Northwest Arkansas Regional Airport is the primary airport serving the communities of Fayetteville, Springdale, Rogers and 

Bentonville. Fayetteville is home to the University of Arkansas; Donald W. Reynolds Razorback Staium is pictured above.

Dun & Bradstreet DUNS Number: 03-810-6196

Tax Identification Number: 71-0702376

Two Digit Congressional District Code: 03

June 11, 2012

Northwest Arkansas Regional Airport Authority

Bentonville, Arkansas

Proposal under the Small Community Air Service Development Program

Docket DOT-OST-2012-0069
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

2

TABLE OF CONTENTS

INTRODUCTORY LETTER .................................................................................................................... 3

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

AIR SERVICE OVERVIEW..................................................................................................................... 5

Catchment Area and Alternate Airports ................................................................................................................. 5

Existing Air Service ................................................................................................................................................ 6

Air Service Development Efforts ............................................................................................................................ 7

AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES............................................................... 9

Capacity Trends ..................................................................................................................................................... 9

Traffic Trends .......................................................................................................................................................11

Leakage to Other Airports in the Region..............................................................................................................13

Domestic Fare Trends..........................................................................................................................................15

Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States .................................17

Domestic Fares Versus Other Airports in the Region..........................................................................................19

STRATEGIC PLAN .............................................................................................................................. 20

Revenue Guarantee for Low-Cost Carrier Service ..............................................................................................20

Goals ....................................................................................................................................................................20

Grant Amendments/Alternate Strategies .............................................................................................................21

PROJECT IMPLEMENTATION, MONITORING AND FUNDING.......................................................... 21

Public / Private Partnerships ................................................................................................................................21

Project Funding ....................................................................................................................................................22

Proposed Implementation Timeline .....................................................................................................................23

PROJECT MONITORING AND FINANCIAL CONTROL...................................................................... 24

Success Metrics ...................................................................................................................................................24

Legal Sponsor......................................................................................................................................................24

Financial Controls ................................................................................................................................................25

APPENDIX A: REQUIRED SUMMARY INFORMATION ..................................................................... 26
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

3

INTRODUCTORY LETTER
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

4

EXECUTIVE SUMMARY

Northwest Arkansas Regional Airport is proposing a Small Community Air Service Development Grant in the 

amount of $1,000,000 to supplement a community-based cash contribution of $100,000, airport cash funding of 

$200,000, community in-kind contributions of $50,000 and airport in-kind incentives valued at $625,052 to provide 

a minimum revenue guarantee for service at Northwest Arkansas Regional Airport by a low-cost carrier.

The average domestic fare at Northwest Arkansas Regional Airport was among the highest of all airports in the 

Lower 48 United States, but the average domestic fare is especially high among Northwest Arkansas Regional 

Airport's peer group airports – airports generating at least 100,000 domestic origin and destination passengers in 

2011. Although Allegiant Air serves Northwest Arkansas, the service is limited to less-than-daily point-to-point 

service to Las Vegas, Los Angeles and Orlando/Sanford. Although Allegiant's fares are lower than the fares 

offered by the network carriers to these destinations, Allegiant's service does not provide for connections beyond 

the destinations, and Allegiant's pricing in Northwest Arkansas does not have a competitve impact on the pricing 

strategies of American, Delta, United or US Airways at Northwest Arkansas. 

The communities served by Northwest Arkansas Regional Airport are relatively isolated, with the closest low-cost 

carrier service available in Tulsa and Little Rock (and to a lessor extent at Branson). The network carriers serving 

Northwest Arkansas do not price fares based on fares at either Tulsa or Little Rock, where pricing by both 

Southwest and Frontier is matched by the network carriers at these airports. 

In 2011, ex-Allegiant airline capacity at Northwest Arkansas Regional Airport was down 25.6% since it peaked in 

2005, and ex-Allegiant traffic was down 17.9% since it peaked in 2006. Even when the impact of Allegiant is 

considered, capacity is down 22.8% since 2005, and domestic traffic is down 7.6% since 2006.

Based on a leakage study completed in June 2011, slightly more than one-fifth of the traffic generated in the 

primary catchment area of Northwest Arkansas Regional Airport is lost to other airports in the region, with the 

airport in Tulsa capturing approximately 12% of the traffic and the airport in Little Rock capturing 6% of the traffic.

