1 

# Proposal

Provo City Corporation, Utah

United States Department of Transportation Office of Aviation Analysis Small Community Air Service Development Program

Application under the:

-Wendell H. Ford Aviation Investment and Reform Act for the 21 st Century (AIR-21) As Reauthorized by the: -Vision 100-Century of Aviation Reauthorization Act

Proposal Sponsor: Provo City Corporation

Contact: Mr. Steve Gleason Airport Manager Provo Municipal Airport

351 West Center Street

PO Box 1849 Provo, Utah 84603

Docket: OST-2010-0149

Date: August 27, 20102 SMALL COMMUNITY AIR SERVI CE DEVELOPMENT PROGRAM
DOCKET OST-2010-0149

SUMMARY INFORMATION FOR PROVO:

A. Applicant Information:

This is not a consortium.

B. Public/Private Partnership:

Public: Private:

1. Provo City Corporation 1. Utah Valley Chamber of Commerce Members 2. Provo Economic Development 3. Utah County

(Collectively the Provo community)

C. Project Proposal:

X Marketing _ _ Upgrade Aircraft _X _ New Route ___ Personnel _ Increase Frequency _X_ Low Fare Service

_ _ Travel Bank __ Service Restoration _X __ Subsidy ___ Surface Trans. Regional Service ___ Other
_X _ Revenue Guarantee _X_ Launch New Carrier
_X Start Up Cost Offset First Service

_ Study __ Secure Additional Carrier

D. Existing Landing Aids at Local Airport:

_X Full ILS _X _ Outer Marker __X __ Other (Radar/GPS)
_X _ Localizer _X _ Published Instrument Approach3 E. Project Cost:

1. Federal Amount Requested: $500,000

2. State Cash Financial Contribution: $0

3. Local Cash Financial Contribution-- 3a. Airport Cash Funds: $0 3b. Non-Airport Cash Funds: $50,000 3c. Total Local Cash Funds: $0 4. TOTAL CASH FUNDING: $50,000

5. Local Funds Contributed from Already-Existing Programs or Projects included in Line: $0

6. Local Funds Contributed from New Commitments

Or New Resources included in Line 3c.: $0

7. Airport In-Kind Contribution: $50,000 8. Other In-Kind Contribution: $50,000 9. TOTAL IN-KIND CONTRIBUTION: $100,000

10. TOTAL PROJECT COST: $650,000

F. Enplanements :

___0____ 2000 ____1,086___ 2001 ____333__ 2002 ____800___ 2003 ____882__ 2004 ___948___ 2005 __1,070

_ 2006 ___595___ 2007 _ _712

_ 2008 _ _1,568

_ 2009
Source: ACAIS; Note: Operations are Air Taxi Charter, No scheduled service

G. Is this application subject to rev iew by State under Executive Order 12372

Process

___ a. This application was made ava ilable to the State under 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 Federal Debt?

_X _ No ___ Yes (explain)4 TABLE OF CONTENTS

Subject Page

Executive Summary 1

Introduction 5 Major Issues 6 Role of the Provo Airport 7
Factors That Have Affected Air Service 8 Catchment and Community Profile 8

Market Analysis 10 Potential Passengers 12
Potential Air Service 13 Proposed Fares 14 Passenger and Revenue Forecast 14

Action Plan for the Provo Airport 15 Public-Private Partnership 15 Project Goals 15
Action Plan Elements 15 Marketing Program 15 Target Audience 15 Marketing and Media Selection 16 Total Incentive Package 16 Sponsor Participation 16

Performance Measurement 17
Recruitment of Air Service 17 Marketing and Media Plan 17
Air Service Performance 17

Community Support 17
Assurances 18

Appendix A - Letters of Support (Note Congressional Letter sent directly to Secretary LaHood)Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

1 EXECUTIVE SUMMARY

For purposes of this executive summary , we have identified and summarized the bulleted and checked items directly from the 2010 Order to ensure a comprehensive, competitive response. The Order says our a pplication should help communities secure air service enhancements that will be responsive to their air transportation/air fare needs on a long-term basis after the fi nancial support of the grant has ended. Specifically, the Order ident ifies the following items and our response follows each.

