# Santa Maria Public Airport Santa Maria, California

Legal sponsor: Santa Maria Public Airport District
DUNS: 08591 7870 Congressional District Code: CA

- 23

Contact: Chris Hastert General Manager
3217 Terminal Dr ive Santa Maria, CA 93455 Phone: (805) 922

- 1726
Fax: ( 805 ) 922

- 0677 chastert@santamariaairport.com 

# P ROPOSAL UNDER THE 

# S MALL 

# C OMMUNITY


# A IR 

# S ERVICE 

# D EVELOPMENT 

# P ROGRAM

D OCKET 

## #: DOT

- OST

- 201 1

- 01 19

### Prepared by 

# T ABLE OF 

# C ONTENTS

P AGE



### Summary Information

................................ ............................ 1 Proposal Highlights

................................ ................................ 2 Higher Than Average Fares

................................ ................................ .............. 2 Community Cost Contribution

................................ ................................ ......... 2 Public

- Private Partnership

................................ ................................ ................. 2 Material Benefits

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

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



### Air Service Environment

................................ ........................ 3 Airport Catchment Area

................................ ................................ .................. 3 Business Community

................................ ................................ ....................... 4 Educational Institutions

................................ ................................ ................... 4 Tourism

................................ ................................ ................................ ........... 5



### Air Service

– Existing and Historical

................................ ...... 6 Existing Air Service

................................ ................................ .......................... 6 Historical Air Service

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



### Air Service Needs and Deficiencies

................................ ....... 10 Major Orig in/Destination Markets Not Served Adequately

.............................. 10 Higher than Average Fares

................................ ................................ ............. 11 

### Strategic Plan

– Air Service

................................ .................. 12 Project Goals

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

................................ ................................ ...................... 12 Airline Participation

................................ ................................ ....................... 12 Detailed Market Analysis

................................ ................................ ............... 13 Alternate Plan

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

- New Project and Goals

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



### Stra tegic Plan

– Implementation and Funding

...................... 15 Public

- Private Partnership

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

................................ ................................ ............ 15 Project Continuation and Sustainability

................................ .......................... 18 Strate gic Plan Funding

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

### Schedule and Monitoring

................................ ..................... 19 Schedule and Milestones

................................ ................................ ............... 19 Monitoring Program

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

### Appendix A. Community Support

................................ ......... 21 Appendix B. Detailed Market Analysis

................................ .. 29

# 1 

# S UMMARY 

# I NFORMATION

A. Applicant Information: ( Check all that apply)

X Not a
Consortium Interstate
Consortium Intrastate
Consortium Community now receives EAS subsidy

X Community (or Consortium member) previously received a Small Community Grant If previous recipient, date of grant: June 26, 2002
E xpiration date of grant: March 12, 2005

B. Public/Private Partnerships: (List organization names)

Public Private

1. Santa Maria Public Airport District 1. Santa Maria Valley Chamber of Commerce & Visitor &
Convention Bureau

2

. Santa Maria Economic Development Commission

C

. Project Proposal: (C

heck all that apply)
X Marketing X Start

- up Cost Offset

Travel Bank X Secure Additional
Service Surface Transportation X New Route
Launch New Carrier Subsidy Study X Revenue Guarantee Upgrade Aircraft First Service
Service Restoration Other (specify): Regional Service

D. Existing Landing Aids at Local Airport:

X Full ILS X Published Instrument Approach

X Localizer X Outer/Middle Marker

X Other (specify): VOR and GPS Approach es E. Project Cost:

Line Description Sub Total Total
Amount
1 Federal amount requested $490,000

2 State cash financial contribution $0

Local cash financial contribution 3a Airport cash funds $45,000 3b Non

- airport cash funds $130,000

3 Total local cash funds (3a+3b) $ 175 ,000

4 TOTAL CASH FUNDING (1+2+3) $ 665 ,000

In

- Kind contribution
5a Airport In

- Kind contributio n** $55,000

5b Other In

- Kind contribution ** $10,000

5 TOTAL IN

- KIND CONTRIBUTION (5a+5b) $ 6 5,000

6 TOTAL PROJECT COST (4+ 5 ) $ 730 ,000

F. 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) for each.

5a Airport In

- Kind contribution: Fee waivers 5b Other In

- Kind contribution: Marketing

G. Is this application subject to review by State under Executive Order 12372 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, b ut has not been selected by the State for review.

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

H. Is the Applicant delinquent on any Federal debt? (if “yes”, provide explanation)
No Yes (explain ) X

X

### T HIS SECTION CONTAINS 

### : •

• Project goals

• Description of the Strategic
Plan



### • Highlights of the grant application



# 2 

# P ROPOSAL 

# H IGHLIGHTS

his Small Community Air Service Development Program grant application for the Santa Maria Public Airport meets
the criteria of Docket DOT

- OST

- 2011

- 0119

. Santa Maria Public Airport District

, the legal sponsor, is requesting $ 490,000 in federal assistance to implement a $ 730

, 000 air service initiative

. The project goal is to obtain nonstop service to a major airline’s hub that is locate d east of Santa M aria

. The Strategic Plan

, Sky W est Airlines / United Express

Denver service

, will achieve the project ’s goal

.



### H IGHER 

### T HAN 

### A VERAGE 

### F ARES

Santa Maria is underserved and overpriced , particularly

to eastbound markets

. With eastbound connections
limited to United Express Los Angeles service

, the optio ns for traveling east are inconvenient and expensive. Santa Maria travelers pay a significantly higher average fare than other nearby regional airports causing diversion from the local airport

. On average, Santa Maria’s airfares (excluding Allegiant Air’s Las Vegas fares) exceed California and national averages by
almost 60 percent.



### C OMMUNITY 

### C OST 

### C ONTRIBUTION

To support this air service initiative, the Santa Maria Public Airport District and community will fund 33 percent of the proposed $ 730 ,000 Strategic Plan. Non

airport revenue sources will fund 20 percent ($ 13 0,000 ) of the $ 665 ,000 cash requirement. This is a strong commitment by the local community to acquire new
eastbound hub service.



### P UBLIC



### - P RIVATE 

### P ARTNERSHIP

The Santa Maria Public Airpo rt District, Santa Maria Valley Chamber of Commerce & Visitor & Convention

Bureau and Santa Maria Economic Development
Commission have formed a public

- private partnership. This partnership has been successful in past air service
efforts and is dedicated to the success of this initiative. 

