# P R O P O S A L U N D E R T H E 

# S M A L L 

# C O M M U N I T Y


# A I R 

# S E R V

I C E 

# D E V E L O P M E N T 

# P R O G R A M

Docket #: DOT-OST-2010-0124



## Columbia Metropolitan Airport Columbia, South Carolina

Legal sponsor: RichlandLexington Airport District

DUNS: 0737071680000 Congressional District Code:

SC-02

Contact: Dan Mann, AAE
Executive Director

PO Box 280037 Columbia, SC 29228-0037 Phone: (803) 822-5019 Fax: (803) 822-5138 d.mann@columbiaairport.com

# T A B L E O F 

# C O N T

Summary Information

................................ Proposal Highlights

................................ Higher than Average Airfares

................................ Community Cost Contribution

................................ Public-Private Partnership

................................ Material Benefits

................................ Use of Funds in a Timely Fashion

................................ Air Service Environment

................................ Airport Catchment Area and Market Potential Strong and Diverse Economy

................................ Population and Business Growth

................................ Air Service – Existing/Historical
Existing Air Service

................................ Historical Air Service

................................ Past Air Service Development Efforts

Air Service Needs and Deficiencies
Major Origin/Destination Markets Not Served Adequat ely High Airfares ................................

................................ Strategic Plan – Air Service

................................ Project Goals ................................

................................ Proposed Air Service

................................ Airline Participation

................................ Market Analysis

................................ Alternate Plan ................................

................................ Strategic Plan – Implementation and Funding
Public-Private Partnership

................................ Incentive and Support Plan

................................ Strategic Plan Funding

................................ Project Continuation and Sustainability
Schedule and Monitoring

................................ Critical Milestones

................................ Monitoring Program

................................ Appendix A. Letters of Support
Appendix B. Related News Article



# T E N T S

................................ ............................. 1

................................ .................................. 2

................................ ........................................... 2

................................ ......................................... 2

................................ ................................................. 2

................................ ................................................... .......... 3

................................ ..................................... 3

................................ .......................... 4
Airport Catchment Area and Market Potential

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

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

................................ ..................................... 6
Existing/Historical ............................................... 7

................................ ................................................... ....... 7

................................ ................................................... ..... 7 Past Air Service Development Efforts

.................................................. .............. 9

Air Service Needs and Deficiencies ....................................... 10
Major Origin/Destination Markets Not Served Adequat ely .............................. 10

................................ ................................. 11

................................ .................... 12

................................ ................................. 12

................................ ................................................... ... 12

................................ ................................................... .... 13

................................ ................................................... .......... 13

................................ ............................... 15
Implementation and Funding .................... 16

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

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

................................ ................................................... 17 Project Continuation and Sustainability

.................................................. ........ 18

................................ ...................... 19

................................ ................................................... ...... 19

................................ ................................................... ... 20
Appendix A. Letters of Support ............................................ 21 Appendix B. Related News Article ........................................ 45PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Prepared byPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 1 

# S U M M A R

Y 

# I N F O R M A

T I O N

A. Applicant Information: (Check all that apply)

X Not a Consortium Interstate

Consortium Intrastate

Consortium Community now receives EAS subsidy Community (or Consortium member) previously received a Small Community Grant If previous recipient, date of grant: N/A

B. Public/Private Partnerships: (List organization names)

Public Private Columbia Metropolitan Airport Greater Columbia Chamber of Commerce (Navigating
from Good to Great Foundation)

C. Project Proposal: (Check all that apply)

X Marketing Regional Service Personnel Launch New Carrier Travel Bank First Service
Surface Transportation Secure Additional Carrier Revenue Guarantee New Route Start Up Cost Offset Low Fare Service Study X Subsidy
X Upgrade Aircraft Other (specify):

__________ Increase Frequency Service Restoration

D. Existing Landing Aids at Local Airport:

X Full ILS X Published Instrument Approach
X Localizer Outer/Middle Marker Other (specify): E. Project Cost: 1. Federal amount requ ested: $ 75 0,000
2. State cash financial contribution: $0 3. Local cash financial contribution... 3a. Airport cash funds: $ 18 0 ,000 3b. Non

- airport cash funds: $ 83 ,000 3c. Total local cash funds (3a.+3b.) $ 263 ,000 4. TOTAL CASH FUNDING (1.+2.+3c.) $ 1 ,013 ,000 5. Local funds contributed from already

existing programs or projects included in line 3c. amount: $0 6. Local funds contributed from new commitments or new resources included in line 3c. amount: $263,000 7. Airport In

- Kind contribution: (Monitoring/Marketing) $8,700 8. Other In

- Kind contribution: (Program administration/Marketing) $211,950
9. TOTAL IN

- KIND CONTRIBUTION (7.+8.): $220,650 10. TOTAL PROJECT COST (4.+9.): $ 1,233,650

F. Enplanements:

2000 600, 020 2005 732,625
2001 531, 619 2006 642,848
2002 503,790 2007 613,233
2003 509,082 2008 568,520
2004 634,105 2009 519,374

G. Is this application subject to review by
State under Executive Order 12372 process? c. Program is not covered by E.O.

12372.

H. Is the Applicant delinquent on any Federal debt? (if “yes”, provide explanation)

No

Yes X XPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 2 

# P R O P O S A L 

# H I G H L I G H T S

olumbia Metropolitan Airport has never applied for, nor received a Small Community Air Service Development Program grant. T his grant application for the Columbia Metropolitan Airport meets the criteri a of Docket DOT-OST-2010- 0124. Columbia Metropolitan Airport, the legal spo nsor, is requesting $750,000 in federal assistance to implement a $1,233,650 air se rvice initiative.

The project goals are:

1. Upgrade high-priority hub service to mitigate the i mpact of Southwest Airlines planned service at nearby compet ing airports Greenville/Spartanburg and Charleston

2. Increase seats and competition to reduce airfares

3. Reduce the need to drive to alternate airports to a ccess adequate air service and competitive fares

Improved Atlanta hub service is a top priority of t he community. The Strategic Plan, upgrading Delta Air Lines’ Atlanta service, will achieve the project goals.

H IGHER THAN A VERAGE A IRFARES

The Columbia Metropolitan Airport is currently over priced and underserved when compared to nearby competing airpo rts. Columbia Metropolitan Airport’s average fares are higher tha n those of other airports in the geographic area. Columbia is signi ficantly overpriced compared to other communities in the region ranging from 23 percent higher than Savannah to 64 percent higher than Rale igh/Durham in calendar year 2009.

C OMMUNITY C OST C ONTRIBUTION

To support this air service initiative, the Airport and community will fund 39 percent of the proposed $1,233,650 Strategic Plan. Non-airpor t revenue sources will fund eight percent ($83,000) of the $1,013,000 cash requiremen t. This is a strong commitment by the local community to be proactive and improve loc al service.

P UBLIC -P RIVATE P ARTNERSHIP

Local businesses and the public-private partnership have the ability to successfully implement this project. Columbia Metropolitan Airp ort has partnered with the Greater Columbia Chamber of Commerce (also known as Navigat ing from Good to Great Foundation) for purposes of air service development . This is not a new partnership. This public-private partnership has worked successfully together for many years partnering on 

# C This section addresses:

• Project goals

• Description of the Strategic Plan

• Highlights of the grant application

I m p r o v e d A t l a n t a h u b s e r v i c e i s a t o p p r i o r i t y o f t h e

c o m m u n i t y
. T h e S t r a t e g i c P l a n ,

u p g r a d i n g D e l t a A

i r L i n e s ’ A t l a n t a

s e r v i c e , w i l l a c h i e v e

t h e p r o j e c t g o a l s
.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 3 new air service initiatives. The Airport and the c ommunity are committed to the successful development of air serv ice at Columbia.

M ATERIAL B ENEFITS

Columbia’s metropolitan area is the largest in the state with a population of 785,000. Columbia Metropolitan Airpo rt’s catchment area has a population of almost 1,040,000. Columbi a’s strength is through its diverse base of businesses and institut ions all of which depend on the local airport. As the capital of Sou th Carolina, the economy has a strong government, military, academic and corporate base. The air service improvement plan proposed in this grant application will benefit a broad segment of the traveling public, including bu siness, education institutions and other enterprises.

