# --

Dun & Brad street DUNS Number : 799069245 Tax Identification Number: 38

- 6004869 Two

- Digit Congres sional District Code: 01 

# Sawyer International Airport Serving Marquette County and Michigan's Upper Peninsula

Proposal under the Small Community Air Service Development Program

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- 0119Sawyer International Airport; Marquette, Michigan

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## TABLE OF CONTENTS

INTRODUCTORY LETTER

................................ ................................ ................................ .................... 4
EXECUTIVE SUMMARY

................................ ................................ ................................ ........................ 5
AIR SERVICE OV ERVIEW

................................ ................................ ................................ ..................... 6
Catchment Area and Alternate Airports

................................ ................................ ................................ ................. 6 Marquette's Existing Air Service

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


### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

................................ ............................... 9
Capacity Trend and Discontinued Service

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

Domestic and International Traffic Trends

................................ ................................ ................................ ........... 10 The Relationship Between Capacity, Domestic Traffic and Domestic Fares

................................ ...................... 12


### STRATEGIC PLAN

................................ ................................ ................................ .............................. 13
Proposed Use of SCASD Funding

................................ ................................ ................................ ....................... 13

Goal

................................ ................................ ................................ ................................ ................................ ...... 13 Current Marquette

- Lansing Ai r Service

- Schedule

................................ ................................ ............................. 13 Current Marquette

- Lansing Air Service

- Fares

................................ ................................ ................................ ... 14 Historical Marquette

- Lansing Traffic and Average Fares

................................ ................................ .................... 15

Grant Amendments/Alternate Strategies

................................ ................................ ................................ ............. 16 

### PROJECT IMPLEMENTATION, MONITORING AND FUNDING

................................ .......................... 17
Public / Private Partnerships

................................ ................................ ................................ ................................ 17 Sources and Allocations of Project Funding

................................ ................................ ................................ ........ 17 Project Timeline

................................ ................................ ................................ ................................ ................... 18 Continuation of Project Activities beyond the Grant Timeline

................................ ................................ .............. 19 

### SUCCESS METRICS, LEGAL SPONSOR AND FINANCIAL CONTROL

................................ ............ 20

Success Metrics

................................ ................................ ................................ ................................ ................... 20 Legal Sponsor

................................ ................................ ................................ ................................ ...................... 20

Financial Controls

................................ ................................ ................................ ................................ ................ 20


### AIR CARRIER LETTERS OF SUPPORT

................................ ................................ ............................. 21
APPENDIX A: REQUIRED SUMMARY INFORMATION

................................ ................................ ..... 23

A. Applicant Information

................................ ................................ ................................ ................................ .... 23

B. Publi c/Private Partnerships

................................ ................................ ................................ .......................... 23

C. Project Proposal

................................ ................................ ................................ ................................ ........... 24

D. Existing Landing Aids at Local Airport

................................ ................................ ................................ .......... 24

E. Project Cost

................................ ................................ ................................ ................................ .................. 24Sawyer International Airport; Marquette, Michigan

Proposal Under the Small Community Air Service Development Program; Docket DOT

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- Kind Contr ibutions**

................................ ................................ ................................ ................................ . 24

G. Is this application subject to review by state under Executive Order 12372 Process?

................................ 25

H. Is this applicant delinquent on any federal debt?

................................ ................................ ......................... 25


### APPENDIX B: LETTERS OF SUPPORT

................................ ................................ ............................. 26Sawyer International Airport; Marquette, Michigan

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### INTRODUCTORY LETTERSawyer International Airport; Marquette, Michigan

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### EXECUTIVE SUMMARY

Sawyer International Airport, which serves as the primary airport for Marquette, Michigan and a large portion of Michigan's Upper Peninsula, is request ing a Small Community Air Service Development (SCASD) Grant in the

amount of $2 50 ,000 . SCASD fund ing would be supplemented with community and airport funding totaling $76 ,000 in cash and i n

- kind funding valued at $257,658 to provide a minimum revenue guarantee for air service between Marquette and Lansing. The total value of the proposed program is $583,568, including all sources of

cash and in

- kind contributions.

