### Proposal Under the Small Community Air Service Development Program

Docket DOT-OST-2011-0119

Submitted by 

### Manistee County Blacker Airport

Barry Lind Airport Director 2323 Airport Road Manistee, Michigan 49660



### DUNS# 948868799 EIN 382169455 MI-002Manistee County Blacker Airport

Small Community Air Service Development Program 2



### Table of Contents

1. Proposal Overview 

### 2. Historical Commercial Airline Service 

### 3. Existing Air Service 

### 4. Community Air Service Needs 

### 5. Air Service Development Efforts 

### 6. Strategic Planning 

### 7. Marketing Campaign Program 

### 8. Partnerships 

### 9. Necessary Funding Required 

### 10. Marketing Campaign Success 

### 11. Continued Marketing Program 

### 12. Air Service Development 

### 13. Legal Sponsor

Appendix A – Grant Summary Information Appendix B - Marketing Plam Appendix C - Body Group/Michigan Department of Transportation Study Appendix D – In-Kind ContributionsManistee County Blacker Airport

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## Manistee County Blacker Airport Small Community Air Service Development

Grant Proposal

1. Proposal Overview

The Manistee and Ludington area of Michigan has historically suffered from the lack of quality, affordable commercial air service. While air service has been subsidized through the Essential Air Service program, the resulting service was not well utilized by the local community. That has changed in 2011 with the introduction of affordable, quality regional jet air service. This change is resulting in improved utilization of the airport by the community and also resulting in significantly lower per passenger subsidy levels through EAS. However to take full advantage of the current level of service, a comprehensive marketing program is needed to further promote the service now available. After decades of poor under-utilized air service, a consistent, sustained marketing program is needed to change peoples negative perceptions about flying from the local airport. With the result being significantly more people utilizing the service thereby reducing subsidy requirements and spurring local economic development.



### 2. Historical Commercial Airline Service

The Manistee County Blacker Airport has a long history of commercial air service. Commercial airline service spans 50 years; the timetable is as follows:

– 1961: Manistee, Michigan receives its first commercial flight, with service provided by North Central Airlines.

– 1961-1979: North Central Airlines provides service with the Convair 340, later the Convair 580. Service was primarily short “milk run” routes connecting Manistee with Grand Rapids to the south and various cities to the north. It was during this period that Manistee would see its best level of enplanements up until the current year (8499 total passengers in 1968).

– 1979-1981: Republic Airlines, formed as the result of the merger of North Central and Southern, continued to provide commercial service to the Manistee Blacker Airport during the first years of airline deregulation. However soon after deregulation, Republic stopped service. This began a long period of decreasing quality of service with frequent carrier and schedule changes. Enplanements were severely impacted during this period and wouldManistee County Blacker Airport

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never really recover (2628 average total annual passengers during 1980's).

– 1981-1982: Simmons Airlines took over commercial air service with 18 seat EMB 110 aircraft.

– 1982-1984: American Central Airlines took over commercial air service also with EMB 110 aircraft.

– 1984-1988: Alliance Airlines took over commercial air service with Cessna 402 aircraft.

– 1988-1996: Alliance Airlines was acquired by Great Lakes Airlines in 1988 beginning the longest period of service by a carrier since North Central. It was during this period that Great Lakes began operating as United Express.

– 1996-2002: With a notice to terminate service at Manistee the era of unsubsidized service ends and that of EAS subsidies began. Great Lakes Airlines acquired the essential air service contract to keep our community connected to the national air transportation network. In 2001 with the loss of the United Express code share, Great Lakes reorganizes and moves operations out west, ending service in the midwest.

– 2003-2008: Skyway Airlines dba Midwest Connect was awarded the essential air service contract. With the change in carrier also came a change in hub with a switch from Chicago O'Hare to Milwaukee. Service was provided by 19 seat Beech 1900 aircraft. Shortly after Skyway began service passenger enplanements began to rise after two decades of stagnation. In 2003 total passengers increased 14%; 2004 +35%; 2005 +0%; 2006 +40% and 2007 +8%. It was also during this time period that a State of Michigan grant program was in place to provide marketing funds to small airports. The results of those marketing dollars can be seen in the improved passenger counts.

– 2008: Manistee experienced a two month suspension of service when Skyway discontinued operations.

– 2008-2011: Great Lakes Airlines returned to Manistee. Service continued to be provided to the Milwaukee hub. For the first time in the nearly fifty years of commercial service, service was provided exclusively via non-stop flights to a hub.

