# P ROPOSAL UNDER THE 

# S MALL 

# C OMMUNITY



# A IR 

# S ERVICE 

# D EVELOPMENT 

# P ROGRAM

Docket #: DOT

- OST

- 2011

- 0119



# Arcata/Eureka **Airport**

**Eureka , California** 

Legal sponsor:

Humboldt County

DUNS: 143535529 Congressional District:

CA

- 01

Contact: Jacquelyn Hulsey Airport Director 3561 Boeing Avenue McKinleyville , California

95519

- 9358 Phone: (707) 839

- 5401 Fax: (707) 839

- 3596 jhulsey@co.humboldt.ca.usPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Prepared by 

# T ABLE OF 

# C ONTENTS

Summary Information

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

................................ ................................ ......... 2
Higher than Average Airfares

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

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

Public

- Private Partnership

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

Material Benefits

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

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



### Air Service Environment

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

Remote Catchment Area

................................ ................................ ................ 4 Strong and Diverse Economy

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



### Air Service

– Existing/Historical

................................ ..................... 7
Existing Air Service

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

Historical Air Service

................................ ................................ ...................... 7 Past Air Service Development Efforts

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



### Air Service Needs and Deficiencies

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

Service Needs to a Second Hub

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

Unmet Market Demand

................................ ................................ ................ 11 High Airfares

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


### 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

P ublic

- 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

................................ .................... 22
Appendix B. Detailed Market Analysis

................................ ......... 37PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 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

, d ate of grant: 2004 ; Expiration date of grant: September 14, 2006

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

Public Private Humboldt County Arcata/Eureka Airport Redwood Region Economic Development

Commission

C

. Project Proposal:
(Check all that apply)

X Marketing X Start

- Up Cost Offset

Travel Bank X Secure Additional Service Surface Transportation X New Route

X 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): GPS E. Project Cost:

Line Description Sub
Total Total
Amount

1 Federal amount requested $480,000

2 State cash financial
contribution $0

Local cash financial
contribution 3a. Airport cash funds $ 5,000
3b. Non

- airport cash
funds $ 69,220

3 Total local cash funds (3a+3b) $74 ,220

4 TOTAL CASH FUNDING (1+2+3) $554 ,220

In

- Kind contribution 5a. Airport In

- Kind
contribution ** $37,54 5

5b. Other In

- Kind
contribution** $ 73,800

5 TOTAL IN

- KIND CONTRIBUTION (5a+5b) $1 11,345

6 TOTAL PROJECT COST (4+5) $ 665,565

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.

Airport : L anding fee waiver ; program administration
Other : M arketing ; program administration

G. Is this application subject to review by

S tate under Executive Order 12372 process?

c. Program is not covered by E.O.

12372.

H. Is the Applicant delinquent on any Federal debt? (if “yes”, provide explanation)

No X XPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 2 

# P ROPOSAL 

# H IGHLIGHTS

his grant application for the Arcata/Eureka Airport ( ACV ) meets the criteria of

Docket DOT

- OST

- 2011

- 0119

. Humboldt County , the legal sponsor and owner/operator of ACV

, is requesting $ 480 ,000 in federal assistance to implement a $ 665,565 air service initiative.

The project goal is to improve eastbound connections . Improving eastbound

connections is a top priority of the community. The Strategic Plan,
nonstop United Exp ress service to Denver , will achieve the project goals. The proposed Strategic Plan will improve connectivity and increase competition at ACV which will reduce airfares and the need

to drive long distances to alternate airports to access adequate air

servi ce and competitive fares.



### H IGHER THAN 

### A VERAGE 

### A IRFARES

Since 2001, ACV’s airfares have risen dramatically, 39 percent compared to only 12 percent for the state of California and nine percent nationally. ACV has a significant fare discrepancy with other surrounding California airports, the West region and the n ational average. In 2010, ACV’s one

- way average fare was $28 higher than California, $30 higher than the West region and $29 higher than the US average.

