# A PPLICATION 

# U NDER THE 

# S MALL 

# C OMMUNITY



# A IR 

# S ERVICE 

# D EVELOPMENT 

# P ROGRAM

Docket DOT

- OST

- 2012

- 006 9



# Arcata/Eureka **Airport**

**Eureka , California** 

Legal sponsor:

Humboldt County

DUNS: 143535529

Tax ID: 94

- 60000513
Congressional District:

CA

- 01

Contact: Emily Jacobs

Airport Director

3561 Boeing Avenue

McKinleyville , California

95519

- 9358
Phone: (707) 839

- 5401
Fax: (707) 839

- 3596

EJacobs @co.humboldt.ca.usAPPLICATIONUNDERTHESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Prepared by 

# T ABLE OF 

# C ONTENTS

Application Highlights

................................ ................................ ..... 1

Higher than Average Airfares

................................ ................................ ......... 1
Community Cost Contribution

................................ ................................ ........ 2

Public

- Private Partnership

................................ ................................ .............. 2

Material Benefits

................................ ................................ ............................ 2
Use of Funds in a Timely Fashion

................................ ................................ .. 2



### Air Service Environment

................................ ................................ . 3

Remote Catchment Area

................................ ................................ ................ 3
Strong and Diverse Economy

................................ ................................ ........ 4



### Air Service

– Existing/Historical

................................ ..................... 6

Existing Air Service

................................ ................................ ........................ 6

Historical Air Service

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

................................ ............................ 8



### Air Service Needs and Deficiencies

................................ ................ 9

Service Needs to a Second Hub

................................ ................................ .... 9

Unmet Market Demand

................................ ................................ ................ 10
High Airfares

................................ ................................ ................................ 10



### Strategic Plan

– Air Service

................................ ........................... 12

Project Goals

................................ ................................ ............................... 12
Proposed Air Service

................................ ................................ ................... 12

Airline Participation

................................ ................................ ...................... 12

Market Analysis

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

Alternate Plan

................................ ................................ .............................. 14
Previous Grant Recipient

- New Project and Goals

................................ ..... 14



### Strategic Plan

– Implementation and Funding

............................. 15

Public

- Private Partnership

................................ ................................ ............ 15
Incentive and Support Plan

................................ ................................ .......... 15
Strategic Plan Funding

................................ ................................ ................. 19
Project Continuation and Sustainability

................................ ........................ 19



### Schedule and Monitoring

................................ .............................. 20

Critical Milestones

................................ ................................ ........................ 20
Monitoring Program

................................ ................................ ..................... 21



### Appendix A. Letters of Support

................................ .................... 22APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 1 

# A PPLICATION 

# H IGHLIGHTS

his Small Community Air Service Development Program (SCASDP) grant
application for the Arcata/Eureka Airport ( ACV ) meets the criteria of Docket

DOT

- OST

- 2012

- 006 9

. Humboldt County , the legal sponsor and

owner/operator of ACV , is requesting $ 750 ,000 in federal assistance to implement a

$ 1.1 million air service initiative.

The project goal is to improve e astbound connections which is a top
priority of the community. The Strategic Plan, nonstop United Express

service to Denver , will achieve the project goals. The proposed
Strategic Plan will improve connectivity and increase competition at

ACV which will re duce airfares and the need to drive long distances to
alternate airports to access adequ ate air service and

competitive fares.



### H IGHER THAN 

### A VERAGE 

### A IRFARES

Since 2001, ACV’s airf ares have risen dramatically, 58 percent

compared to only 23 percent for the state of California and 18 percent
nationally. ACV has a significant fare discrepancy with other
surrounding California airports, the West region and the n ational

average. In 2011 , AC V’s one

- way average fare was $ 36 higher than

California, $ 39 hig her than the West region and $ 38 higher than the
US average. This is further supported by the Bureau of
Transportation Statistics ( BTS ) report for calendar year 2011 that
shows ACV with an average roundtrip fare of $458, $94 or 26 percent

higher th an the national average of $364.

From 2004 to 2012, ACV’s air service declined significantly . Since the

high in departures in 2005, departures have declined 29 percent

. Seats peaked in 2008 and have since declined 47 percent. This capacity decline is

much greater than the national average, underscoring the need for improved air

service access to the region.

Because of these high airfares and inadequate service levels, ACV is losing nearly 25

percent of its traffic base to alternate airports . The diversion is likely higher following

the loss of Alaska Airlines in April 2011

. **Excessive drive distances to San**

**Francisco and Sacramento of five**

**- plus hours, high airfares** 

**, and lack of** 

**competing service at ACV makes**  **improving air service, specifically adding**

**eastern connections, a top priority**

. 

# T This section addresses:



### • Project goals



### • Description of the

Strategic Plan



### • Highlights of the grant

application



## New hub service

that increases

eastbound connecting
opportunities is a top priority of the
community.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 2 

### C OMMUNITY 

### C OST 

### C ONTRIBUTION

To support this air service initiative, ACV and the community will fund

35 percent of the proposed $ 1.1 million Strategic Plan. Non

- airport

revenue sources will fund 25 percent ($ 259,420 ) of the $ 1,037,020

cash requirement. This is a very strong commitment by the local

community to continue to be proactive to improve local air service.



### P UBLIC



### - P RIVATE 

### P ARTNERSHIP

Local businesses and the public

- private partnership have the ability
to successfully implement this project. ACV has partnered with the Redwood Region
Economic Development Commission (RREDC) for purposes of air service

development. This is not a new partnership. This public

- private partnership has
worked successfully together for many years partnering on new air ser vice initiatives.

ACV and the community are committed to the successful development of air service

at ACV and have a vested interest in the successful outcome of this Strategic Plan

.



### M ATERIAL 

### B ENEFITS

ACV’s isolated catchment area has a population that exceeds 140,000.
Arcata/Eureka’s strength is through its diverse base of businesses and institutions all

of which depend on the local airport. The Eureka

- Arcata

- Fortuna Micropolitan area is
listed in the top 15 percent in the country for economic strength. Humboldt State
University, located just minutes from ACV, is national ly known and has the largest

proportion of out

- of

- state students of any of the California State Universities. Known
as the “California’s Redwood Coast”, Humboldt County is home to the world's tallest
trees and more than 100 miles of stunning Northern California coast bringing tourists
from across the country . The air service improve ment plan proposed in this grant
application will benefit a broad segment of the traveling public, including business,

education al institutions and tourism.



### U SE OF 

### F UNDS IN A 

### T IMELY 

### F ASHION

The public

- private partnership has a solid schedule an d S trategic P lan to ensure

timely use of the funds. An initial meeting was held with the targeted airline in
anticipation of this grant application, and the Strategic Plan proposal is

under consideration. 

