APPLICATION UNDER SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM
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SUMMARY INFORMATION 1

All applicants must submit this Summary Information schedule, as the application coversheet , a completed standard form SF424 and the full application proposal on www.grants.gov

. For your preparation convenience, this Summary Information schedule is located at http://www.dot.gov/policy/aviation- policy/small -community- rural

- air

- service/SCA SDP

A. P ROVIDE THE LEGAL SPO NSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL

NUMBERING SYSTEM (DUNS) NUMBER , INCLUDING +4, EMPLOYEE IDENTIFICAT ION NUMBER (EIN) OR TAX ID
. Legal Sponsor Name: Name of Signatory Party for Legal Sponsor:
DUNS Number:
EIN/Tax ID:

B. L IST THE N AME OF THE COMMUNITY OR CONSORTIUM OF COM MUNITIES APPLYING : 1.____________________________________________________ 2.____________________________________________________ 3.____________________________________________________ 4.____________________________________________________

C. P ROVIDE THE FULL AIRP ORT NAME AND 3-L ETTER IATA A IRPORT C ODE FOR THE

APPLICANT ( S ) AIRPORT ( S ) (O NLY PROVIDE CODES FOR THE AIRPORT ( S ) THAT ARE ACTUALLY

SEEKING SERVICE ).
1. 2

. 3

. 4

.

1 Note that the Summary Information does not count against the 20

- page limit of the SCASDP application.D OES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE ISSUED BY

THE F EDERAL A VIATION A DMINISTRATION UNDER 14 CFR P ART 139? (I F “N O ”, P LEASE

EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR WHETHER AN

APPLICATION UNDER P ART 139 IS PENDING .)
Yes No (explain)

______________________________________________________________________________

______________________________________________________________________________ D. L IST THE 2- DIGIT CONGRESSIONAL DISTRICT CODE APPLIC ABLE TO THE SPONSORI NG

ORGANIZATION , AND IF A CONSORTIUM , TO EACH PARTICIPATING COMMUNITY
. 1. 2

. 3

. 4

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E. A PPLICANT I NFORMATION : (C HECK A LL T HAT A PPLY )

Not a Consortium Interstate Consortium Intrastate Consortium Community currently receives subsidized Essential Air Service Community (or Consortium member) previously received a Small Community Air Service Development Program Grant
If previous recipient: Provide year of grant(s) :_______________________________; and, the text of the grant agreement section(s) setting forth the scope of the grant project :

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

F. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )
PUBLIC PRIVATE
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.G. P ROJECT P ROPOSAL : 1. G RANT G OALS : ( CHECK ALL THAT APPLY )

Launch New Carrier Secure Additional Service Upgrade Aircraft
First Service New Route Service Restoration Regional Service Surface Transportation Professional Services 2
Other (explain below)

2. F INANCIAL T OOLS T O B E U SED : ( CHECK ALL THAT APPLY )

Marketing (including Advertising): promotion of the air service to the public
Start

- up Cost Offset : offsetting expenses to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration)
R evenue Guarantee : an agreement with an air service provider setting forth a minimum guaranteed profit margin, a portion of which is eligible for reimbursement by the community
Recruitment of Air Carrier: air service development activities to recruit new air service, including expenses for airport marketers to meet with air service providers to make the
case for new air service
Fee Waivers : waiver of airport fees, such as landing fees, to encourage new ai r service; counted as in-kind contributions only Ground Handling Fee : reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers
Travel Bank: travel pledges, or deposited monetary funds, from pa rticipating parties for the purchas e of air travel on an air carrier , with defined procedures for the subsequent use of the pledges or the deposited funds; counted as in-kind contributions only

2 “Professional Services” involve a community contracting with a firm to produce a product such as a marketing plan, study, air carrier proposal, etc.Other (explain below)

______________________________________________________________________________

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H. E XISTING L ANDING A IDS AT L OCAL A IRPORT : Full ILS Outer/Middle Marker Published Instrument Approach
Localizer Other (specify)

I. P ROJECT C OST : D O NOT ENTER TEXT IN SHADED AREA
L INE D ESCRIPTION S UB T OTAL T OTAL A MOUNT
1 Federal amount requested
2 State cash financial contribution Local cash financial contribution
3a Airport cash funds
3b Non

- airport cash funds
3 Total local cash funds ( 3a + 3b )
4 TOTAL CASH FUNDING ( 1+2+3 )
In

- K ind contribution
5 a Airport In

- Kind contribution **
5b Other In

- Kind contribution **
5 TOTAL IN

- KIND CONTRIBUTION ( 5a + 5b )
6 TOTAL PROJECT COST ( 4+ 5 )

J. 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) and the value ($) of each.K. I S T HIS A PPLICATION S UBJECT T O R EVIEW B Y AN A FFECTED S T ATE U NDER E XECUTIVE O RDER 12372 P ROCESS ?

