Access For A Strong and Diverse Economic Base ..............................7

IV. Air Service at The Eastern Iowa Airport ............................................................................10

Current Service Levels................................................................................................................10

Low Load Factors Indicate High Levels of Traffic Leakage ........................................................11

Service Levels at CID Are Inferior Relative to Neighboring Airports...........................................12

Significant Pricing Disparities Exist Relative to Neighboring Airports .........................................14

Passenger Enplanement Trends at Eastern Iowa Airport...........................................................15

Previous Air Service Development Activities at Eastern Iowa Airport.........................................16

V. SCASD Grant Proposal ........................................................................................................17

Summary of Grant Objectives.....................................................................................................17

Identified Potential Solutions.......................................................................................................17

Revenue & Passenger Projections .............................................................................................19

VI. SCASD Grant Administration Plan ....................................................................................21

Allocation of Funds .....................................................................................................................21

Revenue Performance Guarantee ..............................................................................................21

Marketing Activities To Support New Service .............................................................................22

Progress Reports to DOT ...........................................................................................................23

Program Duration........................................................................................................................23

Market Support Beyond Term of Program ..................................................................................23

ATTACHMENT: Appendix B.....................................................................................................24

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 3

I. Proposal Introduction 

The Cedar Rapids Airport Commission, as the operator of The Eastern Iowa Airport, is pleased 

to submit this request to the US Department of Transportation for a grant under the 2010 Small 

Community Air Service Development Program. 

The Identified Deficiency 

The market area served by The Eastern Iowa Airport suffers from a combination of 

disproportionately high fare and inadequate access to key population and business centers 

throughout the United States. This translates into a substantial amount of passenger traffic 

generated within The Eastern Iowa Airport primary catchment area driving to other airports. The 

impacts of such traffic leakage are two-fold: First, it limits the ability to retain existing and recruit 

new air service. Second, the lack of competitive air service has a negative impact on the 

regional economy, particularly when evaluated by site selectors for business expansion 

opportunities. 

The Solution 

The SCASD grant funds requested in this proposal will make it possible to resolve this 

deficiency by providing much needed risk-mitigation funding to recruit nonstop service by one of 

the low-cost carriers (“LCC”) that operate a comprehensive route network. As the Department is 

aware, in the current economic environment, airlines are reticent to initiate service at smaller 

communities without some form of risk mitigation. The grant funds requested in this proposal will 

provide such mitigation and the airport believes will add to the long list of examples where the 

SCASD program has materially contributed to air service improvements. 

Analysis indicates that a LCC operating a network route strategy will have a wide reaching 

impact on fares and, therefore, have the maximum impact with respect to reducing traffic 

leakage from The Eastern Iowa Airport. The Airport has identified the following carriers as the 

most logical providers of such service: 

• SkyWest Airlines (code-share service with AirTran Airways) to Milwaukee; 

• Frontier Airlines service to Milwaukee; or 

• AirTran Airways service to Atlanta. 

Note that Frontier Airlines service to Denver has not been included as a potential solution as 

this service would be competitive with existing service provided by United Express.1

 

1

 As noted in the Request for Proposals, “The Department is reluctant to subsidize one carrier but not others in a competitive 

market. For this reason, communities that propose to use the grant funds for service in a city-pair market that is already served by a 

carrier must explain in detail why the existing service is insufficient or unsatisfactory, or provide other compelling information to 

support such proposals. This information is necessary for the Department to consider the competitive implications of giving financial 

or other tangible incentives for one carrier that the other carrier is not receiving.”

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
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The Strategy 

To accomplish this, The Cedar Rapids Airport Commission is requesting a grant of $400,000 

under the Small Community Air Service Development Program, with a community match of 

funds anticipated to total $50,000. These funds will be applied to a carefully structured risk 

mitigation program supported by local marketing and public awareness program. 

The Eastern Iowa Airport will provide an additional $100,000 of “in-kind” contribution of airport 

landing and rental fees waivers and $100,000 cash to be used for marketing. 

The Cedar Rapids Airport Commission believes that the grant proposal outlined is consistent 

with both the spirit and intent of Congress in establishing the Small Community Air Service 

Development program. Furthermore, the extensive analyses accomplished by the community 

indicate that the service this grant will make possible will be successful and economically viable. 

All correspondence regarding this proposal should be directed to: 

Mr. Timothy Bradshaw, A.A.E. 