## Known as the

“California’s
Redwood Coast”, Humboldt County is

home to numerous businesses,

educational

institutions and

tourist destinations driving the need for
improved air

service.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 3 

# A IR 

# S ERVICE 

# E NVIRONMENT

CV is a non

- hub, commercial service airport located in Humboldt County in

northwestern California. ACV serves a remote catchment area that is relatively

isolated and has a very prominent business, education and tourism economy.

This section provides an overview of the Arca ta/Eureka community and its need for

additional air service and improved connectivity to the east

.



### R EMOTE 

### C ATCHMENT 

### A REA

The primary catchment area for ACV includes communities in Humboldt and Mendocino

counties. The catchment area covers 40 zip codes, with a population of approximately

140,220 residents

. The area displayed in Exhibit 2 .1 in blue is the area that ACV should

ideally serve given drive distances

.

E XHIBIT 2 .1 ACV CATCHMENT AREA

T he Humboldt County population has grown steadily over the past decade as people
continue to be drawn by the quality of life offered by the region

. By 2020 , the population
of Humboldt County is expected to grow an additional four percent (source: Woods &

Poole Economics, Inc.). Air service at ACV must exp and to keep pace with this

growing community.

While ACV serves the majority of their catchment area, 76 percent , 24 percent use
alternate airports including San Francisco International Airport (14 percent) and

Sacramento International Airport (six percent). E xcessive drive distances of five hours or
greater each way to San Francisco and Sacramento ( Table 2 .1 , next page ) along with 

# A This section addresses:

Description of the

Arcata/Eureka community

in relation to air service to

demonstrate the benefit of
the Strategic Plan to a

broad segment of the
traveling public.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 4 high airfares and lack of competing service at ACV are the key

determinates of the need for improved air s ervice, specifically ad ding

eastern connections

.



### S TRONG AND 

### D IVERSE 

### E CONOMY

Voted as one of Sunset Magazine’s “Best Places to Live” , the
Arcata/Eureka community is dynamic and growing. The Eureka

Arcata

- Fortuna Micropolitan area is listed in the top 15 percent in the
country for economic strength . Foreclosure rates have remained low

, and unemployment is in line with the California state average. All

indicators show that due to its geographic isolation, **Arcata/Eur eka**  **is**

**not your**  **typical small community and**  **is in great need of**

. The following subsections discuss **improved air service access**

local businesses in the community and their significant growth, higher

education facilities and tourism.



### Local Businesses

There are multiple l arge local employers in Humboldt County with

high travel needs. Table 2.2 lists a sample of the companies and

organizations in the Arcata/Eureka area that would benefit from new

nonstop air service at ACV.

Top growth industries in Arcata/Eur eka include Healthcare, Building
and System Construction and Maintenance, Investment Support
Services, Management and Innovation Services, Niche

Manufacturing, and Tourism. Niche Manufacturing has 500 different companies in the

five

- county north coast regi on

. Humboldt County has the highest concentration of these

companies in the five counties . The north coast region sells 90 percent plus out of the
region, into the US and Europe

, and r equire s air service to the global marketplace to sell

their products . Th e Management and Innovations Service Industry provide p rofessional,

business

- to

- business services with 90 percent plus export . The industry grew 85 percent
in the last 15 years and requires air service access to continue to grow

.

There are multiple projec ts of statewide and national s ignificance that require efficient air

service access. Examples of these projects include :

• A $14 million fiber optic line was completed in D ecember 2011 creating full

telecommunications redundancy for the area . This will lead to greater service

and attractiveness to growing sectors of the economy.

• N ew clean energy projects have received national attention. Projects include :

o Shell Wind Energy’s Bear River Project

o Schatz Energy Lab’s d evelopment of the hydrogen p owered c ar

• St. Joseph Redwood Memorial H ospital completed a $140 million expansion

that included adding additional staff. TABLE 2.1 DRIVE TIMES TO ALTERNATE
AIRPORTS

AIRPORT MILEAGE DRIVE

TIME Redding, CA (RDD) 155 2 hr, 57 min Medford, OR (MFR) 177 3 hr, 12 min Sacramento, CA (SMF) 299 4 hr, 54 min

San Francisco, CA (SFO) 303 5 hr, 36 min

TABLE 2.2 LOCAL COMPANIES WITH HIGH
TRAVEL NEEDS

COMPANY/
ORGANIZATION County of Humboldt Humboldt State University St. Joseph Health System Redwoods Community College District Mad River Community Hospital

Dell Arte International

Sun Valley Group

Pacific Gas & Electric

Blue Lake Casino and Hotel

Bear River Casino Cypress Grove Chevre

Cher

- Ae Heights Casino Schmidbauer Lumber Company Security National Servicing Corporation GHD Engineering

Green Diamond/California Redwood

Kokatat Lost Coast Brewery

Wing Inflatables

Tomas JewelersAPPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 5 

### Education

The Arcata/Eureka community is the h ome of Humboldt State University (HSU)

. HSU i s

n ationally known and has the largest proportion of out

- of

- state students of any of the

California State Universities. HSU’s annual contribution to the Humboldt County
economy is estimated to be approximately $216 million annually

. Their Small Business
Development Center (SBDC) program directs the California S BDC program by the US

Small Business Administration. There are over 100 SBDC locations in California with a
total budget of $20 million with HSU at the center of the activity

.

HSU is also a state

- of

- the

- art research facility and the county’s second large st employer
with over 1,000 faculty and staff and annual payroll of over $92 million. Annual

enrollment is approximately 7,700 students and grew nine percent from 2006 to 2011.

HSU has expended over $41 million over the last th ree years on new construction. This
growth and investment requires convenient access to the region via ACV to

remain viable.

Another nearby educational institution is the College of the Redwoods . Annual student

enrollment is approximately 9,100 with over 1,11 0 total pers onnel

. Both University and
College students will greatly benefit from improved eastbound connecting opportunities.



### Tourism

Humboldt County, “California’s Redwood Coast”, is home of the world's tallest trees and
more than 100 miles of stunning Northern Ca lifornia coast. Tourism provides substantial
economic benefits to the Arcata/Eureka economy but cannot survive without sufficient air

service access

. The following provides just a few of the many tourist attractions in

the area:

• 3,000 plus rooms

• 2.3 millio n acres

– total land area in Humboldt County

• Redwood National Park

– World Heritage Site

• Arcata Marsh and Wildlife Sanctuary

• Avenue of the Giants

• World’s tallest trees

– over 2,000 years old

• Madaket Cruise

• Humboldt Bay Maritime MuseumAPPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 6 

# A IR 

# S ERVICE



# –

E XISTING 

# /H ISTORICAL

his section provides an overview of existing air service. Carriers providing service,

service frequency, nonstop destinations offered, and equipment types are

included in the discussion. A summary of historical air service is also included

with destination s, traffic levels, and service providers. A description of air service

development efforts concludes the section.