Service by a low-cost carrier with a network of destinations beyond the hub or focus city the carrier would serve 

nonstop from Northwest Arkansas, would likely generate a competitive pricing response from the four network 

carriers serving Northwest Arkansas and result in lower fares in the competitive markets.
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

5

AIR SERVICE OVERVIEW

Catchment Area and Alternate Airports

The Fayetteville-Springdale-Rogers Metropolitan Statistical Area is considered as the primary catchment area for 

Northwest Arkansas Regional Airport, where most of the airport's traffic either originates or is destined, but the 

airport also draws some traffic from more rural areas in Arkansas, Missouri and Oklahoma. The July 1, 2011,

Census Bureau population estimate of the Fayetteville-Springdale-Rogers metropolitan statistical area was 

473,830 residents; the population of the metropolitan statistical area grew 35.5% since 2000 from 349,562 

residents. 

Other airports with commercial airline service in the region are located in Tulsa, Little Rock, Fort Smith, 

Springfield, Joplin, and Branson. The airport in Joplin is the closest airport to Northwest Arkansas at 74 miles; the 

airport in Little Rock is the furthest at 218 miles.

Exhibit 1: 60- and 120-Minute Drive Times from Northwest Arkansas Regional Airport and the Location of Alternate Airports in 

the Region

Airport Location

Road Miles from 

XNA

Drive Time from 

XNA

JLN 74 1:26

FSM 83 1:26

BKG 97 2:17

TUL 101 1:47

SGF 111 2:25

LIT 218 3:28

Based on Mapquest.com airport-to-airport calculations
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

6

Existing Air Service

Northwest Arkansas is served by five airlines – American, Delta, United, US Airways and Allegiant -- to 16 

nonstop destinations. With the exception of Allegiant's three destinations, all of Northwest Arkansas' service is to 

major airline hubs or focus cities where connections can be made to other destinations in the airline networks. 

Also with the exception of the Allegiant service, none of the so-called low-cost carriers, including Southwest (or 

AirTran), JetBlue, Frontier, Spirit or Virgin America, serve Northwest Arkansas. Although Allegiant offers low 

fares to Las Vegas, Los Angeles and Orlando/Sanford, Allegiant's service does not provide connections to a 

larger network of cities as the other low-cost carriers typically offer via connections at their hubs or focus cities.

Exhibit 2: Current Routes Operated by Carrier from Northwest Arkansas Regional Airport

The number of departures per day, average seats per departure and seats per day by market and by carrier 

scheduled in August 2012 are displayed in Exhibit 3. With 42.7% of total capacity, American operates more 

capacity at Northwest Arkansas than any other carrier. Delta operates 26.5% of the capacity, United is the third 

largest carrier in terms of capacity, with 16.2%, and US Airways operates 7.9% of the capacity. Collectively,
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

7

American and Delta control more than two-thirds of the airport's total capacity, and the four network carriers 

operate 93.4% of the total capacity at the airport. Allegiant's less-than-daily service to Las Vegas, Los Angeles 

and Orlando/Sanford generates just 6.6% of the total capacity, although Allegiant's capacity can vary lower or 

higher depending on the time of year.

Exhibit 3: Departures per Day*, Seats per Departure and Seats per Day by Market and Carrier at Northwest Arkansas –

August 2012 (OAG Data as of May 23, 2012)

* The number of departures per day is displayed in increments of sevenths (because there are seven days in a week). "1 5/7" is read as one 

flight seven days a week with a second flight operated five of the seven days in a week. 

Air Service Development Efforts

Although Northwest Arkansas Regional Airport has relatively good service operated by the four network carriers 

serving the market to major hubs and focus cities, there is no low-cost carrier service at the airport and virtually no 

pricing competition among the network carriers serving Northwest Arkansas. The first priority of the airport and 

the community is, therefore, to obtain service on a low-cost carrier, but the airport is taking a two-pronged 

Departures 

per Day

Seats per 

Departure

Seats 

per Day

% of Total 

Capacity

American DFW 8 71 564 23.3%

LGA 2 1/7 37 81 3.4%

ORD 6 5/7 58 388 16.0%

Total 16 6/7 61 1,033 42.7%

Delta ATL 6 4/7 53 347 14.4%

CVG 6/7 50 44 1.8%

DTW 1 68 64 2.6%

MEM 1 6/7 50 94 3.9%

MSP 1 6/7 50 94 3.9%

Total 12 1/7 53 642 26.5%

United/Continental DEN 1 2/7 50 68 2.8%

EWR 1 50 50 2.1%

IAH 2 6/7 50 140 5.8%

ORD 2 5/7 50 134 5.5%

Total 7 6/7 50 392 16.2%

US Airways CLT 2 5/7 53 148 6.1%

DCA 6/7 50 44 1.8%

Total 3 5/7 53 192 7.9%

Network Carrier Total 40 4/7 56 2,258 93.4%

Allegiant LAS 2/7 150 44 1.8%

LAX 2/7 150 44 1.8%

SFB 3/7 150 73 3.0%

Total 1 150 160 6.6%

Grand Total 41 4/7 58 2,418 100.0%
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

