# August 2, 2011 Sponsor: Shenandoah Valley Regional Airport , Weyer’s Cave, Virginia Greg Campbell, Airport Director Congressional Code: VA

- 0 06
Dun & Bradstreet Number: 040154247 Tax Identification Number (EIN): 54

- 0919748 

### Application for Federal Support for Current Essential Air Service (EAS) via: Advertising/Marketing Program 

# SHENANDOAH VALLEY REGIONAL AIRPORT SHENANDOAH VALLEY
, VIRGINIA
Proposal Under the Small Community Air Service Development Program Docket DOT

- OST

- 2011

- 0119Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 2 TABLE OF CONTENTS

Introductory Letters of Support 3 Summary Information

– Appendix C 6
Introduction 8
The Shenandoah Valley Air Service Market 9
Current and Historical Service 10 Air Service Development Efforts 16
Air Service Needs and Deficiencies 17 Strategic Plan 21 Proposed Marketing Program 21 Implementation Timeline 25
Public/ Private Partnership 26 Funding Plan 27
Performance Measures and Financial Controls 28 Legal Sponsor 29
Letter s of Support 30 Availability of Alternate Airports 42 Airport Information 43 Community Profile 44 Comparison to Other Communities in Region 55
Conclusions 56



### Section Page NumberShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 3 INTRODU CTORY LETTERS OF SUPPORTShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 4Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 5Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 6 SUMMARY INFORMATION

– APPENDIX C

Small Community Air Service Development Program
Docket DOT

- OST

- 2011

- 0119



### A. Applicant Information

Not a Consortium Community now receives EAS subsidy
Interstate Consortium Intrastate Consortium Community previously received a Small Community Grant If previous recipient, date of Grant: ______ 2003_____________

_________ expiration date of G rant: __ October 28, 2006

___ _

_


### B. Public/Private Partnership

Public:

1. Shenandoah Valley Regional Airport
2. Shenandoah Valley Regional Airport Commission

Private:

1. Shenandoah Valley Partnership
2. Harrisonburg

- Rockingham Chamber of Commerce
3. Greater Augusta Chamber of Commerce



### C. Project Proposal

Marketing Upgrade Aircraft New Route
Travel Bank Service Restoration Subsidy Surface Transportation Regio nal Service Revenue Guarantee
Launch New Carrier Start

- Up Cost Offset First Service Study Secure Additional Service Other (Specify)Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 7 D. Existing Landing Aids at Airport

Full ILS Outer/Middle Marker Published Instrument Approach
Localizer Other:



### E. Project Cost

1. Federal amount requested: $ 15 0,000
2. State cash financial contribution: $ 0
Local cash financial contribution:
3a. Airport cash funds: $ 0
3b. Non

- Airport cash funds: $ 50 ,000
3. Total local cash funds: $ 50,000
4. TOTAL CASH FUNDING: $ 20 0,000
In

- Kind Contribution:

a. Airport In

- Kind contribution: $ Various
b. Other In

- Kind contribution: $ Various
5. TOTAL IN

- KIND CONTRIBUTION: $ Undetermined
6. TOTAL PROJECT COST: $ 20 0,000



### F. In

- Kind Contributions

For funds in lines 7a (airport in

- kind contribution) and 7b (other in

- kind contribution), please describe the source(s) of fund(s) for each. Advertising and marketing match money (media companies)



### G. Is Application Subject to Review by State Under Executive Order 1237 2 Process?
This application was made available to the State on ______. Program is subject to review, but has not been selected b y the State. Program is not covered.



### H. Is Applicant Delinquent on any Federal Debt?

NoShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 8 INTRODUCTION

T

he Shenandoah Valley Regional Airport has made tremendous progress in increasing passengers and reducing its leakage over the last three years. In that time, the Airport has spent more than $100,000 of its own money in publicizing its Essential Air Service to Washington Dulles on the United Express brand

. In that time, the Airport has seen passengers grow by almost 140%

- proving that marketing of local air se rvice can work to increase passengers. The challenge, however, is that the Airport is still retaining just 8% of its local catchment area passengers.

Th rough its recent work, th e Airport has developed partnerships with major media outlets in the Valley, and it is able to leverage those partnerships for extensive ad space and air time. The challenge is that the Airport’s budget is small, so it is unable to sufficiently blanket the area in such a way as to further discourage p assenger “leakage.” Due to the real, or in some cases perceived, fare disparity in using the Shenandoah Valley Regional Airport, many travelers from
the immediate Shenandoah Valley catchment area don’t even check fares and schedules on
local service befor e booking out of other airports in the region. The fare perception is not helped by the fact that the Shenandoah Valley had the highest average fare in the mid

Atlantic in 2010

– at $237 each way.

Still, t he Airport believes the best way to reduce the Department of Transportation’s
current Essential Air Service burden at the Shenandoah Valley Regional Airport is to increase the number of passengers flying through the Airport, spreading the federal government investment over more passengers. As passenger traffic increases at the Airport, revenues will grow, and the federal subsidy required to support the air service will be reduced. The best way to grow passengers in the short term in the Shenandoah Valley will be to promote the current service to potential local travelers. The Department of Transportation has a unique opportunity to invest a small amount in this grant proposal, that could help save it millions of dollars in Essential Air Service (EAS) funding in the years to com e. 

## “The Airport has spent more than $100,000 of its own money [on marketing]... [and it] has seen passengers grow by almost 140%

- proving that marketing of local air
service can work...”Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 9 THE SHENANDOAH VALLEY AIR SERVICE MARKET Current and Historical Air Service

2010 was another positive year for Essential Air Service (EAS) at the She nandoah Valley Regional Airport. Passengers grew by 29% from 2009 to 2010, adding about seven passengers per day each way

– one of the most robust stories of growth of all airports in the Essential Air Service (EAS) program. This growth happened despite the fact that the average fare in the market went up
13% in 2010.

The Airport is a critical link to the air transportation system, serving the heart of one of the most famed valleys in all of America. While the Airport isn’t located in any one large city, it draws passengers from a number of large cities throughout the Valley. In fact, the Airport was built in the
center of the Valley in o rder
to be able to attract and serve passengers from a
number of cities, rather
than just one

.

The Airport’s immediate
catchment area includes
the communities of Staunton, Harrisonburg, Waynesboro, Augusta, and Rockingham. The 30
minute drive Shenandoah Valley Regional Airport
catchment area ( shaded in blue in map 1 ) is home to 174,822 people as of the latest US Census estimates, while the one hour drive catchment area ( shaded in gray in map 1 ) is home to 416,932 people. The Valley has added 102,511 residents since 2000

– a population increase of
31%. The Shenandoah Valley Regional Airport has the ability to draw from an even larger area
due to its relative isolation

– located between two ranges of the Appalachian Mount ains. 

### MAP 1: Shenandoah Valley Regional Airport’s immediate (30 minute) and extended (60 minute) catchment areasShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 10 34,660

11,990 14,700 14,510 11,880 10,210 8,830 13,760 15,560 20,000 1,480

430 270 250

320

270
260 1,110 1,310 1,720 49.5

17.0 20.5 20.2

16.7
14.4 12.5 20.4 23.1 29.8

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 PDEW International Domestic

$194 $199 $194 $201
$178 $174

$146 $254

$210 $237

4/Day PIT (US) + 4/Day IAD (UA) 2/Day PIT (US) 2/Day IAD (US) 3/Day IAD (UA) In the last decade the Airport has seen a precipitous decline in the number of flights and available seats offered by its tenant airlines. In the early 2000s, the Airport had four flights a day
each , to Pittsburgh and Dulles, with service on both the US Airways and the United Airlines codes. During that period, the Shenandoah Valley Regional Airport generated as many as 49.5 passengers per day each way (PDEW) (see figure 1). By 2007, with EAS service p rovided only by US Airways Express to and from Dulles, passengers fell to just 12.5 per day each way (PDEW). In the three years since then the Airport has seen passengers grow by 138% despite the fact that fares have gone up by 62%

- indicating the econom y in the region is likely rebounding.

