# Application Under the Small Community Air Service Development Program

Docket DOT

- OST

- 2012

- 0069                       



# Bert Mooney Airport **Butte, Montana**

                       Legal sponsor : Bert Mooney Airport Authority
D UNS: 15

- 605

- 3241 Federal Tax ID: 81

- 0453199 Congressional District Code: MT

- 01

Contact: Patrick Shea

- Airport Manager Bert Mooney Airport

∙ 101 Airport Road

∙ Butte, MT 59701 (406) 494

- 3771

∙ pshea@butteairport.comApplication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Table of Contents**

Prepared by 

# Table of **C ontents** 

Page

Application Highlights

................................ ............................... 1 Essential Air Service with High Travel Costs

................................ .......... 1 Realistic Timeline

................................ ................................ .................... 2 Financial Stakeholders Actively Involved

................................ ................ 2


### Air Service Environment

................................ ............................ 3 Isolated Catchment Area

................................ ................................ ........ 3 Strong Local Economy

................................ ................................ ............ 4


### Air Service

– Existing and Historical

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

................................ ................................ ................. 6 Historical Air Service

................................ ................................ ............... 6 Previous Air Service Development Efforts

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


### A ir Service Needs and Deficiencies

................................ ........ 10 Maintain Schedule Frequency

................................ ............................... 10 Extraordinarily High Airfares Continuing to Climb

................................ . 10 

### Strategic Plan

................................ ................................ ........... 12 Project Goals

................................ ................................ ........................ 12 Proposed Air Service

................................ ................................ ............ 12 Public

- Private Partnership

................................ ................................ ..... 12 Proposed Plan

................................ ................................ ...................... 13 Strategic Plan Funding

................................ ................................ .......... 14 Project Continuation and Sustainability

................................ ................. 15 Previous Grant Recipient

- New Project and Goals

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

### Schedule and Monitoring

................................ ......................... 17 Schedule

................................ ................................ ............................... 17 Monitoring Program

................................ ................................ .............. 17 

### Appendix A. Marketing Plan

................................ .................... 18 Marketing Plan Goals

................................ ................................ ............ 18 Marketing Partnership

................................ ................................ ........... 18 Target Audience

................................ ................................ .................... 19 Promotion Campaign

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

### Appendix B. Community Support

................................ ........... 22Appl ication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Application Highlights** 

### 1



# Application **Highlights**

his Small Community Air Service Development Program (SCASD P) grant application for Bert Mooney Airport (BTM) in Butte

, Montana meets the
criteria of Docket DOT

- OST

- 2012

- 006 9

. The Bert Mooney Airport Authority , the a irport sponsor, is requesting $15 0 ,000 in financial assistance to support a $ 175

, 000 air service in itiative. The project g oal is to i mprove the performance of existing Essential Air Service ( EAS ) to prevent further service
reductions after the initial EAS agreement ends

.

The Strategic Plan to accomplish the project goal is to fund a marketing/service awareness campaign to publicize the attributes of the existing EAS service. Additionally, market monitoring will be conducted to track the value of the marketing campaign and to provide feedback for adjusting local promotion if
needed. The intent of the pr ogram is to make l ocal travelers aware of the service options available from BTM and the convenience of flying local versus driving to alternate airports.



### Essential A ir S ervice with H igh T ravel C osts

Since Horizon Air exited BTM in August 2008, only Salt Lake City EAS service
remain s as a result of Delta Air Lines’ decision to convert BTM to an EAS market

. With limited air service options and geographic proximity to alternate airports

, BTM’s catchment area air travelers often drive to larger

, alternate air ports to

access conveniently scheduled service

. As a result, the performance of existing
service could erode and be at risk of ex ceeding the mandates of the
EAS program

.

The airport catchment area is geographically isolated with drive times to alternate

a irports exceeding 1.5 hours. Approximately 51 percent of BTM catchment area
travelers ( over 65,000 air travelers each year) are driving to alternate airport s. The previous loss of two daily roundtrips and the third seasonal roundtrip has
deteriorated what was already marginal time

- of

- day coverage and has led to high passenger diversion and airfares that are well above average

. Since the majority
of BTM’s air travelers are traveling to destinations that can be served via Salt Lake City , the current two round trip EAS sche dule needs to be promoted to continue its sustainability and meet the local need for access to the national air transportation system

. 

# T This section contains:



### • Project goals



### • Description of the

Strategic Plan



### • Highlights of the grant

applicationAppl ication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Application Highlights** 

### 2



### R ealistic T imeline

The Strategic Plan is designed to increase ridership at BTM by implementing an aggressiv e , new marketing campaign to maintain and sustain the service

. R etaining the existing EAS flight s will require a service awareness campaign designed to educate the traveling public and promote the benefits of flying local

. Key components of the Strategic P lan include:

• Multi

- media marketing plan

• F inancial commitment by the community

• Service monitoring program to ensure success



### F inancial S takeholder s A ctively I nvol ved

The Bert Mooney Airport Authority, the Butte

- Silver Bow Chamber of Commerce,
Butte Local Development Corporation, and the City/County of Butte

- Silver Bow
have formed a public

- private partnership to support this application. This partnership has the ability to implement the project in a reasonable timeline and is committed to seeing it succeed

. Non

- airport revenue source s will fund nine percent ($12,5 00) of the $ 16 5 ,000 Strategic Plan cash requirement. Bert Mooney Airport Authority and the community will provide 14 percent ($ 2 5 ,000 ) of the total funding plan in the form of cash and in

- kind servi ces; $1 0 ,000 is in

- kind services with the remaining $ 15 ,000 in cash

. All the requirements for sustainability are in place.



### Material Benefits

The assistance will provide material benefits to a broad segment of the traveling public, including business, edu cational institutions, and other enterprises, whose
access to the national air transportation system is limited. BTM serves a remote population in the airport catchment area of 69,360 living in an area that is secluded from major population centers. The re moteness of BTM’s catchment area makes air service essential to the economic health of the region. The region served by BTM has an evolving economy with key industries requiring adequate
local air service. 

