Proposal Under the: Small Community Air Service Development Program Docket

Tax ID Number: 23 2 - digit Congressional District Code: Charles R. Everett, Jr Lehigh Proposal Under the: Small Community Air Service Development Program Docket OST - 2012 - 0069 Duns Number: 045140415 Tax ID Number: 23 - 6002608 digit Congressional District Code: PA- 005

Legal Sponsor: Charles R. Everett, Jr., Executive Director Lehigh-Northampton Airport Authority

3311 Airport Road Allentown, PA 18109 Tel: (610) 266 - 6001 Fax: (610) 264 - 0115 E - mail: ceverett@lnaa.com Proposal Under the: Small Community Air Service Development Program Docket

# ~ Lehigh - Northampton

(A I RPORT AUTHORITY\ Lehigh Valley International Airport Queen City Airport Braden Airpark June 11,2012 Aloha Ley Associate Director Department of Transportati on 1200 New Jersey Ave, S.E. Washington, DC 20590 3311 Airport Road , Allentown , PA 18109 610.266 . 6001 Fax . 610 . 264 . 0115 www.llylvia.com

Sub j ect: Small Community Air Service Devel opment Program
- Docket OST-2012-0069 Application for the Lehigh- Northampton Airport Authority
- Lehigh Valley International Airport (ABE) Dear Associate Director Ley, On behalf of the Lehigh- Northampton Airport Authority, operator of the Lehigh Va ll ey International Airport, I am pleased to submit for your cons ideration our 2012 grant app li cation to the Sma ll Community Air Service Development Program. This application , if chosen, will h elp move the A irport one step clo ser to its goal of increasing access to the national aviation sys tem for all residents ofNortheastern Pennsylvania and Western New Jersey. The Lehigh Valley Internationa l A irp ort , whi ch serves a catchment area of over 1 . 8 million people , as we ll as the third l arges t metropolitan area in Pennsylvania , ha s very limited ai r service to the we s t coast with high fare s ervice to Detroit and C hi cago . The authority h as an ongo in g partnership with many of th e r egion ' s stakeholders including Di s cover Lehigh Valley , Greater Lehigh Vall ey Chamber of Commerce a nd the Lehigh Vall ey Economic Devel opment Corporation to en sure that new a ir servi ce at Leh i gh Valley International Airport is a succes s . Thi s app li cation requests $300 , 000 from the Department to fund a re v enue guarantee program to attract this new service which wi ll not only increase acce s s to the national aviation system but al so to reduce leakage to Newark Liberty International Airport and Phi l ade lphia International Airport thereby reducing congestion at those airp orts. If you have any questions or concerns regarding this app lication , please contact me , the designated l egal spo n sor at ( 61 0) 266-6001. Thank you in ad v ance for your cons id eration. Very Tru l y Y

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# r·**~S!!~~tor**June 6, 2012
Aloha ley Associate Director Department of Transportation Small Community Program, W86-310 1200 New Jersey Ave, SE Washington, DC 20590 Dear Associate Director Ley: Frontier Airlines, Inc. Frontier Center One 7001 Tower Road Denver , co 80249 p 7 20. 374. 4200 F 720 . 3 74.437 5 frontierairlines . com

Frontier Airlines is pleased to support the application of Lehigh Valley International Airport (ABE) for a SCASDG aimed at attracting new low fare nonstop service to Denver . While Frontier can provide no assurances regarding future service at Lehigh Valley, the availability of SCASDG funds will definitely factor positively in our evaluation of the market. This is important given the challenges facing the u .s. domestic airline industry resulting from costs associated with new market development, the perpetual uncertainty surrounding oil prices and the risk associated with flying a route of over 1 , 500 miles. For these reasons, Frontier Airlines supports the SCASDG application of Lehigh Valley International Airport (ABE) and asks that you give it favorable consideration. Please feel free to contact me should you have any questions. Sincerely,

G eg Aretakis Vice President, Network and Revenue Frontier Airlines**I. Lehigh Valley International Airport**  **Air Service Opportunities**