### E XISTING 

### A IR 

### S ERVICE

ACV is served by United Express to two nonstop destinations

, Sacramento and San Francisco. The Crescent City service is
provided by United under the Essential Air Service program to

connect Crescent City to Sacramento and San Francisco

. No jet

service exists today as **t he market is served exclusively with**  **30**

**-**
**seat turboprop aircraft** 

. Eastern connectivity is heavily reliant on

United’s San Francisco connections

. There are an average of 66
weekly flights and 1,980 seats ( Table 3 .1 ). Turboprop service with

limited connectivity to the east does not meet the needs of the region.

Through December 2012 there are no improvements an ticipated in United’s service at

ACV. United did, however, recently announce

their Denver hub service expansion to two new
domestic markets, Shreveport, LA and Grand

Forks, ND indicating current growth at that hub

.



### H ISTORICAL 

### A IR 

### S ERVICE

ACV has suffered from a significant decline in air
service over the last five years. This subsection summarizes ACV ’s air service history
including: destinations, traffi c levels, and service providers. Extenuating fact ors that have

affected air service over time are also reviewed.



### Destinations, Service Providers and Traffic Levels

From 200 4 to 20 1 2

, ACV ’s air service declined significantly ( Table 3 .2 , next page)

. Since

the high in departures in 2005, departures have declined 29 percent. Seats peaked in

2008 and have since declined 47 percent. **This capacity decline is much greater than** 

**the national average, underscoring the need for**  **improved air service access**  **to**

**the region** 

. 

# T

TABLE 3 .1 EXISTING AIR SERVICE

NONSTOP
DESTINATION MARKETING
CARRIER AIRCRAFT WEEKLY

DEPT WEEKLY
SEATS Crescent City,
CA United Saab 340 (turboprop) 6 180

Sacramento,
CA United Saab 340 (turboprop) 12 360

San Francisco,
CA United Saab 340 (turboprop) 48 1,440

Total 66 1,980

Source: Diio Mi, May 2012 This section addresses:



### • Description of existing

air service



### • Synopsis of historical

air service



### • Description of air

service development

effortsAPPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 7 ACV has lost not only frequency but also service to major hubs that provided substantial

eastbound connections:

• Alaska Airlines service to Los Angeles (with tag service over Redding)

• Alaska Airlines service to Portland

• Delta Air Lines service to Salt Lake City

At one time, ACV supported three carriers to four primary destinations (2008/2009). The

loss of Portland, Los Angeles and Salt Lake City service s has seriously deteriorated

ACV’s ability to meet the air service needs of the community

.

TABLE 3.2 HISTORICAL DEST INATIONS AND SERVICE PROVIDERS

DESTINATION AIRLINE ITEM CALENDAR YEAR

2004 2005 2006 2007 2008 2009 2010 2011 2012

Crescent City, CA United Dept 658 636 559 363 364 343 316 315 314

Seats 19,740 19,080 16,770 10,890 10,920 10,290 9,480 9,450 9,420

Los Angeles, CA Alaska Dept 238 334 343 483 324 239 106

Seats 16,660 24,716 25,504 35,742 24,182 18,164 8,056

Portland, OR Alaska Dept 366 115

Seats 23,244 7,852

Redding, CA Alaska Dept 366 613 728 728 577 728 691 106

Seats 24,696 42,910 53,872 54,120 42,698 54,358 52,516 8,056

Sacramento, CA United Dept 645 643 632 624 629 619 622 631 628

Seats 19,350 19,290 18,960 18,720 18,870 18,570 18,660 18,930 18,840

Salt Lake City, UT Delta Dept 390 438

Seats 19,500 21,900

San Francisco,
CA United Dept 2

, 798 2

, 764 2

, 474 2

, 887 2

, 349 1

, 986 2

, 359 2

, 335 2

, 592

Seats 94,180 88,880 74,220 86,610 70,470 59,580 70,770 70,050 77,760 Scheduled departures 4,833 5,009 4,727 4,945 4,792 4,438 4

, 227 3

, 493 3

, 534

Scheduled seats 181,210 194,672 188,538 195,844 198,200 188,880 169,590 114,542 106,020

Source: Diio Mi



### Extenuating Factors that have A **ffected A**  **ir S**  **ervice**

The primary factors that have impacted ACV’s air service are : 1) I ts geographic location and available aircraft size and capabilities

. 2) I ts relatively isolated location in the northwest quadrant of California, removed

from major population and commercial centers

.

These unique circumstances have created ready

- made air trave l demand. With no major

airports nearby and limited highway access, the dependence on air travel is unusually

high. Accordingly, the need for quality air service is a necessity

.

The high dependence on air service translates into a need for frequency of service and

additional hub access , particularly hub connections to eastern destinations

. The
frequency needs combined with the geographic proximity to San Francisco International

Airport has offered economic support only for smaller aircraft. This has tran slated to
turboprop aircraft whose speed and range have rendered them appropriate only for

markets of approximately 300 miles or less , such as San Francisco

. The reduction of

smaller jet turboprop aircraft in regional airline fleets will continue to impact ACV’s future

air service making the implementation of this S trategic Plan of vital

economic importance

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 8 

### P AST 

### A IR 

### S ERVICE 

### D EVELOPMENT 

### E FFORTS

ACV and its community supporters have been very proactive in

attempts to maintain and improve air service ( Table 3.3 )

. Each year

ACV staff makes numerous proposals to airlines who could

successfully se r ve the ACV market. This strategy includes frequent

follow

- up and communication to keep potential air carriers informed

on ACV ’s market as well as provide continuous information that could
affect their decision to begin service. ACV recently attended both the

Network USA and ACI

- NA JumpStart Air Service Development

conferences where they met with multiple airlines. This grant

application is one more example of a pro

- active community f ully

engaged in its air service development efforts

.

