# June 11, 2012

Sponsor: University of Illinois Office of Capital Programs and Real Estate Services

Champaign, Illinois Bruce K. Walden, Director Congressional Code: IL

- 15
Dun & Bradstreet Number: 04

- 154

- 4081 Tax Identification Number (EIN): 37

- 6000511 

# UNIVERSITY OF ILLINOIS WILLARD AIRPORT CHAMPAIGN/URBANA, ILLINOIS
Application Under the Small Community Air Service Development Program Docket DOT

- OST

- 2012

- 0069
Application for Federal Support for New Air Service via Revenue Guarantees
, Advertising and Marketing , and Start

- Up Cost Offsets
Targeted towards Improved Eastbound Air ServiceUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 2

TABLE OF CONTENTS

Introductory Letter of Support 3 Summary Information

– Appendix C 4
Introduction 7
The Central Illinois Air Service Market 8
Current and Historical Service 9
Overview of Passenger Leakage 12 Air Service Development Efforts 15
Air Service Needs and Deficiencies 16 Regional Fare Environment 17 Passenger Leakage Detail 1 8 Strategic Plan for New Air Service 20 Targeted Route: Champaign/Urbana

– Washington Dulles 21 Potential Eastbound Passenger Traffic 22 Implementation Timeline 26 Public/ Private Partnership 27 Legal Sponsor 28
Conclusion 29 

### Section Page NumberUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 3

INTRODUCTORY LETTER OF SUPPORTUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 4

SUMMARY INFORMATION

– APPENDIX C

Small Community Air Service Development Program
Docket DOT

- OST

- 2012

- 0069



### A. Applicant Information

Not a Consortium Community now receives EAS subsidy Interstate Consortium Intrastate Consortium Community previously received a Small Community Grant If previous recipient, Date of Grant: ________________________________ Expiration date of G rant: _______________________ Federal Funds Requested: ______________________ Carrier(s) Service Obtained:

____________________ Destination(s) Served: __________________________



### B. Public/Private Partnership

Public:

1. University of Illinois at Urbana

- Champaign
2. City of Champaign
3. City of Urbana

Private:

1. Champaign County Economic Development Corporation
2. Champaign County Alliance
3. University of Illinois Chancellor’s Office Community Projects FundUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 5

C. Project Proposal

Marketing Upgrade Aircraft New Route
Travel Bank Service Restoration Subsidy
Su rface Transportation Regional Service Revenue Guarantee Launch New Carrier Start

- Up Cost Offset First Service Study Secure Additional Service Other (Specify)



### D. Existing Landing Aids at Airport

Full ILS Outer/Middle Marker Published Instrument Approach
Localizer Other: VOR, GPS, NDB, PAPI, VASI



### E. Project Cost

1. Federal amount requested: $ 600,000
2. State cash financial contribution: $ 0
Local cash financial contribution:
3a. Airport cash funds: $ 80,000
3b. Non

- Airport cash funds: $ 0
3. Total local cash funds: $ 80,000
4. TOTAL CASH FUNDING: $ 680,000
In

- Kind Contribution:

a. Airport In

- Kind contribution: $ 345,007
b. Other In

- Kind contribution: $ Various
5. TOTAL IN

- KIND CONTRIBUTION: $ 3 44
, 997 + Media Match
6. TOTAL PROJECT COST: $ 1,025 ,00 7 + In

- KindUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 6

F. In

- Kind Contributions

For funds in lines 7a (airport in

- kind contribution) and 7b (other in

- kind contribution), please describe the source(s) of fund(s) for each. Airport In

- Kind: Landing Fee Waiver for 12 Months: $34,125 Jetbridge Fee Waiver for 12 Months: $19,344
Common Use Rent Waiver for 12 Months: $212,736 Dedicated Space R ental Waiver for 12 Months: $78,792 Total Airport In

- Kind Contribution: $34 4
, 997 Community In

- Kind: Matching funding for advertising and marketing of service.



### G. Is Application Subject to Review by State Under Executive Order 12372 Process?

This application was made available to the s tate under the Executive Order 12372 Process
for review on ______. Program is subject to E.O 12372, but has not been selected by the state for review

. Program is not covered by E.O 1237 2

.



### H. Is Applicant Delinquent on any Federal Debt?

NoUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 7

INTRODUCTION

In the last month the University of Illinois Willard Airport completed a new passenger retention and leakage analysis, investing significant time and money in an effort to better understand its own market and how its local catchment area could best be served by the Airport. The analysis
ha s uncovered some startling facts about air service in central Illinois. While it has long been assumed many Champaign/Urbana passengers flew out of Bloomington/Normal and Indianapolis because of low fares, it has been determined that almost half of airlin e passengers traveling to and from Champaign/Urbana really use Chicago area airports. Only 12% of passengers use Bloomington/Normal, contrary to popular regional
beliefs.