### On July 15, 2011, Delta **Air Lines’ file d notice**  **of its intent to terminate its subsidy** 

**** **free service at Butte,**

**Montana, effective October 13, 2011** 

**. Delta’s EAS began in**  **April 2012.**Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Air Service Environment** 

### 3



# Air Service **Environment**

his section provides a profile of the Butte community highlighting the economic and demographic attributes of the BTM catchment area. It identifies the businesses, institutions, government branches, and population that benefit from the existing EAS

.



### Isolated C atchment A rea

BTM , located in Butte, Montana, serves a population in the airport catchment

area of 69,360 living in an area that is seclude d from major population centers

. As can be seen in Exhibit 2 .1

, BTM’s catchment area includes : the city of Butte, Silver Bow County , Deer Lodge County, and portions of Beaverhead, Madison, Jefferson, Granite, and Powell counties.

EXHIBIT 2 .1 AIRPORT CATCHMENT AREA

According to a Passenger Demand Analysis (leakage study) conducted in 2007,
BTM serves 51 percent of its catchment ar e a air travelers. Of the diverting passengers, 45 percent use Bozeman’s Gallatin Field Airport, 22 percent use Missoula International Airport, and 31 percent use other airports. Despite a drive time of over two hours to Missoula and nearly an hour

- and

- a

- ha lf to Bozeman, over 65,000 origin and destination passengers annually drive to another airport instead of using BTM

. Driving to a distant airport from the catchment area can be
an ordeal. B elow freezing for seven months of the year combined with snow and 

# T This section contains:



### • Description of the Butte

community in relation to
air service



### BTM **serves a population in**  **the airport catchment area** 

**of 69,360 living in an area that is secluded**  **from major population**
**centers.**Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Air Service Environment** 

### 4

m ountainous terrain make driving hazardous. Since the loss of Horizon Air
service in 2008 and conversion of Delta Air Lines’ service to EAS in 2012 , it is highly likely that diversion has increased.



### Strong L ocal E conomy

The remoteness of BTM ’s catchment a rea makes air service essential to the
economic health of the region. The region served by BTM has an evolving economy with key industries requiring adequate local air service. Copper, gold, and silver mining were once Butte’s economic foundation; now, whi le mining continues to be an important economic asset, Butte’s economy is driven by more
diverse sources. Additionally, Butte’s local economy is strong despite the flagging national economic picture.



### Mining

Butte’s metals ( i.e. copper, molybdenum

, and historically gold an d silver) are
distribut ed world wide. Montana Resources operates an open

- pit copper and molybdenum mine on the edge of the city. The scale of local operations require that experts in far ranging fields such as environmental protection, industrial production, and geology travel to and from the site from all over the globe. Based on identified ore bodies and the current production level, the mine has approximately 20 years of operational life securing a demand for locally based air
travel into the future.

Historically, the market price of commodity metals had dramatic effects on Butte’s local economy; high prices result ed in an economic boom while low prices had negative effects. Starting in the late 1980s a concerted effort was started to solidify the long

- standing large employers and also to diversify Butte ’s basic industry base to moderate the boom and bust cycles. L ocal government,
chamber of commerce , and economic development organization s laid the groundwork to insulate and stabilize Butte’s economy from dips in commodity pric es, in turn, stabilizing air service demand.



### I **nfrastructure to S**  **upport H**  **eavy Industry** 

Butte is the home of a full

- service inland transportation port, the Port of Montana. It is the only location in Montana that is served by two class one railroads.
Additi onally, at the junction of Interstates 15 and 90 , Butte has excellent road
access both north/south and east/we st

. This strategic location has attracted an economic core of manufacturing and transportation support services. Air service completes the cadre o f Butte’s transportation advantages. Reliable and frequent local air service is a key resource for Butte’s industry and community. Table 2.1 provides a list of major employers. In addition, t he m ajor industrial/manufacturing
firms located in Butte that rel y on local air service include: TABLE 2 .1 BUTTE’S MAJOR EMPLOYERS

ORGANIZATION EMPLOY

EES Public employers Butte School District 500

- 900

Butte

- Silver Bow Local Government 500

- 900 Community Counseling & Correctional Service 250

- 499

Montana Tech 250

- 499

St. James Community Hospital 500

- 900
Private employers Acadia Montana 250

- 499 Advanced Silicon Materials 100

- 249

M.S.E. Inc. 100

- 249 Montana Resources 250

- 499 Northwestern Energy 250

- 499 Source: Montana Department of Labor and IndustryApplication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Air Service Environment** 

### 5

• Aerospace firms (AeroTec)

• Advanced engineering firms (MSE Technology Applications, Pioneer Technical Services, Water and Environmental Technology, Dowl HKM, Robert Peccia & Associates, Ev erly & Associates, Great
Divide Engi neering)

• High technology materials fir ms (REC Silicon

, REC Solar, and Sea
Cast Metals )

• Mining (Montana Resources)

• Utilities (NorthWestern Energy, 360networks Corporation)



### Institutions and **G overnment**  **D ependent on**  **A ir**  **S ervice** 

Butte is the hub for educatio n, medical services, and government services for
southwestern Montana. Institutions reliant on air service for connections to personnel, customers, suppliers, and other facilities are located here. Over 40 federal, state, and local government offices are l ocated in the Butte area, each requiring access to air service. Montana Tech, a four

- year college located in Butte, is a world renowned engineering school offering multiple technical degrees. Because of its ties to national and international corporations t he
U niversity was hard hit by the recent cuts in air service

.