U SE OF F UNDS IN A T IMELY F ASHION

The public-private partnership has a solid schedule and Strategic Plan to ensure timely use of the funds. An initial meeting was held with the targeted airline in anticipation of this grant application, and the Strategic Plan prop osal is under consideration. A s t h e c a p i t a l o f S o u t h C a r o l i n a , t h e

e c o n o m y h a s a

s t r o n g g o v e r n m e n t ,
m i l i t a r y , a c a d e m i c

a n d c o r p o r a t e b a s e
.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

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# E N V I R O N M E N T

olumbia, South Carolina, is the capital of the stat e and home to a wide range of institutions and businesses. The strength of Colum bia and by extension the Columbia Metropolitan Airport is the diversity of t he economy. The economy has a strong government, military, academic and corporate base. This base is dependent on air service and has a strong need for travel.

A IRPORT C ATCHMENT A REA AND M ARKET

P OTENTIAL

The Columbia Metropolitan Airport, as shown in
Exhibit 3.1 , encompasses the majority of the state of South Carolina as the metropolitan area is the largest in the state with a population of 785,000. The area displayed in Exhibit 3.1 is the area that the Airport should ideally serve and has a population of almost 1,040,000. An estimated 60 percent of catchment area passengers use the local airport. For the 12-months ended July 31, 2010, the Airport served approximately 925,000 passengers. With an estimated 60 percent passenger retention rate, roughly 617,000 passengers use other airports.

Given the fare environment for Columbia, diverting passengers were likely enticed by lower fares elsewhere. The entry and expansion of Southwest Airlines into neighboring airports is an event that will likely exacerbate this trend. Diversion to competing airports represents a significant economic loss for the Columbia metropolitan area.

S TRONG AND D IVERSE E CONOMY

Columbia’s strength is through its diverse base of businesses and institutions all of which depend on the local airport. The following is an o verview of the different sectors of the local economy including educational institutions.

Military

Columbia is home to the US Army’s largest basic com bat training base, Fort Jackson. Fort Jackson trains 50 percent of all soldiers and 80 pe rcent of the women entering the Army each year. This requires training as many as 45,00 0 basic and advanced soldiers annually. Fort Jackson encompasses 52,000 acres of land and h as over 1,000 buildings. In addition, 

# C This section addresses: Description of the Columbia community in relation to air
service to demonstrate the benefit of the Strategic Plan to a broad segment of the traveling public.

EXHIBIT 3.1 COLUMBIA METROPOLITAN AIRPORT CATCHMENT AREA

T h e C o l u m b i a

m e t r o p o l i t a n a r e a i s

t h e l a r g e s t i n t h e

s t a t e w i t h a p o p u l a t i o n o f 7 8 5 , 0 0 0

. T h e

e x p a n d e d a i r

p o r t

c a t c h m e n t a r e a h a s a p o p u l a t i o n o f a l m o s t 1 , 0 4 0 , 0 0 0

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 5 Fort Jackson has added new schools such as: the US Army Chaplain Center and School, the Defense Academy for Credibil ity Assessment and Drill Sergeant School.

Fort Jackson naturally creates a community around i t within Columbia. On top of the approximately 45,000 soldiers trained annually, an additional 14,000 soldiers attend courses at the sc hools and 3,600 active duty soldiers are based at Fort Jackson alon g with their 10,000 family members. Fort Jackson employs an additional 4,400 civilians and provides services for more than 115,000 retiree s and their family
members.

The economic impact on Columbia’s economy is substa ntial. Fort Jackson’s direct impact through its expenditures exceeds $717 million. The indirect impact is far greater than that
as hundreds of thousands of individuals and their f amilies cycle through Fort Jackson each year and use hotels, restaurants and other services . Fort Jackson will continue to grow in the future, has an extraordinarily high demand for air service and is dependent on Columbia Metropolitan Airport.

Government

State capitals inherently have a great need for air travel with links between Washington DC, other state capitals and other individuals visiting Colum bia to access the state’s political center. The state’s departments and institutions when totaled are the largest employers in Columbia. As shown in Table

3.1 , the state of South Carolina employs almost 14,500 people within Columbia. The employment estimate only includes state agencies that employ over 1,000 people. State government will always produce high demand for air travel and is a permanent, stable fixture of the local economy.

Local Businesses

Given the presence of state government and a large military instillation, it is no surprise that priva te
business thrives in Columbia. The Columbia metropolitan area represents all major industries from banking and technology to education, healthcare and manufacturing. Table 3.1 shows the top employers in central South Carolina. These employers have a national and international presence and require a strong transportation system

. TABLE 3.1 LARGEST REGIONAL EMPLOYERS
EMPLOYER SECTOR EMPLOYEES State of South Carolina* State 14,434 Palmetto Health Alliance Health Care 9,300 Blue Cross & Blue Shield of S.C. Insurance 6,900 University of South Carolina Education 4,755 Wal-Mart Retail 4,500 United Parcel Service Distribution 3,788 Lexington Medical Center Health Care 4,000 Department of Mental Health State 4,917

AT&T Utility 2,852 Department of Corrections State 3,160 Gold Kist Inc Manufacturing 2,210 Husqvarna Manufacturing 2,300 Department of Health and Environmental Control State 2,121

Scana & SCE&G Utility 2,210 Humana/TriCare Insurance 2,100 Department of Transportation State 1,966 Providence Hospital Health Care 1,790 Michelin Tire Corp. Manufacturing 1,650 Toumey Healthcare System Health Care 1,600

Verizon Telecommunications 1,550 Wachovia Bank Banking 1,475 Dorn VA Medical Center Health Care 1,457 Kraft Foods Global Inc Manufacturing 1,375 Westinghouse Electric Manufacturing 1,200 Budget and Control Board State 1,142 Department of Juvenile Justice State 1,128 CSC Corporation Insurance 1,100 Colonial Life & Accident Insurance Insurance 1,032
Bose Corporation Te chnology/ Manufacturing 870

Bank of America Banking 750

Source: Central SC Alliance * Inclusive of all state agencies that employ over 1,000PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 6 Education

In addition to a strong business climate and govern ment and military presence, higher education is also well represented in the Columbia area. Columbia is home to the University of South C arolina, Benedict and Allen Colleges, Columbia College, Columbia Inte rnational University, Midlands Technical College and Newberry College. Each college offers educational opportunities ranging fr om a two-year vocational degree to advanced degrees. The Universi ty of South Carolina, in particular, enrolls almost 28,000 stud ents annually and employs almost 4,800 staff in central South Carolin a.

Tourism

Table 3.2 shows that the Columbia Metropolitan Convention and Visitors Bureau has experienced a significant economic impact as a result of an underserved and overpriced market. More than $1.5 million in lost business can be directly attributed to inadequate local air service. Absent a strong air service retention and improvement program such as the Strategic Plan proposed herein, losses associated with inadequate air service can only be expected to increase.