Perhaps most telling is the fact that just 16% of Champaign/Urbana passengers use t heir own airport

– Willard Airport. The biggest reason for the poor passenger retention: high fares. Champaign’s Willard Airport has the highest average fare of all commercially served airports in Illinois and Indiana, at $294 each way. Champaign/Urbana ’s average fare is 78% above the regional average, meaning Willard Airport passengers pay a premium averaging $129 one way for the privilege of using the hometown airport.

Fares have rapidly increased in the Champaign/Urbana market

– up 22% in the last three years

– as airlines have cut Willard Airport capacity. Since the summer of 2009 Willard has lost 44% of its daily departures and 34% of its daily departing seats. It’s harder to find seats to and from Willard, especially at peak travel times, while it’s also much more expensive to fly from Willard than from other airports in Illinois. Moreover, Willard Airport is served now by just one carrier

– American Eagle.

The Ai rport, and the University, must address these air service deficiencies. The Airport is seeking a Small Community Air Service Development Grant in support of new eastbound hub access

. The target of new service is the United hub at Washington Dulles, as Wa shington has available capacity for additional flights, and it ranks as Champaign/Urbana’s sixth largest origin and destination passenger market, with an average of 51 local passengers per day each way. The Airport has developed a coalition of support and matching funding to make the project a reality. 

## “ ...just 16% of Champaign/Urbana passengers use their own airport... the biggest reason... high fares.”University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 8

THE CHAMPAIGN/URBANA AIR SERVICE MARKET Current and Historical Air Service

While t he University of Illinois Willard Airport has seen its capacity cut by more than a third in the last three years, it still plays a vital role in connecting east central Illinois, and the State’s flagship University, to the rest of the world. The Airport’s pr imary catchment area covers many of the communities within an hour’s drive (see map 1). The Airport is most likely to capture passengers
who live within a half hour’s drive, seen in the

darkest shade of blue on map 1. This area is home to 184,773 people as of
the 2010 US Census. The Airport’s extended
catchment area reaches
out to a 45

- minute drive radius, which is home to 245,684 people, and a 60

- minute drive radius, which is home to 390,541 people. Willard Airport does not typically pull passengers fr om outside
the 60

- minute drive radius, as there are other airports closer to those residents, including Chicago’s airports, Bloomington/Normal, Peoria, Decatur, Springfield, and Indianapolis. Nonetheless, in the past when Willard Airport had unique servic e not offered from other central Illinois airports, it drew from a larger area. It is anticipated that this
would be the case i f Willard had the only East Coast non

- stop service in the region.

Champaign/Urbana is down to a single carrier. American Eagle is the only scheduled airline providing service, with six weekday non

- stops to Chicago O’Hare and one daily non

- stop to Dallas/Ft. Worth (see figure 1 on next page). In July of 2010, Willard Airport also had two daily
Delta Air Lines non

- stops to Detroit , but that service was lost as Delta rationalized its regional network and ended service to many smaller communities throughout the Midwest. The 

### MAP 1: University of Illinois Willard Airport Catchment Area Source: Sixel Consulting Group , 2010 US CensusUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 9 Champaign/Urbana

– Detroit market had been continually served by Northwest for almost two decades, but it did not fit in with Delta’s plans
for the Detroit hub.

The result of the loss of Delta
service is available seat capacity which is down almost 16% from July of 2010 to July of 2012 (see figure 1). The Airport has met with
American and communicated frequently
with that airline about its capacity needs, resulting in American capacity that is up 14% since July of 2010

– but not enough to overcome the loss of all service from Delta. Moreover, with American being the sole carrier in the market they have pricing power that has caused the average fare in the market to increase by almost 20% since Delta left.

The summer of 2009 was the las t high point for Willard Airport airline capacity. In July of 2009, Willard had an average of 9.5 departing flights per day and an average of 425 daily departing airline seats (see figure 2 on next page ). Since that time, airlines serving the Airport hav e cut flights by an average of 4.2 departures per day, or 44%. Airlines have reduced their available departing seats to just 281 per day as of February 2012, a loss of 144 departing seats per day since summer of 2009, or 34% of total capacity. 

