Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 APPLICATION UNDER

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 2014

- 0113

SUMMARY INFORMATION

A. PROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D& B) DATA UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER, INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN) OR TAX ID.
Legal Sponsor Name: Great Falls International Airport Authority
Name of Signatory Party for Legal Sponsor: John Faulkner

DUNS Number: 15

- 6130148

EIN/Tax ID: 81

- 0347136

B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING:

1. Great Falls, Montana

C. PROVIDE THE FULL AIRPORT NAME AND 3

- LETTER IATA AIRPORT CODE FOR THE APPLICANT(S) AIRPORT(S) (ONLY PROVIDE CODES FOR THE A IRPORT(S) THAT ARE ACTUALLY SEEKING SERVICE).

1. Great Falls International Airport (GTF) 2.

3. 4.

DOES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE ISSUED BY THE FEDERAL AVIATION ADMINISTRATION UNDER 14 CFR PART 139? (IF “NO,” PLEASE EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR WHETHER AN APPLICATION UNDER PART 139 IS PENDING.)

Yes No (explain)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 D. LIST THE 2

- DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.
1. None (at

- large congressional representation) 2.

3. 4.

E. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)

Not a Consortium Interstate Consortium Intrastate Consortium
Community now rece ives subsidized Essential Air Service
Community (or Consortium member) previously received a Small Community Air Service Development Program Grant
If previous recipient: Provide Year of grant(s):

____________________________________________________ ; Did not execute contract with DOT and, the text of the Grant agreement section(s) setting forth the scope of the grant project:

________________________________________________________ ______________________

____________________________________________________________________________________

____________________________________________________________________________________

__________________ F. PUBLIC/PRIVATE PARTNER SHIPS: (LIST ORGANIZATION NAMES )

PUBLIC PRIVATE
1. Great Falls International Airport Authority 1.

2. 2.

3. 3.

4. 4.

5. 5.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 G. PROJECT PROPOSAL:

1. GRANT GOALS: (CHECK ALL THAT APPLY)

Launch New Carrier Secure Additional Service Upgrade Aircraft

Fi rst Service New Route Service Restoration
Regio nal Service Surface Transportation Professional Services
Other (explain below)

____________________________________________________________________________________

____________________________________________________________________________________

____________________________ ________________________________________________________ 2 . FINANCIAL TOOLS TO BE USED: (CHECK ALL THAT APPLY)
Marketing (including Advertising): promotion of the air service to the public

Start

- Up Cost Offset: offsetting expense s to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration)

Revenue Guarantee: an agreement with an air service provider setting forth a minimum guaranteed profit margin, a portion of which is eligible for reimbursement by the community

Recruitment of Air Carrier: air service develo pment activities to recruit new air service, including expenses for airport marketers to meet with air service providers to make the case for new air service

Fee Waivers: waiver of airport fees, such as landing fees, to encourage new air service; counted as in

- kind contributions only
Ground Handling Fee: reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers

Travel Bank: travel pledges, or deposited monetary funds, from participating parties for the purchase of air travel on an air carrier, with defined procedures for the subsequent use of the pledges or the deposited funds; counted as in

- kind contributions only

Other (explain below)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 H. EXISTING LANDING AIDS AT LOCAL AIRPORT:

Full IL S Outer/Middle Marker Published Instrument Approach

Localizer Other (specify)

I. PROJECT COST: DO NOT ENTER TEXT IN SHADED AREA

J. IN

- KIND CONTRIBUTIONS**

For funds in lines 5a (Airport In

- Kind contribution) and 5b (Other In

- Kind contribution), please describe the source(s) of fund(s) and the value ($) of each.

_ ___________________________________________________________________________________

___________________________________________________________________________________ K. IS THIS APPLICATION SUBJECT TO REVIEW BY AN AFFECTED STATE UNDER EXECUTIVE ORDER 12 372 PROCESS?

a. This application was made available to the State under the Executive Order 12372 Process for review on (date) _____________.

b. Program is subject to E.O. 12372, but has not been selected by the State for review.

c. Program is not covered by E.O. 12372.