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 S tate for review.

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

L. I S T HE L EAD A PPLICANT OR A NY C O -A PPLICANTS D ELINQUENT O N A NY F EDERAL D EBT ? (I F “Y ES ”, P ROVIDE E XPLANATION )
No Yes (explain)

______________________________________________________________________________

______________________________________________________________________________ APPLICATION CHECKLIST

I NCLUDED ? I TEM For Immediate Action Determine Eligibility
New Grants.gov users must r egister with www.grants.gov

. Existing Grants.gov users must verify ex isting www.grants.gov account has not expired and the Authorized Organization R epresenta tive (AOR) is current

. For Submission by 5:00 PM EDT on July 31, 2014 Communities with active SCASDP grants: notify DOT/X50 of intent to terminate existing grant in order to be eligible for selection in FY2014 Complete Application for Federal Domestic Assistance (SF424) via www.grants.gov
S ummary Information schedule complete and used as cover sheet (see Appendix B )
A pplication of up to 20 one - sided pages (excluding any letters from the community or an air carrier showing support for the application ) , to include:

• A description of the community’ s air service needs or deficiencies

.

• A strategic plan for meeting those needs under the Small Community Program

.

• A detailed description of the funding necessary for implementation of the community's project.

• An explanation of how the proposed project differs from any previous projects for which the community received SCASDP funds (if applicable).

• Designation of a legal sponsor responsible for adminis tering the program

.

• A motion for confidential treatment (if applicable)

– see Appendix D below.

# G rant Proposal Under The

Small Community Air Service Development Program

For 

# Spokane Airport Board

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- 0113 DUNS # 058614496 Congressional District #5Proposal under the Small Community Air Service Development Program Spokane Airport Board

– Spokane International Airport

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## Table of Contents
Proposal Introduction and Outline

................................ ................... 3
Overview of Grant Request

................................ ................................ ..................... 3 Legal Sponsor of Proposed Project

................................ ................................ .......... 5 Community Support

................................ ................................ ............................... 5 Contact Information

................................ ................................ ............................... 5



### GEG Service Area and Economic Generators

................................ .... 6
Geographic Location and Market Population

................................ ............................. 6 Spokane Economy: Dynamic and Diverse

................................ ................................ 7 Relationship Between Economy and Air Service Access at GEG

................................ . 8



### The Air Service Challenge at GEG

................................ ..................... 9
Current Air Service at GEG Fully Utilized

– Additional Capacity Needed

...................... 9 Strong Conne ction between Texas and Spokane

- Coeur d’Alene Region

................... 1 0 Increasing Fare Trend at GEG is Concerning

................................ .......................... 1 1 GEG

- DFW Profitability Potential Appears Promising

................................ ................ 1 1



### Grant Structure and Implementation Plan

................................ ..... 1 3
Funding and Distribution Sources

................................ ................................ .......... 1 3 Risk Abatement Terms

................................ ................................ ......................... 1 3 Marketing Activities to Support the New Service

................................ ..................... 1 4 Grant Request Differs from FY 2011 SCASDP Grant Award

................................ ...... 1 5 Air Service Development at GEG

................................ ................................ ........... 1 6



### Appendix

................................ ................................ ........................... 1 7Proposal under the Small Community Air Service Development Program Spokane Airport Board

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# Proposal Introduction and Outline

Overview of Grant Request

The Spokane Airport Board respectfully submits its application for the 2014 Small Community Air Service Development Program. The Spokane

- Coeur d’Alene Region can be characterized as a growing community with a burgeoning economy. However, due to its geographic location in eastern Washington, it is iso lated and relies heavily on air service provided at Spokane International Airport (GEG) as an economic generator as the region’s primary connection to the national transportation system.

This grant application will explain and highlight that an air servic e deficiency exists that is negatively impacting the Spokane

- Coeur d’Alene Region . A Small Community Air
Service Development Program grant will aid in alleviating this deficiency. As the following map illustrates, year round a ir s ervice access to the southern United States is lacking at GEG. 