### FIGURE 1: Service at the University of Illinois Willard Airport July 2010 vs. July 2012; Source: OAG Schedu le Data, May 2012University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 10

The Airport has worked to reverse the decline in available seats and the loss of flight frequency.
It has met in person with almost a dozen airlines in the last three years. It has not had success in drawing additional capacity for two reasons: it did not have an adequate handle on its true market, including passengers that leak to other airports; and it does not have the financial support to offer large incentive packages on its own. While the airport in Bloomington/Normal has a property tax to help it keep costs artificially low, Willard Airport has only the support of users
fees and a cash

- strapped University.

As a result of capacity cuts, Willard Airport has seen its passengers decline rapidly through the
latter half of the last decade. While passengers have been in decline, fares have been rising rapidly to some of the highest levels in the Midwest, and in the country. Since 2005, the average one way fare from Willard Airport has gone up by $86 each way, or $172 roundtrip

– an increase of 41% (see figure 3 on next page ). 

### FIGURE 2 : Flights, Seats a nd Passengers per Day Each Way, Universi ty of Illinois Willard Airport Source: US DOT T100; July 2009

– February 2012University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 11

Rising fares have suppressed passengers, and forced passengers to use other airports. Since peaking in 2005, at an average of almost 347 passengers per day each way, Willard Airpor t passengers have dropped by 38% (see figure 3). In the last seven years, Willard Airport has lost an average of 131 passengers per day each way. In fact, passengers have continued to decline, year after year, for each of the last seven years. Willard A irport hasn’t seen so few passengers in almost two decades.

It’s not that the Champaign/Urbana region isn’t generating as many airline passengers as it used to. Quite the opposite is true. Willard Airport is retaining fewer passengers than it has in the last decade. The Airport’s May 2012 leakage and retention study shows the Airport retains just 16.3% of the passengers generated in its immediate catchment area , or an average of 215 passengers per day each way (see figure 4 on next page ). The entire Wi llard Airport catchment area generates an average of 1,318 passengers per day each way, with 83.7% using airports other than their local airport. 

### FIGURE 3 : O&D Passengers and Average Fares at the University of Illinois Willard A irport Source: US DOT Table OD1A; Calendar Year 2002

– Calendar Year 2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 12

It was expected that Champaign/Urbana’s leaking passengers most
often used Bloomington/Normal’s airport or Indianapolis’ airport. The data shows, however, that the largest portion of Champaign/Urbana passengers drive two and a
half hours to Ch icago O’Hare
to access the national air transportation system. Altogether, 32% of Champaign/Urbana passengers, or an average of 422 passengers per day each way, use O’Hare (see figure 4). Another 14% use Chicago Midway

– meaning 44% of all Champaign/Urba na travelers fly in and out of Chicago, despite it being farther away than other alternate airports in the region.

The data also shows that almost as many Champaign/Urbana passengers drive three hours to St. Louis to catch their flights as those who drive an hour to Bloomington/Normal. While an average of 188 passengers per day each way generated in the Willard Airport catchment area fly out of Bloomington/Normal, almost 156 passengers per day each way drive to St. Louis (see figure 4). Just 59 passenger s per day each way, on average, use Indianapolis, despite the fact it’s an hour closer to Champaign/Urbana than St. Louis.

The numbers are a genuine reflection of why people leak to other airports. Simply put, fares are lower in St. Louis than they are i n Indianapolis, so people will drive the extra hour. The same goes for fares at Chicago Midway versus Bloomington/Normal. Champaign/Urbana travelers, in most cases, leak based on fare. The exception is Chicago O’Hare, where Champaign/Urbana 

### FIGURE 4: CMI Catchment Area Passengers by O&D Airport; Source: Sixel Consulting Group CMI True Market St udy, CY2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 13 passengers a ctually pay more, on average, than they do at Willard Airport. Passengers appear to leak to O’Hare for the
wide breadth of non

- stop flights, and the wide array of non

- stop international destinations.

The passenger leakage in the Willard Airport catchment area happens in all origin and
destination markets. Willard retains less than 35% of passengers in each of its top 25
passenger markets (see figure 5). In 12 of Willard’s top 25 true markets it retains less than 15% of passengers, with especially poor
retention to leisure destinations such as Orlando, Las Vegas, Phoenix, and South Florida. To destinations on the East Coast
, Willa rd Airport retains less than 20% of its local catchment area passengers, with more than 28,000 annual New York/Newark passengers flying from other airports and almost 26,000 Washington/Baltimore passengers leaking away from Willard.

