# Proposal Under the Small Community Air Service Development Program, Docket DOT

- OST

- 2010

- 0124

Charlottesville

- Albemarle Airport Authority

DUNS 09

- 741

- 7349

Congressional District Code: 05 & 07100 Bowen Loop, Suite 200 Charlottesville, VA 22911
Ph: 434

" 973

" 8342

Fax: 434

" 974

" 7476



### August 26, 2010

Department of Transportation

1200 New Jersey Avenue, SE!! Washington, DC 20590

RE:!! Small Community Air Service Development Program!! DOCKET DOT

" OST

" 2010

" 0124
Charlottesville

" Albemarle Airport Authority Grant Application

Dear Sir/Madam:

Included with this letter is Charlottesville

" Albemarle Airport’s (CHO) Small Community Air

Service Development Program grant application. The Charlottesville Albemarle Airport Authority has formed a public

" private partnership with eighteen other organizations for the

purpose of securing commercial air service deemed critical to the economic development of the region. Prior to filing this application, CHO conducted extensive research and analysis of the
local air service market and completed passenger and profitability projections for the air service proposed herein.!! The purpose of this grant is to:

! Provide new nonstop service to Chicago

" O’Hare International Airport which is

considered vital to the local business community and leisure travelers as well;

! Help mitigate leakage to surrounding regional airports; and

! Backfill recently lost hub service to Detroit.

The attached application meets the priorities established by the Secretary of Transportation:

! These improvements will provide benefits to a broad segment of the traveling public, including businesses, educational institutions, and other enterprises, whose access to
the national air transportation system is limited due to the recent loss of Detroit service;

! The community has established a public

" private partnership to facilitate air carrier

service to the public;

! The community will provide a portion of the cost of the total proposed air service

program; andProposal Under the Small Community Air Service Development Program

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# Table of Contents

1. The CHO Market

................................ ................................ ................................ ................. 1
1.1 Catchment Area

................................ ................................ ................................ .................. 1 1.2 Demographics

................................ ................................ ................................ ..................... 4



### 2. Air Service Issues at CHO

................................ ................................ ................................ . 7
2.1 Current O&D Passengers

................................ ................................ ................................ ... 7 2.2 Current Scheduled Service at CHO is Not Adequate and Dominated by Turboprop Equipment

................................ ................................ ................................ ................................ ......... 8 2.3 CHO Has High Fares Compared to Peer Markets

................................ ............................ 10 2.4 CHO Leaks Significant Amounts of Traffic to Other Airports

................................ ............. 12 2.5 CHO Air Service Development Efforts

................................ ................................ .............. 16



### 3. Project Overview and Action Plan

................................ ................................ ................. 17
3.1 A Well Developed Public

- private partnership

................................ ................................ .... 17 3.2 Business Case for CHO

- ORD

................................ ................................ ........................... 17 3.3 Support Plan for New Air Service

................................ ................................ ...................... 22 3.4 Project Sustainability After Grant Expiration

................................ ................................ ..... 25 3.5 Funding Plan

................................ ................................ ................................ ..................... 25 3.6 Pr ior SCASDP Grant Award

................................ ................................ .............................. 27



### 4. Project Implementation Plan

................................ ................................ .......................... 28
4.1 Schedule

................................ ................................ ................................ ........................... 28 4.2 Progress Reporting and Performance Measures

................................ .............................. 28Proposal Under the Small Community Air Service Development Program

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# 1. 

# The CHO Market

1.1 Catchment Area

The City of Charlottesville, the county seat of Albemarle County, is located 115 miles from Washington, DC, and is essentially halfway between Boston and Atlanta. Centrally located in Virginia, Charlottesville is about 70 miles from the state capitol of Richmond. The City sits on the Rivanna River sandwiched between the Southwest Mountains and Blue Ridge Mountains.

The greater Charlottesville region is connected, anchored and boasts an enhanced healthcare environment:

Connected

With convenient access to major highways, an intensely creative culture and close proximity to larger metropolitan areas, the region is an emerging center for new business development in communication, information technology, biotechnology, light manufacturing and distribution.

Anchored
Home of the University of Virginia, one of the nation’s premier academic and research institutions, the area is host to more than two dozen wineries and some of the nation’s most acclaimed vintners that add to the backdrop of la rgely agricultural settings and mountain views.

Enhanced Healthcare Environment
The availability of outstanding healthcare services not only represents a rapidly growing component of the regional economy, but is an amenity that enhances the environment fo r both businesses and residents.
The University of Virginia Health Sciences Center is a major teaching and research 650

- bed hospital that has a L evel One trauma center, offers m edi

- vac helicopter service, and ranks among the 100 best hospitals in the Unite d States.
Throughout the region there are five hospitals, including Martha Jefferson Hospital in Charlottesville, which is currently moving to an 84

- acre Outpatient Care Center.Proposal Under the Small Community Air Service Development Program

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### Charlottesville’s employment is supported by the following major industries :

! Retail

! Lodging

! Construction

! IT & professional services

! Healthcare

! Electronic equipment & instruments

! Publishing & broadcasting

! Finance & insurance



### Kiplinger.com recently named Charlottesville as the fourth best city in America for jobs. Cities on this list have strong job markets, but are expected to create new, well

- paying positions

. Specifically, the report stated that, “ The home of Thomas Jeffer son's university is an unexpecte d blend of Southern charm and liberal edge, with a strong business base .”

Two local companies that generate significant business travel include Sperry Marine and GE Fanuc Automation. With 800 employees locally and 1300 wor ldwide, Sperry Marine has large interest in local airport connectivity. An average of 400 engineers travel annually with a travel budget well over a million dollars. GE Fanuc Automation has its world headquarters in Charlottesville, and numerous other

op erations located in the Americas, Europe & Asia, hence airline connections and reliability dictate its choice in airports.

