Docket DOT-OST-2011-0019 

Proposal Under the 

Small Community Air 

Service Development 

Program 

Small Community Grant Proposal 

Application of 

The Yellowstone / Big Sky 

Air Service Coalition / 

Bozeman Gallatin Field Airport 

Legal Sponsor: 

Gallatin Field Airport Authority 

DUNS Number: 14-417-2814 

Tax ID No.: 81-6005083 

Congressional District Code: 00 

August 2, 2011 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page i 

TABLE OF CONTENTS

1 Executive Summary...........................................................................................................2

1.1 Public/Private Partnership Applicant .......................................................................................... 2

1.2 The Air Service Development Goal of the Yellowstone/Big Sky/ Bozeman Coalition ............. 3

1.3 The Proposed Air Service Development Plan for this Federal Grant Application ..................... 3

1.4 Implementation and Administration of this Proposed Project .................................................... 4

1.5 Precedents for Grant Awards to Seasonal and Tourist Dependent Small Communities............. 4

1.6 Contact for this Application........................................................................................................ 5

2 Bozeman’s Air Service Market..........................................................................................6

2.1 Bozeman’s Airport Service Area ................................................................................................ 6

2.2 Bozeman’s Existing Air Service ................................................................................................. 7

2.3 Bozeman’s Air Service Development and Changes, 2005-2011 .............................................. 10

2.4 Bozeman’s Air Passenger Traffic ............................................................................................. 13

3 Yellowstone/Big Sky/Bozeman Coalition’s Air Service Development Plan...............17

3.1 Air Service Development Activities During the Past Five Years ............................................. 17

3.2 Bozeman-New York – Air Service Development Plan............................................................. 18

3.3 Administration of the Proposed Program.................................................................................. 20
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 2 

1 EXECUTIVE SUMMARY

1.1 PUBLIC/PRIVATE PARTNERSHIP APPLICANT

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport, (hereinafter referred to 

as the “Yellowstone/Big Sky/Bozeman Coalition”) is submitting this application for a federal funding 

grant under the Small Community Air Service Development Program. Neither Bozeman nor members of 

this Coalition have previously applied for or been awarded any grants in previous years under this 

program. 

The Yellowstone/Big Sky/Bozeman Coalition currently consists of the following public and private sector 

organizations: 

Public Sector 

 Gallatin Field Airport Authority (“Bozeman Airport”) 

 Bozeman Economic Development Council 

 Montana Tourism Corporation 

Private Sector Organizations 

 Yellowstone Club/Discoveryland 

 Big Sky Resort 

Additional Bozeman area resorts and businesses have also been actively involved in Bozeman’s air 

service development and are likely to participate in this Coalition. 

The Gallatin Field Airport Authority is the legal sponsor of this application and will be responsible for all 

administrative requirements of the proposed project and federal grant. The Airport Authority has led air 

service development activities for the Bozeman Airport for many years. 

Over the past five or more years, the two private sector organizations listed above have participated 

extensively in Bozeman’s initiatives to develop new and additional air services, -- and with great success. 

Since 2005, seven new airline routes have been instituted on either a seasonal or year-round basis, six of 

which are currently operated. These include nonstop services to new destinations by incumbent airlines 

(Delta and United) as well as service from new airlines (Frontier and Allegiant Air). Yellowstone 

Club/Discoveryland and Big Sky Resort have been instrumental in providing financial inducements 

through revenue guarantees for the development of several of the new routes that have been obtained. 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 3 

The principal role of the private sector members of the Yellowstone/Big Sky/Bozeman Coalition will be 

to provide the locally generated funding for the revenue guarantee program that is proposed in this 

application. 

1.2 THE AIR SERVICE DEVELOPMENT GOAL OF THE YELLOWSTONE/BIG SKY/ 

BOZEMAN COALITION

The Yellowstone Region served by the Bozeman airport is one of the fastest growing regions in Montana. 

Over the past decade, Bozeman’s airport service area population has been growing at the average rate of 

1.5% per year, as compared to 0.9% for the State of Montana and the U.S. The tourist and visitor 

industry in the region has been a major driver of economic growth, as well as the development and 

expansion of other businesses. The availability of nonstop flights that by-pass traditional connecting hub 

routings is critical to the growth of tourist and visitors to the Yellowstone Region. In recent years, new 

nonstop services have been established in the Chicago, Atlanta, San Francisco, Los Angeles, Las Vegas 

and Phoenix markets, and competitive nonstop service in the Denver market. Several of these markets 

are served on a seasonal basis (peak winter and peak summer months). Two of the more recent yearround markets are served with less than daily service. 

New York is currently Bozeman’s 6th largest O&D passenger market, and the largest market without 

nonstop service. Four major airlines that have hub networks at either Newark or JFK Airport and can 

potentially offer convenient connecting services for other major East Coast cities, such as Washington 

and Boston, which rank as Bozeman’s 10th and 12th largest O&D passenger markets. 

The Yellowstone/Big Sky/Bozeman Coalition’s goal is to obtain nonstop service in the New York market, 

initially for the peak Summer and Winter season, and eventually on a year-round basis. 

1.3 THE PROPOSED AIR SERVICE DEVELOPMENT PLAN FOR THIS FEDERAL GRANT 

APPLICATION

Over the past 18 months, the Gallatin Field Airport Authority and members of the Yellowstone/Big 

Sky/Bozeman Coalition have met with each of the four airlines that are the most likely candidates to 

provide New York-Bozeman nonstop services and have presented detailed service proposals, traffic and 

financial forecasts and discussed potential incentives that may be possible including financial guarantee 

plans. Based on these discussions, the Coalition believes that nonstop service can be obtained with a 

reasonable financial risk sharing plan. 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 4 

The specifics of any service plan will depend significantly on the carrier that operates the service. 