P OPULATION AND B USINESS G ROWTH

A fundamentally sound economy with strong ties to government, military, academic and private institutions provides the stability needed for continued growth. Over the lastdecade, the population of the ColumbiaNewberry metro area has grown by 15 percent and is poised to continue to do so. In 2010 alone, over $133 million has been invested into future growth industries such as hydrogen fuel cells, the IT sector and distribution ( Table 3.3 ). The demand for air
service will increase and the Columbia Metropolitan Airport must be capable of meeting the increased demand. TABLE 3.2 LOST BUSINESS DUE TO AIR SERVICE ACCESS/H IGH FARES

MEETING NAME SHOW ATTENDEES LEAD EEI

CALCULATION REQUESTED

ROOMS Leadership Workshop 175 $73,500 280 Environment Committee 25 $10,500 40 POD Committee 50 $15,750 60 Safety Committee 25 $10,500 40 USA Rugby 2008 Men's Div I, II &

III Playoffs 2,000 $218,750 700
USA Rugby South Club 7's Tournament 400 $62,500 200

2009 ISHIB Annual Conference 400 $131,250 500 15th Annual Software Users Conference 250 $116,813 445 The National Symposium on Student Retention 300 $149,363 569
National Sales Meeting 100 $78,750 300 2011 Annual Meeting 900 $440,475 1,678 2012 National Alliance of Preservation Commissions 300 $237,563 905

Total 4,925 $1,545,713 5,717 Source: Columbia Metropolitan Convention & Visitors Bureau

TABLE 3.3 2010 COLUMBIA INVESTMENT

COMPANY INVESTMENT ($000s) TYPE PRODUCT SERVICE Akebono Brake Corp. 35,600 Expansion Aluminum Brake calipers International Paper 25,000 Expansion Fine Paper Undisclosed 23,000 New Beef Products Republic National Distributing Co. 11,800 Expansion Wine/Liquor Distribution TB Kawashima USA 9,000 Expansion Automotive Textiles Kaydon Corporation 8,900 Expansion Custom Bearings & Assemblies FPL Food LLC 8,900 New Beef Products Trulite 5,000 Expansion Hydrogen Fuel Cells Palmetto State Armory LLC 3,000 Expansion Distribution of Ammo & Gun Parts Immedion 2,000 New Data Center DentaQuest 750 New Call Center Quality Software Services 480 New IT Services and Systems Integration Total 133,430
Source: Central SC AlliancePROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 7 

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# – E X I S T I N G 

# / H I S T O R I C A L

his section provides an overview of existing air se rvice. Carriers providing service, service frequency, nonstop destinations offered, fa res and equipment types are included in the discussion. A summary of historica l air service is also included with destinations, traffic levels, service providers and average airfares. A description of air service development efforts concludes the section.

E XISTING A IR S ERVICE

Columbia Metropolitan Airport is served by five airlines to 10 nonstop destinations. American Airlines, Continental Airlines, Delta Air Lines, United Airlines and US Airways serve the market. US Airways is the only airline using turboprop aircraft at Columbia Metropolitan Airport. There are an average of 269 weekly flights and an average weekly capacity of 14,228 seats ( Table 4.1 ).

H ISTORICAL A IR S ERVICE

Columbia Metropolitan Airport has
suffered from a decline in air service over the last five years. This subsection summarizes Columbia Metropolitan Airport’s air service history including: destinations, traffic levels, service providers and airfares. Extenuating factors that have
affected air service over time are also
reviewed.

Destinations, Service Providers and Traffic Levels

From 2005 to 2009, Columbia Metropolitan Airport’s air service declined significantly. Total departures over the five-year period declined 24 pe rcent. Columbia Metropolitan Airport
lost air service to several hub/destination markets including:

• Allegiant Air to Ft. Lauderdale (July 2009), Orland o (September 2009) and Tampa (February 2007)

• Continental Airlines to Newark (June 2009) 

# T

TABLE 4.1 EXISTING AIR SERVICE NONSTOP DESTINATION MARKETING CARRIER AIRCRAFT WEEKLY DEPARTURES WEEKLY

SEATS

Atlanta, GA Delta CRJ-200 (Jet) 70 3,500 CRJ-700 (Jet) 1 70 CRJ-900 (Jet) 3 228 MD-88 (Jet) 3 426 737-800 (Jet) 4 604

Charlotte, NC US Airways CRJ-200 (Jet) 27 1,350 ERJ-145 (Jet) 14 700 Dash 8

- 300 (Turboprop) 6 300

Chicago, IL (ORD) United CRJ-200 (Jet) 13 650 ERJ-145 (Jet) 8 400 Dallas/Ft. Worth, TX American ERJ-145 (Jet) 21 1,050

Detroit, MI Delta CRJ-200 (Jet) 11 550 ERJ-145 (Jet) 3 150 Houston, TX (IAH) Continental ERJ-145 (Jet) 14 700 New York, NY (LGA) Delta CRJ-200 (Jet) 6 300 Philadelphia, PA US Airways CRJ-200 (Jet) 19 950 Washington, DC (DCA) US Airways CRJ-200 (Jet) 7 350 ERJ-145 (Jet) 12 600 Washington, DC (IAD) United CRJ-200 (Jet) 25 1,250 ERJ-145 (Jet) 2 100 Total 269 14,228
Source: apgDat, August 2010 This section addresses:

• Description of existing

air service

• Synopsis of historical air

service

• Description of air service development efforts

F r o m 2 0 0 5 t o 2 0 0 9 , C o l u m b i a M e t r o p o l i t a n A i r p o r t ’ s a i r s e r

v i c e d e c l i n e d s i g n i f

i c a n t l y

w i t h t o t a l d e p a r t u r e s

o v e r t h e f i v e - y e a r p e r i o d d e c r e a s i n g 2 4
p e r c e n t

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 8 • Delta Air Lines to Dallas/Ft. Worth (January 2005), Memphis (October 2009), Orlando (April 2008) and Tampa (Nov ember 2005)

• Independence Air to Orlando (April 2005), Tampa (Ap ril 2005) and Washington Dulles (December 2005)

• Spirit Airlines to Ft. Lauderdale (February 2009)

In 2010, additional service losses occurred includi ng Delta’s Cincinnati service. Some limited service gains offset the los ses with Delta increasing departures at Atlanta and American addin g Dallas/Ft. Worth service in November 2005. The impact of the depart ure gains were partially offset by decreases in aircraft size, par ticularly to Atlanta.

While departures declined since 2005, enplanements also declined. Since 2005, enplanements have decreased 29 percent. The five-y ear high in enplanements occurred in 2005 when departures also peaked ( Table 4.2 ).

TABLE 4.2 HISTORICAL DESTINATIONS AND SERVICE PROVI DERS

DESTINATION AIRLINE DEPARTURES - CALENDAR YEAR % CHANGE 2005-09 2005 2006 2007 2008 2009 Atlanta, GA Delta 3,008 2,681 2,458 2,593 3,419 14 Charlotte, NC US Airways 2,609 2,568 2,538 2,779 2,492 (4)
Chicago, IL (ORD) American 0 94 0 0 0 0 United 1,094 1,451 1,512 1,433 1,180 8 Cincinnati, OH Delta 2,323 1,184 1,225 1,070 750 (68)

Dallas, TX (DFW) American 184 1,072 1,065 1,130 1,071 482 Delta 29 0 0 0 0 (100) Detroit, MI Delta 974 712 690 691 499 (49)

Ft. Lauderdale, FL Allegiant 0 0 0 0 24 100 Spirit 0 0 0 157 28 100 Houston, TX (IAH) Continental 747 907 925 908 876 17 Memphis, TN Delta 166 680 680 683 376 127 New York, NY (LGA) Delta 990 591 565 579 346 (65) Newark, NJ Continental 694 809 641 621 275 (60)

Orlando, FL (MCO) Delta 690 356 343 116 0 (100) Independence 152 0 0 0 0 (100) Orlando, FL (SFB) Allegiant 0 0 0 0 85 100 Philadelphia, PA US Airways 987 1,077 999 947 900 (9) Tampa, FL (PIE) Allegiant 0 8 16 0 0 0
Tampa, FL (TPA) Delta 152 0 0 0 0 (100) Independence 430 0 0 0 0 (100) Washington, DC (DCA) Delta 865 886 931 1,032 952 10
Washington, DC (IAD) Independence 1,999 0 0 0 0 (100) United 1,420 1,475 1,469 1,462 1,510 6 Total departures 20,094 17,077 16,593 16,742 15,281 (24) Enplanements 732,625 642,848 613,233 568,520 519,374 (29)
Source: apgDat; Columbia Metropolitan Airport recor dsPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 9 Airfares

Columbia Metropolitan Airport has a significant far e discrepancy with other South Carolina airports, the Southeast region and the national average as shown in Table 4.3 . In 2009, Columbia Metropolitan Airport’s one-way avera ge fare was $50 higher than Greenville/Spartanburg, $48 hig her than Charleston, $70 higher than the Southeast region an d $64 higher than the US average. The average fare of $2 08 in a large metropolitan area is too high for the local e conomy.