No nonstop service is available from any airport on Michigan's Upper Peninsula to the State Capital in Lansing, and a significant amount of Uppe r Peninsula business is conducted in Lansing as the seat of the state's government and home to Michigan State University. Currently, travelers using commercial air service must connect in Detroit or Minneapolis/St. Paul when traveling between the Upper P eninsula and Lansing. Other options include the use of private aircraft, an air taxi or driving to Lansing. The drive to Lansing is 396 miles and

is typica lly a seven hour trip in good weather conditions

.
In 2010, Marquette's airline capacity was down 1 7.2% since it peaked in 2006 largely because Midwest Airlines discontinued service to Milwaukee in 2007. Capacity is expected to be down even further in 2011 and 2012 as American Eagle discontinues two of the three of the flights it has operated at Marque tte for the last six years. As capacity declined, traffic has also declined. Since 2006, combined domestic and international traffic was down 19.0% in 2010 versus the peak in 2006.

Domestic traffic accounts for 93% of the traffic in Marquette, and the av erage domestic fare was relatively high in 2010 at $191 in each direction. Marquettes's average domestic fare was 21.6% higher than the average domestic

one

- way fare of $157 for the average Lower 48 airport in 2010.

Although connecting service is avail able on Delta between Marquette and Lansing, the elasped travel time can be up to five

- and

- half hours, and only two departure time options are available for travel from Lansing to Marquette (four options are avai lable from Marquette to Lansing). The avera ge Marquette

- Lansing one

- way fare was an
eye

- popping $305, or $610 roundtrip, in 2010 and analysis of fares currently publishied in the market indicates fares are still high, with a complex structure of advance purchase and minimum stay requirements. New nonstop

serv ice in Marquette

- Lansing market would stimulate traffic in the market by redirecting travelers who would have otherwise driven between Marquette and Lansing or not traveled in the first place given the time and expense required to make the trip today.Sawyer International Airport; Marquette, Michigan

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### AIR SERVICE OVERVIEW

Catchment Area and Alternate Airports

Sawyer International Airport , on Michigan's Upper Peninsula, is relatively isolate d and serves as the primary airport for a large portion of the Upper Peninsula. 55,629 people live within a 30

- minute drive of the airport, 74,909 people live within a 60

- minute drive of the airport, and 102,886 people live within a 90

- minute drive of the airport.

There are five other airport s on the Upper Peninsula. Th e closest al ternate airport is located in Escanaba

, a 60 mile drive from Sawyer; other airports are located in Houghton (CMX)

, Iron Mountain (IMT) , Ironwood (IWD) and
Sault Ste. Marie (CIU) . Sawyer International Airport carried 51.2 % of the domestic traffic among th e airports on the Upper Peninsula; the airport in Houghton carried 20% of the traffic, and each of the other airports carri ed less than 15% of the traffic. Sawyer has more airline capacity than any of the other airports.

Exhibit 1: 30, 60 and 90

- Minute Dr ive T imes from Sawyer International Airport and the locations of other Upper Peninsula Airports with Commercial Air Service (except Sault Ste. Marie)Sawyer International Airport; Marquette, Michigan

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### Marquette's Existing Air Service

Both American and Delta operate service using regional jets at Sawyer International Airport . Delta serves its

hubs in both D etroit and Minneapolis/St. Paul, but the Minneapolis/St. Paul service is seasonal and is scheduled to be discontinued in September and be reinstated in April. American operates one roundtrip to its h ub at Chicago O'Hare. No other airlines operate at Sawyer.

Exhibit 2 : Current Routes Operated at Sawyer International Airport

This Section Continued on Next PageSawyer International Airport; Marquette, Michigan

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scheduled at Sawyer International Airport in August 2010 and August 2011 are displayed in Exhibit 3

. Delta will operate approximately 80% of Sawyer's c apacity in August 2011 with slightly more than 2 daily departures per day , on average, to Detroit and two daily flights to Minneapolis/St. Paul; however, the Minneapolis service is seasonal. Delta will not operate the Minneapolis service between September and April.