However, the Coalition is confident that with the proposed amount of funds available for a revenue 

guarantee, which is $1,725,000 ($1.0 million federal grant and $725,000 local contribution), nonstop 

service can be established on a seasonal basis in the New York-Bozeman market. We expect that this 

level of funding will support a two-year service period with 2 to 3 weekly round trips during each of the 

peak summer and peak winter periods. 

Section 3.2 of this application more completely describes the air service development plan for the New 

York-Bozeman market. 

1.4 IMPLEMENTATION AND ADMINISTRATION OF THIS PROPOSED PROJECT

The Gallatin Field Airport Authority will be the legal sponsor of this project and will be responsible for 

the administration of this program, which is more fully described in Section 3. 

1.5 PRECEDENTS FOR GRANT AWARDS TO SEASONAL AND TOURIST DEPENDENT SMALL 

COMMUNITIES

The DOT has awarded Small Community Air Service Development grants to a number of small 

communities whose economies are highly dependant on tourism and visitor industries, including 

communities whose air service needs are highly seasonal. Over the years, awards have been made to the 

following communities that are similar in many respects to Bozeman: 

 2002 Hailey, ID (Sun Valley), $600,000 

 2002 Taos/Ruidoso, NM, $500,00 

 2003 Gunnison/Crested Butte, CO, $200,000 

 2004 Steamboat Springs, CO, $500,000 

 2005 Durango, CO $750,000 

 2007 Panama City, FL $575,000 

 2009 Tunica, MS, $500,000 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 5 

1.6 CONTACT FOR THIS APPLICATION

The contact person for all communications with respect to this application is: 

Scott Humphrey 

Deputy Airport Director 

Gallatin Field Airport 

850 Gallatin Field Rd Ste 6 

Belgrade, MT 

406-388-6632 

Scott.humphrey@gallatinfield.com 

Contacts for key private sector organizations of the Coalition are: 

Steve Adelson 

Managing Partner 

Yellowstone Club/Discoveryland 

480-205-1335 

sadelson@discoverylandco.com 

Meg O’Leary 

Big Sky Resort 

406-995-5892 

moleary@bigskyresort.com 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 6 

2 BOZEMAN’S AIR SERVICE MARKET

2.1 BOZEMAN’S AIRPORT SERVICE AREA

Bozeman’s Gallatin Field Airport (BZN) is a non-hub airport located in Gallatin County in Southwestern 

Montana. Gallatin Field serves a 9-county market area which has a population of approximately 233,000. 

Gallatin County and its five adjacent counties represent the core service area and has a population of 

132,000. The secondary service area (as defined by the Montana DOT) includes three counties within a 

90 minute drive of BZN with a population of 101,000. Gallatin County has been the fastest growing 

county in Montana over the past decade with its population increasing by 32%, or an average growth rate 

of 2.8% per year. The population of Bozeman’s entire airport catchment area has grown by 16% since 

2000, or an average annual rate of 1.5% per year. This compares to an annual population growth rate of 

0.9% for the State of Montana and the total U.S. for the same period. 

Exhibit 2.1 – Bozeman’s Airport Carchment Area 

Source: Gallatin Field Airport Master Plan Update, 2007 and US Census 2010 

Bozeman is the gateway to the Yellowstone Region which is an attractive visitor destination with year 

round activities and a growing area for second home development. Gallatin Field is the closest 

commercial airport to Yellowstone National Park which is approximately a 90 minute drive from 

Bozeman. Yellowstone is the 4th largest U.S. National Park in terms of visitors attracting approximately 

3.3 million visitors annually. Bozeman is also the most convenient airport to several world-class ski 

Sweet

Grass

BZN BZN

Silver

Bow

Madison

Jefferson

Lewis

and

Clark

Broadwater

Meagher

Gallatin

Park

2010 2000 vs. 2010

County Population Change AAG

Gallatin 89,513 21,682 2.8%

Park 15,636 -58 0.0%

Jefferson 11,406 1,357 1.3%

Madison 7,691 840 1.2%

Broadwater 5,612 1,227 2.5%

Meagher 1,891 -41 -0.2%

BZN Primary Service Area 131,749 25,007 2.1%

Lewis and Clark 63,395 7,679 1.3%

Silver Bow 34,200 -406 -0.1%

Sweet Grass 3,651 42 0.1%

BZN Secondary Service Are 101,246 7,315 0.8%

Total BZN Catchment Area 232,995 32,322 1.5%

Total Montana 989,415 87,220 0.9%

Bozeman’s Airport Catchment Area 

Population

2010 2000 vs. 2010

County Population Change AAG

Gallatin 89,513 21,682 2.8%

Park 15,636 -58 0.0%

Jefferson 11,406 1,357 1.3%

Madison 7,691 840 1.2%

Broadwater 5,612 1,227 2.5%

Meagher 1,891 -41 -0.2%

BZN Primary Service Area 131,749 25,007 2.1%

Lewis and Clark 63,395 7,679 1.3%

Silver Bow 34,200 -406 -0.1%

Sweet Grass 3,651 42 0.1%

BZN Secondary Service Are 101,246 7,315 0.8%

Total BZN Catchment Area 232,995 32,322 1.5%

Total Montana 989,415 87,220 0.9%
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 7 

resorts. Big Sky, Spanish Peaks, Moonlight Basin and Yellowstone Club are resorts within 45 minutes of 

Bozeman. 