### M ATERIAL 

### B ENEFITS

Nonstop eastbound air service will benefit a broad segment of the traveling public, including business es
, education al institutions and other enterprises. Within a

60

- minute drive, approximately 400,000 peo ple reside in the area expanding to almost 700,000 within a 120

- minute drive. Importantly, Vandenberg Air Force Base
and its’ associated aerospace contractors employ over

8

, 6 00 people and has a high demand for Denver service
because of its’ many aerospace partners that are
located in and around Denver. The growing population
of North Santa Barbara C ounty, the US aerospace industry and many businesses in the region desperately need the proposed service

. Denver has been the area’s
number one market outside of California for many

years

. There is no other service improvement th at would mean as much to the region as non stop service

to Denver.



### U SE OF 

### F UNDS IN A 

### T IMELY 

### F AS H ION

A ll of the elements are in place to ensure the timely use
of grant funds. A market analysis has been completed
for SkyWest/ United service to Denver (refer to Appendix

B ). Preliminary discussions with SkyWest/United have already taken place

. I t is reasonable to expect that this service could be implemented in spring /summer 201 2

. 

# T

# 3 T HIS SECTION CONTAINS 

### : Description of the Santa Maria community in relation to air service
to demonstrate the benefit of the Strategic Plan to a broad segment of the traveling public. 

# A IR 

# S ERVICE 

# E NVIRONMENT

he Santa Maria Public Airport is in need of air service expansion. Vandenberg Air Force Base ’s proximity to Santa
Maria Public Airport and the solid and growing business and population base in the Santa Maria area is driving local demand for air service improvements. This section reflects the broad segment of the traveling public, including businesses, educational institutions and other enterprises that will benefit from the proposed Strategic Plan.



### A IRPORT 

### C ATCHMENT 

### A REA

Santa Maria Public Airport is located on the Central Coast of California in the city of Santa Maria. The Airport is located in northern Santa Barbara County, about 35 miles south of the city of San Luis Obispo

, 70 m iles nort h of the city of Santa
Barbara and 17 0 miles north of Los Angeles. The A irport’s catchment area, shown in dark green in Exhibit 3.1 , has a population of almost 225,000. Within a 60

- minute drive from the Airport the population is almost 400,000 and expands
to 700,000 w ithin 120 minutes.

Over the next 20 years, Santa Barbara County is forecasted to grow by 11 percent

. The fastest growing

c ity in Santa Barbara County, the “ All America City ” of Santa Maria, stands at the center of that growth. Santa Maria is the growth region of the
Central California Coast

. In the last 10 years, Santa Maria’s population grew over 20 percent. Santa Maria’s

s cenic terrain, moderate climate and quality of life have fueled the dramatic migration of new residents and businesses seeking affordable
locations in California. Additionally, growth has been boosted by Santa Maria’s proximity to and the increased activity at Vandenberg Air Force Base, the West Coast home of the National Aeronautics and Space Administration’s (NASA) space program. 

# T

EXHIBIT 3.1 AIRPORT CATCHMENT AREA

## S ECTION 

## 3. A IR 

## S ERVICE 

## E NVIRONMENT



# 4 B USINESS 

### C OMMUNITY

Like other California communities, Santa Maria has evolved from an agricultural background to a diversified economy that includes aerospace/military, educat ion, medical, technology
and service sectors. What was once a slow

- paced farming community is now a dynamic regional center

. The Santa Maria Valley has a burgeoning agricultural industry, as well as connections with aerospace due to its proximity to
Vanden berg Air Force Base. Other significant manufacturing includes wire and cable production, medical manufacturing, high

- tech communications, dental products manufacturing and a myri ad of other industrial products. Table 3.1 provides a list of top employers in the Santa Maria area.

Agriculture is the number one industry in the Santa Maria Valley, and new technologies are emerging. The Windset Farms project, which features the first hydroponic farming in the region, will have four large, 32

- acre greenhouses with 5.7 million square f eet in total. The project will create over 240 jobs. This will open the door for further technological advancements in agriculture and create new business opportunities in Santa Maria.

With over 1

, 300 employees, Marian Medical Center is one of the largest employers in the Santa Maria Valley. Marian
Medical Center’s 216,000 square foot, 188

- room hospital

e xpansion will open additional opportunities for medical related businesses, service and medical products. A number of companies in Santa Maria specialize in manufacturing medical and health products. The expansion is projected to be completed in 2011.

Vandenberg Air Force Base present s the ideal anchor for companies specializing in space technologies. At present, Vandenberg Air Force Base and its’ associa ted aerospace contractors play an important role in the region’s economic engine collectively employing over 8,6 00 people. Because Vandenberg is the West Coast home of the US space program, there are a number of aerospace firms including Lockheed Martin, B oeing, C& D Aerospace and InDyne located either on the base or in the community. Significantly, the Air Force B ase along with its aerospace contractors have direct links with sister companies and/ or other aerospace contractors that are located in the Denver/ Colorado Springs area.



### E DUCATIONAL 

### I NSTITUTIONS

Santa Maria is home to the campus of Allan Hancock Community College. The College serves all of northern Santa
Barba ra C ounty and parts of San Luis Obispo and Ventura counties at campuses in Santa Ma ria, Lompoc, Solvang and Vandenberg Air Force Base. Over 1,300 courses are offered in over 100 fields of study via nine academic departments.
Allan Hancock Community College, with nearly 1,000 employees, is one of the five largest employers in northern San ta Barbara County. The Santa Maria area also has several university extension programs including: Chapman University Academic Centers, La Verne University and Embry

- Riddle Aeronautical University

. TABLE 3.1 INSTITUTIONS
EMPLOYER INDUSTRY

Vandenberg Air Force Base Defense and Aerospace Santa Maria School District Public Education

Marian Medical Center Health Care Allan Hancock College Public Education

City of Santa Maria Public Administration Orcutt Union School District Public Education Betteravia Farms Agriculture C&D Zodiac Aerospace Manufacturing

Den

- Mat Corporation Manufacturing VTC Nonprofit Source: Santa Maria Chamber of Commerce & Visitor & Convention Bureau

## S ECTION 

## 3. A IR 

## S ERVICE 

## E NVIRONMENT



# 5 T OURISM

Santa Maria’s backdrop of coastline and wine count ry provide unlimited year

- round recreation and leisure opportunities. Tourism is a significant industry due to Santa Maria’s central
location between the Sierra Madres Mountains and Pacific
Ocean and the wide selection of Central Coast activities.

