Proposal under the Small Community Air 

Service Development Program For

St. George Airport

Docket DOT-OST-2010-0124

Sponsor: City of St. George / St. George Municipal Airport

DUNS Number: 627376569

Congressional District Code: UT02

Contact: Mr. Marc M. Mortensen

Support Services Manager

175 East 200 North 

St. George, UT 84770

435.627.4005

mm@sgcity.org

Due Date: August 27, 2010
Table of Contents

Subject Page

DOT Summary Information 1

Support Letter from Sky West Airlines 3

Support Letter from Senator 4

Support Letter from Convention and Tourism Bureau 6

Support Letter from St. George Mayor McArthur 7

Proposal 9

Executive Summary 9

Previous Grant 10

Our Community Team 10

Our Airport 10

Plan is Consistent with DOT Priorities 12

Community Profile 12

Economic Indicators 13

Air Service History 15

Current Air Service 15

High Air Fares 16

Top Markets for St. George 16

Air Service Comparison 17

Passenger Forecast for Los Angeles Service 18

Estimated Profitability for Sky West 18

Action Plan 20

Plan Elements 20

Marketing Program 20

Revenue Guarantee 21

Total Incentive Package 22

Performance Measurement and Schedule 23

Measurement 23

Schedule 23

Community Support 23

Requirements 24

Financial Controls 24

Return on Investment 24

Alternate Plan with Frontier Airlines 24

Exit Strategy 25

Assurances 25

Letters of Support 26
Proposal of the City of St. George and St. George Airport Page 1

APPENDIX B

Order: 2010-7-16

Docket DOT-OST-2010-0124

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)

 Not a Consortium Interstate Consortium Intrastate Consortium

 Community now receives EAS subsidy

 Community previously received a Small Community Grant in 2004. 

B. PUBLIC/PRIVATE PARTNERSHIP 

Public: Private:

1. City of St. George 1. Sky West Airlines

2. St. George Airport 2. St. George Area Chamber of Commerce

3. Washington County 3. Washington County Economic Development

4. St. George Convention and Tourism

5. Dixie State College

6. Ft. Pierce Industrial Park

7. Zion National Park

C. PROJECT PROPOSAL

Project Proposal: (Check All That Apply)

 X Marketing Upgrade Aircraft X New Route

 Personnel Increase Frequency X Lower Fares

 X Travel Bank X Service Restoration ___ Subsidy

___ Surface Transport X Regional Service ___ Other (Specify)

 X Revenue Guarantee Launch New Carrier 

___ Start Up Cost Offset First Competitive Service 

 Study Secure Additional Carrier

X
Proposal of the City of St. George and St. George Airport Page 2

D. EXISTING LANDING AIDS AT LOCAL AIRPORT:

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

 X Localizer X Other (Specify) _GPS__

E. PROJECT COST:

1. Federal amount requested: $550,000

2. State cash financial contribution 0

3. Local cash financial contribution: 

 3a. Airport cash funds: 50,000

 3b. Non-airport cash funds: 50,000

 3c, Total local cash funds: 100,000

4. TOTAL CASH FUNDING $650,000

5. Local funds contributed from already existing 

programs or projects included in line 3c.

6. Local funds contributed from new commitments 100,000

or new resources included in line 3c.

7. Airport In-kind contribution:

7a. Advertising 50,000

7b. Airport landing fees and rents 

8. Other in-kind contribution:

8a. Travel Bank Ticket Program 150,000

9. TOTAL IN-KIND CONTRIBUTION $200,000

10. TOTAL PROJECT COST $850,000

F. ENPLANEMENTS:

2000 42,472 2005 45,110

2001 42,347 2006 53,777

2002 32,621 2007 53,690

2003 38,075 2008 46,607

2004 47,734 2009 38,693

G. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER 

 PROCESS? Program is not covered by E.O. 12372.

H. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? No

 
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PROPOSAL OF THE CITY OF ST. GEORGE AND

ST. GEORGE AIRPORT

Executive Summary

This proposal is part of a two phase program to get new air service for the St. George Airport in 

St. George, Utah. The first phase secured a grant earlier this year to pay for an Air Service 

Market Study to determine passenger demand and to pay for a recruiting program to attract new 

air service. The second phase is to secure a grant under this year’s program to provide a revenue 

guarantee and marketing funds to support new air service.

The City of St. George and St. George Airport are seeking a Small Community Air Service 

Development Program grant to address the loss of air service at St. George Airport. On 

September 1, 2009, SkyWest Airlines operating as United Express terminated its service to Los 

Angeles International Airport leaving St. George Airport with no scheduled passenger air service 

to the West. The only service remaining at St. George Airport is Sky West Airlines operating as 

Delta Connection to Salt Lake City with 30 seat EMB-120 turbo prop. 

