# Proposal Under the Small Community Air Service Development Program

Docket: DOT-OST-2014-0113 Sponsor: Sheridan County Airport Sheridan, WY Airport DUNS: 169645892 County DUNS: 033802372 Congressional District Code: WY-AL

Tax ID: 836000124

Contact: John Stopka Airport Manager 908 W. Brundage Lane, Sheridan, WY 82801 (307) 674-4222 

# July, 2014



# Sheridan County Airport

# Table of Contents

Summary Information 3 Proposal 8 Air Service Challenges/History 9 Economic Impact 15
Plan And Overview 16 Priority Selection Criteria 19 Secondary Selection Criteria 21 Previous Project Goals 23 Letters of Support 24

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# Proposal

8 Sheridan County, Wyoming is located midway between Yellowstone Park and the Black Hills at the foot of the majestic Big Horn Mountains. Home to nearly 30,000 residents, Sheridan County is a lively tourist area, with robust wildlife and a rich history. Sheridan’s economy is diverse, with large employers in the natural resources, tourism and railroad industries, as well as Federal and State government. Continued growth of these industries requires reliable, stable, and affordable connections to the U.S. air service network. Sheridan is applying for a SCASD grant for these purposes. Sheridan faces a set of unique challenges retaining and attracting new air service. Changes in the airline environment have caused fares to increase; capacity and reliability to drop. Sheridan is located in a remote geographic area; a 6-hour plus drive from either a large hub airport or city with a substantial low-fare presence. Only one airline serves Sheridan currently. Sheridan seeks a Small Community Air Service Development Grant to fund a revenue guarantee for nonstop service to a large hub by a second airline, securing the community’s

link to the national air service network. Sheridan County Airport proposes funding a portion of this revenue guarantee with a $500,000 Small Community Air Service Development Grant. Federal funds will be combined with $1.3 million in cash funds from the State ofWyoming and $450,000 cash from local sources. An additional $50,000 in inkind contributions for landing fee waivers and marketing costs will also be provided. The total package of funds for this project will be $2,300,000. However, federal dollars will account for 22% of total funds for this revenue

guarantee. Sheridan County and the State of Wyoming realize the importance of stable, competitive air service to the regional economy and are willing to fund nearly 80% of this revenue guarantee.

# Air Service Challenges

9 Sheridan County Airport currently has service to Denver on Great Lakes Airlines. Great Lakes currently three round-trips on 30-seat Embraer 120

aircraft. However, levels of service have fluctuated over the years.

Capacity at Sheridan County Airport is well off peak levels. And the implementation of Part 117 at the airline currently serving the airport makes future capacity difficult to predict.Seats Per Day Each Way

0

32.5 65 97.5 130

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014Departures Per Day

0 1.75

3.5 5.25 7

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014

Flown Scheduled 

## Seats Down:
36% from Peak

Flights Down:
52% from Peak10 

# Air Service Challenges

More troubling than capacity, average fares at Sheridan County Airport have risen sharply over the past several years, and now are well above the U.S. average.



# Annual Enplaned Passengers Vs. Fare - SHRAnnual Passengers

0 5,250 10,500 15,750 21,000Average Fare

$60 $120 $180 $240

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Passengers Fare

$0 $60 $120 $180 $240

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Sheridan Continental US Average Sheridan’s airfares peaked in 2012. In 2013, Sheridan fares stood at $219 one-way. That’s $43 or 25% more than the average for the Continental U.S.. Sheridan meets one of the most important priority selection criteria for a Small Community Air Service Development Grant. Sheridan’s fares are consistently above average.11 

# Air Service Challenges

In 2013, Sheridan’s average U.S. Domestic fares were higher
than 80% of 426 markets in the
lower 48 states.



# Sheridan Vs. Denver Fares

100% 125% 150% 175% 200%Average Fare

$100 $135 $170 $205 $240

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Sheridan Denver CYS as & of DEN While Sheridan County Airport’s average fares dipped slightly in 2013, they’re still consistently higher than the region’s largest hub in Denver. Over the past several years, Sheridan’s fares have been roughly 50% higher than Denver’s fares. Sheridan’s fares dropped between 2005 and 2007 due new service, new destinations and new competition at the airport.12 

# Air Service Challenges

Recent passenger retention analysis demonstrates that Sheridan County Airport retains only 30% of airline traffic from its

natural catchment area. However, in 2014, Sheridan County airport’s passenger retention has steadily and materially worsened, dropping to levels

not seen before.

New airline service would stimulate competition, lower fares and attract traffic from the 70-80% of passengers who are driving to other airports for air travel.

New, competitive airline service would allow Sheridan County Airport to improve passenger retention from its currently very low levels and reduce the long drive a large percentage of residents are making to large hubs to access the U.S. air transportation

network. 

