### APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST -2014-0133

SUMMARY INFORMATION 1



### All applicants must submit this Summary Information schedule, as the application coversheet , a completed standard form SF424 and the full application proposal on www.grants.gov

. For your preparation convenience, this Summary Information schedule is located at http://www.dot.gov/policy/aviation- policy/small -community- rural

- air

- service/SCA SDP

A. P ROVIDE THE LEGAL SPO NSOR AND ITS DUN AND BRADSTREET 

### (D&B) DATA UNIVERSAL

NUMBERING SYSTEM 

### (DUNS) NUMBER 

### , INCLUDING 

### +4, EMPLOYEE IDENTIFICAT ION NUMBER


### (EIN) OR TAX ID



### . Legal Sponsor Name:

Name of Signatory Party for Legal Sponsor:

DUNS Number:

EIN/Tax ID:

B. L IST THE 

### N AME OF THE COMMUNITY OR CONSORTIUM OF COM MUNITIES APPLYING 

### :
1.____________________________________________________

2.____________________________________________________

3.____________________________________________________

4.____________________________________________________

C. P ROVIDE THE FULL AIRP ORT NAME AND 

### 3-L ETTER 

### IATA A IRPORT 

### C ODE FOR THE

APPLICANT 

### ( S 

### ) AIRPORT 

### ( S 

### ) (O NLY PROVIDE CODES FOR THE AIRPORT 

### ( S 

### ) THAT ARE ACTUALLY

SEEKING SERVICE 

### ).

1. 2

.
3

. 4

.

1 Note that the Summary Information does not count against the 20

- page limit of the SCASDP application.

### D OES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE ISSUED BY

THE 

### F EDERAL 

### A VIATION 

### A DMINISTRATION UNDER 

### 14 CFR P ART 

### 139? (I F 

### “N O 

### ”, P LEASE

EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR WHETHER AN

APPLICATION UNDER 

### P ART 

### 139 IS PENDING 

### .)

Yes No (explain)

______________________________________________________________________________

______________________________________________________________________________ D. L IST THE 

### 2- DIGIT CONGRESSIONAL DISTRICT CODE APPLIC ABLE TO THE SPONSORI NG

ORGANIZATION 

### , AND IF A CONSORTIUM 

### , TO EACH PARTICIPATING COMMUNITY



### . 1. 2

.
3

. 4

.

E. A PPLICANT 

### I NFORMATION 

### : (C HECK 

### A LL 

### T HAT 

### A PPLY 

### )

Not a Consortium Interstate Consortium Intrastate Consortium

Community currently receives subsidized Essential Air Service

Community (or Consortium member) previously received a Small Community Air Service Development Program Grant

If previous recipient: Provide year of grant(s) :_______________________________; and, the text of the grant agreement section(s) setting forth the scope of the grant project :

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

F. P UBLIC 

### /P RIVATE 

### P ARTNERSHIPS 

### : (L IST 

### O RGANIZATION NAMES 

### )

PUBLIC PRIVATE

1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

### G. P ROJECT 

### P ROPOSAL 

### :

1. G RANT 

### G OALS 

### : ( CHECK ALL THAT APPLY 

### )

Launch New Carrier Secure Additional Service Upgrade Aircraft

First Service New Route Service Restoration
Regional Service Surface Transportation Professional Services 2



### Other (explain below)

2. F INANCIAL 

### T OOLS 

### T O 

### B E 

### U SED 

### : ( CHECK ALL THAT APPLY 

### )

Marketing (including Advertising): promotion of the air service to the public

Start

- up Cost Offset : offsetting expenses to assist an air service provider in setting up a
new station and starting new service (for example, ticket counter reconfiguration)

R evenue Guarantee : an agreement with an air service provider setting forth a minimum
guaranteed profit margin, a portion of which is eligible for reimbursement by the
community

Recruitment of Air Carrier: air service development activities to recruit new air service,
including expenses for airport marketers to meet with air service providers to make the

case for new air service

Fee Waivers : waiver of airport fees, such as landing fees, to encourage new ai r service;
counted as in-kind contributions only
Ground Handling Fee : reimbursement of expenses for passenger, cabin, and ramp (below
wing) services provided by third party ground handlers

Travel Bank: travel pledges, or deposited monetary funds, from pa rticipating parties for
the purchas e of air travel on an air carrier , with defined procedures for the subsequent use
of the pledges or the deposited funds; counted as in-kind contributions only

2 “Professional Services” involve a community contracting with a firm to produce a product such as a marketing plan, study, air carrier proposal, etc.

### Other (explain below)

______________________________________________________________________________

______________________________________________________________________________

H. E XISTING 

### L ANDING 

### A IDS AT 

### L OCAL 

### A IRPORT 

### :

Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other (specify)

I. P ROJECT 

### C OST 

### : D O NOT ENTER TEXT IN SHADED AREA



### L INE 

### D ESCRIPTION 

### S UB 

### T OTAL 

### T OTAL 

### A MOUNT



### 1 Federal amount requested

2 State cash financial contribution

Local cash financial contribution

3a Airport cash funds

3b Non

- airport cash funds

3 Total local cash funds ( 3a + 3b )

4 TOTAL CASH FUNDING ( 1+2+3 )

In

- K ind contribution

5 a Airport In

- Kind contribution **

5b Other In

- Kind contribution **

5 TOTAL IN

- KIND CONTRIBUTION

( 5a + 5b )

6 TOTAL PROJECT COST ( 4+ 5 )

J. 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) and the value ($) of each.

### K. I S 

### T HIS 

### A PPLICATION 

### S UBJECT 

### T O 

### R EVIEW 

### B Y AN 

### A FFECTED 

### S T ATE 

### U NDER 

### E XECUTIVE



### O RDER 

### 12372 P ROCESS 

### ?

a. This application was made available to the State under the Executive Order 12372

Process for review on (date) _____________.

b. Program is subject to E.O. 12372, but has not been selected by the S tate for review.