Wineries provide a large amount of revenue for the region, both in wine production and through tourism. The Santa Maria Wine Trail is very popular among visitors. Other
attractions include:

• Pismo Beach

• Hearst Castle

• Foxen Canyon Wine Trail

• Solvang

• La Purisima Mission

• Guadalupe

- Nipomo Dunes Complex

# 6 T HIS SECTION CONTAINS 

### :

• Description of existing air
service

• Synopsis of historical air service



### • Description of air service development efforts 

# A IR 

# S ERVICE



# – E XISTING

AND 

# H ISTORICAL

he following is a current and historical look at air service

at Santa Maria Public Airport

. Carriers providing service, service frequency, nonstop destinations offered and
airfares are shown. Also included in the following section is a discussion of past air service development efforts and extenuating factors that have affected air service

.



### E XISTING 

### A IR 

### S ERVICE

Santa Maria Public Airport has nonstop service to Las Vegas International Airport on Allegiant Air and Los Angeles International Airport on United Ex press ( Table 4.1 ). Allegiant provides three weekly departures with the 150

- seat MD

- 80 narrow

- body jet. United Express, operated by SkyWest Airlines, provides an average of four daily departures (only three on Saturday) with the 30

- seat Embraer 120 turboprop
aircraft. The only anticipated change in Santa Maria’s schedule over the next 12 months is the loss of two departures per week to Los Angeles from September 2011 through March 2012 (reduction from four daily rou ndtrips to three on Tuesday and Wed nesday).

TABLE 4.1 EXISTING AIR SERVICE NONSTOP DESTINATION MARKETING CARRIER AIRCRAFT WEEKLY DEPARTURES WEEKLY SEATS
Las Vegas, NV Allegiant Air MD

- 80 (150

- seat jet) 3 450

Los Angeles, CA United Express EMB

- 120 (30

- seat turboprop) 27 810

Total 30 1,260
Source: apgDat, August 2011



### H ISTORICAL 

### A IR 

### S ERVICE

Historically, Santa Mari a Public Airport has supported service to a variety of hubs/destinations including: Las Vegas, Los Angeles, Oxnard, Paso Robles, San Francisco, San Luis Obispo and Santa Barbara. The following summarizes the historical air service situation including: destinations, traffic levels, service providers and airfares

. Extenuating factors that have
affected air service over time is also reviewed. 

# T

## S ECTION 

## 4. A IR 

## S ERVICE



## – E XISTING AND 

## H ISTORICAL



# 7 Destinations, Service Providers and Traffic

Levels

During the last five years departures and seats have declined.
Exhibit 4.1 provides a summary of annual departures , seats and enplanements from 200 6 through 20 10

. During the five

year period, departures peaked in 200 7

. However, with the addition of Allegiant service to Phoenix

- Mesa and Las Vegas, seats peaked in 2008

. From 2006 to 2010, annual departures decreased 21 percent and seats decreased nine percent. Enplanements improved through 2009 then declined from

2009 to 2 010 by 22 percent.

EXHIBIT 4.1 DEPARTURES, SEATS, AND ENPLANEMENTS

Source: apgDat; Airport records

Table 4. 2 provides additional detail on average scheduled weekly departures and seats from 200 1 through 201 1 by
destination and carrier. United Express provided nonstop Los Angeles service over the entire period; however, departures decreased from a high in 2001 of 50 per week to only 26 per week in 201 1

. During the period, Allegiant began service to Las Vegas in 2006 and has continued to do so with thre e departures per week. In 2007/2008, Allegiant also provided nonstop service to Phoenix/Mesa but pulled the service in 2008. Historically, Santa Maria Public Airport has not had the
benefit of eastbound hub service flown by a mainline carrier.

TABLE 4.2 H ISTORICAL DESTINATIONS AND SERVICE PROVIDERS

DESTINATION AIRLINE ITEM AVERAGE SCHEDULED WEEKLY DEPARTURES/SEATS
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Las Vegas, NV Allegiant Air Dept 3 3 3 3 3 3
Seats 431 450 488 450 438 438 Los Angeles, CA United Express Dept 50 40 41 41 41 34 34 33 27 27 26
Seats 1,500 1,200 1,230 1,230 1,230 1,010 1,020 978 803 810 790 Phoenix, AZ (AZA) Allegiant Air Dept 2 2
Seats 300 300 Average weekly departures 50 40 41 41 41 36 37 37 30 30 29 Average weekly seats 1,500 1,200 1,230 1,230 1,230 1,298 1,520 1,590 1,253 1,248 1,228
Source: apgDat Las Vegas, NV 0 19,000 38,000 57,000 76,000 95,000

0 500 1,000 1,500 2,000 2,500

2006 2007 2008 2009 2010Enplanements/SeatsDepartures

Calendar year

Scheduled Departures Enplanements Scheduled Seats

## S ECTION 

## 4. A IR 

## S ERVICE



## – E XISTING AND 

## H ISTORICAL



# 8 Airfares

Over the last five years, Santa Maria Public Airport’s average fares have far exceeded Santa Barbara, San Luis Obispo, the state of
California

, the West region and national

average s as Table 4. 3 shows. In 2010 , Santa Maria’s average fare (excluding the impact of Allegiant’s low Las Vegas fares) were as much

as 60 percent higher than the West region’s average fare, 30 percent higher than San Luis

O bispo and 36 percent higher than Santa Barbara. Santa Maria’s fares were 59 percent higher than the national average. While Allegiant’s presence in the Santa Maria market dramatically improved fares to/from Las Vegas, their top origin and
destination marke t, other options are needed in the Santa Maria marketplace to bring fares more in line with other airports regionally and nationally.