Air service connectivity has been a major problem in the Shenandoah Valley. These problems
have been exacerbate d by the fact that the Airport has seen numerous changes in its Essential Air Service (EAS) provider, including airline and destination changes. The Airport’s long

- standing service to US Airways ’ Pittsburgh hub was cancelled at the end of 2004 (see figure 1 ). Colgan Air, the EAS provider in the Shenandoah Valley, elected to move service to Washington Dulles, but retain the US Airways affiliation in 2005. This caused a lack of connectivity, due to the limited number of US Airways flights at Dulles that dr amatically suppressed local passenger traffic and

revenue.



### FIGURE 1 : O&D Passengers and Average One Way Fares at SHD CY2001

– CY2010; Source: US DOT Table OD1AShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 11 665 799 1421 1392 1553 1327 1331 1394 1336 1669

1076 1159

983 1174 1272 1288 1353 1509 1488 1479 1523 1733 1618
1305

1194 995 1564 1855 1825 1686 1478 1597 1816 2313 2348 2114

1826
1521 1862 2033 2470

0 500 1000 1500 2000 2500 3000
2008 2009 2010 2011 2011 SHD Passengers Are on Pace to Top Levels Last Seen

in 2001, when Two Airlines Served Two Hubs from SHD Once Colgan was able to put the United Airlines code on its Dulles flights the market again started to take off. In just the last year the Airport has added an average of 6.7 passengers per day each way

– an increase in passengers of 29% (see figure 1). Fares are still a challenge, however. The average fare paid by passengers at Shenandoah Valley Regional Airport in 2010 was $237 each way , which ranks Shenandoah Valley as the highest fare marke t in the Mid

Atlantic.

Even with higher fares than all surrounding airports, and with passenger leakage that is estimated by the Airport’s recent True Market Study to exceed 90%
, or 280 passengers per day each way, the Airport has seen month

- over

- month passenger gains in every month so far in 2011 (see figure 2). In fact, in May of 2011 the Airport saw its best mo nth in the last three years, with 2,470 total passengers flying in and out of the facility, for an average of 39.8 passengers per day each way

– an increase of 33% over passenger numbers for 2010.



### FIGURE 2 : O&D Passengers at Shenandoah Valley Regional Airport January 2008

– May 2011; Source: Shenandoah Valley Regional AirportShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 12 There is much to be positive about in the Shenandoah Valley market in 2011. The Airport’s extensive marketing campaign has been part of the reason for the passenger gains. The Airport has partnerships with more major me dia outlets in the Valley, and it is able to leverage those partnerships for extensive ad space and air time. The challenge is that the Airport’s budget is small, so it is unable to sufficiently blanket the area in such a way as to better discourage
passe nger “leakage.”

The biggest challenge to curbing leakage is the fact that the Shenandoah Valley Regional Airport is the most expensive, in terms of average fare, of all airports in the
mid

- Atlantic region, including Virginia, Maryland, and Delaware

. For the calendar year 2010, the average one way
fare at S henandoah Valley was $2 3 7 (see
f igure 3).

Average fares in the Shenandoah Valley

are 30 % higher , or $ 5 4 higher each way, than the regional avera ge one way fare of $183 (see f igure 3). Moreover, the Shenandoah Valley’s average one way fare is $ 64 higher each way than the a verage fare at Richmond, of $173 each way as of 2010. This causes a large number of passengers who live in the SHD catchment area to make the drive
to Richmond

– which is 124 miles each way with a roundtrip drive time of 4:44

– in order to access lower priced air service. Still, Richmond is only the market’s second largest source of passenger leakage. Most Shenandoah Valley passengers choose to make the longer drive to the higher f are market of Washington Dulles to access the national air transportation system.

To better understand passenger leakage, the Airport commissioned

– at its own expense

– a True Market Study. The study was completed in the fourth quarter of 2010, repres enting traffic from the year ended second quarter of 2010. It showed the Shenandoah Valley Regional Airport retains just 8.3% of the passengers traveling to and from its one hour drive time catchment area (see figure 4). The study also showed that the Sh enandoah Valley market generates a total of 225,613 annual origin and destination passengers

– or 309 passengers per day each way. 

### FIGURE 3 : Average One Way Fares at Mid

- Atlantic Airports CY2010; Source: US DOT Table OD1A

$237

$223

$206

$202

$196

$192

$173

$161

$149

$142

$81

$0 $50 $100 $150 $200 Shenandoah Valley
Washington, DC

Charlottesville

Roanoke

Norfolk

Lynchburg

Richmond

Salisbury

Newport News

Baltimore

Hagerstown Regional Average : $ 183Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 13 Airport Passengers PDEW Share

1 Shenandoah Valley, VA 18,711 25.6 8.3% 2 Washington Dulles, DC 86,271 118.2 38.2% 3 Richmond, VA 41,714 57.1 18.5% 4 Charlottesville, VA 30,988 42.4 13.7% 5 Baltimore, MD 23,703 32.5 10.5% 6 Washington National, DC 20,675 28.3 9.2% Other Airports 3,551 4.9 1.6%

Total Shenandoah Valley Area Passengers 225,613 309 100.0% Rank

Shenandoah Valley, 8.3%

Washington Dulles, 38.2%

Richmond, 18.5% Charlottesville, 13.7% Baltimore, 10.5% Washington National, 9.2% Others, 1.6% The study, which will be explained in more detail in the following sections of this proposal, shows that the largest proportion of the region’s travelers use Washington Dulles

– representing 38.2% of the market’s travel or 118 passengers per day each way (see figure 4). Another 18.5% of the region’s passengers

– or 57 passengers per day each way

– use Richmond, while almost 14%

- or 42 passengers per day each way

– use Charlottesville. In all, the market leaks 283 passengers per day each way to other airports in the region

– one of the highest leakage rates of commercially

served regional airports in the country.

The leakage study illustrates that there is
a sufficient market in the Shenandoah Valley for the current Essential Air Service to be supported. It also illustrates that awareness of the service offered locally is not sufficient. In general, it appears local travelers assume they will have to drive to access air service.

With this leakage in mind, the A irport has developed a comprehensive plan to ac hieve its air
service goals

– in line with the SCASD Program. The Airport’s marketing and advertising plan includes many media platforms, and will blanket the region, ensuring widespread outreach. The program is the best way for the DOT to ensure its EAS funding is being put to its best possib le use in the Shenandoah Valley. The Airport cannot , however, undertake a wide ranging advertising campaign on its own

– its revenues simply cannot cover that kind of expense. In this case, it
needs a federal partner for financial assistance

. The Airport believes a federal Small Community Air Service Development Grant will not only help it publicize its flight availability, but that it will also limit leakage, and capture more local passenger traffic

.