The City of St. George is opening a replacement airport on January 13, 2011. This new airport 

will have a 9,300 foot runway capable of handling most commercial jet aircraft. The terminal 

will be 35,000 square feet and can handle multiple airlines. The old St. George Airport is located 

on a bluff and is not able to accommodate commercial jet aircraft and to meet the air travel needs 

of the future, St. George needed a new airport.

The leaders of St. George have been actively recruiting airlines to provide air service at the new 

airport. During this past year, meetings and discussions have been held with Allegiant Air, 

American Airlines, American Eagle, Delta Air Lines, Frontier Airlines, Horizon Air, SkyWest, 

Southwest Airlines, United Airlines, US Airways, and Vision Air. All of the airlines requested 

an incentive package to consider providing service at the new St. George Airport. The airlines 

have requested funds for a revenue guarantee and cost offset for the first year of service, funds 

for marketing and advertising and a travel bank advance ticket purchase program.

In order to create an attractive incentive package, the City of St. George and St. George Airport 

will need a grant of $550,000 from the Department of Transportation under the Small 

Community program. These funds will be matched with $100,000 of local cash, $50,000 of inkind funding, and a travel bank program of $150,000 resulting in a total incentive package of 

$850,000.

St. George is located in Washington County, the most southern county of Utah. The St. George 

Airport provides service to over 250,000 residents in southern Utah, northern Arizona, and 

eastern Nevada. St. George Airport is a small hub airport and has commuter service to one hub, 

Salt Lake City, with small turbo prop aircraft. St. George is also the gateway airport for six

major national parks and other popular destinations. A leakage study developed last year showed 

that the local market generated 627 airline passengers per day but the St. George Airport only 

retained 122 passengers per day, a retention rate of 19.5%. The destination that had the largest 

amount of passenger demand was the Los Angeles metropolitan area. 
Proposal of the City of St. George and St. George Airport Page 10

Previous Grant

The City of St. George has approached the Small Community Air Service Development Program 

as a two phased project. The first phase was to request a grant to fund an Air Service Market 

Study and start recruiting airline service for the new replacement airport. The second phase was 

to request a grant to provide funds for an airline as a revenue guarantee to offset initial operating 

losses and provide marketing support to start new air service.

The City of St. George and St. George Airport received the first grant from the Department of 

Transportation under this program in 2009 for $100,000 to fund the development of a marketing 

program to recruit new service and provide for advertising to support existing air service. The 

local community contributed $20,000 in cash and $20,000 of in-kind advertising to support the 

air service development program.

The recruiting program has been successful. Representatives of the City and the Airport have 

attended the Allegiant Conference held in Las Vegas in February, the Network Conference held 

in Ft. Lauderdale in March, and the ACI Jump Start Conference held in San Diego in June. 

There have been meetings and discussions with eleven airlines with SkyWest Airlines, Allegiant 

Air, and Frontier Airlines all expressing interest in providing service at the new St. George 

Airport. 

Sky West Airlines has stated that they will go ahead and upgrade the existing St. George – Salt 

Lake City service from EMB-120 aircraft to CRJ-200 as aircraft become available. They have 

also expressed interest in returning to the St. George – Los Angeles market with regional jets 

when the new airport opens and aircraft are available. The City St. George has developed a 

marketing and advertising program to promote the existing SkyWest service. It is estimated that 

the funding for the air service recruiting and advertising will be spent by the end of December, 

2010, making St. George eligible for a new grant next year.

Our Community Team

The City of St. George and the local community are moving ahead to improve the air service for 

the new replacement airport. The City and the Airport are working with various business 

interest, local government departments, the St. George Area Chamber of Commerce, the 

Washington County Economic Development Council, St. George Convention and Tourism, 

Dixie State College, Zion National Park, and Sky West Airlines in developing a public-private 

partnership to provide community support for the development of better air service.

Our Airport

The St. George Airport received its first air mail service in 1938 and has had scheduled 

passenger air service since 1959. Currently, the Airport is served by SkyWest Airlines operating 

as the Delta Connection. The Airport meets FAA Part 139 requirements. Passenger screening is 

provided by TSA. The Airport meets all FAA avionics requirements. Due to its location on the 

top of a mesa, the Airport can only handle smaller propeller aircraft like the EMB-120 for 

scheduled passenger service. In order to accommodate regional jets and standard twin jets, the 
Proposal of the City of St. George and St. George Airport Page 11

City of St. George moved ahead with the development of a $175 million replacement airport. 

The new airport will have a 9,300 foot by 150 foot runway and a 35,000 square foot terminal. 

Future plans call for extending the runway to 11,500 feet if needed. The opening of the new 

replacement airport is scheduled for January 2011.