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

L. I S 

### T HE 

### L EAD 

### A PPLICANT OR 

### A NY 

### C O 

### -A PPLICANTS 

### D ELINQUENT 

### O N 

### A NY 

### F EDERAL 

### D EBT 

### ?

(I F 

### “Y ES 

### ”, P ROVIDE 

### E XPLANATION 

### )

No Yes (explain)

______________________________________________________________________________

______________________________________________________________________________ APPLICATION CHECKLIST

I NCLUDED ? I TEM

For Immediate Action
Determine Eligibility

New Grants.gov users must r egister with www.grants.gov

. Existing Grants.gov users must verify ex isting www.grants.gov account has not expired and the Authorized Organization R epresenta tive (AOR) is current

. For Submission by 5:00 PM EDT on July 31, 2014
Communities with active SCASDP grants: notify DOT/X50 of intent to terminate existing grant in order to be eligible for selection in FY2014
Complete Application for Federal Domestic Assistance (SF424) via www.grants.gov

S ummary Information schedule complete and used as cover sheet (see Appendix B )

A pplication of up to 20 one - sided pages (excluding any letters 

### from the community or an air carrier showing support for the application ) , to include:

• A description of the community’ s air service needs or deficiencies

.

• A strategic plan for meeting those needs under the Small Community Program

.

• A detailed description of the funding necessary for implementation of the community's project.

• An explanation of how the proposed project differs from any previous projects for which the community received SCASDP funds (if applicable).

• Designation of a legal sponsor responsible for adminis tering the program

.

• A motion for confidential treatment (if applicable)

– see Appendix D below.

## Docket : DOT-OS T -2014-0133 Before t h e Office of t h e S e cret a ry of Tra n s p ort a tion
US Dep a r t ment

of Tra ns p ort a tion



# Proposal for
SMALL COMMUNITY AIR SERVICE DEVELOPMENT (SCASD) Grant

Vict or ia Regional Air por t Vict or ia, Texas

Ju ly 2014

prepared by:



# Cou nty of Victoria, TexasVictoria Regional Airport FY 2104 SCASD Grant Proposal

- i

- 7/31/2014 

### TABLE OF CONTENTS

Proposal for Small Community Air Service Development Grant Victoria Regional Airport (VCT)

Standard Form 424

SCASD Grant Proposal Application (Cover Sheet)

Introductory Letters of Support

Executive Summary

................................ ................................ ................................ ................................ ......................... ES

- 1

1. Regional Setting

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

2. Existing Air Service

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

3. Community Air Service Needs

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

4. Air Service Development Initiatives

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

5. Strategic Planning

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

6. Proposed Marketing Program

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

7. Proposed Program Budget

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

8. Sustained Marketing Efforts

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

9. Previous SCASD Grant

................................ ................................ ................................ ................................ ................ 1 0

10. Legal Sponsor

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

Appendix A Supporting DocumentationVictoria Regional Airport FY 2014 SCASD Grant Proposal

ES

- 1 7/31/2014 

### Executive Summary

Victoria Regional Airport (VCT) serves Victoria, Texas and six surrounding counties. The Airport has had commercial air service for more than 40 years. Victoria Regional Airport is part of the Department of Transportation’s Essential Air Service (EAS) Prog ram and depends upon available funding to maintain its vital connection to the national air transportation system. Although the local and regional economy has been rapidly expanding in the industrial and manufacturing sector s , passenger traffic has decline d significantly over the past 18 months. Despite the region’s economic growth, VCT has actually experienced a notably substantial decrease in month ly passenger traffic

.
Passenger activity levels have deteriorated significantly due to a poor quality of service compounded by factors including aircraft equipment (non

- pressurized, piston

- engine , single pilot operation ), baggage limitations, and all

- to

- frequent non

- weather flight cancellations. These circumstances have severely impacted the numbe r of passengers flying into and out of the Victoria Regional Airport (VCT), forcing over 9 7 % of the available passenger traffic to drive hours to and from other surrounding airports. The resulting drop in passenger enplanements puts VCT at risk of being el iminated from the Essential Air Service Program in its entirety if it stays on the current course.

The situation has forced the airport’s governance to make a radical shift in its approach to providing an adequate level of air service to meet the known existing demand of the region’s traveling public. Beginning in late 2014, the airport is chang ing air carriers and initiat ing higher quality regional air service, connecting Victoria to new hub destinations including Austin and Dallas

- Ft Worth. Taking adv antage of the Alternate Essential Air Service (AltEAS) program, Victoria will assume a greater hands

- on role toward controlling and managing air service, with funds directly received from DOT which can be used to incentivize the airport’s new air service p rovider. This change is expected to provide the platform for dramatically improving the utilization of air service both for the region’s travelers and for visitors alike.

Changing air carriers to provide a higher level of service in equipment, and destina tion(s) to better meet the demands of the traveling public is imperative

. The challenge now lies in how to get the message out to recapture lost market share to slash an incredibly high leakage rate of 9 7 %. Our urgent need is to get those passengers to us e VCT again.

