OST 2011-0119

DUNS # # 038768131

Wisconsin Congressional District WI - 07

Legal Sponsor: City of Rhinelander & County of Oneida
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

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Proposal Summary

Statement of Air Service Deficiency

Rhinelander/Oneida County Airport has been notified by Delta Air Lines that the carrier 

will end decades of service to the region on September 5, 2010. The clear reason 

provided for this decision is not traffic levels, per se, but simply that the Delta system is 

restructuring and reducing its regional fleet. 

Delta Air Lines is retiring all of the 34-seat turboprops in its Connection system, as well 

as dozens of 50-seat jets. The fallout is that Rhinelander is losing the majority of its 

connectivity with the national and global air transportation system.

This action leaves Rhinelander with only two 37-seat flights to the very small Frontier 

operation at Milwaukee, where on-line connections are minimal. This service is a tag-on 

to Essential Air Service to Iron Mountain, Michigan. This leaves Rhinelander often with 

as few as 15 seats or fewer. Combined with the fact that Frontier does not have wide 

connections to the rest of the nation at MKE, this service falls far short of filling the void 

being left by Delta.

The Airport has identified a solution in recruiting service to Chicago/O’Hare. In fact, the 

wider omni-directional connectivity of either of the two hubbing carriers at ORD will 

easily replace the Delta service, and allow more access than the traditional service to 

Minneapolis/St. Paul.

The Airport and the Community have held meetings with United Airlines, the largest of 

the two hubbing airlines at Chicago/O’Hare. The traffic void left by Delta is well 

understood by the carrier, but it was made clear that in an industry environment of high 

fuel costs and limited regional fleets, incentives will need to be in place to proceed with 

further negotiations. It is understood that a similar situation exists at the other ORD 

hubbing carrier, American.1

Grant Request 

The Airport and the County of Oneida herein submit an application for $100,000 under 

the Small Community Air Service Development Grant Program. This will be matched by 

community funds in the amount of $15,000. The funding will be used to assist the carrier 

in establishing itself in the marketplace and at Rhinelander Regional Airpor.

 

1

American is in the process of re-organizing its regional flying, including the corporate spin-off of American Eagle.
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 3

The funds would be aimed at two key components necessary for a new airline brand to 

establish itself. The first is marketing. The second is the cost hurdle of setting up 

operations at the Airport.

The program funds would include a $15,000 marketing and advertising spend In the 

Rhinelander area to build brand awareness. On the Airport side, the funding would be 

used to offset the normal and usual costs of establishing ticket counter, gate, and ramp 

operations. This includes usual and reasonable expenses related to purchase or 

transfer of computers, communications lines, ground equipment, and backwalls.

In addition, the Airport has an additional $42,000 in in-kind support in the form of 

waivers of landing fees and rentals, plus use of an airport-owned billboard for one year.

This is not a case of attempting to build a new market. It is simply attracting an airline 

system to take over and build on the traditional 70,000+ passengers that already exist at 

Rhinelander.

The Airport and the citizens served by it appreciate the Department’s consideration of 

this application.

Please direct any questions or correspondence to:

Mr. Joe Brauer

Airport Director

Rhinelander/Oneida County Airport

3375 Airport Rd. 

Rhinelander, Wisconsin 54501
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 4

Table of Contents

Proposal Summary.......................................................................................................... 2

Statement of Air Service Deficiency............................................................................. 2

Grant Request ............................................................................................................. 2

Technical Outline ............................................................................................................ 5

Community and Airport: ............................................................................................... 5

Official Project Sponsor ............................................................................................... 5

Community Partners .................................................................................................... 5

Project Description....................................................................................................... 5

Market Overview ............................................................................................................. 6

Population Base........................................................................................................... 6

Historic & Current Air Service ...................................................................................... 6

Fares Are Much Higher At RHI .................................................................................... 9

Fares: Up Almost 30% Since 2005............................................................................ 10

Proposed Solution to Air Service Deficiency ................................................................. 11

Marketing Support ..................................................................................................... 11