The new St. George Airport will be a full service Airport. Its passenger terminal will include 

state of the art systems for passenger check-in, baggage handling, and security screening. There 

will be space for multiple airlines, rental car companies, and a restaurant. Convenient, 

reasonably priced automobile parking will be available at the terminal. The new Airport is 

located six miles from downtown St. George and is connected to Interstate 15 by its own 

highway. Tenants and vendors at the new Airport will provide a full range of aviation services 

including fueling, maintenance, instruction, charter flights, and aircraft storage.

LOCATION OF THE NEW REPLACMENT AIRPORT
Proposal of the City of St. George and St. George Airport Page 12

Our Plan Is Consistent With DOT Priorities

This project to reinstitute air service to Los Angeles for St. George Airport is consistent with the 

priorities established by the Secretary of Transportation. The Airport will work with SkyWest

Airlines to add new service to the Los Angeles International Airport and to upgrade service to 

regional jets to Salt Lake City International Airport. The Airport will continue to actively recruit 

air service to other hub airports that will facilitate access to the National Transportation System.

This project will benefit local businesses, higher education institutions, the general public, and 

the tourism market. It will provide an excellent alternative to long drives to either Las Vegas or 

Salt Lake City for flights to southern California and points beyond.

Community Profile

St. George was founded as a cotton mission in 1861 as part of a greater effort of the Church of 

Jesus Christ of Latter-day Saints to become self sufficient. St. George has become the 

population and commercial center for southern Utah. Due to its southern location and its early 

cotton farming, the area is sometimes known as “Dixie”. The City of St. George is located on 

Interstate 15 and south of the starting point of Interstate 70. The City is 120 miles north of Las 

Vegas and 300 miles south of Salt Lake City.

From 2000 to 2008, the population for the primary airport catchment area increased 53%. 

Washington County (where St. George is located) has seen a population increase of 66% since 

2000, one of the largest county increases in the United States. The greatest economic impact has 

been the growth of retail sales. The primary catchment area has seen retail sales increase by 

130% and effective buying income has doubled.

POPULATION GROWTH OF WASHINGTON COUNTY

Year Population Annual Growth

2005 127,120 --

2006 132,350 4.1%

2007 139,640 5.5%

2008 147,050 5.3%

2009 154,680 5.2%

2010 162,540 5.1%

2020 205,000 2.4%

2030 251,900 2.1%

Source: City of St. George and Washington County

The St. George economy is service oriented. There is large employment in health, education, 

government, and tourism. The St. George Area Chamber of Commerce will continue to support 

existing employers in the area while the Washington County Economic Development Council is 

attracting new businesses that will contribute to the economic growth of the area. 
Proposal of the City of St. George and St. George Airport Page 13

ST. GEORGE HAS A DIVERSE ECONOMY

Sector Employment % of Total

Retail/Wholesale 8,779 18.3%

Healthcare 7,493 15.5%

Government 7,202 15.0%

Hospitality/Entertainment 7,010 14.6%

Services 5,959 12.4%

Construction 4,021 8.4%

Transportation/Utilities 2,842 5.9%

Manufacturing 2,472 5.1%

Finance/Real Estate/Insurance 2,033 4.2%

Mining/Agriculture 276 0.6%

The St. George Area Convention and Tourism Office works to bring visitors to the St. George 

area. There are six major national parks in the St. George Airport catchment area. There are 

approximately 3,100 hotel rooms in the area with prices ranging from $29 to $395 per night. 

The area has 23 golf courses within one hour of downtown St. George. St. George has the 

second largest conference center in the state of Utah. Dixie Conference Center has a 47,500 

square foot exhibit hall, twenty-one meeting rooms, and seating for 6,200 in the exhibit hall.

Economic Indicators

The St. George Airport primary catchment area covers four counties in Utah, and parts of one 

county in Nevada and Arizona. The secondary catchment area covers four more counties in Utah 

and one additional community in Arizona. Washington County accounts for 139,640 people or 

55.7% of the total market area. The average retail sales for Washington County is $47,972 per 

household and the median household income for Washington County is $46,822.

ECONOMIC DATA FOR ST. GEORGE AIRPORT CATCHMENT AREA

 Housing Retail Sales/ Median Income/

Market Population Units Household Household 

Utah

Washington County 139,640 54,690 $47,972 $46,822

Iron County 43,525 17,980 42,333 39,909

Sevier County 19,700 7,730 47,620 43,172

Kane County 6,520 4,850 20,204 41,274

Beaver County 6,090 2,870 27,770 41,632

Garfield County 4,530 3,320 17,125 42,398

Wayne County 2,520 1,450 22,715 38,566

Piute County 1,340 800 6,232 35,704

Arizona

Page City 6,800 2,600 n/a 60,890

Colorado City 4,800 1,630 n/a 41,640

Fredonia City 1,050 455 n/a 39,275

Nevada

Mesquite City 19,750 9,300 n/a 42,941

Total 250,415 107,675
Proposal of the City of St. George and St. George Airport Page 14

St. George Airport Catchment Area

The St. George Airport catchment area covers southwest Utah, northwest Arizona and part of southeast 

Nevada. The area is a combination of high plateau desert and mountains. There are four counties in 

Utah, two cities in Arizona, and one city in Nevada that are considered the primary market. The primary 

market is within 1:30 from the new Airport and has an estimated population of 220,000. The secondary 

market is further away and would use the new service to LAX since the St. George Airport would be the 

closest airport with nonstop service.