Airport Director 

The Eastern Iowa Airport 

2515 Arthur Collins Parkway, SW 

Cedar Rapids, Iowa 52404 

Telephone: (319) 362-3131 

Fax: (319) 362-1670 

Email: T.Bradshaw@crairport.org 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
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II. Proposal Background 

a) Proposer 

The Eastern Iowa Airport 

2515 Arthur Collins Parkway, SW 

Cedar Rapids, Iowa 52404 

Tel: (319) 362-3131 

Fax: (319) 362-1670 

Email: T.Bradshaw@crairport.org 

Iowa Congressional District #2 

DUNS# 144735557 

Contact: Mr. Timothy Bradshaw, A.A.E. 

Airport Director 

b) Official Sponsor 

The Cedar Rapids Airport Commission is the official sponsor of this proposal. 

c) Community Match 

The Iowa Department of Transportation Office of Aviation 

c) Summary of Grant Request 

The proposal requests $400,000 in grant funds from the Small Community Air Service 

Development (SCASD) program to recruit service by a low-fare carrier that is able to 

offer the community access to a comprehensive route network. The SCASD grant funds 

will be supplemented with up to $50,000 in community match, $100,00 “in-kind” airport 

fee waivers and $100,000 cash from the airport to be used for marketing. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
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III. The Eastern Iowa Airport Market 

Primary Catchment Area 

The Eastern Iowa Airport (CID) serves a population of approximately 595,000 in Eastern Iowa, 

with an average household income of $56,880. The airport’s catchment area includes not only 

the City of Cedar Rapids but also Iowa City, home to the University of Iowa. 

Primary Catchment Area

The Eastern Iowa Airport – Cedar Rapids

4

CID Catchment Area

The airport is conveniently located off Interstate 380, which runs north and south, and 

approximately 18 miles north of Interstate 80 which runs east and west. 

The proximity to Interstate 80 would be beneficial to The Eastern Iowa Airport if not for the fact 

that this highway functions as a conduit of traffic leakage to Des Moines International Airport to 

the west and Quad Cities International Airport to the east. The resulting catchment area overlap 

is shown on the map on the next page and illustrates the concern that airline planning personnel 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 7

have with respect the ability of Eastern Iowa Airport to retain traffic that is generated to and from 

its core market area.2

 

4

4

4

MLI

DSM

CID

Des Moines 

International Airport

Overlapping Catchment Areas

Iowa Interstate 80 Corridor

The Eastern 

Iowa Airport

Quad Cities

International Airport

Des Moines International Airport overlap with CID

 

Quad Cities International Airport overlap with CID

While airport management believes it can develop a compelling case for traffic retention, the 

SCASD grant funds for risk mitigation purposes requested herein will provide inherently risk 

adverse airline planning personnel with a higher comfort level when evaluating the market 

served by The Eastern Iowa Airport. 

CID Provides Air Service Access For A Strong and Diverse Economic Base 

While the economy of The Eastern Iowa Airport catchment area has historically been defined by 

the manufacture and processing of agricultural and food products, steel fabricating, and 

electronics, in recent years this has been augmented by high-technology and transportation. 

The Cedar Rapids-Iowa City "Technology Corridor" is the result of cooperation between a 

number of public and private organizations in the airport’s primary catchment area. This has 

quickly positioned the region as a leader in the defense electronics industry, the fastest-growing 

segment of the CID catchment area economy being telecommunications and telemarketing. The 

recruitment of new industry and companies is supported by local firms that provide services 

such as electronic design and consultation, systems planning, equipment manufacturing, and 

telemarketing. 

2

 The issue of service deficiencies and traffic leakage are discussed in more detail in the next section of this proposal.

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
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While efforts to diversify the economy with technology have been successful, it is important to 

underscore that the region continues its historical role in agricultural and food processing. The 

Eastern Iowa Airport catchment area is home to more than 275 different manufacturing plants, 

including Quaker Food and Beverages, Amana Refrigeration Products, General Mills, Inc., and 

H.J. Heinz Company. 

The table below lists the largest employers (both public and private sector) within the primary 

catchment area of The Eastern Iowa Airport. 

Largest Employers in CID Catchment Area

Employer/Organization Approx # of 

Employees 

University of Iowa 17,300

Rockwell Collins, Inc. 7,300

University of Iowa Hospitals & Clinics 6,678

AEGON USA, Inc. 3,700

Heartland Express 3,279

Hy-Vee Food Stores 3,062

St. Lukes Hospital 3,062

Cedar Rapids Community School District 2,882

Mercy Medical Center 2,734

Whirlpool Corporation 2,461

Iowa City Community School District 1,626

Veterans Affairs Medical Center 1,540

Kirkwood Community College 1,525

Mercy Iowa City 1,423

Pearson 1,400

PRC 1,261

City of Cedar Rapids 1,231

ACT, Inc. 1,160

Quaker Oats 1,100

Linn-Marr Community Schools 960

Nordstrom Direct 950

Yellowbook USA 889

Allliant Energy 840

Linn County Administration 830

Systems Unlimited 825

Riverside Casino & Golf Resort 778

General Mills 730

Gazette Communications 650

City of Iowa City 641

Toyota Financial Services 524

United Fire Corp 425

SOURCE: Priority One and Iowa City Area Development Group

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
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National publications are taking notice of the successful transition underway in the regional 

economy: Cedar Rapids and Iowa City were recognized as “Best Places for Businesses and 