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

Air service at Santa Maria Public Airport has been affected by the close proximity of other commercial air service airports. Santa Barbara Municipal Airport is approximately 70 miles away

, and San Luis Obispo County Airport is approximately 35 miles away. The larger Santa Barbara catchment area population resulted in more service at th at airport while airports serving the smaller Santa Maria and San Luis Obispo catchment areas competed vigorously for air service for their air
travelers. The result is both airports having limited north/south service, but neither airport has service to either of the hubs at Salt Lake City

or Denver.

The proximity of Vandenberg Air Force Base to Santa Maria Public Airport has proven to be a major generator of air travel

, much of which would be best served by air service to a major eastbound hub. San Luis Obispo catchment area air travelers could be conveniently served by
Santa Maria service to an eastbound hub. Such service would negate
the need for air travelers from the two smaller catchment areas to drive

over 70 miles to Santa Barbara to access service to an eastbound hub.



### Past Air Service Development E fforts

The Santa Maria Public Airport District Board of Directors has been actively involved in air service development. O ver the past five years, the Board of Directors has worked closely with the community on air service development efforts and
continues to do so

. Since 2005, Santa Maria Public Airport has aggressively pursued new air service including:

• Delta Connection: Salt Lake City, two daily, CRJ

- 200 (2005)

• United Express: Denver, one or two daily, CRJ

- 200 (2006)

• Frontier Jet Express: Denver

, two daily, CRJ

- 700 ( 2007 )

• United Express/SkyWest Airlines: Denver, one or two daily, CRJ

- 200 (2010 /2011 ) TABLE 4.3 AVERAGE ONE

- WAY FARE PAID
AVERAGE FARE SMX % HIGHER 2006 2007 2008 2009 2010 Santa Maria $209 $238 $295 $270 $253 Santa Barbara $185 $191 $195 $176 $186 36% San Luis Obispo $192 $195 $218 $206 $195 30% California $151 $152 $159 $143 $160 58% West Region $145 $145 $156 $141 $158 60%
US $150 $149 $160 $145 $159 59% Source: Data Base Products, Inc.; excludes Allegiant Air

## S ECTION 

## 4. A IR 

## S ERVICE



## – E XISTING AND 

## H ISTORICAL



# 9 For each of the initiatives, detailed market analyses and meetings at the airline headquarters have been completed. Market studies such as route forecasts and retention/diversion analyses have also regularly been conducted to keep the information current for
use in these initiatives. In addition to the above, air
service wor kshop s have been held in the community to continue to educate the community on local air service issues, challenges and options for the Santa Maria Public Airport. In 2008, a $7 million Terminal Expansion Project was completed to meet the needs
of Santa Ma ria Public Airport passengers for the foreseeable future, with future growth options incorporated into the design.

In 2004 Santa Maria Public Airport District was one of 13 airports that formed the California Airports Coalition and
received a Small Commun ity Air Service Development Program grant to evaluate the unmet air service needs in California. This study evaluated the intrastate air service needs of these 13 communities as well as the primary travel demand of each community to non

- California destinat ions. Importantly, even though the study was completed in 2006/2007 Denver surfaced as Santa Maria’s top non

- California destination. This study focused the management at Santa Maria Public Airport on Denver and, as can be seen from the list of airline init iatives on the previous page , all of Santa Maria’s airline
initiatives have targeted either Denver o r Salt L ake City service.

This Small Community Air Service Development Program grant is the needed component to incentivize an airline to take
the risk and operate service to Denver, consistently Santa Maria’s number one non

- California market.

# 10 T HIS SECTION CONTAINS 

### : Description of Santa Maria Public Airport’s air service needs and
deficiencies



# A IR 

# S ERVICE 

# N EEDS AND 

# D EFICIENCIES

he Santa Maria area is underserved and overpriced, particularly to destinations located east of Santa Maria

. The Air Service Needs and Deficiencies section identifies
the deficiencies in air service at Santa Maria Public Airport and what air service improvements are needed t o correct these
deficiencies. This section demonstrates that Santa Maria is underserved, and the average airfares in this community are higher than other comparable communities.



### M AJOR 

### O RIGIN 

### /D ESTINATION 

### M ARKETS 

### N OT



### S ERVED 

### A DEQUATELY

O nly 33 percent of S anta Maria Public Airport ’s catchment area passengers use the local airport. The existing air service to Los Angeles International Airport provides reasonable convenience to north/south air travelers along the heavily traveled

West Coast. However, limited frequency in eastbound Los Angeles nonstop markets and a relatively limited number of eastbound destinations, particularly those where codeshare agreements exist, seriously reduce the convenience of Los Angeles eastbound connecting opportunities. Dissatisf action with Los Angeles connecting routings is generally shown by
lower retention percentages as illustrated in Table 5.1 in the top 15 Denver and east markets. Importantly, Denver and Colorado Springs are the area’s top two eastern origin and destination markets.

TABLE 5.1 CATCHMENT AREA RETENTION AND DIVERSION OF PASSENGERS

TOP EASTERN MARKETS SMX RETENTION % DIVERSION %

SBA LAX OTHER Denver, CO 38 44 15 2 Colorado Springs, CO 74 17 7 3 Washington, DC (IAD) 63 16 15 6

Chicago, IL (ORD) 31 6 49 14 Orlando, FL 50 32 13 5 New York, NY (JFK) 21 17 54 8

Dallas, TX (DFW) 31 21 45 3 Houston, TX (IAH) 16 23 48 13 New Orleans, LA 29 33 31 7 San Antonio, TX 56 23 16 5

Boston, MA 48 32 16 4 Philadelphia, PA 43 15 40 2 Baltimore, MD 66 11 20 3 Nashville, TN 10 22 65 3 Atlanta, GA 33 26 30 11 Total Domestic 50 21 19 10 

# T

## S ECTION 

## 5. A IR 

## S ERVICE 

## N EEDS AND 

## D EFICIENCIES



# 11 The most serious deficiency in Santa Maria ’s service is the lack
of service to an eastbound hub such as Denver or Salt Lake City. Service improvement s are badly needed by Vandenberg
Air Force Base and its’ associated aerospace contractors which
have extensive air travel to/from Denver and Colorado Springs.
Santa Maria service to an eastbound hub would also serve the adjacent San Luis Obispo community

. Santa Barbara

- Denver service has operated at annual load factors ranging from 83 to 89 percent for the 2006 through 2010 time periods making it hard to get a seat on those flights. Santa Maria service to either Salt Lake City or Denver would alleviate the need for Santa Maria or San Luis Obispo travelers to travel over 70 miles
to Santa Barbara

, where seat availability is limited

, or drive over 170 miles to Los Angeles.