L. IS THE LEAD APPLICANT OR ANY CO

- APPLICANTS DELINQUENT ON ANY FEDERAL DEBT? (IF “YES”, PROVIDE EXPLANATION)

No Yes (explain)

____________________________________________________________ _______________________ Line Description Sub Total Total Amount 1 Federal amount requested $500,000 2 State cash financial contribution Local cash financial contribution 3a Airport cash funds $20,000 3b Non

- airport cash funds $100,000 3 Total local cash funds (3a + 3b): $120,000 4 TOTAL CASH FUNDING (1 + 2 + 3): $620,000 In

- Kind contribution 5a Airport in

- kind contribution** $81,140 5b Other in

- kind contribution** 5 TOTAL IN

- KIND CONTRIBUTION (5a + 5b): $ 10 1,140 6 TOTAL PROJECT COST (4 + 5): $7 2 1,140 $ 20
, 000

Airport in

- kind contribution is from airport marketing funds. Other in

- kind contributions are from a local radio station, Central Montana Radio Network.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 

## TABLE OF CONTENTS

INTRODUCTORY LETTER

................................ ................................ ................................ .................... 2
DELTA AIR LINES LETTER OF SUPPORT

................................ ................................ ........................... 3
EXECUTIVE SUMMARY

................................ ................................ ................................ ........................ 4
AIR SERVICE OVERVIEW

................................ ................................ ................................ ..................... 5 Catchment Area and Alternate Airports

................................ ................................ ................................ ................. 5 Existing Air Service

................................ ................................ ................................ ................................ ................ 6 Air Service Development Efforts

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

### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

................................ ............................... 8 Capacity Trends

................................ ................................ ................................ ................................ ..................... 8
Domestic Traffic Trends

................................ ................................ ................................ ................................ ......... 9
Domestic Fare Trends

................................ ................................ ................................ ................................ .......... 10 Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States

................................ . 11 Domestic Fares Versus Other Airports in the Region

................................ ................................ .......................... 12 Leakage to Other Air ports in the Region

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

### STRATEGIC PLAN

................................ ................................ ................................ .............................. 14 Revenue Guarantee for Service to Chicago or Atlanta

................................ ................................ ........................ 14
Goals

................................ ................................ ................................ ................................ ................................ .... 17 Grant Amendments/Alternate Strategies

................................ ................................ ................................ ............. 17 

### PARTNERSHIPS, FUNDING, IMPLEMENTATION, SUCCESS METRICS AND FINANCIAL CONTROL

................................ ................................ ................................ ................................ ............ 17 Public / Private Partnerships

................................ ................................ ................................ ................................ 17 Project Funding

................................ ................................ ................................ ................................ .................... 18 Implementation Timeline

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

### Success Metrics

................................ ................................ ................................ ................................ .. 19 Legal Sponso r

................................ ................................ ................................ ................................ ...................... 20
Financial Controls

................................ ................................ ................................ ................................ ................ 20Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 2 

### INTRODUCTORY LETTE R

Brooke Chapman, Associate Director Small Community Air Service Development Program Office of Aviat ion Analysis U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590
July 29, 2014
RE: Small Community Air Service Development Grant
Dear Ms. Chapman:
The Great Falls International Airport Authority hereby submits its applicat ion for the 2014 Small Community Air Service Development (SCASD) Program. Our proposal complies with the program guidelines provided by the Department of Transportation. We believe our proposal for a minimum revenue guarantee for connecting service at a h ub in the East

– either Chicago or Atlanta

– represents an efficient use of SCASD funds and an opportunity to improve air service in Great Falls.
Over the last ten years, Great Falls has lost a significant amount of network carrier capacity, including cap acity to Minneapolis, the most logical connecting hub for travel east of Great Falls. As network carrier capacity has trended down, network carrier traffic has also trended down. Since it peaked in 2005, Great Falls’ domestic ex

- Allegiant traffic was dow n 13.8% in 2013 to just 347 passengers per day each way.
As capacity and traffic have declined, the average domestic ex