### Strong **E conomy**  **D espite**  **N ational**  **R ecession** 

In 2008

- 2009, with financial markets collapsing and housing bubbles bursting, the economy in Butte and southwest Montana remained relatively quiet. A s low economy meant businesses remained steady in Butte while other cities struggled with rising unemployment and a shrinking tax base. According to the University of Montana's Bureau of Business and Economic Research, the economy in the
Butte

- Silver Bow are a grew 0.6 percent in 2010, and a similar number was expected in 2011, with non

- farm labor income in the county expected to increase by around two percent annually until at least 2015. That means the county is growing, albeit slowly, while other parts of t he state and country are in decline. Bright spots in 2011 included:

• Federal Express opened an $8 million freight transfer center in the Tax Increment Financing Industrial District (TIFID) off Interstate 15
in September.

• The TIFID started a two

- year project to build a wastewater line that will run from the industrial park to the m etro sewer, allowing businesses to tie in to city services.

• Acadia Montana opened a new $2.2 million facility

.

• The County will build a $13.7 million So uthwest Montana Veterans
Home. C onstruction will likely start in 2012.

• SeaCast foundry added positions in the last year

.

• UTRS Titanium is looking to expand in the near future. 

### While most of the **nation was reeling from the recession,** 

**Butte’s economy remained stable.** Application Under the Small Community Ai r Service Development Program Bert Mooney Airport Authority**Air Service –** **Existing and Historical** 

### 6



# Air Service

**– Existing**  **and Historical**

his section presents a record of the current and historical air ser vice for
BTM

. The current air service discussion highlights: service frequency, nonstop destinations, and equipment types. The historical air service section includes a description of historical destinations, traffic levels, service providers, and any exte nuating factors that have affected air service in the past or that can be expected to influence air service in the future. Past air service development efforts are also covered in this section.



### Existing A ir S ervice

BTM suffers from very limited air service. Only
one carrier serves the market

, Delta Air Lines (operated by SkyWest Airlines). Direct commercial air service is pr ovided to Salt Lake City, UT under the EAS program

. BTM had 14 weekly departures and 70 0 outbound seats in May 2012

. Delta use s the 50

- seat Canadair Regional J et to provide service. Table 3 .1 provides a list of current air service at BTM

.



### Historical A ir S ervice

Air service at BTM has suffered over the last 10 years. This subsection
summarizes BTM’s air service history including: destinations, traffic levels, and service providers. Extenuating factors t hat hav e affected air service are
also reviewed.



### Destinations **, S**  **ervi ce**  **P roviders, and**  **T raffic**  **L evels** 

Over the past 10 years, scheduled air service at BTM has been eroding. In 2003
Horizon Air provided nonstop service to Bozeman, MT and Seattle, WA, while Delta (SkyWest) offered nonstop service to Salt Lake City, UT. In December
2005 the first major decline in service occu rred when Delta cut its BTM

- Salt Lake City frequency from four to two daily roundtrips. Table 3. 2 , next page, provides the history of BT M’s nonstop destinations by air carrier and destination over the past 10 years. 

# T

TABLE 3 .1 CURRENT AIR SERVICE BTM

Hub Salt Lake City Car rier Delta Aircraft CRJ 200 Weekly Departures 14
Weekly Seats 700

Connecting Destinations 85

Source: Diio Mi, May 2012 This section contains:



### • Description of existing air

service



### • Sy nopsis of historical air

service



### • Description of air service

development efforts



### BTM suffers from very

**limited air service. Only one carrier serves** 

**the market, Delta Air Lines (operated by**  **SkyWest Airlines).**Application Under the Small Community Ai r Service Development Program Bert Mooney Airport Authority**Air Service –** **Existing and Historical** 

### 7

TABLE 3. 2 HISTORICAL DESTINATIONS AND SERVICE PROVIDERS DESTINATION AIRLINE 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Bozeman, MT (one

- stop to Seattle) Horizon Aug

Salt Lake City, UT Delta
Seattle, WA

(nonstop) Horizon Mar

In March 2006

, Horizon discontinued nonstop flights to Seattle. In August 2008
Horizon withdrew from the mar ket completely by canceling non stop flights to Bozeman (which essentially was a one

- stop service to Seattle). That left SkyWest (operating as Delta Connection) as the only service provider at BTM

.

From the first quarter 2003 to the fourth quarter 2011 BTM ’s total departures declined by 64 p ercent (from 472 to 169 departures per quarter). Outbound seats decreased by 68 percent (from 26,690 to 8,450 total seats per quarter) over the same period of time. Exhibit 3 .1 shows the trend in departures and outbound seats by year (through 2011 )

. Overal l, departures decreased from 2,071 in 2003 to 663 in 2011, nearly 70 percent. Outbound seats followed the same trend.

EXHIBIT 3.1 DEPARTURES AND SEATS

Table 3.3 , next page, shows the trend in outbound passengers and load factors
over the same nine

- yea r period (2003 through 2011). Overall, outbound

passengers decreased by 55 percent (from 52,016 annual passengers in 2003 to 23,264 annual passengers in 2011). Since 2008 when Delta became the only provider of scheduled air service at BTM, the load factor remained relatively
stable

– between 60 and 70 percent on average. 0 30,000 60,000 90,000 120,000 150,000

0 500 1,000 1,500 2,000 2,500200320042005200620072008200920102011SeatsDepartures

Calendar year Departures SeatsApplication Under the Small Community Ai r Service Development Program Bert Mooney Airport Authority**Air Service –** **Existing and Historical** 

### 8

TABLE 3. 3 HISTORICAL LOAD FACTORS AND OUTBOUND PASSENGERS CALENDAR YEAR
2003 2004 2005 2006 2007 2008 2009 2010 2011 Salt Lake City , UT 45% 42% 51% 70% 64% 64% 68% 62^ 70%

Bozeman

, MT 33% 33% 32% 34% 33% 34% Seattle , WA 68% 68% 70% 74% 70% 72% Outbound passengers 52,016 56,480 53,725 50,105 47,187 36,995 23,044 24,419 23,264

Source: Diio Mi T

- 100

Even with the reductions in capacity, outbound passengers increased from 2003 through 2005. However, in 2006 service cuts were too restrictive for the market to bear and enplanements began to decrease. Load factors and airfares increased as departures and seats evaporated. Based on 2004 and 2007 leakage studies, d iversion averaged 40 percent for the period from October 2003 through September 2004 and increased to an average of 49 percent for the period from November 2005 through October 2007; an increase of nearly 13,000 diverting origin and destination passengers per year.