Exhibit 2.2 – Bozeman is the Gateway to the Yellowstone Region 

 

Unlike many other non-hub airports in the U.S., there are no significantly larger air carrier airports which 

serve the Bozeman/Yellowstone area. The closest FAA small hub airport is Billings, which is 

approximately 150 miles (2 1⁄2 hour driving time) west of Bozeman. However, the level and patterns of 

air service for interstate travel at Billings are similar to those at Bozeman. The principal difference in 

service is that Billings is a hub for regional EAS service to/from about six small communities in Montana. 

As a result, there is no significant leakage of traffic from the Bozeman catchment area to the Billings 

airport or any other airport. As a practical matter, the Bozeman/Yellowstone area is entirely dependent on 

Gallatin Field for commercial air travel. 

2.2 BOZEMAN’S EXISTING AIR SERVICE 

Five airline brands currently serve Bozeman with a total of 151 weekly departures to 10 destinations. 

Delta and United are the two major network airlines and both serve Bozeman with a combination of their 

own mainline aircraft as well regional jet aircraft operated by regional carriers under the major airlines’ 

code. Frontier and Allegiant Air are both low cost carriers that began service to Bozeman in 2008. 

Horizon Air is a regional airline that flies nonstop to Seattle. 

BZN BZN
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 8 

The following summarizes Bozeman’s current scheduled air services: 

 Delta provides year-round service principally to its hubs of Minneapolis and Salt Lake City. 

Delta also provides a weekly seasonal flight to Atlanta during both the winter and summer 

seasons. 

 United operates year-round service to its hubs of Denver and Chicago O’Hare Airport. Both 

routes are served with a mix of mainline and RJ aircraft. United also provides daily nonstop 

flights to San Francisco and Los Angeles on a seasonal basis. SFO is served in both the peak 

winter and peak summer months, and LAX during the summer. 

 Frontier Airlines provides two daily nonstops to Denver on a year round basis with 90-seat 

regional jets. 

 Horizon Air operates two daily nonstops to Seattle with 70-seat Q400 turboprop aircraft. 

 Allegiant Air operates two weekly flights to Las Vegas and two weekly flights to PhoenixMesa Airport. 

Exhibit 2.3 – Bozeman’s Scheduled Air Service, August 2011 

Source: OAG Schedules Aug. 2011; Allegiant Air website 

Bozeman’s Nonstop Service

August 2011

Nonstop Marketing Weekly Aircraft

Market Miles Carrier Dep't Types

Atlanta 1,628 Delta 1 738

Chicago 1,174 United 16 319, 320, CR7

Denver 512 United 28 319, CR7, CRJ

Denver 512 Frontier 14 E90

Las Vegas 696 Allegiant Air 2 MD-80

Los Angeles 898 United 7 CRJ

Minneapolis 864 Delta 21 319, 320

Phoenix 847 Allegiant Air 2 MD-80

Salt Lake City 341 Delta 39 CRJ

San Francisco 807 United 7 CRJ

Seattle 550 Horizon Air 14 DH4

Total Weekly Departures 151

Nonstop Marketing Weekly Aircraft

Market Miles Carrier Dep't Types

Atlanta 1,628 Delta 1 738

Chicago 1,174 United 16 319, 320, CR7

Denver 512 United 28 319, CR7, CRJ

Denver 512 Frontier 14 E90

Las Vegas 696 Allegiant Air 2 MD-80

Los Angeles 898 United 7 CRJ

Minneapolis 864 Delta 21 319, 320

Phoenix 847 Allegiant Air 2 MD-80

Salt Lake City 341 Delta 39 CRJ

San Francisco 807 United 7 CRJ

Seattle 550 Horizon Air 14 DH4

Total Weekly Departures 151
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 9 

Because of its geographic location, most of Bozeman’s nonstop routes are in the medium to long haul 

range. Nine of Bozeman’s 10 nonstop routes are over 500 miles; six routes are over 800 miles, with 

Atlanta being the longest nonstop market served at just over 1,600 miles. Bozeman’s air services are 

provided with a mix of narrowbody mainline jets, regional jet aircraft with 50 to 90 seats and large 70-

seat turboprop aircraft. Regional jets currently comprise 64% of Bozeman’s scheduled departures and 

48% of the total seat capacity; narrowbody aircraft account for 27% of departures, but 44% of total seat 

capacity; turboprops account for 9% of departures and 8% of seat capacity. 

Exhibit 2.4 – Distribution of Bozeman’s Scheduled Air Service by Aircraft Class 

 Schedule Departures Scheduled Seats

Mainline 

Jets

27%

Regional 

Jets

65%

Turboprops

8%

Mainline 

Jets

44%

Regional 

Jets

48%

Turboprops

8%

Source: OAG Aug. 2011 and Allegiant Air website 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 10 

2.3 BOZEMAN’S AIR SERVICE DEVELOPMENT AND CHANGES, 2005-2011 

Bozeman has been active and highly successful in promoting air service development at Gallatin Field 

over the past 5 or more years, as reflected in the schedule history (based on August schedules) shown in 

the following Exhibit. 

Exhibit 2.5 – Bozeman’s Nonstop Service by Market, Summer Schedules, 2005-2011 

Source: OAG August schedules; Allegiant Air Website. 