“In Kind” Support........................................................................................................ 12

The Grant Will Generate Strong Traffic For The Region............................................ 13

Prior Air Service Development Activities.................................................................... 14

Program Plan............................................................................................................. 14

Post-Program Marketing............................................................................................ 14

Summary ................................................................................................................... 15
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 5

Technical Outline

Community and Airport:

Rhinelander/Oneida County Airport

Mr. Joe Brauer

Airport Director

715-365-3416

Official Project Sponsor

Rhinelander/Oneida County Airport, The City of Rhinelander, County of Oneida

Community Partners

This proposal is supported by the Oneida County Economic Development Corporation.

This organization will be responsible for the following:

 Working with the Airport in negotiating agreements with the target air carrier 

subsequent to grant award.

 Assuring community marketing and outreach to support the new access via 

Chicago/O’Hare

 Liaison with the Department in regard to carrier performance during the grant 

period.

 Administration of the total program funding, including contact with the 

Department.

 Preparation of quarterly reports, as determined necessary by the Department. 

Project Description

The request is for a grant of $100,000, to be matched by $15,000 in local funding, plus

$42,000 in in-kind support. The program is to offset the costs of a new carrier in 

establishing successful operations at Rhinelander, with service to Chicago/O’Hare.
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

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Market Overview

Population Base

Rhinelander/Oneida County Airport serves a population base of approximately 110,000 

over a wide area of Northern Wisconsin.

US highway 8, and US highway 51 are the main conduits that feed passengers to and 

from rural areas of the region. This population base has been, and with the service 

made possible under this grant will continue to be, the core traffic base of 

Rhinelander/Oneida County Airport.

Historic & Current Air Service

Rhinelander has traditionally been a spoke on the Northwest/Delta MSP hub system. It 

also had 19-seat service via Midwest Express to Milwaukee. The latter routing was an 

intermediate stop to support EAS service at Ironwood, Michigan.

Historically, much of the Northwest/Delta service to MSP was operated with 34-seat 

turboprops via an intermediate stop at Eau Claire. In 2002, the Department awarded 

Rhinelander
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

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Rhinelander a Small Community Air Service Grant to underwrite the upgrade of this 

service to include nonstop jet service to MSP. This proved wildly successful, as 

demonstrated by enplanements at RHI:

Note that the 2002 SCASD grant supported new capacity in the market, which spiked 

passenger traffic 55% by 2005. Subsequent to that, however, changes at Midwest 

Airlines resulted in their exit from the RHI market, and fleet changes at Delta shifted 

capacity elsewhere. With replacement service to ORD, and the enormous connectivity 

at that hub, the 2005 figures can be quickly reestablished and expanded.

2002 2003 2004 2005 2006 2007 2008 2009 2010

Passengers 53,387 65,075 77,918 82,644 77,583 72,384 50,688 51,876 47,507

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

85,000

Rhinelander Responds Quickly To Capacity Changes
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 8

The decline in passengers was entirely the result of airline strategy changes, not 

weakness in the RHI marketplace. A comparison of 2005 v 2010 is instructive:

Between the peak in 2005 and today, seat capacity has been slashed by more than one 

third, resulting in much-increased leakage to CWA. The Airport believes that this current

grant will be as successful as the 2002 award in accomplishing exactly the goals 

congress had in mind when the program was established.2

The offset of the expense of opening a new station, which this grant will provide, will be 

an strong incentive for either of the hubbing carriers at ORD to take advantage of the 

void left by Delta.

The Delta Service Was The Only Real Connectivity

Midwest was merged with Frontier in 2009, and today, that carrier operates two 37-seat 

flights daily on a MKE-RHI-IWD routing, again to support the IWD EAS market. This 

market combination does not provide sufficient seats nor sufficient frequency to meet 

the needs of the post-Delta Rhinelander market.

In addition, the Frontier hub at MKE is very sparse, with only 166 daily departures 

(including commuter flights) and essentially no international connectivity whatsoever, At 

ORD, American has over 450 departures, and United over 600. Either carrier will not 

only address the loss of Delta, but will also provide enhanced access to the national and 

global air transportation networks.