– 2011: Chautauqua Airlines dba Frontier Airlines begins non-stop regional jet service with 37 seat EMB-135 aircraft to their Milwaukee hub. Passenger numbers initially increase by 400%.Manistee County Blacker Airport

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### 3. Existing Air Service

On April 18 th , 2011, Chautauqua Airlines dba Frontier Airlines began providing service to the Manistee County Blacker Airport. Currently Frontier provides 13 flights per week to Milwaukee and the schedule breakdown is as follows:

Arrivals: Monday through Friday Flight 1898 – 2:55 PM Flight 1896 – 9:34 PM Saturday Flight 1898 – 4:10 PM Sunday Flight 1898 – 2:55 PM Flight 1896 – 9:34 PM

Departures: Monday through Friday Flight 1895 – 7:30 AM Flight 1899 – 3:15 PM Saturday Flight 1895 – 7:30 AM Sunday Flight 1897 – 12:15 PM Flight 1899 – 3:15 PM

All flights are non-stop to Milwaukee, Wisconsin. General Mitchell International Airport is a hub for Frontier Airlines, which features service to major destinations throughout the United States. Frontier currently services the Manistee County Blacker Airport with the EMB-135 37 seat Regional Jet.



### 4. Community Air Service Needs

In April, 2011 the Manistee County Blacker Airport made a transition from Great Lakes Airlines to our current Essential Air Service air carrier, Chautauqua Airlines dba Frontier Airlines. During the last decade, Manistee has seen a gradual growth in enplanements since the switch of service from Chicago O'Hare to Milwaukee. First Skyway Airlines dba Midwest Connect increased the ridership levels with their exceptional customer service practices and the marketing program administrated through the Manistee County Blacker Airport and the State of Michigan via advertising grant money. In 2007 the State of Michigan was no longer able to continue their advertising grant program, however in spite of the fact that Manistee saw a lapse in service during the spring of 2008 and a switch in carrier to Great Lakes that same year, the growth was eventually able to continue. Now in 2011 with the advent of quality, reliable regional jet service that customers expect, the airport is undergoing rapid growth.
However in the current environment with escalating fuel prices, air carriers operating regional jets are faced with significant challenges operating them profitably. In order to sustain quality regional jet service, which has significantly improved passenger numbersManistee County Blacker Airport

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the first few months of Frontier's service, a sustained effort needs to be made to market and promote the service. Otherwise Manistee may loose regional jet service and return to 19 seat or possibly 9 seat service. And with that reduced level of service the airport would likely see passenger numbers plummet and subsidies per passenger significantly increase.
Frontier is demonstrating that significantly more demand exists for air service at Manistee than been seen over the last 50 years. In order to tap into that demand, quality service needs to be provided (i.e. non-stop regional jet service at a reasonable price) otherwise passengers will drive significant distances in order to obtain the quality air service they desire from other airports.
According to a Boyd Group study commissioned by the Michigan Department of Transportation-Aeronautics Division, the Manistee County Blacker Airport has been experiencing 85% to 90% passenger leakage to other airports. The estimated annual base demand within the core catchment area of Manistee was projected to be 54,700 for 2011. By improving the awareness of the quality service now available at the Manistee County Blacker Airport through a comprehensive marketing program we can improve significantly on the historic 10%-15% catchment. The Essential Air Service program has provided the Manistee County Blacker Airport with an air carrier to provide access to the national air transportation system; our community needs to support this service with passengers. However after years of poor under-utilized service, a consistent comprehensive marketing plan is needed to change negative perceptions about flying from the local airport.
If air service were to be discontinued at our airport, the direct and indirect impact on this region’s already struggling economy would be far reaching. Local businesses would be forced to use other airports considerably further away for their airline travel options. The local tourism industry would be equally affected by removing from tourists an important travel option into this region to enjoy the many year round attractions. Fewer businesses would choose to locate in the Manistee area in preference to other areas with commercial air service.