ACV is losing 24 percent of its traffic base to alternate airports , likely more following the loss of Alaska Airlines in April 2011 . Lower fares and greater service levels are likely the greatest cause of this unnecessary diversion. E xcessive drive di stances to San Francisco

and Sacramento of five

- plus hours , high airfares and lack of competing service at ACV drive the need to use alternate airports making improving air service, specifically adding eastern connections, a top priority.



### C OMMUNITY 

### C OST 

### C ONTRIBUTION

To support this air service initiative, ACV and the community will fund 28 percent of the proposed $ 665,565 Strategic Plan. Non

- airport revenue sources will fund 12 percent ($ 6 9,220 ) of the $ 5 54 ,220 cash requirement. This is a strong commitmen t by the local community to be proactive and improve local 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 

# 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.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 3 not a new partnership. This public

- private partnership has worked successfully together for many years partnering on new air service

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 in stitutions 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 nationally 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. The air service improvement 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 and 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 consideratio n. 

## Known as the
“California’s Redwood Coast”, Humboldt County is
home to n umerous businesses,
educational
institutions and
tourist destinations driving the need for improved air
service.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 4 

# 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 improved 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, wi th a population of approximately
140,220 residents

. The area displayed in Exhibit 3.1 in blue is the area that ACV should ideally serve given drive distances

.

From 2000 to 2010, the Humboldt County population has grown steadily as people continue to be drawn by the quality of life offered by the region . Over the next 10 years, the population of Humboldt County is expected to grow an additional seven percent (source: Woods & Poole Economics, Inc.). Air service at ACV must expand 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 3.1 ) along with high airfares and lack of competing service at

ACV are the key determinates of the need

to drive long distances to use alternate airports making improving ai r service, specifically adding eastern connections, a top priority. 

# A

TABLE 3.1 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 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.

EXHIBIT 3.1 ACV CATCHMENT AREAPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 5 

### 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 are low

, and May 2011 unemployment was 0.6 percent lower than the California state average. All indicators show that Arcata/Eureka is not your typical small community and is in great need of improved air service access

. The following subsections discuss 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 3.1 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/Eureka include Healthcare, Building and System Construction and Maintenance, Investment Su pport Services, Management and Innovation Services, Niche Manufacturing, and Tourism. Niche Manufacturing has 500 different companies in the five

- county north coast region with a h igh

concentration around Arcata

. Humboldt County has the highest

concentration of the five counties . The north coast region sells

90 percent plus out of the region, into the US and Europe

, and

r equire air service to the global marketplace to sell their products

. The 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

.

Other projects of statewide and national s ignificance include the

c ompletion of a $10 million fiber optic line scheduled for the third quarter of 2011 creating full telecommunications redundancy for the

area . This will lead to greater service and attractiveness to growing sectors of the economy. In addition, the new clean energy proje cts have received national attention. Projects include the Shell Wind Energy’s Bear River Project and the Schatz Energy Lab’s

d evelopment of the hydrogen p owered c ar

. The projects require

efficient air service access.



### 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 TABLE 3.1 LOCAL COMPANIES WITH HIGH TRAVEL NEEDS COMPANY/ ORGANIZATION Humboldt State University Humboldt County St. Joseph Health System Redwoods Community College District Mad River Community Hospital Hoopa Valley Tribe Sun Valley Group
Pacific Gas & Electric
Blue Lake Casino and Hotel
Bear River Casino
Cher

- Ae Heights Casino Schmidbauer Lumber Company
Coast Seafoods
Pacific Choice Seafoods Cypress Grove Chevre Tomas Jewelry Holly Yashi Jewelry
Green Diamond/California Redwood Co. Lost Coast Brewery

Wing Inflatables
Kokatat
Carlson Wireless C. Crane Company
Jessicurl
Marimba One

Dell‘Arte Fire & Light OriginalsPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 6 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 SBDC program by the US Small Business

Administration. There are over 1 00 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 largest 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 regio n via ACV to

remain viable.