Even when leaking pass engers from the Willard Airport catchment area are taken into account, the overall average fare in the catchment is $247 each way as of calendar year 2011 (see figure
6 on next page ). That’s $82 each way higher than the Illinois

- Indiana average fare of $1 65 one
way

– a premium of 50% over the region’s average fare, even when Champaign/Urbana passengers fly from airports other than Willard. The catchment suffers from high average fares to virtually all destinations, outside of those served by low cost carr iers in central Illinois such as
Orlando. 

### FIGURE 5: Top 25 True O&D Passenger Markets in CMI Catchment Source: Sixel Consulting Group CMI True Market Study, CY2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 14

Fares from Champaign/ Urbana to east coast cities are among the highest per seat mile, with relatively short stage lengths. For example, the average fare from the Willard Airport catchment area, out of all air ports passengers used, to Washington/Baltimore was $183 each way (see figure 6). The average one way fare to New York/Newark was $164 in 2011, while the average fare to Boston was $157 each way.

It would be comforting to
assume that the air service decline at Willard Airport has “bottomed out.” It would certainly seem to be the case. But one could have made the same assumptio n at any point in the last several years, and yet capacity continued to be cut, fares continued to rise, and passengers continued to fall. Now is the time for the University of Illinois to
take action to reverse the trend

– with the help of a Small Commun ity Air Service Development
Grant. 

### FIGURE 6: Average True One Way Fares in Top CMI Catchment Markets Source: Sixel Consulting Group CMI True Market Study, CY2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 15

AIR SERVICE DEV

ELOPMEN T EFFORTS

T he University of Illinois Willard Airport has had an active 2011 and 2012 in air service development. Most recently, in the last six weeks, the Airport and its consultant completed a new True Market/Leakage

- Retention Study to better identify its air service strengths and weaknesses. This Study will serve as the foundation for a new air serv ice development strategy in the remainder of 2012 and 2013.

While the study validated some thoughts
about the market

– including the need for
eastbound service to better connect the large number of international travelers with
their destinations

– it als o showed some surprising trends. It was not anticipated that Chicago O’Hare would be the number one airport of use for Champaign/Urbana travelers. The number of passengers using other central Illinois airports was much lower than expected. Willard’s str ategy must be to compete on more efficient non

- stops over price.

The Airport also worked on an initiative in fall of 2011 to bring Vision Airlines non

- stop Florida service to the market. The Airport invested more than $100,000 in the seasonal
service to Punta Gorda, which performed
well. The service ended as Vision re

allocated the aircraft to cover for the shut

down of DirectAir.

The University and the Airport are committed to better serving central Illinois. The Airport makes
air service investments where they make sense

– and now has a targeted goal in securing
eastbound non

- stop service. 

### FIGURE 7: Willard Airport True Market Study Source: Sixel Consulting Group ; May 2012University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 16

AIR SERVICE NEEDS AND DEFICIENCIES IN CHAMPAIGN/URBANA

Willard Airport is a microcosm of the challenges in regional market air service over the last several years. The Airport has seen its service cut to the point it has just one airline. It’s the first time since deregulation in 1978 Willard Airport was served by o nly one carrier. With the loss of competing service, the Airport has had its available airline seats cut by 34% and its departures cut by 44%. While flights and seats have been cut, fares have rapidly increased

– up 22% in just the last three years.

In 2011, Willard Airport has the highest average fare of all commercially served airports in Illinois, Indiana, and Wisconsin. The average one way fare at Willard was $294

– one of the highest one way fares in the country for the period (see figure 8). Wil lard’s fare was 78% higher than the regional average fare of $165 each way or an average of $129 more per one way trip. Willard’s fare was also 21% higher than the fare of the next closest airport
on the list

– the Evansville Regional Airport

– which was a Small Community Air Service Development Grant awardee in
2011.

Among competing airports, Willard Airport has, by far, the highest average
fares

– which aren’t really competitive at all. Willard’s average fare is 66% higher than the fare at Chicago O’Ha re

– its number one airport for passenger leakage. Willard’s fare is 110% higher than the fare at Chicago Midway, which has low cost service provided, primarily, by Southwest Airlines. While the average one way fare at Bloomington/Normal is $155 each way

, the fare at CMI is $294

– a $139 one way premium to use Champaign/Urbana’s airport (see figure 8). 

### FIGURE 8 : Average One Way Fares in IL, WI, and IN Source: US DOT OD1A; Calendar Year 2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 17 The Airport’s True Market Study was able to determine the average fare paid by travelers to and from the Champaign/Urbana catchment area. Including passengers that “leak” to other airports, the average fare paid to and from the local catchment area is $247
one way

– still higher than an y average fare paid in the region (see figure 9). Passengers that fly out of Willard pay $294 each way on average, while passengers that fly out of Central Illinois Regional Airport in Bloomington pay $111 less one way or 38% less than the fare at
Willard

.

