Proposal Under the Small Community 

Air Service Development Program: 

Docket DOT-OST-2011-0119

Bemidji Regional Airport Authority

Legal Sponsor:

DUNS: 148387249

Congressional District Code: 7- Congressman Peterson

8- Congressman Cravaack August 2011
Table of Contents

Pages

 Airport and Community Contact Information

 Executive Summary

 Evaluation Criteria

 Project Proposals and Costs

 Appendices

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Small Community Air Service Development Program OST-DOT-2011-0119

9
Contact Information

Bemidji Regional Airport Authority

3824 Moberg Dr. NW, Suite 101

Bemidji, MN 56601

Harold M. Van Leeuwen, Jr.

Executive Director

Tele: 218-444-2438

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Small Community Air Service Development Program OST-DOT-2011-0119

9
Community Contact Information

 City of Bemidji

 Bemidji City Hall

 317 4

th Street NW

 Bemidji, MN 56601-3116

 (218) 759-3560

 John Chattin

 City Manager

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Small Community Air Service Development Program OST-DOT-2011-0119
Project Sponsor

Bemidji Regional Airport Authority

Bemidji Regional Airport

3824 Moberg Dr. NW, Suite 101

Bemidji, MN 56601

Marshall Froyd

Chairman

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Small Community Air Service Development Program OST-DOT-2011-0119
Executive Summary

 Bemidji, Minnesota (BJI) is located in north central Minnesota, serving a population 

base of approximately 121,000 within a 60-mile radius.

 BJ I air service capacity (seats) has been reduced by single carrier by 50% since 2002. 

BJI fluctuates between 2 and 3 daily flights to MSP depending on the season. This is 

down from 5 daily flights in 2004.

 Meanwhile, BJI’s average fare paid has increased almost 50% since 2002, and is 

currently 65% above the U.S. average. This equates to a $110 higher one-way fare (or 

$220 round-trip).

 As a result, approximately 56% of BJI’s traffic base is driving nearly 4 hours to MSP to 

originate their air travel. Dependent upon the O&D market, BJI’s air fares are typically 

25%-100% higher than comparable MSP markets.

 With funds made available through the Small Community Air Service Development Pilot 

Program, BJI hopes to start a Travel Desk, that will assist in lowering leakage, increase 

traffic, and stabilize service and yield to make air service self-sustaining.

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Small Community Air Service Development Program OST-DOT-2011-0119
Strategic Plan Overview

Target Audience

Those travelers that are currently utilizing other airports or are driving 

to/from Bemidji (aka “leakage”) because of their lack of familiarity with 

service availability at BJI or because of the lower fares elsewhere. We will 

be targeting passengers that drive to/from MSP and passengers that will be 

coming to the area for specific events at the new regional event center 

(opened in 2010). The other target market is the International Language 

Camp along with foreign/international students attending Bemidji State 

University full time in their immersion programs that is operated each 

summer for international students from around the world.

Timetable

 Ramp-up: Improve enplanements by 7% in 2012.

 Growth: Increase BJI traffic by 15% by 2013

 Self-Sufficiency: Stabilize BJI service to produce a positive yield for DL by 

2015 to avoid EAS subsidization.

7

Small Community Air Service Development Program OST-DOT-2011-0119
Strategic Plan Overview (continued)

Goals/Objectives.

 To provide a full service transportation arrangement and assistance service for 

residents, major local businesses, Bemidji State University, local government, 

and all inbound travelers

 To lower BJI leakage and increase BJI traffic by 15% by 2013.

 To build local traffic and eliminate need for a potential EAS subsidy.

 To operate a financially self-sustaining BJI Travel Desk through a combination of 

the grant, local participation, and commissions.

Past Grant Description and Differences. This is our second proposal. The first 

proposal focused upon lowering airline operating costs by funding a ground handling 

operation. The carrier targeted was Allegiant for new LAS service. This proposal 

focuses on lowering leakage, increasing use of inbound air travel to the region, and 

achieving improved performance resulting in lower airfares, by offering a unique 

service that will allow the region to aggregate resources and build an effective 

data base for airline travel. In addition, with the recent announcement by DL

stating their intent to abandon or seek additional subsidies in EAS markets such as 

Bemidji, this service will provide a major resource for passengers in the region.