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

enrollment is approximately 9,100 with 1,113 total personnel

. Both University and College students will greatly benefit from improved eastbou nd 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 California 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 million 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 MuseumPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 7 

# A IR 

# S ERVICE



# –
E XISTING 

# /H ISTORI CAL

his section provides an overview of existing air service. Carriers providing
service, service frequency, nonstop destinations offered, fares and equipment types are included in the discussion. A summary of historical air service is also included with destinations, traffic levels, service providers and average airfares

. A description of air service development efforts concludes the section.



### E XISTING 

### A IR 

### S ERVICE

ACV is only 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

con nect 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 w eekly flights and an average weekly capacity of 1,980 seats ( Table 4.1 ). Turboprop service with limited connectivity to the east does not meet the needs of the region.

Through December 2011 there are no improvements anticipated in United’s service at
ACV. The only change is United plans on reducing the San Francisco service by one flight per week in September.



### 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, service providers and airfares

. Extenuating factors

that have affected air service over time are also reviewed.



### Destinations, Service Providers and Traffic Levels

From 200 1 to 20 11

, ACV ’s air service declined significantly ( Table 4.2 , next page)

. Total departures in the month of July since 2001 declined 49 percent while seats declined 51
percent

. Since 2008, capacity has been reduced an astounding 54 percent underscoring the need for this Strategic Plan to provide improved access to the area. ACV has lost not only frequency but also service to major hubs that provided substantial

eastbound connecti ons: 

# T

TABLE 4.1 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: apgDat, July 2011 This section addresses:



### • Description of existing

air service



### • Synopsis of historical

air service



### • Description of air

service development

effortsPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 8 • Alaska Airlines service to Los Angeles

• Alaska Airlines service to Portland

• United 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 4.2 HISTORICAL DESTINATIONS AND SERVICE PROVIDERS

DESTINATION AIRLINE ITEM MONTH OF JULY
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Crescent City, CA United Dept 12 13 13 13 12 12 7 7 7 6 6
Seats 360 390 390 390 360 360 210 210 210 180 180

Los Angeles, CA Alaska Dept 7 7 7 14 7 7
Seats 490 518 532 1,036 518 532

Portland, OR Alaska Dept 7 7 8 7
Seats 259 259 527 490

United Dept 14
Seats 420

Redding, CA Alaska Dept 14 14 7 7 14 14 14 7 14 14
Seats 518 518 490 490 980 1,036 1,064 518 1,036 1,064

Sacramento, CA United Dept 12 13 13 13 12 12 12 12 12 12 12
Seats 360 390 390 390 360 360 360 360 360 360 360

Salt Lake City, UT Delta Dept 14 12
Seats 700 600

San Francisco, CA United Dept 70 61 49 56 56 51 62 49 38 49 48
Seats 2,100 1,830 1,610 1,820 1,820 1,530 1,860 1,470 1,140 1,470 1,440 Average weekly departures 129 108 90 96 101 96 102 103 90 88 66 Average weekly seats 4,017 3,387 3,407 3,580 4,010 3,804 4,026 4,294 3,864 3,606 1,980 Source: apgDat



### Airfares

Since 2001 , ACV’s airfares have risen dramatically , 39 percent compared to only 12 percent for the state of California and nine 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. 3

. In 2010

, ACV ’s one

- way average fare was $16 higher

than Redding , $ 41 higher than Sacramento

, $8 higher than San Francisco, $28 higher
than California, $ 30 higher than the West r egio n and $29 higher than the US average.
ACV is losing 24 percent of its tra ffic base to alternate airports . Lower fares and greater

service levels are likely the greatest cause of this unnecessary diversion.