TABLE 3.3 PAST AIR SERVICE DEVELOPMENT EFFORTS

YEAR INITIATIVE RESULT

2009 Allegiant Air Conference/Brochure Completed

2010 Delta Air Lines’ Community Update Completed

2011 Passenger Demand Analysis

- retention/diversion study Completed

Network USA 2011

- Airline Meetings Completed

ACI

- NA JumpStart 2011

- Airline Meetings Completed

2012 Network USA 2012

- Airline Meetings Completed

ACI

- NA JumpStart 2012

- Airline Meetings Completed 

## ACV and its
community
supporters have
been very proactive
in attempts to

maintain and
improve air service.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 9 

# A IR 

# S ERVICE 

# N EEDS AND



# D EFICIENCIES

he Air Service Needs and Deficiencies section identifies the major
origin/destination markets that are not served adequately and the high fare levels

in the ACV market

. This section provides a detailed analysis to demonstrate that

ACV is

. **unde rserved and**  **overpriced**



### S ERVICE 

### N EEDS TO A 

### S ECOND 

### H UB

Currently virtually all ACV catchment area air travelers are required to travel via San

Francisco International Airport on turboprop aircraft . While this can be a reasonable
routing for southbound passengers, congestion and weather problems at San Francisco

are well known with frequent reliability issues for connecting passengers. Additional

operational delays are expected this year. The option of connecting via an additional

hub for eastbound travel would greatly improve the quality of catchment area air service

and aid economic and market development.

The market served by ACV is in need of additional capacity as San Francisco flights

average d 76 percent f or the year ended January 31, 2012 . This is a very high load
factor for flights with an average capacity of 30 seats suggesting that rejected demand

occurs on many flights and is supported by a comparison to other tur boprop markets

from San Francisco, as Table

4 .1 shows. Service to a second

hub would alleviate the inability

to buy a seat during peak

demand periods in this

underserved market and

provide the added value of

routing options when

operational problems exist at

the San Francisco hub.

The ACV market responded
strongly to Delta Air Lines’ Salt
Lake City eastbound
connecting service. Table 4

. 2

shows the load factor for the 15 months that Delta served the market. While load factors

dipped during the low

- season months, during the summer months the **load factor**

. June load factors were up nine percentage points year over **exceeded 80 percent**

year. De lta also operated at a time when both Alaska Airlines and United Airlines served

the market. In 2011, Alaska terminated all service at ACV. The only hub service available
is now provided by United at San Francisco International Airport limiting competition to 

# T

TABLE 4 .1 SAN FRANCISCO TURBOPROP
LOAD FACTOR COMPARISON

SFO MARKET LOAD
FACTOR % SEATS/

OPERATION

ACV 76 30
Sacramento, CA 74 30
Santa Barbara, CA 77 30 Redding, CA 65 30
North Bend, OR 68 30 Monterey, CA 65 30 Crescent City, CA 64 30 San Luis Obispo, CA 69 30

Klamath Falls, OR 54 30

Bakersfield, CA 59 30

Chico, CA 52 30
Modesto, CA 44 30

Source: Diio Mi; Year Ended 1 /31/1 2 TABLE 4.2 ACV

- SLC LOAD
FACTOR

MONTH LOAD
FACTOR

Jun

- 08 70.4

Jul

- 08 83.1 Aug

- 08 83.8 Sep

- 08 61.5

Oct

- 08 64.4

Nov

- 08 70.1

Dec

- 08 66.7

Jan

- 09 54.7

Feb

- 09 48.5

Mar

- 09 61.4
Apr

- 09 63 .0 May

- 09 71.4

Jun

- 09 79.2

Jul

- 09 85 .0 Aug

- 09 81.1

Source: Diio Mi This section addresses:

Description of the
Arcata/Eureka community’s

air service needs and

deficiencies

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 10 the east. It is anticipated with current service levels limited to connections at San

Francisco, **the market will react even stronger to new hub service in the future**

.



### U NMET 

### M ARKET 

### D EMAND

The ACV catchment area has an esti mated
true market demand of 340 passengers daily

each way. For the year ended June 30, 2012,

approximately 198 seats daily each way were

provided at ACV to San Francisco. This

combined with the high l oad factors on the

segment ampl y demonstrates that **the ACV**

**catchment area market is unde r**  **served and**

**in need of service to a second hub that** 

**provides eastbound connections** 

.

Table 4

. 3 shows ACV’s top catchment area

markets and ACV’s retention in these markets.
ACV has relatively high retention to West Coast
markets, particularly Californ ia markets with

nonstop service. T he retention study was
conducted when ACV had nonstop Los

Angeles service and reten tion is likely lower in
many West Coast markets . Retention is much

lower, however, in eastern markets and
internationally. For example, ACV’s Dallas retention is only 49 percent while retention to
Washington, DC is only 22 percent

. The proposed service wil l drastically improve

retention to these eastern markets and reduce the need to drive long distances

. Improved retention of air travelers from ACV’s market area who currently use other

airports is the key to improving existing air service and the foundatio n for future air

service improvements.



### H IGH 

### A IRFARES

The Order Soliciting Community Proposals indicated that the US Department of
Transportation (DOT) will compare the local community’s airfares to the national average

airfares for all communities using t he BTS database. T he BTS report for calendar year

2011 shows ACV with an average roundtrip fare of $458

, $94 or 26 percent higher than

the national average of $364.

Since 2001, ACV’s airfares have risen dramatically, 58 percent compared to only 23

percent for the state of California and 18 percent nationally. ACV has a significant fare
discrepancy with other surrounding California airports, the West region and the national

average as shown in Table 4. 4 , next page . In 2011, ACV’s one

- way average fare was

$3 0 higher than Redding, $48 higher than Sacramento, $15 higher than San Francisco,
$36 higher than California, $39 higher than the West region and $38 higher than the

US average. TABLE 4

. 3 ACV RETENTION/DIVERSION BY MARKET

MARKET O&D PAX

PDEW RETENTION
% TRUE

MARKET

PDEW Los Angeles, CA 44,306 91 66.7 San Diego, CA 9,926 79 17.2
San Francisco, CA 9,852 98 13.8
Seattle, WA 7,529 78 13.2
Denver, CO 6,363 77 11.3 Phoenix, AZ (PHX) 4,115 68 8.3

Las Vegas, NV 5,090 86 8.2 Chicago, IL (ORD) 3,818 76 6.9
Sacramento, CA 4,390 98 6.2 New York, NY (JFK) 2,227 60 5.1
Portland, OR 3,128 87 4.9 Dallas, TX (DFW) 1,718 49 4.8 Washington, DC (IAD) 2,513 80 4.3
Boston, MA 2,280 79 4.0
San Jose Cabo, Mexico 852 30 3.9
Honolulu, HI 2,004 73 3.8 Minneapolis, MN 1,972 74 3.7 Orange County, CA 2,301 89 3.6