### H IGHER THAN 

### A VERAGE 

### F ARES

High airfares combine d with the lack of direct service to an eastbound hub push air travelers to divert to alternate airport s for service to Denver and east. Table 5.2 compares calendar year 2010 Santa Maria average airfares with those of San Luis Obispo, Santa Barbara and Los Angeles in the catchment area’s top 15 markets Denver and east.

TABLE 5.2 AIRFARE COMPARISON

MARKET AVERAGE FARE DIFFERENCE SANTA MARIA SAN LUIS OBISPO SANTA BARBARA LOS ANGELES SBP SBA LAX Denver, CO $194 $149 $133 $111 $45 $61 $82 Colorado Springs, CO $366 $192 $213 $211 $174 $154 $155 Washington, DC (IAD) $324 $222 $190 $218 $103 $134 $106

Chicago, IL (ORD) $196 $214 $198 $202 ($18) ($2) ($6) Orlando, FL $330 $228 $230 $203 $102 $100 $127 New York, NY (JFK) $287 $261 $211 $271 $26 $76 $17

Dallas, TX (DFW) $241 $244 $205 $195 ($3) $36 $46 Houston, TX (IAH) $381 $253 $193 $221 $128 $188 $160 New Orleans, LA $276 $223 $206 $203 $53 $70 $73 San Antonio, TX $287 $204 $193 $175 $84 $95 $112

Boston, MA $237 $215 $209 $206 $22 $28 $31 Philadelphia, PA $258 $243 $231 $241 $15 $27 $17 Baltimore, MD $402 $265 $275 $188 $138 $128 $214 Nashville, TN $285 $218 $204 $188 $67 $81 $97 Atlanta, GA $471 $238 $199 $192 $232 $272 $279 Source: Data Base Products, Inc.; CY 2010

Though this is a limited sample, it makes the case that Santa Maria ’s fares in eastbound markets are overpriced compared to adjacent airports. One

- way airfare differences are as high as $279 (Atlanta) with multiple markets exceeding $100

one

- way. Service to an eastbound hub with improved routings and added capacity will result in lower fares.

# 12 T HIS SECTION CONTAINS 

### :

• Strategic Plan

• Alternate plan



### • Previous grant recipient with

new project and goals



# S TRATEGIC 

# P LA N


# – A IR 

# S ERVICE

his Strategic Plan section provides a detailed description of the goals of the project and a primary and alternate plan for attaining those goals. This application reflects a new project with different goals from those detailed in Santa Maria’s 2002 grant award.



### P ROJECT 

### G OALS

The following goals will be accomplished by the proposed Strategic Plan:

• Secure air service to a major airline’s hub located east of Santa Mar ia Public Airport

• Mitigate the need to use alternate airports to access adequate air service



### P ROPOSED 

### A IR 

### S ERVICE

The proposed Strategic Plan to meet the project’s goals is: Santa Maria

Denver service , one or two daily Canadair Regional Jet 200 round trips operated by SkyWest Airlines/United Express ( Exhibit 6.1 )

. The effect of this plan on the project goals will be :

• Adding non stop, regiona l jet service to United Airline s ’ Denver hub will prov id e the region with direct access to i ts number one eastern destination and improve connectivity to markets located
east of Denver.

• Non stop service to Denver will reduce the number of passengers that are now diverting to other airports to fly to Denver or traveling to destinations east of Denv er

.

• Added capacity will provide greater availability of “cheap seats” thereby reducing Santa Maria’s higher than average airfares. Lower airfares will influence passengers to use Santa Maria Public Airport that are now traveling to alternate airports.



### A IRLINE 

### P ARTICIPATION

Over the past five years, members of the public

- private partnership have met with United Airlines, Delta Air Lines and SkyWest Airlines regarding nonstop service to the hubs at Denver and Salt Lake City. Recent discussions with SkyWe st/United have been positive. Because this is a new market, SkyWest/United ’s willingness to serve Santa Maria depends on Santa Maria’s public

- private partnership fulfilling its obligations and a grant award for this application. 

# T

EXHIBIT 6.1 ROUTE MAP

DEN SLC

SMX

## S ECTION 

## 6. S TRATEGIC 

## P LAN



## – A IR 

## S ERVICE



# 13 D ETAILED 

### M ARKET 

### A NALYSIS

A financial analysis and forecast has been completed for SkyWest/United service to Denver International Airport. Key points of the analysis are described below and the full analysis
is included as Appendix B, Detailed Market Analysis

.

Projections were c ompleted for a one and two roundtrip
schedule on a 50

- seat Canadair Regional Jet. The operating and market assumptions are listed below:

• The Denver local market will be stimulated 50 percent for one roundtrip and 100 percent for two roundtrips. Connecting mark ets will be stimulated up to 10 percent for one roundtrip and 50 percent for two roundtrips depending on SkyWest/United’s market share of existing passengers.

• SkyWest/United’s Santa Maria

- Denver service will capture a share of the passengers now driving to an alternate airport (i.e. Sa n Luis Obispo, Santa Barbara, and Lo s Angeles ).

• Diversion from SkyWest/United ’s existing Santa Maria

- Los Angeles servic e was taken into consideration.

• SkyWest/United’s fully allocated operating costs between Santa M aria and Denver were estimated usin g apg Dat
Form 41 data for SkyWest , adjusted by the manufacturer ’ s cost curve and SkyWest feedback.