To help re

- introduce travelers to the improved equipment, new schedules, and destinations available as a result of the shift to AltEAS, the County of Victoria is seeking $100,000 in federal funds from the Small Community Air Service (SCASD) P rogram to develop and implement a comprehensive marketing program

. If granted, the County intends to use the SCASD funds (in addition to $50,000 of
its own funds plus $15,000 in in

- kind services ) to conduct an aggressive and sustained television, radio, pr int

, and social media marketing campaign to recapture what was until recently, a growing number of passengers using the airport. The target audience will be focused on the business community, not just locally, but also toward industry and leisure travel re presentatives in who regularly visit the region.

The marketing program will be specifically designed to provide a clear, consistent

, and ubiquitous message to shift the negative perceptions away from the Airport’s former air service and toward
interest and a willingness to try the new service to new destinations . Successful implementation of the marketing program will be measured by a rapid and significant growth in enplanement levels, indicating that more travelers are utilizing the new service and are satisfied with the improvements in reliability, equipment, schedul e , and destination choices.Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 1

- 7/31/2014 1

. Regional Setting

Vi ctoria Regional Airport is a non

- primary commercial service airport located five miles northeast of the city of Victoria. The Airport has three runways, modern passenger terminal and an Air Traffic
Control Tower . The primary runway, Runway 12L/30R is 9,101 feet long and is enhanced by a precision instrument landing system (ILS). Runway 12R/30L is parallel to the primary runway and is 4,643 feet long and Runway 17/35 is 4,899 feet in length.

The region served by the Victoria Regional Airp ort consists of Victoria County and six adjacent counties as depicted in Figure A.

Figure A Regional Area

Table 1 presents recent population trends for the regional area.

Table 1 Regional P opulation Estimate

County 2010 2011 2012
Calhoun 21,357 21,442 21,609

DeWitt 20,096 20,255 20,465
Goliad 7,232 7,243 7,351 Jackson 14,074 14,032 14,255

Lavaca 19,267 19,347 19,468 Refugio 7,362 7,291 7,259

Victoria 86,846 87,545 89,269

TOTAL 176,234 177,155 179,676

Source: Source: U.S. Census BureauVictoria Regional Airport FY 2014 SCASD Grant Proposal

- 2

- 7/31/2014 As T able 1 indicates, Victoria County is the largest and fastest growing county (2 percent annually ) among the seven. The regional area is located roughly equidistant (1.5

- 2 hour drive) between Houston, Austin, San Antonio, and Corpus Christi. Figure B illustrates the relative location of Victoria to the surrounding major metropolitan areas. This locati on represents the situation where, as with other small communities, some levels of passenger leakage to the airports of these major cities can be expected.

Regional employment has also been increasing in recent years, driven by opportunities from expanding and new manufacturing firms. Table 2 lists the top 10 major manufacturing employers

in Victoria County , average employment levels

, and their representativ e industry sectors.

Table 2 Regional Manufacturing Employment

Company Employment Industry Sector The Inteplast Group 2,300 Plastic Products

Formosa Plastic 1,800 Petrochemical / Plastics

ALCOA 650 Aluminum / Alumina

INVISTA 600 Petrochemical

DOW

– Seadrift Operations 564 Petrochemical Caterpillar

– NAHEX
Victoria 510 Heavy Excavators Kaspar Wireworks 430 Metalworks/Plating

Mount Vernon Textiles 267 Textiles Berry Plastics 180 Plastics

Seadrift Coke 157 Needle Coke Fordyce Holdings Inc. 142 Sand & Gravel

INEOS Nitriles 125 Petrochemical

Source: Victoria Economic Development Corporation Figure B Competing AirportsVictoria Regional Airport FY 2014 SCASD Grant Proposal

- 3

- 7/31/2014 Among the se private sector employers, the largest are in the petrochemical industry. While economic indicators point toward growth for this strategically important sector, the community’s ability to maintain and nurture this segment of the economy will be based in no small part on the

avai lability of viable air service.

2. Existing Air Service

In July 2012, Sun Air Express, LLC dba Sun Air International was selected to provide Essential Air

Service at Victoria with an annual subsidy of $2,294,000. The EAS servi ce was to include four weekday and four weekend nonstop round trips for a total of 24 flights per week a week to George Bush Intercontinental Airport (IAH) for the 2012

- 2014 period. Sun Air specified the use of a nine

passenger, piston twin

- engine Piper Navajo aircraft operated with a single pilot

.

Sun Air initiated service in October 2012 shortly after the airport experienced a complete cessation of air service for the previous 90 days. Subsequent to Sun Air’s startup, monthly enplanements have averaged less than half of previous enplanements. This is partly the result of Sun

- Air’s use of an unpressurized piston engine aircraft to serve the VCT

- IAH market which may preclude many business travelers from flying into or out of the airport because of persona l preferences, corporate policy, or other restrictions. Table 3 illustrates the historical pattern of monthly enplanements for
the 2011

- 2014 period

.