TABLE 4.3 AVERAGE ONE

- WAY FARE PAID
AVERAGE FARE ACV $ DIFF 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
ACV $135 $143 $145 $152 $153 $178 $179 $189 $177 $187 Redding, CA $140 $150 $151 $154 $165 $183 $184 $197 $177 $171 $16 Sacramento, CA $114 $108 $112 $112 $119 $130 $130 $139 $132 $145 $41 San Francisco, CA $194 $178 $176 $165 $177 $194 $193 $188 $159 $179 $8
California $143 $134 $133 $129 $138 $151 $152 $159 $143 $159 $28 West Region $131 $125 $127 $126 $134 $145 $144 $155 $140 $157 $30
US $146 $136 $138 $134 $137 $149 $149 $160 $144 $158 $29

Source: Data Base Products, Inc.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 9 

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

The primary factors that have impacted ACV’s air service are its geographic location and available aircraft size and capabilities. Its relatively isolated location in the northwest quadrant of California, removed from major population and commercial centers, has created ready

- made air travel 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 an d

additional hub access

. The frequency needs combined with the geographic proximity to San Francisco International Airport has offered economic support only for smaller

aircraft. This has translated 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 impact ACV’s future air service making the implementation of this Strategic Plan of vital economic importance

.



### 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. Each year ACV staff makes nume rous 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 de cision to begin service. ACV recently attended both the Network USA and ACI

- NA JumpStart conferences where they met with multiple airlines. This grant application is one more example of a community

f ully engaged in its air service development efforts

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 10 

# 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 pr oblems at San Francisco

are well known with frequent reliability issues for connecting passengers. 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 mark et development.

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

average d 79 percent for the year ended March 31, 2011. This is a very high load factor for flights with an average capacity of 30 seats suggesting that rejected demand occurs on many flights. Service to a second hub would alleviate the inability to buy a seat

duri ng peak demand periods in

this underserved market and provide the added value of routing options when operational problems exist at

the San Francisco hub. Compared to other turboprop
markets from San Francisco, ACV’s load factor is extremely high (as Table 5.1 shows).

The ACV market responded strongly to Delta Air Lines’ Salt Lake City eastbound connecting service. Table 5. 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 exceeded 80 percent. June load factors were up nine percentage points year over year. This clearly demonstrates the market’s need for additional service. Delta also operated at

a time when both Alaska Airlines and United Airlines operated in the market. 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. 

# T

TABLE 5.2 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: apgDat TABLE 5.1 SAN FRANCISCO TURBOPROP LOAD FACTOR COMPARISON

SFO MARKET LOAD FACTOR % SEATS/ OPERATION
ACV 79 30 Sacramento, CA 76 30 Santa Barbara, CA 76 30 Redding, CA 72 30 North Bend, OR 70 30 Monterey, CA 67 30
Crescent City, CA 66 30 San Luis Obispo, CA 66 30

Klamath Falls, OR 59 30

Bakersfield, CA 57 30

Chico, CA 56 30 Modesto, CA 49 30
Source: apgDat ; Year Ended 3/31/11 This section addresses: Description of the Arcata/Eureka community’s

air service needs and

deficiencies

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 11 

### 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 July 31, 2011, approximately 195 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 5. 3 shows ACV’s top catchment area

markets and ACV’s retention in these marke ts. ACV has relatively high retention to West Coast markets, particularly California markets with nonstop service (note the retention study was conducted when ACV had nonstop Los Angeles service). Retention is much lower,
however, in eastern markets and

in ternationally. For example, ACV’s Dallas retention is only 49 percent while retention to Washington, DC is only 22 percent

. The proposed service will drastically improve

retention to these eastern markets and reduce the need to drive long distances . Improv ed
retention of air travelers from ACV’s market area who currently use other airports is the key to improving existing air service and the

foundation for future air service improvements.



### H IGH 

### A IRFARES

As shown in Table 4.3 on page 8 , ACV’s one

way average fares are high

, exceeding the state of California’s average by $28 one

- way and the national average by $29. Table 5. 4 further demonstrates ACV’s higher than average fares, particularly to 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 $53 one

- way and San Francisco by $40 one

- way. In the Dallas market, ACV exceeds Sacramento by $96 and San Francisco by $84. These are just a few examples of the excessively high fares caused by the limited air service offerings and lack of eastbound connection opportunities in the ACV market. TABLE 5. 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

TABLE 5. 4 AIRFARE COMPARISON BY MARKET

RANK DESTINATION ACV FARE SFO FARE SMF FARE ACV DIFF.