1. Promoting awareness among reside nts of locally available service. Government and business teaming for informal air service recruitment efforts were initiated some years ago and continue to represent the Provo community. These ongoing air service efforts and economic devel opment efforts repres ent almost every local constituency, and fully meet the intent and spirit of a pu blic-private partnership. 2. Attracting a new carrier through revenue guarantees or operating cost
offsets. As you will read in this application, the Provo community is supporting this air service effort by providing $150,000 wort h of support. Provo City Corporation has already spend in excess of $100,000 to obtain scheduled air service. 3. Attracting new forms of service, such as on-demand air taxi service. While the Provo community is herein int ending to attract lo w-cost scheduled air service and this application is written to seek support to make that happen, we believe non-scheduled charter activity will continue to be an important part of the airport’s suite of services. 4. Offering an incumbent carrier fina ncial or other incentives to lower its fares, increase its frequencies, add ne w routes, or deploy more suitable aircraft, including upgrading its equi pment from turboprops to regional jets. Although the Provo Municipal Airport does not have an incumbent carrier, we propose to add a new route in cooperati on with an existing low-cost carrier. 5. Combining traffic support from su rrounding communities with regionalized service through one airport; or provid ing local ground transportation service to improve access to air service to the community and the surrounding area. The Provo Municipal Airport is increasingly becoming an important part of the ability of our business community to remain co mpetitive and for the citizenry’s local access to the national air transportation syst em. The Provo community believes that the airport, in this regard, will only incr ease in scope and role. There are several cities, towns, and counties within the ca tchment area outside of Utah Valley.

In addition, the Order not es these as important:

6. A description of the comm unity's existing air service. A detailed description may be found in the Pr oposal section of this application. 7. A synopsis of the communi ty's historical service. A detailed description may be found in the Proposal section of this application.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

2 8. A description of the community ai r service development efforts over the past five years and the resu lts of those efforts. A detailed description may be found in the Proposal section of this application. 9. A description of the community air service needs or deficiencies. A detailed description may be found in the Proposal section of this application. 10. A strategic plan for meeting t hose needs under the Small Community Program, including: The Action Plan for the Provo Airpor t contains the strategic plan. (1) Clear identification of the target audience of each component of the proposed transportation initiative, incl uding all advertising and promotional
efforts. The target audience for this application is the Denver-bound/connecting traveler based upon our recent air service market analyis. The primary reason for working through Denver International Airport as proposed is for its connecting ability. Advertising and marketing is contained in the Action Plan section. (2) A realistic timetable for impl ementation of the grant project. As outlined in the Action Plan section, init iation of the service would begin as soon
as the service is funded with the SCASDP grant and coordinated wit h the airline. (3) An explanation of how the service will become self-sufficient. As outlined in the Action Plan section, self sufficiency is demonstrated with the appropriate load factor and yield. Advertis ing, promotions, and a public relations program are all part of t he marketing program to suppo rt the air service. (4) A clear outline the goals and obj ectives sought to be achieved. The goal is to bring low-cost scheduled air service to the Provo community from Denver International Airport. 11. A description of any public-private pa rtnership that will participate in the project. Provo City Corporation and the Provo business community (the public-private partnership) represent public and privat e local interests in this regard. Other surrounding counties will also benefit and may be asked to participate in the future. 12. A detailed description of the fundi ng necessary for implementation of the service, including the federal a nd non-federal contributions. The grant amount requested is $500,000 while airport and community cash and inkind contributions total $150,000 for a total proposal amount of $650,000. More

details are found in t he Action Plan section. 13. An explanation of how the community will ensure that its own funding contribution is spent in the manner proposed. Provo City Corporatio n will ensure that funds are spent timely and wisely. Explanation is found in the Perf ormance Measurement section. 14. A description of how the community w ill monitor the progress of the grant project and the identity of critical mil estones to be met during the life of the grant. A description of our responsiveness in this regard found in the Performance
Measurement section.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative
3 15. A description of how the community plans to continue with the project if it is not self-sustaining after the grant award expires. We believe that we have prepared a very strong proposal for DOT consideration. The Provo community has committed to $150,000 in local funds, of which $50,000 is local cash. The Provo Community is commi tted to the six-month start up period and our estimates of demand herein show potentia l for a substantial increase in demand
as the market matures. 16. Designation of a legal sponsor res ponsible for administering the program. Provo City Corporation with minimal assistance from th e business community and
substantial assistance fr om the Airport Manager and outside consultants will administer the grant and the activities out lined in the Action Plan section.

Also, the Order indicates that priority will be given to those applicants who competitively answer these inquiries:

17. Air fares are higher than the national average air f ares for all communities;
Given that no scheduled service exists , this question does not apply. 18. The community or consortium wi ll provide a portion of the cost of the activity from local sources other than airport revenue sources. The Provo community proposes to provi de nearly $100,000 of in-kind funding for the proposed service over a year. 19. The community or consortium has est ablished or will establish a publicprivate partnership to facilitate air carrier service to the public. The Provo community (the public-private partnership) is established and has engaged air service recruitment efforts and strategies. 20. The assistance will provide material benefits to a broad segment of the traveling public, including business, educational institutions, and other enterprises, whose access to the air system is limited. We expect that the grant will be used to establish a new profitable route for a national air carrier, a new low-cost way for the residents of the Utah county and surrounding counties (catchment area) to connect to the world’s air transportation system and provide for a su bstantial economic benefit to the
residents and businesses of the Utah Vall ey. Several educational institutions exist within the catchment area, includ ing as Brigham Young University with a 35,000 student population and the LDS Mi ssionary Training Center where 25,000 students are trained annually.
21. The assistance will be u sed in a timely manner. The Provo community antic ipates that assistance will be drawn on a monthly
basis until exhausted. 22. The relative size of each applicant community. As can be seen in the Major Issues section of this application, we are a community with a relatively small number (673,000) of citi zens, fitting the spirit and intent of the Small Community Air Service Program.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