Philadelphia, PA 1,803 71 3.5 Washington, DC (DCA) 509 22 3.2

Total all markets 187,855 76 339.5
Source: Mead & Hunt, Inc. Passenger Demand Analysis ; Note: T he retention study was
conducted when ACV had nonstop Los Angeles service

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 11 TABLE 4. 4 AVERAGE ONE

- WAY FARE PAID

AVERAGE FARE ACV $

DIFF 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ACV $132 $142 $115 $126 $131 $156 $157 $165 $158 $170 $209
Redding, CA $136 $148 $126 $130 $134 $153 $153 $165 $151 $153 $179 $30
Sacramento, CA $110 $108 $108 $109 $117 $128 $127 $137 $132 $145 $161 $48
San Francisco, CA $194 $182 $170 $161 $174 $190 $187 $184 $155 $176 $194 $15

California $141 $135 $128 $126 $135 $148 $148 $156 $141 $158 $173 $36
West Region $130 $126 $123 $123 $132 $143 $142 $153 $139 $156 $170 $39

US $145 $140 $134 $131 $135 $147 $147 $157 $143 $157 $171 $38

Source: Diio Mi

Table 4

. 5 further demonstrates , particularly to **ACV’s higher than average fares**

eastern markets. When compared to San Francisco and Sacramento, the catchment
area’s top two diversionary airports, ACV’s fares are high. To Denver, ACV’ s fares exceed Sacramento by $46 one

- way and San Francisco by $35 one

- way. In the Dallas

market, ACV exceeds Sacramento by $106 and San Francisco by $148 . These are just a
few examples of the excessively high fares caused by the limite d air service offerings
and lack of eastbound connection opportunities in the ACV market.

TABLE 4.5 AIRFARE COMPARISON BY MARKET

RANK DESTINATION ACV

FARE SFO

FARE SMF

FARE ACV

DIFF.

1 Los Angeles, CA $152 $94 $117 $58

2 San Diego, CA $189 $98 $117 $91

3 San Francisco, CA $157 N/A $103 $54

4 Seattle, WA $243 $118 $131 $125

5 Denver, CO $175 $140 $129 $46

6 Phoenix, AZ (PHX) $214 $130 $137 $83

7 Las Vegas, NV $191 $102 $112 $89

8 Chicago, IL (ORD) $261 $208 $232 $54

9 Sacramento, CA $91 $103 N/A ($12)

10 New York, NY (JFK) $348 $282 $213 $136

11 Portland, OR $250 $154 $110 $140

12 Dallas, TX (DFW) $313 $165 $207 $148

13 Washington, DC (IAD) $243 $266 $258 ($15)

14 Boston, MA $269 $256 $220 $49

15 Honolulu, HI $300 $247 $259 $53

16 Minneapolis, MN $293 $222 $211 $82

17 Orange County, CA $198 $116 $121 $82

18 Philadelphia, PA $341 $288 $228 $113

19 Washington, DC (DCA) $343 $203 $231 $140

20 Anchorage, AK $361 $245 $233 $128

All domestic markets $209 $194 $161 $48

Source: Mead & Hunt Passenger Demand Analysis; Diio Mi.; CY 2011APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 12 

# S TRATEGIC 

# P LAN



# – A IR 

# S ERVICE

he Strategic Plan proposed by ACV will achieve the communit y’s goals and help
to alleviate the air service deficiencies of this community. This Strategic Plan

section provides a detailed description of the goals of the project and a primary

and alternate plan for attaining those goals. As a previous grant recipient, this application
is a new project with different goals than the previous project.



### P ROJECT 

### G OALS

The project goal is to significantly improve eastbound connections to adequately serve

the Arcata/Eureka area . By improving eastbo und connections, which is ACV’s top air

service deficiency, t he following will be achieved :

• High airfares will be reduced and more in line with other markets with additional

capacity and competition in the marketplace

.

• The n eed to drive excessively long d istances to use alternate airports to access

adequate air service and competitive fares will be mitigated.

• S eat availability will be opened up on high load factor San Francisco flights for

additional passengers in high demand markets

.



### P ROPOSED 

### A IR 

### S ERVICE

With existing service limited to San

Francisco, ACV’s primary air service need

is to a hub offering significant eastern
connecting opportunities, specifically
Denver International Airport ( Exhibit 5 .1 ).

High average fares and diversion of

catchment area travelers support the need

for this air service initiative. United Airlines’
Denver service would provide ACV with

optimal air service access and new unique

one

- stop connections

. This plan will

achieve the project goal s by o ffering more

service options and p roviding a more

reliable hub airport compared to San

Francisco, which is plague d with delays

and cancellations.



### A IRLINE 

### P ARTICIPATION

Recently , members of the public

- private partnership ( Table 6 .1 , page 15 ) met with

United Airlines regarding nonstop eastbound service. Discussions with United have been

positive. However, based on preliminary discussions, the community support package
proposed in the Strategic Plan is critical in the airline’s decision to serve the Den ver 

# T This section addresses:



### • A Strategic Plan for

meeting ACV’s air

service needs and

deficiencies



### • Alternate plan to meet

the goals

United Airlines’ Denver:

405 daily departures

124 nonstop destinations

11 international destinations 63 unique one

- stop destinations ACV

DEN EXHIBIT 5.1 PROPO SED AIR SERVICEAPPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 13 market. United to Denver would meet the goals of this SCASDP grant
application and is the highest priority of the community

.



### M ARKET 

### A NALYSIS

A financial analysis and forecast has been developed for United

service to Denver Internationa l Airport. A summary of the results of

the analysis is provided below.



### Mature Market Results

P rojections were completed for a one roundtrip schedule on a 50

- seat Canadair Regional

Jet. Table 5 .1 provides a summary of the detailed market analysis completed.

Passenger projections were based on a mature market (i.e., passenger projections

would be at 100 percent on the first day of serv ice) and prior to fuel cost increases

. It is
estimated that one roundtrip per day will generate at least $6.7 million in system revenue

for United. Projected system profit is estimated at over $1.5 million. The estimated profit
margins suggest that after the initial service ramp

- up that the service would be self

sustaining and profitable for United. Previous eastbound connecting service via Salt Lake
City was reaching maturity when pulled due to fuel cost inc reases.

TABLE 5.1 ACV

- DENVER SUMMARY
DETAILED MARKET ANALYSIS

ITEM STATISTICAL CATEGORY

1 Available seats per departure 50

2 Segments per day 2

3 Onboard passengers 27,836

4 Load factor 76.3%

5 Segment 1 fare $147

6 Segment 1 revenue $4,305,847

7 Segment 1 cost $4,269,186

8 Segment 1 profit margin $ $36,661

9 Segment 1 profit margin % 1%

10 Average fare all markets $228

11 System revenue $6,705,976

12 System cost $5,155,812

13 System profit/loss $1,550,164

14 System margin 23%

Source: Mead & Hunt, Inc.