Table 6.1 provides a summary of the SkyWest/United Denver market analysis for one and two roundtrip s per day on the

50

- s eat Canadair Regional Jet 200. Passenger projections were based on a mature market (i.e., passenger projections would be at 100 percent on the first day of service). It is estimated that one roundtrip per day wil l generate $615,195 (15
percent margin ) in s egment profit for SkyWest/United

. Two roundtrips per d ay are projected to generate $804,531 (10 percent margin) in segment profit for SkyWest/United

. The Santa Maria

- Denver route is forecast to be a strong economic performer for both SkyWest and United aft er ramp

- up is complete. Wi th an estimated 31 percent fully allocated system profit margin for one roundtrip and 29 percent for two roundtrips

, . this market will be self

- sustaining

Although it is estimated that SkyWest/United will earn a profit after the

Santa Maria

- Denver market matures, SkyWest/United will not generate this amount of profit at start

- up. New markets typically have losses during the first year of operation, hence the need for a revenue guarantee to temper the airline’s risk. The uncertainty in the airline industry including the fluctuating cost of fuel will play a large part in the reve nue guarantee negotiations
with SkyWes t/United

. TABLE 6.1 SANTA MARIA

- DENVER MARKET ANALYSIS

ITEM STATISTICAL CATEGORY 1 ROUNDTRIP 2 ROUNDTRIPS 1 Available seats per departure 50 50
2 Segments per day 2 4
3 Onboard passengers 28,545 54,437
4 Load factor 78% 75%
5 Average fare all markets $268 $276
6 Segment 1 revenue $4,093,808 $7,761,756
7 Segment 1 cost $3,478,613 $6,957,225
8 Segment 1 profit margin $ $615,195 $804,531
9 Segment 1 profit margin % 15% 10%
10 System revenue $6,267,277 $12,312,614
11 System cost $4,326,266 $8,732,060
12 System profit/loss $1,941,011 $3,580,554
13 System margin 31% 29%
Source: Mead & Hunt, Inc.

## S ECTION 

## 6. S TRATEGIC 

## P LAN



## – A IR 

## S ERVICE



# 14 A LTERNATE 

### P LAN

If Santa Maria Public Airport fails to obtain SkyWest/United service to Denver, the secondary target is Delta Air Lines ’ service to Salt Lake City. Consistent with the intent of the air service initiative proposed, Delta’s Salt Lake City hub fills the need for service to a hub airport located east of Santa Maria. A previous analysis of this option that was completed for a presentation to Delta planners indicated that the service would perform well for Delta. Frontier Airlines’ s ervice to Denver or US Airways’ Phoenix service would also meet the goals of this grant application.



### P REVIOUS 

### G RANT 

### R ECIPIENT



### - N EW 

### P ROJECT

AND 

### G OALS

In 2002 the Santa Maria Public Airport District was awarded a Small Community Air Service Development Program grant. The 2002 grant goals included the following:

• Recruit jet service to areas not currently served

• Increase service from the current carrier

• Attract a new carrier to stimulate competition thus creating competitive fares

• Increase community awaren ess with regard to recruiting air carriers to the area

The US Department of Transportation’s portion of the project budget, $217, 530, included a plan for partial funding of an air service marketing program and support for a leakage study.

The 2002 application’s goals targeted the improvement of overall air service at the A irport through marketing, research and meeting with airlines. This 2011 application is focused on securing service to a major airline hub whose location promotes the flow of passengers to markets east of Santa Maria. By adding high value service to the east

, passenger diversion will be reduced and the added capacity will push airfares down further attracting travelers that are now using alternate airports. Also, the 2011 im plementation plan is different from the 2002 application. This year’s plan includes a revenue guarantee, airport fee waivers and marketing program specifically supporting new service to eastern
hub s /destinations.

In summary, the goals and plan associated with this 2011 grant application are different from Santa Maria’s 2002 grant application/award. Accordingly, this application qualifies as a new project and meets the requirements of the Small Community Air Service Development Program.

# 15 T HIS SECTION CONTAINS 

### :

• Public

- private partnership

• Designation of a legal sponsor

• Funding



### • Sustainability of the project



# S TRATEGIC 

# P LAN


# – I MPLEMENTATION AND 

# F UNDING

his section, Strategic Plan

- Implementation and Funding , details the incentive and support plan required to implement the Strategic Plan. A legal sponsor has been designated and a public

- private partnership that will actively participate in implementing the proposed project has been formed. Also, this section addresses the self

sufficiency of the service and provides a description of the community’s plan to continue the project if it is not self

sustaining after the grant funds are expended. A project budget and breakdown of the sources of funds is included.



### P UBLIC



### - P RIVATE 

### P ARTNERSHIP

Santa Maria Public Airport District is the sponsor of this grant application. For the purpose of this application, Santa Maria Public Airport District, the Santa Maria Valley Chamber of

Commerce & Visitor & Convention Bureau and the Santa Maria Economic Development Commission have formed a public

private partnership (refer to commun ity support letters in Appendix A ). Collectively, this partnership is committed to completing the Strategic Plan outlined herein.

All partners in the public

- private partnership will be involved in the execution of the Strategic Plan ( Table 7.1 ). Santa Maria
Public Airport will execute all federal grant offers, process associated reimbursement requests, oversee grant administration, and manage the revenue guarantee. Th e Santa Maria Valley Chamber of Commerce & Visitor & Convention Bureau along with the Santa Maria Economic Development Commission will assume responsibility for the implementation and management of the marketing program associated with the proposed service

.



### I NCENTIVE AND 

### S UPPORT 

### P LAN

The public

- private partnership proposes a community support package that has been tested and proved to be successful in acquiring airline service and generating new passengers. To reduce SkyWest Airlines/United Express’ breake ven period and offset the economic risk during start

- up, the public

- private partnership proposes the following incentives ( Exhibit

7.1 , next page):

• Revenue guarantee: reduce airline economic risk

• New service marketing campaign: create new service awareness for SkyWest/United

• Airport fee waivers: reduce airline start

- up costs 

# T

TABLE 7.1 PUBLIC

- PRIVATE PARTNER ROLES PUBLIC

- PRIVATE PARTNER ROLE Santa Maria Public Airport District Grant and revenue guarantee administration Santa Maria Valley Chamber of Commerce &

Visitor & Convention Bureau Coordination of the marketing program

Santa Maria Economic Development Commission Coordination of the marketing program

## S ECTION 

## 7. S TRATEGIC 

## P LAN



## – I MPLEMENTATION AND 

## F UNDING



# 16 Revenue Guarantee

To reduce airline risk and provide an incentive for SkyWest/United to provide nonstop service to Denver, this Strategic Plan includes
a revenue guarantee. Although pro forma projections for new
eastbound hub service are positive ( Appendix B ), service ramp

- up and breakeven can take up to a year. It is anticipated that SkyWest/United will require a $ 600,000 revenue guarantee to mitigate the risk of starting th is new market. The exact terms of the revenue guarantee a greement are subject to
further negotiations.