Table 3

VCT Monthly Enplanements
2011

- 2014

Month 2011 2012 2013 2014 Jan 330 412 275 188 Colgan (Jan 2011

– Jun 2011)

Feb 293 428 206 145 Colgan (Jul 2011

– Jun 2012)

Mar 381 537 298 211 Sun Air (Oct 2012

– Jun 2014)
Apr 389 526 294 212 May 482 533 316 241 Jun 477 485 321 233 Jul 515

- 271 Aug 505

- 280 Sep 457

- 244

Oct 474 221 249

Nov 469 337 201

Dec 396 293 235

Total 5,168 3,772 3,190 1,230

Average 431 n/m 266 205

Notes:

a. Cessation of air service Jul

– Sep 2012 due to Pinnacle/Colgan bankruptcy b. Average monthly enplanements for 2012 based on six month s dataVictoria Regional Airport FY 2014 SCASD Grant Proposal

- 4

- 7/31/2014 As T able 3 illustrates, monthly enplanements since Sun Air initiated service have never approached the previous averages by Colgan. Currently, under these conditions, Victoria Regional Airport is at risk of being eliminated from the Essential Air Service program. Under t he rules of the EAS

program , VCT must maintain a minimum average of 10 enplanements per day . S ince Victoria Regional Airport became part of the EAS program, passenger enplanements have well exceeded 10 passengers per day for all of the years previous to 2013. Beginning in FY 2012, enplanements have periodically dropped below 10 and continue to remain close to the minimum requirement.

EAS proposals were solicited for the Jul y 2014

– Jun e 2016 period and two proposals were received. Sun Air proposed a continuation of its use of the single pilot, nine

- passenger piston twin

engine aircraft to serve VCT with flights to IAH. Another airline proposed the use of a single

- engine

, single pilot, nine

- seat turbine aircraft. Both proposals were ultimately rejected by the County, primarily due to the corporate travel restrictions. Sun Air’s poor flight completion performance and bagg age limitations , both which have contributed to the fa i ling business travel at VCT

, w as cited as rationale for the rejection of their proposal

.
In lieu of soliciting new EAS proposals, the County elected to request entrance into the Alternate
Essential Ai r Service program which allows them to partner directly with an air service provider an negotiate for the most suitable equipment, schedule, and destination(s) to most closely match
business travel demands.

3. Community Air Service Needs

The most recent air service study for Victoria Regional Airport was completed in 2012. The report identified the regional catchment area which has a population of 228,700 based on an area consisting of 37 zip codes.

The most disturbing finding of the report is that only three percent (3%) of the regional
catchment area travelers used VCT . Forty

- two percent diverted to IAH, 27 percent to AUS, 15 percent to SAT, 11 percent to HOU and two percent to CRP. This suggests that most all Victoria

based or

- bound business travel ers are forced to drive 1.5

- 2 hours each way through one of the surrounding airports.

The study also indicated that the true air service market for Victoria is estimated at over 300,000 annual origin and destination passengers or 413 passengers daily e ach way. Domestic travelers accounted for 258,000 (86 percent) of the total true market while international travelers made up the remaining 42,000 passengers (14 percent).

Among the true market travelers, 64 percent (165,900) passengers were destined to / fr om one of the top 25 origination/destination markets. Dallas (DAL) was the number one destination with five percent of passengers however, VCT retain s only one percent of passengers to Dallas (DAL). The next largest markets were: Newark (NYC), Denver, Phil adelphia, and Las Vegas with retention rates
of four, three, two, and one percent, respectively.Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 5

- 7/31/2014 The failure to capture more of the local air travel market demand can be attributed to one of two basic reasons; (1) lack of knowledge that local commercial ai r service is available or, (2) unwillingness or inability to use the local commercial air service. Visitors to the region may not be aware that there is local service or assume no air service is available. On the other hand, travelers
who know that there is available air service are not willing or through corporate policies, may not be able to use the service. Many corporations have policies that prohibit personnel travel on non

t u rbine aircraft, single pilot operations, and/or other such restrictions.

Ov er the past 18 months, VCT air service has been limited to non

- stop service to IAH, with four flights daily using a Piper PA

- 31 Navajo. The aircraft is flown with only one pilot on board and is configured for nine seats, one of which includes the right se at in the cockpit. The Navajo is an unpressurized twin

- engine piston

- driven aircraft and has limited baggage capacity, particularly if

one or more passengers check in with full

- size luggage.

With the drastic reduction in passenger enplanements since the introduction of the most recent EAS service at Victoria Regional Airport, it became readily apparent that an urgent need to make radical adjustments was necessary in order to preserve the abili ty for travelers to connect to the national air transportation system and attempt to rebuild the passenger traffic levels. This led to the County rejecting proposals for renewing the existing EAS services and requesting entry in the Alternate EAS program . The primary emphasis of the Alternate EAS for VCT was to bring back a

two

- pilot turbine twin

- engine aircraft with 19 seats and standard baggage capacity. Also, in order to recapture more of the latent air service market locally, non

- stop service to Hou ston would be abandoned in favor of commercial air service to the Dallas area with an intermediate stop in Austin.

This service is expected to begin in October and there will be a n immediate need to educate the catchment area of the availability and benefi ts of the new service. The proposed marketing program will accomplish this and will also serve to encourage previous travelers to return to VCT for their
air travel needs.

4. Air Service Development Initiatives

As demonstrated in Table 3 , scheduled air se rvice at Victoria Regional Airport has struggled in recent years. The performance of its Essential Air Service (EAS) has diminished to a point where it is in danger of being no longer sustainable regardless of the approved subsidy levels. The current

air service provider uses an unpressurized piston twin

- engine aircraft that has proved to be unpopular ( a nd in some cases unusable) with business travelers. On

- time performance

, single pilot operation, baggage limitations, and maintenance cancellations have r eached a level that has severely reduced confidence in the ability for travelers to make connections at IAH. Since October of 2012, average monthly passenger enplanements have dropped to represent only 53 % of previous monthly activity

.