1 Los Angeles, CA $131 $81 $100 $49

2 San Diego, CA $141 $82 $94 $59

3 San Francisco, CA $186 $0 $88 $98

4 Seattle, WA $152 $112 $120 $40

5 Denver, CO $174 $134 $121 $53

6 Phoenix, AZ (PHX) $169 $127 $134 $42

7 Las Vegas, NV $172 $95 $114 $77

8 Chicago, IL (ORD) $233 $222 $210 $22

9 Sacramento, CA $101 $88 $0 $13

10 New York, NY (JFK) $242 $272 $192 $50

11 Portland, OR $177 $150 $96 $81

12 Dallas, TX (DFW) $308 $224 $211 $96

13 Washington, DC (IAD) $258 $247 $267 $11

14 Boston, MA $238 $227 $195 $43

15 Honolulu, HI $255 $204 $233 $51

16 Minneapolis, MN $258 $218 $213 $46

17 Orange County, CA $147 $90 $99 $57

18 Philadelphia, PA $289 $280 $215 $74

19 Washington, DC (DCA) $354 $188 $229 $166

20 Anchorage, AK $263 $218 $247 $45
All domestic markets $187 $179 $145 $41
Source: Mead & Hunt Passenger Demand Analysis; Data Base Products, Inc.; CY 2010PROPOSAL UNDER 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 eastbound 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 the additional

capacity and competition in the marketplace

.

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

adequate air service and competitive fares will be mitigated.



### 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 6.1 ). 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 proj ect goals 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 7.1 , 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 Denver

market. United to Denver would meet the goals of this Small Community Air Service Development Program grant application and is the highest priority of the community

. 

# T This section addresses:



### • A Strategic Plan for

meeting ACV’s air

servi ce needs and

deficiencies



### • Alternate plan to meet

the goals

United Airlines’ Denver:
428 daily departures
121 nonstop destinations
11 international destinations 62 unique one

- stop destinations EXHIBIT 6.1 PROPOSED AIR SERVICE

ACV

DEN SLC

LAX PHXPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 13 

### M ARKET 

### A NALYSIS

A financial analysis and forecast has been developed for United

service to Denver Internationa l Airport. The detailed analysi s is

included as A ppendix B, Detailed Market Analysis

.



### Mature Market Results

Projections were completed for a one roundtrip schedule on a 50

- seat Canadair Regional Jet. Table 6.1 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 service). 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 increases.

TABLE 6.1 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 76.30%

5 Average fare all markets $228

6 Segment 1 revenue $4,269,186

7 Segment 1 cost $5,155,812
8 Segment 1 profit margin $ $36,661

9 Segment 1 profit margin % 1%
10 System revenue $6,705,976

11 System cost $5,155,812

12 System profit/loss $1,550,164

13 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. 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 6.2 , next page )

. The ramp

- up period

assumes that 75 percent of the mature marker traffic will fly in the first month, April 2012.

The market will then mature at a rate of 2.5 percent per month until reaching 100 percent by the eleventh month, February 2013. Based on the ramp

- up forecast, it is estimated

th at United will require a revenue guarantee of at least $ 48 0,000 to begin service. For success, the new service will also require a strong marketing program. 

## Carriers have expressed interest
in serving ACV to a
hub with eastbound connecting opportunities and support this grant application.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 14 TABLE 6.2 ACV

- DENVER RAMP

- UP AND SHORTFALL

MONTH SEASONALITY RAMP

- UP LOAD FACTOR REVENUE COST PER MONTH NET SURPLUS/ SHORTFALL Apr

- 12 8.4 % 75% 58% $270,921 $350,892 ($79,971) May

- 12 9.3% 78 % 65% $309,681 $362,588 ($52,908)
Jun

- 12 9.8% 80% 73% $336,725 $350,892 ($14,167)
Jul

- 12 9.2% 83 % 68% $328,188 $362,588 ($34,401) Aug

- 12 9.6% 85% 73% $351,025 $362,588 ($11,564) Sep

- 12 5.9% 88 % 48% $223,647 $350,892 ($127,245)
Oct

- 12 8.4% 90% 68% $326,870 $362,588 ($35,719)
Nov

- 12 7.8% 93 % 67% $309,448 $350,892 ($41,444)
Dec

- 12 9.3% 95% 79% $379,211 $362,588 $16,622
Jan

- 13 7.6% 98 % 67% $321,037 $362,588 ($41,552)
Feb

- 13 6.6% 100% 66% $284,466 $327,499 ($43,034)
Mar

- 13 8.1% 100% 72% $347,123 $362,588 ($15,465)
Total 100% 67% $3,788,341 $4,269,186 ($480,845)