4 23. The geographic location of each a pplicant, including the community's proximity to larger centers of air ser vice and low-fare service alternatives. Provo is approximately 55 miles south fr om the Salt Lake City Metropolitan area, separated by a congested Interstate 15 drive. 24. Whether the community's proposal, if successfully implemented, could serve as a working model for other communities. Not only do we believe that this model will be successful, but believe variants of
this model have been successful elsewhere. We hope to refine and improve upon previous business models and share that information with those to follow. 25. Current demographic indicators for the community, such as population, income and business activity. The Major Issues section cont ains this information. 26. The community's demonstrated co mmitment to and participation in the proposed grant project. The Provo community is committed to attrac ting low-cost air carrier service and we
believe the service will be sustainable given the market analysis conclusions reached in upcoming pages. 27. The grant amount requested compared with total funds available for all
communities. The Provo community believes that our pr oposed assistance figure is large enough to be effectual but small enough to make us competitive. 28. The proposed federal grant amount requested compared with the local
share offered. The Provo community believes that our pr oposed share is comparable to what may be found in other competit ive applications.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

5 PROPOSAL OF PROVO AIRPORT (PVU)

Introduction

The Provo community has for a number of years been preparing t he Provo Municipal Airport (PVU) to be the commerc ial airport for the Utah Vall ey, a market catchment area of approximately 673,000 people.

This catchment area includes Utah County
and five smaller counties
to the south. The Utah Valley comprises approximately 22% of
the economic base of
the Wasatch Front.
Sabre MIDT data
indicate that 17% of the originating passengers
from the Wasatch Front are from Utah County alone, with a population of 545,000.

Community leaders
believe that passenger air service with jet equipment to key
markets in the west will help to continue the development of area
business. To add new
air service at Provo Municipal Airport, the
airlines need to view Provo Municipal Airport as being more beneficial to their long term goals than other airports. Airlines are seeking route profitability, good facilities, community support, available resources for long term improvements, and limited co mpetition. Initial or short-term incentives such as reduced fees, free rents, and promoti onal funds will be necessary to attract new air service.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

6 New commercial air service at Provo Air port will produce new jobs and bring revenue to the community. Revenue from new air service w ill create visitor expenditures at hotels, restaurants, car rentals, and local shops. The Ai rport will receive new fees in the form of terminal rents, landing fees, fuel flowage f ees, and passenger facility charges. The new airline will purchase fuel, supplies, and crew meals. All of these expenditures will translate into new jobs.

Eight other airports in the west, serving citi es approximately the same size as the Provo Municipal Airport market, average 28 jet fl ights and 17 commuter flights per day. The top twenty air markets for Salt Lake City Inte rnational Airport have hi storically accounted for approximately 60% of the total passenger s for the Airport. Fourteen of these top 20 markets for Salt Lake City Inter national Airport are located in the western states. It is expected the same trend will hold tr ue for Provo Municipal Airport.

The Provo Municipal Airport market is a si gnificant part of the total Salt Lake City International Airport market. The Provo Muni cipal Airport market area has 26.8% of the population, 23.6% of the househ olds, 20.6% of retail sales, and 22.2% of the buying income for the entire region. A weighting of these econom ic indices gives the Provo Municipal Airport market ar ea a 20.1% share of the tota l air travel market.

Based on Sabre MIDT data for the Provo Airport market area, the current passenger potential to all points in the United States is 718,000 an nual passengers.

The passenger forecast for Provo Airport indi cates that there is a large enough demand to support daily jet flights to DEN, DFW, LAS, LAX, PHX, SFO and SEA. Utilizing fares comparable to the average fares at Salt Lak e City International Airport, flights to Denver, Los Angeles, Phoenix, Portland/Sea ttle, and Las Vegas are projected to be profitable with stand ard twin jet aircraft. Service to and from Los Angeles will be very
attractive for the international market and serv ice to Denver will be very attractive for customers connecting to the mi dwest, east, or southeast.

Today, catchment area passengers must drive to Salt Lake City International Airport on a very congested freeway (Inter state 15) and the drive can ta ke as much as two hours depending on traffic conditions and the origin of the drive. Furthermore, major construction is expected over the next two y ears on this interstate. This will be a substantial hassle and will play a large role in the potential init ialization of air service.

Major Issues
Due to drastic shifts in the commercial avia tion business model, the air traveler in the United States has had to endure a much longer transit time through airports, higher load factors and poorer service on the airlines, a nd a reduction of flights and seats to many markets has occurred. Security measures implemented after 9/11 often require air travelers to arrive at an airport two hours in advance of departure for domestic flights
and three hours in advance of departure for international fl ights. Travelers ticketed onProvo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

7 commercial service providers located at hub airports having increa singly endured longer lines for checking in, checking baggage and fo r passing through the security gates.