Careers” by Forbes magazine’s “best of” list published in April 2010. Cedar Rapids ranked 

number 13 out of the nation’s 200 largest metropolitan statistical areas (MSAs) and Iowa City 

ranks second among smaller metros (i.e., population below 245,000). Moreover, Cedar Rapids 

was ranked number one for projected job growth by Forbes. 

While the “Technology Corridor” program can be viewed as a success, the key to this economic 

transformation realizing its full potential is resolving air service deficiencies at The Eastern Iowa 

Airport. The SCASD grant funds requested in this proposal are specifically intended for this 

purpose and will help the airport’s catchment area maximize economic growth and 

diversification. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 10

IV. Air Service at The Eastern Iowa Airport 

Current Service Levels 

The Eastern Iowa Airport is served by three airline networks – United, Delta, and American- as 

well as low-fare carrier Allegiant Air. 

Air Service at The Eastern Iowa Airport

September 2010

SOURCE: Innovata, LLC via Aviation DataMiner

Monthly 

Departures Average Daily Monthly Seats Avg Daily Avg Per Departure

American 314 10.5 14,668 489 46.7

DFW ER4 142 4.7 7,100 237 50.0

ORD ERD 172 5.7 7,568 252 44.0

Delta 222 7.4 11,580 386 52.2

DTW CRJ 110 3.7 5,916 197 53.8

MSP CRJ 112 3.7 5,664 189 50.6

Allegiant 41 1.4 6,150 205 150.0

AZA M80 15 0.5 2,250 75 150.0

LAS M80 17 0.6 2,550 85 150.0

SFB M80 9 0.3 1,350 45 150.0

United 288 9.6 17,144 571 59.5

DEN CR7 28 0.9 1,848 62 66.0

CRJ 8 0.3 400 13 50.0

E70 71 2.4 4,970 166 70.0

ER4 7 0.2 350 12 50.0

ORD CR7 1 0.0 66 2 66.0

CRJ 23 0.8 1,150 38 50.0

E70 43 1.4 3,010 100 70.0

ER4 107 3.6 5,350 178 50.0

Market Total 865 28.8 49,542 1,651 57.3

Departures Seats

Carrier Dest Aircraft

The network carriers offer nonstop service to five connecting hubs on regional jet equipment. 

Allegiant Air offers less-than-daily service to Las Vegas, Mesa/Phoenix, Orlando Sanford, and 

seasonal service to Tampa/St.Pete. In total, travelers using The Eastern Iowa Airport have 

access to average of 28.8 daily departures and 1,861 daily departing seats. 

Service levels at The Eastern Iowa Airport have been relatively stagnant since 2004, as 

illustrated by the year-over-year comparison of CID service levels provided on the next page. 

Note that the number of airlines has declined between 2009 and 2010 due to the combination of 

Delta and Northwest. This has resulted in the “new” Delta reducing its overall service levels at 

CID, including discontinuing nonstop service to its hubs at both Atlanta and Cincinnati. This data 

point is hidden by the fact that Allegiant Air has added less-than-daily service to Phoenix. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 11

Service Level Trends at The Eastern Iowa Airport 

2004-2010 

Sep 2004 Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010

Airlines 5555554

Nonstop Destinations 8 8 9 9 11 7 9

Avg. Daily Departures 37 39 39 39 36 33 29

Avg. Daily Departing Seats 2,139 2,145 1,990 2,117 1,940 1,826 1,651

Avg. Seats per Departure 57.8 55.0 51.0 54.3 54.1 55.7 57.3

SOURCE: Innovata, LLC via Aviation DataM iner

Note that average number of daily departing seats at CID has declined from 2,139 during 

September 2009 to 1,651 during September 2010, representing a decline of approximately 23 

percent. This factor, along with a lack of capacity provided by low-fare network airlines relative 

to neighboring airports, results in significant average fare differentials for those travelers using 

The Eastern Iowa Airport and is a driver of traffic leakage. The SCASD grant funds requested in 

this proposal are intended to remedy this air service deficiency. 