American will operate the remaining 20% of the capacity with a nonstop flight to Chicago six days a week and a onestop flight to Chicago via Traverse City one day a week. American's capacity at Sawyer will be down 61.2% in August 2011 versus August 2010. In August 2010, American operated onestop service to Chicago six days a week via Green Bay and Traverse City, but the service via Green Bay has been discontinued, and the service via Traverse City will operate onl y one day a week in August 2011 and is scheduled to be discontinued entirely in September.

Exhibit 3 : Departures per Day * , Seats per Departure and Seat s pe r Day by Market and Carrier at Sawyer Intern ational Airport in August 2011 v ersus August 2010Sawyer International Airport; Marquette, Michigan

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### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES
Capacity Trend and Discontinued Service

Marquette's capacity peaked in 2006 at 342 seats per day each way and declined to a 10

- year low of 257 seats per day each way in 2009. The decline began toward the end of 2007 when Midwest Airlines discontinued

ser vice to Milwaukee. Capacity continued to trend down into 2008 and 2009 as both Delta/Northwest and

America n reduced capacity, but increased in 2010 as both carriers added capacity and generated a total of 283 seats per day each way. Between 2006 and 2010, capacity declined 17.2%.

Capacity is expected to decline even further in the 2011 and in 2012 because Ame rican Eagle will discontinue two of the three flights it has operated at Marquette since 2005. The two flights American Eagle will drop were operated via Green Bay and Traverse City to Chicago. American Eagle is discontinuing the service because a

scope clause issue does not allow airlines operating with American code (AA) to operate point

- to

- point flights (flight segments th at d o not begin or end at an American hub) if the airline is not a wholly

- owned subsidiary of AMR corporation . The change to America n's schedule will result in the loss of approximately 100 seats in each direction per day a t Marquette and equate to a reduction of about one

- fourth of Marquette's total capacity.

Exhibit 4 : Sawyer International Airport Seats per Day Each Way by Carrier

– 2001

- 2010 ( T

- 100 data )

-Sawyer International Airport; Marquette, Michigan

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### Domestic and International Traffic Trend s

Marquette 's traffic peaked in 2006 with 124,600 domestic origin and destination (O&D) passengers and 7,900 international O&D passengers. In 2010, domestic traffic was down 19.8% fro m the 2006 level, and international
traffic was down 7.2% over the same period; total traffic was down 19.0%. Both domestic and international traffic rebounded slightly from 2009 to 2010.

Exhibit 5 : Sawyer International Airport Domestic and International Annual Origin and Destination Passengers

– 2001

- 2010 ( DB1B data)

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international PDEW. At 137 domestic PDEW, domestic traffic was essentially at its 2003/2004 level. When traffic was at its peak in 2006, Marquette generated 171 domestic and 10.8 international PDEW.

Exhibit 6 : Sawyer International Airport Domestic and International Pass engers per Day Each Way (PDEW)

– 2001

- 2010 ( DB1B data)Sawyer International Airport; Marquette, Michigan

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### The Relationship Between Capacity, Domestic Traffic and Domestic Fares

The relationship between Marquette's capacity, domestic traffic and average domestic one

- way fare is illustrated

in Exhibit 7 . Like the domestic traffic, Marquette's capacity peaked in 2006 and traffic trended down as capacity declined. The average domestic fare peaked in 2008 at $214 as airlines raised fares to cover record fuel prices
and declined in 2009 as the cost of oil declined and the U.S. entered the recession. Traffic recovered slightly in 2010 versus 2009, even as the average domestic fare increased to $191 each way . Although Marquette's average domestic fare was below its 2008 peak in 2010, the 2010 fare was still the second highest over the last
ten years.

Exhibit 7 : Sawyer International Airport Seats per Day Each Way, Passengers per Day Each Way (PDEW) and Average Domestic One

- Way Fare

– 2001

- 2010 ( DB1B data and T

- 100 data )Sawyer International Airport; Marquette, Michigan

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### STRATEGIC PLAN

Proposed Use of SC

ASD Funding

Sawyer International Airport is requesting SCASD funding of $250,000 to supplement locally

- generated cash funding and in

- kind incentives to provide a minimum revenue gaurantee for service between Marquette and the State Capital in Lansing. There is currently no air service between the Michigan's Upper Peninsula and Lansing.