Small Community Air Service Development Program OST-DOT-2011-0119 8
Situation Review & Concept

 BJI currently suffers significant “leakage” resulting in marginal load factors 

 This is particularly true of outbound passengers who do not travel frequently and 

inbound passengers who, in most cases, have minimal knowledge of Northern 

Minnesota and the service available

 The International Language Camp has many unaccompanied students driving from 

MSP with complex travel coordination

 BJI is an EAS city and DL has indicated that they intend to seek an EAS subsidy to 

continue service

 BJI airport regularly fields numerous phone calls daily from people inquiring about 

how to get to Bemidji

 Bemidji lacks a single full service Bemidji-based travel agent. The program would 

coordinate with the local niche agency to support and expand their business 

 Concept: Using a combination of existing and additional airport staff, start up a 1 

person travel desk, with the objective of booking inbound and outbound travel, 

coordinating travel arrangement with the event center to bring additional 

enplanements to BJI, working with Bemidji State University for all related travel, 

and providing services for existing BJI travelers and improve their ease of travel 

Small Community Air Service Development Program OST-DOT-2011-0119 9
Air Service Initiatives

 BJI has regularly met with officials from Delta Airlines (previously 

Northwest) attempting to address reductions in air service as it relates to 

frequency, gauge, seats, tag flights, and fares . Some gauge improvements 

have been experienced and tag flights have been eliminated. Fares and 

seat capacity remain as major challenges.

 In the past, BJI has met with Allegiant Air to measure interest by them and 

to garner nonstop Las Vegas or Phoenix-Mesa service and recently have met 

with Sun Country to advocate flights to various locations by them.

 BJI is a designated Essential Air Service (EAS) city and has been identified 

by DL as a target city for new subsidization

 Attempts to solicit service from other airlines such as Midwest and United 

have not met any interest because of the stage length to their hubs and 

the near geographic monopoly of the area by Delta

10 Small Community Air Service Development Program OST-DOT-2011-0119
BJI is located in North Central Minnesota, caters to 

a population base of 121,000 (within 60 miles)

11 Small Community Air Service Development Program OST-DOT-2011-0119
BJI Air Service Today

Note: Schedule is for 2012 going forward. LF is for YE 6/11

Daily

Dest Carrier Fleet Flights Seats LF

MSP CH BEC 0.7 8 -

MSP DL CRJ 2.0 100 59%

12 Small Community Air Service Development Program OST-DOT-2011-0119
BJI seat capacity is down about 50% since 2002

4.0

5.0

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220

240

260

280

300

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Departs Seats

Source: Innovata Schedule Data

13 Small Community Air Service Development Program OST-DOT-2011-0119
In addition, the Bemidji MSA has service levels 

well below that of comparably sized markets

Peer Markets CSA 

Population

Median Household 

Income

Annual 

Enplanements

Elmira, NY 88,641 $39,102 208,986

Great Falls, MT 79,385 $37,895 355,966

Key West, FL 74,737 $66,537 433,055

Helena, MT 70,558 $43,098 209,091

Durango, CO 49,555 $49,397 276,383

Bemidji, MN 43,169 $36,933 49,192

Pullman, WA 39,838 $41,988 124,356

Butte, MT 32,801 $35,377 63,039

Source: U.S. Census Bureau; D.O.T. Report T-100 YE1Q09 

14 Small Community Air Service Development Program OST-DOT-2011-0119
BJI Passenger volume is down 50% in ten years

80,000

100,000

120,000

15 Small Community Air Service Development Program OST-DOT-2011-0119

0

20,000

40,000

60,000

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Source::D.O.T. Report T-100 
Tied in part to capacity, BJI’s air fares are 65% 

above the U.S. average

$180

$200

$220

$240

$260

$280

$110 one-way 

higher or 65% more 

than U.S.

$100

$120

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$160

$180

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BJI Fare US Fare

Source: D.O.T. Report 10% Coupon Sample

16 Small Community Air Service Development Program OST-DOT-2011-0119
Lack of air service + high fares = 56% “Leakage”

Source: ADI/adjusted Sabre MIDT YEMAR09

17 Small Community Air Service Development Program OST-DOT-2011-0119
“Leakage” is particularly relevant in top markets

Rank Market PDEW Fare RevDEW % Retention Booked PDEW

1 MSP 3.2 $ 179 $ 573 100% 3.2

2 PHX 2.2 $ 239 $ 525 83% 2.6

3 ORD 2.0 $ 255 $ 510 Unavailable Unavailable

4 DCA 1.7 $ 299 $ 509 42% 4.0

5 LAX 1.9 $ 259 $ 492 17% 11.4

6 DTW 1.5 $ 314 $ 472 Unavailable Unavailable Unavailable Unavailable

7 ANC 1.3 $ 351 $ 456 100% 1.3

8 ATL 1.6 $ 238 $ 381 11% 14.0

9 LAS 1.4 $ 251 $ 351 100% 1.4

10 SEA 1.6 $ 216 $ 346 33% 4.8

Source: ADI/adjusted Sabre MIDT YEMAR09

18 Small Community Air Service Development Program OST-DOT-2011-0119
Recap/Comments

 BJI meets the selection criteria for the SCASDP grant:

 The average BJI air fare has increased almost 50% since 2002. Currently, the 

average BJI fare paid is 65% higher than the U.S. average, which equates to $220 

round-trip MORE than the U.S. average.

