Docket OST

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______________________________________ Jackson

- Evers International Airport 1 

# Jackson

- Evers International Airport

Grant Application Under the 

# Small Community Air Service Development Program

Docket OST

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- 0124 DUNS # 784425738Docket OST

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______________________________________ Jackson

- Evers International Airport 2 

# S ummary of Proposal

The Jackson

- Evers International Airport (JAN) herein respect fully submits its application for a grant under the 2010 Small Community Air Service Development Grant Program.

The objective of this application is a grant in the amount of $ 2 50,000, to be matched with $50,000 in local funding to implement an aggressive Air S ervice R estructuring & Marketing P lan to increase ridership generated within the 14

- coun ty region served by the airport, as well as increasing inbound traffic, which today represents over 47% of all passengers using the Jackson

- Evers International Air port.

In the current sluggish economy, air travel demand is not growing. The result is that ridership has tapered off, which can result in airlines reducing service and capacity at Jackson

- Evers. The Airport and it community partners understand that maint aining existing air service access is as important as efforts to recruit new service.

The entire airline industry is restructuring. It is now critical that airports such as Jackson

- Evers International take steps to assure that local air service fits the new global airline environment.

To that end, the Airport has developed an aggressive progr a m that is aimed at a total analysis of the current air service at JAN, and, working with the community and incumbent carriers, identify actions where service can be streamlined, improved, and enhanced. It is more than just a marketing campaign. Instead, it is a trend

- setting reassessment of how Jackson will identify how it will fit into the global air service picture, and how it can work with airlines to enhance the value of Jackson to their route systems.

The Airport is joined in this application with the Greater Jackson Alliance, which is a consortium of 12 key civic organizations, including the City of Jackson and the State of Mississippi.Docket OST

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______________________________________ Jackson

- Evers International Airport 3 JAN believes that the use of funds outlined herein would have a significant beneficial economic impact on the region and, therefore, the community believes that it is a strong candidate for the Small Community Air Service Development Program.

Respectfully submitted,

Mr. Dirk Vanderleest, Executive Director Jackson

- Evers International Airport 100 International Dr. Suite 300 Jackson, MS 39298 (601) 664

- 3500Docket OST

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______________________________________ Jackson

- Evers International Airport 4 

# Contents of Proposal

SUMMARY OF PROPOSAL 2

I. OUTLINE OF APPLICATION 5

Local Traffic Shifts Illuminate The Need For This Project 5

Repositioning Jackson To Assure Maximum Air Service Access 6

Air Service Restructuring At Jackson De mands New Perspectives 7

Solution: Air Service Restructuring & Marketing Plan 7



### THE AIR SERVICE PICT URE AT JACKSON 9

A Population of Over 625,000 Depend On Jackson

- Evers 9

Enhanced Air Service Access Is Vital To The Regional Economy 9

Air Service Access 10

Capacity: Cuts Have Caused Declines In Passenger Traffic 11

Passenger Declines Match Capacity Cuts 12

Fares

– Not The Issue. It’s Lost Demand That’s The Problem 13

It’s Not “Leakage”

– It’s “Deterred Demand” 14



### PROJECT ACCOMPLISHME NT 15

Air Service Restructuring & Marketing Plan 15

Stakeholders & Partnerships 15

Project Deliverables 16

Use of Funds 18

Past Air S ervice Development Activities 19Docket OST

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______________________________________ Jackson

- Evers International Airport 5 

# I. Outline of Application

Jackson

- Evers International Airport has seen passenger traffic decline for the past several years. The local economy is so und, yet airlines have consistently cut capacity, with a resulting loss in enplanements.

The Airport believes that the reasons for these declines are rooted in factors not directly related to traffic demand, per se . Instead, they are due to shifts in the local and global economies that have created new demand patterns. There is a need to realign local air service to take advantage of these shifts.

To accomplish this, the Airport and Community must clearly identify where these shifts in air service demand have taken place, quantify them, and assist incumbent (and, hopefully new) airlines in adjusting schedules, routes, capacity, hub

- access and other factors to take advantage of them.

This will be accompanied by aggressive marketing efforts in cooperation with the incumbent carriers to assure that consumers and businesses in Jackson and elsewhere in the world understand the new air service structure that accesses the region. The Airport is designing this project as an Air Service Restructuring & Marketing P lan.

To be sure, the project that will be funded by this grant is unique, but it tackles a challenge that other communities will also need to address in the future: assisting airlines with hard local data to allow them to realign air service patterns to c apture the new revenue flows generated by a new global economic and business environment.