### 5. Air Service Development Efforts

Over the last five years the Manistee County Blacker Airport has done a number of things in order to retain air service and expand the use of the service. 2007 saw the ending of a State of Michigan marketing grant program. During that program from 2004-2007 Manistee saw a 72% increase in passengers (3941 to 6760). While all of the growth can not be attributed to the marketing efforts since that time period also corresponded to the change in service from Great Lakes/Chicago O'Hare to Midwest Connect/Milwaukee, certainly a portion of the growth is likely due to the marketing efforts.Manistee County Blacker Airport

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In 2008 with the loss of Skyway, development efforts focussed on simply retaining air service. Even with the EAS program guarantees, Manistee was without any air service for a period of two months during 2008. With the advent of Great Lakes service beginning in 2008, it was a period of rebuilding and learning. During the summer of 2009 the airport conducted a passenger survey to better understand the needs of the community with regards to air service in preparation for the 2010 EAS bidding RFP.
As an Essential Air Service airport, Manistee County Blacker Airport has been working within the boundaries of the EAS program. The long EAS selection process for Manistee during 2010 required three rounds of bidding to finally come to a successful conclusion. The development efforts included working with many potential air carriers and options were also explored in possibly utilizing the Alternate EAS program as a solution to the air service needs at Manistee. The conclusion of the EAS selection process resulted in Frontier Airlines being awarded the bid and bringing much improved service to Manistee.
This year the airport embarked on an advertising program to promote the launch of the new Frontier service. Since Frontier has started service we have seen 300% increases in enplanements some of which can be attributed to the marketing efforts.



### 6. Strategic Planning

The overall goal of this proposal’s funding is to increase airline ridership at the Manistee County Blacker Airport by effectively promoting public awareness of local airline service and the new airline. With continued growth at the Manistee airport, we will make this region a more appealing destination for both tourism and business. Also, with continued ridership growth at the Manistee County Blacker Airport, we are better positioned to attract new businesses and reduced Federal EAS subsidies and possibly the elimination of the need for any subsidy.Manistee County Blacker Airport

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Table 1 - Total Passengers Per Year Since EAS Subsidies Began
As Table 1 shows, the utilization of the air service at Manistee has been steadily increasing since the advent of EAS subsidized service. However in 2011 with the advent of a quality affordable service we are seeing significant growth that we anticipate being able to continue with additional marketing.

Table 2 - Average EAS Subsidy per Passenger
Table 2 shows that in spite of the fact that passenger numbers were increasing from 1998 through 2010, the average subsidy per passenger was also increasing as costs were rising faster than enplanements. However with the new service that trend is now being changed with 2011 and 2012 seeing projected significant decreases in per passenger subsidies.

1998 2001 2004 2007 2010 2011 Projected 2012 Projected 0 5000 10000 15000 20000 25000 30000

Passengers

1998 2001 2004 2007 2010 2011 Projected 2012 Projected 0 50 100 150 200 250 300

EAS Subsidy per PassengerManistee County Blacker Airport

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The Manistee County Blacker Airport has not seen passenger numbers like last year's in nearly 40 years, and this year is easily surpassing that. A properly administered marketing strategy and quality airline service will allow the Manistee County Blacker Airport to not only continue the growth seen over the last few years, but to dramatically accelerate that growth.
The projected goals for the Manistee County Blacker Airport are as follows:
Total Passengers Actual Boardings 2010: 6760 Projected 2011: 20,000 +200% End of 12 Month Campaign (Dec 2012): 30,000 +50%



### 7. Marketing Campaign Program

With Chautauqua/Frontier initializing service in April, 2011, the Manistee County Blacker Airport Board recognized the importance of marketing the new service. Due to the timing of the introduction of Frontier service and the timing of this SCASDP grant cycle, the board determined it couldn't wait for this grant cycle before beginning to market the new service. Therefore the airport allocated $21,000 and an additional $20,000 was obtained from the Little River Casino Resort to implement a marketing campaign for 8 months (April – November) during 2011 to promote the introduction of Frontier service. We are already seeing the results of the combination of the new Frontier service and the marketing of that service. For example in July 2011, Manistee saw 3163 total passengers versus 1074 in July 2010.
However we strongly feel that effective marketing isn't one-time marketing. But instead to be effective, marketing needs to be comprehensive and on-going. Therefore as we plan for 2012 marketing efforts we are looking to this SCASDP grant to allow us to follow through on what has already been started.
The Manistee County Blacker Airport plans to continue and expand a comprehensive advertising campaign to inform the region of the quality air service available locally. This campaign will put to use many of the available media outlets to get the message out to the public. Comparison information will also be used to help inform persons of the cost of using alternative travel options. (Ex. P arking, drive times, fuel costs and lost productivity).
The Manistee County Blacker Airport will focus the marketing within the catchment area of the airport. This marketing will target Manistee County and those that border Manistee County: Mason, Wexford, Benzie and Lake Counties.Manistee County Blacker Airport

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The population of these counties according to the 2010 census is as follows:

County Population Benzie 17,525 Lake 11,539 Manistee 24,733 Mason 28,705 Wexford 32,735 Total 115,430
The proposed medias for this campaign will be radio, television, newspaper, billboards, social media, internet and publications. The goal of this media outreach will be to make the primary catchment populace aware of the advantages of using the Manistee County Blacker Airport.
The marketing campaign is planned to begin January 2012 and complete December 2012.
This time frame is intended to align with the EAS 2-year contract award cycle. The next Manistee EAS RFP should go out for bids in late 2012. When this marketing program has delivered the 30,000 total passengers for 2012, we would anticipate that to result in decreased subsidy requirements for the next EAS contract.