### Airline Risk During Ramp

**- Up** 

Although it is estimated that United will earn a profit on both a segment and a system
basis, they will not generate this amount of revenue or margin at start

- up , particularly on
the first segment (ACV

- Denver)

. Airlines typically incur losses in new markets during the

ramp

- up period. The length of the ramp

- up period is highly dependent on marketing

efforts. In the case of the proposed service to Denver, a ramp

- up period was created
( Table 5 .2 , next page )

. The ramp

- up period assumes that 60 percent of the mature

market traffic will fl y in the first month, April 2013

. The market will then mature over the

first 12 months until 100 percent by t he twelfth month, March 2014

. Based on the ramp

up forecast, it is estimated that United will require a revenue guarantee of at least $ 1 

## Carriers have
expressed interest

in serving ACV to a

hub with eastbound connecting
opportunities and support this grant
application.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 14 million to cover segment losses in the first 12 months

. For success, the new service will

also require a strong marketing program.

TABLE 5.2 ACV

- DEN VER SEGMENT RAMP

- UP AND SHORTFALL

MONTH SEASON

ALITY ONBOARD

PAX RAMP

UP % RAMP

- UP

PAX LOAD
FACTOR REVENUE COST

PER
MONTH SEGMENT
SURPLUS/
SHORTFALL Apr

- 13 8.4% 2,338 65.0% 1,520 50.7% $222,688 $350,892 ($128,204)
May

- 13 9.3% 2,589 67.9% 1,758 56.7% $257,610 $362,588 ($104,978)

Jun

- 13 9.8% 2,728 70.8% 1,932 64.4% $283,118 $350,892 ($67,774)

Jul

- 13 9.2% 2,561 73.8% 1,889 60.9% $276,728 $362,588 ($85,860)
Aug

- 13 9.6% 2,672 76.7% 2,049 66.1% $300,180 $362,588 ($62,409) Sep

- 13 5.9% 1,642 79.6% 1,307 43.6% $191,504 $350,892 ($159,388)

Oct

- 13 8.4% 2,338 82.5% 1,929 62.2% $282,642 $362,588 ($79,946)

Nov

- 13 7.8% 2,171 85.4% 1,855 61.8% $271,732 $350,892 ($79,160)

Dec

- 13 9.3% 2,589 88.3% 2,287 73.8% $335,051 $362,588 ($27,537)

Jan

- 14 7.6% 2,116 91.3% 1,930 62.3% $282,846 $362,588 ($79,742)

Feb

- 14 6.6% 1,837 94.2% 1,730 61.8% $253,481 $327,499 ($74,019)

Mar

- 14 8.1% 2,255 97.1% 2,189 70.6% $320,725 $362,588 ($41,863)

Total 100.0% 27,836 100.0% 22,374 61.3% $3,278,306 $4,269,186 ($990,880)

Source: Mead & Hunt, Inc.



### A LTERNATE 

### P LAN

While the public

- private partnership was encouraged by discussions with United, if ACV

fails to obtain Denver service in a reasonable time period , alternate carriers will be

approached for eastbound connecting service. Alternate hub service that would fulfill the
goals of this grant application include: Salt Lake City, Phoenix, Dallas/Ft. Worth, or Los

Angeles. Consistent with the intent of the air service initiative proposed, obtaining

nonstop service to an alternate hub airport with numerous eastbound connecting

opportunities and competitive airfares is the best option for ACV catchment

area passengers.



### P REVIOUS 

### G RANT 

### R ECIPIENT



### - N EW 

### P ROJECT AND 

### G OALS

In 2004, the U S DOT awarded Redding Municipal Airport and ACV (as a consortium

member) a SCASDP grant. The 2004 grant included the following project goals:

• Introduce service to Los Angeles to meet the needs of the Los Angeles

basin travelers

• Reduce fares by adding a second carrier to the airport

The US DOT’s portion of the project budget, $500,00 0 , included partial funding of a

revenue guarantee and marketing support. Where the previous application’s goals were
specific in nature by concentrating on the Los Angeles Basin destined traveler, this

application’s goals focus specifically on eastbound connection needs : obtain

competitive eastbound service with concentration on Denver International Airport. As

demonstrated, this application qualifies as a n ew project and meets the requirements of

the SCASDP

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 15 

# S TRATEGIC 

# P LAN



# –

I MPLEMENTATION AND 

# F UNDING

his section, Strategic Plan

- Implementation and Funding , provides the detailed
incentive and support plan required to implement the Strategic Plan. A legal
sponsor responsible for administering the program has been designated, and a

public

- private partnership has been formed to actively participate in implementing the

proposed project. In addition, this section identifies self

- sufficiency of the service as an
integral part of the community’s goals and provid es a description of the community’s plan

to continue with the project if it is not self

- sustaining after the grant award expires. A
detailed description of the funding necessary for implementation of the Strategic Plan,

including federal and non

- federal co ntributions, is included.



### P UBLIC



### - P RIVATE 

### P ARTNERSHIP

Humboldt County/ ACV has been designated as the sponsor of

this grant application. For the purpose of this application,
Humboldt County/ ACV and RREDC have formed a public

- private
partnership (refer to community support letters in Appendix A ).

Collectively, the partn ership is committed to completing the
Strategic Plan outlined herein.

All partners in the public

- private partnership will be fully involved in the execution of the
Strategic Plan ( Table 6 .1). Humboldt County/ ACV will execute all federal grant offers,

process all associated reimbursement requests, oversee grant administr ation and

administer the revenue guarantee

. RREDC will be responsible for administering the

marketing campaign. Tog ether these partners form a team committed to improving air

service at ACV and seeing this Strategic Plan through to completion.



### I NCENTIVE AND 

### S UPPORT 

### P LAN

The current industry status filled with recent an d ongoing airline mergers and buyouts,

limited fleet availability, volatile fuel prices and an uncertain economy is challenging for

many communities like Arcata/Eureka

. These obstacles work against new service and

extend the time it takes for new or increas ed service to gain profitability. Accordingly,

airlines are cautious and highly risk adverse requiring communities to partner with them

to reduce economic uncertainty. In today’s industry, community risk mitigation programs

have become an expectation. To b e effective, airline support packages must be

structured to address the realities of today’s industry and ensure that investments made

are quick to respond. This Strategic Plan is structured to address today’s

industry realities. 