### Local Traffic Shifts Illuminate The Need For This Project

The imperatives for the community and of the A irport in filing this application are as follows:

1. Constrict ions in the airline industry in general

- and at specific carrier incumbents at Jackson

– have manifested in a dangerous downward spiral in both departures and seat capacity. This has resulted in a corresponding decline in enplanements at Jackson

- Evers Int ernational.

2. The two largest carriers at JAN, Delta and Southwest, have both materially reduced capacity over the past three years. More disturbingly, in the past two months, both have announced intentions to cut service further.Docket OST

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- Evers International Airport 6 3. The decline in passenger traffic over the past five years has been primarily due to reductions in air service capacity . Based on current forecasts for 2010, the decline is almost one

- for

- one: the decline in enplanements matches the decline in seats offered.

4. The decline is not due to leakage to other cities. There are simply no other airports within reasonable driving distance where service levels could account for 300,000 annual lost O&D passengers in 2010 v 2005. The reason is that demand is being deterred due to a need to re

- adj ust air service to accommodate the new traffic demands created by the emerging global economy.

5. The challenge is clear: the levels and structure of air service at JAN have not adjusted to the new economic connectivity that Mississippi must have to the nati on and the globe. This represents an opportunity for new traffic for incumbent carriers as well as new entrants.

6. Working jointly with the community and the airlines, the Airport will ascertain service shifts that are necessary to better provide access to JAN, and increase airline traffic.



### Repositioning Jackson To Assure Maximum Air Service Access

These are not one

- off events that are specific to Jackson

- Evers International Airport. They are part of the outcome of the evolution of the airline industry’s basic business models. The airline industry is experiencing a business system that is shifting materially from the past.

 Mergers of mega US carrier systems are being accompanied by a shift in consumer loyalty toward airline alliances
, rather than the bran ds of the individual members.

 Regional jets are being retired and not replaced, changing the traffic and revenue requirements for service.

 International connectivity is increasingly important to communities such as JAN. Today approximately one in four U S passenger enplanements are directly or indirectly the result of travel decisions made outside of the United States. 1

1 This includes the direct international boardings plus those that involve international travelers in getting to the gateway hub, and the additional flights taken within the country by foreign visitors. Analyses by Boyd group International indicate that by 2014, almost 30% of US airline traffic will be internationally

- driven.Docket OST

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- Evers International Airport 7  The costs of air service, and hence the fares paid by passengers, are going up. This will affect how airlines make market decisions, an d the types of revenue streams they will seek to access at cities such as Jackson.



### Air Service Restructuring At Jackson Demand s New Perspectives

The situation that is unfolding at Jackson

- Evers International is the clear result of these changes in the ai rline industry.

 In fact, passenger traffic at JAN is now trending to be more than 12 % down in 2010 compared to 2009

.

 Airlines have substantially reduced capacity

– between 2005 and 2010, the seats scheduled at JAN are down 14%

- and can be expected to go lower by the end of the year.

These trends run counter to the fact that Jackson’s economy remains vibrant. The core reason for traffic declines is that the airline industry and the business dynamics that drive it have changed.

The clear need is to r eview the current air service at JAN and ascertain where changes may be needed to adjust to both the new airline industry and the opportunities that the global economy represents for additional service at Jackson

- Evers International.



### Solution: Air Service Restructuring & Marketing Plan

Amid all these rapidly

- accelerating trends, the basic structure of air service at JAN (as well as other cities its size) has not changed.

Examples can be cited. Today, the industrial base of the state and of Jackson is

ve ry different than 15 years ago. Yet the basic air service patterns at JAN are the same. There are new demands for access to Southern California, for example, due to growth in the aerospace industry in Mississippi. There is increased demand for new and smoo ther access to key points in Asia, due to investment in the state from that region of the world.

The point is that a complete review of how current air service patterns are meeting or not meeting these new travel needs will identify changes that can
grow passenger traffic at Jackson.

This is what the Airport is describing as an Air Service Restructuring & Marketing Plan . The current and forecast core drivers of air travel demand inDocket OST

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- Evers International Airport 8 the region need to be clearly re

- defined and identified in regard to the opportunities they represent to incumbent (and new) airlines in the Jackson market.