Market 2005 2006 2007 2008 2009 2010 2011 Seats/Flts Percent

Denver 1,890 2,190 2,136 4,300 4,446 2,990 3,302 1,412 75%

Minneapolis 2,422 2,940 2,940 2,940 2,724 2,632 2,748 326 13%

Salt Lake City 4,396 2,850 2,450 2,470 2,490 2,120 1,950 -2,446 -56%

Seattle 980 1,470 1,960 1,470 490 1,330 980 0 0%

Chicago 0 490 924 1,092 1,140 1,452 1,542 1,542 n.c. 

Atlanta 0 300 483 403 300 320 160 160 n.c. 

Detroit 0 148 124 124 124 124 0 0 n.c. 

San Francisco 0 0 50 50 50 350 350 350 n.c. 

Los Angeles 0 0 0 66 0 350 350 350 n.c. 

Las Vegas 0 0 0 300 300 300 300 300 n.c. 

Phoenix 0 0 0 0 0 0 300 300 n.c. 

Total Seats 9,688 10,388 11,067 13,215 12,064 11,968 11,982 2,294 24%

Denver 35 35 36 42 45 42 42 7 20%

Minneapolis 21 21 21 21 21 21 21 0 0%

Salt Lake City 63 49 49 47 47 42 39 -24 -38%

Seattle 14 21 28 21 7 19 14 0 0%

Chicago 0 7 14 7 8 16 16 16 n.c. 

Atlanta 0 2 3 3 2 2 1 1 n.c. 

Detroit 0 1 1 1 1 1 0 0 n.c. 

San Francisco 0 0 1 1 1 7 7 7 n.c. 

Los Angeles 0 0 0 1 0 7 7 7 n.c. 

Las Vegas 0 0 2 2 2 2 2 n.c. 

Phoenix 0 0 0 0 0 0 2 2 n.c. 

Total 133 136 153 146 134 159 151 18 14%

Weekly Flights

Summer (August ) Schedules

Weekly Seats

Change 2005-11
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 11 

In 2005 Bozeman had nonstop service to only 4 major hub destinations – United served Denver, 

Northwest served Minneapolis, Delta served Salt Lake City and Horizon Air served Seattle. Since 2005, 

new nonstop service has been instituted in 7 new markets, 6 of which continue to be served in 2011. 

Over this period, Bozeman’s summer season seat capacity has increased by 24% and its scheduled 

departures have increased by 14%. New service on a number of these routes have been obtained through 

incentives and revenue guarantees similar to that which is the focus of this Small Community Air Service 

Development grant application. 

 In 2006 United began a single daily service to Chicago O’Hare Airport. This service has now 

been increased to 16 weekly nonstops. 

 In 2006 Delta instituted 2 weekly flights to Atlanta in the peak summer and winter seasons. 

Delta has continued these seasonal services with frequencies ranging from 1 to 3 flights per 

week. 

 In 2006 Northwest began summer and winter seasonal service to Detroit with one weekly 

roundtrip. This service was operated through 2010. 

 In 2007 United began summer and winter seasonal service to San Francisco, initially with one 

weekly flight. This service has been increased to daily flights in 2010 and 2011. 

 In 2008 United also added a seasonal weekly nonstop flight to Los Angeles. This service has 

also been increased to daily service, although is presently operated only during the summer 

season. 

 In 2008 Frontier entered the Denver market providing 3 daily Q400 roundtrips by its regional 

carrier. Frontier now provides 2 daily roundtrips with 90-seat regional jet aircraft. 

 In 2008 Allegiant Air began year-round nonstop service to Las Vegas with two departures per 

week and has continued this service through the present time. 

 In 2010, Allegiant instituted two weekly roundtrips on a year-round basis to Phoenix-Mesa 

airport. 

The Bozeman community has been instrumental in working with airlines to provide new services at 

Bozeman. Private sector organizations have contributed to incentive packages that have provided revenue 

guarantees and/or direct financial support to induce some airlines to offer some of the new services. For 

example, revenue guarantees have been provided to attract Delta’s service to Atlanta, Frontier’s service to 

Denver and Horizon Air’s service to Seattle. What has been important is that the revenue guarantees 

negotiated have rarely needed to be used, almost all the new service BZN has received over the last 

decade has become self-sustaining.
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 12 

The Bozeman market has generated the traffic support needed to sustain services in both new and long 

standing routes. In CY 2010, the average load factor for all scheduled flights at Bozeman was 79.2%. 

Eight of the 12 nonstop carrier routes operated during the year achieved load factors of 80% or higher. 

Exhibit 2.6 – Bozeman Average Load Factors by Carrier Routes, CY 2010 

Source: USDOT, Database Products, T100. 

