PROPOSAL UNDER THE

SMALL COMMUNITY AIR SERVI CE DEVELOPMENT PROGRAM

Docket DOT-OST-2010-0124

City of Kearney, Nebraska

DUNS# 085814960

NE 03

Existing Air Service

Great Lakes Airlines provide s three non-stop round trips to Denver each day. Typical non-refundable fares are $110 - $180 each way; refundable tickets ar e generally priced between $250 - $300 each way. Kearney Regional Ai rport is a Class III, and so does not handle larger regional aircraft on a schedul ed basis. Great La kes flies Beechcraft 1900 pressurized twin engine turboprop aircraft or less frequently (due to fewer planes) Embraer 120 Brasilla pressurized twin engine turboprop airc raft with 19 or 30 seats, respectively.

The City of Kearney has writte n a letter of support to the De partment of Transportation for the Great Lakes proposal for Essential Air Service subsidy, with continuation of current service levels, with a subsidy am ount of $1,965,740 annually. This proposal is for the two year period beginning November 1, 2010.

Historical Service

In 1959 Kearney Regional Airport, then na med Kearney Municipal Airport, began receiving commercial air service form Fron tier Airlines. In 1976, Air Nebraska began serving Kearney, followed in 1979 by Pioneer Airlines. Kearney’s peak of three

commercial carriers ended in 1980 with the di scontinuation of service by Frontier. Two years later Air Nebraska also left the mark et. In 1986, Pioneer Airlines was replaced by GP Express Airlines – which remained as the commercial air service provider in Kearney

until 1996 when all service was discontinued.

In 1997 commercial air service to Denver was revived in Kearney by Great Lakes Airlines, then known as United Express, whic h is the current commercial air service provider at Kearney Regional Airport. A local effort to partner with the Department of Transportation and seek out new proposals for Essential Air Service lead to the resumption of service in Kearney by Great Lake s. It is that local energy and foresight, combined with funding from the Department of Transportation, which has made the Kearney Regional Airport the third busiest scheduled commercial service airport in Nebraska. Enplanements dropped off sharply af ter the terrorist att acks of 9/11, and again less drastically during the recent recession, following national trends.

In the last year, the regional airport (Central Nebraska Regi onal Airport in Grand Island, Nebraska) in closest proximity to Kearney Re gional Airport has cha nged their destinationhub from Kansas City to Denver, bringing th e two airports into conflict with some overlapping catchment areas. The City of Ke arney does not desire to compete directly

with another Essential Air Service Communit y, and believes that a market analysis and strategic plan may help Kearney Regiona l Airport succeed without marketing in competition with Grand Island.

Recent Local Air Service Development Efforts

In 2006, the Air Transportation Committee (ATC) of the Chamber of Commerce and the Airport Advisory Board (AAB) of the City of Kearney partnered to re-brand the airport, which included a new logo and name change to Kearney Regional Airport. A marketing campaign to entice passengers to fly locally, “Make it simple to Fly: Simply Fly Kearney” was developed in collaboration wi th Great Lakes Airlines to include the following initiatives:

• Public relations efforts including a PowerP oint template for presentation to key community and business leaders

• Print ad campaign including brochures, mailings, newsletters, and more to Chamber members, service groups, etc.

• Website design update

• Billboard, TV, radio, and newspaper adve rtising campaign in surrounding region

Enplanements did increase, partly as a resu lt of these marketing efforts, and partly through the change of hub destin ation for Grand Island from Denver to Omaha, and later to Kansas City. The ATC and the AAB were also successful in securing 30-seat Brasilia aircraft complete with restroom facility a nd attendant for the Kearney Regional Airport.

In 2009, a second marketing campaign designe d to attract more travelers from surrounding communities was launc hed with the tagline, “Hop. Skip. Fly.”. It focused on the convenience and savings of flying locally ra ther than driving to a medium or large hub. Unfortunately, this campaign coincided w ith first an economic downturn and then a change in hub destinations for the Grand Island airport, Kearney’s closest commercial air service provider. Enplanements dropped for Kearney, although remained above the 10,000 mark.

Strategic Plan

In order to continue to maintain the level of service, infrastructure and facilities that the regional area needs, the Kearney Regional Airport must maintain AIP funding. To expand and improve service and prepare for ch allenges that are facing the regional air service industry and the Essential Air Service program in the next five to ten years, the Kearney Regional Airport must position itself to better understand the marketplace and how to promote and attract travelers and service providers. A professional market analysis and strategic plan will arm the City of Kearney will the data necessary to set realistic objectives a nd harness the support of private orga nizations to ensure success in

the future.The Kearney Regional Airport Strategic Planning project will identify the market area for the airport as well as potential marke ting and promotional activities to decrease leakage and increase the consumer base. Although dates are subject to adjustment depending on award date, the City of Kearney desires to release a Request for Proposals for a market research and strategic planning c onsultant in January of 2011. After a thirty day submittal period, the City will review prop osals, conduct interviews and confirm a contract by March 1, 2011. Research shoul d begin immediately, and should progress quickly with the assistance of local partner or ganizations that can gather information in collaboration with the selected consultant. On-site research and meetings with the consultant will be conducted by May 15, 2011.