8

approach by aggressively pursuing both service from a low-cost carrier and service from incumbent airlines to 

destinations not currently served by the network carriers. Airport management has met with both low-cost carriers 

and network carriers over the past 12 months to discuss the performance of existing service at Northwest 

Arkansas and potential new service from the network carriers and new service from low cost carriers. These 

discussions have helped shape the strategy to develop Northwest Arkansas Regional Airport's air service 

development objectives. The basic message communicated from the network carriers regarding their pricing 

strategies in the market is they charge what they believe the market will bear and they are satisfied with current 

levels of profitability. The low-cost carriers believe traffic could be stimulated with lower fares, but their level of 

confidence in the market would increase if the airport and community could provide a revenue guarantee.
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

9

AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacity Trends

Northwest Arkansas' total capacity (to include network carriers and Allegiant), measured in terms of seats per day 

each way, is down 22.8% since 2005. Also since 2005, Northwest Arkansas has lost slightly more than onefourth or 25.6% of its ex-Allegiant capacity. The ex-Allegiant capacity reduction is the result of discontinued 

service to Los Angeles, St. Louis, Miami, Raleigh/Durham and Salt Lake City, substitutions of regional jets for 

mainline equipment in markets such as Chicago and Memphis and combinations of fewer frequencies and/or the 

use of smaller regional jet aircraft in markets served from Northwest Arkansas. With the exception of Allegiant's 

limited less-than-daily service to Las Vegas, Los Angeles and Orlando/Sanford beginning in 2009, Northwest 

Arkansas has never been served by a low-cost carrier, and Allegiant provides only point-to-point service to the 

three destinations it serves from Northwest Arkansas.

Exhibit 4: Seats per Day Each Way at Northwest Arkansas Regional Airport (Ex-Allegiant and Allegiant) Year-End Fourth 

Quarter 2002-2011 (DOT T-100 data) 

This Section Continued on Next Page

1,725

2,177

2,511

2,752

2,436

2,537 2,516

2,414

2,271

2,047

2 8 6 9 7 8

0

500

1,000

1,500

2,000

2,500

3,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Seats per Day Each Way

E x-Allegiant Seats per Day Each Way Allegiant Seats per Day Each Way
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

10

Exhibit 5 illustrates that American, Delta and United/Continental have reduced capacity at Northwest Arkansas

since 2005. American's capacity is down 30.3%, Delta's capacity is down 33.3%, and the combined capacity of 

United and Continental is down 4.8%. The capacity of US Airways is up 7.9%.

Exhibit 5: Seats per Day Each Way by Carrier at Northwest Arkansas Regional Airport – Year-End Fourth Quarter 2002-2011

(DOT T-100 data) 

This Section Continued on Next Page

0

500

1,000

1,500

2,000

2,500

3,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

976 1,076 1,091

1,295 1,207 1,258 1,276 1,160

1,019 903

688

773

972

906

677

703 655

649

680

604

2 9

206

325

432

427

452 457

472

449

411

3 2

122

122

120

125

125 128

133

123

129

5 7

137

155

Seats per Day Each Way

American Delta/Northwest United/Continental US Airways Allegiant
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

11

Traffic Trends

While Northwest Arkansas' capacity peaked in 2005, traffic peaked in 2006 at approximately 1,091,000 annual 

origin and destination (O&D) passengers. Since the peak in 2006, total traffic is down 5.4%, but the decline in 

total traffic is masked by Allegiant entering the market in 2009 and international traffic increasing 22.8%. 

Domestic ex-Allegiant traffic, which generated approximately 80% the total traffic in 2011 at Northwest Arkansas,

is down 17.9% since 2006.

Exhibit 6: Annual Domestic and International Origin and Destination (O&D) Passengers at Northwest Arkansas Regional 

Airport Year-End Fourth Quarter 2002-2011 (DB1B data)

This Section Continued on Next Page

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

692,360

763,090

881,990

1,007,100 1,009,200 999,360 955,850

879,850 857,290 828,430

37,690 91,460 103,450 

41,400 

51,210 

64,330 

75,350 81,680 84,380 

86,480 

87,130 

98,120 100,300 

Annual Domestic O&D (Ex-Allegiant) Annual Domestic O&D (Allegiant) Annual International O&D

1,032,180 1,046,870

1,004,670

1,042,330

1,082,450 1,090,880 1,083,740

946,320

814,300

733,760
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

12

When Northwest Arkansas' annual O&D data is translated to passengers per day each way (PDEW), ex-Allegiant 

domestic traffic is down 247 PDEW from 1,382 PDEW in 2006 to 1,135 PDEW in 2011; international traffic is up 

25 PDEW from 112 PDEW in 2006 to 137 PDEW in 2011, Allegiant generated 142 PDEW in 2011 (versus none 

in 2006), and total traffic is down 80 PDEW from 1,494 PDEW in 2006 to 1,414 PDEW in 2011. 