To remain competitive and prof itable, airlines continue to cut costs through reducing employee wages/benefits, st affing levels and discontinui ng non-performing routes. Morale issues with remaining airline staff have impacted customer service levels with the traveling public. Several carriers have exited the industry, while mergers and takeovers have affected other major serv ice providers (i.e.-Delta/Northwest; Republic/Frontier, etc.). I ndustry consolidation has been expected for some time but seems to be just now gaining momentum while increasing passenger loads continue to strain capacity and profitability even in the current economic uncertainty.

With new marketing strategies to retain market share, increase revenue and enhance brand recognition, commercial air service prov iders are opting to ex pand air service to smaller airports. This program makes it easier fo r the air traveler that lives or works near these smaller airports to more easily r each business or personal destinations and also reduces the congestion at the major airpor ts by spreading out the passengers and flights to other airports.

The Role of Provo Airport The Provo Municipal Airport is currently a general aviation airport and an commercial service alternate for Salt Lake City International Airport. The Provo Municipal Airport fits the classic role of a satellite airport. Prov o Municipal Airport is sponsored, owned and operated by Provo City Corporation. The Ai rport's budget is approved by the City and any annual deficient is made up solely by the City. As such, any "In-Kind" contributions made by the Airport toward this grant request are a subsidy of the City. Provo Municipal Airport is managed by an Airport Manager that reports to the City Department of Public
Works.

The Provo Municipal Airport is designated a Part 139, Class 1, Category III facility. Provo Municipal Airport has completed majo r improvements to it s runways and aprons. The Provo Airport presently accommodates c harter operations, small cargo, air taxi operations, general aviation, aircraft stora ge, and aircraft maintenance and repair. Provo Municipal Airport is minutes from In terstate 15 giving it easy access to all
communities in the catchment area.

The primary runway is 8,600 f eet long by 150 feet wide with high intensity lighting, a 140,000 pavement strength rati ng, ILS/DME and GPS approa ches, VOR on the field,
Air Traffic Control Tower and Radar. These ar e the necessary aviation infrastructure items to safely accommodate airline traffic. Initially, passengers will utilize Millionaire Aviation Terminal; check-in counters for tw o airlines, a departure lounge with security and a common baggage claim area all exist wit hin the building. Discussions with TSA regarding space, security equipment and per sonnel have already occurred and await a carrier. Parking and rental cars are currently available right in front of the current
terminal.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative
8 Factors That Have Affected Air Service Provo Municipal Airport does not have scheduled passenger air service. The Salt Lake City International Airport, in t he past, has been able to meet the air travel needs of the total metropolitan area. In the past few years getting to and using Salt Lake City International Airport has become difficult and time consuming.

The development of a satellite airport in t he Salt Lake City metro market would help eliminate congestion and lo st time for air travelers. Prov o Municipal Airport is the ideal location for a satellite airport in the region. In the past, the Airport did not meet the air carrier standards for passenger air service. No w the Airport has insrastructure that can accommodate standard twin jet aircraft and sc heduled service jet aircraft. The Provo Municipal Airport has a pr ivately-owned air terminal t hat can accommodate regional passenger air service. The Provo Munici pal Airport also ow ns land that can
accommodate a new modern terminal if the passenger and flight demand becomes large enough. The current Ai rport Master Plan anticipates this possibility.

The Air Service Market Study indicates th at the catchment area for Provo Municipal Airport is large enough to support passenger air service to major hub markets. Airport Management has upgraded the Provo Airport to meet the operationa l requirements of
the commercial airlines. Based on other metr o areas with multiple airports, the Provo Municipal Airport is well located in the Salt Lake metro area and should be attractive to the travelers in its region and al low the airlines the ability to operate either regional jets or standard twin jets.

Catchment Area and Community Profile The Provo Municipal Airport is a convenient airport for the residents of Utah Valley, Utah County and five counties to the south and to the east. The dividing point between Provo Municipal Airport and Salt Lake City Inte rnational Airport, in terms of distance and driving time, is the “point of the mountain”. This a geologica l (Salt Lake/Utah Valley) and cultural (Salt Lake/Provo-Orem) dividing li ne of the Salt Lake Metropolitan Area.

The Provo Municipal Airport catchm ent area encompasses a population of approximately 673,000 and 194,000 households.

County Population 2000 2009 Growth Utah 368,540 545,307 48.0% Carbon 20,425 19,989 (2.2%) Duchesne 14,371 17,948 24.9% Juab 8,238 10,244 24.4% Millard 12,405 12,276 (1.1%) Sanpete 22,763 25,946 14.0% Sevier 18,842 19,976 6.0% Wasatch 15,215 21,600 42.0% Totals 480,659 673,286 40.1%Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

9 Total retail sales for the catchment area approx imate $7.7 billion. Approximately 32% of the area households have an annual buyi ng income in excess of $50,000.