Monthly updates, in the form of written notices and web conferences between the consultant and the City of Kearney will ensure that the project remains on task and keep communication concerning unanticipated problem s or new avenues of analysis open. A

draft version of the market anal ysis should be presented to the stakeholders, consisting of the City of Kearney and pa rtner organizations, for comm ent by July 15, 2011. A draft strategic plan for comment and final mark et analysis should be presented to the stakeholders by September 1, 2011. The final st rategic plan and mark et analysis package should be submitted to stakeholders by Se ptember 30, 2011. A public review of the project will take place in a tele vised public hearing on October 11, 2011.

Public-Private Partnerships and Funding

The Buffalo County Economic Development Council and Kearney Area Chamber of Commerce are extremely supportive of the Kearney Regional Air port and the economic impact of quality, affordable, local air service. Both organizations have worked with the City of Kearney on past proj ects involving the Kearney Regi onal Airport, most notably through the Chamber Air Transportation Comm ittee involvement in the 2006 marketing campaign. Each organizations has committed to assisting with the Kearney Regional Airport Strategic Planning project through in-kind donatio ns of $500 each of media and marketing assistance to gather data from th e existing and potential business and industry base in the Kearney area. The Developmen t Council and the Chamber of Commerce are committed to the success of the Kearney Regional Airport and as stakeholders will collaborate with the City of Kearney to ensure the successful implementation of a strategic plan.

The Kearney Area Visitor’s Bureau frequently partners with the City of Kearney on projects, and will support the market analysis of the Kearney Regional Airport Strategic Planning project. Air transportation is essent ial to a thriving tourism economy.

The University of Nebraska at Kearney is a partner with the City of Kearney at the Kearney Regional Airport, along with a privatel y owned fixed base operator, in providing pilot training and an aviation degree program. The University also has a significant

interest in the continued success of the air port and the economic impact it has on the community of which the University is an important fixture. The University of Nebraskawill provide an in-kind donation of $1,000 to assist with research for the market analysis portion of the project.

The City of Kearney will contribute $5,000 from general fund revenues, allocated for airport marketing, and $10,000 from general f und revenues not previ ously allocated for airport use, for a total cash contribution of $15,000. No airport revenues will be used as match for this project. A federal reque st of $50,000 will be matched by the above described $17,000 of cash and in-kind local sources.

A separate fund will be created by the City of Kearney, in keep ing with City grant policies, for all project costs. The Airpor t Manager, Jim Lynaugh, and the Assistant to the City Manager, Suzanne Brodine, will collaborate to administrate the project and monitor the program funds with continuous ap proval form the Kearney City Council. Mr. Lynaugh has over 10 years experience in the management of the Kearney Regional Airport Budget, more than $1.3 million annually including over $200,000 annually in FAA funding. Ms. Brodine oversees all federal and state grant projects undertaken by the City of Kearney, currently totaling appr oximately $3.4 million in open awards. An independent audit of City accounts will be made at the end of the fiscal year to ensure that all funding is spent in the manner proposed.

Monitoring and Evaluation

Kearney Regional Airport Strategic Planning project will be monitored on an ongoing basis through monthly web meetings between the City of Kearney and the selected consultant. Key milestones, listed here with estimated dates subject to award, will be required to be met on time through a contract between the City of Kearney and the

consultant:

January 2011 Request for Proposals for a market research and strategic planning

March 2011 Execute consultant contract May 2011 On-site research and meetings with stakeholders and consultant July 2011 Draft market analys is submitted to stakeholders September 2011 Draft strategic plan and final market analysis submitted October 2011 Final strategic plan and market analysis package submitted October 2011 Public hearing to review project

If proposed activities are in pr ocess, but not completed, and th e City of Kearney feels that the selected consultant is justified in extending deadlines, the City of Kearney is committed to reallocating funding from the general fund to complete the proposed project. However, strict contract language and continual monitoring will ensure that the Kearney Regional Airport Strategic Planning project will be completed on budget. The City of Kearney is committed to carrying out the objectives indicated by the project to make the Kearney Regional Airport successf ul, including funding from general fund revenues to establish a marketing campaign and potentially move from a Class III to Class II airport.Long-term Project Commitment

The goals of the Kearney Regional Air port Strategic Planning project are self-contained and will be written into a contract for professi onal services with a consulting firm chosen through a public Request for Proposals process. The contract will re quire regular status updates and completion of milestones to ensure that the project is on schedule. If the goals of the project - the completion and presentation of an in-depth analysis to determine the viability of enhancing air transportation at the K earney Regional Airport through marketing, potential class upgrade from III to II , and financial incentives for enhanced or expanded commercial service – are not met before the grant expires, the City of Kearney

will terminate the contract with the consultant . The City would then develop a new plan of action to generate funding, th rough a mix of local private and public funds to complete the project on a lesser scale than presented in this application. Although the analysis

could not be conducted with the level of detail desired to ensu re that future plans are well structured, the City of Kearney is committed to establishing quantitative analysis to guide planned investment in service and infrastr ucture at Kearney Regional Airport.

The long-term goals of the project extend be yond the grant period. The City of Kearney has dedicated funds from gene ral revenues and is considering additional revenue sources, such as a dedicated percentage of an occupa tion tax, to support promotional activities and potential carrier incentives at the Kearney Regi onal Airport. In a ddition, local private partners are interested in supporting these activities but without a formal study a plan of action can not be developed and presented for funding. The City of Kearney and its private partners will use the results of this study to target communities and organizations

in the catchment area that benefit from c ontinued and expanded se rvice and present a strategic plan to them for consideration for support and funding.

Legal Sponsor

City of Kearney is the legal sponsor for this application and will receive program

reimbursements.