Next, the Airport and incumbent carriers will work together to make the schedule, route, and hub

- access shifts necessary. Finally, an aggressive marketing program will be crafted to assure that both the region and the globe can take advantage of the Jackson economy.Docket OST

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- Evers International Airport 9 

# The Air Service Picture At Jackson

A Population of Over 625,000 Depend On Jackson

- Evers

Approximately 625,000 residents live within a 60 minute drive of Jackson International Airport. This region includes most of Central Mississippi. Interstates 20 and 55, the two major interstate highways in the state, intersect within five miles of the airport.



### Enhanced Air Service Access Is Vital To The Regional Ec onomy

Jackson is the capital of the State of Mississippi and is the economic and governmental center of the state. The state government is a major employer in the region. However, as with other points in the South, high

- tech and heavy industry are both g rowing.Docket OST

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- Evers International Airport 10 

### Air Service A cc ess

Jackson

- Evers International is currently served by five major airline systems, with access to nine connecting hub gateways, plus nonstops to Orlando and Washington/Reagan. 2

While this appears to be strong air service access, there are a number of clouds on the horizon:

 Delta has indicated it may delete the nonstop s ervice to DCA due to low
revenues;

 Southwest ’ s fall schedule represents a further reduction in capacity. In December, they will offer 6.4% fewer seats than the current JAN

s chedule.

 Year to date data indicate that passenger traffic may decline by almost 1 2 % in 2010

The Airport believes that these reductions and the corresponding decline in enplanements are due to shifts i n the industry, and are clearly not the result of any fundamental weakness in local traffic demand. This project will identify

2 Th ese include HOU, MDW, and BWI

– all operated by Southwest. While that carrier does not fully bank its flights they are increasingly moving toward more connecting activity at those airports.Docket OST

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______________________________________ Jackson

- Evers International Airport 11 revisions in the service patterns that will engender additional inbound and outbound ridership.



### Capacity: Cuts Have Caused Decli nes In Passenger Traffic

Over the last five years, there has been a 14% reduction in seats at JAN, which has contributed to the decline in enplanements.

During this period, the Airport has lost access to two connecting hubs. One is the Delta operation at DFW, and the other is the Delta hub at Cincinnati/Northern Kentucky. These losses were the result of Delta eliminating its DFW hub, and severely reducing the size of the CVG operation.

These, plus major reductions in capacity by Southwest, have elimin ated over 300,000 seats, combining inbound and outbound flight reductions.Docket OST

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- Evers International Airport 12 

### Passenger Declines Match Capacity Cuts

It is noted that passenger traffic year after year has followed the decline in airline seats offered.

Note that between 2005 and 2009, available departure seats have declined by at least 155,000 (not including the impending reductions by Southwest), while 2010 enplanements (based on current forecasts) will decline by 150,000

– almost exactly matching the reduced seat availability.

This a gain illuminates the fact that there are untapped passenger revenue opportunities at Jackson for incumbent carriers. The need, however, is to determine where, in the new business environment, the Airport can assist these carriers in adjusting current servi ce patterns to re

- capture this demand.Docket OST

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- Evers International Airport 13 

### Fares

– Not The Issue. It’s Lost Demand That’s The Problem

Average fares at Jackson are actually lower than at several other communities in the region. This is due to the presence of Southwest in the market.

But, even when fares are low, traffic at JAN continues to decline.

Again, this is a clear demonstration that the loss in passengers is not due to factors inherent in the community or region.Docket OST

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- Evers International Airport 14 

### It’s Not “Leakage”

– It’s “ Deterred Demand ”

Because of the geographic location of JAN and the presence of Southwest Airlines in the market, it is clear that this reduction in passengers is not “leakage” to other airports

– there are none within reasonable driving distance that could accommodate such leakage.

Instead, this loss is due to dampened demand, both inbound and outbound, i.e., consumers simply deterred from traveling. This affects both Jackson and the Airport negatively. It is obvious that major changes in the global, national, and Mississippi econo mies are not in alignment with the current air service.

This is an exciting opportunity to rebuild this lost traffic base. This project will review all aspects of the passenger flows and connectivity that are represented by the current service levels, and outline actions that carriers and the Airport can pursue to again accommodate this latent demand.Docket OST

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______________________________________ Jackson

- Evers International Airport 15 

# Project Accomplishment

Air Service Restructuring & Marketing Plan

In this project, the grant funds will be applied to achieve the following:

1. A complete analysis of the current air service access at Jackson. The key inbound markets

– both domestic and international

– will be identified, including those that are expected to expand in the future. These would entail issues such as the needs of key industries in the region, the range of business connections domestically and internationally, and reviews of flight timing.