### Goal

The goal of the proposed service is to begin nonstop service from Marquette to Lansing to provide business travelers with more convenient access to the state capi tal at fares lower than current fares offered via connecting service to Lansing.



### Current Marquette

- Lansing Air Service

- Schedule

Although it is possible to fly between Marquette and Lansing today, only Delta operates single carrier service, and

a connect ion is required i n Detroit . The average elapsed travel time with a connection via Detroit is approximately

three

- and

- half hours in either direction. Based on Delta's September 2011 schedules, two connections are available per day in each direction. Sched ules for travel from Mar quette to Lansing and return in early September

are illustrated in Exhibit 8

.

Exhibit 8 : Delta Marquette

- Lansing Flight Schedules and Elapsed Travel Times (Depart fro m Marquette on Friday, September 9

, 2011; Return to Marquette on Friday, September 16 , 2011)Sawyer International Airport; Marquette, Michigan

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### Current Marquette

- Lansing Air Service

- Fares

Airfares between Marquette and Lansing are high, especially for business traveler s without a need to spend a weekend night in Lansing Exhibit 9 illustrates the Marquette

- Lansing fare structure for outbound travel from Marquette in late A ugust and a return in early September. The lowest fare is $338 roundtrip, but it requires a 21

- day advance purchase and a Sunday night stay. The lowest fare avai lable without either a Saturday or Sunday night stay is $688 roundtrip, but this fare requires a 14

- day advance purchase. The lowest fare with a 7

- day advance purchase is $728, and the lowest fare available with no advance purchase requirement is $888. T he $888 roundtrip fare equates to a fare of $1.54 per mile ( the nonstop distance by air from Sawyer International Airport to Lansing Capital Region International Airport is 28 8 miles in each direction)

.
The high fares, minimum stay and advance purchase req uirements are a function of an airline's preference to feed passengers from smaller communities, such as Marquette, to longer

- haul flights to large cities at th e hub operated with mainline aircraft and because relatively little competition exists between s mall cities (Delta is the only airline serving both Marquette and Lansing). An airline will sell tickets between small cities with a connection at a hub, such as Detroit or Minneapolis/St. Paul, but tickets are genera lly prohibitively expensive, and minimu m stay and advance pu rchase requirements not suitable to business travelers.

Exhibit 9 : Delta Marquette

- Lansing Fare Structure (Depart fro m Marquette on Friday, September 9 , 2011; Return
to Marquette on Friday, September 16 , 2011) Source: Expertflyer.com as of July 28, 2011Sawyer International Airport; Marquette, Michigan

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### Historical Marquette

- Lansing Traffic and Average Fares

Exhibit 10 illustrates th e Marquette

- Lansing market generated 7.9 passengers per Day Each Way in 1994 at an

average one

- way fare of $124. In the 16 years since 1994, traffic in the market has eroded t o less than one
PDEW in 2010 at an average one

- way fare of $305, or $610 roundtr ip. The introduction of nonstop Marquette

Lansing service would likely stimulate traffic above the 1994 level because no airline has ever operated nonstop service in the market. Nonstop service would also likely drive the average fare down from its unpre cedented

2010 level to a likely level between $100 and $150 each way.

Exhibit 10 : Marquette

- Lansing Passengers per Day Each Way (PDEW) and Average One

- Way Fare

– 1994 through 2010 (DB1B Data)Sawyer International Airport; Marquette, Michigan

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### Grant Amendments/

Alternate Strategies

Nonstop Marquette

- Lansing service is the goal of the community's Small Community Air Service Development (SCASD) proposal. The community is proposing SCASD funding in the amount of for $2 50,000 that will be supplemented with $ 76,000 in cash from community

- based business a nd economic development organizations to
offer a minimum rev enue guarantee to an airline for Lansing service. An additional $16,000 of in

- kind

contributions for marketing, promotion and advertising would supplement the cash incentives offered b y the community, and the Airport would waive fees, estimated to be $ 241,658 over a two y ear period for the service

.
If a grant is awarded for Marquette

- Lansing service, and the community is not successful in its eff ort to recruit a carrier to operate the propose d Lansing service

, the project sponsor would ask the Department to consider
reallocation of the award funds for service to a leisure destination on a low

- cost carrier such as Allegiant or Direct

Air

.Sawyer International Airport; Marquette, Michigan

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### PROJECT IMPLEMENTATION, MONITORING AND FUNDING

Publ ic / Private Partnerships

The County of Marquette, Michigan, is the owner and operator of Sawyer International Airport, and is the project sponsor. The County of Marquette is a public entity. The City of Marquette is the other public partner supporting this project.