Extenuating Factors that have Affected Air Service

Columbia Metropolitan Airport has largely been free of extenuating factors that have affected air service. Greenville/Spartanburg Inter national Airport and Charleston International Airport are approximately 110 miles a way. Air service at each of the three airports is very similar. The only factor affectin g Columbia Metropolitan Airport is that their geographic location tends to limit the airport catc hment area to a maximum radius of 50 to 60 miles. This has proven to have little impact on Columbia’s air service since this air service generally parallels the air service at the other tw o airports.

The recent announcement that Southwest Airlines wil l introduce service at Charleston and Greenville/Spartanburg reportedly with five roundtr ips in each market has introduced a new extenuating factor that will negatively affect Colu mbia’s air service. This new low-fare service, the first in the state of South Carolina, normally draws passengers from as much as 100 miles away. Absent defensive measures, Southwe st’s service at the two airports can be expected to poach Columbia Metropolitan Airport cat chment area passengers away from the local airport. A proactive response is require d to avoid a possible deterioration in quality and quantity of service at Columbia Metropolitan Ai rport which serves the state’s capital.

P AST A IR S ERVICE D EVELOPMENT E FFORTS

The Columbia Metropolitan Airport and its community supporters have been very proactive over the last f ive years to maintain and improve air service. Table 4.4 highlights the extensive ongoing air service development efforts. Columbia Metropolitan Airport has been very active with resp ect to a broad range of airline meetings including airline c onferences such as Network USA and ACI-NA JumpStart and meetin gs with both low-cost and legacy airline meetings at their headquarters. One recent example of Columbia’s ongoing efforts is the very successful June 2010 community meeting where a larg e contingent (approximately 175 people) of business a nd political
leaders attended the session held to address the So uthwest Airlines’ impact to Columbia and to develop an air service retention strategy. This grant application is one more example of a community fully engaged in its air service dev elopment. TABLE 4.3 AVERAGE ONE-WAY FARE PAID
AVERAGE FARE
2005 2006 2007 2008 2009 Columbia $161 $208 $205 $228 $208 Greenville/Spartanburg $160 $194 $186 $194 $158 Charleston $155 $197 $172 $175 $160 Southeast Region $132 $147 $146 $153 $138
US $137 $149 $149 $160 $144
Source: Data Base Products, Inc.

TABLE 4.4 PAST AIR SERVICE DEVELOPMENT EFFORTS
YEAR INITIATIVE

2005 ACI-NA JumpStart (AA, B6, CO, UA, US) Delta Air Lines Meeting (headquarters)

2006 ACI-NA JumpStart (AA, G4, NW) Frontier Airlines Meeting (Headquarters)

2007 ACI-NA JumpStart (AX, B6, NW) American Airlines Meeting (Headquarters) Delta Air Lines Meeting (Headquarters) Gulfstream Airlines Meeting (Headquarters) Spirit Airlines Meeting (Headquarters)

2008 ACI-NA JumpStart (DL, G7, NW, PGX) Delta Air Lines Meeting (Headquarters) Southwest Airlines Meeting (Headquarters)

2009 ACI-NA JumpStart (9E, PGX, UA) Allegiant Air Meeting (Headquarters) Delta Air Lines Meeting (Headquarters) JetBlue Airways Meeting (Headquarters) Southwest Airlines Meeting (at CAE)

2010 ACI-NA JumpStart (B6, F9, FL) Air Service Community Meeting Network USA (AA, DL, FL, UA, US, WN)

A b s e n t d e f

e n s i v e

m e a s u r e s , S o u t h w e s t ’ s s e r

v i c e

a t C h a r l e s t o n a n d G r e e n v i l l e / S p a r t a n b u r g c a n b e

e x p e c t e d t o p o a c h C o l u m b i a M e t r o p o l i t a n A

i r p o r t

c a t c h m e n t a r e a p a s s e n g e r s a w a y f r o m t h e l o c a l

a i r p o r t

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

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# D E F I C I E N C I E S

he Air Service Needs and Deficiencies section identifies the major origin/destination markets that are not served adequately and fare lev els. Columbia Metropolitan Airport’s air service has in the past generally met its catchment area’s needs. However, the entry of Southwest Airlines’ low-fare service at Charleston International Airport and Greenville/Spartanburg International Ai rport will accentuate previous modest service shortcomings and create others.

M AJOR O RIGIN /D ESTINATION M ARKETS N OT S ERVED

A DEQUATELY

With nonstop service to 10 markets including eight hubs and nonstop service in eight of the catchment area’s 11 largest markets, the array of nonstop destinations has been adequate and similar to service at its two primary competing airports. Even with the amount o f service in the market a 2008 Catchment and Leakage Analysis comple ted by OAG Aviation Solutions determined that Columbia Metropo litan Airport retained only 60 percent of passengers within a 90- minute drive catchment area. It is expected that Southwest’s en try into the Charleston and Greenville/Spartanburg, South Carolina markets will reduce Columbia’s retention by increasing passenger diversion and likely cause ser vice reductions in the Columbia market.

Historical Impact of Southwest Airlines

Absent an aggressive defensive strategy, Southwest market entry has resulted in diversion of traffic from adjacent airports. When Southwest ent ered the Buffalo market in 2000 with four nonstop destinations and 10 departures per day , passengers at Buffalo Niagara International Airport increased 25 percent in 2001 compared to 1999 while the average airfare declined 21 percent. However, at the adjac ent airports, Greater Rochester International Airport’s passengers declined seven p ercent without experiencing the same
level of fare decline as Buffalo. At Erie Internat ional Airport, passengers declined 24 percent with virtually no impact on airfares. From July 20 00 to July 2001, Erie’s departures declined 17 percent and seats declined 38 percent. Rocheste r is located approximately 70 miles from Buffalo Niagara International Airport, and Erie is located approximately 100 miles. With
distances similar to the distance between Columbia and Charleston and Greenville/Spartanburg, negative impacts on Columbi a Metropolitan Airport’s passengers and service levels are anticipated.

Similarly, Southwest’s entry into the Norfolk marke t to four nonstop destinations and 12 daily departures in 2001 resulted in 2002 average f ares declining 23 percent and passengers increasing 16 percent. At the adjacent Richmond In ternational Airport about 100 miles 

# T This section addresses: Description of Columbia’s air
service needs and
deficiencies

I t i s e x p e c t e d t h a t S o u t h w e s t ’ s e n t r

y i n t o t h e C h a r

l e s t o n

a n d G r e e n v i l l e / S p a r t a n b u r g m a r k e t s

w i l l r e d u c e C o l u m b i a ’ s r e t e n t i o n b y i n c r e a s i n g p a s s e n g e r d i v e r s i o n

a n d l i k e l y c a u s e

s e r v i c e r e d u c t i o n s i n

t h e C o l u m b i a

m a r k e t

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 11 from Norfolk, Richmond’s passengers declined 13 per cent with a corresponding decrease in departures and seats of 1 4 percent.

Based on these examples and many others where South west has
entered the market at an adjacent airport

, Columbia Metropolitan Airport anticipates a negative impact on service le vels and

passengers

. This air service initiative will assist in counte ring the Southwest impact.

Additional Capacity Will Be Needed

In response to Southwest’s entry into the Charlesto n and Greenville/Spartanburg markets, Columbia’s airfares will likely be adjusted downwar d somewhat from their current high level to remain competitive and protect their market posi tion in the catchment area which will create passenger demand. The need for capacity will increase, particularly if existing carriers reduce capacity in reaction to Southwest’s entry. Load factors in the Atlanta, Charlotte and Dallas markets of 77, 72 and 74 percent, respective ly, for the year ended April 30, 2010, are high enough that they are likely unable to absorb t he additional market demand. In July 2010, the Atlanta market capacity represented appro ximately a third of the total Columbia Metropolitan Airport seat capacity with 12 roundtri ps in the market. The market’s 77 percent load factor indicates little or no seat ava ilability on many or most peak flights.