### 8. Partnerships

The Manistee County Blacker Airport works to build partnerships with the community at every level: county government, local units of government, private businesses, community groups and individuals. During these tough economic times there is an increased awareness of the need for cooperation in order to achieve economic growth.
We have seen this already during 2011. With the local Little River Casino Resort contributing $20,000 already to our efforts and working with us to implement our program.
As we look forward to the time period and project covered by this grant proposal, we see local units of government (Manistee County) and groups (Local Revenue Sharing Board) joining our efforts. We anticipate working with each partner as we have already done with the Little River Casino Resort in order to effectively promote the Airport and community.
The local community is strongly in favor of this proposal, as demonstrated by the significant amounts of cash and non-cash commitments pledged to this effort. In a rural area such as ours, the business community and citizens at large understand what anManistee County Blacker Airport

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important component to the local economy the Manistee County Blacker Airport is. In reviewing our package, we would ask that considerable weight be given to the amount of community support that has been demonstrated.



### 9. Necessary Funding Required

The estimated funding requirement to implement a highly effective public awareness advertising campaign is $90,000. The amount that is requested is $50,000 through this grant along with $25,000 cash pledged through local support and $15,000 in in-kind local support. The local contributions have been acquired through municipalities, local businesses, and community groups.



### 10. Marketing Campaign Success

Throughout the advertising campaign the success will be monitored through the observation of increased passenger enplanements. The Manistee County Blacker Airport's goal is to increase passenger boardings by 50% for 2012.
Campaign success will be measured in accordance with the following:

January 1 Start Campaign
Immediately Develop Marketing Material
Immediately Survey deficiencies, review avenues for advertising and strategies. (Destinations and seasons)

1 st month Begin marketing campaign

3 rd month Reassess marketing strategies and make necessary changes.

6 th month Measure effectiveness and make changes if necessary

9 th month Measure effectiveness

12 th month Measure effectiveness
Measuring the effectiveness of this program will be done at intervals stated above. By theManistee County Blacker Airport

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end of the third month of this program, Frontier Airlines will have been serving Manistee for about one year. This will enable year over year comparisons that will allow tracking of the effectiveness of the program. By the end of the first six months of this campaign, the overall success of this grant should be verifiable. If the boarding increases have not met expectations and advertising modifications have been ineffective by the ninth month the remaining grant money will be returned and the program will be discontinued.
Throughout this whole campaign, surveys will be collected from the airline passengers. These surveys will request information regarding:

– Customer satisfaction of current service

– Destinations

– Pricing

– Marketing comments

– Overall travel experience using the Manistee County Blacker Airport.

These surveys will be conducted in relation to our campaign success schedule. All surveys will be uniform with previous surveys for consistent results and less chances of unreliable interpretations.



### 11. Continued Marketing Program

We believe that marketing is an essential piece in acquiring new and maintaining existing customers. When this project is as successful as we believe it will be, the Manistee County Blacker Airport will continue to acquire advertising monies through state and local sources. The long term goal is to reduce the need for EAS subsidies and to potentially eliminate that need completely. While those efforts may not be as comprehensive as that proposed here due to less available funding, the importance of a continual marketing effort is crucial to being effective.



### 12. Air Service Development

The Manistee County Blacker Airport Board is committed to aggressively executing our Proposal, and developing a long-range plan to ensure the economic viability of our Airport. We know that Manistee County is in one of the few areas in Michigan that are continuing to grow in an otherwise economically depressed State. The Manistee County Blacker Airport Board, as well as the community, is involved and committed to not only this Proposal, but also long-term sustainability of one of the area's most valuable economic development tools, the Manistee County Blacker Airport. The Manistee County Blacker Airport Board plans to remain active in continuing marketing efforts of any air carrier into their Airport.Manistee County Blacker Airport

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### 13. Legal Sponsor

Manistee County Blacker Airport 2323 Airport Road Manistee, Michigan 49660 DUNS Number 948868799Manistee County Blacker Airport