# T

TABLE 6 .1 PUBLIC

- PRIVATE PARTNER ROLES

PUBLIC

- PRIVATE

PARTNER ROLE

Humboldt County/ACV Grant and revenue guarantee administration, marketing program

RREDC Assist with the marketing

program This section addresses:



### • Description of the

public

- private

partnership



### • Designation of a legal

sponsor



### • Funding necessary for

implementation of the
Strategic Plan



### • Sustainability of the

project



## Humboldt County/ACV and

RREDC have formed a public

private partnership.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 16 The public

- private partnership proposes a n airline incentive program that has been tested

and proved to be successful. To reduce United

Express’ breakeven period and offset the

economic risk during start

- up, the public

- private

partnership proposes the following incentives
( Exhibit 6 .1 ):

• Revenue guarantee : reduce airline

economic risk

• New service marketing campaign: c reate

improved service awareness

• Landi ng fee waivers: reduce start

- up costs



### Revenue Guarantee

ACV is competing with other markets across the

country for a very limited resource . Without a

revenue guarantee, ACV has little chance of
becoming one of United’s priority Denver

markets. To reduce airline risk and provide

incentive to United to initiate nonstop service to

Denver , this Strategic Plan includes an airline revenue guarante e as part of the

community support package. United’s annual cost of providing daily service to Denver

with the Canadair Regional Jet 200 is estimated at $5. 2 million

. It is anticipated that

United would require at least a $ 1 million airline revenue guarant ee to consider ACV

Denver service

. Exact terms of the airline revenue guarantee agreement are subject to
further discussions and negotiation.



### Marketing Campaign

A complete marketing/advertising plan will be developed prior to any expenditure of

marketing dollars. This plan will be specifically tailored to the needs and support of new

service with improved eastern connectivity.

Extensive efforts have been underway for years. Currently, there is a community

- wide
effort to garner support for new and existin g service. This effort has involved the use of
social media, traditional media, electronic newsletters, and the gathering of information
and pledges from the public. All of these efforts provide a strong base from which to

support new service supported by this grant. Implementation of marketing and
advertising can be immediate and effective with minimal effort or resources needing to
be spent on planning beyond the tailoring and delivery of specific messaging toward s building the new service.

The marketing plan will be structured for an 18

- month program and will focus on public
awareness of the new service. However, a permanent marketing program will be in
place, meaning that existing efforts will continue in an expanded and enhanced manner

past the grant p eriod. 

## To reduce airline
risk and provide

incentive to United
Express to provide new nonstop, high

priority hub service, this Strategic Plan

includes an airline
revenue guarantee. EXHIBIT 6.1 INCENTIVE AND
SUPPORT PLAN

New hub service

Revenue guarantee

US DOT Marketing program/ Landing fee

waiver

Community/

AirportAPPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 17 Marketing service ramp

- up will emphasize how the new service will

make air travel more convenient, less time

- consuming, and less

costly, while providing more direct access to primary destinations. In

addition, there will be a more general awarenes s campaign on the
issues of supporting local air service, already underway. This

campaign will become a permanent part of the operation of ACV and

will include the entire marketing mix discussed below.

In addition, there will be extensive “free media” via commentaries and
news stories. For example, the executive director of RREDC, who will

be coordinating marketing for this project, has a twice per month

radio commentary which can be used to promote service.

MARKETING MESSAGES:

Key marketing messages that will be directed to the new service supported by this grant

will emphasize the features and benefits of the prop osed service to the identified
audiences. Messages will focus on the following:

• Convenience: The new service will get passengers to key eastern destinations

with more convenience.

• Cost effective: The new service will reduce th e cost of travel to key

easter n destinations.

• Airline name and aircraft type: The new service is provided by a name brand
airline and larger aircraft.

TARGET AUDIENCE

The target audience for the new air service is a combination of business travel and

leisure travel. For the business m arket, the target audience can best be identified as
follows: direct to consumer; corporate/government account; and travel agency. For the
leisure market, the target audience is: direct to consumer; tour operator/consolidator; and

travel agency.

MEDIA MIX

• Print: D iscounted a dvertising will be provided by the local daily paper.

• Television : A dvertising and messaging will be televised on local broadcast

stations and the cable provider. Local broadcasters are offering free and

reduced marketing exposure. In a ddition, news coverage of the efforts to date

has been extensive. A news conference will be held upon the announcement of

new service.

• Radio : Commitments for free and reduced advertising have been secured from

local radio stations.

• Websites : Websites pro moting the service will include, but not be limited to :

o www.FlyHumboldt.org

o www.Humboldtmade.com

o www.NorthcoastProsperity.com

o www.Rredc.com 

## Marketing service

ramp

- up will
emphasize how the

new service will

make air travel more
convenient, less

time

- consuming,
and less costly

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 18 o www.Humboldt.edu

o w ww.co.humboldt.ca.us/aviation

• Social Media : The social media effort will include the already
existing @FlyHumboldt (Twitter),

www.facebook.com/flyhumboldt and

www.facebook.com/lovehumboldtmade

.

• Direct email contact : Over 1,000 recipients targeted for

direct email from airline surveys and pledges will be

contacted . Constant Contact is currently being used for

this effort.

• Other print and e

- newsletters : This will includ e print and e

newsletters from the local Chambers of Commerce, Main
Street organizations and others.

• Speaking engagements : A detailed presentation will be created and delivered to

local service clubs and business organizations. A sample presentation is
embedded on flyhumboldt.org.

MARKETING SCHEDULE

Marketi ng will begin at least 60 days prior to the initiation of service. The initial program
will focus on the target audience, solidify travel agent interest, schedule meetings and
presentations to advise local area businesses of service and schedule, and begin the

print and radio advertisements. In addition, a welcoming celebration will be held at ACV

to herald the arrival of the first aircraft of the new service. This will be a heavily publicized
public event that will draw significant local coverage.

It is expected that a significant share of the budget will be expended in the first 60 days.
However, the total advertising and promotion program is planned for 18 months. Efforts

to secure donations and other support for marketing will be ongoing.

FUNDING

A pa rtnership agreement with local media outlets has been established. This $ 78 ,800
campaign will be funded by non

- airport sources ( $68,800 in

- kind) and ACV
($10 ,000 cash)

.



### Fee Waivers

The air service support program includes a landing fee waiver. As part of ACV’s standard

rates and charges, in 2012, signatory airlines will be charged a landing fee assessed at

$1.70 per 1,000 pounds of gross landed weight. ACV will waive landing fees for the first

12 months for new hub service . Landing fees for the first 12 mo nths are estimated at

$ 31,645 with the use of the Canadair Regional Jet 2 00 with one daily roundtrip. The
landing fee waiver may vary depending on aircraft type used, the number of roundtrips

offered and final negotiations with the airline

. 