Exhibit 7: Annual Domestic and International Passengers per Day Each Way (PDEW) at Northwest Arkansas Regional Airport

Year-End Fourth Quarter 2002-2011 (DB1B data)

0

250

500

750

1,000

1,250

1,500

1,750

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

948

1,045

1,205

1,380 1,382 1,369 1,306

1,205 1,174 1,135

52 125 142

57

70

88

103 112 116

118

119

134 137

Domestic PDEW (Ex-Allegiant) Domestic PDEW (Allegiant) International PDEW

1,414 1,434

1,376

1,424

1,483 1,494 1,485

1,293

1,115

1,005
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

13

Leakage to Other Airports in the Region

Despite having no airport within a two hour drive of Northwest Arkansas Regional Airport with low-cost carrier 

service, a leakage study of 2010 traffic completely in June 2011 revealed slightly more than 20% of the traffic 

generated within the primary catchment area of the Northwest Arkansas Regional Airport is lost to other airports 

in the region. The airport in Tulsa captured 12.4% of the traffic, and the airport in Little Rock captured 5.7% of the 

traffic generated in the catchment area of Northwest Arkansas Regional Airport (the remaining traffic was lost to 

the airports in Fort Smith, Springfield, Branson and Joplin). 

Exhibit 8: Airport Origin for Northwest Arkansas Catchment Area Traffic January 2010 – December 2010 (June 2011 Leakage 

Study Data)

The high percentage of traffic leaked to the airports in Tulsa and Little Rock is not surprising given the high fares 

at Northwest Arkansas Regional Airport, the lack of low-cost carrier service at the airport, and the service by 

Southwest in Tulsa and Southwest and Frontier in Little Rock. Based on the data collected in the June 2011 

leakage study, the average fare (domestic and international) paid at Northwest Arkansas was $259 each way 

79.1%

12.4%

5.7%
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

14

versus $191 at Tulsa and $202 at Little Rock. The fare paid by travelers using Northwest Arkansas was 35.6% 

higher versus Tulsa and 28.2% higher versus the average fare paid at Little Rock.

Exhibit 9: Average Fare Paid by Northwest Arkansas Catchment Area Passengers by Originating Airport – January 2010 

through December 2010 (June 2011 Leakage Study Data)

$0 $50 $100 $150 $200 $250 $300

Northwest Arkansas

Tulsa

Little Rock

Other

$259

$191

$202

$181

Average One-Way Fare
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

15

Domestic Fare Trends

As airlines have cut capacity in Northwest Arkansas since 2005, fares have increased. Since Northwest 

Arkansas' capacity peaked in 2005 at 2,752 seats per day each way, the average domestic fare for all domestic 

traffic, including Allegiant traffic, increased $67 each way or 36.4% to $250 each way. This increase came as 

Northwest Arkansas' capacity fell 22.8% and traffic fell 7.5%.

Exhibit 10: Passengers per Day Each Way (PDEW), Seats per Day Each Way and Average Domestic One-Way Fare at 

Northwest Arkansas Regional Airport – Year-End Fourth Quarter 2002-2011 (DOT T-100 and DB1B Data – All Carriers)

This Section Continued on Next Page

1,725

2,177

2,511

2,752

2,436

2,537 2,516

2,443

2,340

2,124

948

1,045

1,205

1,380

1,382 1,369 1,306 1,257 1,300 1,277

$194

$203

$198

$183

$208 $211

$236

$199

$225

$250

$100

$150

$200

$250

$300

0

500

1,000

1,500

2,000

2,500

3,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Average One-Way Fare

Seats and Passengers per Day Each Way

Seats per Day Each Way (All Carriers) Domestic PDEW (All Carriers) One-Way Domestic Fare (All Carriers)
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

16

While the average domestic fare for all carriers serving Northwest Arkansas increased 36.4% from $183 to $250 

since 2005, the difference in the domestic fare increase is even more profound when the Allegiant fare data is 

segregated from ex-Allegiant domestic fare data. When the Allegiant data is excluded, the average fare 

increased $86 or 47.2% from $183 to $269 each way, exclusive of any taxes or fees.