## Passenger Retention Trends Sheridan County Airport

2010

2011

2012

2013

Jan-14

Feb-14

Mar-14

Apr-14

0% 25% 50% 75% 100% 

## Airport Usage YTD 2014
Sheridan Catchment

# Air Service Challenges

13 Sheridan’s air service needs cannot adequately be met by driving to nearby airports.

The two closest airports, Billings and Rapid City, have high average fares and limited nonstop flights to

limited destinations.

Drive times to large nearby hubs
with lower fares and more service are inconveniently long, especially
when inclement weather is a factor.

Affordable, reliable, convenient access to a large hub is necessary for Sheridan to recapture the leaking to other airports.

* Excludes Intra-Montana flights

# Air Service Challenges

14 Reliability of air service has been one of Sheridan’s most pressing issues. Sheridan’s existing air service has performed well below U.S. Averages, both in delays and cancellations. These two factors are an important part of Sheridan’s ability to retain passengers from within its catchment area. If service is not reliable; if service is much worse than U.S. averages, Sheridan County Airport passengers will choose to drive to airports where the service is more reliable.

Sheridan’s flights, on average, have been 10-20 percentage points worse than the U.S. average for delays for the past 2 years.

Sheridan’s flights have been substantially more likely to be cancelled than other flights, on average. In 2014, 38% of Sheridan’s flights were cancelled, while only 1.5% of U.S. flights were cancelled. This is an abnormal level of cancellations

for a U.S. airline.

There can be no doubt that reliability at Sheridan County Airport is negatively impacting passenger traffic. Improved reliability is another reason Sheridan seeks

additional air service.

0% 10% 19% 29% 38%

2013 2014 (YTD)

Sheridan U.S. 

## % Flights Delayed % Flights Cancelled

0% 10% 20% 30% 40%

2013 2014 (YTD)

Sheridan U.S.

# Air Service Economic Impact

15 * From 2010 Wyoming Department of Transportation Aeronautics economic impact study The current level of air service in Sheridan is damaging the local economy. The decline in ridership over the past 7 years is costing the local economy at least $1.4 million annually. Sheridan seeks to bolster its economy by increasing traffic above and beyond 2007 levels with new, competitive air service, benefitting local business and

residents.

A more recent 2013 study of economic impacts of commercial airports and airline services in Wyoming estimated the total off-airport and on-airport impact of Sheridan County Airport to be $23,418,570

.

# Plan and Overview

16 Sheridan County Airport plans to use state, local and SCASD funds to solicit a second carrier to serve the airport. Sheridan requests a $500,000 Small Community Air Service Development Grant to fund a $2.3 million dollar total revenue guarantee. Program Goals:

Increasing local utilization of Sheridan County Airport. Sheridan’s passenger retention is declining drastically in 2014. Only 15-25% of area passengers are estimated to currently use SHR. New, competitive airline service to a large hub with increased frequency and capacity will increase passenger retention. Increasing reliability of airline service. The reliability of air service at Sheridan County Airport is much worse than U.S. averages. A new carrier would increase reliability and thereby increase passenger usage of the airport. Reducing airfares paid at Sheridan County Airport. Sheridan’s fares are well above the national average. New airline service should cause some price competition in Sheridan This has happened in the past. Better access to the U.S. Air Transportation Network. Additional airline service will provide better, more reliable connectivity than currently exists at Sheridan. Plan Specifics/Allocation of Funds:

Revenue Guarantee: The revenue guarantee will be used to incentivize new airline service at Sheridan County Airport. The funds will be used to offset the new airline’s losses for up to three years after commencing service. Exact terms will be negotiated once grant money is
awarded. Federal funds will constitute only 22% of the total revenue guarantee.
78% of the funds will come from state and local sources.

$500,000 Small Community Air Service Development Grant. $450,000 Local matching funds from 2 Wyoming counties & local businesses. $1,300,000 State of Wyoming - Air Service Enhancement Program. $50,000 In-kind contributions.

# Plan and Overview

17 Marketing/Advertising:

Sheridan County Airport proposes $25,000 in reduced marketing costs for the new

service.

Facilities Use Abatements/Startup Costs Offsets:

Sheridan County Airport proposes $25,000 in waiver of landing fees for the new

airline.

Other Costs:

The airport will not use SCASD funds for administration, or monitoring and reporting of results under the grant. Additional expenses incurred will be paid out of the airport’s general operating funds.

Oversight:

The governing body of Sheridan County Airport, the Sheridan County Board of County Commissioners, will be responsible for all fiscal issues and D.O.T. reporting requirements. As a government entity, D.O.T. should be assured that proper financial oversight for implementation rests in the hands of the Commissioners. The Board of Commissioners understands that it is responsible for program expenditures and will submit invoices to D.O.T. for reimbursement based on the grant request.