County Housings Sales($) Buying Income ($) Utah 143,052 6,105,784 7,125,712 Carbon 9,127 296,113 308,690 Duchesne 8,125 224,307 228,015 Juab 3,522 134,058 121,167 Millard 4,857 135,632 182,975 Sanpete 8,637 179,318 285,380 Sevier 7,846 361,416 282,590 Wasatch 9,660 271,461 432,972 Totals 194, 825 7,707,819 8,967,501

Brigham Young University and Ut ah Valley State University ar e a great source of air
travel for the catchment area. The Universi ties each enroll of 35,000 students who come
from all over the United Stat es and from foreign countries. Both Universities have a large demand for business travel, sports charte rs, individual student travel, and visiting
friends and relatives. The Missi onary Training Center is also a major force for travel. It moves 25,000 to 30,000 missi onaries annually. Other major employers include: Ameritech Library Systems, No vatek, Convergys, Corel, Folio Corporation, Micron Technologies, Nature’s Sunshine, Nimbus M anufacturing, Novell, Nestle, Nu Skin, Powder River Manufacturing, Power Quest Co rporation, Symantec, Intel and Viewsoft.

Employment Sector Percent of Total
Education and Health Services 20.8% Trade, Transportation, Utilities 16.1%
Government 14.5%
Professional and Business Services 12.0% Manufacturing 10.7% Leisure and Hospitality 7.8% Construction and Mining 7.3% Information Technology 4.4%
Financial 3.7%
Other Services 2.4%

The airport is also a gateway for tourism. There are five ski areas, Alta, Brighton, Snowbird, Solitude and Sundance that are within thirty minut es of the Provo Municipal Airport. When trying to plan the perfect Utah family vacation, there is no better destination than Provo. With the beauty of t he scenery, diversity of the activities, and abundance of family attractions including: skiing, hiking, horseback riding, fishing, rafting, and biking. Utah Va lley is the gateway to the following recreational opportunities: Utah Lake, Thanksgiving Poin t, Timpanagos Cave, Seven Peaks Resort Water Park, Provo Town Square and the BY U Earth Science Museum. Approximately 2,700 hotel rooms exist in the City with rates ranging fr om $29 to $395 per night.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative
10 MARKET ANALYSIS

The Provo Municipal Airport ma rket area exhibits the charac teristics of other successful satellite airports like Orange County and Burbank:

• The catchment area is experiencing pos itive economic growth, and citizens and businesses in the area are seeking a more convenient way to travel by commercial airline than the major airport.

• There is heavy highway congestion from t he market area to the major airport and this creates long driving times, ex tra hassle and adds to area pollution.

• The major airport suffers from long lines and long waits to process through the security area.

• Lower fares to regional markets c an be obtained at the satellite airports.

Given a mature air service market and t he catchment area population, the Provo Municipal Airport can effect ively accommodate a substantial number of passengers and markets. Other mature market satellite airpor ts, like Colorado Springs for example, have a number of daily non-stop departures.

Community Population Non-Stop Markets Provo, UT 673,000 0 Colorado Springs, CO 608,510 9 Boise, ID 594,960 17 Eugene, OR 343,960 8 Grand Junction, CO 137,700 6 Idaho Falls, ID 166,070 5 Spokane, WA 468,000 14 Reno, NV 453,400 13

Almost all of the catchment area pass engers are using Salt Lake City (SLC) International Airport. Based upon Sabre MIDT data, the catc hment area generates 850,000 passengers per year. Catchment ar ea bookings account for 17% of SLC initiated passengers in the top 50 city- pair markets and 11% of catchment area passengers are internationally-bound.

Catchment Area Community B ookings Daily Pax City Share Provo 588,814 1,613 69.1% Orem 148,462 406 17.4% American Fork 73,068 200.2 8.6% Price 31,559 86.5 3.7% Lindon 5,636 14.7 0.6% Payson 3,383 9.3 0.4% Lehi 1,936 5.3 0.2% Totals 852,583 2,335 100%Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

11 Given that Provo Municipal Ai rport does not currently have scheduled air carrier service,
SLC data from Sabre MIDT data for 2009 were used to infer market share. The following table shows 661.6 average daily SLC enplanements bound for DEN and that 139.0 per day (50,735 annually), or 12%, of them originated from the Provo catchment area. Of course, not all those passengers connected through Denver.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

12 An annual number of passengers fo r the potential Provo market can then be calculated from the top city-pair SLC markets from the Sabre data:

Market SLC PDEW SLC Annual PVU Share PVU Potential Passengers SLC – DEN 661.6 482,970 21% 101,423

SLC – LAX 618.9 451,800 18% 81,324 SLC – BUR 72.3 52,780 16% 8,445 SLC – LGB 430.1 313,970 16% 50,235 SLC – ONT 111.6 81,470 25% 20,367 SLC – SNA 272.1 198,630 13% 25,822
LA Area Totals: 1505 1,098,650 -- 186,193