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### Appendix AManistee County Blacker Airport

Small Community Air Service Development Program 15Manistee County Blacker Airport

Small Community Air Service Development Program 16Manistee County Blacker Airport

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### Appendix B

Marketing Plan

Cable and Local Network Television
The primary role of television in this plan is to build brand awareness. Building on the success and awareness created by Manistee County Blacker Airport's 2011 television campaign, TV ads featuring local opinion leaders from the Manistee community will continue to be the method used to deliver the message. Key points will continue to be convenience, low fares, free parking and the benefits of flying Frontier Airlines.
Cable ads will be placed in two Charter Media markets: Manistee, Ludington and Cadillac, reaching 16,900 households and Grand Traverse, Leelanau, Benzie and Frankfort, reaching 18,900. Spots will air on ESPN, TRAVEL, FOOD, TLC, TBS, DISC, FOX NEWS, HISTORY, ABC FAMILY, and TNT, reaching a targeted audience of adults, male and female.
Local Network TV spots will run on 9&10 (CBS) and 7&4(NBC), which cover 30 counties throughout Northern Michigan. Spots will run, primarily, during local newscasts.Manistee County Blacker Airport

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9&10 News Coverage Map – 25 Counties, Primary Market Strong adult rankings, CBS affiliateManistee County Blacker Airport

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7 & 4 News Coverage Map – 35 Counties, strong adult rankings, NBC affiliateManistee County Blacker Airport

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Billboards
Outdoor posters promoting the " www.flymanistee.com " brand will rotate monthly between in the local markets. All billboard locations will be on major highway routes.

Radio
(:10) second "live reads" will be utilized to promote last-minute fare sales. These ads will run on WMTE-FM, WKLA-FM and WTCM AM/FM. The purpose of the radio ads is to supplement the overall image and brand building being done via television and billboards with content that is more immediate in nature (fare sales).
WMTE FM and WKLA FM cover Manistee and Mason counties, targeting adults 25-54. Both stations feature local news and capture a large local audience. No current map available.

WTCM FM covers Northern Michigan, as one of the highest rated radio stations in the area. With strong adult ratings and a large local following, this station will deliver a wide audience.Manistee County Blacker Airport

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Newspaper Inserts
Insertions in local newspapers 2 times during the year will be used for image, and last minute fair sales. Local newspapers to utilize: Ludington Daily News, Manistee News Advocate, Traverse City Record Eagle, Cadillac News.
Ludington Daily News covers Mason & Manistee Counties: Circulation 9,233, Monday - SaturdayManistee County Blacker Airport

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Ludington, Scottville, Custer, Fountain, Walhalla, Free Soil, Branch, Baldwin, Hart, Manistee, Pentwater, Mears
Manistee News Advocate covers Manistee County: Circulation 5,000, Monday - Saturday Arcadia, Bear Lake, Brethren, Copemish, East Lake, Filer City, Fountain, Free Soil, Irons, Kaleva, Manistee, Onekama, Scottville, Wellston
Cadillac News covers Wexford and Lake County: Circulation 7,700, Monday - Saturday Mesick, Reed City, Evart, LeRoy, Tustin, Luther, Marion, Falmouth, McBain, Lake City, Merritt, Manton, Cadillac
Traverse City Record Eagle covers 13 counties, including Grand Traverse, Leelanau, Benzie and Wexford Counties: Circulation 24,000, Daily

Web Site/E-marketing
Regular maintenance and updating of the www.flymanistee.com web site along with select pay-per-click or on-line advertising. Also a continued emphasis on the FlyManistee facebook page.

Event Sponsorships
Chamber Business After Hours, Travel Agent Open House, Forest Festival Sponsorship, etc.

Print Advertising
Display ads in the Manistee County CVB Visitor's Guide, Mountain Life Magazine and Shoreline Visitor's Guide.Manistee County Blacker Airport

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2012 Proposed Budget

Cable Television Purchased $ 15,200 Cable Television In-kind 8,000 Local Network TV Purchased 16,000 Local Network TV In-kind 7,000 Billboard 8,000 Radio 8,000 Newspaper Inserts 8,000 Website/E-marketing 4,000 Print/Magazine/Travel Guides 4,000 Event Sponsorships 2,000 Media Production 2,800 Graphic Design/Pre-press 1,250 Administration 4,000 Contingency 1,750 $ 90,000Manistee County Blacker Airport

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### Appendix CManistee County Blacker Airport

Small Community Air Service Development Program 25Manistee County Blacker Airport

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### Appendix D