- Allegiant Great Falls one

- way fare has increased and stood at $243 in 2013

– an increase of 44.8% since 2005. Among Lower 48 airpor ts with at least 100,000 domestic ex

- Allegiant origin and destination passengers, the average domestic ex

Allegiant Great Falls fare of $243 ranked as the 34th most expensive fare in the United States.
The Airport Authority has partnered with various orga nizations in the community to develop and promote air service. These partnerships include the Great Falls Chamber of Commerce, the Great Falls Tourism Improvement District and the Great Falls Convention and Visitors Bureau. The Chamber and the Tourism Im provement District have committed to cash funding totaling $100,000 to supplement the proposed SCASD funding.
Thank you in advance for your review of our proposal, and we look forward to hearing from you.
Sincerely,

John Faulkner, A.A.E. Airport Director Great Falls International Airport Authority



# Great Falls International Airport Authority

2800 Terminal Drive Great Falls, MT 59404

- 5599 Tel: (406) 727

- 3404 | Fax: (406) 727

- 6929 | Email: info@flygtf.comGreat Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 3 

### DELTA AIR LINES LETTER OF SUPPORTGreat Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 4 

### EXECUTIVE SUMMARY

Great Falls International Airport is proposing Small Community Air Service Development Grant f unding in the amount of $500,000 for a for a minimum revenue guarantee for service to Chicago on American
Airlines or United Airlines or service to
Atlanta on Delta Air Lines. Service to Chicago or Atlanta would provide
better connections from Great Falls to
destinations on the East Coast (and
the Midwest in the case of service to Chicago). Connectivity from Great
Falls to both the East Coast and the Midwest is somewhat limited to existing service offered by Delta via its hub in Minneapolis/St. Paul, service offered by United via its hub in De nver and seasonal less

- than

daily service on Frontier via its hub in Denver.

Excluding the capacity and traffic added by Allegiant beginning in 2006, capacity and traffic on the carriers with the ability to connect traffic beyond major hubs has declined s ince both capacity and traffic peaked in 2005. In fact, ex

- Allegiant capacity at Great Falls is down 45.7% since 2005 from 1,095 ex

Allegiant seats per day each way to 594 seats per day each way in 2013. Domestic ex

- Allegiant traffic is
down 13.8 % from 293,750 origin and destination O&D passengers in 2005 to 253,090 O&D passengers
in 2013. As capacity declined, the average one

- way domestic fare at Great Falls increased and has remained well above $200 each way in each of the last seven years. In fact, Great Falls’ average domestic one

- way far e, excluding Allegiant data , stood at $243 in 2013. Among all airports in the Lower 48 United States, the average domestic ex

- Allegiant fare was $ 182 in 2013, making the average Great
Falls domestic ex

- Allegiant fare 33.6% higher than the average Lower 48 domestic ex

- Allegiant fare. (Including Allegiant data, the average one

- way domestic Great Falls fare was $201 compared to $181 for the average one

- way domestic Lower 48 fare.)

A sign ificant amount of the traffic generated in the Great Falls Metropolitan Statistical Area leaks to other airports; Great Falls retains just 51.4% of the traffic. Additional service

– especially service to a large connecting hub to the East would reverse t he declining trends in both capacity and traffic, and would likely put downward pressure on the high fares.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 5 

### AIR SERVICE OVERVIEW

Catchment Area and Alternate Airports T he primary catchment area for Great Falls International Airport is the Great Falls Metropolit an Statistical Area, but given the relatively isolated location of the airport, the vast distances from smaller communities in Montana to an airport with commercial service and the proximity of Great Falls to Canada, the airpo rt’s catchment area is much larger than just the Great Falls Metropolitan Statistical Area.

Other airports with commercial airline service in the region are located in Helena, Missoula, Bozeman, Kalispell and Billings

. The airport in Helena is the closest airport to Great Falls at 86 miles , but the airport in Missoula (173 miles) captures the largest share of traffic leaked from Great Falls International Airport.