Reporting Dept Onboard Load

Market Carrier Perf Psgrs Seats Factor

Denver United 3,225 161,165 198,416 81.2%

Minneapolis Delta 1,771 146,114 178,575 81.8%

Salt Lake City Delta 3,473 145,427 178,149 81.6%

Denver Frontier 1,269 70,439 95,300 73.9%

Seattle Horizon Air 1,259 65,819 95,640 68.8%

Chicago United 870 53,976 65,628 82.2%

Las Vegas Allegiant Air 210 26,769 31,500 85.0%

San Francisco United 456 17,045 25,104 67.9%

Atlanta Delta 117 15,991 18,741 85.3%

Los Angeles United 148 4,749 7,464 63.6%

Phoenix Allegiant Air 32 4,194 4,800 87.4%

Detroit Delta 35 3,749 4,376 85.7%

Grand Total 12,865 715,437 903,693 79.2%
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 13 

2.4 BOZEMAN’S AIR PASSENGER TRAFFIC

Traffic Growth Trends 

Bozeman’s air passenger traffic nearly doubled during the 15-year period 1995-2000 with annual 

enplanements growing from 186,685 to 365,210, or an average annual growth rate of 4.5%. Bozeman’s 

enplanements recorded positive growth each year from 1995 to 2005, with the 10-year annual growth rate 

of 6.0%. This steady growth trend was interrupted in 2006 with a 5.3% decline due mainly to the Chapter 

11 bankruptcies and service reductions of Delta and Northwest Airlines in late 2005. At the time, these 

two airlines accounted for approximately 60% of Bozeman’s total enplanements. Bozeman’s traffic 

rebounded with its historic growth rates in 2007 and 2008, but declined slightly in 2009 due to the 

economic recession. However, Bozeman’s traffic has again rebounded with strong growth. In 2010, 

Bozeman’s enplanement grew by 6.6%, and traffic has grown by 12.7% for the first six months of 2011. 

At this rate, Bozeman’s enplanements will exceed 400,000 for CY 2011. 

Exhibit 2.7 – Bozeman Air Passenger Enplanements, 1995 – YTD June 2011 

Source: Bozeman Airport Record 

Bozeman Growth from

Year Enplanements Prior Year

1995 186,685

1996 196,378 5.2%

1997 207,352 5.6%

1998 218,117 5.2%

1999 222,767 2.1%

2000 242,650 8.9%

2001 256,134 5.6%

2002 274,499 7.2%

2003 281,052 2.4%

2004 308,985 9.9%

2005 335,679 8.6%

2006 317,850 -5.3%

2007 335,276 5.5%

2008 351,214 4.8%

2009 342,714 -2.4%

2010 365,210 6.6%

2011(f) 411,592 12.7%

Jan-Jun

2010 163,010

2011 183,792 12.7%

Average Annual Growth

1995-2010 4.5%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 14 

Bozeman’s Top O&D Passenger Markets 

Exhibit 2.8 shows the CY 2010 O&D passenger traffic for Bozeman’s top 25 O&D markets. Nine of the 

top 12 O&D markets have nonstop service on either a year round or seasonal basis. The three markets 

that do not have nonstop service are all Northeast U.S. markets. New York is the largest O&D market 

without nonstop service with 27,660 passengers and is followed by Washington with 22,700 passengers 

and Boston with 14,830 passengers. 

The Bozeman-New York market generates more local O&D passengers than either Minneapolis or 

Chicago which have 3 and 2 daily nonstops, respectively. It is also larger than Atlanta which supports 

summer and winter season service. Although most of Bozeman’s top O&D markets are also connecting 

hubs for the carriers providing the service, the candidate airlines for nonstop New York-Bozeman service 

also have connecting hubs at either JFK or Newark airports which could draw traffic from Boston, 

Washington and other East Coast cities. 

Exhibit 2.8 – Bozeman’s Top 25 O&D Passenger Markets, CY 2010 

Source: USDOT O&D Survey; OAG Aug 2011; Allegiant Air website 

CY 2010 Aug 2011 

O&D Nonstop O&D Weekly

Rank Market Miles Passengers PDEW N/S Depts

1 Denver 524 47,710 65 42

2 Seattle 542 35,770 49 14

3 Las Vegas 701 34,220 47 2

4 San Francisco 807 29,470 40 7

5 Los Angeles 902 28,340 39 7

6 New York 1,897 27,660 38 None

7 Minneapolis 871 25,880 35 21

8 Chicago 1,182 23,670 32 16

9 Atlanta 1,637 22,700 31 1

10 Washington 1,769 22,400 31 None

11 Phoenix 854 15,320 21 2

12 Boston 1,985 14,830 20

13 Dallas/Fort Worth 1,162 14,460 20

14 Portland 552 12,070 17

15 Orlando 2,008 10,780 15

16 San Diego 956 10,290 14

17 Houston 1,406 10,020 14

18 Philadelphia 1,847 9,460 13

19 Nashville 1,432 8,790 12

20 Detroit 1,395 8,540 12

21 Sacramento 728 7,670 11

22 Kansas City 958 7,260 10

23 Salt Lake City 348 6,770 9 39

24 Charlotte 1,732 6,550 9

25 Anchorage 1,876 6,530 9

Subtotal Top 25 412,380 565

All Other 285,720 391

Total 698,100 956 151
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 15 

Bozeman’s Airline Market Shares 

Bozeman is served by five airline brands. In 2010, two major network airlines accounted for 76% of 

Bozeman’s total enplanements – Delta with a 43% market share and United with a 33% share. (These 

figures include regional airline services operated under the major airline’s brand.) Frontier and Horizon 

Air each had a 10% market share and Allegiant Air enplaned 4% of the traffic. 

Exhibit 2.9 – Bozeman’s Airline Market Shares, CY 2010 

Source: Bozeman Airport Records 

Bozeman’s Air Fares 

Based on a comparative analysis of average fares in selected Bozeman markets with average fares in 

national markets for the corresponding distance categories, Bozeman’s fares appear reasonable in relation 

to the “benchmark median” fares. 

It is evident that low cost carriers, such as Allegiant and Frontier have a competitive impact on reducing 

fares in the Bozeman markets that they serve. For example, the average fares in the Bozeman-Las Vegas 

and Phoenix markets are more than 40% below the “benchmark” fare and the Bozeman-Denver average 

fare is 20% below the benchmark fare. 