The one anomaly in the Champaign/Urbana True Market fare
data is the fact that local catchment area passengers actually pay more to fly out of Chicago O’Hare than they pay to fly out of Willard. The average one way fare paid by
Willard catchment area travelers who fly in and out of O’Hare was $320 in 2011, which is $26 more each way than the Willard fare (see figure 9). This reflects the fact that those who “leak” to O’Hare tend to be on longer stage length flights, with many flying internationally d ue to improved non

- stop and one

- stop flight options. This illustrates the need for better long haul and international connectivity at Willard, and the need for eastbound service that can connect to European destinations.

The fare disparities

, along with the lack of sufficiently competitive flight options , force the majority of Willard Airport catchment area passengers to use other airports. Willard Airport retains just 16% of its local catchment area passengers as of calendar year 2011. In its top 10 origin and destination passenger markets, Willard retains no more than 32% of passengers to any market, while in its top 20 markets it retains no more than 35% of passengers (see figure 10 on next page ). Boston has the best retention of Willard’s top mark ets, with almost 35%. The worst 

### FIGURE 9 : Fare by Airport for CMI Catchment Passengers Source: Sixel Consulting Group CMI True Market Study; May 2012University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 18

retention of passengers is in the Champaign/Urbana

– Orlando market where less than 3% use their local airport. Airports in Chicago capture between 30% and 40% of Champaign/Urbana
passengers to top markets, while Bloomington/Normal and St. Louis capture the rest.

Champaign/Urbana passengers are pushed to other airports, in part, due to the lack of available seats at Willard Airport. Champaign/Urbana ranks as one of the most underserved
markets in the Midwest . As of calendar yea r 201 1
, Champaign/Urbana had just 0.48 available departing airline seats per capita of its Metropolitan Statistical Area (MSA) (see figu re 11 ). That number was down from 0.57 seats per capita in 2010

– a loss of 16% of seats per capita. With less than on e half of one departing seat per resident per year, the Champaign/Urbana MSA had fewer available departing seats
than both Peoria and Bloomington/Normal

, along with 

### FIGURE 1 1 : Available Seats per Capita in Illinois Markets Source: US DOT T100, 2010 US Census; CY2011 FIGURE 10 : CMI Catchment Area True Airport Market Share in Top 20 Markets Source: Sixel Consulting Group CMI True Market Study; May 2012University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 19

Moline/Quad Cities

. The central Illinois average number of available departing a irline seats per capita was 0.92 in 2011

. Champaign/Urbana’s available departing seats per capita was just 48% of that average.

The same can be said about enpla ned passengers per capita. Champaign/Urbana lags behind
all but two other central Illinois cities as of calendar year 2011 (see figure 12 ). Willard Airport saw just 0.35 passengers per resident of the Champaign/Urbana MSA

– 79% fewer
passengers pe r capita than the nearest airport

– Bloomington/Normal . The central
Illinois average number o f passengers per capita was 0.70 in 2011

– exactly double the average in Champaign/Urbana’s MSA.

These indicators illustrate how the University of Illinois Willard Airport is relatively underserved when compared to corollary cities in its own region. The lack of available seat capacity drives 84% of the market’s passengers to other airports, where they find more extensive flight options, more carrier choice, and lo wer fares. The Airport is working diligently to
reverse this trend

– this Grant application is just one the efforts the Airport is making to improve
service. 

### FIGURE 12 : Passengers per Capita in Illinois Markets Source: US DOT T100, 2010 US Census; CY2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 20

STRATEGIC PLAN FOR NEW AIR SERVICE

In the mid

- 1990s Willard Airport had non

- stop service to five hubs on four airline networks. By the
mid

- 2000s the Airport had two airlines serving just three hubs. And as we head into the 2010 decade, the Airport is down to just one airline with service to two hubs. While westbound connectivity is decent, with service through Dallas/Ft. Worth on American, and Midwest connectivity is solid with service through Chicago O’Hare on American, there is little to no eastbound connectivity.

Moreover, the Champaign/Urbana market is saddled with some of the h ighest fares in the country

– and the highest average fare in the Midwest. Capacity cuts and high fares have forced many passengers to use other airports. Many have been priced out of flying from their
hometown.