### E

**xtenua ting**  **F actors**  **T hat**  **H ave**  **A ffected**  **A ir**  **S ervice** 

BTM struggles to obtain and retain the necessary air service needed to serve its
catchment area air travelers. Three primary facto rs have affected air service

at BTM

.

1. : With a li mited catchment are a Limited catchment area population population of approximately 69 ,000 and an estimated catchment area true market of 135,000, the Butte market is not of sufficient size and lacks current ridership to interest additional airline s

. In 2012 the existing Salt Lake City serv ice fell under the protection of the EAS program

. As the state capital, Helena commands attention. Bozeman and Missoula are home to the state’s two largest universities and, with larger catchment area populations, are the first to draw the attention of air line capacity and route planners considering serving the area. Hence, BTM
does not receive the service that the market merits.

2. : With a n extremely modest High diversion to surrounding airports

level of service that fall s short of market needs, the result i s that nearly
half of BTM catchment area travelers divert to surrounding airports that offer greater levels of service. Helena Regional Airport is approximately 65 miles away; Bozeman ’s Gallatin Field is approximately 80 miles away; and Missoula Internatio nal Airport is approximately 125 miles

away. Frequent inclement weather conditions and the need to traverse 6,000 foot high mountain passes makes it important that Butte’s air service needs be met locally rather than requiring catchment area air
travelers to brave the mountainous drive to an alternate airport.Application Under the Small Community Ai r Service Development Program Bert Mooney Airport Authority**Air Service –** **Existing and Historical** 

### 9

3. : Market potenti al not reflected in BTM’s reported passengers

Airlines focus their air service decisions on US Department of Transportation (DOT) reported origin and destination passengers.
BTM’s traf fic statistics provide no recognition of the nearly 50 percent of the catchment area market that are diverting to alternate airports due to the inadequacy of local air service. Compounding BTM’s problem and completing the vic i ous cycle, airline planners ar e basing service
decision s at other Montana airports on exaggerated traffic statistics that
include BTM’s catchment area passengers who are included in other airport ’ s reported statistics due only to the inadequacy of BTM’s air
service. Accordingly, it is difficult to persuade airlines to recognize i ts true air service potential.

The end result of this combination of factors has been an erosion of air ser v ice at
BTM with the remaining EAS in need of support

. As service erodes, the convenience of using loc al service and the reasons for using it diminish

, and the performance of the remai n ing air service deteriorates. This downward spiral in air service must be reversed or the future of Butte’s economic development cou l d be in jeopardy.



### Previous A ir S ervice D evelopment E fforts

Over the past several years, BTM has aggressively sought air service improvements ( Table 3

. 4 )

. Se veral market studies have been completed and air
service deficiencies identified. Airport management has met with Delta regularly
to revi ew air carrier performance in the market. During these meetings, additional
routes have been discussed. Delta, SkyWest, Horizon, and Allegiant Air have been approached with service requests but

, to date, have not responded favorably.

The highest new service priorities have been to improve Salt Lake City service. I n 2010 BTM successfully implemented a service improvement initiative with Delta as a direct result of
the 2009 SCASD P award. Unfortunately, that successful service improvement ini tiative was short lived as Delta continued to reduce its regional jet fleet and pulled the additional seasonal frequency. Subsequently, in September 2011 the service was put out to bid for EAS and the 2009
SCASD P grant was returned to the US DOT. TABLE 3

. 4 PAST AIR SE RVICE DEVELOPMENT EFFORTS YEAR INITIATIVE RESULT

2009 Airfare Monitoring Completed Market analysis

- DL/MSP service Completed

SCASD grant

application Successful

2010 Delta Air Lines seasonal service Successful

2011 EAS bid and award CompletedApplication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Air Service Needs and Deficiencies** 

### 10



# Air Se **rvice Needs and**  **Deficiencies**

ith BTM’s air service now being under the auspices of the EAS program, a disc u ssion of market air service needs and deficiencies is
focused on short

- term and long

- term needs. In the short

- term, the challenge is to retain th e critically needed existing service. To accomplish t his objective it is necessary to aggressively market the existing service and to closely monitor service us e and any su b sequent service changes.

The BTM catchment area air travel market has been trauma tized over the last seven years by a 50 percent reduction in Delta Air Lines Salt Lake City service,
the loss of Horizon Air service and increasing fare differences with surrounding airports starting in 2009. Though service was essentially unchanged, the

t ransition to the EAS program was deemed to have unfavorable connotations. Marketing and community promotion are required to further awareness of the existing service and to emphasize convenience of using the local airport. Future economic development oppor tunities are contingent on the retention and expansion of air service as dem onstrated by catchment area us e and demand.



### Maintain S chedule F requency

BTM ’s air service is limited to service to the Salt Lake City hub with two roundtrips per day

. Given the ca tchment area’s modest market potential, service

to a single hub may be adequate to main t ain service

, but it requires service

awareness

. With an aggressive marketing campaign, the market is capable of sustaining existing service as BTM has had as many as fo ur regional jet
round trips to Salt Lake City

. Service is nearing the point where it no longer meets
basic demand. As a result, local travelers are using a lternate airport s but can be made aware of the benefits of flying locally

.



### Extraordinarily H igh A irf ares C ontinuing to C limb

BTM’s average airfares are among the highest in the country. In 2011 BTM ranked 23rd out of approximately 450 airports in the contiguous US in terms of domestic average fares. Fares in BTM were the highest of all commercial airport s in the Northwest Region and in the State of Montana. BTM’s fares in 2011 were 49 percent higher than the national average. Fares in BTM have been on the rise during the past several years (with a slight year

- over

- year decline in 2011).
Between 2004 and 2 011 airfares rose 41 percent. The national average fare over the same period of time has increased by 28 percent. 