The Shenandoah Valley Regional Airport currently has three daily flights on Colgan Air, dba United Express, to Washington Dulles, on 34

- seat Saab SF340 aircraft, operated under the 

### FIGURE 4 : Originating Airport for SHD Catchment Passengers YE2Q10; Source: Sixel Consulting Group True Market StudyShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 14 Essential Air Service (EAS) program. The flights opera te under an annual subsidy of $2.18 million
, which was renewed in February of 2011

. C urrent service continues to gain local support, with enplanements up more than 135% in the last three years.

It is important to Shenandoah Valley travelers that they have an
omni

- directional hub. Washington Dulles serves that purpose well. The Shenandoah Valley market’s top 25 origin and destination passenger
markets are spread throughout the country (see figure 5). The largest
markets in 2010 were Denver and Chicago, which each average 1.6 passengers per day each way. Other major markets included Boston, New York/Newark, and Los Angeles, reflecting the wide

- ranging needs of business travelers in the community.

The problem with local service through Washington Dulles is that the Shenandoah Valley market is often saddled with higher than average fares. It has been documented that SHD has the highest average fares in the mid

- Atlantic region, at $237 each way. It must also be noted that the Shenandoah Valley has high average fares even in its shorter

- haul markets. For example, the average fare from SHD to New York/Newark in 2010 was $195 each way, or $390 roundtrip (s

ee figure 6). Similarly, the average fare from SHD to Atlanta was $302 each way and the average fare to Detroit was $254 each way

– both much higher than regional airfare averages over shorter stage lengths. 

### FIGURE 5 : Top 25 O&D Passenger Markets, Shenandoah Valley Regional Airport, 2001

– 2010; Source: US DOT Table OD1A

1,160 1,140 1,020 920 890 880 670 630 560 540 540 520 510 500 440 440 440 390 360 350 270 250 250 250 230 1.6 1.6 1.4 1.3 1.2 1.2 0.9 0.9 0.8 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.5 0.5 0.5 0.4 0.3 0.3 0.3 0.3

0 200 400 600 800 1,000 1,200 Denver, CO Chicago, IL Boston, MA New York/Newark, NY Los Angeles, CA San Francisco, CA Orlando/Sanford, FL Dallas/Fort Worth, TX Kansas City, MO

Las Vegas, NV Seattle/Tacoma, WA Houston, TX San Diego, CA Phoenix/Mesa, AZ Tampa, FL Indianapolis, IN Hartford, CT Columbus, OH

Portland, OR Cleveland, OH

Atlanta, GA Washington, DC San Antonio, TX Detroit, MI Sacramento, CA Annual PassengersShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 15 High average fares in the Shenandoah Valley market have the effect of not only suppressing overall passenger traffic, but also causing much of the region’s passenger traffi c to leak to other airports. With fares at Charlottesville, Richmond, and the Washington, DC airports all lower
than the fares at the Shenandoah Valley Regional Airport the majority of local passengers access air transportation from these other airports. Another effect is that
local travelers become
conditioned not to check fares at
SHD

– booking tickets directly from these other airports without ever looking at the local fare. The Airport must use this Grant opportunity to educate its catchment area to, at least , check local fares first. 

### FIGURE 6 : Average One Way Fares at Top 25 O&D Markets, 2001

– 2010; Source: US DOT Table OD1A

$170 $160 $136 $195 $217 $184 $179 $188 $192 $240 $256 $236 $198

$209 $166 $168 $156 $146 $223 $185 $302 $174 $183 $254 $214

$0 $50 $100 $150 $200 $250 $300 Denver, CO Chicago, IL Boston, MA New York/Newark, NY Los Angeles, CA San Francisco, CA Orlando/Sanford, FL Dallas/Fort Worth, TX Kansas City, MO

Las Vegas, NV Seattle/Tacoma, WA Houston, TX San Diego, CA Phoenix/Mesa, AZ Tampa, FL Indianapolis, IN Hartford, CT Columbus, OH

Portland, OR Cleveland, OH

Atlanta, GA Washington, DC San Antonio, TX Detroit, MI Sacramento, CA 

### SHD Average : $ 237Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 16 AIR SERVICE DEVELOPMENT EFFORTS

Th e She nandoah Valley Regional Airport’s overarching air service development goal is to boost Airport performance to the level that an Essential Air Service subsidy is no longer required. As part of this goal, the Airport has spent more than $100,000 of its own funding marketing and advertising the service provided in the last two years. Additionally, the Airport works closely with an air service development consulting firm to i dentify new options for air service, and to work to build enplanements.

Air service development work began in earnest at Shenandoah Valley Regional Airport in 2003, as the Airport began working diligently to restore air service and passenger traffic to pre

- 2001
levels. Since that time, the Airport has experienced numerous set

- backs including US Airways’ elimination of the Pittsburgh hub in 2004, the use of the US Airways code on flights to Dulles, and a poorly timed schedule once the United code was put into place on Dulles flights. Since then,
t he Airport maximized local res ources to help inform the community of the significant changes,
and while substantive increases in passen ger traffic have been achieved, the Airport still leaks the majority of its local passengers.

The Airport undertook a True Market Study in the
fourth quarter of 2010 to gain a greater
understand ing of this leakage, so it could better
focus marketing and advertising dollars on specific segments of the public still choosing to use other airports. The Airport is ready to put this data to work as it develo ps its 2011

– 2012 market plan, but it needs additional monetary support to give the marketing plan its greatest possible impact. Again, t he ultimate goal is to recapture passengers that have been lost in the p ast several years and lessen the region’s dep endence upon
, or possibly eliminate the need for
, Essential Air Service funding.



## AIR SERVICE NEEDS AND DEFICIENCIES “While substantive increases in passenger traffic have been achieved, the Airport still leaks the

majority of its local passengers.”Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 17 AIR S ERVICE NEEDS AND DEFICIENCIES AIR SERVICE NEEDS AND DEFICIENCIES
As has been established in this proposal
, t he Shenandoah Valley Regional Airport leaks 91.7% of the passengers traveling to and from its catchment area to other airports in the region. Of the 283 passengers per day each way who travel to and from the Shenandoah Valley, just 25.6 passengers per day each way

-- as of the year ended second quarter 2010

-- chose to use the Shenandoah Valley Regional Airport.

There appear to be two major reasons why passengers chose to use airports besides the one directly in the Shenandoah Valley. One: fares at SHD are not always competitive with those found at the other airports in the region. And two: passengers leak to other airports to ge t on nonstop flights to their destinations, rather than making a connection along the
way.

The Airport’s True Market Study shows that the average fare paid by Shenandoah Valley catchment area passengers, at all airports they fly to and from, is $193 each way (see figure 7). This fare is $34 less each way than the Shenandoah Valley Regional Airport actual average of $227 each way

– a savings of 18%

.

The Airport’s study shows the average fare paid by catchment area passengers who flew in and out of the Shenandoah Valley Regional Airport, itself, was $227 each way as of the year ended second quarter 2010 (see figure 7). SHD catchment area passengers ac tually pay a little more to fly out of Washington Dulles instead of the Shenandoah Valley Regional Airport

– an average of $242 each way. This can be explained by the fact that the average stage length on Dulles itineraries is much longer (over 1,500 mile s) than the average stage length on Shenandoah Valley itineraries (less than 1,000 miles). It also illustrates the fact that Shenandoah Valley travelers will sometimes drive to Dulles to access long haul non

- stops, rather than to take a connecting flight originating at SHD. 