ST. GEORGE AIRPORT CATCHMENT AREA

Even though the average retail sales and average median income are somewhat moderate, the 

residents of St. George have an excellent quality of life due to the geographical nature of the 

market area and the lower cost of living.

ST. GEORGE HAS A LOW COST OF LIVING

Market Cost of Living Index

St. George 95.6

Boise 95.5

Bozeman 106.8

Corvallis 109.7

Casper 98.0

Fresno 115.6

Laramie 104.0

Portland 113.6

Salt Lake City 101.7

San Diego 101.7

San Francisco 162.0
Proposal of the City of St. George and St. George Airport Page 15

Air Service History

St. George Airport has been served continuously since 1972 by SkyWest Airlines. In the early 

years, Sky West shuttled business travelers to Salt Lake City. In the 1990’s the airline started 

nonstop service to Las Vegas with flights continuing on to Phoenix. In 2000, new nonstop 

service was added to Los Angeles International Airport and this service replaced the service to 

Las Vegas. On September 1, 2009, SkyWest terminated service to Los Angeles. The airline has 

continued to provide nonstop service to Salt Lake City. All flights to Salt Lake City are operated

with 30 seat EMB-120 aircraft due to the restrictions at the current St. George Airport.

HISTORICAL NONSTOP SERVICE AT ST. GEORGE

 Los Angeles Salt Lake City All Markets

Year Flts/wk. Seats/wk. Flts/wk. Seats/wk. Flts/wk. Seats/wk.

2000 14 420 37 1,110 51 1,530

2001 14 420 42 1,260 56 1,680

2002 14 420 42 1,260 56 1,680

2003 14 420 48 1,440 62 1,860

2004 14 420 42 1,260 56 1,680

2005 14 420 41 1,230 55 1,650

2006 12 360 56 1,680 68 2,040

2007 14 420 56 1,680 70 2,100

2008 14 420 45 1,350 59 1,770

2009 14 420 44 1,320 58 1,740

2010 0 0 45 1,350 45 1,350

Source: Official Airline Guide, Summer editions for 2000- 2010.

Current Air Service

SkyWest currently operates forty-five flights per week between St. George and Salt Lake City 

utilizing the 30 seat EMB-120 turbo prop aircraft. These flights are operated as the Delta 

Connection. These frequent flights meet the needs of the local passenger going to Salt Lake City 

for a day trip to conduct business or visit friends and relatives and for passengers making 

connections to Delta Air Lines flights, other SkyWest flights, and the flights of other airlines.

CURRENT ST. GEORGE-SALT LAKE CITY SERVICE

August 2010

Market Depart Arrive Aircraft Frequency

St. George – Salt Lake City 6:04 am 7:25 am EMB-120 x Sa, Su

 7:50 am 9:10 am EMB-120 Daily

 9:00 am 10:20 am EMB-120 Daily

11:50 am 1:10 pm EMB-120 x Sa, Su

 1:10 pm 2:25 pm EMB-120 Sa

 2:55 pm 4:14 pm EMB-120 x Sa

 5:45 pm 7:00 pm EMB-120 Daily

 7:20 pm 8:40 pm EMB-120 Daily
Proposal of the City of St. George and St. George Airport Page 16

Market Depart Arrive Aircraft Frequency

Salt Lake City – St. George 7:25 am 8:50 am EMB-120 x Sa, Su

10:10 am 11:40 am EMB-120 x Sa, Su

11:00 am 12:25 pm EMB-120 Daily

 3:20 pm 4:40 pm EMB-120 Daily

 5:05 pm 6:25 pm EMB-120 Daily

 7:50 pm 9:15 pm EMB-120 Daily

 9:30 pm 11:05 pm EMB-120 Daily

High Air Fares

With air service to only Salt Lake City, passengers to and from the cities in southern California, 

Hawaii, and the Pacific are paying a premium air fare. For example, a passenger flying from St. 

George to Los Angeles will need to connect at Salt Lake City International Airport and pay a one 

way fare of approximately $215.00. The one way trip time is approximately 4 hours. A 

passenger flying from St. George to Honolulu will need to also connect in Salt Lake City and pay 

a one way fare of approximately $740.00. The one way trip time is approximately 9 to 10 hours.

A leakage analysis developed by Sabre Airline Solutions in 2009 found that over 80% of the St. 

George airline customers went to other airports with 55% of the passengers using Las Vegas. 