## GEG Year

- Round Nonstop Service Pattern

CY 2014Proposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 4 This objective of this proposal is a revenue guarantee and accompanying marketing program to attract year

- round service to Am erican Airlines’ Dallas

- Ft. Worth (DFW) hub. With American Airlines and US Airways recently completing their merger to create one of the largest airlines in the world, the DFW hub will not only allow for air service access between Spokane and the southern United States, but also create co nvenient and
efficient one

- stop connectivity to many international destinations.

A Small Community Air Service Development Program grant award will also assist in stemming the decreasing passenger and capacity trend at GEG over the last several
years. Se at capacity has decreased by approximately 25% between CY 2007 and CY 2013 which has resulted in a decrease of 15% in enplanements over this same time period. This is not due to the performance of incumbent airlines at GEG, but rather a
function of the rat ionalization of capacity in the overall airline industry over the last five years. It has been identified that American Airlines’ Dallas

- Ft. Worth hub can provide the maximum benefit to the Spokane community of any new air service at GEG.



## GEG Enplanement and Seat Capacity Trend

CY 20 07

– CY 2013Proposal under the Small Community Air Service Development Program Spokane Airport Board

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### Legal Sponsor of Proposed Project

The Legal Sponsor of the Small Community Air Service Development Program grant application will be the Spokane Airport Board.



### Community Support

The Spokane Airport Board is joined by Greater Spokane Incorporated as the community partner for this application. Greater Spokane Incorporated will be responsible for community outreach and marketing of the new proposed service to
ensure its success and u ltimate self

- sufficiency.



### Contact Information

All correspondence regarding this proposal should be referred to:

Lawrence Krauter, A.A.E., AICP Chief Executive Officer Spokane International Airport 9000 W. Airport Drive #204 Spokane, WA 99224

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# GEG Service Area and Economic Generators

Geographic Location and Market Population

The Spokane International Airport has a wide catchment area due to the region’s lack of access to alternative airports. Situated in eastern Washington, Spokane is approximately a 4.5 hour drive from Seattle

- Tacoma International Airport (SEA) and involves a rugged mountain pass which can be treacherous in the winter. This allows GEG to have a wide reach for its service area with approxi mately 600,000 people within a one hour drive and 900,000 within a two hour drive.



## GEG Primary and Extended Service AreaProposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 7 As the map illustrates, due to its location and lack of proximity to other regional airports, the Spokane

- Coeur d’Alene Region truly relies on scheduled air service at Spokane International Airport to stimulate economic activity in the region.



### Spokane Economy: Dynami c and Diverse

Th e Spokane

- Coeur d’Alene Region is headquarters to both public and private industry which rely on GEG air service. Spokane is home to Fairchild Air Force Base, including
the 92 nd Air Refueling Wing, whose aircraft and personnel are the backbone o f the Air Force’s tanker fleet on the West Coast. 1 With approximately 5,000 military and civilian jobs, Fairchild AFB is the la rgest employer in Spokane

- Coeur d’Alene Region

.

In addition to the military presence in the region, there is a strong healthcar e sector with over 40,000 direct and support employees. Manufacturing accounts for approximately 9% of the area’s employment, of which a rapidly growing aerospa ce industry accounts for over 120 manufacturers, suppliers, distributors, and service organizati ons providing products to the industry.

Spokane and the surrounding region is a veritable four season recreational paradise, and tourists from around the world take advantage of the opportunities the region
affords. There are five ski areas within a two hour drive of downtown Spokane for winter recreation, as well as access to world class biking, hiking, whitewater rafting, golfing, and fishing for the summer months. The region is also home to over 20 wineries, a Smithsonian associated museum, the Spokane Symphony, and the resort town of Coeur d’Alene, which is only 40 minutes away.

The region also boasts an impressive array of institutions of higher education. These schools rely on the scheduled air service at GEG to attract students from across the

1 http://www.fairchi ld.af.mil/library/factsheets/index.aspProposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 8 world as well as faculty. Below is a list of the schools and enrollment for these institutions, which totals over 60,000 students.