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 fulf ill the goals of this grant application include: Salt Lake City, Phoenix, 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 opportunit ies 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 Department of Transportation awarded Redding Municipal Airport and ACV (as a consortium member) a Small Co mmunity Air Service Development Program
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 Departm ent of Transportation’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 travel er, 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 new project and meets the requirements of the Small Community Air Service Development Program

.PROPOSAL UNDER 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 h as 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 provide s 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 con tributions, 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 7.1). 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 7.1 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.PROPOSAL UNDER 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 7.1 ):

• Revenue guarantee : reduce airline

economic risk

• New service marketing campaign:

c reate improved service awareness

• Landing fee waivers: reduce start

up costs



### Revenue Guarantee

ACV is competing with other markets stretched 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 guarantee 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 $ 480 ,000 airline
revenue guarantee 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 t he 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 existing 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

advertisin g 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 building the new service.

The marketing plan will be structured for an 18

- month program and wi ll 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 period. 

## 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. New hub service

Revenue guarantee

US DOT Marketing program/ Landing fee

waiver

Community/

Airport EXHIBIT 7.1 INCENTIVE AND SUPPORT
PLANPROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 17 Marketing service ramp

- up will emphasize how t he 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 awareness campaign on the issues of supporting local air servic e, 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 proposed service to the identified audiences. Messages will focus on t he 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

eastern 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 market, the target audience can best be identified as

follows: dire ct 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: We have received offers of discounted a dvertising from our local daily paper.

• Television : A dvertising and messaging will be televised on local broadcast stations and our cable provider. Local broadcasters are offering free and reduced marketing exposure. In addition, news coverage of our 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 promoting the service will include, but not be limited to :

o www.FlyHumboldt.org

o www.Humboldtmade.com 

## The $ 83,800 marketing campaign

will be funded by

non

- airport sources ($ 1 0,000 cash and $6 8 ,800 in

- kind) and ACV ($5,000 cash)

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 18 o www.NorthcoastProsperity.com

o www.Rredc.com

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 . We currently use Constant Contact 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 organizatio ns. A sample presentation is embedded on flyhumboldt.org.

MARKETING SCHEDULE

Marketing 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 b e 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. Eff orts

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

FUNDING

A partnership agreement with local media outlets has been established. This $83,800 campaign will be funded by non

- airport sources ($ 10,000 cash and $68,800 in

- kind) and ACV ($5,000 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 we ight. ACV will waive landing fees for the first

12 months for new hub service . Landing fees for the first 12 months 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 o n aircraft type used, the number of roundtrips

offered and final negotiations with the airline

.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 19 

### S TRATEGIC 

### P LAN 

### F UNDING

The public

- private partnership is requesting US Department of Transportation assistance in funding 72 percent, or $ 4 80 ,000, of the Strat egic Plan. Specifically, US Department of Transportation funding will be used to fund 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 7. 2 provides the Strategic Plan budget by element and sources of funding. ACV

and the community will fund 28 percent of the total proposed air service program. Non

airport funding sources will provide 12 percent of the cash requirement a nd 21 percent of the funding for the total program including in

- kind services.

TABLE 7. 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 $480,000 $20,000 $500,000 Marketing campaign $5,000 $10,000 $68,800 $83,800
Fee waivers $31,645 $31,645 Strategic Plan monitoring $25,540 $25,540 Airline meeting/negotiations $13,680 $13,680 Program administration $5,900 $5,000 $10,900
Total $480,000 $5,000 $37,545 $69,220 $73,800 $665,565 Percent of total project 72% 1% 6% 10% 11% 100%
Percent of cash contribution 87% 1% N/A 12% 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 aft er 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 service.PROPOSAL UNDER 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 part nership. A monitoring program is also provided to track the progress of the project.