### FIGURE 7 : Average One Way Fares Paid by SHD Catchment Passengers YE2Q10; Source: Sixel Consulting Group True Market Study

$227

$242

$143

$166

$159

$141

$0 $50 $100 $150 $200 Shenandoah Valley

Washington Dulles

Richmond

Charlottesville

Baltimore

Washington National 

### Regional Average : $ 193Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 18 It must also be noted that average fares paid by SHD catchment area passengers at the other major airports capturing SHD’s leakage are all significantly lower than the fares paid at SHD, itself. The Airport’s True Market Study shows S HD catchment area passengers pay 37 % less

– or $ 166 each way

– at Charlottesville, 43 % less

– or $ 159 each way

– at Baltimore, 59 % less

– or $ 143 each way

– at Richmond, and 61 % less

– or $ 141 each way

– at Washington

- National (see figure 7). It becomes much more difficult to keep passengers trained to check fares at their local airport when fares 50% and 60% less, on average, can be found within a three hours’ drive.

The airfare disparity can also be seen in many of the Shenandoah Valley’s top passenger markets when compared, specifically, to fares paid by catchment area passengers at Richmond and at Washington Dulles. In 15 of 20 of the large st passenger markets identified by the True Market Study, passengers paid the highest average fare at Shenandoah Valley (see figure 8). In some cases the fare disparities were in excess of $50 each way. A good example of this is Atlanta, where the
averag e Shenandoah Valley one way fare was $282, while the average Washington Dulles fare was $135, and the average Richmond fare was $147 each
way.

Because of higher average airfares, and limited knowledge of the availability of local air service, passengers a re suppressed, and airlines rarely realize the true market potential of the Shenandoah Valley. The Airport, itself, saw 19.4 passengers per day each way to and from its top 25 origin and
destination markets in 2010. But the Airport’s leakage study
shows the market, as a whole, generated 204 passengers per day each way to and from those $169 $138 $161 $115 $214 $203 $188 $149 $227 $208 $142 $256 $167 $282

$175 $210 $158 $187 $201

$105 $110 $155 $107 $294 $116 $202

$133 $211 $244 $227 $223 $152 $236 $135

$165 $201 $131

$150 $184

$86 $130 $150 $110 $121 $59 $67 $111 $215 $154 $147 $179 $64

$

- $50 $100 $150 $200 $250 $300 $350 Orlando, FL Boston, MA Chicago O'Hare, IL Fort Lauderdale, FL Seattle/Tacoma, WA New York La Guardia, NY Dallas/Fort Worth, TX Tampa, FL Los Angeles, CA Denver, CO Hartford, CT Phoenix, AZ Long Beach, CA San Francisco, CA Atlanta, GA Indianapolis, IN Las Vegas, NV Columbus, OH Cleveland, OH Kansas City, MO 

### RIC IAD SHD 

### FIGURE 8 : Average One Way Fares in Select Top Markets YE2Q10; Source: Sixel Consulting Group True Market StudyShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 19 markets as of the year ended second quarter 2010. The top “true” O&D
market

– Orlando

– generated 44.2 passengers per day each way, while only one Orlando passenger per day each way flew in/out of SHD (see figure 9). Other examples include Boston, which generates 26.6 “true” passengers per day each w ay; Chicago, which generates 15.5 “true” passengers per day each way; and New York/Newark, which generates 8.5 “true” passengers per day each
way.

Despite being the only carrier in the Shenandoah Valley market, United does a relatively poor job retaining local passengers. The Airport’s True Market Study shows 69% of local passengers travel on airlines other than United (see figure 10). United’s retention rate is just 31%

-

even though United is the only carrier at SHD, itself, and United has a major hub at the number one airport for leaking
passengers

– Washington Dulles.

It appears passengers in the Shenandoah Valley tend to leak
out of the market to get on
other carriers besides United. At the same time, it appears there 32,295 19,401 11,346 10,450 10,056 9,642 8,192 5,735 4,891 4,168 4,001 3,979 3,574 3,517 3,485 3,402 3,166 3,083 2,932 2,667 2,310 2,125 2,002 1,967 1,912 44.2 26.6 15.5 8.5 11.3 5.9 11.2 7.9 6.7 5.7 5.5 5.5 4.9 4.8 4.8 4.7 4.3 4.2 4.0 3.7 3.2 2.9 2.7 2.7 2.6

0 5,000 10,000 15,000 20,000 25,000 30,000 Orlando, FL Boston, MA Chicago, IL New York/Newark Fort Lauderdale/Miami, FL Los Angeles Basin Seattle/Tacoma, WA Dallas/Fort Worth, TX Tampa, FL Denver, CO Hartford, CT Phoenix, AZ San Francisco, CA Atlanta, GA Indianapolis, IN

Las Vegas, NV Columbus, OH Cleveland, OH Kansas City, MO Houston Intercontinental, TX Nashville, TN Dayton, OH Jacksonville, FL Wichita, KS New Orleans, LA PDEW 

### FIGURE 9 : Top 25 “True” O&D Passenger Markets in SHD Catchment YE2Q10; Source: Sixel Consulting Group True Market Study

United, 31.0%

US Airways, 13.2% jetBlue, 12.7% Airtran, 9.9%

Delta, 11.3%

Southwest, 7.4% American, 5.9% Continental, 1.6%
Virgin America, 0.6% Alaska, 0.5% 

### FIGURE 10 : “True” Carrier Passenger Share in SHD Catchment YE2Q10; Source: Sixel Consulting Group True Ma rket StudyShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 20 is no “favored” airline for local passengers, with US

Airways earning the number 2 market share with 13.2% of passengers and jetBlue taking the
number 3 spot with 12.7% of SHD catchment area passengers (see figure 10). This gives the Airport confidence that a more widespread marketing and advertising campaign can pull passengers over to the United brand.

While some deficiencies are not easily cured

– s uch as the airfare disparity between Shenandoah Valley Regional Airport and other airports in the region

– a big challenge can be overcome through better local knowledge of the services available at SHD. It is clear that the limited marketing efforts of t he Airport over the last three years have had a huge impact on building local passengers

– up almost 140% since 2007. The Airport believes a more widespread marketing campaign can have an even bigger impact in retaining the hundreds of passengers per day that currently leak to other airports.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 21 STRATEGIC PLAN Proposed Marketing Program 

## STRATEGIC PLAN The Airport seeks a Small Community Air Service Development Grant in order to assist it with a widespread marketing and advertising campaign in support of current Essential Air Service (EAS) provided by Colgan Air/United Express to Washington Dulles (see m ap 2)

. Through much smaller advertising spends than proposed in this application, Colgan has seen extremely strong month

over

- month passenger growth in each and every month since the end of 2007

– with total passengers up nearly 140% in that time. The
A irport believes a more widespread campaign, specifically targeted at passengers who are currently leaking to other airports in the region, will spur even more impressive passenger growth.

At the same time, the Airport would hope the increased enplanements from a marketing and advertising program would reduce the burden on the Essential Air Service (EAS) program to provide subsidies in the market. The long term goal under the program would be to increase enplanements to a level where the community’s Essent ial Air Service funding is no longer needed.

One of the main reasons for the continued passenger leakage from the Shen andoah Valley Regional Airport is the lack of local knowledge about available air serv ice at SHD. Those who live in the Airport catchment area are not conditioned to check local fares first, before booking flights from other airports throughout Virginia. Local area travelers immediately book flights from Charlottesville, Roanoke and Richm ond, without ever checking to see what the options are from Shenandoah Valley itself. This lack of general air service awareness is draining the local economy of valuable travel dollars, as travelers spend more than they would locally by 

### FIGURE 11 : Current Website Banner Advertising MAP 2 : Current EAS Route Shenandoah Valley

– Washington DullesShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 22 wasting time and gas driving to other airports.