 Revenues to support the costs associated with the travel desk will be generated 

from booking commissions received from car rental agencies, hotels, travel 

packages, restaurants, and ticketing local events.

 The travel desk will partner with the local niche travel service providers to 

expand exposure.

 BJI’s departing seat volume has declined 50% since 2002. Currently, with only 2 

flights per day, BJI’s air service is well below that of comparably-sized markets 

across the U.S.

 The program would be developed and implemented in 2012 for immediate 

results.

 The result of the combination of extremely high air fares and the lack of air service, 

is that 57% the Bemidji-area booked traffic makes a nearly 4 hour drive to MSP for 

their air travel.

19 Small Community Air Service Development Program OST-DOT-2011-0119
BJI will use funds to start up & develop an 

airport-based Travel Desk

 Would fill a gap: No full service local agencies based in Bemidji currently

 To reduce “leakage” of inbound and outbound passengers

 Subsequently, would increase traffic volumes

 At minimal incremental operating cost

 Would provide optimal customer service for all local traveler segment

20 Small Community Air Service Development Program OST-DOT-2011-0119
Benefits of a BJI Travel Desk

 As mentioned earlier, will draw passengers to BJI, reducing “leakage”

 Reduces the likelihood of requiring an EAS subsidy

 Provides comprehensive travel arrangement services for International Language 

Camp

 Improves negotiating leverage for maintaining existing or replacement service

 Ability to control Customer Service component of operation

 Staff will have intimate understanding of the needs & resources of the area

 Provides a single source of contact for travelers to make all arrangements

 From generated booking data, a database will be built for each customer 

that will enhance BJI’s future air service development efforts

 Would include primary destinations, hotel needs, local transportation needs, 

approximate value of travel annually, special needs, etc.

 Would allow for better decision-making, scheduling, etc.

 Would work hand-in-hand with both Chamber & Convention/Visitor Bureau

21 Small Community Air Service Development Program OST-DOT-2011-0119
Key services offered

 Commercial airline reservations to/from BJI

 Provide alternative arrangements for disruptions from cancelled flights

 Coordination and purchase of ad-hoc charter flights to resort destinations

 Cruise packages

 Booking of hotels both locally & at destination points

 Car Rentals or charter bus arrangements

 Booking dinner reservations

 Coordinate with local conventions & provide support when visitors arrive

 Coordinate with large university and government events & provide support to visitors

Small Community Air Service Development Program OST-DOT-2011-0119 22
Additional Services offered

 Passports & visas application assistance

 Service disruption assistance

 Key for low-frequency markets like BJI

 International based youth travelers for locally-based schools & camps

 Provide travel assistance for Bemidji-area language camp

 Coordination with niche cruise agency

 Assistance in making multi-modal travel arrangements when air travel is 

only a component 

Small Community Air Service Development Program OST-DOT-2011-0119 23
Grant Request: $141,000

A portion of year one startup/operating costs

 BJI would partner with a National multi 

location travel agency

 Agency has similar arrangement currently 

with 20 airports across U.S.

 Agency would provide BJI with no up front 

costs

 Software: No cost

Cash Outlay: Year One

Furniture/Equipment $2,000 

Labor & Benefits $40,000 

Signage $5,000 

Computer System/Peripherals $10,000  Software: No cost

 Training: No cost (except for travel)

 Ongoing BJI costs are almost completely 

variable

 Agency deal: They get $10 per booked ticket

 For first year, airport would subsidize to 

grow the business 

 BJI only needs financial assistance through 

2012 in order to grow the self sustaining 

revenue base

Small Community Air Service Development Program OST-DOT-2011-0119 24

Computer System/Peripherals $10,000 

Travel $10,000 

Advertising $20,000 

Startup Management Costs $15,000 

Management & Consulting $36,000 

Transaction Costs to Agency $23,000 

Less Commissions

$161,000

$20,000

Net grant request $141,000
After startup, expect to breakeven

Cash Flow: Year 2

Commissions and fees $85,000

Expenses:

Labor $40,000

 In year 2, BJI would start generating 

revenues

 BJI would charge $10/ticket

 Additionally, would charge fees for 

cruises, packages, etc.