Exhibit 11: Average One-Way Domestic Fare at Northwest Arkansas Regional Airport – Year-End Fourth Quarter 2002-2011

(DOT DB1B data)

$194

$203 $198

$183

$208 $211

$236

$199

$225

$250

$204

$241

$269

$76 $81

$95

$0

$50

$100

$150

$200

$250

$300

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Average One-Way Domestic Fare

Domestic Fare (All Carriers) Domestic Fare (Ex-Allegiant) Domestic Fare (Allegiant)
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

17

Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States

The average domestic fare at the average Lower 48 airport in 2011 was $171 in 2011. The average domestic 

fare at Northwest Arkansas Regional Airport is significantly higher than the average domestic fare at most other 

Lower 48 airports in the United States. In 2011, the average domestic fare at Northwest Arkansas for all carriers 

was $250 and $269 when Allegiant fares are excluded. The average fare of $250 at Northwest Arkansas (to 

include Allegiant) was 46.4% higher, and the average fare of $269 at Northwest Arkansas (to exclude Allegiant) 

was 57.7% higher than the average fare at the average Lower 48 airport in 2011. 

Exhibit 12: Average Domestic Fare at Northwest Arkansas Versus the Average Lower 48 Airport – Year-End Fourth Quarter 

2002-2011 (DB1B data)

This Section Continued on Next Page

$194

$203 $198

$183

$208 $211

$236

$199

$225

$250

$204

$241

$269

$136 $138 $134 $136

$149 $149

$159

$143

$157

$171

$0

$50

$100

$150

$200

$250

$300

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Average One-Way Domestic Fare

XNA Domestic Fare (All Carriers) XNA Domestic Fare (Ex-Allegiant)

Average Lower 4 8 Airport Domestic Fare (All Carriers)
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

18

Not only did Northwest Arkansas have high fares relative to the average Lower 48 airport, the average domestic 

fare of $250 at Northwest Arkansas, to include Allegiant data, ranked as the 11th highest fare among all lower 48 

airports with at least 100,000 origin and destination passengers in 2011.

While Northwest Arkansas Regional Airport generated the 11th highest domestic fare among Lower 48 airports 

with at least 100,000 origin and destination passengers in 2011 when Allegiant data is included, the airport's 

domestic fare of $269 ranks as the 6th highest domestic fare when Allegiant data is excluded. Only Minot, 

Columbus (Georgia), Bismarck, Idaho Falls and LaCrosse generated a higher average domestic ex-Allegiant fare 

than Northwest Arkansas in 2011. 

Exhibit 13: Origin and Destination Passengers, Passengers per Day Each Way (PDEW) and Average Domestic Fare at the 25 

Highest Fare Airports with at Least 100,000 Domestic O&D Passengers in 2011 (DB1B data)