Another significant impact on employment and business travel in the region is the Defense Intelligence Agency’s (DIA) relocation of over 800 jobs to the Charlottesville area. The 170,000 square

- foot facility, a 2005 Base Realignment and Closure authorization, was completed in May of 2010. To date, over 25 defense contractors have moved within a 20 mile radius of CHO to better serve th e DIA. The facility will merge intelligence operations

-- approximately 800 people from DIA and 200 from the Army National Ground Intelligence Center. The Defense Department estimates this move will bring 2,500 additional long

term jobs to the Charlottes ville, VA region

.Proposal Under the Small Community Air Service Development Program

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### Other employers in the area include:

o American Press (Commercial printing)

o Crutchfield Corporation (Electronics retailer)

o CFA Institute (Global Investments)

o Dominion Virginia Power (Utility)

o Hyperion Telecommunications (Telecom)

o Inova (Solutions Creative Reporting Technology)

o Klöckner Pentaplast of America (Rigid PVC film and sheets)

o LexisNexis (Publish ing)

o Luck Stone Corporation (Crushed stone)

o Hyosung (Tire Cord)

o MicroAire Surgical Instruments (Surgical instruments)

o MPS (Publishing)

o National Card Control Company (Credit card services)

o National Optronics (Lens processing equipment) o Pharmaceutical Resea rch Associates (Pharmaceutical research)

o Plow & Hearth (Home and garden mail order retailer)

o RIGID Products (Industrial machinery)

o The Rochester Corporation (Marine cable manufacturing)

o SNL Financial (Research and publishing)

o Southern Health (Healthcare)

o S print (Telecommunications)

o State Farm Mutual (Insurance)

o Tovaris (Secure e

- mail solutions)

o Tri

- Dim Filter Corp. (Air filters)

o Upstate Biotechnologies (Biotechnology)

o Wal

- Mart (Food Distribution)

o Wintergreen Resorts (Resort)

o Worldstrides (U.S. Larg est Student Travel organization )



### The University of Virginia is a significant economic driver for the regional economy. UVA was recently ranked by U.S. News & World Report as #2 among the nation’s top public universities. The school is home to approximately 19,000 students and over 2,000 faculty and staff members. UVA boasts $300 million in sponsored research and a nationally renowned health system including one of the nation’s top 100 hospitals. A $3 billion capital development program includes a cancer hospital, children’s hospital and acute care center.Proposal Under the Small Community Air Service Development Program

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CHO 

## 1.2 Demographics

According to the Thomas Jefferson Partnership for Economic Development (TJPED), within a sixty minute drive of CHO there are:

! Population of 439,306

! $277 million in total travel expenditures

! $62 million in airline travel expenditures



### It is often useful to compare current figures and projected growth rates to other similar cities within the same geographic region that are serve d by commercial airports. Therefore

, Charlottesville will be compared to the following cities for all demographic and economic indicators: Lynchburg, Newport News, Norfolk, Richmond, Roanoke and Virginia Beach. These cities were chosen due to their similar geographic locations in Central/Southern Virginia. Most city comparisons are performed on a Metropolitan Statistical Area (MSA 1

1 An MSA has at least one urbanized area of 50,000 or more population, plus adjacent territory that has a high degree of social and

economic integration with the core as measured by commuting ties. 

### ) basis. For a more accurate comparison, we will use the cities of Newport News, Norfolk and Virginia Beach as opposed to the co mbined MSA for all three. The Charlottesville MSA includes the City of Charlottesville as well as Albemarle, Fluvanna, Greene and Nelson counties. For growth rates, Charlottesville will also be compared to the state of Virginia and the United States as a w hole. See the first f igure on the next page for a comparison of the current population for the aforementioned cities and a comparison of projected 2010

- 2015 population growth rates is shown in the next f igure.Proposal Under the Small Community Air Service Development Program

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2010 Total Population

Source: Woods & Poole, 2010

2010

- 2015 Population Growth Comparison

Source: Woods & Poole, 2010



### The Charlottesville MSA is projected to grow from its current size of 199,000 to nearly 211,000 by 2015. With a projected growth rate of 6% from 2010 to 2015, Charlottesville will grow faster than 4 of the 7 cities included in this comparison, slower than the growth rate for the Commonwealth of Virginia but slightly faster than the growth rate projected for t he United States as a whole. A comparison of total households is shown on the next page and is followed by a comparison of projected growth rates through 2015. 1,269

447

302 250 234 199 181

0 200 400 600 800 1,000 1,200 1,400

Richmond Virginia Beach Roanoke Lynchburg Norfolk Charlottesville Newport News 2010 Total Population (‘000 )

9%

7%

6%

5%

3%

1%

0% 8%

5%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 5

- Year Population Growth RateProposal Under the Small Community Air Service Development Program

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2010 Total Households

Source: Woods & Poole, 2010

2010

- 2015 Household Growth Comparison

So urce: Woods & Poole, 2010



### Total households in Charlottesville are projected to grow by 9% through 2015, 50% faster than the projected growth rate for population. This is greater than 4 of the 7 cities included in the comparison but, again, slightly slower than the growth rate for the Commonwealth of Virginia but faster than the growth rate projected for the United States as a whole. 511

171

130 102 90 82 73

0 100 200 300 400 500 600

Richmond Virginia Beach Roanoke Lynchburg Norfolk Charlottesville Newport News 2010 Total Households (‘000 )

11% 11%

9%

6%

5% 4%

3% 10%

6%

0% 2% 4% 6% 8% 10% 12% 5

- Year Households Growth RateProposal Under the Small Community Air Service Development Program

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# 2. 

# Air Service Issues at CHO

2.1 Current O&D Passengers

CHO generates 344,840 annual passengers according to the U.S. DOT O&D Survey (year ended December 31, 2009). This figure equates to 472.4 total passengers per day each way (PDEW). 2 

### Total passengers can be subdivided into 315,590 domestic passengers (432.3 PDEWs) and 29,250 international passengers (40.1 PDEWs). 92% of CHO’s passeng ers are domestic whereas 8% are traveling to international destinations.