Low Load Factors Indicate High Levels of Traffic Leakage 

Despite the reduction in available seats, load factors on the service which remains at The 

Eastern Iowa Airport tend to be lower than industry averages. The graph below illustrates this 

point by providing load factors on regularly scheduled service at CID for the year ending May 

31, 2010. 

Load Factors at Eastern Iowa Airport

Regularly Scheduled Service: 12-Months Ending May 31, 2010

SOURCE: T-100 filings via Aviation DataMiner

78.3%

66.5%

73.0%

92.7%

60.0%

57.1%

66.9%

88.4%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 12

Note that the highest load factors in the market are reported by Allegiant Air, which provides 

low-fare service to Orlando/Sanford and Las Vegas. This data indicates that consumers in The 

Eastern Iowa Airport catchment area are responsive to low fares and will use their local airport 

when provided an affordable option. Otherwise, they seek out lower fares at neighboring Des 

Moines International Airport and Quad Cities International Airport, where a greater choice of 

airlines offers more nonstop destinations which, in turn, drives a more competitive market 

dynamic that results in lower fares. Both of these points are discussed in greater detail below. 

The recruitment of additional service (and specifically low-fare service) facilitated by the SCASD 

grant funds requested in this proposal will provide consumers with additional capacity, 

frequency, access to the lower fares, and a greater choice of carrier brands. Furthermore, the 

addition of a low-fare network carrier at CID will drive a competitive response by incumbent 

carriers so that more seats are made available at lower published price points. Ideally, this will 

result in higher load factors for all carriers serving The Eastern Iowa Airport. 

Service Levels at CID Are Inferior Relative to Neighboring Airports 

As indicated above, the stagnant service levels at The Eastern Iowa Airport and greater choice 

of carriers at Des Moines International Airport and Quad Cities International Airport are 

illustrated by two points. First, the neighboring airports offer more nonstop destinations and, 

second, both airports offer a higher number of average daily departing seats, of which a greater 

percentage of the total is provided by low-cost carriers. 

These points are illustrated on the graphic on the next page.

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 

13

Airport Service Levels

CID v Neighboring Airports: September 2010

The Eastern Iowa Airport

Des Moines International Airport

Quad Cities International Airport

Number of Airlines: 4

Nonstop Destinations: 8

Average Daily Departing Seats: 1,651

% LCC Capacity: 12.4%

Average Daily LCC Seats: 205

Number of Airlines: 9

Nonstop Destinations:16

Average Daily Departing Seats: 3,044

% LCC Capacity: 11.3%

Average Daily LCC Seats: 344

Number of Airlines: 4

Nonstop Destinations: 8

Average Daily Departing Seats: 1,837

% LCC Capacity: 17.6%

Average Daily LCC Seats: 324
OST-2010-0124 14

Significant Pricing Disparities Exist Relative to Neighboring Airports 

The lower levels of capacity, lower percentage of LLC seats, and smaller number of nonstop 

flights all contribute to higher average fares. This, in turn, contributes to higher levels of traffic 

leakage which in itself is an impediment to the recruitment of additional air service. 

The table below illustrates the average one-way gross fare paid in the top 25 O&D markets for 

the 12-months ending March 31, 2010.3

 In 14 of the top 25 O&D markets, travelers at The 

Eastern Iowa Airport paid the highest average OW gross fare representing 56% of the markets 

illustrated. 

Average OW Gross Fare Paid 

CID v Neighboring Airports: YE March 31, 2010

Rank Market Psgr Gross Fare Psgr Gross Fare Variance w/ CID Psgr. Gross Fare Variance w/CID