## Higher Education in Spokane Region

Relationship between Economy and Air Service at GEG

Scheduled air service at GEG is t he indispensable factor that drives the Spokane

- Coeur d’Alene Region economy. Despite the downward trend in enplanements and capacity at the airport, t he cu rrent air service at GEG is highly utilized

– to the point where additional capacity is needed in order for the local economy to continue its growth trajectory. The Spokane community understands the changing dynamics in the US aviation industry and decreasing appetite for risk am ong US carriers. The Small Community Air Service Development Program grant award would be used to help offset the risk associated with American Airlines entering the GEG market. However, it is fully expected that GEG

- DFW n onstop service will become self

- su staining due to a strong community of interest not only betw een Texas and the Spokane

- Coeur d’Alene Region , but also because of the strong connectivity DFW allows for southern US travelers.Proposal under the Small Community Air Service Development Program Spokane Airport Board

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# The Air Service Challenge at GEG

Current Air Service at GEG Fully Utilized

– Additional Capacity Needed
Spokane suffers from the need for additional capacity in order to meet the demand of the community’s air service requirements. Load factors for the pri mary hubs where
passengers can efficiently and conveniently connect to GEG from the southern United States are very high, indicating that there are passengers that cannot utilize GEG for
their travels due to lack of available s eats. Because the Spokane

- Coeur d’Alene Region is both a strong business and leisure mark et, this lack of capacity impacts both GEG originating passengers and inbound travelers from points ac ross the southern US.


## GEG Load Factor s for Current Hub Service that Provides Convenient Connectivity to the Southern US

CY 2013

Nonstop service between GEG and American Airlines’ DFW hub would allow for increased options for both outbound and inbound passengers.Proposal under the Small Community Air Service Development Program Spokane Airport Board

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### Strong Connection between Texas and Spokane

- Coeur d’Alene Region
A strong community of interest exists between the stat e of Texas and the Spokane

Coeur d’Alene Region , which further supports the need for Dallas

- Ft. Worth nonstop service. During CY 2013, approximately 44,000 passengers traveled between GEG and DFW alone making DFW the #14 O&D market at GEG during this time period. This is an impressive number of passengers when considering nonstop service does not exist, and it can be expected that significant market stimulation would result from the
commencement of n onstops b etween the two regions.



## GEG

– Texas O&D Passenger s and Revenue

CY 2013

Not only is there strong existing demand between the Dallas

- Ft. Worth region and the Spokane

- Coeur d’Alene Region , but there are an additional 90,000 annual origin and destination passengers between G EG and the state of Texas. Houston, San Antonio, and Austin account for approximately 60,000 additional passengers on an annual basis

– none of which can fly direct between Texas and Spokane.

There is an undeniable connection between the two regions , whi ch would only be strengthened with the addition of nonstop service. With approximately 130,000Proposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 11 passengers traveling between GEG and the state of Texas, there is a definitive need for increased air service access between this underserved market and Spokane.



### Increasing Fare Trend at GEG is Concerning
Over the last five years, the average one way gross fare at GEG has increased by approximately 30%, from $172 in CY 2009 to $223 in CY 2013. This is a disturbing trend that may be exacerbated by the limited available seat capacity in the market. It is the community’s hope that the addition of GEG

- DFW nonstops would help bring fare discipline to the market by adding an additional airline and route , thereby promoting healthy competition among carriers.



## GEG Av erage One Way Gross Fare Five Year Trend: CY 2009

– CY 2013

GEG

- DFW Profitability Potential Appears Promising
The Spokane Airport Board and the community fully understand that the ultimate objective of a ny new service is to reach self

- sufficiency. Initial forecasts accomplished
for GEG

- DFW route indicated that there is a strong likelihood of the route quicklyProposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 12 attaining profitability. Based on a 1x daily nonstop service pattern with an A

- 319 aircraft, an 86.7 % load factor is projected on the route. While it is fully anti cipated that
the market is self

- sustainable, a Small Community Air Service Development Program grant award will give American Airlines some comfort level in entering a brand new market. As has been previously discussed, ai rlines are increasingly conservative in their route decision making process, particularly when evaluating new routes. While it is
evident that GEG

- DFW has solid profitability potential, a revenue guarantee approach helps ease concern on the part of the air line which assumes the risk when entering new
markets.



## GEG

- DFW Projected PerformanceProposal under the Small Community Air Service Development Program Spokane Airport Board

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# Grant Structure and Implementation Plan

Funding and Distribution Sources
The Spokane Airport Board is joined by Greater Spokane Incorporated as its community partner in this grant application. Greater Spokane Incorporated works to create something greater for the Spokane region by connecting businesses to valuable relationships and resources, driving i nitiatives to improve the region, and advocating for
business with a unified voice.

It is proposed that the grant request for American Airlines DFW nonstop service be split between risk abatement and a comprehensive marketing/advertising initiat ive to
pro mote the new service, with the majority of the funds going towards risk abatement. The community requests a grant award in the amount of $750,000, with a community match of $150,000 (20%).