Since the Atlanta hub is the dominant routing for C olumbia air travelers, it is critical that sufficient capacity be available or traffic will di vert to the new low-fare Southwest service at Charleston and Greenville/Spartanburg. Columbia Me tropolitan Airport needs to be proactive in protecting airport revenue by minimizi ng diversion to the new Southwest service and providing the convenient air service de served and needed by its catchment area. The key factor in accomplishing this defensive stra tegy is creating and maintaining a reasonable level of seat availability via the high demand Atlanta hub gateway. With 12 roundtrips in the market, 11 regional jets and one mainline jet, capacity increases should be achieved by substituting larger aircraft rather tha n frequency additions.

H IGH A IRFARES

While Southwest’s entrance into Charleston and Greenville/Spartanburg will likely impact Columbia’s average airfares, currently Columbia’s average fares are markedly higher than those of other airports in the geographic area. Table 5.1 compares Columbia’s average airfares with other airports in the area. The airfares do not include Allegiant Air’s service impact which may dramatical ly lower airfares in some markets causing a larger far e disparity. It is clear that Columbia is significan tly overpriced compared to other communities in the region ranging from 23 percent higher than Savannah to 64 percent higher than Raleigh/Durham in calendar year 2009. TABLE 5.1 COMPARISON OF AVERAGE ONE

- WAY FARE PAID

COMPARISON
AIRPORT AVERAGE FARE CAE %
HIGHER 2005 2006 2007 2008 2009 Columbia, SC $161 $202 $205 $228 $208 Asheville, NC $162 $195 $194 $195 $165 26% Chattanooga, TN $177 $204 $177 $179 $146 42% Charleston, SC $155 $197 $172 $175 $160 29%
Charlotte

- Douglas, NC $164 $165 $163 $178 $152 37% Greensboro, NC $146 $176 $162 $167 $150 39%
Greenville/ Spartanburg, SC $160 $194 $186 $194 $158 31%

Wilmingt on, NC $144 $181 $167 $171 $147 41% Raleigh/Durham, NC $122 $142 $137 $143 $127 64% Savannah, GA $135 $169 $162 $171 $169 23% Knoxville, TN $157 $191 $182 $199 $164 27% Southeast Region $132 $147 $146 $153 $138 19%

U.S. $137 $149 $149 $160 $144 15%
Source: Data Base Products, Inc. T h e n e e d f o r

c a p a c i t y a t C o l u m b i a M e t r o p o l i t a n A

i r p o r t

w i l l i n c r e a s e w h e n S o u t h w e s t b e g i n s

s e r v i c e , p a r t i c u l a r

l y i f

e x i s t i n g c a r r i e r s

r e d u c e c a p a c i t y i n

r e a c t i o n t o S o u t h w e s t ’ s e n t r

y
.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 12 

# S T R A T E G I C 

# P L

A N



# – A I R 

# S E R

V I C E

he Strategic Plan proposed by the Columbia Metropol itan Airport will achieve the community’s goals and help to alleviate the pending air service deficiencies of this community by keeping it competitive with nearby com peting airports. This Strategic Plan section provides a detailed description of the goals of the project and a primary and alternate plan for attaining those goals. Though t he addition of seats to existing hub service is the primary goal, the accompanying goal is the r eduction of fares to remain competitive with nearby alternative airports.

P ROJECT G OALS

The following project goals will be met by the prop osed Strategic Plan:

• Increase incumbent airline high-priority hub servic e to mitigate the impact of Southwest Airlines planned service at nea rby competing airports Greenville/Spartanburg and Charleston

• Provide additional capacity and competition in the marketplace to
reduce airfares

• Mitigate the need to use alternate airports to acce ss adequate air service and competitive fares

P ROPOSED A IR S ERVICE

With existing service to nearby hubs Atlanta and Ch arlotte, Columbia Metropolitan Airport’s primary air service need is larger aircraft to Atla nta. Higher than average fares and high diversion of catchment area travelers support the n eed for this air service initiative, particularly with the expected arrival of Southwest Airlines into nearby Greenville/Spartanburg and Charleston. Delta Air L ines, rather than US Airways, is the highest priority given the level of current diversi on to US Airways’ Charlotte hub and would provide Columbia with optimal competitive air servi ce access.

Recent dialogue with the community indicates that t here is strong support for larger planes in and out of Columbia with Atlanta service being t he number one priority of the Columbia community.

This plan will achieve the project goals by:

• Providing an airline incentive package to obtain la rger plane service to an existing highpriority hub

• Maintain and improve air service choices at the loc al airport and provide additional competition in the marketplace to reduce airfares

• Reduce the need to use alternate airports to access adequate air service and competitive fares 

# T This section addresses:

• A Strategic Plan for meeting Columbia’s air
service needs and
deficiencies

• Alternate plan to meet the goals

W i t h e x i s t i n g s e r

v i c e

t o n e a r b y h u b s A t l a n t a a n d C h a r l o t t e , C o l u m b i a M e t r o p o l i t a n A i r p o r t ’ s p r i m a r

y a i r

s e r v i c e n e e d i s l a r g e r

a i r c r a f t t o A t l a n t a
.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 13 A IRLINE P ARTICIPATION

Over the past five years, members of the public-pri vate partnership have met with Delta Air Lines regarding Columbia’s service. Recent discuss ions with the airline have been encouraging as Delta will be greatly impacted by th e arrival of a new low-fare competitor in the state of South Carolina. In particular, Delta has expressed interest in a plan such as this grant application to remain competitive in the near term, and the community’s concerns have been shared with the carrier. The community s upport package proposed in the Strategic Plan is critical in Delta’s decision to u pgrade service to the Columbia market. If Delta is slow to commit to upgrading aircraft into Atlanta, the community will pursue US Airways or one of the other Airport’s incumbent car riers to meet the goals of this Small Community Air Service Development Program grant app lication.

M ARKET A NALYSIS

A financial analysis and incremental cost forecast has been developed for upgrading existing Atlanta regional jet service to larger mainline air craft. Results of the service improvement analysis targeting Delta Air Lines, the primary tar get for improved high-priority hub service,
is summarized below:

Aircraft Upgrade Results

Table 6.1 shows that Columbia’s current Atlanta service is m ade up of 11 daily regional jet flights along with one larger 142-seat MD-88 flight. The Atlanta market is currently operating a t 4,828 seats per week each way based on the accompanying schedule, c omprising approximately 34 percent of Columbia’s total weekly seats as shown in
Table 6.2 . The Atlanta market represents the largest amount of seats of any market served out of Columbia and therefore has the potential for the greatest impact to Columbia’s capacity goin g forward.

In order for Columbia to achieve capacity parity wi th Charleston and Greenville/Spartanburg following Southwest Airlines entrance into those competing markets, Columbia Metropolitan Airp ort will need to increase its capacity by at least 20 percent to remain competitive. Table 6.3 , next page,
indicates that the increase in available seats out of Charleston and Greenville/ Spartanburg is expected to be between 19 and 28 percent.