An analysis of the data from the Airport’ s recently completed True Market Study shows the biggest gap in service is to the east

– and the best hub/airline combination for covering that service gap is the United hub at Washington Dulles Airport. The service would provide Champaign/Urbana
with its first ever non

stop flight to the Washington, DC area, along with

one

- stop connections to 69 cities, two

- thi r ds of which require a

backtrack connection with current CMI service (see map 2). 

### MAP 2: One

- Stop Connections over Washington Dulles on United Source: Sixel Consulting Group Hub Builder; May 2012University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 21

The Champaign/Urbana True M arket currently produces 661 origin and destination passengers per day each way to destinations that naturally connect over the United Airlines/Star Alliance Washington Dulles hub, not counting any passengers that might use the service from the other central Illinois catchment areas. As of calendar year 201 1
, the CMI True Market Study showed
that Champaign/Urbana generated 482
, 530 total origin and destination passengers that would flow over Washington Dulles on United. Of these passengers, just 17.5% use Willard Airport, with 82.5% flying from other airports

– representing 543 passengers per day each way who leak to other airports.

The Willard Airport catchment area has generated as many as 82 passengers per day each way to and from Washington

- Baltimore. The market currently generates a total of 51 passengers per day each way to and from the DC area, but just 31% of those passengers use Willard Airport (see figure 13). Since 2004, total Washington

- Baltimore passenger s from the Champaign/Urbana catchment area have declined by 37%, or an average of 30 passengers per day each way. During the same period, the average one way fare between Champaign/Urbana and the DC area is up 48%, or an average of $68 each way, to an ave rage of $210 one way or $420 roundtrip. 

### FIGURE 13: O&D Passengers and Average Fares b etween the CMI Catchment and Washington

- Baltimore Source: Sixel Consulting Group CMI True Market Study; CY2002

– CY2011; Includes IAD, DCA, and BWIUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 22

Beyond local Washington

- Baltimore traffic, t he United hub at Dulles has potential to capture large portions of traffic in 69 of Champaign/Urbana’s largest origin and destination passenger markets. The Washington Du lles hub is especially well position ed to help Willard Airport retain its own catchment area passengers

– particularly the ones that current ly drive to Chicago area airports for service to the East Coast and international destinations.

Altogether, to destinations served by United over Dulles, 82.5% of current passengers generated in the Champaign/ Urbana catchment area fly out of airports other than Willard Airport. The top potential market over Dulles on United is Orlando, on trips to which less than 3% of Willard Airport
catchment area passengers currently use Willard. Champaign/ Urbana generates 85.5 passengers per day each way to the Orlan do market alone, as of 2011 (see figure 14). On the
East Coast , Dulles would best connect central Illinois to markets such as New York/Newark, to which the CMI catchment generates an average of 57 passengers per day each way; Boston, to which the CMI catc hment generates an average of 28 passengers per day each way; and London, England, to which the CMI catchment generates an average of almost 13 passengers per day each way. In all of these markets current CMI passenger retention is less than 35%

- meaning two thirds of passengers generated in Champaign/Urbana that are traveling to these markets fly from airports other than Willard. 

### FIGURE 14 : Top 20 O&D Passe nger Markets over IAD on United Source: Sixel Consulting Group Hub Builder ; CY2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 23

The tru e average fare in the Champaign/Urbana
catchment area to destinations over the United hub at Washington Dulles is $219 one way as of 2011 (see figure 15). This “true average” includes all Willard Airport
catchment area passengers to and from all the airpo rts they use. It is not exclusive to Willard Airport, itself, but
it is exclusive to the
catchment.

The Champaign/Urbana

– Washington

- Baltimore fare is $183 one way, as of 2011 (see figure 15). That works out to an average of 36 cents per mile, on a rou te of 506 nautical miles. The overall average fare per seat mile in the US hovers between 17 and 20 cents

– the CMI

– Washington

- Baltimore fare runs at a roughly 80% premium over the national average in 2011.

A third of Champaign/Urbana catchment area pa ssengers that would flow to destinations over Washington Dulles on United currently drive to Chicago O’Hare to access flights. Another 19% use Bloomington/Normal to the same destinations. Just 17.5% of passengers from the catchment use Willard Airport. The poor passenger retention is especially pronounced in markets such as Orlando, where just 2.6% of CMI catchment area passengers are retained; South Florida, where just 8.4% of CMI catchment area passengers are retained; Atlanta, where just 5.3% of CMI

c atchment area passengers are retained; and Richmond, where just 6.6% of CMI catchment area passengers are retained (see figure 16 on next page ). 