Exhibit 1: One, Two and Three Hour Drive T imes from Great Falls International Airport
, the Location of Alternate Airports in the Region , Distances and Drive Times to Alternate AirportsGreat Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 6 

### Existi ng Air Service Great Falls is served by Delta, Frontier, United, Alaska and Allegiant. Delta serves its hubs in Salt Lake City and Minneapolis/St. Pau l, Frontier serves its hub in Denver on a less

- than

- daily seasonal basis, United serves its hub at Denver, and Alaska operates service from Great Falls to Seattle (with some flights operating to Seattle on single

- plane servi ce via Helena). Allegiant serve s Great Falls with less

than

- daily service to Las Vegas, Phoenix/Mesa and recently began seasonal service to Los Angeles.

Exhibit 2 : Current Routes Operated by Carrier from Great Falls International Airport

The number of departures per day, average seats per departure and seats per day by market and by carrier are displayed in the table in Exhibit 3

. Based on July 2014 data, Delta provides the most capacity at Great Falls International airport, with an average of 306 seats per day each way, or 33.5% of the airport's total capacity. Alaska is the second largest carrier at Great Falls with 24.9% of the airport's capacity. Alaska operates one nonstop flight from Great Falls to Seattle complemented by a second Seattle flight which operates via Helena before continuing to Seattle. United operates about 15.9% of the capacity at Great Falls with three 50

- seat regional jet flights to its hub in Denver. Frontier operates three weekly flights to its hub in Denver on a seasonal basis. I n 2014, Fronteir ser vice will operate from May 30 through August 18. Allegiant operates less

- than

- daily service to Las Vegas, Phoenix/Mesa and LosGreat Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 7 Angeles . Although Allegiant's capacity varies throughout the year, it will operate two flights per week to Las Vegas, four flig hts per week to Phoenix/Mesa and two flights per week to Los Angeles year in July. Unlike Alaska, Delta, Frontier and United, and although Allegiant will operate 19.3% of the capacity in July, Allegiant does not offer connecting service beyond Las Vegas, Phoenix/Mesa or Los Angeles

– all Allegiant traffic is point

- to

- point traffic.

Exhibit 3 : Departures per Day * , Seats per Departure and Seats pe r Day by Market and Carrier at Great Falls

– July 2014

* T he number of departures per day is displayed in increments of sevenths (because there are seven days in a week) . "1 5/7" is read as one flight seven days a week with a second flight operated five of the seven days in a week.



### Air Service Development Efforts Great Falls International Airport is active ly engaged with airlines to enhance its air service. Over the past year, the airport director has met with Alaska, Allegiant, American, Delta, Frontier , Southwest and United to discuss the performance of existing service, increased capacity and potential new service.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 8 

### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacit y Trend s As illustrated in Exhibit 4, Great Falls ' total capacity (to include network carriers and Allegiant) , measured in terms of seats per d ay each way, is down 32.8% since 2005 to 736 seats per day each way

. Also since 2005, Great Falls has l ost slight ly less than half or 45.7 % of its ex
- Allegiant capacity to 594 seats per day each way

. The table in Exhibit 5 illustrates the primary reason ex

- Allegiant capacity is down is
the res ult of Delta/Northwest operating fewer seats to its hubs in Salt Lake City and Minneapolis/St. Paul

. Versus 2005, Delta operated 213 fewer seats per day each way to Salt Lake City and 131 fewer seats pe r day each way to Minneapolis for a total of 344 fewe r seats per day each way in 2013. Although both United and Frontier added capacity to and from Denver since 2005 and Alaska added a marginal number
of seats to and from Seattle, total seats to and from major connecting hubs from Great Falls are down
38.3% or 275 seats per day each way.