For Columbia Metropolitan Airport to remain competitive, it must convince one or more of its incumbent carriers to upgrade existing service. As
shown in Table 6.3 , next page, at least eight of the current 11 daily regional jet flights to Atlant a would need to be upgraded to mainline aircraft to maintain capacity parity. TABLE 6.1 DELTA AIR LINES' CAE

- ATL SCHEDULED SERVICE

EQUIPMENT SEAT

CAPACITY DEPARTURE

TIME ARRIVAL

TIME CRJ 50 5:40 6:43
CRJ 50 6:40 7:55
M88 142 7:40 9:00
CRJ 50 8:45 10:01
CRJ 50 10:19 11:27
CRJ 50 11:35 12:51
CRJ 50 12:35 14:03
CRJ 50 13:43 14:59
CRJ 50 15:10 16:26
CRJ 50 16:42 18:03
CRJ 50 18:10 19:23
CRJ 50 19:38 20:55 Source: apgDat, August 2010 schedules

TABLE 6.2 COLUMBIA METROPOLITAN AIRPORT SCHEDULED S EATS

DESTINATION AIRLINE DEPART

URES PER WEEK SEATS

PER WEEK %

TOTAL SEATS Atlanta, GA Delta 81 4,828 34% Charlotte, NC US Airways 47 2,350 17% Chicago, IL (ORD) United 21 1,050 7% Dallas, TX (DFW) American 21 1,050 7% Detroit, MI Delta 14 700 5% Houston, TX (IAH) Continental 14 700 5% New York, NY (LGA) Delta 6 300 2% Philadelphia, PA US Airways 19 950 7% Washington, DC (DCA) US Airways 19 950 7% Washington, DC (IAD) United 27 1,350 9% Source: apgDat, August 2010 schedules D e l t a h a s e x p r e s s e d i n t e r e s t i n a p l a n

s u c h a s t h i s g r a n t

a p p l i c a t i o n t o r e m a i n

c o m p e t i t i v e i n t h e

n e a r t e r m

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 14 Convincing an existing airline to replace lower cos t regional jet operations with higher cost mainline jet operations to keep Columbia Metropolit an Airport’s service competitive is inherently costly and risky if the assumed passenge r loads don’t materialize. As Table 6.4 indicates, upgrading just one daily roundtrip fligh t in the Columbia-Atlanta market increases the airline’s direct operating cost by as much as $ 2.2 million annually. Upgrading eight daily flights quickly becomes an extremely expensive unde rtaking.

TABLE 6.4 CAE-ATL REGIONAL JET UPGRADE COST ESTIMAT E

AIRCRAFT TYPE DOC PER

BLOCK HOUR DIFFERENCE PER ROUNDTRIP ANNUAL COST INCREASE

$ % BLOCK HOUR DAILY

COST INCREASE ANNUAL

COST INCREASE UPGRADE

8 RJ TO 8 MAINLINE UPGRADE

8 RJ TO 4 MAINLINE CRJ $1,392 N/A N/A 2.6 N/A N/A N/A N/A

MD

- 88 $3,683 $2,291 165% 2 .6 $5,957 $2.2M $17.4M $3.4M

Source: APGDat Carrier Form 41 and August, 2010 sch edules

A more realistic scenario is a trade-off where two regional jets (100 seats) are upgraded to one mainline jet (142 seats), increasing overall ca pacity but on a much lower cost basis. Swapping eight regional jets for four mainline jets still has an incremental cost increase of approximately $3.4 million annually. Approximately $833,000 (or 25 percent) of the estimated cost increase will be mitigated by this S trategic Plan with the remainder being covered by incremental passenger revenue.

Airline Risk During Ramp-Up

Columbia is being squeezed on both sides of its air service catchment area by Southwest’s entry into the Charleston and Greenville/Spartanbur g, South Carolina markets. Southwest’s
market reach has been demonstrated to be far-reachi ng and is expected to severely negatively impact Columbia’s already low passenger retention rate by increasing passenger diversion and decreasing existing air service as pa ssengers are initially drawn by Southwest’s low introductory pricing and marketing blitz.

It is during this initial service launch phase that Columbia’s incumbent airlines are most vulnerable to passenger poaching at nearby airports . Without this critically important strategic, proactive program to promote, maintain a nd improve existing service levels, Columbia’s vitally important air service is expecte d to deteriorate as a result of declining passengers and revenue. TABLE 6.3 EXPECTED CHANGE IN SEATS

AIRPORT CURRENT

SEATS PER WEEK MARCH SEATS

PER WEEK WITH WN IN CHS/GSP % CHANGE WITH WN IN CHS/GSP DL CAE

ATL RJ UPGRADES ADDITIONAL

WEEKLY SEATS % CHANGE WITH

DL CAE UPGRADE AND WN IN CHS/GSP CAE 14,228 14 ,228 0% 8 2,982 21%
CHS 27,743 32,993 19% 0 5,250 19%
GSP 18,898 24,148 28% 0 5,250 28%

Source: apgDat, August 2010 Schedules; Press releas e on CHS and GSP service announcementPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 15 A LTERNATE P LAN

If Columbia Metropolitan Airport fails to secure ai rcraft upgrades to Atlanta, US Airways or one of the other existing in cumbent airlines will be approached to provide the extra seats needed to remain competitive with the nearby Charleston and Greenville/Spartanbu rg service improvements. Consistent with the intent of the ai r service initiative proposed, obtaining larger aircraft on existing hig h-priority hub service and competitive airfares is the best option for Col umbia Metropolitan Airport catchment area passengers. Increased capac ity to Atlanta or Charlotte on either Delta Air Lines or US Airways w ould provide the competitive service needed in the community and ful fill the goals of this grant application.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 16 

# S T R A T E G I C 

# P L

A N



# – I M P L E M E N T A

T I O N A N D 

# F U N D I N G

his section, Strategic Plan - Implementation and Funding , provides the detailed incentive and support plan required to implement th e Strategic Plan. A legal sponsor responsible for administering the program has been designated, and a public-private partnership has been formed to actively participate in implementing the proposed project. In addition, this section identifies self-sufficien cy of the service as an integral part of the community’s goals and provides a description of the community’s plan to continue with the project if it is not self-sustaining after the gran t award expires. A detailed description of the funding necessary for implementation of the Strateg ic Plan, including federal and nonfederal contributions, is included.

P UBLIC -P RIVATE P ARTNERSHIP

Columbia Metropolitan Airport has been designated a s the sponsor of this grant application. For the purpose of this application, Columbia Metropolitan Airport and the Greater Columbia Chamber of Commerce (Navigating from Good to Great Foundation) have formed a public-private partnershi p (refer to community support letters in Appendix A ). Collectively, the partnership is committed to completing the Strategi c Plan outlined
herein.

All partners in the public-private partnership will be fully involved in the execution of the Strategic Plan ( Table 7.1). Columbia Metropolitan Airport will execute all fede ral grant offers, process all associated reimbursement reques ts, oversee grant administration and administer the airline subsidy. Columbia Metropoli tan Airport, with the assistance of Greater Columbia Chamber of Commerce, will be respo nsible for administering the marketing campaign. Together these partners form a team committed to improving air service at Columbia Metropolitan Airport and seeing this Strategic Plan through to completion.

I NCENTIVE AND S UPPORT P LAN

The current industry status filled with recent and ongoing airline mergers and buyouts, limited fleet availability, volatile fuel prices an d an uncertain economy is challenging for many communities like Columbia. These obstacles wo rk against new service and extend the time it takes for new or increased service to gain profitability. Accordingly, airlines are cautious and highly risk adverse requiring communit ies to partner with them to reduce economic uncertainty. In today’s industry, communi ty risk mitigation programs have become an expectation. To be effective, airline su pport packages must be structured to address the realities of today’s industry and ensur e that investments made are quick to respond. 

# T

TABLE 7.1 PUBLIC-PRIVATE PARTNER ROLES

PUBLIC-PRIVATE PARTNER ROLE

Columbia Metropolitan Airport Grant and airline subsidy

administration, marketing
program Greater Columbia Chamber of Commerce (Navigating from Good to Great Foundation) Assist with the marketing
program This section addresses:

• Description of the public-private partnership

• Designation of a legal

sponsor

• Funding necessary for implementation of the Strategic Plan

• Sustainability of the project

C o l u m b i a M e t r o p o l i t a n A

i r p o r t

a n d t h e G r e a t e r C o l u m b i a C h a m b e r

o f C o m m e r c e h a v e f o r m e d a p u b l i c p r i v a t e p a r t n e r s h i p

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 17 The public-private partnership proposes an airline incentive program that has been tested and proved to be successful. To reduce Delta’s breakeven period and offset theeconomic risk during start-up, the publicprivate partnership proposes the following incentives ( Exhibit 7.1 ):

• Airline subsidy: reduce airline economic
risk

• New service marketing campaign: create improved service awareness

Airline Subsidy

To reduce airline risk and provide incentive to Delta to upgrade existing high-priority hub service, this Strategic Plan includes an airline subsidy as part of the community support package. Incremental cost projections for upgrading service are expected to be approximately $3.4 million annually. Filling addit ional seats typically has a ramp-up period associated with service upgrades, particularly in a market with significant low-fare competition at two nearby competing airports, but i ncremental costs will be incurred immediately. It is anticipated that Delta would re quire at least an $833,000 airline subsidy to consider upgrading service to its Atlanta hub. Exact terms of the airline subsidy agreement are subject to further discussions and ne gotiation.