### Marke ting Campaign

The success of the proposed service between Santa Maria and Denver will live or die based on the success of the marketing program. Making local travelers aware of the new, nonstop regional jet service to Denver and influencing the thousands of travelers that are now driving to alternate airports to use the local airport is the key. It helps that the new service wil l have the United Express brand

, and Unite d Express is already in the Santa Maria market, but this does not guarantee the success of the
Denver service. The importance of an aggressive promotion campaign cannot be overemphasized.

Table 7.2 provides a breakdown of the marketing dollars to be

spen t on maximizing passenger utilization of new flights between
Santa Maria and Denver. This $ 5 0,000 campaign will be funded by non

- airport funds through Santa Maria Economic Development Commission ($20,000 cash and $10,000 in

- kind) and airport funds through the Santa Maria Public Airport District ($20,000 cash). The Santa Maria Economic Development Commission and the Santa Maria Valley Chamber of Commerce & Visitor &
Convention Bureau will be responsible for management and implementation of the marketing campaign.

The marketing campaign will include a kick

- off phase utilizing public relations and social media, an on

- going media campaign and a promotional event with a media part ner approximately three months after kick

- off. The marketing campaign will be monitored and adjusted as necessary for
maximum results.

KICK

- OFF PHASE

A social media campaign will help get the word out. S. Lombardi & Associates’ social media expert will se t up and maintain social media accounts and be responsible for gathering, networking and informing fans and followers of the latest updates in air travel specials and new flights out of Santa Maria Public Airport. The firm will work to create
awareness of the convenience of the Santa Maria Public Airport and generate more traffic to its website and location. TABLE 7.2 MARKETING BUDGET

DESCRIPTION CASH IN

KIND TOTAL Kick

- Off Phase Public relations $1,000 $0 $1,000 Social media $600 $0 $600
On

- Going Media Television airtime and commercial production $29,600 $0 $29,600

Targeted email

campaign $2,000 $0 $2,000

Print media $2,000 $0 $2,000 Promotional Event Television airtime $4,800 $0 $4,800 Program Administration Santa Maria Economic Development Commission $0 $10,000 $10,000

Total $40,000 $10,000 $50,000 Service initiation

SkyWest Airlines

Revenue guarantee Marketing campaign

US DOT

Non

- Airport Non

- Airport Fee waivers

Airport EXHIBIT 7.1 INCENTIVE PLAN

## S ECTION 

## 7. S TRATEGIC 

## P LAN



## – I MPLEMENTATION AND 

## F UNDING



# 17 Public relations will also be utilized to help secure news coverage of the announcement of new flights coming to Santa Maria. A professionally organiz ed news conference will be a key part of the initial public
relations effort.

ON

- GOING MEDIA

A six

- month on

- going media campaign is proposed with television advertising as the core. This campaign will start immediately following the press conference anno uncing the new flights. Santa Maria

- based television stations KCOY (CBS) and KKFX (FOX) will be primary buys, with Comcast Cable (in Santa Maria, Lompoc and Santa Ynez Valley areas) and San Luis Obispo

- based KSBY

- TV (NBC) as secondary buys.
The “Central Co ast Now” package from KCOY/KKFX gives very good frequency for the money. This can be supplemented with targeted buys in News and other appropriate programming on KCOY/KKFX and

KSBY. The budget of $29,600 will be spent on television airtime and commercial p roduction, spread over six months, with a higher proportion being spent near the kick

- off.

A targeted email campaign will also be used and directed at persons likely to be higher income, frequent fliers and/or skiers. For print media, small, targeted publ ications such as the Pacific Coast Business Times

, which reaches business owners and managers who are likely to travel frequently and be decision makers for corporate travel

, will be used. Chamber of Commerce publications will al so be used to reach this ta rget market.

PROMOTIONAL EVENT

Partnering with a media outlet for a contest will inject some fun and energy into the campaign about three months after
the kick

- off. With easily

- arranged support from public and private entities in the Denver area and from SkyWest/United , a trip to the Denver area including airfare, accommodations and activities will be given away.



### Fee W aivers

The air service support program includes three fee waivers: landing fees, terminal fees and fuel flowage fees

. The Airport
will waiv e landing fees for the first 12 months of new service. Landing fees for the first 12 months are estimated at $ 20,000 assuming the use of the Canadair Regional Jet with one roundtrip daily. An additional six months of landing fees will be offered as part of the sustainability initiative following the one

- year anniversary of service. The landing fee waiver may vary depending on aircraft type used and the number of roundtrips offered.

The Airport will waive common us e terminal fees for the first six months of service. These fees are estimated at $ 15 ,000
for the first six months. Fuel flowage fees will also be waived for the first 12 months of service worth an estimated $2 0,000. An additional six months of terminal and fuel flowage fees will be offere d as part of the sustainability initiative following the one

- year anniversary of service.

## S ECTION 

## 7. S TRATEGIC 

## P LAN



## – I MPLEMENTATION AND 

## F UNDING



# 18 P ROJECT 

### C ONTINUATION AND 

### S USTAINABILITY

Based on positive pro forma projections for SkyWest/United service to Denver, it is anticipated that new eastbound hub
service will be self

- sustaining after the start

- up period which can take up to a year. A leading cause of service failure is lack of awareness in the community. The public

- private partnership will fund an additional $3 0,000 marketing campaign if at the end of the first year of service the average load factor for the 12

- month period averaged less than 70 percent. Additionally, Santa Maria Public Airpo rt will abate landing, terminal and fuel flowage fees for an additional six months, a savings of $ 35 ,000 for SkyWest/United

. The public

- private partnership and the San ta Maria business community are committed to the success of this project and understand the difficulties associated with profitably oper ating new
air service.



### S TRATEGIC 

### P LAN 

### F UNDING

The public

- priv ate partnership is requesting U S Department of Transportation’s assistance in funding 67 percent, or $490,000 of the Strategic Plan ( Exhibit 7.2 )

. Specifically,

US Department of Transportation funding will be used to partially fund the revenue guarantee. The balance of the revenue guarantee and all other elements including the marketing campaign, Strategic Plan monitoring, airline negotiations and airport fee waivers will be funded by the community. Table 7.3 provides the Strategic Plan budget by element and sources of fundi ng. The Airport and community will fund 3 3 percent of the total proposed air service program. Non

- airport funding sources will provide

20 percent of the cash requirement and 19 percent of the funding for the total program including in

- kind services.