The average fares in Bozeman’s in other top markets that are not served by LCC’s are also generally in 

line with the national benchmark fare for the distance category, as are the markets that are served on a 

seasonal basis. The average fare in the top three Bozeman-East Coast markets, none of which have 

nonstop service, range from 4% to 14% higher than the benchmark fares for their distance category. 

Delta

43%

United

33%

Horizon

10%

Frontier

10%

Allegiant

4%
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

The Yellowstone/Big Sky Air Service Coalition / Bozeman Gallatin Field Airport Page 16 

Exhibit 2.10 – Analysis of Average Fares in Selected Bozeman Markets, 4th Quarter 2010 

Source: US DOT O&D Survey, 4th Quarter 2010. 

It may be noted that this fare analysis is based on a limited market sample and time period (4th Quarter 

2010) and did not attempt to consider market characteristics other than distance for the fare comparisons. 

The national benchmark fare in this analysis was the median fare for all markets within the mileage band 

in Table 1 (“Top 1,000 Domestic Markets”) from the DOT Domestic Airline Fares Consumer Report for 

the 4th quarter 2010. 

Ratio

BZN to

BZN Mileage Median Benchmark

Distance O&D Psgrs Ave Fare Category Fare 1/ Fare

Principal Hub Markets

DEN 524 12,900 $122 501-550 $153 0.80

MSP 871 6,200 $176 851-900 $163 1.08

CHI 1,182 5,130 $184 1101-1200 $187 0.98

SEA 542 9,420 $147 501-550 $153 0.96

SLC 341 1,930 $203 301-350 125 1.62

Allegiant Markets

LAS 701 8,910 $93 701-750 $172 0.54

PHX 854 6,410 $95 851-900 $163 0.58

Seasonal Markets

ATL 1,637 5,080 $176 1601-1700 $239 0.74

SFO 807 3,780 $185 800-850 $172 1.08

LAX 902 3,410 $169 901-950 $174 0.97

East Coast Markets

NYC 1,897 4,430 $236 1801-1900 $228 1.04

WAS 1,769 3,360 $248 1701-1800 $221 1.12

BOS 1,985 2,550 $259 1901-2000 $227 1.14

Benchmark Fare

BZN 4Q10

Market

Bozeman
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3 YELLOWSTONE/BIG SKY/BOZEMAN COALITION’S 

AIR SERVICE DEVELOPMENT PLAN

3.1 AIR SERVICE DEVELOPMENT ACTIVITIES DURING THE PAST FIVE YEARS

Working cooperatively with other private and public sector organizations in the Bozeman Yellowstone 

region, Gallatin Field Airport Authority has led air service development activities to obtain additional air 

services for many years. The Airport Authority regularly meets with its incumbent and prospective 

airlines to discuss and promote its air service needs. 

With the population and economic growth that has taken place in the Yellowstone Region since the 

1990s, the demands for additional airline service have also grown rapidly, with service needs not only in 

hub routes, but also the need for nonstop service to additional destinations. For example, as recently as 

2005 Bozeman had nonstop service to only four major hub markets – Salt Lake City, Denver, 

Minneapolis and Seattle, and no additional services in peak winter or peak summer months. With the 

development of expanded visitor and tourist facilities in the region, as well as other economic activity, 

there was a growing for air services to points well beyond Bozeman’s traditional hubs. 

At this time, private sector organizations became much more involved in Bozeman’s air service 

development activities. Organizations, such as the Bozeman Chamber of Commerce, developed 

significant amounts of research relating to the region’s economic activities and growth potential to assist 

air carriers in their analysis and evaluations of market demands not available from other sources. Resort 

organizations such as the Yellowstone Club, Big Sky and other ski and summer resorts and residential 

communities conducted surveys of their visitors that documented origination markets, means of travel and 

other attributes useful in determining air service demand. 

As detailed in Section 2.3 of this proposal, these air service development activities were instrumental in 

obtaining new services in 7 additional nonstop markets since 2005. 

Although the Airport Authority itself did not provide any direct financial support for new services, some 

of the new routes were supported with revenue guarantees and significant marketing support provided by 

several of the private sector resort organizations and more recently with an FAA approved incentive 

program that mitigated first year airport costs. For example, Delta’s seasonal service to Atlanta and 

Frontier’s entry into the Denver market were supported to some extent by direct financial commitments 

by the resort industry. 
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Over the past 18 months, the Gallatin Airport Authority and private sector companies have become more 

closely coordinated in determining the Bozeman’s air service needs and in marketing to prospective 

airlines. 

In February 2010, the Airport Authority decided that incentives were needed in the current economic 

climate to attract new or expanded air service and improve the airport’s competitive position, particularly 

with respect to other resort communities in the Mountain Region. Accordingly, the Authority has 

established an air service incentive program to attract new nonstop service in markets that are currently 

unserved from Bozeman. Incumbent and new carriers are eligible for these incentives. For eligible 

services, the Authority may waive landing fees for a limited amount of time and provide a monetary 

payment for service to a new destination not to exceed $30,000. 