Rank Market

Domestic O&D 

Passengers

Domestic 

PDEW

Domestic 

Fare Rank Market

Domestic O&D 

Passengers

Domestic 

PDEW

Domestic 

Fare

1 Columbus, GA 115,710 159 $308 1 Minot 222,590 305 $330

2 Minot 279,440 383 $288 2 Columbus, GA 115,710 159 $308

3 LaCrosse 169,630 232 $270 3 Bismarck 289,210 396 $287

4 Killeen 332,840 456 $257 4 Idaho Falls 191,060 262 $273

5 Alexandria 242,380 332 $257 5 La Crosse 169,630 232 $270

6 Lawton 112,670 154 $255 6 Northwest Arkansas 828,430 1,135 $269

7 Abilene 144,800 198 $254 7 Shreveport 416,740 571 $268

8 Yuma 134,430 184 $253 8 Grand Forks 150,420 206 $266

9 Shreveport 461,540 632 $252 9 Laredo 129,850 178 $260

10 Bismarck 366,320 502 $252 10 Killeen 332,840 456 $257

11 Northwest Arkansas 931,880 1,277 $250 11 Alexandria 242,380 332 $257

12 Kalamazoo 209,270 287 $250 12 Lawton 112,670 154 $255

13 Aspen 364,320 499 $245 13 Abilene 144,800 198 $254

14 Lake Charles 110,420 151 $244 14 Yuma 134,430 184 $253

15 Fort Smith 152,130 208 $238 15 Springfield, MO 434,850 596 $252

16 Brownsville 140,850 193 $236 16 Casper 120,900 166 $251

17 Columbia, SC 844,710 1,157 $236 17 Kalamazoo 209,270 287 $250

18 Mobile 497,290 681 $234 18 Great Falls 229,770 315 $248

19 Jackson Hole 496,660 680 $233 19 Aspen 364,320 499 $245

20 Lafayette 376,320 516 $232 20 Cedar Rapids 592,710 812 $245

21 Evansville 286,860 393 $232 21 Lake Charles 110,420 151 $244

22 Montgomery 332,060 455 $231 22 Rapid City 406,420 557 $242

23 Monroe 188,700 258 $231 23 Fargo 491,470 673 $242

24 Helena 182,120 249 $230 24 Fort Smith 152,130 208 $238

25 Vail 341,520 468 $229 25 Brownsville 140,850 193 $236

Including Allegiant Traffic/Revenue Excluding Allegiant Traffic/Revenue
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

19

Domestic Fares Versus Other Airports in the Region

As illustrated in Exhibits 12 and 13, Northwest Arkansas' domestic fares are high relative to the average Lower 48 

airport, but the fares are also high relative to the other airports in the region both when the impact of Allegiant is 

included in fare calculations and when Allegiant's impact is not included. The average domestic fare in 2011 for 

all carriers for Northwest Arkansas, Fort Smith, Springfield, Joplin, Tulsa, Little Rock and Branson was $198

compared to the average fare of $250 in Northwest Arkansas. While $198 was the average domestic fare for all 

airports and carriers in the region, the average domestic fares at Tulsa and Little Rock were even lower, with 

Tulsa at $188 and Little Rock at $186. 

The new airport in Branson has also begun to emerge as a viable option for low-cost service for travelers in 

Northwest Arkansas. Although it is located 97 miles from Northwest Arkansas Regional Airport, and the drive 

time is over two hours, affordable fares are available on low-cost carriers at Branson. Both AirTran and Frontier 

are low-cost carriers serving Branson. The average domestic fare at Branson in 2011 was just $130.

Exhibit 14: Average Domestic Fare at Northwest Arkansas Regional Airport Versus Other Airports in the Region – Year-End 

Fourth Quarter 2000-2011 (DB1B data)

$250

$238

$206

$198 $197

$188 $186

$130

$269

$252

$203

$0

$50

$100

$150

$200

$250

$300

XNA FSM SGF Average JLN TUL LIT BKG

Average Domestic One-Way Fare

Average Domestic Fare (All Carriers) Average Domestic Fare (Ex-Allegiant)
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

20

STRATEGIC PLAN

Revenue Guarantee for Low-Cost Carrier Service

Northwest Arkansas Regional Airport believes the most effective and efficient way to reduce fares, increase traffic 

and reduce the number of passengers leaking to other airports is to recruit a low-cost carrier to the community. 

While Northwest Arkansas has service to multiple network carrier hubs and focus cities, the network carriers are 

not competing on price, and the network carriers have not demonstrated a willingness to stimulate traffic at 

Northwest Arkansas Regional Airport with lower fare structures. Service by a low-cost carrier in Northwest 

Arkansas would effectively force the network carriers to match the fare structure of the low-cost carrier resulting in 

more traffic and a reversal in fare trends.

In today's environment, low-cost carriers generally require a community to share the risk of new service by 

providing incentives such as low long-term airport operating costs, waived fees for a minimum of two years, and 

revenue guarantees of varying amounts. Air service development is becoming increasingly competitive among 

airports as fewer airlines and relatively flat airline industry capacity growth has caused most airports in the United 

States to understand the need for low operating costs and implement incentive programs offering waived fees as 

incentives for new and/or expanded airline capacity. The playing field for waived fees is now essentially level, 

and all airports serious about developing and enhancing their air service offer waived fee incentives satisfactory to 

most airlines. The ability for airports and communities to offer funds to support a minimum revenue guarantee is 

not as widespread simply because raising the amount of funding required to meet an airline's minimum revenue 

guarantee threshold can be daunting. Airports and communities that have both incentives of waived fees and 

minimum revenue guarantee funding have a tremendous advantage over airports and communities without 

minimum revenue guarantee funding.

Goals

Northwest Arkansas Regional Airport has three goals for the proposed project to recruit a low-cost carrier to the 

community.

 Lower fares to both the nonstop market and the connecting markets served by the low-cost carrier.

 Reverse the decline in Northwest Arkansas' origin and destination traffic.