# W This section contains:



### • Description of the

down ward spiral in
Butte’s air service and
need for awareness and promotion of existing EAS



### With an aggressive **marketing campaign, the market is capable**  **of sustaining existing**

**service as BTM has had as many as four**  **regional jet roundtrips to Salt Lake City.** Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Air Service Needs and Deficiencies** 

### 11

BTM has long suffered from high airfares. In early 2005, Delta recognized that
BTM airfares were out of line with their fares in other Monta na communities and revised the fare structures in the markets so relationships were more reasonable.
Unfortuna tel y since that time, airfares have again spiraled higher and average airfares remain high in Montana markets

. Relative to other western cities

, B TM’s
air fares are the highest. Table 4 .1 illustrates that BTM’s average fares are high compared to average fares in other Northwest communities and have increased substantially since Salt Lake City service was cut in half at the end of 2005. The
table also shows the excessive difference in fares compared to the Northwest Region and national averages. With higher than average airfares, BTM is in need of promoting the value of convenience on its ex isting service to the traveling public

.

TABLE 4.1 COMPARISON OF AVERAGE FARES

AIRPORT CALENDAR YEAR % BTM DIFF 2004 2005 2006 2007 2008 2009 2010 2011 Butte $182 $182 $233 $254 $276 $258 $262 $256 Bozeman $166 $170 $212 $218 $215 $183 $193 $204 25% Kalispell $166 $174 $218 $223 $219 $1 95 $208 $221 15% Helena $197 $178 $225 $242 $253 $221 $220 $229 11% Rapid City $170 $181 $215 $215 $203 $176 $185 $221 15%

Billings $154 $161 $188 $184 $185 $166 $178 $196 30% Idaho Falls $181 $178 $200 $208 $210 $195 $ 204 $206 24% Missoula $162 $169 $203 $206 $202 $184 $185 $201 27%

Pasco $175 $176 $202 $202 $211 $190 $178 $186 37% Pullman $158 $154 $171 $167 $148 $140 $135 $149 71%

Boise $116 $120 $133 $134 $137 $132 $145 $159 60% Spokane $115 $119 $134 $135 $139 $134 $141 $158 62% Montana $165 $168 $205 $209 $209 $185 $193 $206 24% Northwest Region $137 $143 $155 $155 $158 $143 $155 $167 53% US $134 $137 $149 $149 $160 $144 $158 $172 49%

Source: Data Base Products, Inc. (Outbound only) Note: Northwest region includes WA, OR, ID, UT, MT, WY, COApplication Under the Small Community Air Service Development Program Bert M ooney Airport Authority**Strategic Plan –** **Implementation and Funding** 

### 12



# Strategic Pla **n**

his Strategic Plan section provides a description of the goals of the project
and the plan to support those goals

. This section al so provides a description of the legal sponsor responsible for administering the program and the public

- private partnership that has been formed to actively participate in implementing the proposed project. A detailed description of the funding necessary f or implementation of the Strategic Plan, including federal and non

federal contributions, is also included in this section.



### Project G oals

BTM is in a difficult position. BTM’s passenger base will continue to erode if service is not seen as meeting the ne eds of catchment area travelers, and ultimately it risks losing all service if the current level of service through the EAS program is not maintained. T he overall goal of the Strategic Plan proposed by Bert Mooney Airport Authority is to m aintain and impro ve performance of existing EAS service to prevent further service reductions after the initial EAS agreement
ends

. Maintaining EAS hub service from BTM is the top priority of the community

. I ncreased ridership is critical for maintaining and securing servi ce at BTM and decreasing passenger diversion

.



### Proposed A ir S ervice

To accomplish the goals of this SCASDP grant application

, it is necessary to promote the value of flying locally after the change in service from subsidy

- free to EAS on the existing Salt L ake City hub service

. Funding a new aggressive service awareness campaign will accomplish the project goals by : 1. E ducating the public on the benefits of local air service
2. I mprove awareness of the existing flight schedule which will improve the performance o f the EAS flights and reduce the need to use
alternate airports

This Plan will help increase ridership via an aggressive new marketing campaign. The Strategic Plan proposed will achieve the communities’ goals and help
address the air service needs of the Butte community.



### Public

- P rivate P artnership

Bert Mooney Airport Authority is the owner/operator of BTM and s ponsor of this application

. For the purpose of this application, t he Bert Mooney Airport Authority, City/County of Butte

- Silver Bow, Butte Local De velopment Corporation,
and the Butte

- Silver Bow Chamber of Commerce have formed a public

- private partnership (refer to community support letters in Appendix A ). Collectively, this 

# T This section contains:



### • A Strategic Plan for

maintaining and improving BTM’s air
service



### • Description of the public

- private partnership



### • Designation of a legal

sponsor



### • Funding necessary for implementation of the Strategic Plan



### • New project and goals for prev ious grant recipientApplication Under the Small Community Air Service Development Program Bert M ooney Airport Authority**Strategic Plan –** **Implementation and Funding** 

### 13

partnership is committed to completing the Strategic Plan outlined
herein. All partners in t he public

- private partnership will have an
active role in the execution of the Strategic Plan ( Table 5 .1 ).

Bert Mooney Airport Authority will execute all federal grant offers, process all associated reimbursement requests, and oversee grant
administration

. The Bert Mooney Airport Authority along with the
Butte

- Silver Bow Chamber of Commerce will administer the marketing campaign

. Butt e Local Development Corporation, the lead economic development organization for Butte

- Silver Bow and a
lead in economic deve lopment for Southwest Montana and Montana as a whole, will act as the liaison between the business community
and the air service initiative through direct marketing efforts ( e.g. meetings, e

- mail blasts ). C ity/County of Butte

- Silver Bow will assist
with mo nitoring of the Strategic Plan and performance tracking.