Convenience of nonstop air service always plays a role in a traveler’s decision of which airport to use, so it should come as no surprise that three of CHO’s top ten O&D destinations are markets served nonstop from CHO. Currently, New York City 3 

### ranks as Charlottesville’s top air service market, averaging 28.4 PDEWs. Among the other top ten markets, three are in the West

– the Bay Area 4 

### , the LA Basin 5 

### , and Denver; two are in the South east regions

– Southeast Florida 6 

### and Tampa; and the remaining two are major business markets

– Chicago 7 

### and the Boston Area. 8 

### Of these ten markets, seven do not have nonstop service which indicates CHO’s reliance on service to connecting hubs. The figure below shows a ranking of the top ten O&D city markets by PDEWs.

Charlottesville’s Top Ten O&D City Markets (Calendar Year 2009)

2 Passengers per day each way, or PDEWs, is an industry acronym measuring average daily round

- trip O&D traffic levels. PDEWs

are calculated from total annual O&D passengers divided by the number of days in a year times two (i.e. Annual O&D/(365*2)).

3 New York City includes Newark (EWR), Kennedy (JFK) and LaGuardia (LGA) airpor ts.

4 Bay Area includes Oakland (OAK), San Francisco (SFO) and San Jose (SJC) airports.

5 LA Basin includes Burbank (BUR), Los Angeles (LAX), Long Beach (LGB), Ontario (ONT) and Orange County (SNA) airports.

6 Southeast Florida includes Ft. Lauderdale (FLL ), Miami (MIA) and West Palm Beach (PBI) airports.

7 Chicago includes O’Hare (ORD) and Midway (MDW) airports.

8 Boston Area includes Boston (BOS), Manchester (MHT) and Providence (PVD). Rank CHO To/From PDEW Average Fare

1 New York City 28.4 $208

2 Boston Area 25.5 $143

3 Atlanta 20.6 $177

4 Chicago 18.1 $142

5 Southeast Florida 17.8 $152

6 Bay Area 14.8 $222

7 LA Basin 13.0 $231

8 Denver 11.6 $191

9 Charlotte 11.6 $148

10 Tampa 11.1 $141Proposal Under the Small Community Air Service Development Program

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## 2.2 Current Scheduled Service at CHO is Not Adequate and Dominated by Turboprop Equipment

CHO currently has 19 daily nonstop flights to 5 destinations provided by Delta Connection, United Express and US Airways Express

. A sixth destination, Detroit (DTW), was served twice daily by Delta Connection until it was discontinued on August 1 , 2010. The airport now has 1 32 weekly scheduled commercial aircraft departures supplying 5, 658 seat dep artures, with an average of 42.9 seats per departure. Compared to last year’s schedule ( August 24

- 30

, 2009), departures are up 4.8% for a total increase of 6 weekly, or 0.9 daily, f lights. Seat departures are up 8.2 % for a total increase of 430 weekly or 61.4 daily,
seats. These statistics show that average aircraft size has also increased by 1. 4 seats, or 3.4 %, since last year.

Despite this modest growth in capacity, service at CHO is still dominated by turboprop equipment. 65% of departures and 59% of seat departures are still flown with turboprops. Comparatively, only 5 % of departures at nearby Richmond International Airport (RIC) are flown by turboprops and 2 % of seat departures. Similarly, 25 % of departures at Roanoke Airport (ROA) are flown by turboprops and 21% of seat departures

– a far better ratio of jet to turboprop service than what is available at CHO.Proposal Under the Small Community Air Service Development Program

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### The following table shows CHO’s service patterns for the week of August 23

- 29, 2010:

When Delta discontinued service to Detroit (DTW) on August 1, 2010, it left CHO passengers without a direct connection to the upper Midwest . Convenient , well

- timed connections were lost to some of CHO’s top markets including Chicago, the Bay Area, the LA Basin and Denver. All in all, single connecting options with acceptable schedules were lost in 27 markets, as shown to the right

. The Delta service supplied the C HO market with 13 weekly frequencies with 650 weekly seat departures. The market had been flown since April 2005 and increased from one to two daily frequencies in June 2010. Delta cited aircraft availability issues as a key reason for the service’s cess ation.Proposal Under the Small Community Air Service Development Program

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### As shown below, service at CHO over the past ten years has been relatively stable.

Due to the strength of the local market, CHO has retained nonstop service to most hubs except for the recent discontinuation of Detroit. Nonstop service to Cincinnati and Pittsburgh was discontinued as a result of greater strategic corporate decisions by these airlines to dismantle connecting hubs.



## 2.3 CHO Has High Fares Compared to Peer Markets

As shown in the f igure below , CHO has higher average domestic fares than competing airports in the region. The average domestic fare at CHO is 5% higher than the aver age domestic fare at Roanoke (ROA), 9% higher than at Lynchburg (LYH) and 27% higher than at Richmond (RIC).

Average Fare Comparison with Peer Airports

Source: U.S. DOT, Origin

- Destination Passenger Survey, via Data Base Products. Destination Carrier 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Atlanta (ATL) Delta Connection Charlotte (CLT) US Airways Express Cincinnati (CVG) Delta Connection Detroit (DTW) Delta Connection /

Northwest Airlink New York‐LaGuardia (LGA) US Airways Express Philadelphia (PHL) US Airways Express Pittsburgh (PIT) US Airways Express Washington‐Dulles (IAD) United Express Calendar YearProposal Under the Small Community Air Service Development Program

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### A fare comparison on an individual market level will reveal more than a comparison of the average fare for each airport. The f igure below shows a comparison of the fare at each airport in CHO’s top 20 markets and analyzes how CHO fares compare.