Marketing Campaign

A specific, targeted marketing campaign will be uti lized to increase general awareness of what the Columbia Metropolitan Airport has to offer. The target audience is business travelers and mid-to-upper inc ome households. The Airport has established a partnership agreement with local media outlets. Table 7.2 provides a breakdown of targeted marketing dollars to be spent on maximizing passenger utilization of improved service between C olumbia and Atlanta. This $359,650 campaign will be funded by airport sources ($150,000 cash and $2,500 in-kind) and non-airport sources ($207,150 i n-kind). The Columbia Metropolitan Airport, with the assistance of the Greater Columbi a Chamber of Commerce, will be responsible for oversight of the marketing campaign

.

S TRATEGIC P LAN F UNDING

The public-private partnership is requesting US Dep artment of Transportation assistance in funding 61 percent, or $750,000, of the Strategic P lan. Specifically, US Department of Transportation funding will be used to partially fu nd the airline subsidy. The balance of the airline subsidy and all other elements including th e marketing campaign, Strategic Plan monitoring and airline meetings will be funded by t he community. TABLE 7.2 MARKETING BUDGET
MEDIA BUDGET Radio $150,000 In-Kind Media $150,000 Community Partners $57,150 Inaugural Event $2,500 Total $359,650 T o r e d u c e a i r

l i n e r i s k

a n d p r o v i d e i n c e n t i v e

t o D e l t a A

i r L i n e s t o

u p g r a d e e x i s t i n g h i g h

- p r i o r i t y h u b

s e r v i c e , t h i s S t r a t e g i c P l a n i n c l u d e s a n

a i r l i n e s u b s i d y
. Equipment Upgrade

Airline subsidy

US DOT Airline

subsidy/ Marketing
program

Community/ Airport EXHIBIT 7.1 INCENTIVE AND SUPPORT PLANPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 18 Table 7.3 provides the Strategic Plan budget by element and sources of funding. The Airport and community will fund 39 percent of the t otal proposed air service program. Non-airport funding sources will provide eight perc ent of the cash requirement and 24 percent of the funding for the total program includ ing in-kind services.

TABLE 7.3 STRATEGIC PLAN BUDGET

DESCRIPTION FUNDING SOURCE

TOTAL US DOT AIRPORT NON-AIRPORT
CASH CASH IN-KIND CASH IN-KIND Airline incentive program: Subsidy $750,000 $83,000 $833,000 Marketing campaign $150,000 $2,500 $207,150 $359,650 Strategic Plan monitoring $20,000 $4,800 $24,800 Airline meeting/negotiations $10,000 $1,400 $11,400 Progr am administration $4,800 $4,800 Total $750,000 $180,000 $8,700 $83,000 $211,950 $1,233,650 Percent of total project 61% 15% 1% 7% 17% 100% Percent of cash contribution 74% 18% N/A 8% N/A 100%

As Table 7.4 indicates, non-airport cash contributions are comi ng from nine different entities, indicating wide-ranging support for this critically important community initiative.

TABLE 7.4 NON-AIRPORT CASH CONTRIBUTIONS BUSINESS/ORGANIZATION AMOUNT Navigating from Good to Great Foundation (Greater Columbia Chamber of Commerce) $40,000

City of Columbia $10,000 Richland County $10,000 Lexington County $10,000 Lexington Chamber of Commerce $5,000 Town of Lexington $3,000 City of West Columbia $2,000 City of Cayce $2,000 Town of Springdale $1,000 Total $83,000

P ROJECT C ONTINUATION AND S USTAINABILITY

Based on a strong marketing campaign for promoting upgraded Delta Air Lines Atlanta hub service, it is anticipated that hub service upgrade s will be self-sustaining after the start-up period which can take up to a year. However, a lea ding cause of service failure is lack of awareness in the community. The public-private par tnership will fund an additional $100,000 marketing campaign if at the end of the first year of service the market average load factor for the 12-month period averaged less t han 65 percent. The public-private partnership and the Columbia business community are committed to the success of this project and understand the difficulties associated with profitably operating air service to the Columbia market following Southwest’s entrance into Charleston and Greenville/Spartanburg and will continue to work to ensure its success.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 19 

# S C H E D U L E A

N D 

# M O N I T O R I N G

he public-private partnership has developed a reali stic timetable to achieve the goals of this proposal. This section provides crit ical milestones to be achieved by the public-private partnership. A monitoring progr am is also provided to track the progress of the project.

C RITICAL M ILESTONES

The following milestones are proposed to track the progress of this air service initiative. The timeline is highly depende nt on the date of the US Department of Transportation’s grant award and the service start date.

Marketing Campaign Development/Initiation

J a n u a r y 2 0 1 1 : Development of the marketing campaign will be completed in January 2011 in order to begin the mar keting campaign 30 to 60 days prior to new service initiation estim ated to be March 1, 2011. Development of the marketing campaign is dep endent on air service announcement and start-up. It is anticipat ed that the marketing campaign will begin by February 1, 2011, and contin ue throughout the first year of new service.

Service Improvement Initiation

M a r c h 2 0 1 1 : The service start date is the critical date for t he rest of the Strategic Plan. It is anticipated that Delta will upgrade to mainline jets in March 2011 to coincide with the anticipated Southwest Airlines’ service initiation at Charleston and Greenville/ Spartanburg. Air service initiation is dependent o n airline route planning and availability
of aircraft.

Alternate Plan

M a y 2 0 1 1 : If Delta Air Lines has not committed to upgradin g their Atlanta service by May 1, 2011, Columbia Metropolitan Airport will con tact alternate carriers that would meet the goals of this grant application. Upgradin g of US Airways’ service is the top priority following the upgrade of Delta’s Atlanta s ervice.

End of First Year of Service

M a r c h 2 0 1 2 : At the end of the first year of service, the airl ine subsidy will be provided to Delta. If the service start date changes due to airline circumstances and/or equipment availability, the contract term will change accordi ngly. 

# T This section addresses:

• How the community will monitor the progress of the project

• The plan/schedule for timely completion of the project

I t i s a n t i c i p a t e d t h a t D e l t a w i l l u p g r a d e t o

m a i n l i n e j e t s i n M a r c h 2 0 1 1 t o

c o i n c i d e w i t h t h e

a n t i c i p a t e d S o u t h w e s t A

i r l i n e s ’

s e r v i c e i n i t i a t i o n a t C h a r l e s t o n a n d G r e e n v i l l e / S p a r t a n b u r g
.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 20 A p r i l 2 0 1 2 : If the load factor for the first 12 months of ser vice does not reach an average of 65 percent, Columbia Metropolit an Airport will invest $100,000 in supplementary marketing for an a dditional 12 months to help the service reach the potential pass enger levels required for carrier success. Additionally, a community bus iness coalition made up of the Central SC Alliance, Greater Columbia Cha mber of Commerce, Lexington Chamber of Commerce and Midland s Business Leadership will allocate at least 10 percent of the ir annual travel budget towards this vital community program.

M ONITORING P ROGRAM

The monitoring program proposed is aggressive and c omprehensive. The monitoring program includes: service performance tracking, ass essing the effectiveness of the marketing campaign, and determining the impact of t he service on retention of catchment area passengers at Columbia Metropolitan Airport.

The following will be completed:

• Review aircraft departures, enplaned passengers and load factors on a monthly basis. Airport data, US Department of Transportatio n airline reported data and data obtained directly from the airline will be used.