SLC – SFO 255.9 186,800 20% 37,360 SLC – SJC 121.1 88,400 27% 23,868 SLC – OAK 341.4 249,220 24% 59,813 Bay Area Totals: 718.4 524,420 -- 121,041

SLC – LAS 795.0 580,350 12% 69,642 SLC – DFW 265.5 193,810 29% 56,205 SLC – PHX 672.3 490,780 9% 44,170 SLC – SAN 526.8 384,560 12% 46,147 SLC – SEA 490.7 358,210 13% 46,567 Grand Totals: 5,635.3 4,113,750 -- 671,388

Based upon the above information, the potentia l airlines and markets are as follows: DEN: Frontier, United DFW: American SFO: United, Southwest LAX: Southwest, United OAK: Southwest SEA: Alaska LAS: Allegiant; Southwest PHX: USAir, Sun Country, Allegiant

Potential Passengers Based on these potential passe ngers, there are a number of airports that are large enough to support service from Provo: Denver, Los Angeles International, Long Beach, Oakland and Las Vegas. All five of these markets are prime candidates for new air service and would need the incentive package to support the recruitment of air service.

A decision was reached to solicit Frontier Airlines from their Denver hub. This route has the greatest potential for success because it has more potential passengers than any other city. The community wishes a low-cost carrier and because Fron tier’s operation at Denver offers easy, one-stop flights to the eastern, southern and northern US along with the potential for international flights.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative
13 Because of Denver’s hubbing ability, additiona l city-pairs should be included in the potential passenger counts. Also, it is not r easonable to assume that the service will capture the entire market; an 80% share of t he market is assumed for the Denver route and a 20% share is assumed to connecting cities. SLC Sabre data for the connecting
cities was used:

Market PVU Potential Pax Market Share Potential Pax PVU to Denver 101,423 80% 81,160 PVU to Atlanta 32,850 20% 6,570 PVU to Albuquerque 26,940 20% 5,390 PVU to Chicago-MDW 44,680 20% 8,940 PVU to Dallas DFW 56,360 20% 11,270 PVU to Detroit 13,500 20% 2,700 PVU to Ft. Lauderdale 9,560 20% 1,910 PVU to Houston 11,600 20% 2,300 PVU to Kansas City 13,720 20% 2,740 PVU to Minneapolis 20,000 20% 4,000 PVU to New York JFK 66,360 20% 13,270 PVU to Orlando 34,740 20% 6,950 PVU to St. Louis 18,840 20% 3,770 PVU to Tampa 7,800 20% 1,560 PVU to All Others 20,000 20% 8,000 Total 160,540

Potential Air Service Provo City and Frontier represent atives met at the recent ACI Jumpstart Conference to discuss the proposal. Frontier planning staff i ndicated a willingness to investigate the proposal and Provo City representatives will a gain meet with Frontier Airlines staff on September 2, 2010 to flesh out details. Provo feels that Frontier is supportive of the proposal, but simply needs a bit more time to finalize market planning. Frontier Airlines has provided a support letter found in t he Appendix following this narrative.

To determine the revenue guarantee that ma y be needed, the Provo-Denver market was analyzed. It is estimated that it will take approximately 50,00 0 annual origin and destination passengers to support two daily r ound trip flights per day with ERJ-145, 50 seat regional jet equipment.

Both Frontier and Provo agree that there wil l be a ramp-up period of passengers and
revenue until Frontier reaches its full market shar e. In this instance, it is assumed that the ramp-up period will take approximately six months.

Listed on the next page is a sample schedule that will m eet local needs as well as connecting needs.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

14 POTENTIAL FLIGHT SCHEDULE

Non-Stop Market Depart Arrive Aircraft Frequency Provo - Denver 6:15 am 7:25 am ERJ-145 Daily Denver - Provo 6:05 pm 7:15 pm ERJ-145 Daily
Provo - Denver 9:15 am 10:25 am ERJ-145 Daily Denver - Provo 3:50 pm 5:00 pm ERJ-145 Daily

Proposed Fares Because many of the passengers on this new route are expected to be connecting, special attention will be required to make su re that the fares are competitive and that
times are coordinated with Denver banks. Fares to Denver wi ll need to be competitive with SLC in order to attract pass engers and develop the passenger base.

Passenger and Revenue Forecast Prudent planning for this proposal suggests that Provo will hav e a conservative penetration rate for the planned f our daily flights. It is estimated that the Frontier will
achieve a 50% load factor in the first mont h and increase five per centage points until it
reaches a 75% load factor in month six. Th is assumption is based on experience at
other markets in the west which have introduc ed new service to an airport that did not previously or recently have air service. Based on these ramp-up assumptions and small increases in fares through the start up period, it is estimated that t he airline will achieve 80% market penetration in the Provo-Denver route following month six and reach a near break-even point.