### FIGURE 15 : Average Fares at Top O&D Markets over IAD on United Source: Sixel Consulting Group Hub Builder ; CY2011University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 24

The Airport proposes two daily flights on the Willard Airport

– Washington Dulles route in each
direction. The route between Champaign/Urbana and Washington Dulles would cover 506 nautical miles in a flig ht time of one hour and 20 minutes, on average, assumi ng an average groundspeed of 400 knots on an Embraer ERJ145 aircraft seating 50 passengers in an all

economy layout (see figure 1 7 ).

Origin Destination Departs Arrives Block Time Equipment CMI IAD 6:15am 9:00am 1:45 ERJ IAD CMI 11:45am 12:30pm 1:45 ERJ CMI IAD 1:00p m 3:45p m 1:45 ERJ IAD CMI 6:15p m 7:00 pm 1:45 ERJ
The proposed schedule is designed for ease of network integration into the Washington Dulles hub, ideal business connectivity to East Coast destinations for Champaign/Urbana business
travelers

– allowing for same day business trips to many destinations in the mid

- Atlantic and the
Northeast (see figure 1 7 ). An aircraft would overnight at Champaign/Urbana, departing early 

### FIGURE 16 : CMI Catchment Area True Airport Market Share in Top 20 Markets o ver IAD on United Source: Sixel Consulting Group CMI True Market Study; May 2012

FIGURE 17: Proposed Schedule, Champaign/Urbana

– Washington DullesUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 25

enough to hit the first departing bank of the morning at Dulles on United. The schedule has a late morning return to Champaign/Urbana, wh ich would turn around in time to hit the afternoon/evening international bank at Dulles. The last Dulles

- Champaign/Urbana flight of the day would leave with connections from most inbound international markets. This schedule would achieve two goals: pro viding the best possible connectivity to East Coast destinations, and providing excellent connectivity to international destinations.

The University of Illinois Willard Airport proposes to use a combination of locally raised funding in conjunction with federal Small Community Air Service Development Grant funding in support of
the addition of a new east bound hub

. East bound service is essential in Champaign/Urbana,
and i n all of central Illinois, after Willard Airport lost Delta service to Detroit . The loss of these flight s left the mar ket with no easy east bound access. It must also be noted, there is no East Coast service on any airline from any central Illinois airpor t.

Willard Airport seeks a Small Community Air Service
Develo pment Grant, in the amount of $6 00,000, to help mitigate United ’s initial monetary risk in serving the Champaign/Urbana

– Washington Dulles
route

. The University of Illinois Willard Airport proposes that a relatively small portion of the cost of starting the new service be supported up front with federal funds from the Small Community Air Service Development Program. Of the total project cost of $ 68 0,000, $ 5 0,000 will be used for

mar keting a nd advertising projects . The federal share of the project will be $6 00,000, all of which will be used for the airline revenue guarantee. The federal revenue guarantee share will be matched by $30,000 in local revenue guarantee money and $50,000 in local marketing money. Another $345,000 has been committed by the Airport and the University to reduce United’s initial
start

- up cost by offering full terminal fee waivers and landing fee credits. Including in

- kind

, the total package of incentives available fo r new eastbound service will total almost $1.03 million.
T he Airport projects the new flights will be profitable withi n 12 months

.

The proposed implementation timeline for the project assumes the Department of Transportation will award Small Community G rant Funding in September 201 2 (see figure 18)

. Once the award is announced, the University of Illinois Willard Airport will conduct airline meeting(s) to secure United Express service

. Based on airline planning lead times and the need for advance bookings, we assume the service would not be able to begin until at least June of 201 3

. 

## “There is no east coast service on any airline from any central Illinois airport.”University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 26

The first three milestones on the Airport's timeline are to execute the grant agreement with the Department of Transportation, meet with United and/or United Express carriers to negotiate for service, and sign the minimum revenue guarantee agreement with the appropr iate airline partner (see figure 18)

. Once service is announced and schedules are published, the Airport would begin marketing the new route and working with the new carrier to monitor advance bookings. The Airport will continue its marketing program and continue to work with the new carrier to monitor the route once service begins. The Airport would submit grant status reports on a quarterly basis to the Department throughout the proposed two year term of the minimum revenue guarantee.

While the estimated dates are targets, it is possible service could be secured and launched on a more aggressive timeline once Grant funding is awarded. It is also possible that new service could slip to 201 4 should an airline require additional risk mitigation, be yond that included in this proposal, from the community.