This harmful trend sends 283 passengers per day each way to travel out of other airports in the region while there are empty seats flying in and out of the Shenandoah Valley Regional Airport. In effect
, this leakage wastes valuable Esse ntial Air Service (EAS)
dollars. To counteract the trend the Airport plans a
wide

- ranging marketing campaign, saturating the entire Shenandoah Valley. The campaign will include frequent radio , television, billboard and newspaper advertising, along with giveaways. The Airport seeks $150,000 in federal funds, to be paired with $5 0,000 in
local cash funds, which is above and beyond the current Airport marketing budget . The Airport realizes
the importance of the effort, and has adjusted its budget accordingly to provide a 33% match to the federal funding it is requesting. The campaign is planned to last for at least 12 months, and possibly as long as 18 month s depending on the in

kind matching d onations made by local media companies.

The Airport has already developed a

comprehensive marketing and advertising placement plan, which will include large buys on local and regional radio stations, along with l ocal and regional newspapers and magazines (see figures 11, 12, and 13 ). The campaign will
be focused in the immediate Shenandoah Valley MSA however
, it will also have limited ad placement in bordering counties. It will not include any placement in the i mmediate 

### FIGURE 12 : Current Print Advertising

FIGURE 13 : Current Print AdvertisingShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 23 Medium Details Spots Cost
WHSV TV3 Online Flight Tracker 120 Promos $2,117.64

Kline May Show Sponsorship 78 Spots $2,550.00 Daybreak News 6a

– 7a 30 Spots $4,941.18
Comcast Cable CNN, Disc., ESPN, Fox News, TBS, TNT, Travel, USA, Weather Channel 714 Spots $5,148.00

Facebook Ads Target: Adults 30

- 64 within 25 miles of Harrisonburg/Staunton Unlimited Avg. $4,500.00 ($.75 per click) Google Ad Words Keywords TBD Unlimited $1,500.00 (Avg.)
Phone Directories Misc. service area s $2,591.28

Tourism Publications Local Maps, Guides, New Student Info, Etc. $3,000 (Approx.)
Total $26,348.10 Charlottesville and/or Richmond airport catchment areas.

Other types of marketing will include new website materials for ease of booking and better
awareness of specific flight schedules (see figures 11, 12, and 13 ). The Airport also plans specific outreach to area businesses, through Airport

- affiliated employees, to meet with those who travel most frequently and ensure they are aware of the benefit of using local air service.

The actual advertising will build upon the targeted campaigns that the Airport has been running for the last 18 months. These campaigns push local catchment area residents to check the fares at the local airport before booking their flights, and to
think about the time and expense of driving to other airports in the region to

a ccess air service (see figures 11, 12, and 13 ).

The Airport has developed a specific quarterly plan for the advertising and marketing program th at includes buys on local television stations, the local cable company (which will disseminate the ads across its spectrum of channels), Facebook and Google, along with local publications such as tourism magazines and phone books (see figure 14). This pla n does not include the cost of the creative development. Under this plan, the cost of the buys per quarter would be $26,000, with more than 1,000 television spots and unlimited
internet hits.

Airport leaders believe the marketing and advertising campaign will dramatically increase awareness of the service offered at the Shenandoah Valley Regional Airport, thus increasing enplanements, and helping, in the long term, to lower fares in the market, making the Airport more competitive with other airports in th e region. Moreover, the Airport believes the marketing 

### FIGURE 14 : Potential Quarterly Media Buys Source: Shenandoah Valley Regional Airport, July 2011Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 24 and advertising campaign will have an impact in reducing the burden on the Essential Air Service program in the next bid cycle

.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 25 IMPLEMENTATION TIMELINE

The Airport’s proposed implementation timeline for the project assumes the Department will award Small Community Grant Funding in September 2011

. Once the award is announced, the Shenandoah Valley Regional Airport will begin work with private marketing and advertising firms, along with Colgan Air and United Airlines, to build the campaign materials and to finalize the placement plan.

The first two milestones on the Airport's timeline are to execute the grant agreement with the Department and execute an agreement with a marketing and advertising firm to begin work. These milestones should be achieved by the end of October 2011

. Additionally, t he Airport w ill submit grant status reports on a quarterly basis to the Department throughout the proposed term
of the marketin g and advertising program

. The specific timeline is listed below.



### Activity/Project Milestone Estimated Date

SCASD Grant Award Announcement Sepetmber 2011 Executive Grant Agreement with DOT October 2011 Executive Agreement with Marketing Firm In Place Develop Creative Current Develop Comprehensive Placement Strategy Current Launch Campaign October 2011 Sustain Campaign October 2011 - October 2013 Monitor Route Performance October 2011 - October 2013 Submit Grant Status Reports to DOT Quarterly Q4 2011 - Q4 2013 Close Grant November 2013Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 26 PUBLIC/PRIVATE PARTNERSHIP

A number of local partners will be working with the Shenandoah Valley Regional Airport to promote and market the new service. Contacts will be made to all regional members of chambers of commerce and similar organizations, and those with an interest in growing the

ec onomic base of the community through local business growth, attraction of new businesses and the promotion of tourism and visitor traffic via the airport.


### Shenandoah Valley Partnership

The Shenandoah Valley Partnership acts as an information bridge between the Shenandoah Valley Regional Airport and the region’s businesses. The Partnership represents thousands of businesses in 16 counties across the Shenandoah Valley. As the lead market ing agency in the region, the Partnership is in a unique position to spread word about new air service in the market, and to promote its use. The Partnership is ready to use its resources to promote service to Washington Dulles.


### Harrisonburg

- Rockingham Ch amber of Commerce

The Harrisonburg

- Rockingham Chamber of Commerce works to promote the development of its region of the Shenandoah Valley market. As such, its leaders realize the importance of convenient air service at the Shenandoah Valley Regional Airpo rt. The Harrisonburg

Rockingham Chamber is proud to partner with the Airport in advertising and marketing new service. Moreover, the Chamber continues to work closely with Airport leaders to ensure the
success of air service in the market.


### Greater August a Chamber of Commerce

The Greater Augusta Chamber of Commerce plans to partner with the Shenandoah Valley Regional Airport to help promote and market Washington Dulles service. The Chamber will communicate with all business and community members through e

- mail, mailings, and events, the importance of supporting local air service at the Shenandoah Valley Regional Airport.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 27 FUNDING PLAN

Marketing and Advertising

The Shenandoah Valley Regional Airport proposes to spend a total of $20 0,000 on marketing and advertising promotions in support of United Express service to Washington Dulles. This funding should be sufficient to blanket the market with the message that local service is more convenient than service provided at other airports in the region. The campaign will be developed so that it targets specific segments of the population who are most likely to stop flying from other airports in the region and start fly ing locally

– based on data collected for the Airport’s 2010 True Marke t Study . For examples, see the “detailed explanation of the proposal” section of this application.



### In

- Kind Services

The following organizations will help promote the new service through their various membership groups. There is no estimated value to these services.