### C RITICAL 

### M ILESTONES

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 Department of Transportation’s grant award and the service

start date.



### Marketing Campaign Development/Initiation

: Development of the marketing campaign will be January 20 1 2
completed in January 201 2 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, 2012

, 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 2
It is anticipated that United Express will begin nonstop Denver service in April 2012

. 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 2

, April 201 2

ACV will contact alternate carriers that would meet the goals of this grant application. Nonstop Salt Lake City, Phoenix or Los Angeles service are the top priorities following nonstop Denver service to provide the eastbound conn ections 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 3
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 begin Denver service in April
2012.PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 21 : If the load factor for the first 12 months of service does March 201 3
not reach an average of 65 percent, ACV will in vest $ 50,000 in supplementary marketing for an additional 12 months to help the service reach the potential passen ger levels required for

carrier success.



### 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 Department of Transportation airline reported data and data obtained directly

from the airline will b e 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/ diversion 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 determi ne the impact of the air service improvements on

retention/diversion at ACV

.PROPOSAL UNDER 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 Departm ent of Transportation 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

. The 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
California Legislature

– Assemblyman Wesley Chesbro County of Humboldt

– Board of Supervisors County of Humboldt

– District Attorney City of Eureka

– City Council City of Rio Dell

– Chief of Police Arcata Police Department

– Chief of Police

Businesses and Organizations

Fulkerson & Associates

Greater Eureka Chamber of Commerce Humboldt County Convention & Visitors Bureau Humboldt State University

O&M Industries The California Redwood Company 

# A This section addresses: Letters of support from members of the public

private partnership, the local business community

and state government.

## August 1, 2011

Aloha Ley Associate Director X-50 US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Re: Small Community Air Se rvice Development Program Docket DOT-OST-2011-0119 Humboldt C ounty, Arcata/Eureka Airport

Dear Ms. Ley:

As a Humboldt County resident and the District Attorney of Humboldt County, I strongly support the air service proposal detailed in the Sma ll Community Air Service Development Program grant application. The Arcata/Eureka airport pl ays an important role in providing support to business, government, education, and leisure tr avel to this northwester California rural community. The proposed nonstop United Expr ess service to Denver will improve eastbound connectivity much need ed by our community.

Growth in our area in recent years has been fuel ed by the presence of the Eureka/Arcata Airport. Continued growth in our area will depend largely on our local airport’s ability to meet the needs of our current business stronghol d as well as the needs of pot ential businesses considering locating in Humboldt County.

Arcata/Eureka Airport has forged strong ties with the business community to attract better air service. We appreciate the opportunity to expand the partnership to include the U.S. Department of Transportation through the Small Comm unity Air Service Development Program.

Respectfully,

Paul V. Gallegos District Attorney

## July 27, 2011

Aloha Ley Associate Director, X-50 US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Subject: Small Community Air Service Development Program
Docket DOT-OST-2011-0119
Humbol dt County, Arcata/Eureka Airport

Dear Ms. Ley:

As a business owner and elected offici al, I strongly support the air service proposal detailed in the Small Commun ity Air Service Development Program grant application. Arcata/Eureka plays an important role in providing support to business, government, education, and leisure travel to/from this northwestern California community. The proposed non stop United Express service to Denver will improve eastbound connectivity much needed by the community.

Growth in the Arcata/Eureka area over the past few years has been fueled by the presence of the Arcata/Eureka Airport. Future community growth depends, in part, on the Airport’s ability to meet the needs of existing local businesses as well as companies considering Ar cata/Eureka as a location for their operations.

Arcata/Eureka Airport has forged str ong ties with the business community to attract better air service. We appreciate the opportunity to expand that partnership to include the U.S. Department of Tr ansportation through the Small Community Air Service Development Program.