1 LAS 82,402 $140.16 101,507 $137.45 -1.9% 23,778 $188.36

$223.04

$237.06

$270.35

$247.94

$269.87

$232.81

$255.74

$250.55

$240.91

$271.88

$212.34

$301.32

$217.65

$261.63

$295.99

$213.02

$237.78

$291.09

$260.20

$266.20

$338.63

$216.90

$225.21

$234.29

$237.81

34.4%

2 PHX 18,944 96,884 $169.47 -24.0% 23,558 $204.59 -8.3%

3 MCO 12,913 38,868 $185.52 -21.7% 78,686 $126.35 -46.7%

4 ATL 10,617 36,238 $256.35 -5.2% 78,122 $127.67 -52.8%

5 DFW 37,752 $242.37 45,199 2.3% 22,037 $219.73 -9.3%

6 LAX 19,033 65,863 $156.60 -42.0% 18,827 $221.87 -17.8%

7 DCA 25,602 $200.97 51,662 15.8% 21,207 $166.54 -17.1%

8 LGA 17,320 $206.90 44,395 23.6% 29,884 $124.41 -39.9%

9 DEN 29,817 $245.31 40,047 2.1% 18,103 $260.44 6.2%

10 ORD 18,205 $210.99 64,353 14.2% 4,014 $210.00 -0.5%

11 SEA 13,839 41,254 $180.56 -33.6% 17,140 $211.37 -22.3%

12 BOS 16,799 31,557 $199.48 -6.1% 15,281 $160.42 -24.5%

13 SFO 13,350 40,318 $197.75 -34.4% 8,729 $246.13 -18.3%

14 PHL 12,728 27,998 $206.87 -5.0% 14,112 $171.01 -21.4%

15 TPA 6,327 22,449 $185.75 -29.0% 22,937 $145.43 -44.4%

16 SAN 12,940 23,864 $223.70 -24.4% 13,936 $222.15 -24.9%

17 EWR 13,177 25,774 $209.95 -1.4% 11,702 $180.16 -15.4%

18 BWI 15,740 $177.94 16,162 33.6% 17,968 $138.68 -22.1%

19 DTW 11,354 $290.25 16,682 0.3% 19,097 $199.00 -31.4%

20 FLL 4,708 24,078 $167.41 -35.7% 17,889 $164.34 -36.8%

21 RSW 4,307 12,063 $248.16 -6.8% 27,712 $146.42 -45.0%

22 PDX 7,082 29,845 $181.81 -46.3% 5,605 $292.51 -13.6%

23 IAH 10,431 $215.36 21,554 0.7% 9,905 $186.14 -13.6%

24 RDU 9,931 $176.48 16,224 27.6% 15,523 $152.70 -13.5%

25 CLT 9,039 $198.49 19,351 18.0% 12,404 $165.30 -16.7%

Total 720,481 1,510,340 $220.40 -7.3% 885,798 $186.02 -21.8%

CID DSM MLI

SOURCE: Aviation DataMiner 

In those cases where DSM had the highest fare, such as LGA and DCA, this airport had the 

only nonstop service and airlines were able to extract a modest premium for the convenience of 

such flights. Overall, however, consumers using The Eastern Iowa Airport paid a premium of 

7.3% over those flying from Des Moines International Airport and 21.8% over those flying from 

Quad Cities International Airport. 

 

3

 Markets served with less-than-daily service by Allegiant Air (i.e., Orland/Sanford, Mesa/Phoenix, St. Petersburg and Las Vegas) 

have been excluded.

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 15

As the fare data illustrates, consumers in the Cedar Rapids area are being economically 

penalized when utilizing their hometown airport effectively encouraging them to utilize air 

service at other nearby airports. This is resulting in a downward spiral of passenger 

enplanements that threatens future air service retention and recruitment efforts at The Eastern 

Iowa Airport. The SCASD grant funds requested in this proposal are intended to meet this 

challenge by providing an adequate risk mitigation mechanism with which a low-cost network 

carrier can be recruited thereby encouraging a more competitive environment at Eastern Iowa 

Airport. 

Passenger Enplanement Trends at Eastern Iowa Airport 

The final data point illustrating the challenges facing The Eastern Iowa Airport and supporting 

the need for the SCSAD funds requested in this proposal is the negative trend in passenger 

enplanements during recent years. 

The Eastern Iowa Airport Enplanement Trend

CY 2007- YTD 2010

30,000

35,000

40,000

45,000

50,000

55,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2008 2009 2010

Monthly Enplanements Annual Enplanements

531,256

499,269

474,155

271,188

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

2007 2008 2009 YTD 2010

As illustrated on the bar chart to the right, between 2007 and 2009 enplanements at The 

Eastern Iowa Airport have declined by 10.7 percent. More ominous, 2010 enplanements are 

below 2009 for every single month year to date. The SCASD grant funds requested in this 

proposal are intended to reverse this slide. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
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Previous Air Service Development Activities at Eastern Iowa Airport 

The effort to recruit access to a low-cost carrier network with SCASD funds requested in this 

proposal is not the first or only efforts by The Eastern Iowa Airport to address the air service 

deficiencies or halt the slide in enplanements outlined herein. 

The airport has a full-time marketing and communications staff member who continually pursues 

new air service, as well as communicates with potential customers via advertising, public 

relations, and social media. This includes specific activities aimed at making the airport more 

convenient than alternatives, including complimentary WiFi, valet parking, cell phone waiting lot, 

and Corridor Concierge/Information desk that provides information about Eastern Iowa. The 

airport also maintains on-going communication with incumbent and potential new carriers, 

attends multiple industry conferences and meetings, and engages in joint advertising efforts. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 17

V. SCASD Grant Proposal 

Summary of Grant Objectives 

In this proposal, The Eastern Iowa Airport has clearly identified a quantifiable air service 

deficiency of the type that the Small Community Air Service Development Grant Program was 

intended to specifically to address. 