2. A review of options to address opportunities and challenges that are illuminated in the analysis. The Airport will work closely with all airl ine partners and particularly Delta and Southwest to identify where shifts in service patterns, flight timing, aircraft gauge, and hub access can capitalize on market opportunities for the carriers.

3. A focused marketing program aimed at not only local busi nesses, but also

na tional and global businesses with ties to industries in the Jackson area.

4. A program to monitor improvements in air service traffic levels at Jackson as a result of the project.



### Stakeholders & Partnerships

The Airport will build this p rogram with structured input from the following constituencies:

 Regional: The local consumer s and businesses in the Jackson air traffic catchment area;

 National & International: Targeted companies and firms in other parts of the nation who do business in the Jackson area. This includes entities such telecommunications firms, medical & healthcare companies, and first, second, and third

- tier suppliers to the Nissan factory in Canton, MS.

 Incumbent Airlines: In particular, Delta and Southwest, are enthusias tically in support of this application, and intend to work directly with the Airport in identifying new and emerging traffic flows, both locally and nationally, for JacksonDocket OST

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- Evers International Airport 16 

### Project Deliverables

The Airport believes that this Air Service Restructuring & Ma rketing Plan will be an example for other communities to consider. Over a 24

- month period, the Plan is intended to deliver a range of deliverables. The cost figures are not

- to

- exceed estimates, but there may be some shifting of marketing dollars between
ap plications depending on market changes.

Air Service Restructuring Review

This will be accomplished with the cooperation of all stakeholders, and will be the product of extensive regional research, focus meetings, and data collection from businesses and i ndustries in the region.

The review will provide a clear outline of where air service is not aligned with current and emerging demand (both inbound and outbound) that is being generated in the Jackson region.

A clear set of air service restructuring obje ctives will be identified and matrixed. Working with incumbe nt carriers, the Airport will review where adjustment to current service will take advantage of the unmet demand. In particular, the access of JAN to the three emerging global airline alliances wi ll be quantified and options to strengthen them will be illuminated. 3

This project will also provide the Airport with powerful data to use in recruiting new airline service.

The Review will be the foundation for the subsequent marketing efforts, and will allow the Airport and Community to laser

- focus such activities.

Estimated Program Cost: $ 6 5,000

Multi

- Dimensional Marketing Campaign

The data will be used to develop four separate but related marketing programs.

Regional. A consistent marketing messag e in the Jackson service are will be developed and implemented via newspaper, electronic media, the Internet, and by direct and consistent contact with key businesses and industries in the region. The intent is to make Jackson

- Evers International a high

- pr ofile part of the regional infrastructure, and to assure complete

3 The three Alliances are one world, Star, and SkyTeam. These are e volving into the airline “brand” and the levels of access to them will be very important to Jackson.Docket OST

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- Evers International Airport 17 information regarding improvements and changes in air service access to the rest of the world.

A budget for this program will be developed including all media spending, and it is envisioned that it would be “steady

- state” expenditures over the 24

- month period, with weekly and monthly insertio ns at an average cost of $2,600 per month.

Estimated Program Not

- To

- Exceed Cost: $ 62,400

National. Key business targets that have communities of trave l generation with industries in the Jackson region will be identified. One example of this is Nissan, which has major offices and facilities both in the Jackson region as well as in New York, the Los Angeles Basin, and Nashville. Direct liaison with the de cision

- makers at these facilities can both inform about travel options to and from JAN. as well as generate new travel as well.

As envisioned, this spending would be specific and targeted, estimated at $ 4,750 per quarter over the 24

- month period

Esti mate d Program Cost: $ 3 8,000

International. This is a focus that is often overlooked by mid

- size communities

. However, contact and liaison with key industries in the EU and Asia which have business connections at Jackson can induce additional travel.

The cost will depend upon the outcome of the Restructuring study. However, the Airport estimates an allocation of $ 30,000 over the 24

- month period.

Airline. Separate from the air service development activities undertaken by Jackson, outright marketing to and thro ugh incumbent carriers can produce additional travel demand. Advertising in the in

- flight magazines, for example, not only assist the airline in selling Jackson, but also inform passengers (literally around the world on airline flights) about Jackson.

Thi s will depend upon ad rates and other factors. The estimate is for $2,750 per month for the final 18 months of the program. Total: $49,500.Docket OST

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- Evers International Airport 18 Airline Liaison

Over the 24

- month period, there will be a need to meet with airlines to discuss and analyze air s ervice restructuring. It is estimated that 15 meetings would be held, at an average cost of approximately $3,673 each, including travel.