Exhibit 4 : Seats per Day Ea ch Way at Great Falls International Airport (Ex

- Allegiant and Allegiant )

– Full Year 2004

- 2013 (OAG Da ta)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 9 Exhibit 5 : Ex

- Allegiant Seats per Day Ea ch Way at Great Falls International Airport by Market

– Full Year 2005 Versus Full Year 2013 (OAG data)



### Domestic T

raffic Trend

s Exhibit 6 illustrates G reat Falls domestic ex

- Allegiant traffic peaked in 2005 when capacity peaked. Between 2005 and 2013, domestic ex

- Allegiant traffic is down 13.8% from 293,750 origin and destination (O&D) passengers to 253,090 origin and destination passengers in 2013. Although international traffic increased 22.9% between 2005 and 2013, the increase was on a small base of traffic, and the net increase represents o nly 1,970 O&D passengers. While Allegiant’s traffic has boost ed Great Falls 2013 traffic to a near record level, Allegiant’s 2013 traffic declined by 4,190 O&D passengers versus 2012.

Although total traffic at Great Falls has increased since 2005, most o f the increase can be attributed to Allegiant entering the market in 2006 and growing its traffic to over 92,000 O&D passengers in 2013. Allegiant carried this traffic to just two destinations: Las Vegas and Phoenix/Mesa.

Exhibit 6 : Annual Domestic and International Origin and Destination (O&D) Passengers at Great Falls International Airport Year

- End Fourth Quarter 2004

- 2013 (DB1B data)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 10 

### D omestic Fare Trend

s Exhibit 7 illustrates the relationship between Great Falls ex

- Allegiant seats per day each way, ex

- Allegiant domestic traffic and the average ex

- Allegiant domestic one

- way fare. Since 2005, when both ex
- Allegiant capacity and ex
- Allegiant traffic peaked at Great F alls, th e average ex
- Allegiant domestic one
- way fare increased 44.8% from $168 to $243 in 2013

. The fare peaked at $248 in both 2008 and 2011. The 2013 fare of $243 was just $5 below the 2011 peak of $248.

Exhibit 7 : Passengers per Day Each Way (PDEW), Seats per Day Each Way and Average Domestic One

- Way Fare at Great Falls International Airport

– Full Year 2004

- 2013 (DOT T

- 100 and DB1B D ata

– All Carriers )

A lthough including Allegiant data in the calculation of Great Falls’ average domestic one

- way fare brings the fare down to $2 01, it should be noted the combined Allegiant fare in the Great Falls

- Las Vegas and
Great Falls

- Phoenix/Mesa markets was just $83 in 2013, and Allegiant accounted for more than one

fourth of Great Falls’ total domestic traffi c. Furthermore, Allegiant carried traffic only to Las Vegas and
Phoenix/Mesa (Allegiant’s Great Falls

- Los Angeles service began in June 2014) and does not provide access to a larger network as Delta, Frontier and United provide for travelers to and from G reat Falls. Because the nature of Allegiant’s service does not provide material benefits to a broad segment of the traveling public, we do not believe Allegiant’s impact on the average domestic Great Falls one

- way fare should be considered when assessing the degree to which Great Falls fares exceed the national average
air fares.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 11 

### Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States The average domestic ex

- Allegiant fare at the average Lower 48 airport was $182 in 2013 (inclu ding Allegiant data, the fare was $181). Exhibit 8 illustrates Great Falls’ average domestic fare relative to the average domestic ex

- Allegiant fare at the average Lower 48 airport At $243 , the average domestic ex
Allegiant fare at Great Falls Internatio nal Airport was significantly higher than the average domestic fare at most other Lower 48 airports in the United States. In fact, the average Great Falls fare was 34% or $61 higher than the fare at the average Lower 48 airport in 2013.

Exhibit 8 : Average Domestic Ex

- Allegiant One

- way Fare at Great Falls Versus the Average Lower 48 Airport

– Full
Year 2004

- 2013 (DB1B data)

In 2013, 231 Lower 48 airports generated at least 100,000 domestic ex

- Allegiant O&D passengers ; Great Falls generated 253,0 90 domestic ex

- Allegiant O&D passengers in 2013. Among these 231 airports

– airports with significant amounts of domestic ex

- Allegiant traffic

– the average domestic one

- way fare of $243 at Great Falls ranked as the 34th hi ghest fare airport among the oth er 230 peer group airports. The 40 highest ex