Fare Compa risons for Top CHO Markets

Source: U.S. DOT, Origin

- Destination Passenger Survey, via Data Base Products



### This chart helps explain why CHO loses so much traffic to RIC. For CHO’s top 20 markets, it has the lowest fare of these four airports in only thre e markets

– ORD, PHL and IAH. Interestingly, CHO has lower fares than ROA in all but five markets

– LGA, CLT, TPA, DFW and LAS. Most of the fare discrepancies with ROA are minor except for the case of LGA, whe re CHO’s fare is 65% higher

. LYH has lower fares in most markets and significantly lower fares to LGA and CLT, another issue worth discussing with US Airways. Not surprisingly, RIC has significantly lower fares than CHO. Many of the largest discrepancies occur in markets where RIC has LCC service

– AirTran to ATL and MCO, and JetBlue to FLL, JFK and MCO.

CHO Rank Market CHO LYH RIC ROA CHO v. LYH CHO v. RIC CHO v. ROA

1 LGA $216 $126 $89 $131 71% 143% 65%

2 ATL $177 $135 $112 $209 31% 58% -15%

3 BOS $132 $146 $106 $201 -10% 25% -34%

4 ORD $143 $154 $144 $191 -7% -1% -25%

5 SFO $220 $206 $181 $236 7% 22% -7%

6 DEN $191 $163 $154 $207 17% 24% -8%

7 CLT $148 $80 $145 $129 85% 2% 15%

8 LAX $224 $177 $167 $225 27% 34% 0%

9 TPA $141 $126 $112 $140 12% 26% 1%

10 DFW $187 $182 $197 $184 3% -5% 2%

11 MCO $141 $108 $90 $143 31% 57% -1%

12 PHL $109 $249 $184 $151 -56% -41% -28%

13 IAH $172 $209 $204 $175 -18% -16% -2%

14 MSY $157 $135 $127 $176 16% 24% -11%

15 SEA $223 $199 $177 $237 12% 26% -6%

16 LAS $203 $172 $155 $188 18% 31% 8%

17 PHX $191 $177 $149 $242 8% 28% -21%

18 MSP $195 $191 $195 $236 2% 0% -17%

19 MIA $152 $147 $135 $164 3% 13% -7%

20 FLL $152 $112 $114 $159 36% 33% -4%Proposal Under the Small Community Air Service Development Program

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## 2.4 CHO Leaks Significant Amounts of Traffic to Other Airports

The Charlottesville Service Area

The Charlottesville service area has been defined using relative drive times and distances from CHO a nd represents the area where CHO would be expected to be either the primary choice of airport or could be expected to draw the majority of passengers should it have appropriate service. To better represent the airports’ share and potential, the service are a is divided into two sections: primary and secondary.

The Primary Charlottesville service area is between 40 and 50 miles from CHO and within a 60

- to 90

- minute drive from the airport. It is the area within which CHO is the closest airport of comparable or larger size. The Secondary service area shares a similar eastern boundary reflecting the size and proximity of RIC and the dominance of the Washington, DC, area airports. To the west, however, the Secondary catchment extents up to 90 miles and three hou rs drive time, reflecting the more limited airport choices for this region and the strong potential for CHO to draw from the area

. The f igure below provides a map of the CHO region and the identified primary and secondary catchment areas.

CHO Service Area



## Charlottesville Service Area Profile

Close to 1.3 million passengers from the combined Primary and Secondary Charlottesville Service Area used CHO or other local airports for domestic and international travel in calendar year 2009. 93% of this traffic c onsisted of domestic passengers (1.2 million). South Florida, with over 78,000 passengers, was the top domestic destination followed by the Boston Area (74,000 passengers) and the San Francisco BayProposal Under the Small Community Air Service Development Program

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### Area (72,000 passengers). The figure below highlights the top domestic destinations for passengers originating from the combined Primary and Secondary Charlottesville Service Area. The top 15 domestic destinations account for 61% of all combined Primary and Secondary Charlottesville Service Area

passengers.

Combi ned Primary and Secondary Charlottesville Service Area


### Top Domestic Destinations (Calendar Year 2009)

Rank City Passengers % of Total

1 South Florida 9 78,288 7%

2 Boston Area 10 74,458 6%

3 San Francisco Bay Area 11 71,658 6%

4 New York 12 70,302 6%

5 Orlando 13 67,621 6%

6 Los Angeles Basin 14 60,646 5%

7 Atlanta 54,365 5%

8 Chicago 15 52,715 4%

9 Denver 41,764 3%

10 Tampa 16 31,998 3%

11 Minneapolis

- St. Paul 31,680 3%

12 Kansas City 27,319 2%

13 Las Vegas 24,145 2%

14 Houston 17 22,283 2%

15 Fort Myers 21,322 2%

Subtotal 730,562 61%

All Others 469,427 39%

Total 1,199,989 100%

Source: InterVISTAS market share analysis.



### International traffic from the combined Primary and Secondary Charlottesville Service Area using CHO or other local airports had a total of 95,000 passengers in calendar year 2009. Toronto, with over 10,000

9 Includes Fort Lauderdale/Hollywood International Airport (FLL), Miami International Airport (MIA) and West Palm Beach International Airport

(PBI).

10 Includes Boston Logan Int’l Airport (BOS), Manchester Airport (MHT) and Providence Airport (PVD).

11 Includes Oakland International Airport (OAK), San Francisco Internation al Airport (SFO) and San Jose International Airport (SJC).

12 Includes New York John F. Kennedy International Airport (JFK), New York LaGuardia Airport (LGA) and Newark Liberty Internatio nal Airport

(EWR).

13 Includes Orlando International Airport (MCO) and Orlando Sanford Airport (SFB).

14 Includes Burbank Airport (BUR), Long Beach Airport (LGB), Los Angeles International Airport (LAX), Ontario International Airp ort (ONT) and Santa Ana John Wayne Airport (SNA)

. 15 Includes Chicago Midway Airport (MDW) and Chicago O’Hare International Airport (ORD).

16 Includes Tampa Int’l Airport (TPA) and Tampa St. Petersburg

- Clearwater International Airport (PIE).