In 2012, the bankruptcy of Pinnacle Airlines as parent of Colgan, resulted in Victoria without any air service for a period of three months during the peak summer season. The loss of momentum was compounded by the hurried rebid of EAS service during the hiatus and with only two respondents, the County accepted the only proposal that included the use of a twin

- engine aircraft.Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 6

- 7/31/2014 Unfortunately this led to an immediate and significant reduction in passenger enplanements and
traffic has not recovered.

The County solicited n ew proposals for the VCT

- IAH EAS service in May 2014 and again, only two bids were received, one by the incumbent provider with no material changes in its current service and another by the previous proposer with a single engine turbine aircraft. The Coun ty rejected both proposals and without any other air service providers willing to bid on VCT’s EAS, the County was led to seek entry into the Alternate EAS program. The Alternate EAS program appears to offer greater flexibility and leverage in negotiating for the air service the Sponsor needs by taking responsibility for the contracting directly with an air service provider. Funds for the local AltEAS program come from the DOT budget for EAS as a grant for two years. Any capacity, performance or
other air matters become the responsibility of the Sponsor. If local air service fails under the AltEAS program, the Sponsor can seek to re

- enter the traditional EAS program but without any assurance that EAS will resume in a timely manner.

The County has elected to accept that responsibility and after soliciting proposals has submitted a proposal to DOT by Public Charters, Inc., as its AltEAS air service provider. Public Charter proposes to use a pressurized twin

- engine turbine aircraft with two pilots and stand ard baggage capacity to provide direct service to Austin, the state capital with a continuing flight to the Dallas

– F t. Worth International Airport.

The service will consist of one round trip per day (excluding Sundays) between Victoria and Dallas

F t. Wo rth International Airport (DFW) with an intermediate stop on both the outbound and return legs at Austin (AUS). In addition, on the busier travel days of Monday, Wednesday, and Friday, the airline proposes to operate a second round trip between VCT and AUS . Under this schedule, the Airport would receive a total of 30 flight segments per week: 24 with the VCT

- AUS

- DFW

- AUS

- VCT routing and six with the VCT

- AUS

- VCT routing. Table 4 illustrates the proposed schedule for the
new AltEAS service.

As the table indicates, the air service will improve primarily in terms of connections to Austin
where Southwest Airlines has a major presence and on to DFW, a major American Airlines hub, the early morning schedule provides access to the morning bank of c onnecting flights. It is expected
that the return of a 19

- seat turbine aircraft to the Victoria market will serve as an acceptable aircraft to begin attracting business travelers back using the airport.

5. Strategic Planning

The goal of the SCASD propos al funding is to increase traveler usage of the Victoria Regional Airport. This will be accomplished by aggressively promoting the traveling public’s awareness of the Airport’s new approach to providing air service through the DOT’ s Alternate Essential A ir Service program. The AltEAS program provides the Airport with greater flexibility and control of the air service provider’s performance by directly negotiating for the desired equipment, schedule and city

- pair routes.Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 7

- 7/31/2014 Once the marketing program is in place, community support through local businesses and industry is expected to provide additional awareness of the availability of the air service schedule and

connections. With additional patronage, the airport’s operating revenues are expected to increase which can in turn be used to provide additional resources to enhance the air service.

Also, during the FY 2015

- 2016 period, the Airport will also be developing an update of its Master Plan which will include a strategic planning element to investigate and evaluate specific recommendations for enhancing air service among other issues.

6

. Proposed Marketing Campaign

The County is seeking the Small Community Air Service Development (SCASD) Grant in order to provide financial support for marketing and advertising to introduce and promote the new Alternate Essential Air Service program to the travelers “lost” over the past several years. It will take a concerted effort to educate corporate and business travelers about the availability of (1) aircraft that meet the requirements of large corporate business travelers, (2) aircraft large enough

to accommodate nearly all typical baggage sizes, (3) enhanced reliability, (4) service between more meaningful city

- pairs (VCT

- AUS

- DFW) and

, (5) better customer experience.

While marketing to the local air service catchment area will be important, innovative methods to reach business visitors will be employed to deliver the message that “you can get here from there”. The fundamental competition for the County’s AltEAS program is the value of time. The time and associated expenses for a business traveler (rent al car, fuel, parking, etc.) as they drive from neighboring large airports (IAH/HOU/AUS/SAT) to visit the area and by local business travelers’ drive to those airports will be key points in the campaign to convince business travelers there is a better way to VCT. Table 4 Proposed Air Service Schedule

Daily
Departs Arrives Time

VCT 6:00 AM AUS 6:35 AM 0.6

AUS 7:05 AM DFW 8:10 AM 1.1

DFW 12:30 PM AUS 1:35 PM 1.1

AUS 2:05 PM VCT 2:40 PM 0.6

Monday/Wednesday/Friday Only

Departs Arrives Time

VCT 3:30 PM AUS 4:05 PM 0.6

AUS 4:35 PM VCT 5:10 PM 0.6Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 8

- 7/31/2014 With the support of advertising and marketing provided by the SCASD grant, the County expects to see a rapid and significant increase in passenger levels. Ultimately, the County hopes that the increased enplanements from such a marketing and adver tising campaign will, in the future, reduce the reliance on the Essential Air Service (EAS) program subsidies for the VCT market. The long

term goal under a sustained marketing program will be to enhance use of the airport to a level where the community’s Essential Air Service funding is no longer required.