Estimated Program Cost: $55,100.



### Use of Funds

The proposed funding would be as follows:

The plan, and the actual funding program would be subject to prior approval by the Department.Docket OST

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______________________________________ Jackson

- Evers International Airport 19 

### Past Air Service Development Activities

Jackson has an on

- going air service development program.

 The Airport is in routine contact with the planning departments of all incumbent an d target expansion airlines.

 The Airport has worked with American and Delta in moderating fares to key business destinations.

 The Airport was successful in recruiting Southwest Airlines, and maintains contact with that carrier.

 The Airport has worked wi th other low

- fare airlines in regard to implementing service.

 Jackson

- Evers International was honored to be awarded and earlier grant under the Small Community Air Service Development Grant Program. Furthermore, the community was successful in using the g rant to attract nonstop flights to New York/Newark. 4

4 The service was discontinued, however, mainly due to congestion issues at Newark that made on

- time performance difficult.APPENDIX B Page 1 of 3

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM DOCKET OST-2010-0124

SUMMARY INFORMATION

All applicants mus t submit this information with their prop osal, along with a completed form SF424 on

http:// www.grants.gov.

A. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)

x Not a Consortium ⁭ Interstate Consortium ⁭ Intrastate Consortium

⁭ Community now receives EAS subsidy

x Community (or Consortium member) prev iously received a Small Community Grant

If previous recipient, expiration date of grant: _ September 5, 2008

________________

B. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST ORGANIZATION NAMES )

Public Private

1. Jackson Municipal Airport Authority ____ 1._ Greater Jackson Alliance

_______________ 2.____________________________________ 2.______________________________________ 3.____________________________________ 3.______________________________________ 4.____________________________________ 4.______________________________________ 5.____________________________________ 5.______________________________________

C. P ROJECT P ROPOSAL : (CHECK ALL THAT APPLY)

x Marketing ⁭ Upgrade Aircraft ⁭ New Route

⁭ Personnel ⁭ Increase Frequency ⁭ Low Fare Service

⁭ Travel Bank ⁭ Service Restoration ⁭ SubsidyAPPENDIX B Page 2 of 3

⁭ Surface Transportation ⁭ Regional Service x Other (specify) Air Service Restructuring
⁭ Revenue Guarantee ⁭ Launch New Carrier and Marketing Plan

_________________ ⁭ Start Up Cost Offset ⁭ First Service _________________

_________________ x Study ⁭ Secure Additional Carrier

D. E XISTING L ANDING A IDS AT L OCAL A IRPORT:

x Full ILS ⁭ Outer/Middle Marker ⁭ Published Instrument Approach

⁭ Localizer ⁭ Other (specify )

E. PROJECT COSTS:

1. Federal Amount Requested: _$250,000

____________________________ 2. State cashfinancial contribution: _____________________________

3. Local cash financial contribution...
3a. Airport cash funds: _____________________________
3b. Non-Airport cash funds: _$50,000

___________________________ 3c. Total local cash funds (3a. + 3b.): _$50,000

___________________________ 4. TOTAL CASH FUNDING (1. +2.+3.) _$300,000

___________________________ 5. Local funds contributed from already-existing
programs or projects included in line3c. amount: _____________________________

6. Local funds contributed from new commitments
or new resources included in line 3c. amount: _$50,000

___________________________ 7. Airport In-Kind contribution: _____________________________
(amount & description)

8. Other In-Kind contribution: _____________________________
(amount & description)
9. TOTAL IN-KIND CONTRIBUTION (7.+8.): _____________________________
10. TOTAL PROJECT COST (4.+9.) __$300,000

___________________________APPENDIX B Page 3 of 3 F. ENPLANEMENTS:

2000__683,249 ________ 2004__639,015 ___________ 2008__677,510

___________
2001__645,821 _ _______ 2005__724,946 ____________ 2009 633,021

2002__614,878 _________ 2006__729,303

____________
2003__609,660 _________ 2007__717,122

____________

G. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER 12372

PROCESS?

⁭ a. This application was made available to the State under the Executive Order 12372 Process for review on

(date)___________________.

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

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

H. IS THE APPLICANT DELINQUENT ON ANY FEDE RAL DEBT? (IF “YES”, PROVIDE EX PLANATION)

x No ⁭ Yes (explain) _______________________________________________________________