### Proposed P lan

To ensure sustainability and improve ridership, an aggressive marketing plan is needed. The $1 6 2,500 marketing campaign includes:

• A multi

- media advertising campaign

• Presentations to business groups, civic organizations and Chamber of
Commerce events

• Website and e

- mail promotions

In the Butte market it will be essential to continue creating service awareness in the community and modify existing travel habits due to historically defici ent
schedules and high airfares

. A lack of air service awareness can lead to EAS
failure and continued drive diversion. Most air carriers do not have the budget or
staff to create and implement air service awareness marketing campaign s in
small communities like Butte

. The Strategic Plan proposes to use a comprehensive air service retention marketing campaign to promote ridership on existing Salt Lake City hub service

. The detailed marketing campaign is included
in Appendix A and summarized below.



### Marketin **g G**  **oals**

In the short term, the goal is to continue creating service awareness , promote the direct and indirect benefits of flying local, and change existing travel habits

. To quantify the marketing campaign ’ s impact, service awareness will be measured by e nplanements with the goal to increase enplanements to a level acceptable by Delta, a minimum load factor average of 65 percent for the first year of EAS
service . The load factor goal after the first 12 months of EAS is 70 percent

. TABLE 5.1 ROLES OF PUBLIC

- PRIVATE PARTNERS PUBLIC

- PRIVATE PARTNER ROLE

Pu blic:

Bert Mooney Airport Authority Grant and marketing program administration; Strategic Plan monitoring City/County of Butte

- Silver Bow Strategic Plan monitoring; performance tracking
Private:

Butte Local Development Corporation Air service liaison t o the community; foster community support for service
Butte

- Silver Bow

Chamber of Commerce Marketing program administration; Strategic Plan performance trackingApplication Under the Small Community Air Service Development Program Bert M ooney Airport Authority**Strategic Plan –** **Implementation and Funding** 

### 14

**Marketing P**  **lan**

Over a n 1 8

- month period, a variety of marketing messages will be used to achieve the goals. An aggressive multi

- media program will be implemented to
increase awareness

. Of the advertising program funds, an estimated 45 percent of the budget will be spent on telev is ion advertising, 37 percent on print media, 12 percent on radio and the remaining six pe rcent on direct marketing ( Exhibit
5 .1 )

. Other marketing services will be provided by the community partnership and
include e

- mail and website promotion

.



### Mark **eting B u**  **dget**

It is anticipated that a $ 17 5 ,000 marketing and monitoring budget will
be needed for an 18

- month service awareness campaign

. Approximately $162,5 00 of cash and in

- kind contributions will be
used t o create the different forms of advertising , purchase a ds

, and
rais e awareness of EAS in the Butte market. The 18

- month marketing pro gram will include development and placement of ads through the various media outlets. Table 5

. 2 shows the marketing budget breakdown totaling $ 162

, 5 00

.



### Timeline

To evaluate the success of marketing efforts, passenger enplanements will be reviewed monthly. Since t he goal s are to improve existing ser vice performance
and increase use of the local airport, onboard passenger loads will be used as an
indicator of success. Marketing efforts will begin as soon as possible after award
of the SCASD P grant

. At the end of each three

- month period, enplanements w ill
be reviewed with the Bert Mooney Airport Authority and the Butte

- Silver Bow
Chamber of Commerce to determine the success of the marketing efforts and

, if

necessary, make adjustments

.



### Strategic P lan F unding

Bert Mooney Airport Authority is seeking $15 0 ,000 of US DOT funding to be used as part of this Strategic Plan

. The community will participate in the program by funding a portion of the marketing campaign (cash), performance monitoring (cash and in

- kind), and program administration (in

- kind). Table 5. 3 , next page, provides the Strategic Plan budget broken down by element and sources of funding. The community will fund 14 percent of the total program. Butte

- Silver Bow Chamber of Commerce will provide the non

- airport funding of the
cash requirement. TABLE 5.2 MARKET ING BUDGET

MEDIA BUDGET

Television $73,125

Print $59,875

Radio $19,500 Direct Marketing $10,000

Total $162,500 Tele

vision 45%

Print 37% Radio 12% Direct Market

ing 6% EXHIBIT 5.1 DIVISION OF ADVERTISING FUNDSApplication Under the Small Community Air Service Development Program Bert M ooney Airport Authority**Strategic Plan –** **Implementation and Funding** 

### 15

TA BLE 5.3 STRATEGIC PLAN BUDGET

DESCRIPTION FUNDING SOURCE

TOTAL US DOT AIRPORT NON

- AIRPORT CASH CASH IN

- KIND CASH IN

- KIND Marketing campaign $150,000 $2,500 $5,000 $5,000 $1 6 2,500 Strategic plan staffing/monitoring $12,500 $ 1 2,500

Total $150, 000 $2,500 $5,000 $12,500 $5,000 $175,000 Percent of total project 86% 1% 3% 7% 3% 100% Percent of total cash contribution 91% 2% N/A 8% N/A N/A



### Project C ontinuation and S ustainability

A further downturn in the economy could lead to lower than estimate d load factor

. If at the end of the second six months of service (months seven through 12) the
service d oes not attain a minimum of a 65 percent average load factor, BTM with the support of the community will extend the marketing campaign for the full

s eco nd year of service (months 19 through 24) and will commit additional funding
of $20 ,000 (cash and in

- kind)

. The public

- private partnership understands the importance of this project and will work to see it succeed.

Effective monitoring of the new service will be critical to gauging the success of
the service and assess weakness. To be of aware of service performance, the public

- private partnership will use a consultant to monitor BTM’s air service. After
the SCASDP is awarded , the consultant will meet with public

- private partnership leaders to heighten awareness of the new service, describe the air service development program, and educate on the importance of protecting local air
service. Once the Strategic Plan is in place, the consultant will analyze fare relationships, monitor load factors, and help the s ponsor gauge the success of
the program

.