- Allegiant domestic fare airports are ranked in Exhibit 9.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 12 Exhibit 9 : Full Year 2013 O&D Passengers, Passengers per Day Each Way (PDEW) and Average Domestic One

Way Fare at the 40 Highest Fare Airports with at Least 100,000 Domestic O&D Passengers in 2011 (Excludes Allegiant Data) (DB1B data)



### Domestic Far

e s Versus Other Airports in the Region As illustrated in Exhibit s 8 and 9
, Great Falls ' domestic fares are high relative to the average Lower 48 airport, but the average ex

- Allegiant Great Falls fare is also higher than all but one of the five other airports in Montana with at least 100,000 ex

- Allegiant domestic O&D passengers in 2013. Exh ibit 10 illustrates, only Kalispell , with an average domestic one

- way fare of $249, had a higher average fare than Great Falls among the larger Montana airports.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 13 Exhibit 10 : Average Ex

- Allegiant Domestic Fare at Great Falls International Airport Ver sus Other Airports in Montana with at Least 100, 000 Domestic Ex

- Allegiant O&D Passengers

– Full Year 2013 ( DB1B data)



### Leakage to Other Airports in the Region Based on a leakage study completed in 2011 using full

- year 2010 data, Great Falls International Airport
retains 51.4% of the traffic generated in its immediate catchment area (the Great Falls metropolitan statistical area). 48.6% of the traffic Great Falls International airport could capture is lost to other airports in Montana, with nearly one

- third of the traffic lost to Missoula. Billings captures 7.0% of the traffic, Bozeman and Helena each capture 4.6%, and Kalispell captures slightly less than 2% of the traffic.

Exhibit 11 : Airport Origin for Great Falls Catchment Area Traffic January 2010

– December 2010 (June 2011 Leakage Study)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 14 

### STRATEGIC PLAN

Revenue Guarantee for Service to Chicago or Atlanta Connections from Great Falls to destinations East of the Mississippi River are limited to Delta service via Minneapolis/St. Paul, United service via Denver or Frontier’s less

- than

- daily summer

- only service to
Denver.

Great Falls International Airport and its community partners in t he community are requesting Small Community Air Service Development funds to support a minimum revenue guarantee for nonstop service on United or American between Great Falls and Chicago or on Delta between Great Falls and Atlanta. Not only would either d estination provide service in the local Chicago or Atlanta market, but service on United to Chicago would provide non
- circuitous connections to at least 103 destinations on United via Chicago, at least 71 destinations on American via Chicago or at least 91 destinations on Delta via Atlanta. The logical connections United could serve via Chicago are illu strated on the map in Exhibit 13 ; the logical connectio ns American could serve via Chicago are illu strated on the map in Exhibit 14 , and the logicical connections Delta could serve via Atlanta are illustrated on the map in Exhibit 16

. Chicago (O’Hare and Midway, combined) ranks as Great Falls’ four teenth large st market with market size
of 6.9 PDEW in 2013 and a market size of 10.2 PDEW in third quarter 2013.

As shown in Exhibit 12, a ll markets United could logically flow v ia Chicago generated 114.1 PDEW in the
full

- year 2013 at an a verage fare of $300 in 2013 ; in third quarter 2013, all markets United could logically flow via Chicago generated 154.7 PDEW at an average fare of $290. Also as shown in Exhibit 12, a ll
markets American could logically flow via Chicag o generated 101.1 PDEW in the full

- year 2013 at an average fare of $294; in third quarter 2013, all markets American could logically flow via Chicago generated 137.4 PDEW at an average fare of $284 . (The data for both United and American also includes
data for the local Great Falls

- Chicago market.)

E xhibit 12 : Total Local and Connecting Traffic and Average One

- Way Fares United and American Could Flow Via Chicago (DOT DB1B Data)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 15 Exhibit 13 : Logical Connecting Markets United Could Serve with Great Falls

- Chicago Service (circuity not greater than 60%)

Exhibit 14 : Logical Connecting Markets American Could Serve with Great Falls

- Chicago Service (circuity not greater than 60%)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 16 Atlanta ranks as Great Falls’ thirteenth largest market with market size of PDEW in 2013 and a market
size of 10.6 PDE W in third quarter 2013.