17 Includes Houston Hobby Airport (HOU) and Houston George Bush I ntercontinental Airport (IAH).Proposal Under the Small Community Air Service Development Program

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### passengers, was the top destination followed by London, U.K. (6,000 passengers) and San Juan, Puerto Rico (6,000 passengers). The f igure below highlights the top international destinations for the passengers originating from the combined Primary and Secondary Charlottesville Service Area. The top 15 international destinations account for 54% of all combined Primary and Secondary Charlottesville Service Are a passengers.

Combined Primary and Secondary Charlottesville Service Area


### Top International Destinations (Calendar Year 2009)

Rank City Passengers % of Total

1 Toronto, Canada 10,474 11%

2 London, United Kingdom 18 6,351 7%

3 San Juan, Puerto Rico 6,006 6%

4 Cancun, Mexico 3,547 4%

5 Amsterdam, Netherlands 2,844 3%

6 Frankfurt, Germany 2,821 3%

7 Paris, France 2,755 3%

8 Montreal, Canada 2,529 3%

9 Rome, Italy 2,191 2%

10 Beijing, China 2,108 2%

11 Montego Bay, Jamaica 2,051 2%

12 Vancouver, Canada 2,024 2%

13 Seoul, Korea 1,902 2%

14 St. Thomas, Virgin Islands 1,856 2%

15 Nassau, Bahamas 1,661 2%

Subtotal 51,119 54%

All Others 43,932 46%

Total 95,051 100%

Source: Adjusted MIDT.



## Charlottesville Service Area Passengers Using CHO

CHO is one of six primary commercial service airports that serve the Charlottesville Service Area. CHO is in direct competition with Washington Dulles International Airport (IAD), Washington Reagan National Airport (DCA), Richmond International Airport (RIC), Roanoke Regional Airport (ROA) and Lynchburg Regional Airport (LYH) 19

18 Includes London Gatwick Airport (LGW) and London Heathrow Airport (LHR). 

### . While CHO is the closest airport for passengers within the Primary Charlottesville Service Area, the lack of nonstop service choices and the abundance of service choices available from nearby airports results in more passengers using the competing airports than those using CHO. As shown

19 Shenandoah

- Staunton airport (SHD) lies within the primary service area but currently offers more limited service and draws barely 1% of the

catchmen t area traffic.Proposal Under the Small Community Air Service Development Program

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### in the f igure below , for the 746,000 domestic passengers, the preferred origin airports from the Primary Charlottesville Service Area were CHO with 35%, IAD with 23%, DCA with 21%, and RIC with 14%. The other airports serving the Primary Charlottesville Service Area captured 6% of the passengers. IAD, RIC and DCA each lie within a two hour 20 

### drive from the City of Charlottesville and, with their more extens ive service options, not to mention low cost carrier service, collectively captured nearly 60% of the primary catchment area traffic.

For the 454,400 domestic passengers from the Secondary Charlottesville Service Area, the preferred airports were LYH with 32%, ROA with 24% and IAD with 17%. CHO captured only 3% of the Secondary Charlottesville Service Area passengers.

Charlottesville Service Area Domestic Passengers by Airport

Source: Adjusted MIDT.



### The Charlottesville Service Area’s international travel market is less fragmented across the six airports. As shown in the figure on the next page , 71% of the 59,000 Primary Charlottesville Service Area international passengers used CHO and IAD. CHO and IAD accounted for 38% and 33% of the outbound internation al traffic, respectively.

For the 36,000 international passengers from the Secondary Charlottesville Service Area, the preferred airports were ROA with 48% and LYH with 28%. All together, the other airports serving the secondary service area comprised onl y 24% of the international traffic. CHO attracted only 3% of the Secondary Charlottesville Service Area’s international passengers.

20 Source: Google Maps. CHO 263,872

35% LYH 5,249 1 % ROA 41,836

6%
RIC 105,136

14%

DCA 159,467

21%

IAD 170,035

23% Primary Charlottesville Service Area Total Primary Charlottesville Domestic Passengers = 745,595

LYH 144,967

32% CHO 12,973

3% RIC 35,845

8%

DCA 74,132 16%

IAD 77,867 17%

ROA 108,610

24% Secondary Charlottesville Service Area Total Secondary Charlottesville Domestic Passengers = 454,394Proposal Under the Small Community Air Service Development Program

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Charlottesville Service Area International Passengers by Airport

Source: Adjusted MIDT.



## 2.5 CHO Air Service Development Effor ts

Due to high fares, significant traffic l eakage and poor service quality in terms of equipment types, CHO has been quite aggressive in pursuing and maintaining air service. The Airport has actively participated in the annual ACI

- NA JumpStart event for q uite some time and last year started to attend the annual Network USA conference as well. CHO also attended the Allegiant Air Airport Conference in Feb

. 2010 for the first time to continue air service conversations with Allegiant Air.

CHO keeps in regul ar contact with airlines via e

- mail and phone communications in addition to meetings at carrier headquarters. Over the past few years, meetings have been held at the headquarters of Allegiant

, Delta and Northwest to discuss air service opportunities at CH O. Besides in

- person meetings, the Airport maintains at a minimum quarterly communications with both incumbent and potential new entrant carriers.

The Airport regularly works with air service consultants to study its air service market and identify

oppor tunities for air service improvements. Recent projects have included:

! Strategic air service study and leakage analysis in 2010

! CHO

- ORD route forecast in 2009

! Air service risk assessment in 2008

! Market assessment and passenger analysis in 2007 CHO 22,376 38% LYH
65 0% ROA 3,835 7% DCA 5,359 9%

RIC 7,652 13%

IAD 19,554 33% Primary Charlottesville Service Area Total Primary Charlottesville International Passengers = 58,842

ROA 16,885 48% CHO 1,260 3% RIC 1,836 5% DCA 2,297 6%

IAD 3,729 10%

LYH 10,209 28% Secondary Charlottesville Service Area Total Secondary Charlottesville International Passengers = 36,210Proposal Under the Small Community Air Service Development Program

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# 3. 