• Average airfares will be reviewed on a quarterly ba sis and compared and evaluated to prior quarters. Published airfares will also be tracked via one of the Global Distribution/Computer Reservations Systems (GDS/CRS ) or through airline web sites.

• A follow-up diversion study will be performed to de termine changes in passenger
diversion/retention after the first 12 months of se rvice. By comparing post service improvement retention levels to pre service retenti on levels, the diversion study will determine the impact of the air service improvement s on retention/diversion at Columbia Metropolitan Airport. It will also help t o determine the impact of
Southwest Airlines’ service at Charleston and Green ville/Spartanburg on the
Columbia market.

To assist in these monitoring efforts, Columbia Met ropolitan Airport is currently planning on spending approximately $20,000 on a new data too l to monitor this service.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

Page 21 

# A P P E N D I X 

# A

. L E T T E R S O F


# S U P P O R

T

ppendix A includes letters of support for Columbia Metropoli tan Airport’s application to the US Department of Transportation to increase incumbent airline high-priority hub service to mitigate the i mpact of Southwest Airlines planned service at nearby competing airports. Supp ort letters were submitted by participants in the public-private par tnership, government officials and members of the Columbia area. The letters of suppo rt are included on the following pages of this Appendix A and are listed below.

P u b l i c
- p r i v a t e p a r t n e r s h i p Columbia Metropolitan Airport (refer to cover lette r) Greater Columbia Chamber of Commerce (Navigating fr om Good to Great Foundation)

G o v e r n m e n t
United States Senate – Senator Jim DeMint United States Army Garrison, Fort Jackson Lexington County Legislative Delegation Richland County Legislative Delegation County of Lexington – Chairman James Kinard, Jr. City of Cayce – Mayor Elise Partin City of Columbia – Mayor Stephen Benjamin City of West Columbia – Mayor Bobby Horton Town of Lexington – Mayor Randy Halfacre Town of Pine Ridge – Mayor David Busby Town of Springdale – Mayor Pat Smith

B u s i n e s s e s a n d O r g a n i z a t i o n s Clear Channel Greater Chapin Chamber of Commerce & Visitors Cente r Greater Lexington Chamber and Visitors Center
West Metro Chamber of Commerce & Visitor’s Center 

# A This section addresses: Letters of support frommembers of the publicprivate partnership, the local business community and
state government.August 25, 2010

Aloha Ley Acting Associate Director, X-50 U.S. Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Subject: Small Community Air Servi ce Development Grant Application Docket OST-2010-0124 Columbia Metropolitan Airport – Columbia, SC

Dear Ms. Ley:

The Navigating from Good to Great Foundation is pl eased to submit this letter of support for the Columbia Metropolitan Airport’s grant application fo r US Department of Transportation funding. Effective this date, the Navigating from Good to Great Foundation has authorized a commitment of up to $40,000 for the purpose of assisting the Columbia Metropolitan Airport in obtaining additional scheduled commercial air service. We fully support the proposed plan to establish a program that will aid in attracting a dditional air service to Columbia.

We can confirm that a “public-private” partnership has been formed between Columbia Metropolitan Airport and the Navigating from Good to Great Foundation for the purpose of supporting air service improvements. This air service initiative has our full support. If you decide to fund this application, we have every confiden ce that the program will have the full support of the Columbia community.

We are pleased to have the opportunity to support this grant application, and we assure you that we will work diligently to insure the long-term su ccess of this improvement in air service to our community.

Sincerely,

Charles T. Speth Chairman of the BoardPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMCOLUMBIAMETROPOLITANAIRPORT

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# A R T I C L E

ppendix B includes a copy of a recent news article about Sou thwest Airlines’ entrance into Charleston and Greenville/Spartanburg . The article discusses the impact and challenges Columbia Metropolitan Air port and the Columbia community will face when Southwest begins service. 

# A This section addresses:
Related news article demonstrating Southwest Airlines’ impact on the Columbia community.Posted on Wed, May. 12, 2010 

# Southwest decision leaves Columbia high and dry

By ANDREW SHAIN ashain@thestate.com
Columbia leaders are seeking answers after low-cost giant Southwest Airlines said Tuesday it would start flying to Charleston and Greenville - but not the Midlands - next year.
Southwest poses a bigger threat to the Midlands economy th an the possibility of losing Fort Jackson five years ago, said Ike McLeese, president of the Greater Columbia Chamber of Commerce.
While praising a win for the state in landing Southwest for the first time, Midlands leaders said they fear the airline's low fares will draw more passengers away from Co lumbia Metropolitan Airport, which has some of the nation's highest average ticket prices.
Already, about four in 10 Midlands passengers drive to Charlotte for flights, airport official said.
"This will be more of a slow, grinding death economically," McLeese said.
Midlands officials have said they would try to attract another low-cost airline to Columbia. However, aviation consultant Mike Boyd said Columbia has no chance of doing that with Southwest claiming two nearby airports.
"You can't go to the low-cost airline stor e and pick one out," he said. "It's not goin g to kill air service there, but it's going to be a challenge."
Dan Mann, executive director of the Columbia airport, sa id he would try to work with airlines, including Delta and US Airways, that already serve the Midlands to lower fares.
"Is there an appetite to generate incentives locally so we can have low fares? We'll see," Mann said.
Columbia Mayor Bob Coble said the community will approach the problem like it did when the government considered closing Fort Jackson in 200 5. Business and political leaders gathered with experts to come up with a plan to help the fort escape Pentagon cuts. The community also raised $3.5 million to help the Fort Jackson effort, McLeese said , and could try to collect money again to help improve air service.
Don Herriott, who oversees USC's Innov ista research campus, said he has heard some local companies complain about Columbia's airfares.
But until a solution is found, the Midlands could tout its pr oximity to Charlotte, which has a US Airways hub, as an alternative to businesses considering locating here. "We have to be realistic."
Southwest said it is coming to S outh Carolina without major state or co unty incentives. State lawmakers had been considering $15 million in incentives to draw a low-cost carrier to the state.
But that plan - along with other effort s to raise money in Greenville and Charle ston counties for incentives - now are on hold.
The airline might have liked to get the incentives, but the longer the legi slative debate over them dragged on, the more counterproductive it became for Southwest, said Greenville County Council chairman Butch Kirven. So Southwest executives made their move, taking the incentives issue off the table.

Southwest said it will release details on when it will st art flying from South Carolina, destinations, fares and the number of departures later. Southwest's average one-way fare costs less than $115, the airline said.

The confirmation of Southwes t's arrival should help bring more businesses to the state.
State Rep. Dan Cooper, who is chairman of the House Ways and Means Committee, said "there were five projects within Greenville County, three within the city, that were significantly tied" to Southwest's decision.
"I think it could help make those decisions to come here and maybe bring some headquarters here," said Cooper, Back to web version

Wednesday, Aug 25, Page 1 of 2 The State | 05/12/2010 | Southwest deci sion leaves Columbia high and dry

8/25/2010 htt p ://www.thestate.com/2010/05/12/v- p rint/1282845/southwest-deci sion-leaves-columbia.

...R-Anderson.
Southwest potentially will bring 200,000 new passengers through the Charleston airport each year, forcing competing carriers to lower their fares.
State Sen. Larry Grooms, who worked with Charleston-area business leaders to attract the airline, said the air service expansion is "a flat-out home run" in a recent string of statewide economic development successes, including landing a Boeing factory for North Charleston.
"This is just another chapter in the economic development of the Lowcountry and also a ll of South Carolina," said Grooms, R-Berkeley. "Having a company like Southwest s ends a signal that the economy is strong and growing."

The (Charleston) Post and Courier and The Greenville News contributed to this story.

© 2010 TheState.com and wire service sources. All Rights Reserved. http://www.thestate.com Page 2 of 2 The State | 05/12/2010 | Southwest deci sion leaves Columbia high and dry

8/25/2010 htt p ://www.thestate.com/2010/05/12/v- p rint/1282845/southwest-deci sion-leaves-columbia.

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