If, for some unforeseen reason, service is not commenced within one year after Grant award by United or a United Express carrier , the University of Illinois Willard Airport proposes to use federal
g rant money awarded under the Small Community Air Service Development Program for
additional service on another airline to a market east of Champaign/Urbana . Other options include service to Washington National on US Airways Express, service to Philadelphi a on US Airways Express, service to Charlotte on US Airways Express, service to Atlanta on Delta, service to Detroit on Delta, or service to Cleveland on United Ex press . Should none of these options become workable, the Airport will continue its discussio ns with all other carriers tha t can provide
additional seats to a hub not currently served. 

### FIGURE 18: Grant Implementation Timeline Source: University of Illinois Willard AirportUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 27

PUBLIC/PRIVATE PARTNERSHIP

The Airport has also developed an air service development partnership program, reaching out to businesses and community leaders. The Cities of Champaign and Urbana, the University of Illinois, and Willard Airport will all work together on this air service development project. Other local partners will be working with the Airport to promote and market the new service. The Airport will manage and coordinate the marketing program. Partners in the program are listed below, including their role in the effort to retain current air service and recruit additional air
service.



### Champaign County Economic Development Corporation

The Champaign County Economic Development Corporation is a public

- private partnership dedicated to fostering a cooperative, co unty

- wide approach to economic development. The organization coordinates with a number of other key organizations in the area to promote an
environment in which business thrives.



### Champaign County Alliance

The Champaign County Alliance is a service organi zation for the Champaign County Chamber of Commerce, the Champaign County Economic Development Corporation (EDC) and the Champaign County Convention and Visitors Bureau (CVB). The Alliance is made up of a board of directors with representation from the Ch amber, the EDC and the CVB, plus the top investors (collectively) in the three organizations. These three top investors are the cities of Champaign and Urbana and the University of Illinois.



### University of Illinois at Urbana

- Champaign

The University of Illinois at Urbana

– Champaign is a public research university located in Urbana and Champaign . 2009 enrollment was 31,209 undergraduate and 10,701 graduate students. UIUC is the oldest, largest, and most prestigious campus in the University of Illinois sys tem. The University of Illinois Urbana

- Champaign is the second oldest public university in the state, second to Illinois State University. The university has 17 colleges and instructional units offering more than 150 progr ams of study.University of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 28

LEGAL SPONSOR

As the owner and operator of Willard Airport, the University of Illinois at Urbana

- Champaign is the legal sponsor responsible for administering the program. The University of Illinois at Urbana

Champaign is a government entity.

University of Illinois Office of Capital Programs and Real Estate Services 807 South Wright Street, Suite 340, MC

- 309 Champaign, Illinois 61820 Bruce K. Walden, Director Phone: 217

- 244

- 8496 Fax: 217

- 244

- 8802 bwalden@uillinois.eduUniversity of Illi nois Willard Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 

## 29

CONCLUSIONS

In the last 15 years, the University of Illinois Willard Airport has witnessed the departure of four airlines and the cancellation of service on seven routes. Today, the Airport has just one carrier offering service, despite a catchment that serves more t han 390,000 people, and the State of Illinois’ flagship public university with an enrollment of more than 50,000 students. Current service at Willard Airport is not adequate for the catchment area, as proven by the Airport ’s new leakage study which shows almost 84% of catchment area passengers drive to other airports.

It would be comforting to assume that the air service decline at Willard Airport has “bottomed
out.” But one could have made the same assumption at any point in the last several years, and yet capacity continued to be cut, fares continued to rise, and passengers continued to fall. Now is the time for the University o f Illinois to take action to reverse the trend

– with the help of a Small Community Air Service Development
Grant.

The University and the Airport seek great potential for the success of new air service to an eastbound hub. The Airport’s True Market Study shows the best positioned hub for Champaign/Urbana travelers is the United operation at Washington Dulles. That hu b has the potential to access an average of 661 passengers per day each way to and from the Willard Airport catchment area at an average fare of $219 each way. Of those 661 current passengers per day each way that would flow over Dulles on United 82.5% cu rrently leak to airports other
than Willard

– an average of 543 leaked passengers per day each way that could be
recovered.

With fuel costs rising to near all

- time highs the Airport understands it will not be able to provide an incentive package for new s ervice on its own. While it has developed a strong set of matching funds, it must have the support of the Small Community Air Service Development Program for the project described in this application to come to fruition. The Airport believes this
federal investment in the Champaign/Urbana market will provide for better connectivity for east central Illinois travelers, lower fares throughout central Illinois, and increased access to markets for companies doing business in the region. 

## “ Current service at Willard Airport is not adequate for the catchment area, as proven by the Airport’s new leakage study... ”