Several resort organizations that are now part of the Yellowstone/Big Sky/Bozeman Coalition also 

participate directly in initiatives to recruit new airline services and are able to commit more significant 

financial incentives. Since February 2010 the Coalition has met with a number of airlines regarding the 

institution of nonstop service to new destinations 

3.2 BOZEMAN-NEW YORK – AIR SERVICE DEVELOPMENT PLAN

If the Yellowstone/Big Sky/Bozeman Coalition’s Small Community Air Service Development grant 

application is awarded, the funds, combined with its own funding, will be used to offer a revenue 

guarantee to recruit an airline to provide nonstop service in the Bozeman-New York market. The 

rationale for the market selection and basis for the confidence that the revenue guarantee will lead to a 

viable and self-sufficient service is discussed below. 

Market Selection 

New York is Bozeman’s 6th largest O&D passenger market and its largest market that does not receive 

nonstop service. The Bozeman-New York O&D passenger market is nearly as large as the San Francisco 

and Los Angeles markets which support daily service on a seasonal basis and it is about 20% larger than 

Atlanta which also supports summer and winter seasonal service with mainline aircraft. 

The Yellowstone/Big Sky/Bozeman Coalition is seeking to secure nonstop service, at least several times 

per week during the peak winter and summer months. As shown in the Exhibit below, in CY 2010 the 

Bozeman-New York market generated 329 O&D passenger per week each way during the 1st Quarter and 

368 weekly passengers each way during the 3rd Quarter. With nonstop service 2 to 3 times per week, 

significant traffic stimulation would be expected. Based on the actual experience of the Bozeman-Atlanta 

market, O&D passengers increased by 40% following the institution of nonstop service at similar 

frequency. 
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Exhibit 3.1 – Bozeman-New York Weekly O&D Passengers Each Way by Quarter, 2010 

Source: DOT O&D Survey . (O&D Passengers per Quarter divided by 26.) 

In addition to local NYC-Bozeman O&D passengers, the carrier operating the service would also be able 

to attract passengers from other East Coast markets since the most likely candidates to provide this 

service each have connecting hubs at their New York area airports. Washington and Boston, which rank 

10th and 12th among Bozeman’s domestic O&D passenger markets, as well as other East Coast cities, 

would likely contribute significant connecting passengers for New York-Bozeman nonstop flights. 

Expected Level of Service to be Secured with the Planned Revenue Guarantee 

Over the past 18 months, the Yellowstone/Big Sky/Bozeman Coalition has met with the four airlines that 

would be the most likely candidates to provide New York-Bozeman service. The airlines are United 

Continental from Newark and American, Delta and JetBlue from JFK. For these meetings the Coalition 

had its airline consultant prepare traffic and financial forecasts based on the carrier’s aircraft types, route 

network at the NYC airport hubs and revenue and cost estimates that were all applicable to the specific 

carrier. Depending on the carrier’s philosophy for serving seasonal markets, specific aircraft types and 

cost structure, the specific levels of service that may be provided with the revenue guarantee that would 

be available through this grant may vary by carrier. 

However, it is our best estimate that a $1,725,000 revenue guarantee ($1.0 million federal grant and 

$725,000 community commitment) would support an agreement by the airline to operate approximately 

140 roundtrip flights. This number of flights would allow approximately 5 weekly round trip flights in 

each of the two 13 week winter and summer seasons during one year. Alternatively, it may support a two 
Docket DOT-OST-2011-0019: Proposal Under the Small Community Air Service Development Program August 2, 1011 

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year program with a frequency of 2 of 3 weekly flights each season for a two year period. This second 

alternative would be the Coalition’s preference. 

The exact service frequency and length of time for the revenue guarantee program would be negotiated 

with the airline and may differ from the two alternatives described above. 

Competitive Bid Process 

Following the award of its grant application herein, the Yellowstone/Big Sky/Bozeman Coalition would 

institute a Request for Proposal (RFP) process inviting interested airlines to provide air service proposals 

for New York-Bozeman nonstop service. The proposal requirements would include the carrier’s 

proposed schedules, which may include various schedule frequency alternatives, equipment type, cost 

estimates, and revenue guarantee requirements. The Yellowstone/Big Sky/Bozeman Coalition would 

then evaluate the proposal submissions and meet with one or more of the interested airlines to negotiate 

“best and final” proposals before making a final selection. The Yellowstone/Big Sky/Bozeman Coalition 

would have the professional and technical assistance of its aviation consultant, which has substantial 

experience in negotiating and implementing revenue guarantee programs for new air services, throughout 

the carrier selection process. 

Based on prior meetings and discussions with the principal candidate airlines for New York-Bozeman 

service, the Yellowstone/Big Sky/Bozeman Coalition is confident that it will receive viable proposals for 

this service. It is, however, difficult to predict the specific service plans that may be offered. 

3.3 ADMINISTRATION OF THE PROPOSED PROGRAM

Legal Sponsor and Program Administration 

The Gallatin Field Airport Authority is the legal sponsor for this grant application and will be responsible 

for all administrative aspects related to the proposed program. The Airport Authority will be responsible 

for the receipt, accounting and distribution of all federal and local funds that will used in connection with 

this program. 

The Funding Plan 

Cash Contribution 

The Yellowstone/Big Sky/Bozeman Coalition’s funding plan for this grant application relates entirely to 

cash funds that will be used to provide a revenue guarantee to establish nonstop Bozeman-New York air 

service. 
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The total amount of funding for this purpose is $1,725,000 from the following sources: 

 Federal grant from the U.S. DOT: $1,000,000 

 Yellowstone/Big Sky/Bozeman Coalition minimum contribution: $725,000 

The funding provided by local organizations will come primarily from the private sector organizations, 

with the largest shares provided by the Yellowstone Club/Discoveryland, Big Sky Resort and other 

resorts. As noted above, $725,000 will be the minimum contribution for this program. It is possible that 

with the federal grant award, additional contributions may be secured. 