### Previous Grant Recipient

- New Project and G oals

In 2004 and 2009, the US DOT awarded the Bert Mooney Airport Authority a SCASDP grant. The 2004 grant included t he following project goals:

• Improve air service to a broad section of the traveling community

• Mitigate the need to drive long distances to access acceptable airfares

• Improve access to the national air transportation system

The primary focus of the 2004 gr ant was on and included the following research Strategic Plan elements:

• Market research

– locally funded

• Research summary and next steps

– locally funded

• Airline meetings

– locally funded

• Air service support program

– DOT fundedApplication Under the Small Community Air Service Development Program Bert M ooney Airport Authority**Strategic Plan –** **Implementation and Funding** 

### 16

The primary focus of the 2 009 grant was on schedule improvement and included the following Strategic Plan elements:

• Improve service/schedule coverage to reduce passenger diversion

The 2009 grant award was subsequently recalled and returned to the US DOT due to the service being a warded a bid under the EAS program. Where the previous application’s goals were research and schedule improvement focused (e.g. research studies to understand the market’s needs and adding a third frequency), this application’s goals are specifically focus ed on promoting existing EAS

.

To accomplish the project goals, t he Strategic Plan is focused on promoting existing Salt Lake City service under the EAS program. The Strategic Plan of this grant application uses a to increase ridership to Salt Lake marketing program City. This application qualifies as a new project with new goals and meets the requirements of the SCASDP. The 2004 and 2009 grants are closed. 

### This application **qualifies as a new project with new goals**  **and meets the requirements of the**  **SCASDP.**Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Schedule and Monitoring** 

### 17



# Schedule **and Monitoring** 

he public

- private partnership has developed a realistic timetable for
im plementation of the grant project. This section provides the schedule for implementation of the Strategic Plan

. A monitoring program is also provided to track the progress of the grant project.



### Schedule

The public

- private partnership will develop the mar keting campaign immediately following SCASDP grant award, anticipated in August/September 2012

. The goal is to implement the marketing campaign no later than November 1, 2012. Timing of the marketing campaign is dependent on Strategic Plan funding and gran t
award

. It is anticipated that the marketing campaign will continue for 18 months

.



### Monitoring P rogram

The monitoring program includes service performance tracking, assessing the effectiveness of the marketing campaign, and determining the impact of EAS on retention/diversion at BTM

. The following will be completed to monitor the Strategic Plan:



### Monthly:

• A r eview of aircraft departures, enplaned passengers, and load factors will be completed monthly.



### Quarterly:

• A comparison of average historical airfare s will be made to prior quarters using US DOT airline reported data

.

• Published airfares will be tracked to the top 20 destinations and

compare d to the surrounding drive diversion airport’s fares

.

• Delta will be contacted to ensure expectations for service a re being met

.



### Annual:

• P assenger retention/diversion information will be updated after the
service has been in the market at least 12 months to determine the impact the service has had on retention/diversion at BTM

. 

# T This section contains:



### • How the community

will monitor the progress of the project



### • The s chedule for timely

completion of the project



### The grant award date **is the critical date for the rest of the**  **Strategic Plan.**Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Appendix A. Marketing Plan** 

### 18



# Appendix A

**. Marketing Plan** 

his marke ting plan, sponsored by the Bert Mooney Airport Authority and managed by the Butte

- Silver Bow Chamber of Commerce for promoting
local BTM air service, has been developed to support the goal of this grant application: i mprove performance of existing EAS S al t Lake City service to prevent further service reductions in Butte



### Marketing P lan G oals

Local travel habits represent a barrier that will limit the success of service in BTM
and need to be overcome. Consumer dissatisfaction with current air service has built an ingrained reluctance toward using BTM

. A large percentage of catchment area air travelers use an airport other than BTM (nearly half). Lack of adequate frequency and high fares have led to a high diversion rate for BTM catchment
area air traveler s. Given the catchment area’s remote location, diversion should be significantly lower. For example, Missoula International Airport, another isolated Montana community, has a much higher retention rate as a result of comparatively adequate air service and reasonable fares.

The new marketing campaign proposed in this application will do much to alleviate the usage issues plaguing BTM

. However, travel habits will need to change for the EAS to be successful. A lack of air service awareness can lead to
service failure and continued drive diversion. Without a marketing campaign, the

new EAS will likely flounder. Most air carriers do not have the budget or staff to create and implement air service awareness marketing campaigns for air service improvement initiati ves in small communities like Butte. As a solution to these issues, the public

- private partnership has developed a marketing plan to change air traveler perceptions of flying locally. The marketing plan consists of a promotion campaign to raise awareness o f the new service. The goals of this program will be achieved if the average load factor reaches at least 67 percent.



### Marketing P artnership

To meet the goals of the marketing plan, the Bert Mooney Airport Authority has collaborated with local private org anizations to develop a workable marketing plan. Three local entities and the US DOT have been assigned roles in the marketing plan. Bert Mooney Airport Authority will manage the logistics of the program estimated at $5,000 and fund $2,500 of media buys. B utte

- Silver Bow Chamber of Commerce will fund the monitoring program and will manage the
“above

- the

- line promotion program” (typical paid advertisements). Butte Local Development Corporation will be the liaison between the community and the air 

# T This section contains:



### • A detailed marketing

plan for the Butte market including goals, partnerships, the target
audience and the mu lti

media campaign.



### T

**he public**

**- private**  **partnership has developed a marketing**  **plan to change air traveler perceptions of**  **flying locall y.** Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Appendix A. Marketing Plan** 

### 19

service dev elopment program. The Development Corporation will manage the “below

- the

- line promotion program” (e.g. direct marketing campaign, public relations). All three private partners will leverage their
contacts and members to raise awareness of BTM
service local ly and beyond. The US DOT grant award will be used to the majority of the marketing campaign. Table
A .1 provides a brief description of each partner’s role in the marketing program.



### Target Audience

The ta rget audience for the marketing campaign will be travelers who would benefit from using the BTM , primarily business and leisure air travelers who
reside in the BTM catchment area ( Exhibit 2 .1 , page 3 ) will be targeted. Marketing to travelers visiting the c atchment area is a secondary target

.