Analyses conducted by The Eastern Iowa Airport indicate that the key to reversing the negative 

trends resulting from these deficiencies is to create a more competitive dynamic by recruiting a 

low-cost carrier. Specifically, the airport seeks to recruit an LCC that can provide access to a 

comprehensive network, thereby spreading the impact of low fares across as many markets as 

possible. Within the present realities of the airline industry, however, airlines are reticent to 

initiate service to new markets without reasonable risk mitigation mechanisms, including fee 

waivers and funds to offset initial losses. Therefore, the SCASD funds requested in this 

proposal are essential to the airport reversing the negative trends of recent years. 

The proposed mechanics of the application of the SCASD grant funds are outlined in the next 

section. Simply stated, the airport proposes to use the funds primarily as a back-stop to assure 

that the new service is successful, in the form of risk mitigation funds (i.e., a guarantee of 

minimum revenue levels). It should be noted that this will be based on a negotiated set of 

revenue and expense benchmarks, and is not a permanent subsidy, “travel bank,” or fare-offset. 

The region served by The Eastern Iowa Airport has a high potential to profitably support a lowcost carrier and risk mitigation funds will only be used if revenues fail to reach determined 

levels. 

It is noted that this approach has worked well in other grant awards, and it is possible that some 

or all of the SCASD funds requested herein may not be spent due to the market maturing 

quickly. In such an event, The Eastern Iowa Airport is committed to return such funds to the 

Department so that they can be used to assist other airports with similar challenges. 

Identified Potential Solutions 

The Airport has identified the following carriers as the most logical providers of such service: 

• SkyWest Airlines (code-share service with AirTran Airways) to Milwaukee; 

• Frontier Airlines service to Milwaukee; or 

• AirTran Airways service to Atlanta. 

The improved connectivity that these services would offer travelers in The Eastern Iowa Airport 

catchment area is illustrated on the maps on the next page. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 18

Improved Connectivity via 

Potential Network LCC Carriers

The Eastern Iowa Airport

SOURCE: Innovata, LLC via Aviation DataMiner

Milwaukee Hub

Milwaukee Hub

Atlanta Hub

Proposal of The Eastern Iowa Airport 

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Revenue & Passenger Projections 

The Eastern Iowa Airport understands that a primary objective of the Small Community Air 

Service Development program is to produce long-term improvements in air service. Given this, 

there must be a reasonable potential for profitable levels of traffic and revenue generation by 

the carriers targeted for the use of risk mitigation funds. 

With the assistance of a nationally-recognized air service development consultant, preliminary 

traffic and revenue forecasts have been prepared for the three LCC network options illustrated 

on the prior page. The forecast data indicates that, on a steady-state basis, the service can 

achieve profitability during the first year of service assuming reasonable levels of traffic 

recapture and stimulation of net-new traffic by the introduction of low fares. A summary of these 

traffic and revenue forecast details, along with operating metrics for each potential route, are 

provided below. 

Projected LCC Market Performance at The Eastern Iowa Airport

Carrier Frontier Skywest (AirTran) AirTran

Route CID-MKE CID-MKE CID-ATL

Key Operating Metrics

Sector Length (sm) 208 208 693

Aircraft Type ERJ-145 CRJ-200 B-717

Seats per Departure 50 50 117

Weekly Segments 21 14 14

Completion Factor 99.0% 99.0% 98.5%

Estimated Block Time 0.83 0.83 1.40

Operating Revenues

Local Passengers 3,931 2,703 20,066

Average Fare $134.12 $124.54 $151.75

Local Revenues $527,281 $336,612 $3,045,025

Connecting Passengers 37,364 26,507 41,089

Average Revenue Allocation $54.46 $53.70 $51.21

Prorated Connecting Revenues $2,034,831 $1,423,352 $2,104,246

Ancillary Revenues $307,454 $211,196 $617,912

Annual Sector Revenues $2,869,566 $1,971,160 $5,767,183

Operating Expenses

Estimated CASM $0.231 $0.219 $0.093

Sector Cost $2,402.40 $2,277.60 $7,540.53

Cost per Block Hour $2,894.46 $2,744.10 $5,386.10

Annual Sector Operating Costs $2,597,187 $1,641,512 $5,407,165

Projected Operating Profit/(Loss) $272,379 $329,649 $360,017

Operating Margin 10.5% 20.1% 6.7%

Load Factor 76.4% 81.1% 72.9%

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 20

As the table illustrates, on a preliminary basis each of the potential LCC routes is projected to 

be profitable on a steady-state basis producing operating margins between 6.7% and 20.1%. 