### Risk Abatement Terms

The structure of the $750,000 risk abatement portion of the grant is envisioned as
follows:

 GEG will negotiate with American Airlines an agreed upon target revenue per flight for nonstop DFW service.Proposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 14  GEG and American Airlines will develop a structured, scheduled and formalized

revenue - de termination formula. This includes the local O&D revenue, plus the
GEG segment’s portion of system connecting traffic revenue

.

 A computation will be made on a monthly basis of the progress of the new service. The carrier will agree to provide the airport with advance booking reports and previous month’s traffic and revenue results every thirty days

.

 The settlement for the revenue guarantee will be accomplished preferably after
each six months of service

.



### Marketing Activities to Support the New Service

Greater Spokane Incorporated will adm inister the strategic and exten sive marketing
program in order to build awareness of the new air service. Initiatives will include:

 Comprehensive usage of electronic media forums such as email and social media
outlini ng the benefits of the new DFW service to t he Spokane

- Coeur d’Alene Region

.

 Announcement of the new service via television, radio, and print newspaper
outlets.

 Informational presentations by Greater Spokane Incorporated and the airport
with local civic groups and business leaders prior to and after the start of the
new air service.

 Targeted marketing in the Dallas

- Ft. Worth area to bring awareness of the benefits of the flight (50% of the GEG

- DFW traffic originates at DFW)Proposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 15  Outreach to local businesses and industries that have ties to the state of Texas
and Dallas

- Ft. Worth in particular



### Grant Request Differs from FY 2011 SCASDP Grant Award

The Spokane Airport Board and Spokane International Airport were fortunate recipients of a SCASDP grant award in FY 2011. The award was for $1 million and was specifically targeted for attracting nonstop service to the Los Angeles Basin. Because of such a strong history of passengers traveling between the Sp okane

- Coeur d’Alene Region and the LA Basin, Delta Air L ines entered into the GEG

- LAX market in June 2013 with daily
service.

The results of the Delta LAX nonstops have been decidedly positive, with load factors averaging 83.2% for the first eleven months of service.



## Delta GEG

- LAX Load Factor Performance

J un 2013

– Apr 2014

The purpose of the current grant request is for nonstop service to Dallas

- Ft. Worth due to the large community of interest between Spokane and the state of Texas.Proposal under the Small Community Air Service Development Program Spokane Airport Board

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- 0113 16 Furthermore, new GEG

- DFW nonstop service would allow for convenient conn ectivity for southern United States passengers at DFW and remedy a capacity deficit to/from GEG for these travelers. There is a material and meaningful difference between the current grant request and the FY 2011 award in that the prior award was specifica lly focused on the LA Basin O&D. Spokane has demonstrated its ability to effectively
attra ct new service and achieve self

- sufficiency.



### Air Service Development at GEG

The Spokane International Airport has been diligent in its air service development efforts over the last several years. Air service development is a regular activity at GEG, with emphasis not only on working with incumbent carriers to understand route performance and potential opportunities, but also having formed relationships with

carr iers that are not presently operating at GEG so as to update them on the community and prospective opportunities. Over the last three years, the efforts of the airport management have paid off through the commencement of several new routes, including:

 Del ta GEG

- LAX

 Delta GEG

- SEA

 Delta GEG

- ATL seasonal

 Allegiant GEG

- HNL seasonal

 Southwest GEG

- MDW seasonal

Airport management attends air service development conferences to meet with air carriers and works with air service development consultants to help analy ze and evaluate opportunities at GEG that will benefit the community. The airport also works with its incumbent carriers on comprehensive marketing efforts to bring awareness to GEG’s convenience and positive economic impact for the community.Proposal under the Small Community Air Service Development Program Spokane Airport Board

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# Appendix

T he grant application has outlined the strong connection between the state of Texas
and the Spokane

- Coeur d’Alene Region . However, nonstop service between GEG and
DFW on American Airlines would allow for many passengers from other southern cities
in the United States to conveniently connect at DFW to/from GEG. The following table illustrates the CY 2013 passengers and revenue that would be available to American
Airlines if they were to enter the DFW

- GEG market:



## GEG O&D Accessible over American Airlines’

DFW Route Network CY 2013

Over 400,000 current GEG O&D passengers can connect over DFW to/from GEG prior to any net new demand that DFW

- GEG nonstop service would stimulate.