# Project Overview and Action Plan

3.1 A Well Developed Public

- private partnership

The Charlottesville

- Albemarle Airport Authority (Authority) , owner of Charlottesville

- Albemarle Airport, has formed a public

- private partnership with eighteen other organizations for the purpose of pursuing this grant award and attracting new service to Chicago

. The Charlottesville Regional Chamber of Commerce will assist in the grant administration and oversee the marketing efforts on behalf of the community participants. A list of the organizations that have agreed to participate follows:

o Albemarle County

o Albemarle Magazine

o Charlottesville

- Albemarle Convention and

Visitors Bureau

o Charlottesville Newsplex (CBS19/ABC16/FOX27/MyCvilleTV/Weather Now) o Charlottesville Radio Group

o Char lottesville Regional Chamber of
Commerce

o City of Charlottesville

o C

- ville (magazine)

o Charlottesville Daily Progress (newspaper)

o FORWARD/Adelante (magazine)

o Northwestern Mutual (financial services)

o Okay Yellow (advertising agency)

o PRA Intern ational (pharma ceutical ) o SNL Financial (financial news)

o State Farm Insurance

o The Hook (newspaper)

o United Bank

o University of Virginia (UVA)



### The A uthority will execute all grant agreements, process associated reimbursement requests, manage the marketing program, monitor the project’s progress and oversee grant administration along with the Chamber

. 

## 3.2 Business Case for CHO

- ORD

The plan is to pursue new nonstop regional jet service from Charlottesville

- Albemarle Airport to Chicago

O’Hare Interna tional Airport. Chicago is one of the largest O&D destinations from CHO not to mention a global hub that provides connections throughout all parts of the world. Preliminary discussions have been held with both American Airlines and United Airlines regard ing this potential new service and the Airport’s plan to secure a grant award to help fund a $ 4 00,000 revenue guarantee and associated marketing and carrier start

- up costs

. A route forecast was performed in October 2009 to evaluate the feasibility of daily nonstop service between CHO and ORD. The results of this forecast are shown to the right, which produced a 76% load factor for two daily nonstop flights in the market. This result is indeed conservative as two factors were not taken into
account:Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 21



### Daily roundtrips 2 Seats per departure 50 Available seats (annual) 73,000 Onboard passengers 55,232

Load factor 76% Local passengers 19,484 Connecting passengers 35,748

Local‐connect ratio 35% CHO‐ORD Forecast Results ! CHO h as since lost nonstop service to DTW which would only improve the results of a route forecast for potential nonstop service to ORD since both hubs serve overlapping connecting markets.

! This forecast did not account for traffic currently traveling to Chicag o’s Midway Airport (MDW) from CHO or other regional airports that may elect to utilize nonstop service from CHO to ORD should it become an option.



### Thus, the 76% load factor estimated for new CHO

- ORD nonstop s ervice is indeed conservative. As a point of

c omparison, American Eagle served seventy markets from ORD with more than 100 total trips in the year

ended May 2010. This load factor is higher than the load factor achieved for 38 of those markets, putting potential CHO

- ORD service in the top half Americ an Eagle’s routes served from ORD. The average load factor for all American Eagle service at ORD was 72% for this time period, four percentage points lower than the load factor estimated for potential CHO

- ORD nonstop service.

Should American Eagle choose to start CHO

- ORD service, single connection options (with acceptable connecting times) would be created in 25 markets, 12 that were available via DTW before Delta discontinued the service and 13 net new markets.

Source: OAG, August, 2010.
Should United Express choose to start CHO

- ORD service, single connection options (with acceptable connecting times) would be created in 36 markets, 10 that were available via DTW before Delta discontinued the service and 26 net new markets.Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 22



### Source: OAG, August, 2010.



## 3.3 Support Plan for New Air Service

The support plan for new Chicago service covers two key areas : financial assistance/risk abatement and

new service awareness.

! Cost and risk abatement

a. Revenue  guarantee:

b. Although  the  forecast  shows  that  the route  would

become  self

‐ sufficient  in  the  long

‐ term,  there  is  the  possibility  that  some
financial losses would occur in the first year during the ramp

‐ up period.  It is
during this period that the community will be learning of this new air service
option a nd ridership may take six to twelve months to achieve a steady state
level.  Changing travelers’ behavior is not an overnight phenomenon but can
take months  to achieve  thus  the  proposed $ 4 00,000 .00 revenue  guarantee for the first year

. Fee waivers:

c. 

### To help mitigate the potential financial impact during the
service ramp

‐ up, the Authority will also offer a $20,000 .00 landing fee waiver

for this new service.

Start

‐ up cost assistance : The Authority will also reimburse an airline up to a maximum of $ 9,94 7.56 in start

‐ up costs for establishing an operation at CHO.Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 23

! New s ervice awareness : a comprehensive marketing plan has been developed, the details

of which follow:



### (March 2011

– April 2011) “ GO CHO to Chicago” Campaign Created by Local Creative Firm

! A strategic marketing plan will be created that will concentrate on raising awareness of
a new airline and the connectivity of the new destination as well as increasing top of

mind awareness throughout the first 12 months. Total investment: $10,600



### (March 2011

– May 2011) “Go CHO to Chicago” Radio Campaign to Introduce Chicago Service

! 106.1 The Corner

– Morning News Sponsor @ 8:40am, Monday

‐ Friday. 5 live billboards

each week with 5 commerc ials adjacent to feature each week. 100 commercials will air
on WCNR & WVAX, Monday

‐ Sunday 6 am

‐ 12pm

! Lite Rock Z95.1

– Morning Drive Commercials: 5 commercials each week
Monday

‐ Friday, 6a m

‐ 10a m. 100 commercials will air from Monday

‐ Sunday, 6a m

‐ 12 pm.  20 News/Sports billboards
mentioning CHO to Chicago campaign from Monday