**•** Shenandoah Valley Regional Airport Commission

**•** Shenandoah Valley Partnership

**•** Harrisonburg

- Rockingham Chamber of Commerce

**•** Greater Augusta Chamber of Commerce



### Additional Costs

As part of this program, the Shenandoah Valley Regional Airport u nderstands that additional expenses will be incurred, such as monitoring the results of the program and reporting those results back to the US DOT. The Airport will pay for these additional expenses out of other airport sources and will not incorporate th ese fees and charges into this proposal.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 28 PERFORMANCE MEASURES AND FINANCIAL CONTROLS

The success of the program will be based on a pair of variables. The Airport will judge the first measure of success by the increased number of enplanements on United Express service to Washington Dulles. The second measure of success will be based on how much average airfares charged in the community have gone down, with the increase in enplanements. The measurement of enplanements will include a monthly compa rison, once the program begins, to past enplanements numbers. The measurement of airfares will be derived from US DOT OD1A reports.

As the sponsor, the Shenandoah Valley Regional Airport will be the responsible party for all fiscal
matters and DOT reporting requirements. The group is established as an Airport Authority, which is a public governing body. As a public entity the DOT can be assured that proper financial controls are in place to guarantee that the DOT’s grant will be used in accordance with any subsequent agreement. The Airport understands that the grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will submit invoices to the DOT for reimbursement, based on a percentage of the total grant req uest.

The Shenandoah Valley Regional Airport has developed this proposal as a one

- time grant. The advertising and marketing program will commence as soon as this grant is awarded and last for at least twelve months. It is projected that local enplanemen ts will grow within the first few months of the launch of the advertising program.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 29 LEGAL SPONSOR

The Shenandoah Valley Regional Airport is the legal sponsor responsible for administering the
program. The Shenandoah Valley Regional Airport is a government entity.

Shenandoah Valley Regional Airport 77 Aviation Circle Weyer’s Cave, Virginia 24486 Greg Campbell , Airport Director 540.234.8304 gcampbell@flyshd.comShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 30 LETTERS OF SUPPORTShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 31Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 32Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 33Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 34Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 35Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 36Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 37Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 38Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 39Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 40Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 41Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 42 AVAILABILITY OF ALTERNATE AIRPORTS

The Shenandoah Valley Regional Airport serves the geographically isolated Shenandoah Valley, which is surrounded on all sides by mountains in the Appalachian Range. As such, the region is not well served by alternate airports, even though there are a numb er of airports nearby. The closest alternate airport is Charlottesville, which lies 58 miles away, a drive of an hour and 15
minutes (see figure 15 ). Access to Charlottesville is more difficult than it would appear due to steep topography and the lack of
interstate access.

The largest proportion of Shenandoah Valley travelers fly ing from other airports in the region

use Washington Dulles, which is
132 miles to the nor t heast of the area (see figure 15 ). The drive from the Shenandoah Valley to
Dulles takes more than two hours
and 30 minutes.

Other alternates include Richmond, Roanoke, and Washington Reagan National, but none of these airports is close enough to the Shenandoah Valley
to offer true air se rvice access. 

### FIGURE 15 : Airports in the Same Region as Shenandoah Valley Regional AirportShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 43 AIRPORT INFORMATION

The Shenandoah Valley Regional Airport is located in Weyer’s Cave, Virginia, a short drive for residents of three major regional cities and a number of smaller towns. The Airport was placed in its current location as a gateway to the region, instead of a portal to just one city and
, as such, it draws passengers from a large swath o f the Shenandoah Valley region. Convenient to Harrisonburg, Waynesboro and Staunton, as well as Augusta and Rockingham counties in Virginia, and Interstates 81 and 64, the Shenandoah Valley Regional Airport serves thousands of passengers each year for bot h business and pleasure.

SHD is constantly working to improve not only their facilities, but the
service s they offer to those who use them. Their goal is to make travel
affordable and convenient

.

While the Airport currently has just one commercial carrier, it averages more than 71 operations a day, or more than 26,000 operations per year, making it one of the busier one runway airports in Virginia. That one runway is just over 6,000 feet long, with an ILS (instrument landing sy stem) approach on one end (see figure 16 ). The runway can handle virtually any regional aircraft in virtually any weather conditions.

The Airport has a modern terminal, with plenty of room for additional pass engers. The incumbent airline, Colgan, is the only tenant at the ticket counter, with plenty of space. The terminal is designed to handle additional airlines and additional passengers. 

### FIGURE 16: Aerial Photo, Shenandoah Valley Regional Airport, 2010Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 44 COMMUNITY PROFILE

The Shenandoah Valley of western Virginia and eastern West Virginia is nestled between the Blue Ridge Mountains to the east and the Appalachian Mountains to the west and is a part of the Great Appalachian Valley that runs though Virginia and North Carolina . The Valley is home to the large cities of Staunton, Harrisonburg and Waynesboro. It encompasses seven counties in Virginia and two in West Virginia.

The Valley has grown beyond i t s transitory and agricultural roots to
become the economic and tourist c enter of the northern Appalachian Mountains. The Valley is home to a number of major resorts including the world renowned Homestead, which is a nationally recognized golf and ski resort. The region is also home to a number of cultural attractions, as it is situated just 153 miles from the Nation’s capital. The Valley is the birthplace of the Blue Ridge Parkway

– arguably the most famous drive in the eastern US

– winding through the majestic Blue Ridge Mountains.

“Tourism services” is the largest secto r of employment in the Shenandoah Valley, with more than 41,000 people working in the field. The region also has major investment in food processing, with worldwide companies such as Coors, Hershey, Perdue, Tyson and Pilgrim’s Pride operating large
proces sing facilities in the region.

The Shenandoah Valley economy has grown more diversified, and more high

- tech in the last decade, with Merck operating a large pharmaceutical plant and Wayn

- Tex opening a major operation developing new age plastics and resins . With new economic development, per capita personal income in the Shenandoah Valley is at an all

- time high, keeping pace with the major urban areas of the mid

- Atlantic region, at $32,229
, according to statistics from the Virginia Economic Development Par tnership.

The Valley is home to no fewer than 15 colleges and universities, including such well known schools as the University of Virginia, Virginia Military Institute, James Madison University, andShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 45 Liberty University. Together, these schools enroll m ore than 75,000 full

- time students within a two

hour drive of the Shenandoah Valley Regional Airport.

What’s New in the Shenandoah Valley

The Shenandoah Valley Regional Airport continues to work to grow non

- airline business and to diversify is base of tenants. Most recently, the Airport landed Dynamic Aviation as a tenant. Dynamic wet leases a fleet of MD80 aircraft to various operators throughout the US and around the world. It will employ as many as 400 people on the field in coming years (see figu re 17)

.



# Shenandoah Valley Regional Airport and Dynamic Aviation Announce Agreement for Future Development

The Shenandoah Valley Regional Airport Commission announced that Dynamic Aviation of Bridgewater, Va. has agreed to a long

- term ground lease agreement with the Airport Commission for future Corporate Hangar construction at Shenandoah Valley Regional Airport. Dynamic Aviation through its affiliate, Shenandoah Hangar, LLC., has agreed to a ground lease in the Airport’s North Corporate Hangar Development Area for potentially the next 40 years. This will allow Dynamic Aviation the opportunity to construct Hangar s pace to support their growing flight operations. Dynamic Aviation Group, Inc. is a leading supplier of aerial platforms throughout the world. The company was founded in 1967 and has enjoyed continued growth and diversification in their business since that time. They are headquartered in Bridgewater, Virginia and now employ approximately 400 aviation professionals. According to Michael Stoltzfus, President and Chief Executive Officer of Dynamic Aviation, "We are excited about the growth opportunities this a greement provides. The Shenandoah Valley Regional Airport provides the necessary infrastructure, facilities and all weather capabilities that will be required to support a portion of our growing operation in the years to come. We look forward to growing
ou r business in the Shenandoah Valley." Gerald Garber, Chairman of the Shenandoah Valley Regional Airport Commission commented, "We are extremely pleased that Dynamic Aviation has decided that Shenandoah Valley Regional Airport will be a part of their conti nued growth. We look forward to partnering with Dynamic Aviation to meet their future aviation needs here in the Valley."