The Lehigh Valley International Airport (ABE) catchment area encompasses a large portion of northeastern Pennsylvania and western New Jersey that boasts a population of approximately 1.8 mi llion people. Despite this large population base, the Airport is without service from a low cost carrier to the west coast. This has led to airfares that are higher than the national and regional averages. As the region continues to grow , the need for more air service at ABE becomes increasingly necessary. Presently, a vast majority of the Lehigh Valley International Airport ’s air service is leaking to Philadelphia International Airport and Newark International Airport. In fact, 7 8 % of the travelers who live within the Airport’s catchment area choose those two airports over their hometown airport. Therefore, Lehigh Valley International Airp ort only captures 2 2 % of the travelers who reside within its 40 mi le catchment area. The Airport realizes the best way to reverse the passenger leakage, is for fares in the catchment area to be on par with the fares found at Philadelphia and Newark, as well as, better air service to properly support all of the regional demand for nationwide connectivity. Currently, ABE has high airfares and limited air service to hub airports that offer connections to multiple destinations going to the west coast. F or example, United is the only carrier providing service for the airport with its daily flights to Chicago . Despite United’s service to the Chicago hub, the num ber of destinations available via its Chicago hub is not enough service to properly support all of the regional demand . The proposal being presented outlines a comprehensive program that will cure this air service deficiency by attracting another carrier like Frontier Airlines to offer more com

prehensive nationwide connectivity via its Denver hub thereby effectively increasing ABE ’s access to the national and international air transportation systems and serving as a further catalyst for economic growth in this already rapidly expanding region. It is expected that the potential destination(s) to be served by this new carrier will provide ABE with air service and connectingLehigh -Northampton Airport Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application

2 options to parts of the country that currently are difficult to access via United’s Chicago service, thereby limiting the level of competition between the carriers. This level of geographic separation should ensure that this SCASDP grant money is not used to subsidize a competitor to ABE ’s current air service. In 20 10, the Airport and the community joined together and crafted an innovative community outreach program . This group, known as the Lehigh Valley International Airport’s Air Service Focus Group worked diligently in trying to recruit Southwest Airlines to continue their service to Orlando International Airport and specifically add service to Chicago/Midway, Atlanta Hartsfield International Airport and Ft. Lauderdale International Airport. While this effort was not successful, it did bring the community together and focused on the necessity to not only support the airport but to grow air service at ABE. The strength of ABE’s current and projected demographics , along with its expanding tourism industry and the relative difficulty that both the community and inbound travelers face in accessing convenient air service to and from the region , suggests that ABE presents a viable commercial opportunity for the right airline with the right equipment in the right market. The Airport has had discussions with several airlines and consequently has found many potential suitors to provide new air service ; however, due to current economic conditions these suitors find new air service to ABE or any new location to be a risky proposition that requires some sort of financial assistance to offset the risks associated with the new service . To address these concerns, the Airport has developed a strong community support package that includes assistance with startup costs, and a comp rehensive marketing and advertising program . The Airport is reque sting a $ 300,000 grant to fund this program while the Airport will provide $ 138 ,000 worth of marketing and additional landing fee waivers for up to one year to assist in mitigating startup costs . The Lehigh-Northampton Airport Authority is confident that, with the help of a Small Community Air Service Development Program grant, it wi ll be in a strong position to attract another new hub service by a network carrier such as Frontier to D enver, thereby providing new access to a low cost network airline hub for passengers throughout the ABE catchment area.

### II. **The Lehigh**  **Va lley**  **Market**

**A Region in Need of**  **Convenient Air Service Options** Situated in the northeastern part Airport’s primary catchment area Northampton , Montgomery, Monroe, which are Hunterdon and Warren counties region have easier access to International to the south or N

Location of

Lehigh-Northampton Authority

– Lehigh Valley International Airport

Small Community Air Service Development Program Grant Application

3 

### Market **Convenient Air Service Options** northeastern part of Pennsylvania, Lehigh Valley catchment area include s eight counties: Berks , Bucks Montgomery, Monroe, and the western portions of which are Hunterdon and Warren counties . Over 1. 8 mi llion people region have easier access to Lehigh Valley International than either Philadelphia or Newark Liberty International to the east . Location of Lehigh Valley International Airport

Lehigh Valley International Airport Program Grant Application of Pennsylvania, Lehigh Valley International Bucks , Lehigh , of New Jersey people living in this either Philadelphia

.**Review of Local Demographics Shows Demand for Lehigh Valley Service**  **Lehigh Valley**



## Primary Catchment (identified in the darker **gr een or**  **20**

**To tal Number of Households**  **Av erage Household Income**  

## To **tal Catchment (identified in the light gr een or**  **40 miles**

**To tal Number of Households**  **Av erage Household Income** 

Lehigh-Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application

4 **Demographics Shows Demand for Lehigh Valley Service Lehigh Valley**  **Catchment Area**