## T he $78 ,800 marketing campaign

will be funded by

non

- ai rport sources

( $6 8,800 in

- kind) and ACV ($10 ,000 cash).APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 19 

### S TRATEGIC 

### P LAN 

### F UNDING

The public

- private partnership is requesting US DOT assistance in funding 65 percent, or
$ 75 0 ,000, of the Strategic Plan. Specifically, US DOT funding will be used to fund a portion of the airline revenue guarantee

. A ll other elements including the marketing

campaign, fee waivers, Strategic Plan monitoring and airline meetings will be funded by

the community.

Table 6

. 2 provides the Strategic Plan budget by element and sources of funding. ACV

and the community will fu nd 35 percent of the total proposed air service program. Non

airport funding sources will provide 25 percent of the cash requirement and 29 percent of
the funding for the total program including in

- kind services.

TABLE 6

. 2 STRATEGIC PLAN BUDGET

DESCRIPTION FUNDING SOURCE

TOTAL US DOT AIRPORT NON

- AIRPORT

CASH CASH IN

- KIND CASH IN

- KIND Airline incentive program:

Revenue guarantee $750,000 $250,000 $1,000,000
Marketing campaign $10,000 $68,800 $78,800

Fee waivers $31,645 $31,645 Strategic Plan monitoring $17,600 $17,600 Airline meeting/negotiations $9,420 $9,420
Program administration $5,900 $5,000 $10,900

Total $750,000 $27,600 $37,545 $259,420 $73,800 $1,148,365
Percent of total project 65% 2% 3% 23% 6% 100%

Percent of cash contribution 72% 3% N/A 25% N/A 100%



### P ROJECT 

### C ONTINUATION AND 

### S USTAINABILITY

Based on a strong marketing campaign for promoting United Express Denver hub

service, it is anticipated that the new service will be self

- sustaining after the start

- up period which can take up to a year. However, a leading cause of service failure is lack of

awareness in the community. The public

- private partnership will fund an additional

$ 5 0 ,000 marketing campaign if at the end of the first year of service the market average

load factor for the 12

- month period averaged less than 65 percent. The public

- private

partnership and the Arcata/Eureka business community are committed to the success of

this project , have a vested interest in the outcome of this Strategic Plan, and understand
the difficulties associated with profitably operating air ser vice.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 20 

# S CHEDULE AND 

# M ONITORING

he public

- private partnership established for this Strategic Plan has developed
a realistic timetable to achieve the goals of this pro posal. This section provides

critical milestones to be achieved by the public

- private partnership. A

monitoring program is also provided to track the progress of the project.



### C RITICAL 

### M IL ESTONES

The following milestones are proposed to track the progress of this air

service initiative

. The timeline is highly dependent on the date of the

US DOT’s grant award and the service start date.



### Marketing Campaign Development/Initiation

: Development of the marketing campaign will be January 20 1 3

completed in January 201 3 in order t o begin the marketing campaign

3 0 to 60 days prior to new service initiation. Development of the

marketing campaign is dependent on air service announcement and

start

- up

. It is anticipated that the marketing campaign will begin by

February 1, 2013

, and continue throughout the first year of new service.



### Service Improvement **Initiation**

: The service start date is the critical date for the rest of the Strategic Plan. April 201 3

It is anticipated that United Express will begin nonstop Denver service in April 2013

. Air service initiation is dependent on airline route planning and availability of aircraft.



### Alternate Plan

: If United has not committed to nonstop Denver service by April 1, 201 3

, April 201 3

ACV will contact alternate carriers that would meet the goals of this grant application.
Nonstop Salt Lake City, Phoenix

, Dallas/Ft. Worth or Los Angeles service are the top

priorities following nonstop Denver service to provide the eastbound connections

needed by the community

.



### End of First Year of Service

: At the end of the first year of service, the revenue guarantee will be March 20 1 4

calculated based on the terms of the agreement. If the service start date changes due
to airline circumstances and/or equipment availability, the revenue guarantee contract

term will change accordingly. 

# T This section addresses:



### • How the community will

monitor the progress of

the project



### • The plan/schedule for

timely completion of

the project



## It is anticipated that
United Express will

be gin Denver
service in April

2013

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 21 : If the load factor for the first 12 months of service does March 201 4

not reach an average of 65 percent, ACV will invest $ 50,000 in

supplementary marketing for an additional 12 months to help the

service reach the potential passen ger levels required for

carrier su ccess.



### M ONITORING 

### P ROGRAM

The monitoring program proposed is aggressive and comprehensive.
The monitoring program includes: service performance tracking,
assessing the effectiveness of the marketing campaign, and
determining the impact of the service on retention of catchment area

passengers at ACV

.

The following will be completed:

• Review aircraft departures, enplaned passengers and load

factors on a monthly basis. Airport data, US DOT airline reported
data and data obtained directly from the airline will be used.

• Average airfares will be reviewed on a quarterly basis and

compared and evaluated to prior quarters. Published airfares will

also be tracked via one of the Global Distribution/Computer
Reservations Systems (GDS/CRS) or through airline web sites.

• A follow

- up retention/ diver sion study will be performed to determine changes in

passenger retention/diversion after the first 12 month s of service. By comparing

post

- service impr ovement retention levels to pre

- service retention levels, the
study will determine the impact of the air service improvements on

retention/diversion at ACV

.APPLICATIONUNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 22 

# A PPENDIX 

# A

. L ETTERS OF



# S UPPORT

ppendix A includes letters of support for ACV ’s application to the US DOT

to increase eastbound connecting opportunities

. Support letters were

submitted by participants in the public

- private partnership , government

officials and members of the Arcata/Eureka area

. T he letters of support are included
on the following pages of this Appendix A and are listed below.

Public

- private partnership

Humboldt County/ ACV (refer to cover letter)
Redwood Region Economic Development Commission

Government

County of Humboldt , Treasurer

- Tax Collector John Bartholomew
City of Eureka, Mayor Frank Jager
City of Fortuna, Mayor Douglas Strehl

Businesses and Organizations

Danco

Greater Eureka Chamber of Commerce
Humboldt State University

North Coast Small Business Development Center
Northern California Community Blood Bank

OrderWithin

Redwood Region Entertainment & Education Liais ons, Inc.
Republic Parking System

Wallace & Hinz 

# A This section addresses:

Letters of support from

members of the public

private partnership, the

local business community

and c ity/county

government.