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ALLIANCE & CHAMBER 

BE PART OF SOMETHING GREATER ^ „ r-- . ,,~ i 

THE CEDAR VALLEY OF IOWA -^n'' "'OV 2 ^ CD !.i: U J 

November 21, 2011 

Mayor Buck Clark 

City of Waterloo 

Waterloo, lA 50701 

and 

Mr. Dennis DeVany 

Chief, Essential Air Service Division 

Office of Aviation Analysis 

US Dept of Transportation 

1200 New Jersey Avenue, SE 

Washington, DC 20590 

Dear Mayor Clark and Mr. DeVany: 

Background 

Recently, Mr. DeVany notified Mayor Clark that US DoT Essential Air Service Division (US 

DoT) would make a selection of an air carrier to deliver commercial passenger service to 

Waterloo Regional Airport. Mayor Clark informed the Greater Cedar Valley Alliance & 

Chamber of this upcoming decision. He also informed us that Mr. DeVany and US DoT had 

solicited the Mayor's input on the decision. The Greater Cedar Valley Alliance & Chamber 

offered to solicit the views and preferences of the business community of the area to add to the 

base of information used to make this decision. 

Approach 

The Greater Cedar Valley Alliance & Chamber represents over 1,000 businesses of all sizes and 

major institutions which employ over 50,000 people. Through various programs and partner 

organizations, we deliver economic development services in an economic region in Northeast 

Iowa with a population of approximately 175,000 people. This area is centered on the WaterlooCedar Falls Metro area. Major economic elements and employers in the region include: John 

Deere with over 5,500 professional design, technical, and production employees in six separate 

facilities; PFG/BEST; Denso hitemational; TEREX; ConAgra; Nestle; Target Distribution; 

Tyson; Principal Financial Group; Veridian Credit Union; Isle Corp; VGM; the University of 

Northern Iowa and four other higher education institutions; four major hospitals and the largest 

private practice group between the Mayo Clinic and University of Iowa Hospitals; and many, 

many others. It is an economic area that is engaged in global business. 

The Cedar Valley of Iowa economic area relies on the Waterloo Regional Airport for 

commercial passenger and freight services. The decision of EAS/US DoT is an important one 

and has significant economic impact on this local economy. 

10 West Fourth Street, Suite 310, Waterloo, lA 50701 • Ph: (319) 232-1156 • Fax: (319) 233-4580 

10 Main Street, Cedar Falls, lA 50613 • Ph: (319) 266-3593 • Fax: (319) 277-4325 

www.cedarvalleyalliance.com • www.greatercedarvalleychamber.com 
EAS at Waterloo 

November 21,2011 

Page Two 

To gauge the preference of our investors for either the Delta/Sky West or American/American 

Eagle service and relative destinations - Miimeapolis or Chicago, we implemented a three-step 

process. This process included: 

• All economic development investors in the Alliance & Chamber and all members of the 

boards of our affiliated and partner organizations were invited to a meeting on November 

8 at the Five Sullivan Brothers Convention Center in Waterloo. Those attending heard a 

presentation by a representative of American Airlines, followed by a highly detailed 

briefing on American and Delta airlines and the relative merits of the competing EAS 

bids presented by the Waterloo Regional Airport's consultant. (Delta was invited to 

discuss their service and bid, but declined the invitation.) At the conclusion of that 

meeting, those attending were asked to submit a preference ballot, which also contained a 

solicitation of comments. 

• As a follow up, on November 10, those who were invited but did not attend the 

November 8 meeting were sent copies of the presentations by email, along with the 

preference ballot. The ballot contained space for comment, and of course, the recipients 

could add comment by return email. 

• Additionally, on November 14, all investors of the Alliance & Chamber were sent an 

online preference ballot with space for comment. 

The results of the three requests are summarized on the attached summary table. The verbatim 

comments of the businesses responding are included, along with other unsolicited email 

correspondence that I have received since the issue arose. 

Comment and Preference 

The Greater Cedar Valley Alliance & Chamber is gratefiil to Mayor Clark and the City Council 

for an opportunity to add the voice of the regional business community to official City 

government recommendation, and to the Waterloo Airport Board for sharing its expertise 

through its consultant, Mike Bown, and Airport Manager Brad Hagen. We are also grateful for 

the thoughtful comment of our investors and their clear commitment to commercial passenger air 

service at the Waterloo Regional Airport. 

There are issues most or all agree on: 

• Air service fi-om Waterloo (ALO) is essential to the health of our regional economic base. 

• Jet service is essential. 

• Prices to/fi-om ALO must be competitive and they have been creeping up since Delta 

assumed service after the merger with Northwest. 

• An estimated $500,000 difference in bids to US DoT/EAS for serving ALO is 

compelling. 

• Staying with Delta will not change usage patterns, unless prices rise which will cause 

current users to drive to MSP, CID, or DSM regardless of carrier. A change to American 
EAS at Waterloo 

November 21,2011 

Page Three 

may cause some ALO users to drive to MSP or CID, while if American offers O'Hare 

connections some flyers currently using CID and DSM would commence using ALO. 

Based on the preference comments and ballots, there is clearly a strong affiliation to Delta based 

on: 

• Frequent usage and earned miles and privileges associated with Delta's reward system. 

• Established connection habits in Minneapolis, based on Delta and previous Northwest 

service to their Miimeapolis hub. 

• Ease of navigation within the MSP terminals for coimections. 

• Ease of access to MSP for trip continuation if the Waterloo connection is unavailable. 

• Those going west don't want to go east to O'Hare first. 

There is also a strong statement of preference among some to change to American: 

• Coimections from O'Hare to domestic and international destinations are more fi-equent. 

• More see Chicago as a final destination for business travel. 

• Because of American's emphasis on O'Hare as a hub, there is greater opportunity to 

reach a final destination with one connection (ALO to ORD) rather than two (i.e. ALO to 

MSP to DTW) 

• More see Chicago as offering opportunities to get home faster should connections to 

ALO fail (i.e. there is a hop to CID and a 1 hour drive home, vs a 3 hour drive home from 

MSP) 

Our largest users are split: some prefer to stay with Delta/MSP for the reasons stated above, 

while others see very significant opportunity to grow ALO utilization if American to O'Hare 

service is implemented, also for reasons stated above. 

An analysis of the business show: 

• American is attracted to EAS cities as a business model and is expanding this business, 

while Delta is clearly exiting small markets. 

• Delta is a stronger airline. The forecast bankruptcy of American is troublesome, though 

understood to be contemplated to realign operational costs, per industry standard practice. 

• Delta has a strong hub system, though American's hubs seem to be more accommodating 

to the destinations used by passengers originating from ALO. 

In raw numbers, presented in our three solicitations of preference, and unsolicited email, 

American Airlines is preferred. 
EAS at Waterloo 

November 21,2011 

Page Four 

To us, it is compelling that: 

• There is a significant difference in cost of service favoring American Airlines. 

• The Airport's long term air service consultant has expressed a preference for American 

Airlines service. 

• American Airlines appears to be serving other Midwestern cities quite successfully with 

EAS, and indeed are expanding the number of flights and destinations in several of those 

markets. 

Based on available information and the input of our investors, with the goal being 

the long term continuation of commercial air service at the Waterloo Regional 

Airport, it is our recommendation that the City of Waterloo support, and US 

DoT/EAS award the bid to American Airlines. 

Sincerely, 

Steven J. Dust, CEcD 

Chief Executive Officer 

cc: Brad Hagen, Manager, ALO 

Greater Cedar Valley Alliance & Chamber Board of Directors 

Greater Cedar Valley Alliance & Chamber Management Team