‐ Friday 6am

‐ 7p m

! 97.5 3WV

– Concert Update Sponsor Monday

‐ Friday. 10 sponsor ID’s each week (@4:20p & 8:20p), 5 commercials per day, 15 additio nal spots mentioned throughout
the week identifying “Go CHO to Chicago” as the Concert Update sponsor. Gocho.com/Chicago Link on the Concert Update Banner, commercials on

www.3wv.com . 100 commercials will air from Monday

‐ Su nday, 6am

‐ 12 pm. 20 News/Sports billboards, Monday

‐ Friday 6a m

‐ 7p m

! WINA News Radio

– Morning Drive Commercials 5 commercials each week
Monday

‐ Friday, 6a m

‐ 10a m. 100 commercials will air Monday

‐ Sunday, 6a m

‐ 12 pm. 20 News/Sports Billboards mentioning CHO to Chi cago campaign from Monday

‐ Friday

6am

‐ 7p m

! Website Banner Link/Logo. CHO will have placement on all 5 station websites with a
banner ad that links to Gocho.com/CHICAGO Total Investment: $25,000Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 24


### (March 2011

– February 2012) “Go CHO to Chicago” Television Campaign to I ntroduce & Maintain Chicago Service

! Countdown to “Go CHO to Chicago”

‐ Pre

‐ Promotion Media Blitz

o Go Cho to Chicago Commercial Coverage: March 1 2011 to May 29 2011

o Duration: 13 weeks

o Spots Per Week: 24 spots per week:

o WCAV

‐ CBS19: 8 per wee k (104 total spots)

o WVAW

‐ ABC16: 8 per week (104 total spots)

o WAHU

‐ FOX27: 8 per week (104 total spots)

o Total Campaign Reach %: 82% of TV Households

o Total Campaign Reach #: 61,898 Households

o Total Campaign Frequency: 10.2 times per viewer



### Total Investment: $15,000

! “Go CHO to Chicago”

‐ Promotion Maintenance Schedule

o Go Cho to Chicago Commercial Coverage: June 1 2011 to February 26 2010

o Duration: 39 Weeks

o Spots Per Week: 16 spots per week

o WCAV

‐ CBS19 : 6 per week (234 total spots)

o WVAW

‐ ABC16 : 5 per week (195 total spots)

o WAHU

‐ FOX27 : 5 per week (195 total spots)

o Total Campaign Reach %: 98% of TV Households

o Total Campaign Reach #: 74,720 Households

o Total Campaign Frequency: 11.4 times per viewer



### Total Investment : $30,000

o 24 spots per week (to air between 5am

– 1 am) 8 per week (104 total spots) 8 per week (104 total spots) 8 per week (104 total spots)



### (March 2011

– February 2012) “Go CHO to Chicago” Print Campaign to Introduce & Maintain Chicago Service

! P hase 1: Introduction of Service

‐ r aise initial a wareness t hat there will be a convenient
global connection from CHO to Chicago coming soon.

! Phase 2: Maintenance of Service

‐ i ncrease top of mind awareness that continues the
use of CHO to Chicago service. Total Investment: $68,705Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 25



### (March 2011

– February 2012) “Go CHO to Chicago” Event Campaign to I ntroduce & Maintain Chicago Service

! Phase 1

– June 2011: Chicago Launch Party at CHO.  A c o

‐ operative event supported by

the Charlottesville Chamber of Commerce and the Charlottesville Area Convention and

Visitors Bur eau to create viral awareness and spread the word about the new service.

! Phase2

‐ September 2011: CHO to Chicago Thanksgiving Party on Charlottesville’s

Downtown Mall. A Co

‐ operative event supported by the Charlottesville Chamber of

Commerce and the Char lottesville Area Convention and Visitors Bureau to drive the use
of the Chicago Service during the busy Thanksgiving travel period. Total Investment: $20,000



### (March 2011

– February 2012) “Go CHO to Chicago” University of Virginia Event Campaign
to Introduce & Maintain Chicago Service

! CHO to Chicago University Athletics “T

‐ shirt and Time out” drive. Sponsorship of the

time out and half time t

‐ shirt cannon supported by  scoreboard messaging to spread the
word about the new service to Chicago. Campai gn will cover f ootball, m en’s b asketball

and w omen’s b asketball season s

. Total Investment: $30,000



## 3.4 Project S ustainability A fter G rant E xpiration

It is estimated that the new service will be self

- sustaining after the first six to twelve months of service

. If the service is not meeting airline internal profitability benchmarks once the marketing funds and revenue guarantee have been exhausted, the Airport will indeed extend the landing fee waivers and provide additional marketing support. The Authority wi ll also work with all participants in the public

- private partnership as well as potential new ones to generate additional cash

- based or in

- kind market support.



## 3.5 Funding Plan

The Charlottesville

- Albemarle Airport Authority and the participants in the public

- private partnership a re seeking $500,000 from the U.S. Department of Transportation to fund a revenue guarantee , marketing program and start

- cost assistance for new nonstop regional jet service to Chicago

- O’Hare International Airport. Both the airport and community will provide cash towards the revenue guarantee, marketing program and assistance with airline start

- up costs. The Airport will provide in

- kind contribution via landing fee waivers and additional in

- kind support will come from the community in the form of additional marketing assistance. The table on the following page provides the action plan budget broken down by element and sources of funding.Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 26



### The Airport and Community collectively are providing a 37% match, via cash and in

- kind contri butions, against the requested $500,000 funding from the DOT. The following table shows the list of participants in the public

- private partnership as well as respective contribution levels.Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 27


## 3.6 Prior SCASDP Grant Award

The project outlined in this grant ap plication is indeed different from the ultimate use of funds for the award in 2004. The project funded by that grant award has been completed per the amended terms agreed to between the Charlottesville

- Albemarle Airport Authority and the Department of Tra nsportation. The funds were ultimately used to provide marketing and promotional support for already established hub service that was not meeting the airline’s internal profitability standards. The goal for this grant application is different in that it seeks to provide a revenue guarantee, marketing and advertising support and carrier start

- up cost abatement for service to a hub that is not currently offered from CHO.Proposal Under the Small Community Air Service Development Program

Docket # OST

- 2010

- 0124 28


# 4. 

# Project Implementation Plan

4.1 S chedule

The proposed service would ideally begin in the second quarter of 2011, with June 5 being a target date for planning purposes. If the new service were to start on June 5, 2011, the marketing program will commence approximately three months prior and run continuously for fifteen months thr ough the first anniversary of the new service.