## Primary Catchment (identified in the darker **gr een or**  **20 miles fr** **om ABE):**  **To tal Population**  

## 787,194 **To tal Number of Households**  

## 299,915 **Av erage Household Income**  

## $46,434 **To tal Catchment (identified in the light gr** **een or 40 miles**  **fr om**  **ABE): To**  **tal Population** 

## 1,844,491 **To tal Number of Households**  

## 698,982 **Av erage Household Income**  

## $50,083
Lehigh Valley International Airport Program Grant Application **Demographics Shows Demand for Lehigh Valley Service**



## Primary Catchment (identified in the darker **gr een or**  **20**

**To tal Catchment (identified in the light gr** **een or 40 miles** **Leak age to other Airports within ABE’s** 



### PHL **captur es 24% of the**  **EWR captur es 20% and JFK captur** **es 17%**

• **ABE captur es**  • **NYC combined captur es 45%** 

Source: U.S. DOT O&D Passenger Survey & Adjusted MIDT Passenger Booking Data (YE 2Q 2011)

Lehigh-Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application

5 **Leak age to other Airports within ABE’s**  **Total Catchment Area :**  

### PHL **captur es 24% of the**  **bookings m ade in the catchment ar** **ea EWR captur** **es 20% and JFK captur es 17%** 

**ABE captur es**  **only 22%**  **NYC combined captur es 45%** 

**AB E T**  **otal O&D 22%** 
**PHL 24%**  **EWR 20%**  **JFK 17%**  **LGA 8%**  **BWI 7%**  **MDT 1%**  **AV P,**  **ACY**

**,LNS 1%** 

Source: U.S. DOT O&D Passenger Survey & Adjusted MIDT Passenger Booking Data (YE 2Q 2011)

Lehigh Valley International Airport Program Grant Application 

### bookings m**ade in the catchment ar ea** 

Source: U.S. DOT O&D Passenger Survey & Adjusted MIDT Passenger Booking Data (YE 2Q 2011)**Catchment Area Leakage**

Due to high local fares that are not competitive with fares found at Philadelphia and Newark, ABE struggles to draw passengers from each and every community in the Lehigh Valley Region. While the Airport’s most recent passenger retention/leakage study shows that the majority the primary catchment area, the Airport retains just 22% of the market. Nearly all of the travelers chose to fly from Philadelphia (24%) and Newark (20%) instead of the airport in their own backyard. Therefore traffic within their primary catchment area **Reading Leakage** 

Lehigh-Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application

6 **Catchment Area Leakage Concentrations** 

es that are not competitive with fares found at Philadelphia and Newark, ABE struggles to draw passengers from each and every community in the Lehigh Valley Region. While the Airport’s most recent passenger retention/leakage study shows that the majority of the travelers are coming from the primary catchment area, the Airport retains just 22% of the market. Nearly all of the travelers chose to fly from Philadelphia (24%) and Newark (20%) instead of the airport in their own backyard. Therefore ABE is losing 44% of the potential traffic within their primary catchment area to just those two competing airports **Lehigh V**

**alley Leakage** 

**Northern Philadelphia**

Lehigh Valley International Airport Program Grant Application es that are not competitive with fares found at Philadelphia and Newark, ABE struggles to draw passengers from each and every community in the Lehigh Valley Region. While the Airport’s most recent passenger of the travelers are coming from the primary catchment area, the Airport retains just 22% of the market. Nearly all of the travelers chose to fly from Philadelphia (24%) and Newark (20%) instead of ng 44% of the potential to just those two competing airports .