 Recapture catchment area traffic leaked to other airports.
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

21

Grant Amendments/Alternate Strategies

Northwest Arkansas Regional Airport's primary air service development goal is to attract a low-cost carrier to 

serve the Northwest Arkansas market. If the Department awards Northwest Arkansas Regional Airport a grant for 

the proposed low-cost carrier service, but the community is not successful in recruiting a low-cost carrier to 

operate at Northwest Arkansas Regional Airport, the airport and the community may request the Department 

consider redirecting award funding to assist in recruiting other service. 

In addition to a lack of low-cost carrier service, the airport and the community have also identified hubs and focus 

cities without service from Northwest Arkansas that have been targeted for network carrier service by the carriers 

currently serving Northwest Arkansas. The combinations of destinations and carriers include Los Angeles on 

American, United or Delta; San Francisco on United; Salt Lake City on Delta; Phoenix on US Airways; Miami on 

American; Washington Dulles on United; Philadelphia on US Airways and New York JFK on Delta.

PROJECT IMPLEMENTATION, MONITORING AND FUNDING

Public / Private Partnerships

The airport, local governments and business organizations in the region understand the importance of affordable 

air fares, and the relationship between air fare affordability and economic growth. Based on this recognition and 

awareness, the three groups meet on a regular basis to discuss potential solutions to the unreasonably high fares 

charged by the carriers currently providing service in Northwest Arkansas. Including the Airport Authority, there 

are ten agencies and organizations partnering to improve air service in Northwest Arkansas.

 Northwest Arkansas Regional Airport Authority

 Arkansas Economic Development Commission

 Bentonville-Bella Vista Chamber of Commerce

 Fayetteville Chamber of Commerce

 Rogers-Lowell Area Chamber of Commerce

 Siloam Springs Chamber of Commerce

 Springdale Chamber of Commerce

 Regional Chamber of Commerce

 Eureka Springs Chamber of Commerce

 Northwest Arkansas Council
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

22

Project Funding

In addition to the Small Community Air Service Development Grant of $1,000,000 requested from the

Department, organizations in the community are willing to provide cash of $100,000 and in-kind funding valued at 

$50,000 for local media company advertising placement. The airport will provide cash of $200,000 for marketing 

and estimates the value of its in-kind contributions from waived fees at $625,052 over the two-year life of the 

project. The total value of cash and in-kind contributions from the community and the airport is valued at 

$975,052 or 49.4% of the total project cost of $1,975,052.

Exhibit 15: Summary of Sources and Types of Project Funding

Funding Source Grant Cash In-Kind Total

Department of Transportation $1,000,000 $1,000,000

Community $100,000 $50,000 $150,000

Airport $200,000 $625,052 $825,052

Total $1,000,000 $300,000 $675,052 $1,975,052
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

23

Proposed Implementation Timeline

The proposed implementation timeline for the project assumes the Department will award Small Community Grant 

Funding sometime in July or August 2012. Once the award is announced, Northwest Arkansas Regional Airport

will advise airlines of the grant award. Based on airline planning lead times and the need for advance bookings, 

we assume no airline would begin service until sometime in 2013, and we have conservatively assumed the 

service could not begin until September 2013. The first two milestones on the Airport's timeline are to execute the 

grant agreement with the Department and to negotiate the minimum revenue guarantee agreement with the 

airline. Once service is announced and schedules are published, the airline, the Airport and the community would 

begin marketing the new route and working with the airline to monitor advance bookings. The Airport will continue 

its marketing program and continue to work with the airline to monitor the route once service begins. The Airport 

will submit grant status reports on a quarterly basis to the Department throughout the proposed two-year term of 

the minimum revenue guarantee.

Exhibit 16: Proposed Project Timeline

Activity/Project Milestone Estimated Dates

SCASD Grant Award Announcement August 2012

Execute Grant Agreement with DOT September/October 2012

Airline Meetings November 2012 - March 2013

Announce Service April 2013

Publish Schedule April 2013

Market Route (Pre-Launch) April-August 2013

Monitor Advance Bookings April-August 2013

Adjust Marketing Plan Based on Advance Bookings April-August 2012

Begin Service September 2013

Market Route (Post-Launch) September 2013 and Beyond

Operate Service with MRG September 2013 - August 2015

Monitor Route Performance Sepetmber 2013 - August 2015 and Beyond

Submit Grant Status Reports to DOT Quarterly 3Q 2013 - 3Q 2015
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

24

PROJECT MONITORING AND FINANCIAL CONTROL

Success Metrics

The ultimate success of the program will be based on the community's ability to attract a low-cost airline to serve 

the community, a subsequent decline in fares in the markets served by the airline, an increase in traffic at the 

airport and a reduction in the amount of total traffic generated in the primary catchment area leaking to other 

airports in the region. The Airport will continuously monitor the performance of the new service. Even before 

service begins, we will communicate with the airline on a weekly basis to monitor advance bookings and weekover-week advance bookings. Marketing and promotional activities can be adjusted if advance bookings are 

weak or are not booking at a rate satisfactory to the airline.