In-Kind Contributions 

Additional In-Kind contributions are anticipated from the Gallatin Field Airport Authority and other local 

businesses and organizations. However, because of the procedures that the Airport Authority and other 

entities must follow to appropriate and budget financial and non-financial resources to specific future 

projects, the Coalition cannot make firm commitments on the value of In-Kind contributions at this time. 

With an award of the grant applied for herein, the Coalition is confident that additional contributions can 

be raised. These contributions would most likely be used for marketing and promotional purposes and 

not as part of the revenue guarantee. 

Funding Plan Summary 

To summarize, for the purpose of this grant application, the Yellowstone/Big Sky/Bozeman Coalition’s 

contractual commitment will consist of only its cash contribution to the revenue guarantee arrangement. 

Therefore, the total recognized project amount is $1,725,000, with the local share of $725,000 or 42.0% 

of the total. 

Funding Assurances 

The Gallatin Field Airport Authority will serve as the coordinating party to secure the required local area 

funding that has been pledged. Upon notification of the award from the U.S. DOT, the Airport Authority 

will secure contractual commitments for the local funds that will be used for the revenue guarantee. A 

revenue guarantee agreement will not be executed with an airline until the source of all local funding has 

been firmly committed to the program. 

Timing of the Implementation of the Program 

It is assumed that that the federal grant awards will be announced during the Fall of 2011. When the 

Yellowstone/Big Sky/Bozeman Coalition is notified of its grant, it would immediately begin its RFP 

process to select a carrier. It is likely that the earliest time for services to be provided under the program 

would be the Summer 2012 season, followed by the Winter 2013 season. 
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Administration of the Proposed Revenue Guarantee Contract and Program 

Upon notice of the federal grant award, the Airport will establish a specific project account to govern all 

activities of the program, including financial accounts and implementation activities. Quarterly status 

reports will be prepared as required USDOT that describe the progress in the RFP phase, including carrier 

selection and negotiations relating to the implementation of the air services. 

The revenue guarantee agreement to be negotiated is expected to include the following elements: 

1. An agreed average cost per flight negotiated with the carrier for a given season. This average 

cost would include a specified “base period” average cost of fuel per gallon. 

2. An agreed mechanism for adjusting fuel costs upwards or downwards based on an oil price index 

or other agreed method. 

3. An agreed method of accounting for revenues assigned the New York-Bozeman flights. This is 

likely to be derived from the airline’s normal internal flight segment profitability system. 

4. The “revenue shortfall” would be defined as the costs of the service (average cost per flight times 

number of flights operated) minus the total revenues assigned to the flight. 

5. The “revenue guarantee” would cover the “revenue shortfall” up to a maximum amount, which 

may be based on an agreed percentage of the total costs of service. For example, this maximum 

ceiling on the revenue guarantee may be 20% of total service costs (or a different negotiated rate.) 

6. Revenue guarantee payments would be made on an agreed periodic basis, which would likely be 

on a monthly or quarterly basis. 

7. The airline would provide an invoice for revenue guarantee payments accompanied by 

appropriate documentation of the billing. 

These are relatively standard elements of most airline revenue guarantee agreements. However, the exact 

provisions and terms of the agreement would be subject to negotiation and may vary from the above short 

description. It should be noted that because of the “maximum revenue guarantee cap,” the financial risk 

of the proposed service is shared by both the community and the airline. It is not simply a “purchase of 

service.” 

As part of the contractual agreement with the selected airline, the airline will be required to provide 

certain monthly operational and performance reports for the service covering traffic, revenues and 

operations. These reports will be reviewed by the Airport Authority and the Coalition to verify all 
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invoices related to the revenue guarantee provisions. All revenue guarantee payments will be drawn from 

the project fund account and ultimately apportioned at 58.0% federal funds share and 42.0% local share. 

Monitoring Progress of the Grant Program 

The Yellowstone/Big Sky/Bozeman Coalition will establish an Executive Committee to monitor the 

performance the New York-Bozeman air services and progress of the grant program. Periodic 

performance reports will be reviewed regularly to determine whether any adjustments or changes in the 

contracted services may be appropriate and mutually beneficial for the community and the airline. A 

member of the Executive Committee will be designated as the primary contact person to for day-to-day 

communication with the airline’s designated representative, as needed. 

Promotion and Community Support Plans Beyond the Period Covered by the Federal 

Grant 

The Yellowstone/Big Sky/Bozeman Coalition fully expects that the proposed revenue guarantee program 

outlined here-in will lead to self-sufficient nonstop New York-Bozeman air service during and/or beyond 

the period during which the federal grant is available to develop the services. 

It is important to note that the Yellowstone Region community has previously provided revenue 

guarantees and has worked closely with air carriers to develop nonstop service in other markets and has 

generally been successful. In connection with this proposal, the Yellowstone/Big Sky/Bozeman Coalition 

will have a significant financial stake and vested interest in the success of this program. 

As one of Bozeman’s largest O&D passenger markets and an important source of visitors to the 

Yellowstone Region, the Yellowstone/Big Sky/Bozeman Coalition has a long term interest in developing 

New York-Bozeman air service to its fullest potential. The specific market development strategy for the 

period after expiration of the revenue guarantee service would depend on an evaluation the market 

development at that time. However, at a minimum, we would expect that co-op destination marketing 

and promotional support would be available to promote continued traffic development.