All markets Delta could logically flow via Atlanta generated 114.1 PDEW in 2013 at an average fare of $300 in the full

- year 2013; in third quarter 2013, all markets United could logically flow via Chicago generated 154.7 PDEW at an average fare of $290.

Exhibit 15 : Total Local and Connecting Traffic and Average One

- Way Fares Delta Could Flow Via Atlanta (DOT DB1B Data)

Exhibit 16 : Logical Connecting Markets Delta Could Serve with Great Falls

- Atlanta Service (circuity not greater than 60%)Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 17 

### Goals Great Falls International Airport has five goals for the proposed project to recruit a low

- cost carrier to the community.

 Provide network carrier connecting opportunities to the East at a large hub airport

.

 Reverse the decline in Great Falls ’ network carrier origin and destination traffic.

 Reverse the decline in Great Falls’ network carrier capacity

.

 Lower airfares in markets to the East in markets served with a single connection via Chicago or Atlanta.

 Recap ture catchment area traffic leaked to other airports.


### Grant Amendments/

Alternate Strategies Nonstop Great Falls

- Chicago or nonstop Great Falls

- Atlanta service is the goal of the community's Small Community Air Service Development (SCASD) proposal. The Air port Authority is proposing SCASD funding in the amount of $500,000 th at will be supplemented with $100 ,000 in cash from community

based business and economic development organizations to offer a minimum revenue guarantee to United or American for Chicago service or to Delta for Atlanta service. Analysis of traffic and revenue data indicates the proposed Chicago or Atlanta service should be an appealing opportunity for any of the three targeted airlines.

If a grant is awarded for Chicago or Atlanta service , and the community is not successful in its effort to recruit United or American to Chicago or Delta to Atlanta, Great Falls International Airport would ask to Department to consider reallocation of the award funds for service to an alternate hub on a net work carrier. Potential routes would include Dallas/Ft. Worth or Phoenix on American, Houston on United or
Detroit on Delta.



### PARTNERSHIPS, FUNDING, IMPLEMENTATION, SUCCESS METRICS AND FINANCIAL CONTROL Public / Private Partnerships Great Falls Internation al Airport has long

- standing relationships with three economic and business development entities in the c ommunity, the Great Falls Chamber of Commerce, the Great Falls Tourism Improvement District (an association of local hotel owners and operators) and th e Great Falls Convention and Visitors Bureau. The Great Falls Chamber of Commerce has committed to provide up to $80,000 over the two year life of the project, and the Great Falls Tourism Improvement District has committed to provide up to $20,000 over t he two year life of the project.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 18 

### Project Funding In addition to the Small Community Air Servi ce Deve lopment Grant of $5 00,000 requested from the Department, two non

- airport organizations in the community are willing to prov ide cash totaling $ 100 ,000

. The Airport will provide $20,000 in cash for marketing
, and the estimated the value of Airport in

- kind
contributions from waive d fees at $ 10 1,140 over the two

- year life of the project . The total value of cash
and is valued at $120,000 or 24% of the reques ted SCASD funding. A summary of funding sources is
shown in Exhibit 17.

Exhibit 17 : Summary of Sources and Types of Project Funding



### Implementation Timeline The proposed implementation timeline for the project assumes the Department will award Small
Communit y Gra nt Funding sometime in September or October 2014 . Once the award is announced
, Great Falls International Airport wi ll advise airlines of the grant award . Based on airline planning lead
times and the need for ad vance bookings, we assume no airline would begin service until sometime in
2015 , and we have conservatively assumed the se rvice could not begin until June 2015 . The first two
milestones on the Air port's timel ine are to execute the grant agree ment with the Department and to negotiate the minimum revenue guarantee agreement with the airline . Once service is announced and schedules are published, the airline
, the Airport and the community would begin marketing the n ew route and working with the airline to monitor advance bookings. The Airport will continue its marketing pro gram and continue to work with the airline to monitor the route once service begins. The Airport will submit grant status report s on a quarterly basis to the Department throughout the proposed two year term of the minimum revenue guarantee. The proposed project timeline is shown in Exhibit 18 on the next page. Central Montana Radio Network $20,000