### FIGURE 17: Dynamic Aviation Announcement Source: Shenandoah Valley Regional AirportShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 46 The Interstate 81 corridor is now known as the “Ed ucation and Technology Corridor ”

Universities in the Corridor are currently working on a number of new research projects, with more than $100 million in grants and start

- up capital. The projects range from the pharmaceutical field to improving the internet and preventing terrorist
attacks.

**•** James Madison University rece ived $25 million in external funding to improve laboratory facilities with new high

- tech research instruments. The money came from various sources, including the federal and State government, private industry, and foundations.

**•** The Shenandoah Valley Techn ology Council is working with James Madison University on a full

- scale study of broadband internet access and connectivity. The study will likely lead to major changes in the availability of broadband in the State, connecting many more residents to reliab le
internet access.

**•** Researchers at James Madison University are developing new strategies to protect the nation’s high

- tech infrastructure from acts of terrorism. The University is one of the few in
the US name d as a “center for excellence” by the Nation al Security Agency.

**•** The Shenandoah Valley is a center for biofuels, as both James Madison University and the City of Harrisonburg were noted for their outstanding research and development of an alternative fuel refinery in the region.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 47 Shenandoah Valley Economic Overview

The Shenandoah Valley has long been a center for trade, transportation and agriculture. The region’s good growing climate and easy access has made it a center for processing facilities producing everything from chocolate to chic ken. These facilities form a strong, stable economic base. But today, the economy of the region has grown and diversified from its roots.

More people in the Shenandoah Valley work in sales and office support jobs than in any other occupation (see figure
18 ). Managerial and administrative jobs also make up a large portion of current employment by occupation in the Valley. Altogether, 50.1% of job in the region are considered
“white collar”

– business services and administrat ive positions with very high relative pay. This is the reason why the Shenandoah Valley’s per capita income tops $32,229 annually.

The Shenandoah Valley’s high quality of life has drawn many major companies to locate
facilities in the area (see figures 19 and 20) . The Valley is currently home to five Fortune 1000 companies. These companies employ more than 10,000 people in the Shenandoah Valley Regional Airport’s catchment area

– many in highly mobile sales and administrative positions. 

### FIGURE 18: Employment by Occupation, Shenandoah ValleyShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 48 Firm Rank Revenues Target 28 $64.9 Billion Tyson Foods 89 $28.1 Billion
Merck 103 $23.9 Billion Pilgrim’s Pride 304 $ 8.5 Billion 

### j py Company Product/Service Estimated Employment James Madison University Higher education 2
, 500

- 4
, 999 Augusta Medical Center Health care 1
, 500

- 2
, 499 Pilgrim's Pride Corporation Poultry processing 1
, 500

- 2
, 499 Rockingham Memorial Hospital Health care 1
, 500

- 2
, 499 McKee Foods Corporation Snack cakes 1
, 000

- 1
, 499 Merck & Company Inc

. Pharmaceuticals 1
, 000

- 1
, 499 R

. R

. Donnelley & Sons Company Book printing 1
, 000

- 1
, 499 Target Distribution center 1
, 000

- 1
, 499 Hershey Chocolate of Virginia Inc

. Confectionery products 600

- 999 INVISTA Textiles 600

- 999 Marshalls Retail distribution 600

- 999 Perdue Farms, Inc

. Poultry processing 600

- 999 Tenneco Automotive Inc

. Motor vehicle parts 600

- 999 Alcoa Building Products Inc

. Vinyl siding 300

- 599 American Safety Razor Company, Inc

. Shaving blades and systems 300

- 599 Banta Corporation Book publishing & printing 300

- 599 Coors Brewing Company Malt beverages 300

- 599 Graham Packaging Co

. Plastic bottles 300

- 599 Intrapac
, Inc

. Aluminum products 300

- 599 Nibco Incorporated Copper fittings 300

- 599 Wayn

- Tex, Incorporated Plastic material and resins 300

- 599 Mary Baldwin College Higher education 300

- 599 Tyson Foods, Inc

. Poultry processing 300

- 599 

### FIGURE 19: Top Employers in the Shenandoah Valley Source: Virginia Economic Development Partnership, 2011

FIGURE 20: Fortune 1000 Companies in the Shenandoah Valley Source: Fortune Magazine, 2010Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 49 Select Company Profiles

Merck Pharmaceuticals Established in 1891, Merck is one of the country’s oldest pharmaceutical firms, producing a number of drugs used to treat hundreds of ailments. Merck is also one of the world’s largest companies, employing more than 50,000 people worldwide. With markets in 100 countries, Merck is based in New Jersey. Its Shenandoah Valley operation draws upon the research and development of a number of area colleges and universities to develop new medical solutions.

INVISTA INVISTA is a pioneering firm in the manufactu ring of synthetic fibers and polymers. INVISTA’s best known brand is Lycra, the stretchy material used in a number of clothing applications. INVISTA is one of the Shenandoah Valley’s largest employers, with a major research and manufacturing facility in Waynesboro. The company is based in Wichita, Kansas.

Target Stores Based in Minneapolis, Target is one of the world’s largest and most recognized retailers. With annual sales topping $59 billion, Target is
listed as the 33 rd largest company in the US. Target operates its largest east coast distribution center in the Shenandoah Valley, sending products to all of its stores in the northeastern and
mid

- Atlantic corridors.

Pilgrim’s Pride The largest poultry producer in the US, Pilgrim’s Pride has operat ed farms in the Shenandoah Valley for more than 60 years. The company has 54,000 worldwide employees, with major farms and processing facilities in Alabama, Arkansas, Florida, Georgia, Kentucky, North and South Carolina, Iowa, and Tennessee. The company is based in Texas. The company exports chicken products to more than 80 countries.

Coors Brewing Company A subsidiary of Molson

- Coors, Coors Brewing Company is the second largest brewer in the US, and one of the oldest

– as the company was founded in 18 73. The company has two major brewing facilities in the country

– in Golden, Colorado, and in the Shenandoah Valley of Virginia. Coors produces products that are sold in all US states, along with Canada, Mexico, and the Caribbean.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 50 Shenandoah Valley Tour ism

In recent years, the Valley’s economy has also grown to accommodate the tourist trade. “Shenandoah” is a well known destination around the country. The Valley’s beautiful mountain setting draws more than two million annual visitors. The region offers ou tdoor activities for all seasons, with many ski resorts and golf resorts. Moreover, the Valley is located in the cultural heartland of the country, as many of the nation’s founders lived and worked in the region. Today their homes, businesses, and commun ities draw tens of thousands of tourists seeking historical pursuits. In 2008 the Shenandoah Valley saw total travel expenditures of nearly $800 million

.

The Shenandoah Valley stretches for nearly 200 miles, along the Shenandoah River, between the Blue Ridge and Allegheny Mountains

– both ranges in the Appalachian chain. Nicknamed “the big valley,” Shenandoah has been immortalized in a number of films, songs, and television shows. The Valley was first settled by Europeans in the mid

- 1700s. It has

some of the oldest and most significant historical sites in the country, many of which relate to the founding of the United States, and its early leaders. During the Civil War the Shenandoah Valley was nicknamed the “breadbasket of the Confederacy” due to the wide swaths of agricultural lands and the fertile soil that grew crops to help feed Confederate soldiers. Later, the Valley was
home to President Woodrow Wilson

– whose family has established a library and museum in the Valley today.