The County has plans for a wide

- ranging marketing campaign, to include radio and television media spots, billboard, and print advertising, travel and tourism events, along with special promotions,

conte sts, and other means to enhance awareness of the commercial air service at the Airport. The County is seeking $100,000 in federal funds, to be coupled with $50,000 in local funds and $15,000

in in

- kind services , to leverage the scope and range of the marke ting program. The marketing campaign will be conducted over a 12

- to

- 18 month period with another six months of residual effects of the program. The County expects that it will receive additional in

- kind donations from local media companies to support the p rogram as well, which could benefit the program even more.

Upon receipt of the grant, the County is prepared to engage a professional marketing firm to help develop a branded concept for the new service. This will be followed by with the roll

- out of a

comp rehensive marketing and advertising placement plan, which will include strategic media buys on local and regional radio and television stations. In addition, coordinated buys with local newspapers, magazines, and other print media will focus on educating t he traveling public about
the new AltEAS service schedules and destinations.

While the marketing campaign will be focused on attracting back “lost” patronage from the immediate business and industrial community of Victoria, it will also have an outreach c omponent that targets frequent visitors calling on the region’s businesses. This will take the cooperation of corporate travel planners to help identify the opportunities, needs, and specific issues that may otherwise impede the use of VCT’s commercial ser vice.

Other types of marketing efforts anticipated using the SCASD grant funds will include:

- Links to the carrier’s and airport’s website for booking flights from other local and regional websites (click

- throughs)

- Billboards along common routes targe ting local and visitor passengers using the larger airports

- Social media presence with passive and push messages (Email, Facebook, Twitter, etc.)

- Passenger demographic and surveys with participation incentives

- Branded merchandise, giveaways, and other marketing tools.

The centerpiece of marketing campaign will be promote the flexibility of the Alternate Essential Air Service program and the opportunities it provides to improve customer satisfaction from several facets. It is anticipated that this will be manifested primarily by numerous testimonials, good news stories and the County’s ability to demonstrate to the traveling public that its airline service is dependable, affordable and “gets you where you want to go, when you want to go”.Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 9

- 7/31/2014 7. Propo sed Project Budget

As stated earlier, the County is seeking $100,000 in federal funds which will be leveraged with $50,000 in local funds and $ 1 5 ,000 of in

- kind services to develop and implement an aggr essive marketing campaign to be conducted over a 12

- to

- 18 month period. Table 5 presents the proposed budget for these funds. T he specific budget amounts are subject to change based upon m edia buy discounts and packages available at any given time and/or through the marketing firm.

The County has committed the $50,000 in local funds for the grant which will be supplemented
with the $5,000 pledged as in

- kind services donated by the Victoria Chamber of Commerce (see attached letter of support)

. It is expected that local television, radio

, and print media outlets will
contribute a minimum of an additional $10,000 as they have done in the past, to support the marketing program . Other in

- kind services may become available for the marketing program once the underway. Any unanticipated or additional expenses will be covered by the County through the Airpo rt ’s regular operating revenues or from County funds.

Table 5 Proposed Project Budget

Program Expenses
Item Cost
1. SCASD Administration 10,000 2. Marketing Firm/Specialist 4 0,000 3. Media Buys a. Radio/TV 4 5 ,000 b. Print (Ads, Brochures, Direct Mail) 1 7 ,000 c. Outdoor Advertising (4 @ 500/mo for 12 mo) 24,000
d. Web Presence 5 ,000
e. Social Media 3,000
f. Promotional Items 6,000 4. Passenger Surveys & Promotions 5,000 5. Corporate Outreach 1 0 ,000

Total Marketing Program Costs 1 6 5 ,000

Program Revenue Sources

Resource Amount Proposed SCASD Grant 100,000
Local Contribution 50,000

In

- Kind Services 1 5 ,000
Total Funds & Resources 1 6 5 ,000

Notes: Pro forma budget subject to negotiated media rates and other factorsVictoria Regional Airport FY 2014 SCASD Grant Proposal

- 10

- 7/31/2014 8. Sustained Marketing Efforts

Historically proven by previous enplanement levels, the demand for the Airport’s air service exists. However, over the past few years, travelers have lost confidence in the ability of the air service to consistently and reliably complete flights that conn ect Victoria to the broader air transportation
network.

Unfortunately, it is the business traveler who can afford the fare but cannot afford the risk of a missed connection, either to get to Victoria or their ultimate destination. The lack of reliable ai r service only serves to force these travelers to the road to ensure their connection.

The development of a comprehensive marketing program will serve as the foundation of a sustained marketing presence for the Airport. It is expected that the momentum es tablished by successfully recapturing lost passenger traffic will also provide opportunities to reach new travelers. To regain travelers’ confidence will take time, much longer than the anticipated 12

- 18 month period of the proposed marketing program. The key to the Airport’s marketing program success will be a consistent and sustained message which will be developed as a result of SCASD project. Much of the digital material and web presence will continue to be effective after the program is completed. The Airport will also dedicate marketing expenses from its operating budget in future years which will also utilize materials that emerge from the project.

The airport will maintain the practice of continuous, periodic passenger surveys, social media, website development

, local visits

, and other interaction among community groups and large employers to constantly monitor demand and make recommendations to adjust the service accordingly. These efforts shall continue indefinitely as they provide critical feedback from the end

users for VCT to use as a tool to measure the overall (and specific) effectiveness of the air service. These constant, periodic measurements will allow the service to continuously update the operation
to meet demand.