In addition to the above public entities, several private entit ies are also supporting partners on this project, as follows: Lake Superior Community Partnership (Marquette's local area Chamber of Commerce), Gwinn

- Sawyer Area Chamber of Commerce, Northern Michigan University, Bell Memorial Hospital, Marquette General Health System and Superior Health Partners, Marquette Country Convention and Visitors Bureau, WLUC

- TV6 (Regional NBC Affiliate), ABC5&10 (Regional ABC Affiliate), FM

- 107 and AM

- 970 radio, The Marquette Monthly, and the Upper Peninsula Business Today.



### Sources and Allocations of Project Funding

The total cost of the project is nearly $ 5 8 4 ,000 and include s the amounts of the requested grant, com munity

provided cash and the value of in

- kind airport incentives. The requ ested amount of the grant is $25 0,000, a nd community cash funding is $76,000

. The community will provide 30.4 cents in cash for every dollar requested from the Department.

The Ai rport 's incentive program provides the ability to waive landing fees, a ircraft parking/apron fees, terminal use
fees , and aircraft hangar use fees . The total value of the in

- kind incentives of fered by t he Airport is more than $24 1 ,000 over the two

- year pe riod of the proposed grant . In addition to the airport's in

- kind incentives, partners in the community are pledging $16,000 of in

- kind c ontributions, mainly for the marketing, advertising and promotion
of the new service.

Ex hibit 11 : Sources and Types of Proposed Project FundingSawyer International Airport; Marquette, Michigan

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### Project Timeline

Sawyer International Airport , and its air service development consulting firm, Sixel Consulting Group, have

discussed th e proposed air service with three airli nes including Cape Air, SeaPort and Charter Air Transport . In addition, Superior Aviation, based in Iron Mountain, Michigan has also expressed interest in operating the proposed service with a nine

- seat twin engine aircraft . Based on these discussions, Charter Air Transport and Superior Aviation, appear to be the two firms most interested in operating the proposed service. Cape Air and SeaPort have each indicated they may be interested in operat ing the service, but could not begin the service

within the next 12 months because n either airline anticipates having aircraft available to operate the service.

If Sawyer International Airport is awarded grant funding for its proposed service, discussions with each of the two carriers which have expressed interest in the service would con tinue. The Airport and its consu lting firm will work
with each of the carriers t o determine which carrier can better meet the community's objectives for the prop osed service. The Airport will work closely with the Department throughout the process to ens ure any potential agreement meets the Department's objectives for the Small Community Air Service Development Program. Once a tentative agreement is made with a carrier and the Department's approval for the agreement seems likely, the Airport will provide a r ecommend ation t o the Marquette County Board of Commissioners to proceed with an agreement with the carrier and the Department.

The Airport and its community

- based partners will work with the selected carriers to market the service both prior to its inauguration and after service begins during the grant period. The Airport will also work closely with the

selected carrier to monito r the carrier's financial performance and work with the carrier to adjust marketing and advertising of the service accordingly. In addition, the Airport will work closely with Capital Region International Airport in Lansing to market the service to Lansin g

- originating travelers.

Exhibit 12 : Proposed Project Timeline (Assumes SCAS D Awards Are Announced in Late September or Octo ber 2011)Sawyer International Airport; Marquette, Michigan

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### Continuation of Project Activities beyond the Grant Timeline

The Airport and its community

- based partners in this pr oject are certain sufficient demand exists for the proposed air service to connect Michigan's Upper Peninsula with the State Capital

. If the proposed service is implemented, the airport will continue to work closely with the carrier operating the service to provide marketing, advertising and operational assistance, even after the grant period expires.Sawyer International Airport; Marquette, Michigan

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### SUCCESS METRICS, LEGAL SPONSOR AND FINANCIAL CONTROL

Success Metrics

The success of the project is defined as successfully launching the proposed service and the sustainability of the Marquette

- Lansing market. The proposed SCASD funding will provide a financial "bridge" to the selected carrier until traffic in the market grows and reaches maturity beyond the start

- up phase of operation. The Airport intends to work closely with the selected carrier to monitor traffic and revenue to continuously understand the financial performance of the market.