SUBSIDY REQUIRED FOR SIX MONTHS OF OPERATIONS

Month Load Fare Pax. Revenue Expense Profit(Loss) Cumulative
1 50 $95 2,200 $209,000 $396, 000 ($187,000) ($187,000)
2 55 $100 2,420 $242,000 $396, 000 ($154,000) ($341,000)
3 60 $100 2,640 $264,000 $396, 000 ($132,000) ($473,000)
4 65 $115 2,860 $328,900 $396,000 ($67,100) ($540,100)
5 70 $115 3,080 $354,200 $396,000 ($41,800) ($581,900)
6 75 $115 3,300 $379,500 $396,000 ($16,500) ($598,400)

During the start up phas e, it is estimated that the Pr ovo Community will need a revenue guarantee of $598,400 to cover initial six-m onth operating losses. On an annualized basis, the new route is projected to produce $4,806,000 in passenger revenue. Operating costs are estimat ed to be $4,752,000, resulting in an operating profit for regional jet service. Note that the 41,400 passengers gener ated under this scenario are substantially less than the 160,540 potential passengers noted on the previous page and half of the potential 81,130 pass enger count just to Denver.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

15 ACTION PLAN FOR PROVO AIRPORT

Public-Private Partnership The Provo Municipal Airport is administere d by the Provo City Co rporation through its Airport Manager, Mr. Steve Gl eason. The Utah Valley C hamber of Commerce and its members constitute the private portion of the Partnership. Member s of the Chamber are key leaders from the major businesses in the Valley. Both the Ci ty and the Partnership
know that continued economic development depends on low-cost scheduled air service with flights via a hub.

The Partnership is committed to completing the following Action. The Airport Manager will administer this program under the direct ion of the Partnership . The Airport Manager and staff of the Provo Municipa l Airport will execute all feder al grant offers and process all associated reimbursement requests.

Project Goals The goal of the Partnership is to establish scheduled air servic e with Frontier Airlines to the Provo Municipal Airport. Low-cost scheduled air service will allow the community to better compete for new business and allow the businesses, industry, government organizations and the community as a whole to significantly reduce t he amount of travel time and hassle required.

Action Plan Elements The goal of the Action Plan is to addre ss issues associated with the proposed air service that are critical to the long-term succe ss of that service. In this regard, this
Action Plan will address these elements for the Provo Municipal Airport:

1. Recruit new air service for Provo from Frontier Airlines. 2. Market, promote, and support new air service; spread the word around the
catchment area.
3. Secure additional revenue to support airline service.

Marketing Program The advertising, promotions, public relations program are all part of the marketing program to support new air service. The tar get market for the Provo-Denver service is
the business and leisure traveler. New market ing dollars will be spent in the Salt Lake and Utah Valley areas. The marketing in the Provo ar ea will include advertising, promotions, and public relations in the local community. These mediums will be combined in a campaign to introduce the new air service.

Target Audience The target audience for the new air service is the business and leisure traveler. The most effective way to contact this customer is by targeting the co nsumer at a critical time. All of these targets c an be approached utilizing the same advertising media. For a market like Provo and the Salt Lake City metr o area, the use of television, radio,Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

16 newspaper, and outdoor are the best media. Even though television is the best media for reaching the leisure market, the small amount of air service that will be offered makes television not a sub-optimally cost effective media. The Provo Community will find that a combination of local radio, newspaper, and outdoor billboards will be the most cost effective approach to an adve rtising program. This should also be supplemented with a direct mail program and a series of press releases.

Marketing and Media Selection The Provo Municipal Airport ma rket area can best be reached by using local radio, local newspaper, outdoor, direct mail, trade publications, and the internet. Upon review of the local medium for the Provo market, the fo llowing is recommended. Run advertisements in the Salt Lake Tribune, Deseret News, the Daily Herald and on various Valley radio stations along with the network affiliate television stations.

The Utah Valley Chamber will coordinate a direct mail program to its constituencies and to other businesses in the surrounding areas . The development of a promotion with area businesses with promotional material at the airport will al so be undertaken. A public relations specialist will be retained to issue press releases and handle press
relations.

Total Incentive Package
In order to attract the air service from Frontier Airlines between Denver and Provo an incentive package has been established which would be supportive of their new air
service and reduce the risk of this new ai r service. The total incentive package developed herein includes: flight guarantees to off-set initia l operating losses, funds for marketing and advertising, and waiver of certain airport fees.

TOTAL INCENTIVE PACKAGE FOR NEW AIR SERVICE

Category Estimated Cost SCASDP Grant $500,000 Local Community Cash Contribution $50,000 Airport In-Kind Contribution $100,000 Total Package Costs $650,000

Sponsors Participation Provo agrees to manage the Airport In-kin d program and obtain at least $100,000 in trade. The Small Community Air Service De velopment grant is proposed to cover $500,000 of the total proposed and the remaining $50,000 in cash shall be used for either further subsidy or other exp enses. The Small Community Air Service Development grant will need to cover $500,000 of the total budget.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative

17 Upon the award of this requested grant, the Pa rtnership is prepared to launch a drive to
sell tickets in advance under a “travel bank” program and develop a ba rter program from
local businesses to fund the ma rketing, advertising, and public relations for the new air service. The Airport will offer an attractive fee pr ogram for the first six m onths of service.