# Plan and Overview

18 Timeline:

Assuming the Department of Transportation awards Small Community Air Service Development grants in late 2014, Sheridan County Airport will move as aggressively as possible to implement air service under the terms of the grant. Sheridan County Airport is already in talks with various airlines for additional service to the airport. Should Sheridan County Airport receive SCASD funds, it will solidify negotiations with those airlines and develop timelines and dates to begin new service.

Legal Sponsor:

Sheridan County Airport is the legal sponsor of this proposal. The Airport will administer the programs outlined. The Sheridan County Airport is a government entity.19 

# Priority Selection Criteria

Air fares are higher than the national average for all communities.

Sheridan’s air fares are higher than average. In 2013, Sheridan’s air fares were : 25% higher than the U.S. average. 43% higher than the nearest hub airport in Denver.

The community or consortium will provide a portion of the cost of the activity from local sources other than airport revenues.

Sheridan plans to fund this revenue guarantee as follows: $500,000 Small Community Air Service Development Grant $450,000 Local matching funds $1,300,000 State of Wyoming - Air Service Enhancement Program. $50,000 In-kind contributions

$2,300,000 Total

Federal Funding: 22% of revenue guarantee. State/Local Funding: 78% of revenue guarantee.20 

# Priority Selection Criteria

The community will establish a public-private partnership
Sheridan County has established a public-private partnership.

Sheridan County Airport’s Task Force consisting of Sheridan and Johnson County

stakeholders began meeting in May of 2012. The task force renamed themselves as the Critical Air Service Team (CAST) in October of 2012. The organization became a 501(c)3 in January of 2013. CAST has adopted by-laws and current officers are Bruce Garber, Chairman, Jay Stender, Vice President, and Angela Jarvis, Secretary.

CAST is a multiple stakeholder group of citizens and government that are working to assure commercial service is in Sheridan, reliable, and cost effective. Members include, Representative from the Sheridan County Commission, City of Sheridan, Forward Sheridan, Sheridan Chamber of Commerce, Johnson County Chamber of Commerce, Sheridan Travel and Tourism, representatives from local Travel Agencies, oil and gas industry, financial institutes, and real estate agencies

.

The assistance will provide material benefits to a broad segment of the traveling public, including businesses, educational institutions and other enterprises, whose access to the national air transportation system is limited.

As only 15-25% of Sheridan County Airport’s catchment area airline traffic currently chooses to fly locally, additional service that attracts a larger percentage of traffic will naturally benefit a broad segment of the traveling public.21 

# Priority Selection Criteria

The assistance will be used in a timely manner

As Sheridan County Airport’s passenger retention issues worsen, Sheridan has begun to make contingency plans to reverse this process. Sheridan is prepared to act immediately to solicit an airline for new service to the airport.



# Secondary Selection Criteria

Innovation

Wyoming’s Air Service Enhancement Program (ASEP) is unlike any air service development program in the United States. The State of Wyoming combines state funds with local funds to attract and retain air service within the state of Wyoming. The program was originally funded at $6M per biennium. The primary goals of ASEP are to: Work with existing airlines to improve operational reliability
Work to make airfares affordable. Increase passenger retention of Wyoming airports. Ensure airlines are financially stable to operate in Wyoming. Achieve financial stability in existing Essential Air Service markets. The program funds a number of routes within the state. Sheridan seeks to combine Federal funds with those from this unique program to augment Sheridan County Airport’s air service.22 

# Secondary Selection Criteria

Participation
Efforts to attract new airline service to Sheridan have always enjoyed broad community support. The State of Wyoming’s and Sheridan area’s willingness to fund 80% of the proposed minimum revenue guarantee demonstrates that commitment.

Location

Other Factors

The proposal directly addresses Sheridan ’s stated problems: New competitive airline service will:

Reduce fares Increase enplanements Positively benefit the Sheridan and Wyoming economies.

Sheridan ’s air service is decreasing, and the airport seeks to reverse this trend.

Sheridan has access to Wyoming’s Air Service Enhancement Program to continue financial support for this project (if necessary)after SCASD funds have expired. The proposed Federal funding is only 20% of the total revenue guarantee. Sheridan’s geography is unique. Wyoming is the least populated state in the United States. Sheridan is located in a remote portion of Wyoming, with long drives to hub airports that can provide acceptable access to the U.S. air transportation network. Sheridan County Airport is not proximate to an existing or prior grant recipient, and, therefore, award of a SCASD grant would have no negative impact on Sheridan’s proposal or another active SCASD recipient.

# Previous Project Goals

23 Sheridan County Airport’s 2014 Small Community Air Service Development Grant application differs substantially from the 2005 SCASD grant awarded to the State of Wyoming. The 2005 Wyoming grant was used to correct misperceptions about Wyoming’s air service through an advertising/marketing campaign. The 2005 grant was also used to increase passenger retention across all Wyoming airports. Although that grant was successful for the state, the 2014 grant application is geared mainly to attracting and funding new airline service at a specific airport with specific air service issues, rather than marketing existing air service.

# Letters of Support

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