Exhibit 17: Project Goals and Success Metrics

Project Goals Success Metric

 Lower fares to both the nonstop market and 

the connecting markets served by the lowcost carrier.

 Quarterly year-over-year declines in fares for the 

markets served by the carrier.

 Reverse the decline in Northwest Arkansas'

origin and destination traffic.

 Increased quarterly year-over-year origin and 

destination traffic.

 Recapture catchment area traffic leaked to 

other airports.

 Less leakage to Tulsa and Little Rock.

Once service begins, the Airport will rely on traffic and revenue data provided directly by the airline and the 

amount of reimbursements requested by the airline as indications of project success. T-100 data and DB1B data 

will also be analyzed to compare year-over-year market size growth on a quarterly basis. In addition, the airport 

will analyze leakage once the service has operated for a full year to determine the trend in leakage to other 

airports. The Airport will report its success metrics in the quarterly grant reports to the Department. 

Legal Sponsor

The Northwest Arkansas Regional Airport Authority is the legal sponsor responsible for administering the 

program, and the Northwest Arkansas Regional Airport Authority is a government entity.

Northwest Arkansas Regional Airport Authority

Kelly L. Johnson

Airport Director

Northwest Arkansas Regional Airport

Alice L. Walton Terminal Building

One Airport Blvd. Suite 100

Bentonville, AR 72712

479-790-1000
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

25

Financial Controls

As the sponsor, Northwest Arkansas Regional Airport Authority and its governing body, Northwest Arkansas 

Regional Airport Authority Board, will be the responsible parties for all fiscal matters and the Department's

reporting requirements. The Airport Authority Board is established as a public governing body. 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 Northwest Arkansas Regional Airport 

Authority Board understands that the Grant is a reimbursable grant, meaning the Airport is responsible for 

program expenditures and will submit invoices to the Department for reimbursement, based on a percentage of 

the total grant request.
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

26

APPENDIX A: REQUIRED SUMMARY INFORMATION

A. Applicant Information

 Not a Consortium

 Interstate Consortium

 Intrastate Consortium

 Community now receives EAS subsidy

 Community (or Consortium member) previously received a Small Community Grant

If previous recipient:

Date of Grant: ____________________

Expiration Date of Grant: ____________________

B. Public/Private Partnerships

Public

1. Northwest Arkansas Regional Airport Authority

2. Arkansas Economic Development Commission

3. Bentonville-Bella Vista Chamber of Commerce

4. Fayetteville Chamber of Commerce

5. Rogers-Lowell Area Chamber of Commerce

6. Siloam Springs Chamber of Commerce

7. Springdale Chamber of Commerce

8. Regional Chamber of Commerce

9. Eureka Springs Chamber of Commerce

10. Northwest Arkansas Council
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

27

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 Secure Additional Service Other (explain below)

_______________________________________________________________________________________

_______________________________________________________________________________________

D. Existing Landing Aids at Local Airport

 Full ILS Outer/Middle Marker Published Instrument 

Approach

 Localizer Other (specify)

E. Project Cost

Line Description Sub Total Total Amount

1 Federal amount requested $1,000,000

2 State cash financial contribution

Local cash financial contribution

3a Airport cash funds $200,000

3b Non-airport cash funds $100,000

3 Total local cash funds (3a + 3b): $300,000

4 TOTAL CASH FUNDING (1 + 2 + 3): $1,300,000

In-Kind contribution

5a Airport in-kind contribution** $625,052

5b Other in-kind contribution** $50,000

5 TOTAL IN-KIND CONTRIBUTION (5a + 5b): $675,052

6 TOTAL PROJECT COST (4 + 5): $1,975,052
 

 

Northwest Arkansas Regional Airport Authority; Bentonville, Arkansas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2012-0069

28

F. In-Kind Contributions**

For funds in lines 5a (Airport In-Kind contribution) and 5b (Other In-Kind contribution), please describe the 

source(s) of fund(s) for each.

(5a) Northwest Arkansas Regional Airport will waive landing fees and terminal rent for the first two years of 

service by a low-cost carrier. The value of landing fees assumes two daily flights operated with a 737-300 or 

similar size aircraft and is based on the signatory landing fee of $1.89 per 1,000 pounds. (5b) Communitybased in-kind contribution, valued at $50,000 over the two-year life of the project, is for placement of 

marketing and advertising. 

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)