The average fares for the top ten markets for St. George for the past five years have been 40% to 

60% higher than fares available at Las Vegas.

Top Markets for St. George

There were 75,260 origin and destination passengers for St. George Airport in 2009. The St. 

George-Salt Lake City market is the number one market and accounted for 47.3% of the total 

passengers. The top ten markets accounted for 71.5% of the total passengers. The leakage study 

developed by Sabre showed that the St. George-Salt Lake City market captured 88% of all of the 

bookings in the local St. George market. On the other hand, over 86% of the passengers going to 
Proposal of the City of St. George and St. George Airport Page 17

destinations other than Salt Lake City utilized another airport. Listed below are the top origin 

and destination markets for St. George for 2009 compared to the “true passengers” (O&D plus 

diverted).

TOP PASSENGER MARKETS FOR ST. GEORGE AIRPORT

Market O&D Passengers True Passengers

Salt Lake City 35,620 37,810

Los Angeles 7,010 18,100

Denver 2,480 13,290

Seattle 1,900 8,390

Boise 1,310 6,720

Portland 1,240 3,290

San Francisco 950 20,880

Sacramento 950 2,480

Chicago 880 19,710

Atlanta 800 5,040

Total 53,140 135,710

The air service at St. George (origin and destination passengers) for the top ten markets only 

produced 39% of the passengers. If Salt Lake City is excluded, then the air service only 

accounted for 18% of the passengers in the top markets.

Air Service Comparison

When the St. George Airport market area is compared to other markets that have similar 

populations, it is clear that St. George falls short on air service. The following table compares 

five cities that have an average population of 252,000 to the St. George market area of 250,000. 

These markets average 24 daily flights to 5 cities while St. George has 7 daily flights to one city.

AIR SERVICE COMPARISON FOR ST. GEORGE

Cities Daily

Metro Area Population Served Flights

St. George 255,000 1 7

Lubbock, TX 260,000 6 35

San Luis Obispo, CA 258,000 4 12

Gulfport, MS 250,000 5 22

Lafayette, LA 247,000 4 20

Cedar Rapids, IA 245,000 7 33

Average 252,000 5 24
Proposal of the City of St. George and St. George Airport Page 18

Passenger Forecast for Service to Los Angeles

The Sabre booking data for 2008 shows that 70% of the local residents were using the St. George 

nonstop flights to Los Angeles International Airport. The other 30% were using other airports to 

get to Los Angeles with Las Vegas being the primary airport. The daily passenger bookings 

were 17.4 from St. George to LAX and 7.4 daily passenger bookings from other airports to LAX. 

The other airports in the Los Angeles metro area accounted for 0.3 daily passenger bookings 

using St. George Airport and 12.2 daily passenger bookings using other airports. The total 

passenger bookings for the St. George Airport catchment area were 37.3 bookings per day to the 

Los Angeles metro area. This equates to 27,230 St. George area passengers going to and from 

the Los Angeles metro area.

FORECAST FOR ST. GEORGE – LOS ANGELES

 Outbound Annual Sky West Sky West

Passengers/Day Passengers Share Passengers

SGU-LAX 24.8 36,200 80% 29,000

SGU-Other LA 12.5 18,200 40% 7,300

Total LA Area 37.3 54,400 36,300

SGU-HNL 13.8 20,100 25% 5,000

SGU-SAN 6.3 9,200 25% 2,300

SGU-OGG 3.6 5,200 25% 1,300

SGU-SBA 1.3 1,800 25% 400

Total Beyond Markets 36,300 9,000

Grand Total All Markets 90,700 45,300

This forecast shows that the potential passengers are much greater than the passengers carried by 

Sky West previously in the SGU-LAX market. This is due to a major upgrade in the aircraft to

be flown and the marketing program that will be developed by the St. George parties, especially 

in the international market. As a United Express partner, SkyWest does not do marketing or 

advertising. United Airlines did not provide any marketing or advertising for the previous SGULAX service and did not institute an international program or include St. George and the national 

parks in its own tour programs and packages.

The passenger forecast for the SGU-LAX markets indicates that the market could support two

daily roundtrip CRJ-200 flights per week with a load factor of 58%. Since SkyWest previously 

had a loss operation in this market with the EMB-120 aircraft, it is recommended that the airline 

start with one daily round trip flight during the first year and see if the traffic response is great 

enough to warrant additional flights.

Estimated Profitability for Sky West Airlines

Based on the operating cost for SkyWest, the total expense for a one way flight between St. 

George and Los Angeles with a CRJ-200 is estimated to be $3,040. Based on this expense and 

based on an average one-way fare of $113 as reported by Sabre Airline Solutions for 2008, the 
Proposal of the City of St. George and St. George Airport Page 19

airline will need 39,300 passengers to break even for the route. This forecast is based on two 

trips per day and service in the second year of operation. It is expected that the first year will 

operate at a loss and the small community grant will off-set this loss operation.