PERFORMANCE MEASUREMENT

Recruitment of Air Service Provo City and Frontier represent atives met at the recent Jumpstart Conference to discuss the proposal. Frontier planning staff i ndicated a willingness to investigate the proposal and Provo City representatives will a gain meet with Frontier Airlines staff on September 2, 2010 to flesh out details. Provo feels that Frontier is supportive of the proposal, but simply needs a bit more time to finalize market planning. Frontier Airlines has provided a support letter found in t he Appendix following this narrative.

Marketing and Media Plan The Partnership will work within the commu nity and with a marketing firm to develop a marketing and media plan to suppor t this new air service. This plan will be shared and coordinated through Frontier.

Air Service Performance The City will need Frontier to provide monthl y reports listing the number of passengers carried in both directions, t he number of flights flown, the passenger revenue for the month, other revenue for the month, and the cost of the oper ation. The Partnership will cover the shortfall of any monthly loss until the grant money has been exhausted. If the airline achieves profitability earlier than projected, then the cost offset funds will be either be transferred to supplement marketi ng and advertising for the air service or be
refunded to the US DOT. If Frontier continue s to need some form of incentive after the grant funds have been expended, the Partnership will continue to provide marketing and advertising for Frontier and the Provo Airpor t will continue to offer lower fees.

COMMUNITY SUPPORT

Resolutions supporting the proposal of Provo Municipal Airport and letters of support from Utah’s key congressional delegation and state and local lawmakers are included in the Appendices. Various ci vic and business organizations in the area have also submitted letters and resolutions supporting this proposal and scheduled air service for Provo Municipal Airport and these are included in the Appendices.Provo Airport (PVU), Provo City Corporation, Utah Small Community Air Service Development Program (SCASDP) Application Narrative
18 ASSURANCES

Provo City Corporation hereby provides the U.S. Department of Transportation with the following assurances:

1. It will comply with all of the applicabl e Federal laws, regulations, executive orders, policies, guidelines, and requirements as they re late to the application, acceptance, and use of the Feder al funds for this project.

2. It has legal authority to apply for t he grant, and to finance and carry out the proposed project; that a resolution, moti on, or similar action has been duly adopted or passed as an official act of t he applicant’s governing body authorizing the filing of the application, including all understanding and assurances contained herein, and directing and authorizing th e person identified as the official representative of t he applicant to act in connection with the application and to provide such additional information as may be required.

3. It has access to the funds available for t hat portion of the project costs, which are not to be paid by the United States governm ent. It has sufficient funds to assure operating and maintenance of items f unded under the grant agreement, which it
will own or control.

4. It shall keep all project accounts and reco rds which fully disclose the amount and disposition by the recipient of the procee ds of the grant, the total cost of the project in connection with wh ich the grant is given or used, and the amount or nature of that portion of t he cost of the project supplied by other sources, and such other financial records pertinent to the project. The accounts and records shall be kept in accordance with an acco unting system that will facilitate an
effective audit in accordance wit h the Single Audit Act of 1984.

5. It shall make available for the purpos e of audit and examin ation, any books, documents, papers, and records of the recipient that ar e pertinent to the grant.

6. It will execute the project in accor dance with the approved program narrative contained in the project app lication or with the modifi cations similarly approved.

7. It will furnish quarterly reports as requir ed pertaining to the project and activities.The Honorable Ray LaHood August 24, 2010 Secretary U.S. Department of Transportation
400 Seventh Sheet, SW Washington, D.C. 20590

Subject: Provo Municipal Airport, Provo City, Utah Support for Small Community Air Service Development Program Application, Docket DOT-OST-2010-0124

Dear Secretary LaHood :

I am writing to support the Provo City Airport which has filed an ap plication with the Department of Transportation to participate in the Small Community Air Service Development Grant Program.

Provo City, with support from elected community le aders and local business interests, is working

toward the initiation of direct air service to Denver, Los Angeles, San Francisco and/or Las Vegas from the Provo Airport.

Provo City has completed an Air Service Study which shows excellent potential for the Provo market. Commercial air service, including passenger , and cargo operations, will significantly improve the competitive environment for local businesses in the national and global marketplace. By improving aviation services at the Provo Munici pal Airport, local business travelers will be better able to access important national and international destinations.

Novatek is very supportive of the initiative to br ing scheduled air service to the Provo Airport and would appreciate your considerat ion of Provo City’s application for assistance through the Small Community Air Service Development Grant Program.

Thank you for your time reviewing this letter.

Sincerely,

Travis R. Bird Director, Corporate Development
Novatek, Inc.