Action P lan S chedule



## 4.2 Progress Reporting and Performance Measures

CHO will submit monthly reports detailing the progress that has been achieved towards implementing the proposed grant project. As directed in order 2010

- 7

- 16, materials deemed relevant to the grant project will be submitted as well.

To benchmark and quantify the performance of new nonstop service to Chicago, the Airport will implement the following monitoring program:

o Monthly T

- 100 data will be analyzed as well as quarterly O&D data to evaluate the performance as it relates to total passengers, load factor, fare, yield, top connecting markets, local v. connect ratio and other pertinent performance related statistics as

deemed relevant and ben chmarked to similar markets in the region.

o Route profitability will be discussed with the airline’s route planning department on a regular basis, at least quarterly if not more often. Utilization of the revenue guarantee funding will depend upon the route achieving specific profitability benchmarks as agreed upon by the Airport and carrier. Item

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

Grant award

Airline discussions

Route announcement Marketing: Planning Marketing Campaign

New Service 2012 2011 2010

### To: Jason Burch From: M. Travis Wilburn Biz Dev/ Retail Sales Manager Re: Chicago route
Date: 8/24/10

Re: CHO to ORD

In support of Charlottesville Albemarle Airport Authority’s attempt to secure
service between CHO and ORD. C

- VILLE Weekly is wiling to dedicate five 1⁄4 page color ads valued at $465 each for a total value of $2325.00 in its regular weekly newspaper, C

- VILLE.

Sincerely,

M. Travis Wilburn Biz Development/ Retail Sales Manager C

- VILLE Weekly 308 E. Main St. Charlottesville, VA 22902
4 34.817.2749 x 30 434.242.0380 (c) 434.817.2758 (f)

### August 23, 2010

Barbara Hutchinson Executive Director Charlottesville

- Albemarle Airport 100 Bowen Loop, Suite 200 Charlottesville, VA 22911

Dear Barbara:

It is with great enthusiasm that I submit this letter in full support of the Charlottesvi lle Albemarle Airport Authority’s efforts to secure a Small Community Air Service Development Program grant from the U.S. Department of Transportation.

In recognition and appreciation of CHO’s importance to the economic vitality of the Greater Charlotte sville Region, we pledge $15,000 of in

- kind advertising support to be used as you see fit to market service from the Charlottesville

- Albemarle Airport to Chicago

- O’Hare. This advertising support can be used at your discretion in 2010

- 2011, on any of our t hree local network affiliates (WCAV CBS19, WVAW ABC16, of WAHU FOX27), and on our flagship local news website, newsplex.com.

We greatly value CHO a s an air service provider, but also as an engaged and upstanding community enterprise that makes this region a better place to live and work. If there is anything else we can do to support the grant application process please let me know.

Yours truly,

Brad Ramsey

### Proposed Advertising In

- Kind Donation The Hook Newsweekly August 24, 2010

To whom this may concern,

The Hook Newsweekly would like to show our support for the
Charlottesville

- Albemarle Airport’s proposed Chicago service with an
in

- kind donation of advertising in the amount of $4,700.

- 3 Full Page ads: $1,300 each = $3,900 t otal print advertising

- 2 months of web advertising (skyscraper on www.readthehook.com ) $100 week = $800 total web advertising

TOTA L: $4,700

We plan to donate this advertising if CHO receives the grant funding their Chicago service

Thanks,

Kate Sanders Senior Advertising Executive (434) 295

- 8700 x228 Kate@readthehook.com

100 2 n d 

### S t r e e t N W | C ha r l ot t e s vi l l e V A 22902 | 43 4

- 295

- 8700 | w w w

. r e a dt he hook. c omAugust 24, 2010

Jason Burch Marketing Director Albemarle

– Charlottesville Airport Charlottesville, Virginia

Dear Mr. Burch,

On behalf of our diverse business community, i t is a pleasure to express our total support to your efforts to provide travel ling services from CHO to Chicago.

Our audience, a diverse and upwardly mobile cross

- section of the Greater Charlottesville area will greatly benefit from the convenience offer ed by CHO, according to our flash survey conducted by our online Marketing Tea m.

Hispanic Professionals, entrepreneurs, and individuals have expressed the following opinion s regarding flying to Chicago from CHO vs. Richmond or Washington;

S aves gas money Saves time (from 3 to 5 hours from Richmond or Washington)
L ess stressf ul

– for children and seniors Will prom ote frequent visits to Chicago to visit relatives Will promote getting more visits from friends and family from Chicago during the
winter holidays since Virginia ha s a warmer climate

Forward/Adelante, Virginia’s 1 s t Bilingual Business Journal would like to show our gratitude for your efforts by donating a 1⁄4 page ad ($1000 value) to promote CHO’s trips to Chicago during one full year.

Best regards,


# Olga Morse

Olga Alcaide

- Morse Publisher Forward/Adelante www.ForwardVirginia.comJason,

I am excited to hear that CHO is adding a direct flight to Chicago. As a small business that provides a business

- to

- business service I support most efforts that make Charlottesville more attractive to businesses and this is certainly one of them. I understand how important this development is for the local business community. Additionally, I have many friends and family in Chicago, so I am very excited about the potential to see them more frequently and conveniently.

I would like to extend a $6 00 coupon toward our graphic design services. Typically, $600 is enough to cover most, if not all, of a full page print ad. I hope you can find a use for this coupon in your efforts to ensure the success of this Chicago flight.

Let me know if there is a nything else I can do to help.

Paul Dierkes Owner, Okay Yellow, LLC