REVENUE AND EXPENSE FORECAST FOR SGU-LAX

Passenger Forecast 45,300

Average Fare $113

Passenger Revenue $5,118,900

Other Revenue 102,100

Total Revenue $5,221,000

Number of Daily Flights 2 R.T.

Number of Annual Flights 1,460

Cost per Flight $3,040

Total Expense $4,438,400

Estimated Operating Profit $782,600

Operating Margin 15.0%

The first year of operation will have a ramping-up of passengers and fares during the first few 

months. This normally happens when new air service is introduced in a new market and the 

passenger awareness factor is increased as time goes by. Marketing and advertising usually 

begins 90 to 120 days in advance of the air service. It normally takes much longer to develop 

top-of-the-mind awareness for the new air service.
Proposal of the City of St. George and St. George Airport Page 20

Action Plan

Plan Elements

The goal of the Action Plan is to address issues associated with the proposed new air service that 

are critical to the long-term success of this service. This action plan will address two elements

for the St. George Airport: (1) marketing, promotion, and support of new air service; and (2) 

revenue guarantees for initial air service.

Marketing Program

We believe that a strong marketing and advertising program is key to the success of a grant 

program. For this project, we are allocating $200,000 to advertising, marketing, sales, and public 

relations. We have also included an advance purchase ticket program with a goal of $150,000.

The target audience for outbound service will be the local business traveler. The most effective 

way to contact this customer is by targeting: (1) the traveler; (2) the travel agent; (3) the 

corporate travel coordinator; and (4) the business associations. All of these targets can be 

approached utilizing the same advertising media - radio, newspaper, magazine, direct mail, 

internet and billboards. The target audience for the inbound service will be the business traveler 

and the vacation/leisure traveler. The business travel market for inbound will use the same 

strategy as outbound business travel. The vacation/leisure market will include domestic and 

international travelers. There will be a major emphasis on tour operators and travel agencies 

which specialize in leisure travel.

Advertising and Media Selection

The market in the St. George Airport market area can best be reached by using local newspaper, 

local radio, outdoor, direct mail, trade publications, and online advertising via the internet. The 

Los Angeles market can be reached via newspaper, radio, and internet. It is estimated that 35% 

of the advertising will be spent in St. George and 65% will be spent in the Los Angeles market. 

In the past, no money was spent in Los Angeles for marketing and advertising the air service to 

St. George.

ESTIMATED ADVERTISING EXPENDITURES FOR NEW AIR SERVICE

 Cash In Kind Total

Advertising

 Newspaper/Magazine $ 50,000 5,000 $55,000

 Radio 25,000 20,000 45,000

 Outdoor 10,000 20,000 30,000

 Production 10,000 10,000

 Internet/direct mail 5,000 5,000 10,000

 Total $100,000 $50,000 $150,000
Proposal of the City of St. George and St. George Airport Page 21

Advance Ticket Sales Program

The St. George business community is fully supportive of the new air service to LAX. To show 

its support, the Chamber of Commerce will sponsor a travel bank program for advance ticket 

sales. The initial local incentive being offered for the new air service is a commitment to sell at 

least $150,000 of tickets in advance. The Chamber of Commerce will develop a program with a 

local credit union or bank to escrow and manage the travel bank. The credit union or bank will 

accept deposits and issue debit cards that can be used for travel on Sky West Airlines. 

Direct Sales

Since St. George is the gateway to six major national parks, there is an excellent opportunity to 

sell tour programs and packages to the area. The St. George Area Convention and Tourism 

Office has an $800,000 budget for the development of tourism to the St. George area. They have 

agreed to head up the sales program for the new air service and work with the tour operators and 

travel companies that will sell vacation/leisure business to the area. They have agreed to also 

lead a program to capture the Asian market with an extensive sales program to the major Asian 

tour companies that are now busing customers to the St. George area or flying them to Las 

Vegas.

Sales Promotions

The St. George Airport in partnership with SkyWest Airlines, the Convention and Tourism 

Office and the Chamber of Commerce will work with a major radio station in the Los Angeles 

metro area in promoting a Zion National Park vacation package. This type of program has been 

very successful in the Los Angeles market area in the past.

Public Relations

St. George Airport and its marketing partners will sponsor a trip to St. George for travel writers 

at various newspapers in southern California to sample the new National Parks Vacation 

Program. The Airport will also produce and deliver press releases and stories supporting the new 

air service. 

Revenue Guarantee

Management at SkyWest has told the City of St. George that the airline will need an incentive 

program that includes a revenue guarantee to offset initial operating losses. Based on the 

analysis of our consultants, it is believed that a $500,000 revenue guarantee will be sufficient to 

support the initial new air service for the first year of operation. 