**Lehigh V**

**alley Leakage** 

**Northern Philadelphia Suburb Leakage** Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 7 The passenger leakage from ABE will only continue as long as the number of seats available at the Airport continues to decline, and as long as average fares found at Philadelphia and Newark are significantly less than the average fares at ABE. The Airport must continue to strategize to recruit a low cost carrier to serve west coast markets to the Lehigh Valley Region to bring down fares and reduce the leakage to other airports within its catchment area.Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 8 **The Lehigh Valley’s Economic B**  **ase** is strong and business es c ontinue to relocate to the region because of the following :  D iverse business clusters focused on servic es and technology  Affordable labor pool  Friendly regulatory environment  Sizable investments in business development  Better cost of living, affordable real estate, lower taxes  Migration of NY, NJ & Philadelphia businesses along with new start-ups  41,000 net new jobs created between 1996 - 4Q2009 These are all factors that create a favorable economic environment for sustainable new air service at ABE . One of the many factors driving the Lehigh Valley area’s growth is a mi gration of residents from the Philadelphia Metropolitan and New York City Areas. They are attracted by the lower cost of living in and around the Lehigh Valley and the relatively easy commute to Philadelphia and New York City . The demographic changes occurring in the region are part o f a larger trend of migration from the congested high cost areas in and around Philadelphia to less expensive suburban areas. In fact some of the fastest growing counties in P ennsylvania are Lehigh & Northam pton counties. The region is the third largest metropolitan region in the state. Working closely with the Lehigh Valley Economic Development Corporation, the Lehigh Valley Partnership is a committee of business people in the Lehigh Valley organized to mobilize both private and public resources to re spond to the needs of the community. The mi ssion is to promote selected initiatives which will im prove the quality of life and the economic prospects for the people of the Lehigh Valley.Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 9 The region also has a large national and international presence o f com panies based in the Lehigh Valley. T o name a few, they include, Air Products & Chemicals, Amazon.com, Crayola LLC, Buckeye Partners, Heidelberg Cement, Just Born, Lutron Electronics , Mack Trucks, Olympus Corporation USA, PPL Corporation, Rodale Press , Synchronoss Technologies and many others. **The Lehigh Valley has a favorable business climate:**Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 10 Since July of 2010, the top em ployers in the region formed the Air Service Focus Group . This is a hardworking group of dedicated em ployees of these corporations that are working with Lehigh Valley International Airport to understand and support the airport’s vision to provide for the current and future air transportation nee ds of the greater region. This group consists of representatives from the are a’ s major corporations, health networks, colleges and universities, the Cham ber of Commerce, Convention and Visitors’ Bureaus, as well as, representatives from ABE. These memb ers were assigned their position on the Air Service Focus Group by their organization’s CEO or President . The Group meets on a monthly basis to discuss current initiatives, ABE operational updates and identifying future initiatives. The Air Service Focus Group Mission Statement is the following :
**To:** Support the LVIA vision to provide for the current and future air transportation needs of the greater Lehigh Valley Region in a safe, efficient and cost effective manner. **By:** Sharing current and future corporate and transient travel patterns and needs to jointly attract and grow airline service. **So That:** Lehigh Valley business and community travel requirements and LVIA future initiatives are aligned.The Air Service Focus Group demonstrates the commitment and cohesiveness of

the entire Lehigh Valley comm unity towards ensuring th business and community travel requirements and Lehigh Valley International Airport future initiatives are aligned and working for the benefit of all involved. **Air Service Focus Group**

Despite ABE strong economic connection to tourism 

### The **Air Service Focus Group Members**

Lehigh-Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application

11 he Air Service Focus Group demonstrates the commitment and cohesiveness of the entire Lehigh Valley comm unity towards ensuring that the Lehigh Valley business and community travel requirements and Lehigh Valley International

initiatives are aligned and working for the benefit of all involved.

strong economic connection to tourism, the ABE 

### Air Service Focus Group Members **Represent**

Lehigh Valley International Airport Program Grant Application he Air Service Focus Group demonstrates the commitment and cohesiveness of at the Lehigh Valley business and community travel requirements and Lehigh Valley International

initiatives are aligned and working for the benefit of all involved.



### Represent **:**The Lehigh Valley is also a popular entertainment setting for cultural enthusiasts,

filled with art mu seums and galleries, historical sites, and scenic covered bridges not to mention the recent tourism growth from the Sands Casino Resort & Entertainment Center in Bethlehem. Major Attractions and Events include:

 ArtsQuest Campus

– square foot arts & entertainment center.  Musikfest

– 10 day mu sic festival, with over 1 mi llion visitors each year, hosted by ArtsQuest.  The Sands Casino  NASCAR Pocono Raceway  Trump National Golf Course  The Lehigh Valley IronPigs AAA Minor League Baseball  **New Ice Hockey**  **Arena in Downtown Allentown** 

• 8,000
• 200,000 sq. ft. convention & event center
• Targ eted for 2013
• $100,000 million  **The Sands Casino & Resort is gr owing**  • 50,000 square feet
• Opened Spring 2012
• Outlet Shopping

Lehigh-Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application

12 The Lehigh Valley is also a popular entertainment setting for cultural enthusiasts, filled with art mu seums and galleries, historical sites, and scenic covered bridges not to mention the recent tourism growth from the Sands Casino Resort &

nter in Bethlehem. vents include: Formerly Bethlehem

S teel plant site, features a 65,000 square foot arts & entertainment center.