 

2

Schedule data from Innovata, LLC and analyzed by Aviation DataMiner.

Departures Seats

Carrier Hub 2005 2010 Change % Change 2005 2010 Change % Change

DL MSP 1,618 1,052 (566) -35.0% 55,012 37,706 -17,306 -31.5%

YX MKE 1,199 (1,199) -100.0% 22,781 -22,781

ZK MKE 730 1,444 13,870 13,870

Total 2,817 1,782 (881) -31.3% 77,793 51,576 -26,217 -33.7%
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 9

Fares Are Much Higher At RHI

A review of average fares for RHI’s top ten O&D markets as well as total average fares 

paid for the full year ending 1Q 201, indicate that RHI has much higher fares than other 

airports in the region.

The 22% variance in average fare between RHI and CWA is a major cause of reduced 

ridership, in conjunction with reduced capacity.

In the following page is a graph outlining how fares have increased over the past five 

years at RHI.

RHI RHI CWA DLH GRB

Rank Market AVG Fare AVG Fare AVG Fare AVG Fare

1 PHX $251.97 $214.10 $254.92 $196.65

2 LAX $288.83 $228.86 $294.17 $240.32

3 DEN $242.43 $196.32 $214.18 $172.73

4 LAS $259.03 $206.49 $160.47 $202.37

5 SEA $305.53 $233.14 $283.75 $247.59

6 SFO $301.37 $214.63 $278.09 $218.77

7 ATL $264.29 $222.48 $278.95 $234.12

8 MCO $211.85 $179.82 $237.25 $192.09

9 TPA $211.99 $177.90 $248.33 $188.37

10 DCA $252.75 $196.46 $274.44 $182.14

ALL $261.53 $214.87 $244.68 $223.17

Avg Fare Includes Federal Fees & Taxes
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 10

Fares: Up Almost 30% Since 2005

Fares in the RHI market have risen almost 30%. A snapshot of the 4Q for each year, 

and the current (1Q 2010) fares shows that the RHI market has been pummeled by 

fares that are much higher than at other regional airports. (Note that these data are for 

airline fares, net of federal taxes and fees.)

The service to Chicago/ORD that this grant will make more attractive is not expected to 

be “low fare.” But the wider access to more markets at either of the hubbing carriers 

there will without question in increase ridership at RHI to 2005 levels and beyond.

$189.62

$186.57

$205.16

$197.48

$212.33

$214.79

240.49

$160.00

$170.00

$180.00

$190.00

$200.00

$210.00

$220.00

$230.00

$240.00

$250.00

2004 2005 2006 2007 2008 2009 2010 (Q1)

Since 2005, RHI fares have 

skyrocketed concurrent with 

declining capacity

Fares are net of federal fees and taxes.
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 11

Proposed Solution to Air Service Deficiency 

The Airport and the community have a very straightforward plan to address what will 

otherwise be an economically-devastating loss of air service.

The airport is proposing a grant in the amount of $100,000, matched with local funds of 

$15,000 to offset the costs of entry for one of the two hubbing carrier systems at 

Chicago/O’Hare. As noted, positive and encouraging discussions were held with United 

Airlines in July of 2011, and the Airport will undertake similar meetings with the 

American Airlines system.3

The funding will be used primarily for offsetting the initial station costs for the target 

airline. In addition, there will be a strong marketing effort in the region to introduce the 

new airline brand.

The program will be structured as follows

1. The Airport will make available to the target airline $100,000 in funding to offset 

usual and reasonable expenses to start a new station.

2. Eligible applications are only those that purchase or transfer equipment that is 

specific and necessary for the carrier’s operations. These would include ground 

support equipment, communications equipment, ticket counter and ramp 

identification, etc.

3. The maximum offset will be $100,000 for such expenses.

4. A fund of $15,000 will be dedicated to marketing and advertising in local media to 

build public awareness for the new airline brand.