It is assumed that there will be a ramp up of passengers during the start up period. Load factors 

for SkyWest are estimated to be 30% for the first month and increasing to 55% in the peak travel 

months for an average of 45% for jet service. It should be noted that Sky West had an average 

load factor in the mid 40% with the EMB-120 aircraft. It is also assumed that the average fares 

will be over 20% lower in the first few months to stimulate air travel. 
Proposal of the City of St. George and St. George Airport Page 22

ESTIMATED REVENUE GUARANTEE TO COVER INTIAL OPERATING LOSSES

FOR SERVICE BETWEEN ST. GEORGE AND LOS ANGELES

 Monthly Est. Avg. Cost/ Profit

Month Flights Seats L.F. % Passengers Fare Revenue Flight Expense (Loss)

 April 60 3,000 30% 900 $89 $ 80,100 $3,040 $182,400 ($102,300)

May 62 3,100 35% 1,085 89 96,565 3,040 188,480 ($92,915)

June 60 3,000 40% 1,200 99 118,800 3,040 182,400 ($63,600)

July 62 3,100 45% 1,395 99 138,105 3,040 188,480 ($50,375)

Aug. 62 3,100 50% 1,550 105 162,750 3,040 188,480 ($25,730)

Sept. 60 3,000 45% 1,350 105 141,750 3,040 182,400 ($40,650)

Oct. 62 3,100 45% 1,395 105 146,475 3,040 188,480 ($42,005)

Nov. 60 3,000 50% 1,500 105 157,500 3,040 182,400 ($24,900)

Dec. 62 3,100 55% 1,705 113 192,665 3,040 188,480 4,185

Jan. 62 3,100 45% 1,395 105 146,475 3,040 188,480 ($42,005)

Feb. 56 2,800 50% 1,400 105 147,000 3,040 170,240 ($23,240)

March 62 3,100 55% 1,705 113 192,665 3,040 188,480 4,185

 1

st yr. total 730 36,500 45% 16,580 $103 $1,720,850 $2,219,200 $498,350

Total Revenue Guarantee Needed $500,000

Total Incentive Package

Combining the Small Community Air Service Development Program grant and local 

participation, the City of St. George and St. George Airport will be able to offer a very complete 

incentive package for SkyWest Airlines. The combined incentive package will create an 

extremely strong marketing component, flight guarantee program, and a strong public/private 

partnership. With the federal assistance the total incentive package that would be offered for 

SkyWest Airlines new air service will be $850,000. Total federal participation requested is 

$550,000 with the local community providing $300,000, 35.3% of the incentive package. The 

local community will provide 15.4% of the total cash for the incentive package. 

SUMMARY OF INCENTIVE PACKAGE FOR NEW AIR SERVICE

 Federal Local Total

Flight Guarantee $450,000 50,000 $500,000

Marketing and Advertising 100,000 100,000 200,000

Pre-purchased tickets 150,000 150,000

Total $550,000 $300,000 $850,000
Proposal of the City of St. George and St. George Airport Page 23

Performance Measurement and Schedule

Measurement 

The performance of the proposed air service development project will be tracked on a monthly 

and quarterly basis. This tracking will measure the number of passengers carried by SkyWest

Airlines, the average fare, and the passenger revenue. The Airport will also monitor the number 

of flights being provided, the aircraft type, and the amount of revenue guarantee paid out each 

month. This measurement of performance will be done by meeting with SkyWest Airlines, 

reviewing advance schedules in the Official Airline Guide, and reviewing advance tariffs on file.

Ninety days prior to the start of new air service to LAX, the Airport will institute the marketing 

and advertising program. Daily and monthly load factors will be tracked to see the impact of the 

marketing program. If the passengers do not initially respond to the new air service, then the 

community will implement an additional marketing and advertising program to spike the market.

Schedule

It is the assumption of City of St. George and St. George Airport that the following schedule 

could be employed should the grant application be successful. The City and the Airport commit

to the completion of the grant, if awarded, within two years of acceptance and will diligently 

pursue an earlier closeout. The following timeline is proposed:

PROPOSED TIMELINE

Item Estimated Date

Execution of Grant Agreements End of 2010

Completion of Marketing Plan February 2011

Meet with St. George marketing partners March 2011

Start Negotiations with Sky West April 2011

Start Air Service Prior to April 2012

Community Support

The City and the Airport have created a public/private partnership to aid in our recruitment 

efforts. This public/private partnership is composed of business leaders, educational institutions, 

association representatives, community organizations and residents. The leading organizations 

of the partnership are as follows:

The City of St. George Sky West Airlines

Washington County St. George Area Convention & Tourism

St. George Airport Zion National Park

Washington County Economic Development Ft. Pierce Industrial Park

St. George Area Chamber of Commerce Desert Canyons

Dixie State College 
Proposal of the City of St. George and St. George Airport Page 24

DOT Requirements

Financial Controls

As the sponsor, the City of St. George will be the responsible party for all fiscal matters and 

DOT reporting requirements. As a public entity the DOT can be assured that proper financial 

controls are in place to guarantee that this grant will be used in accordance with the agreement 

between the City and the DOT. The City of St. George understands that the grant is a 

reimbursable grant and the City will be responsible for program expenditures and will submit 

invoices and contracts to the DOT for approval and reimbursement.