### Legal Sponsor

The Marquette County Board of Commissioners is the legal sponsor responsible for administering th e proposed

program , and the Marquette County Board of Commissioners is a government entity.

County of Marquette
Sawyer International Airport
Keith D. Kaspari, MPA, C.M.
Airport Manager

125 G Avenue

Gwinn, MI 49841

906

- 346

- 3308 (office)



### Financial Controls

As the sponsor, the Marquette County Board of Commissioners , will be the responsible partie s for all fiscal matters and the Department's reporti ng requirements. As a public entity

, the Department can be assured that proper financial controls are in place to guarantee that the Department ’s Grant will be used in accordance with any subsequent agreement. The Marquette County Board of Commissioners understands that the Grant is a

reimbur sable grant, meaning the County is responsible for program expenditures and will submit invoices to the Department for reimbursement, based on a percen tage of the total grant request.Sawyer International Airport; Marquette, Michigan

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### AIR CARRIER LETTERS OF SUPPORTSawyer International Airport; Marquette, Michigan

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### APPENDIX A: REQUIRED SUMMARY INFORMATION

A. Applicant Information

Not a Consortium

Interstate Consortium

I ntrastate Consortium

Community now receives EAS subsidy

Community (or Consortium member) previously receive d a Small Community Grant

If previous recipient: Date of Grant: ____________________ Expiration Date of Grant: ____________________



### B. Public/Private Partnerships

Public

 County of Marquette

 City of Marquette

 City of Negaunee

 City of Ishpeming

Private

 Lake Superior Community Partnership

 Gwinn

- Sawyer Area Chamber of Commerce

 Marquette Area Chamber of Commerce

 Marquette County Convention and Visitors Bureau

 Boreal Aviation

 WLUC TV

- 6

 KBUP/WBKP ABC 5 & 10

 WMQT FM 107 / AM 970

 Marquette Monthly

 Upper Peninsula Business Today (Monthly News Magazine)Sawyer International Airport; Marquette, Michigan

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### C. Project Proposal

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

- up Cost Offset First Service Study S ecure Additional Service Other (explain below)

Sawyer International Airport is requesting SCASD funding to provide a minimum revenue guarantee for an air carrier to operate service between Marquette and Lansing

.


### D. Existing Landing Aids at Local Airport

Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify)



### E. Project Cost

F. In

- Kind Contributions**

For funds in lines 5 a (Airport In

- Kind contribution) and 5 b (Other In

- Kind contribution), please describe the source(s) of fund(s) for each.

(5a) Sawyer International Airport will waive landing fees, all passenger terminal and office space fees and aircraft storage fees total ing an estimated $120,829 per year for up to two years in exchange for air service between Marquette and Lansing (the two year value is $241,658) . (5b) Five media outlets and the MarquetteSawyer International Airport; Marquette, Michigan

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### 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.

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



### H. Is this applicant delinquent on any federal debt?

No Yes (explain)Sawyer International Airport; Marquette, Michigan

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### APPENDIX B : LETTERS OF SUPPORTSawyer International Airport; Marquette, Michigan

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Proposal Under the Small Community Air Service Development Program; Docket DOT

- OST

- 2011

- 0119 50Sawyer International Airport; Marquette, Michigan

Proposal Under the Small Community Air Service Development Program; Docket DOT

- OST

- 2011

- 0119 51Sawyer International Airport; Marquette, Michigan

Proposal Under the Small Community Air Service Development Program; Docket DOT

- OST

- 2011

- 0119 52Sawyer International Airport; Marquette, Michigan

Proposal Under the Small Community Air Service Development Program; Docket DOT

- OST

- 2011

- 0119 53