$ 101,140 $ 7 21 ,140 G reat Falls Intl AirportGreat Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 19 Exhibit 1 8 : Proposed Project Timeline

Activity/Project Milestone Estimated Dates SCASD Grant Award Announcement September 2014 Execute Grant Agreement with DOT September/October 2014

Airline Meetings October 2014

- February 2015 Announce Service February 2015 Publish Schedule February 2015 Market Route (Pre

- Launch) February

- September 2015 Monitor Advance Bookings February

- September 2015 Adjust Marketing Plan Based on Advance Bookings February

- September 2015

Begin Service June 2015 Market Route (Post

- Launch) June 2015 and Beyond Operate Service with MRG June 2015

- May 2017 Monitor Route Performance June 2015 and Beyond Submit Grant Status Reports to DOT Quarterly 3Q 2014

- 2 Q 2017



### Success Metrics Success of the proposed use of grant funds will ultimately be whether the one of the targeted airlines adds service from Great Falls to Chicago or Atlanta. Secondary success metrics will be increased network carrier traffic, less leakage to competing airp orts in the region (primarily to Missoula) and a downward trend in network carrier fares, particularly to destinations in the East. The Airport will work closely with the airline to monitor the performance of the new service . Even before service begins , we will
communicate with the airline on a weekly basis to monitor advance bookings and week

- over
- week of advance bookings. Marketing and promotional activities can be a djusted if advance bookings are weak or are not booking at a rate satisfactory to the airline.

Exhibit 19 : Project Goals and Success Metrics

Project Goals Success Metric

 Provide network carrier connecting opportunities to the East at a large hub airport.  Introduction of nonstop service from Great Falls to Chicago or Atlanta.

 Reverse the decline in Great Falls’ network carrier origin and destination traffic.  Increase in year

- over
- year network carrier enplanements and deplanements beginning in the month new service to Chicago or Atlanta begins

.
 Reverse the decline in Great Fall s’ network carrier capacity  Increase in year

- over
- year network carrier capacity (defined as seats per day each way) beginning in the month new service to Chicago or Atlanta begins

.
 Lower airfares in markets to the East in markets served with a single conn ection via Chicago or Atlanta.  Decrease in average airfares in markets served with a single connection via Chicago or Atlanta.

 Recapture catchment area traffic leaked to other airports.  Decrease in leakage to other airports in the region

.Great Falls International Airport Authority; Great Falls, Montana

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2014

- 0113 20 Once service begins, the Airport will rely on traffic and revenue data provided directly by the airline and the amount of reimbursements requested by the airline as indications of project success. T

- 100 data and DB1B data will also be analyzed to compare year

- over
- yea r market size growth on a quarterly basis. In addition, the airport will analyze leakage once the service has operated for a full year to determine the trend in leakage to other airports. The Airport will report its success metrics in the quarterly grant reports to the Department.


### Legal Sponsor Great Falls International Airport Authority is the legal sponsor responsible for administering the program. Great Falls International Airport Authority is a government entity.

Great Falls International Airport Authority Administration Office 2800 Terminal Drive Great Falls, MT 59404 John Faulkner
, Airport Director 406

- 727

- 3404


### Financial Controls As the sponsor, Great Falls International Airport Authority and its governing body, Great Falls
International Authorit y Board , will be the responsible parties for all fiscal matters and the Department's reporti ng requirements. The Airport Authority Board is established as a public governing body. As a public entity, the Department can be assured that proper financial co ntrols are in place to guarantee that the Department’s Grant will be used in accordance with any subsequent agreement. The Great Falls International Airport Authority Board understands that the Grant is a reimbursable grant, meaning the Airport is respons ible for program expenditures and will submit invoices to the Department for reimbursement, based on a percentage of the total grant request.