Nonetheless, given uncertainties in the overall economic environment, the risk of systemic 

shock (i.e., fuel prices, etc.), and the capital intensive nature of the airline industry in general; it 

is questionable whether any of the identified airlines can be recruited lacking a meaningful risk 

mitigation mechanism. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 21

VI. SCASD Grant Administration Plan 

The Eastern Iowa Airport is keenly aware that the Department has limited funds available under 

the Small Community Air Service Development program and, as such, it must award grant 

dollars where the ability to resolve a major air service deficiency on a sustainable level can be 

demonstrated. The airport believes that it has made such a case in this proposal. 

If the Department acts favorably upon this proposal, The Eastern Iowa Airport is prepared to 

implement a detailed program ready to assure successful use of SCASD grant funds. 

Allocation of Funds 

The funding required to implement the program herein totals $650,000. The airport is requesting 

$400,000 from the Small Community Air Service Development Program, to be supplemented by 

up to $50,000 in community match and $200,000 from the Eastern Iowa Airport in the form of inkind fee waivers and marketing support. Specifically, the proposed distribution and use of funds 

is as follows: 

Project Component Funding Level Source of Funds % of Total 

Risk Abatement $400,000 SCASD 62% 

Risk Abatement $50,000 

Community 

Funds 8% 

Marketing Support $100,000 Airport Funds 15% 

Fee Waivers $100,000 Airport - In Kind 15% 

TOTAL $650,000 100% 

Revenue Performance Guarantee 

The majority of SCASD funds requested in this proposal – $400,000 – will be made available as 

a risk-mitigation mechanism to incubate new service. Upon grant approval, The Eastern Iowa 

Airport will immediately initiate discussions with the targeted carriers identified in this proposal 

The purpose of these negotiations will be to stipulate the performance guarantees of the carrier 

in exchange for eligibility for performance guarantee funds. At a minimum, these discussions will 

include the following: 

• Revenue and operating expense expectations for the new service will be based on the level 

of service provided (frequencies, equipment, schedule, etc.); 

• Fares to be offered that approximate those available at the neighboring markets of Des 

Moines and/or Quad Cities, including availability of fares in lower priced “buckets”; 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 22

• Schedules timed for maximum connectivity thereby maximizing the number of markets 

impacted by low-fares; 

• On-time performance and completion rates will be consistent with the carrier’s systemwide 

averages; 

• Credit of all local revenues to the CID market; 

• An acceptable percentage of revenues for connecting passengers beyond the connecting 

hub credit to CID according to a methodology agreed upon between the airport and airline, 

but most likely following an industry standard square root of mileage based formula; and 

• The carrier will serve the route for the duration of the term that SCASD funds are available, 

allowing sufficient time for the route to achieve profitability. 

Based on these criteria, operating expenses, revenue, and performance will be monitored and 

reported on a monthly basis, to provide input regarding remedial local marketing activity or 

feedback to the carrier to address service shortfalls, if any. Preferably, the determination of 

whether risk mitigation payments are necessary will be accomplished at the end of each 

quarter. 

Prior to executing any agreement The Eastern Iowa Airport will provide the revenue guarantee 

documents to Department staff for review and approval. 

Marketing Activities To Support New Service 

While The Eastern Iowa Airport believes that new service from a low-cost carrier will be well 

received and supported by the community, it is clearly understood that public awareness and 

advertising activities will be a critical element in ensuring the new flights become self-sustaining 

over the long-term. 

Of the cash funds in this proposal, $100,000 has been budgeted for this purpose, including the 

following elements: 

• A marketing campaign in the Cedar Rapids and Iowa City region promoting the new service 

to include radio, print, and outdoor media; 

• Effective use of the airport’s existing social media channels, including Twitter; and Facebook 

• Public relations and communications activities that utilize the local media as an additional 

outlet for increased public awareness. 

The Eastern Iowa Airport will complete and submit to the Department a detailed budget for 

these activities, based on a planned 12-month program, after consultation with the carrier that is 

recruited using SCASD funds. The airport feels that such as step is necessary to develop a 

strong partnership with the carrier and minimize duplication of efforts. Airport management will 

then monitor all expenditures and provide the Department with a quarterly accounting, along 

with the Department’s prorated share of the expenses. 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 23

Progress Reports to DOT 

The Eastern Iowa Airport will provide the Department with progress reports on the marketing 

expenditures, and airline operational performance on a quarterly basis, unless the Department 

requires a different schedule. 