Return on Investment

The City of St. George and St. George Airport have developed a cost effective and achievable 

strategy to recruit new air service that will fill the void in air service in the St. George-Los 

Angeles market. This proposal utilizes proven methods and techniques for forecasting and 

developing a successful marketing program. 

The City of St. George and St. George Airport is requesting $550,000 from the DOT and will 

contribute another $100,000 in cash. For this investment, the St. George Airport will again have 

air service to Los Angeles with bigger aircraft and competitive fares. It is estimated that 

SkyWest Airlines will achieve an operating profit of $782,600 in the second year of operation. 

The St. George Airport will get $80,000 in revenue from landing fees, fuel fees, passenger 

facility charges, and auto parking from the new flight. It is estimated that the community will 

attract over $6 million in visitor spending as a direct impact from the new air service.

Alternate Plan with Frontier Airlines

If, for some reason, SkyWest Airlines were to decide to not start air service in the St. George-Los 

Angeles market, then St. George will offer the revenue guarantee and marketing program to 

Frontier Airlines for air service to Denver. Data from the Sabre study indicated that Denver was 

the second most requested market after Los Angeles and Denver offers connecting service to 

most markets in the U.S. and to key international points. Frontier Airlines has expressed interest 

in serving the St. George-Denver market and has submitted a letter supporting the grant request 

of St. George (included at back of this proposal). 

Frontier has indicated that it could provide 12 roundtrip flights per week between St. George and 

Denver with 50 seat ERJ-148 regional jet aircraft. Initial analysis of this option indicates that a 

revenue guarantee of $500,000 will be sufficient to cover initial operating losses. The remaining 

$150,000 for marketing and advertising will provide for a strong program to develop passenger 

demand on this route.
Proposal of the City of St. George and St. George Airport Page 25

Exit Strategy

The sponsor has developed this proposal as second phase of a two phase program for new air 

service. The first phase was for a grant to pay for a market study and recruit air service. The 

community received a grant for this phase. The funds from the first grant will be expended by 

the end of December 2010. The second phase is for a grant to pay for a revenue guarantee and 

pay for marketing to support new air service. If awarded, this grant request will start in January, 

2011. The advertising and marketing will commence 90 days prior to the start of air service and 

continue for the first six months of air service. The revenue guarantee will be in place for the 

first 12 months. Based on the projections contained herein, Sky West Airlines should be 

profitable at the end of the first year and should experience a profitable second year. 

If Sky West Airlines does not meet the forecast number and the losses are greater than expected, 

then the community can either come up with additional funds on its own to supplement the 

revenue guarantee program or the airline may decide to absorb the losses or terminate service. 

Assurances

The City of St. George and St. George Airport (hereinafter referred to as “Sponsor”) hereby 

provides the U.S. Department of Transportation with the following assurances:

The Sponsor will comply with all of the applicable federal laws, regulations, 

executive orders, policies, guidelines, and requirements as they relate to the 

application, acceptance, and use of the federal funds for this project.

The Sponsor has the legal authority to apply for the Small Community Air Service 

Development Program grant, and to finance and carry out the proposed project; that a 

resolution, motion, or similar action has been duly adopted or passed as an official act 

of the applicant’s governing body authorizing the filing of the application, including 

all understandings and assurances contained therein, and directing and authorizing the 

person identified as the official representative of the applicant to act in connection 

with the application and to provide such additional information as may be required.

The Sponsor has access to the funds available for that portion of the project costs, 

which are not to be paid by the United States government. The Sponsor has sufficient 

funds to assure operating and maintenance of items funded under the grant 

agreement, which it will own or control.

The Sponsor shall keep all project accounts and records which fully disclose the 

amount and disposition by the recipient of the proceeds of the grant, the total cost of 

the project in relation to the grant, and the amount or nature of that portion of the cost 

of the project supplied by other sources, and such other financial records pertinent to 

the project. The accounts and records shall be kept in accordance with an accounting 

system that will facilitate an effective audit in accordance with the Single Audit Act 

of 1984.
Proposal of the City of St. George and St. George Airport Page 26

The Sponsor shall make available for the purpose of audit and examination, any 

books, documents, papers, and records of the recipient that are pertinent to the grant.

The Sponsor will execute the project in accordance with the approved program 

narrative contained in the project application or with the modifications similarly 

approved.

The Sponsor will furnish such periodic reports as required pertaining to the project 

and activities.
Proposal of the City of St. George and St. George Airport Page 27
Proposal of the City of St. George and St. George Airport Page 28
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