5. The cost-offset program is envisioned to begin 45 days from service initiation and 

conclude 30 days after the first flight.

6. The carrier must agree to serve the market for at least 18 months.

Marketing Support

A marketing and brand-awareness program will be implemented starting 30 days from 

date of planned service start. 

 

3

At this time, AMR is looking to spin-off American Eagle. As a result, the exact entities that will be operating regional 

flights for American are not fully clear. 
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

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This will be a program established and directed by the community partner, the Oneida 

County Economic Development Corporation. It will include:

1. Focused efforts to shift consumer loyalty from Delta to the new carrier. Most 

frequent flyers in the region will be members of the Delta SkyMiles program. To 

limit the leakage to Delta flights at CWA, strong efforts will be made to build 

membership in the United MileagePlus program or the American AAdvantage 

program, as appropriate.

2. Targeted contact with key travel generators in the region, using direct mail, 

electronic contact, and social media.

3. Civic presentations to the community to build recognition of the target carrier, its 

system, its schedule, and the scope of the new access for RHI.

4. Follow-up promotional activities as necessary to assure that traffic on the new 

service builds rapidly.

“In Kind” Support

The Airport will offer the carrier its standard program for new entrants. This will be 90 

days of rent and landing fee waivers, which is approximately $30,000. 

In addition to the Marketing funds, the airport will provide airline use of a highway 

billboard that it owns for one year. This is valued at $12,000 based on current rates for 

the billboard.
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 13

The Grant Will Generate Strong Traffic For The Region

The Airport feels that either of the target carrier systems, American or United, would 

immediately “inherit” the traffic abandoned by Delta, plus recapture some of the traffic 

now leaking to CWA. Therefore, the challenge is not a need to build traffic for the 

replacement carrier, but to facilitate its entry into the RHI market.

The proposed service, which this grant will facilitate, opens RHI to more destinations 

and more access to and from the rest of the globe. When Delta was serving RHI, the 

traffic base was not large enough to attract service from either AA or UA. Today, with 

Delta’s cessation of service at RHI, the O’Hare opportunity represents a vast 

improvement in air service for Northern Wisconsin consumers.
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

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Prior Air Service Development Activities

The Airport and community have worked very hard to assure that RHI attracts and 

retains the maximum air service possible. The airport successfully recruited additional 

capacity for MSP service in 2002-2005. Efforts were successful in supporting Midwest 

Express flights to that carrier’s MKE hub.

In 2008, with the assistance of a SCASD grant, the airport accomplished a complete 

regional market potential analysis that clearly identified the opportunities and the risks 

that the RHI market faces. Despite these efforts, changes in the structure of the airline 

industry have reduced service at RHI.

This grant will be instrumental in successfully reversing the effects of these airline 

industry shifts. 

Program Plan

The funding is envisioned for the program as structured below:

SCASD Grant Financial Plan

Station Cost 

Offset

Marketing 

Program In Kind Total

Community $15,000 $42,000 $57,000

US DOT $100,000 $100,000

TOTAL $100,000 $15,000 $42,000 $157,000

Post-Program Marketing

The Airport has an active air service development program that with the assistance of 

this grant will successfully replace the Delta service. At the end of the 90-day period, the 

Airport and the Oneida County Economic Development Corporation have the resources 

to continually provide marketing and local support for the service.
Proposal under the Small Community Air Service Development Program

Rhinelander, Wisconsin

DOCKET# OST-2011-0119 Page 15

Summary

It is again noted that this program is intended to shift existing, known passenger 

demand from the soon-to-end Delta service to another carrier. Therefore, the efforts to 

retain passengers at RHI will not be as difficult as in cases where traffic patterns need 

to be entirely shifted or built from scratch.

The Airport would point out the serious need for this grant. With Delta leaving the 

market, there are no other network-carrier options open to RHI, other than the two 

outlined in this application. The Frontier service is beneficial, but it cannot replace the 

lost access through MSP.

Therefore, the Airport and Community would urge favorable consideration of this 

application.