Sincerely,

julie fulkerson

Julie Fulkerson City Council, C ity of Trinidad
Fulkerson & Associates

## July 28, 2011

Ms. Aloha Ley, Associate Director, X-50 US Department of Transportation
1200 New Jersey Ave, SE W86-310 Washington, DC 20590

RE: SMALL COMMUNITY AIR SERVICE DE VELOPMENT PROGRAM - DOT- OST2011-0119 – ARCATA/EUREKA AIRPORT, HUMBOLDT COUNTY CALIFORNIA

Dear Ms. Ley:

I am writing on behalf of the Board of Directors and members of the Greater Eureka Chamber of Commerce in support of the above referenced application. The Chamber Board strongly supports the air service proposal detailed in the Small Commun ity Air Service Development Program grant application. The Arcata/Eureka Airport plays an integral role in providing support to business, government, education, an d leisure travel to/from this northwestern California community. The proposed nonst op United Express service to Denver will significantly improve east bound connectivity much need ed by the community.

Growth in the Arcata/Eureka area over the past few years has been aided by the presence of the regional Airport facilities. Future community growth depends, in pa rt, on the Airport’s ability to meet the needs of existing local businesses as we ll as companies considering Arcata/Eureka as a location for expanded operations.

Arcata/Eureka Airport has forged strong ties with the business community to attract better air service. We appreciate the opportunity to e xpand that partnership to include the U.S. Department of Transportation through the Sma ll Community Air Service Development Program.

### Ms. Aloha Ley – July 28, 2011 – Page 2



## If you or your staff have any questions or care to discuss this recommendation in greater detail, please feel free to contact me.

Sincerely,

J Warren Hockaday

President/CEO1 Harpst Stre

T HE C ALIFORNIA S T A Maritime Academy  

### Offi



## July 28, 2 0

Aloha Le y Associate US Depar t 1200 Ne w Washingt o

Subject: S
D
H

Dear Ms. L

As the Pr e in the Sm a airport is a who must plays a cri leisure tra v Express s e Many of o these trips

One of th e business e n our regio n
presence o ability to m Arcata/Eu r

The Arcat a attract bet t U.S. Dep a Program.

et  Arcata,

A TE U NIVERSITY  Bak e

Monterey Bay  Northri 

### ce of the P



## 0 11

y

Director, X

t ment of Tr a Jersey Ave

,
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### (PHONE 707 / 822-8800 • FAX 707 / 822-8995 • www.omindustries.com) July 29, 2011

Aloha Ley Associate Director X-50 US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Re: Small Community Air Service Development Program Docket DOT-OST-2011-0119 Humboldt County, Arcata/Eureka Airport

Dear Ms. Ley:

As a Humboldt County resident and small business owner, I strongly support the air service proposal detailed in the Small Community Air Service Development Program grant application. The Arcata/ Eureka airport plays an important role in providing support to business, governme nt, education, and leisure travel to this northwester California rural community. The proposed nonstop Un ited Express service to Denver will improve eastbound connectivity much needed by our community.

Growth in our area in recent years has been fueled by th e presence of the Eureka/Arcata Airport. Continued growth in our area will depend largely on our local airport’s ability to meet the needs of our current business stronghold as well as the needs of potential businesses considering locating in Humboldt County.

Arcata/Eureka Airport has forged strong ties with the business community to attract better air service. We appreciate the opportunity to expand the partnership to include the U.S. Department of Transportation through the Small Community Air Service Development Program.

Sincerely,

Rob McBeth, Owner of O&M Industries Inc. Corporate Office • 5901 Ericson Way • Arcata, California 95521 • 707 / 822-8800
Colusa, CA 530 / 458-8850 • Medford, OR 541 / 772-4606 • Crane Hill, AL 256 / 747-2747PROPOSAL UNDER THESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMARCATA/EUREKAAIRPORT

Page 37 

# A PPENDIX 

# B. D ETAILED 

# M ARKET



# A NALYSIS

onfidential submission of Humboldt County

. 

# C This section contains: An in

- depth analysis evidencing familiarity with the Denver market and ultimate success of the proposed Strategic Plan.