### Promotion C ampaign

The promotion campaign will raise awareness of the service available at BTM

, and communicate the benefits of using the local airport for travel. The promotion campaign is designed around two componen ts: above

- the

- line promotion (e.g. media advertising) and below

- the

- line promotion (e.g. direct m arketing, public relations).



### Above

**- the** 

**- L**  **ine P**  **romotion**

Advertising is a key part of marketing any service industry. The advertising program for BTM air service will be highly targeted, and will communicate the
bene fits of using local air service

.

ADVERTISING C AMPAIGN C REATION

An advertising campaign will be developed to reach business and leisure
travelers with key messages. The campaign will have several comp onents and development will include :

• Creation of a tagline or slogan and logo that convey the most important message(s) for the target audiences

• Development of ad messages and concepts

• Production of ads designed to incorporate into print, radio

, and
telev ision advertising by the marketing partners

In addition to stand

- alone ads promoting the service, a small “ad within an ad” (or tag

- on ad) will be designed to piggyback onto ads promoting tourism, events, recreational or business facilities, and business throughout the service area. TABLE A .1 MARKETING PARTNERS

ORGANIZATION RESPONSIBILITY CASH FUNDING

Be rt Mooney Airport Authority Partial funding of marketing program $2,500

Butte

- Silver Bow Chamber of Commerce Funding of monitoring program $12,500

Butte Local Development Corporation Manage non

media advertising $0

Total $15,000Application Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Appendix A. Marketing Plan** 

### 20

These cross

- promotions with community marketing programs will communicate the availability and benefits of air service into and out of BTM

. Radio and print ads will incorporate the same cross

- promotional aspect as the print ads

.

ADVERTISING PLACEMEN T

The partnership with key community leaders will be particularly beneficial to the marketing of BTM’s air service by providing cost

- effective advertising opportunities. Advertising funding is earmarked for regional advertising

camp aigns, including news papers, television, radio, and I nternet advertising. Appropriate publications/magazines by airlines with codeshare agreements with
Delta Air Lines will also be targeted. Some of these ma y be co

- sponsored by
the Delta

.

Print advertisements will be placed with regional and local Print Advertisi ng - newspaper advertising within the service area, including the Montana Standard and Butte Weekly. Print advertisements may also run in state and regional visitors’ guides, recreational guides, and business guides

.

Advertisements will run with local radio owned by Butte Radio Advertising

- Broadcasting and Cheery Creek Radio. These stations include: KAAR, KMBR, KXTL, KBOW, KANA, KOPR, and KGLM.

Advertisements will run on local tel evision Television Advertising

- station KXLF.



### Below

**- the** 

**- Line P**  **romotion**

The private partners provide a wide range of communication vehicles for engaging and informing the audiences about BTM air service. Promotion efforts will actively target business travelers in the airport catchment area. Leisure travelers will be passively pursued. Active promotion activities will include a direct
mail and e

- mail campaign to business leaders in the community. BTM will also be promoted at meetings of the C hamber of C ommerce, Loca l D evelopment
C orporation, and local service organizations. Passive promotion will take place in newspaper and television news editorials.

PROMOTION PLACEMENT

- ACTIVE

The partnership with key community leaders will be particularly ben eficial to the
mark eting of BTM air service by providing cost

- effective public
relations opportunities

. The C hamber of C ommerce and Local Development
C orporation have online and/or printed newsletters that go to the business leaders in each community, a key target audience f or air service, making these publications an effective means of communicating about air service in Butte

. TheApplication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Appendix A. Marketing Plan** 

### 21

private partners have also agreed to feature information and news about BTM air service on their websites that they maintain to promote their comm unities.

The Butte Local Development Corporation will p rovide promotional materials to community partners and to businesses with headquarters and/or facilities in other regions, such as the Washington Companies, Northwestern Energy, MSE, Inc.,
and M.E.R, Inc., to educate and inform potential inbound travelers from these businesses about the availability of air service to Butte

. A speakers’ bureau will be established to give presentations and provide informational materials at service club meetings and wit h key area businesses and organizations, especially as the air service improvements are launched.

In addition, the air service logo/tagline artwork will be transferred to a stamp that will be provided to community marketing partners, who can easily use i t to cross

promote the air service with little effort and no cost to them.

The Butte Local Development Corporation will launch a targeted direct mail campaign to provide information and news about the air service to those who
make the travel decisions for businesses and organizations in the service area.

PROMOTION PLACEMENT

- PASSIVE

Passive below

- the

- line promotion will include a series of regular press releases and other information provided to regional media throughout the service area to keep the med ia and

, subsequently, the public informed of the availability of air
service at BTM

, and th e benefits of using the service

. The media will be informed of and included in many of the community relations events and activities
described in the active below

- th e

- line promotion , including community events
related to the air service.

T he local newspapers , Montana Standard and Butte Weekly, will be targeted for regular communications. Local radio and television media will receive regularly

released information ab out BTM air service.

Editorial calendars for publications that reach the target audiences will be evaluated for potential news value, especially when they cover a topic that may refer to communities, businesses

, or recreation within the service area, off ering an opportunity to mention or promote BTM air service.

Throughout the year, promotional opportunities that arise will be used to cross

promote BTM’s air service. Examples include providing information and promotional materials to the public at visi tor

- related events like : the An R i R a Montana Irish Festival in August

, the Fo u rth of July Freedom Fest

, the National
Folk Festival

, and Evil Knievel Days which all draw thousands of visitors.A pplication Under the Small Community Air Service Development Program Bert Mooney Airport Authority**Appendix B. Community Support** 

### 22



# Appendix B

**. C**  **ommunity Support**

ppendix B includes letters of support for Bert Mooney Airport Authority ’s
SCASDP grant application. Support letters were submitted by public

private partners, government entities, and members of the Butte community. The letters of support are included on the following pages of this Appendix A

. 

# A This section contains:



### • Support letters from

members of the public

private partnership, government entities,
and member s of the Butte community.