 More like “typical agency”

Travel $3,000 

Advertising $2,000 

Management & Consulting $18,000 

Transaction Costs to Agency $23,000 

Total expenses $80,000 

Revenues in excess of 

expenses $5,000 

 Would also staff agency with airport 

staff

 Also, startup costs are all gone

 Would start to utilize Travel Desk to 

generate fees for air service

 Taking advantage of database

Small Community Air Service Development Program OST-DOT-2011-0119 25
Proposed Consulting Services

 Management of startup phase

 Principals have experience at running a travel agency

 Negotiate contracts with local hotels, restaurants, etc. including commission 

structure

 Develop data base collection structure

 Assistance with building travel database, generated from booking 

data

 Would be used for future air service development efforts

 Ongoing air service development consulting

 Developing presentations

 Working with airlines

Small Community Air Service Development Program OST-DOT-2011-0119 26
 Bemidji Airport Authority – Will be the lead organization on developing 

and implementing the program.

 The Bemidji Chamber of Commerce- Will assist the Authority in the 

promotion of the region and soliciting business support to fly local

Convention and Tourism Bureau- Will serve as coordinating point with 

Bemidji’s Project Proposal is bolstered by the 

support of a public-private partnership

 Convention and Tourism Bureau- Will serve as coordinating point with 

event center 

 State of Minnesota Department of Transportation- Support marketing 

efforts

27 Small Community Air Service Development Program OST-DOT-2011-0119
 Develop a program which will improve the marketability of the airport and 

the greater Bemidji region

 Reduce “leakage” and subsequently increases traffic by at least 15% by 

2013

Air Service Development Goals tied to Program

 Improve current Delta service enough, so as to eliminate the needs for a 

EAS subsidy 

28 Small Community Air Service Development Program OST-DOT-2011-0119
 The Bemidji Airport proposes its Small Community Air Service 

Development Program be evaluated based on the following milestones:

 Reduced “leakage”

 15% increase in passenger enplanements by 2013

 Elimination of EAS subsidy by 2015

 Expanded travel service for all segments of the population

The effectiveness of BJI’s program will be gauged by 

improvements in passenger volume & service levels

 The Authority will receive monthly updates to report milestones and 

convey the community’s progress toward meeting the project’s stated 

objectives (or as dictated by the Department of Transportation).

 In the event that dynamics of the aviation industry and/or current 

negotiations impact the feasibility of the carriers targeted in our proposal, 

the Authority will work with the Department to amend its application, 

keeping within the confines of stated air service development objectives.

29 Small Community Air Service Development Program OST-DOT-2011-0119
How will the community ensure that funds are 

spent as stated?

 BJI will supply D.O.T. with invoices of all dollar spent

 With an itemized accounting of all spending done

 This will be done on a monthly basis

 BJI will also complete annual audits and report any discrepancies to D.O.T.

Small Community Air Service Development Program OST-DOT-2011-0119 30
What if program is not self-sustaining?

 First, this program has little in the way of ongoing, incremental operating 

costs, hence the risk of this is relatively low

 But, should this occur, the following would occur:

 Reduced travel, advertising & consulting: $23,000 in savings

 This would leave variable costs to travel agency as only operating costs

 Hence, if airport charges back customers, there is little chance of not breaking even

Small Community Air Service Development Program OST-DOT-2011-0119 31
Conclusions

 As noted earlier, BJI meets all the selection criteria for the SCASD grant:

 Air Fares. The average BJI fare paid has increased almost 50% since 2002. Currently, the 

average BJI fare paid is 65% higher than the U.S. average, which equates to $220 round-trip 

MORE than the U.S. average.

 Air Service. BJI’s departing seat volume has declined 50% since 2002. Currently, with only 2-

3 flights per day, BJI’s air service is well below that of comparably-sized markets across the 

U.S.

 With funds made available through the Small Community Air Service 

Development Pilot Program, BJI hopes to increase enplanements in order 

to reduce carriers’ costs, lowering the barriers to entry and/or expansion 

by sharing in the financial risk of entering a new market. We will also use 

some of the funds to more aggressively market BJI and hopefully reduce 

current “leakage” rate.

32 Small Community Air Service Development Program OST-DOT-2011-0119