9. Previous S CASD Grant

The County applied for and received a very modest $20,000 grant under the FY 2003 Small Community Air Service Program. From this grant, $19,416 was used for marketing and promoting existing commercial air service. The project was successfully completed in 2005 and the marketing program was instrumental in increasing passenger counts throughout 2004.

For the FY 2006 SCASD program, the County applied for a $300,000 grant with $50,000 in

dedi cated local funds to be used as a financial backstop for inducing Continental Connection to provide an additional daily flight for the VCT

- IAH market. The proposal included a focused marketing program to bring community awareness to the new scheduled flig ht. The County was not selected for a grant award. There have been no subsequent grant proposals from the County
before th e current FY 2014 submittal

.Victoria Regional Airport FY 2014 SCASD Grant Proposal

- 11

- 7/31/2014 This proposed project differs from the previous FY 2003 grant in several areas. Unlike the 2003
grant, t he proposed FY 2014 grant is focused on educating the local traveling public regarding a

new approach to providing new air service to the region

.
The FY 2014 project focuses attention to ward a radical shift away from what local air service has
become and from what the community has been accustomed to in recent years. The new air service brings back a larger 19

- seat turbine aircraft (with a crew of two) and adequate baggage capacity. The proposed project will also introduce two new destinations (Austin and Dallas Fort Worth).
These markets have not been served from Victoria over the past 20 years.

Finally, t he scale of the FY 2014 project is much larger in scope and detail (the orig inal FY 2003 project only expended $19,400) and incorporates the use of social media and other means to
communicate the mess a ge which w ere not as popular or accepted 10 + years ago

.

10. Legal Sponsor

The legal sponsor of the SCASD grant is the County of Victoria , Texas as owner and operator of the Victoria Regional Airport. The designated legal representative of the Airport is:

Donald R. Pozzi, County Judge County of Victoria, Texas 115 N. Bridge St

. Victoria, Texas 77901

(361) 575

- 4558

# Appendix A

Support Documentation700 N Main, Suite 104 Victoria, Texas 77901 361

- 485

- 3190 vedc@victoriaedc.com April 29 , 2014

Congressman Blake Farenthold Congressional District 27 , Texas 5606 N Navarro, Suite 203 Victoria, Texas 77904

Dear Congressman Farenthold :

Please accept this lette r in support of the Victoria Regional Airport and Essential Air Service for

Vi ctoria and our surrounding communities.

The Victoria Economic Development Corporation (VEDC) is the contracted marketing agent for the City of Victoria and Victoria County. We work to recruit new industry to our community for the purpose of creating prima ry jobs and expanding the tax base; and to maintain existing businesses and assist them with expansions. Prospecti ve companies diligently screen potential
communities for the right location for their business by scrutinizing the assets available to them.

T he clients we attract are highly dependent on the availability of local air transportation for their operations. We have been successful in the past to present a strong business case for Victoria resulting in the decision of Caterpillar Inc. to locate thei r North American Hydraulic Excavator facility in our community. The availability of commercial ai r service was an important factor in
their decision to locate in Victoria.

The business climate in Texas is the strongest in the nation, resulting in numerous r equests for information from global companies seeking to locate in the south. Victoria is in direct competition with other communities in the state and nation for these projects. These companies are requiring close proximity to airports as criteria for com munity consideration. Two hours from a commercial airport is too far . It is imperative for Victoria to maintain the Victoria Regional Airport and commercial air service for advancing and maintaining local economic development

. The loss of this asset would place our community at a competitive disadvantage to attract new industry or grow existing industry. We would be precluded from submitting for industrial projects with air service as criteria; resulting in the potential loss of jobs and revenue for our

com munity.

I appreciate the opportunity to offer my comments on this important issue for your consideration, and ask you to help us strengthen the viability of the Victoria Regional Airport by supporting the Essential Air Service program. Please contact me any time if I may be of further
assistance.

Sincerely,

D. Dale Fowler, CEcD
President 2014 Board of Directors

Thomas A. Schmidt

Chairman

Jeff Lyon

Vice

- Chairman

Dan Easton

Treasurer

Dennis Patillo

Immediate Past Chairman

Charmelle Garrett

Executive Board

Bobby Jacob

Executive Board

William R. Blanchard

Tom Butler

Elton Calhoun

Cally Fromme

Russell Marshall

David McLarry

Jon New

Judge Donal d R. Pozzi

Janis Scott

Stephen ThamesVict oria Officials C om m it F un din g t o Save Airport

by M el issa C ro we T h e Vict o ria Advo cat e J ul y 2 9 , 2 0 1 4

V i c tori a C ou nty offi c ials are looki ng at a $ 150,000 marketi ng c am pai gn t o i m prove t h e repu tati on at V i c tori a Regi onal Ai rport.

S i n c e S u n Ai r Interna t i o n a l s t arted flyi ng ou t of V i c t ori a i n Oc tober 2012, a c ons tant s tri ng of

m ai n tenanc e i s s u es , c anc eled fli gh ts
, baggage i s s u es and ti c keti ng problem s h ave doom ed th e ai rport.

U nles s th e nu m b er of departi ng pas s engers i nc reas es , th e ai rport c ou ld fac e los ing federal fu ndi ng, a

c ons equ enc e th at wou ld effec ti vely end c om m erc i al ai r s ervi c e i n V i c tori a.

W i th a new c arri er anti c i pated to s t art i n Oc t ober, V i c t ori a C ou nty c om m i ss i oners voted Monday to

c om m i t $ 50,000 to Ai rport Manager Jas on Mi lews ki 's propos ed c am pai gn to s h ow off th e c h anges

.