The Shenandoah Vall ey features picture

- postcard farms and inns along country roads and the popular Skyline Drive and Blue Ridge Parkway, probably the most beautiful parkway in the nation. One of
the natural wonders of this world is the 100

- million

- year

- old Natural Bridge. The region also has many caverns, which include Shenandoah Caves, with an elevator to take you underground. The region is home to dozens of hiking trails, paddle sports, and horseback riding in the Blue Ridge Mountains. Moreover, there are a number of po pular resorts in the Shenandoah Valley, including Bryce, the Homestead and Massanutten.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 51 Shenandoah National Park Appropriately, the Shenandoah Valley Regional Airport is the gateway to Shenandoah National Park, which draws more than 1.2 million visitors to the region per year. The Park is located along the crest of the Blue Ridge Mountains, with hiking trails that l ace the hillsides. The Park also has the largest wilderness area on the east coast

– 40% of its area is designated as wilderness that cannot be developed.

Blue Ridge Parkway The famed Blue Ridge Parkway runs along the ridge of the Blue Ridge Mountains from Shenandoah National Park all the way to the Great Smoky Mountains National Park in North Carolina and Tennessee. The Parkway hosts more than three million vehicle trips per year. The Parkway runs a t otal of 469 miles, with the Shenandoah Valley Regional Airport located at
its north end

– the perfect gateway for a drive from north to
south.

The Homestead Resort “The Homestead,” as its known locally, is Virginia’s most well

- known and spectacular mount ain resort. The Homestead features a huge, red brick resort hotel, with hundreds of rooms and a number of restaurants. But the
real attraction is what lies outside. The Homestead features three championship golf courses, equestrian facilities, a fly fis hing school, a European

- style spa, skiing, snowboarding, ice skating, and a conference center. The Homestead has long been considered one of the world’s finest getaways.

Natural Bridge Considered one of the seven natural wonders of the world, the Shenan doah Valley’s Natural Bridge is a 215 foot tall and 90 foot wide rock formation that created a bridge over a valley in the Appalachian Mountains. The Bridge has been visited by historical figures such as Thomas Jefferson and George Washington

– it is init ialed by both. Today, the Bridge draws more than a million annual visitors.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 52 Shenandoah Caves Located in the heart of the Valley, the Shenandoah Caves are considered the most spectacular on the East Coast . But the real attraction is the fact that the Caves are the only ones in the East that have an elevator descending into the depths, instead of a long hike, making them the most accessible caves in the US.

New Market Battlefield
The 300 acre New Market Battlefield marks the site, near Virginia Military Institute (VMI), where VMI cadets joined the fight, helping to defeat the North in a pivotal battle. Today, the
battlefield is also home to the Hall of Valor Civil War Museum. The site is often the first visited on the Civil War trip from Virginia through Maryland and Pennsylvania.

Higher Education in the Shenandoah Valley

The Shenandoah Valley is home to one of the largest and most prestigious collections of colleges and universities in the world. Th ere are no fewer than 15 universities, colleges, and community colleges in, and immediately surrounding, the Valley. Together, these institutions enroll almost 100,000 full

- time students (see figure 21 ), and employ more than 20,000 highly skilled
and educ ated full

- time faculty members. The institutions of higher learning in the Shenandoah Valley are among the most highly respected in the world, truly training the leaders of tomorrow.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 53 James Madison University Long considered one of the finest public research universities in the country, James Madison University (JMU) provides research in emerging fields that helps fuel the economy of the Shenandoah Valley. Located in Harrisonburg, JMU provides more than 100 co urses of studies in science and liberal arts fields. The school launched its School of Engineering in 2007. Kiplinger’s Magazine ranks JMU the 21 st best buy in higher education in the US.

Virginia Military Institute Also located in Lexington, Virginia Military Institute is best known as “VMI.” It is the oldest military college in the US, founded in 1839. VMI cadets going through a strenuous selection process before admission, and the Institute draws the best students from the top of their classes arou nd the country. VMI is considered the “West Point of the South,” as it served that purpose during the Civil War.

Liberty University Located in Lynchburg, Virginia, Liberty University is the largest institution of higher education in the Shenandoah Valle y. The University is a Baptist college, modeled after the theological education offered at Notre Dame and Brigham Young. Liberty’s current chancellor is Rev. Jerry Falwell. Liberty offers 71 programs of study for undergraduates, and 36 programs from gra duate students.

James Madison University Public 18,454 4

- year or above Mary Baldwin College Private 1,738 4

- year or above Bridgewater College Private 1,514 4

- year or above Eastern Mennonite University Private 1,387 4

- year or above
Blue Ridge Community College Public 4,466 2

- year Piedmont Virginia Community College Public 4,874 2

- year

Total 32,433 

### FIGURE 21: The Shenandoah Valley’s Higher Education Facilities Source: Virginia Economic Development, 2011Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 54 Mary Baldwin College Founded in 1842, Mary Baldwin College has long been one of the nation’s premier women’s liberal arts institutions. US News and World Report ranks the

College as a top tier master’s level university. Today, the highly

- selective school enrolls more than 2,000 full

- time students from all 50 states and around the world.

Washington and Lee University Located in Lexington, Virginia, Washington and Lee University was founded in 1749, making it one of the oldest private universities in the US. The University is currently ranked as one of the top 15 private liberal arts universities in the country by US News and World Report . As a highly selective institution, the University enrolls some of the
best and brightest students from around the country, and around the world.Shenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 55 COMPARISO N TO OTHER REGIONAL COMMUNITIES

FIGURE 22: Statistical Summary of Eastern Region Airports Calendar Year 2010, Source: US DOT Table OD1AShenandoah Valley Regional Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 56 CONCLUSIONS

The Shenandoah Valley Regional Airport has the highest average fare of all airports in the mid

Atlantic region at $237 each way in 2010. The Airport leaks more than 90% of its catchment area passengers to other airports in the region. Yet despite the bad news, the Airport’s $100,000 marketing plan over the last several years has caused local passengers to increase by 140%, proving that local air service marketing can work.

As a smaller, Essential Air Service airport, the Shenandoah Valley Regional Airport does not have the resources to build a widespread “blanket” marketing campaign. But the Airport has had success in its targeted campaigns. With more funding to better spread the message, the Airport anticipates it can grow passengers up to levels
seen last in 2001

– roughly double the number of passengers currently using the facility

The Ai rport has a sound strategy in place for its federally supported advertising campaign.
Much of the creative work has already been completed. Additionally, the Airport has developed a potential quarterly purchase plan which includes more than 1,000 televis ion spots and unlimited internet exposure. The plan only needs federal funding to move forward.

The Airport believes this marketing blitz will reduce leakage to other airports. Then, as passenger traffic grows in the market, through the increased market ing and advertising proposed in this application, revenues will grow, and the federal subsidy required to support Essential Air Service (EAS) in the Shenandoah Valley will be reduced. The Department of Transportation can invest a small amount in this gran t proposal, that could help save it millions of dollars in EAS funding in the years to come. 

## “The Airport has a sound strategy in place for its federally supported

advertising campaign. The plan

only needs federal funding to
move forward.”