TABL E 7.3 STRATEGIC PLAN BUDGET

DESCRIPTION FUNDING SOURCE

TOTAL US DOT AIRPORT NON

- AIRPORT

CASH CASH IN

KIND CASH IN

KIND Airline incentive program:

Marketing campaign $20,000 $20,000 $10,000 $50,000 Revenue guarantee $490,000 $110,000 $600,000
Fee waivers: Landing fees $20,000 $20,000 Terminal fees $15,000 $15,000 Fuel flowage fees $20,000 $20,000 Consultant fees:

Airline negotiations $10,000 $10,000 Strategic Plan monitoring $15,000 $15,000 Total $490,000 $45,000 $55,000 $130,000 $10,000 $730,000 Percent of total project 67% 6% 8% 18% 1% 100% Percent of cash contribution 74% 7% N/A 20% N/A 100% Cash: Non

Airport

18%

Cash: US

DOT 67% Cash: Airport

6% In

- Kind: Non

Airport

1% In

- Kind: Airport

8% EXHIBIT 7.2 CASH VS IN

- KIND FUNDING

# 19 T HIS SECTION CONTAINS 

### :

• Schedule and milestones for timely completion of the project



### • Monitoring program



# S CHEDULE AND 

# M ONITORING

r ealistic timetable for implementation of the grant project has been developed to achieve the project goals and ensure the timely use of the grant funds. This section details the milestones and a monitoring program to track the progress of the project.



### S CHEDULE AND 

### M ILESTONES

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

service initiative. A timeline follows on Exhibit 8.1 , next page.

• : After the grant is awarded and Airline negotiations agreement is signed, the public

- private partnership will contact SkyWest Airlines/ United Express and continue airline negotiations.

• : While the airline agreement is being finalized , the marketing Marketing campaign development/initiation campaign will be developed. The timing of the marketing campaign is critical; ideally, marketing would begin 30

to 60 days prior to new service initiation. Development of the marketing campaign is dependent on the timing
of SkyWest/United’s announcement and initiation of daily Denver service.

• : The public

- private partnership anticipates daily service to Denver would begin in spring/early Service initiation

summer of 201 2 following successful negotiations with SkyWest/United

. The remaining elements of the Strategic Plan depend on this date. The public

- private partnership understands the realities of the airline industry; airline route planning and availability of right

- sized aircraft are critical to air service initiation and may delay the service start date.

• : The revenue guarantee will be calculated based on the terms of Revenue guarantee contract completion the agreement, typically at the end of the first year of service. Assuming a June 2012 start date, the revenue guarantee contract would expire May 201 3

. If the service start date changes due to airline circumstances and/or equipment availability, the revenue guarantee contract term will change accordingly.

• : SkyWest/United service to Denver is the primary target of the Strategic Plan. If SkyWest/United A lternate plan

does not show interest in starting service by May 2012 , then Delta Air Lines’ service to Salt Lake City will be pursued. If neither air carrier h as shown interest in implement ing the propo sed service by December 31, 201 2

, Santa Maria Public Airport District will propose an alternate plan that meets the goals of this grant application. 

# A

## S ECTION 

## 8. S CHEDULE AND 

## M ONITORING



# 20 The timeline proposed in Exhibit 8.1 is highly contingent on the timing of the grant award and successful airline
agreement negotiations. If either is delayed, other elements on the timeline will be pushed back.



### M ONITORING 

### P ROGRAM

Monitoring new air service initiatives is critic al to success. Given the turbulent state of the aviation industry, a irline
staff do not have the time to monitor small markets on a regular basis as other initiatives often take priority

. Given this, an aggressive and comprehensive monitoring program is pr oposed for new Santa Maria

- Denver
service

. 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

Santa Mar ia Public Airport

. The Strategic Plan will be
monitored as follows:

• Available service performance indicators will be reviewed on a monthly basis. The indicators are dependent on availability of data reported by
the airline to the US Department of Transport ation and data reported to the Airport. It is anticipated that the following indicators will be reviewed monthly: departures, available seats, enplaned passengers and load factors.

• On a quarterly basis, average airfares will be compared and evaluated to prior quarters.
Published airfares will also be tracked via one of the Global Distribution/Computer Reservations Systems (GDS/CRS). Revenue per available seat mile will be reviewed and compared against other markets served by SkyWest/ United

at Denver.

• On a n annual basis, an updated retention/diversion study will be completed to assess the impact of the service on retention of passengers at the local airport. EXHIBIT 8.1 PROPOSED TIMELINE

June1, 2012

May 30, 2013 End of first year of service; Revenue guarantee calculated Monthly/quarterly service performance monitoring January 1, 2012

February 28, 2012 December 31, 2011 Grant award
Continue airline negotiations

Finalize airline negotiations and marketing plan

United Express initiates daily DEN service April1, 2012 Marketing begins

# 21 T HIS SECTION CONTAINS 

### : Letters of support from members of the public

- private pa rtnership, the local business community, and
state government.



# A PPENDIX 

# A. C OMMUNITY 

# S UPPORT

ppendix A includes letters of support for the Santa Maria Public Airport ’s application to the US Department of Transportation for eastern hub service. Support letters were submitted by participants in the public

- private partnership and members of the Santa Maria co mmunity. The letters of support are included on the following pages of this Appendix A and are listed below.



### P UBLIC



### - PRIVATE PARTNERSHIP Santa Maria Economic Development Commission Santa Maria Valley Chamber of Commerce & Visitor & Convention Bureau



### G OVERNMENT City of Santa Maria

– Mayor Larry Lavagnino



### B USINESS AND 

### C OMMUNITY 

### S UPPORT Diani Companies Hardy Diagnostics Quintron Systems, Inc. Your People Professionals 

# A

# 29 T HIS SECTION CONTAINS 

### :
An in

- depth analysis evidencing familiarity with the target markets
and ultimate success of the proposed Strategic Plan

.



# A PPENDIX 

# B. D ETAILED 

# M ARKET 

# A NALYSIS

onfidential submission of the Santa Maria Public Airport

, Santa Maria, CA

. 

# C