As word s preads of th e new c arri er, travelers are already reth i nki ng plans to fly ou t of V i ctori a.

D es pi t e Brad Bi s h op's bad experi enc e wi th S u n Ai r two s u mm ers ago, h e sai d h e wou ld b e wi lli ng to gi ve a new c arri er a try.

After flyi ng i nto Hou s ton from Mexi c o, h i s fli gh t bac k to V ic tori a was c anc eled. He ended u p h avi ng to take a two- h ou r c ab ri de bac k h om e.

"I'm s u re I'll end u p flyi n g ou t of V i c t ori a agai n," Bi sh op, 22, of V ic tori a, s ai d.

Mi lews ki wi ll s ubm i t an appli c a t i on W ednes day for a $ 100,000 federal grant h e h opes wi ll c over
two- t h irds th e c os t of th e m arketi ng plan ai m ed at prom oti ng th e i m proved servi c e a new c arri er i s bri n gi ng to V i c tori a.

"W e need to do a m as si v e m arketi ng c am pai gn to let ou r pu bli c know th ere are s i g ni fi c ant ch anges at th e ai rport," Mi lews ki s ai d.

T h e n ew c arri er, P u b l i c C h arters
, wi ll s tart offeri ng s ervi ce Oc t. 1 to Au sti n and D allas

- two of th e b u si e st a i r p o r t s i n a f

i v e -s tate regi on, inc lu di ng A rkans as , Lou i s i ana, N ew Me x i co , O k l a h o ma a n d Te x a s.

S i n c e Pi nnac le Ai rli nes Corp., wh i c h operated C onti n ental and later U ni t ed fli g h ts from V i c tori a , d e c lared b ankru ptc y in Apri l 2012, V i c tori a Regi onal has s tru ggled to li ve u p t o i ts federa l c o n t r a c t wi th th e Es s enti al A i r S ervi c e program

. T h e program h elps s m aller c om m u ni ti es m ai ntai n an ai rli ne.

" I d o n ' t want to beat a dead h ors e," Mi lews ki s ai d. "W i th ou t any qu es t i on, i t 's c lear th at th e level o f

s ervi ce we're offeri ng i s not m eeti ng th e dem and."

T o c onti nu e bei ng i n th e Es s enti al Ai r S ervi c e program , th e ai rport n eeds an average of 10 pas s engers a day and s u bs i di es of no m ore th an $ 200 per pas s enger.

W h i le ai rports ac ros s th e s ou t h wes t regi on s aw an average 2 perc ent i n creas e i n pas s engers , V i c tori a

s aw a 45 perc ent drop from 2012 to 2013.

V i c tori a i s s ec ond- to- las t i n pas s enger nu m bers for th e 2013 c alendar year and i s above th e s u bs i dy

c ap, Mi lews ki s ai d."If ou r dec li ne i n pas s enger c ou nts were reflec ti ve of ou r loc al or regi onal ec onom y, I wou ldn't be h ere

today t r y i n g t o p u r s u e th i s ," Mi lews ki s ai d. "More and m ore people are flyi ng, and th e ec onom y i s getti ng better i n ou r regi on."

C ou nty Com m i s s i oner D anny Garc i a s ai d i t's u nc lear i f th e m arketi ng c am pai gn f o r t h e n ew c arri er wi ll

s h ow a retu rn on i nves tm ent.

"It's really a s h ot in th e dark for u s ," h e s ai d. "Bu t i f V i c t ori a Cou nty i s goi ng to c onti nu e to grow

... we h ave to provi de th at type of s ervi c e, wh ic h i s a good ai rli ne."

T h e S mall C om m u n i t y A i r S ervi c e D evelopm ent Grant h as $ 7 m i lli on i n i ts bu dget t h i s year and typi cally fu nds abou t 10 projec ts , Mi lews ki s ai d.

"It's s tri c tly u s ed for m arketi ng, wh i c h i s exac tly wh at we need i t for," Mi lews ki s ai d.

C ou nty Ju dge D on Pozzi s ai d h e s upports th e ai rport m anager's rec om m endati on.

W i th ou t th e grant, th e ai rport wou ld s ti ll need th e m arketi ng c am pai gn and li kely $ 50,000 from th e

c ou n ty, Pozzi s ai d.

C om m i s s i oner K evi n Janak applau ded Mi lews ki 's efforts

.

"W e need to s pend at leas t th at am ou nt of m oney to i nform th e pu bli c th at th i s i s a new look," Janak

s ai d.

If pas s e n g e r c ou nts don't i m prove, th e next move i s to seek a wai ver from th e D epartm ent of
T rans portati on, Mi lews ki s ai d.

C om m i s s i oner Gary Bu rns s ai d th e ai rport needs to m ake a dras t i c c h ange.

Bu rns propos ed m aki ng th e c om mi tm ent as a loan to th e ai rport, wh i c h wi ll be repai d to th e c ou nty.

C om m i s s i oners di d not di s cu s s a ti m eli ne for repaym ent.

Mi lews ki s ai d i f th e grant i s approved, h e wi ll look at h i ri ng a m arketi ng fi rm to take th e lead.

"W e wi ll los e all ai r s ervi ce c om pletely i f we don't do s om eth i n g," Mi lews k i s ai d, later addi ng, "T h i s i s

ou r bes t s h ot."

Sour c e: http :

//m.v ic tor ia a dv oc a te.c o m/news/2014/jul/28/mc _c o mmc our t_072914_245319/