Program Duration 

The grant under this proposal requested for a period of one year from the date service 

commences. The Eastern Iowa Airport agrees that any unused funds not applied toward 

marketing or revenue guarantee during this period will be relinquished to the Department. 

Market Support Beyond Term of Program 

The Eastern Iowa Airport believes that the recruitment of low-cost carrier service facilitated by 

the grant funds in this proposal will be supported by the community and achieve self-sufficiency 

during the term of this program. 

Nonetheless, it is possible that factors outside the direct control of either the airport or the 

carrier could impact route performance, and prevent service at CID from achieving forecasted 

performance. Examples of such events are economic recession, volatility in oil prices, airline 

bankruptcies, labor actions, and terrorist attack (or threat thereof).4

 Should this occur, the 

management team at The Eastern Iowa Airport is prepared to assist the carrier with marketing 

support and other assistance, to be developed in consultation with the carrier, to ensure service 

continues beyond the term of this program. 

 

4

 It is noted that risk of such occurrences, regardless of how slight, are the driver behind airlines increasingly requiring risk mitigation 

and/or fee waivers to initiate new service, particularly in smaller markets such as that served by The Eastern Iowa Airport.

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
OST-2010-0124 24

ATTACHMENT: Appendix B 

Proposal of The Eastern Iowa Airport 

for a Grant Under the Small Community Air Service Development Program 
APPENDIX B 

 Page 1 of 3 

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM 

DOCKET OST-2010-0124 

SUMMARY INFORMATION

All applicants must submit this information with their proposal, along with a completed form SF424 on 

http:// www.grants.gov. 

A. APPLICANT INFORMATION: (CHECK ALL THAT APPLY) 

X Not a Consortium ⁭ Interstate Consortium ⁭ Intrastate Consortium 

⁭ Community now receives EAS subsidy 

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

 If previous recipient, expiration date of grant: ____August 28, 2008________________ 

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

Public Private

1. _Cedar Rapids Airport Commission_______ 1.______________________________________ 

 2.__State of Iowa, Office of Aviation________ 2.______________________________________ 

 3.____________________________________ 3.______________________________________ 

 4.____________________________________ 4.______________________________________ 

 5.____________________________________ 5.______________________________________ 

C. PROJECT PROPOSAL: (CHECK ALL THAT APPLY)

X Marketing ⁭ Upgrade Aircraft X New Route 

⁭ Personnel ⁭ Increase Frequency X Low Fare Service 

⁭ Travel Bank ⁭ Service Restoration ⁭ Subsidy 

 

 
 APPENDIX B 

 Page 2 of 3 

⁭ Surface Transportation ⁭ Regional Service ⁭ Other (specify) 

 _________________ 

X Revenue Guarantee X Launch New Carrier _________________ 

 _________________ 

⁭ Start Up Cost Offset ⁭ First Service _________________ 

 _________________ 

⁭ Study X Secure Additional Carrier 

D. EXISTING LANDING AIDS AT LOCAL AIRPORT:

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

X Localizer X Other (specify) (PAPIS, MALSR)

E. PROJECT COSTS: 

1. Federal Amount Requested: __$400,000 __________________ 

2. State cash financial contribution: __$50,000 ___________________ 

3. Local cash financial contribution... 

3a. Airport cash funds: __$100,000___________________ 

3b. Non-Airport cash funds: __N/A_______________________ 

3c. Total local cash funds (3a. + 3b.): __$100,000___________________ 

4. TOTAL CASH FUNDING (1. +2.+3.) __$550,000___________________ 

5. Local funds contributed from already-existing

 programs or projects included in line3c. amount: __$100,000___________________ 

6. Local funds contributed from new commitments 

 or new resources included in line 3c. amount: ___N/A______________________ 

7. Airport In-Kind contribution: __$100,000; Landing fees and____

 (amount & description) ___rentals reduction____________

8. Other In-Kind contribution: ___N/A______________________ 

 (amount & description) 

9. TOTAL IN-KIND CONTRIBUTION (7.+8.): ___$100,000__________________ 

 10. TOTAL PROJECT COST (4.+9.) ___$650,000__________________ 
APPENDIX B 

 Page 3 of 3 

F. ENPLANEMENTS: 

2000__503,664_________ 2004____471,377__________ 2008___499,600___________ 

2001__443,344_________ 2005____501,351__________ 2009 474,508 

 2002__441,087_________ 2006____516,095__________ 

2003__461,827_________ 2007____530,417__________ 

 

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. 

X c. Program is not covered by E.O. 12372. 

H. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? (IF “YES”, PROVIDE EXPLANATION) 

X No ⁭ Yes (explain) _______________________________________________________________