10 day mu sic festival, with over 1 mi llion visitors each year, NASCAR Pocono Raceway Trump National Golf Course The Lehigh Valley IronPigs AAA Minor League Baseball **New Ice Hockey**  **Arena in Downtown Allentown** 

– 10,000 seat arena 200,000 sq. ft. convention & event center Targ eted for 2013 $100,000 million
-plus investment **The Sands Casino & Resort is gr owing**  50,000 square feet Opened Spring 2012 Outlet Shopping

Lehigh Valley International Airport Program Grant Application The Lehigh Valley is also a popular entertainment setting for cultural enthusiasts, filled with art mu seums and galleries, historical sites, and scenic covered bridges not to mention the recent tourism growth from the Sands Casino Resort &

Formerly Bethlehem

S teel plant site, features a 65,000 10 day mu sic festival, with over 1 mi llion visitors each year,Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 13 **Current Options: LV** **IA**

**Scheduled Airline**  **Service:**

**TOTA L 2**  **7 1,628** 

**Current Options for**  **Lehigh Valley Passengers**  :

Carrier Airport Daily Flights Daily Seats Air Canada Toronto 2 38 AirTran Orlando Int’l 2 274 Allegiant Orlando/Sanford 4/week 86 (Avg.) St. Petersburg 2/week 43 (Avg.) My rtle Beach 2/week 43 (Avg.) Delta Atlanta 4 200 Detroit 4 200 Frontier Orlando Int’l. 2/week 38 (Avg.) United Washington Dulles 4 136 Chicago 3 150 USAirways Charlotte 3 196 Philadelphia 5 224Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 14 With limited access to airline hubs from ABE today, recent studies indicate that roughly 78 % of the ABE air traveler market utilizes either Philadelphia International Airport or Newark Liberty International Airport for their air travel needs. The close distances between the ABE area and the Philadelphia and Newark airports are not a reason to deny ABE air service . Looking at distance alone ignores the reality that the roads between ABE and both Philadelphia and Newark airports are highly conge sted, a situation that will only worsen due to the population shift to the Lehigh Valley Region that will create increased commuter traffic. The road situation

– at certain times of day is near gridlock . Because many ABE area residents often keep their jobs in the Philadelphia and New York City areas , congestion on the main route s between the cities is increasing. Philadelphia is by far the closest l arge airport to ABE (66 mi les ) while Newark airport (78 mi les) and New York metro traffic can cause large de lays the closer to Newark airport one gets. These distances require travelers to allow close to three hours of time before their flight for travel to Philadelphia and at least two hours of drive time for Newark. Often additional buffer time mu st be built- in for potential gridlock during rush hour times . The ability to avoid this drive to Philadelphia or Newark would be a strong selling point for local residents to use new direct service from ABE and would be an even stronger selling point for inbound tourists who are unfamiliar with the area thereby making the drive all the more inconvenient and cumbersome . In fact , it is safe to assume that a certain portion of potential ABE tourists never travel to the region simply because of this hassle and with proper air service at Lehigh Valley International Airport those tourists may

finally choose to visit the area. Based on the information already presented in this application it is obvious that the Lehigh Valley and Philadelphia have a symbiotic relationship. As a suburb to Philadelphia, the Lehigh Valley area represents nearly 20% of the population of the Philadelphia DMA . With the assistance of this air service development grant , and the incentive package created to entice Frontier Airlines to operate new servi ce to Denver from ABE , it could serve as the catalyst that brings other airlines to ABE for the same purpose. Eventually a large portion of the ABE centric passengers who currently use Philadelphia International will now be able to use ABE thereby decreasing some of Philadelphia’s air traffic and easing the congestion burden the airport faces.Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 15 ABE lacks low cost network carrier hub service to the west coast that provides access to hundreds of cities across America. As depicted below, airfares are on the rise at ABE. The carriers that have been attracted to ABE over the past years are all low cost carriers that are focused on Florida service. The business plan that low- cost carriers follow makes ABE more attractive to these types of carriers, but less attractive to higher cost network carriers that prefer to use small regional equipment to serve new markets such as ABE. This air service grant will enable ABE to attract a type of air service the region lacks and create a more com petitive environment for airfares. Domestic Fares are on the Rise.Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 16 

### III. **Successful Air** 

**Service for**  **Lehigh V**

**alley International Airport**  As previously stated in this application, the community’s objective is to establish air service that consumers – both locally and those coming to ABE from around the nation

– will be sure to use . The Airport and the community understand that for this air service at ABE to be successful it must me et the following criteria:
 **Robust Local**  **Market Demand**  **& Strong**  **Connectivity.** ABE presents a viable commercial opportunity for the right carrier, operating the right equipment, in the right market. T o maximize the likelihood of success, service should be offered in a market with both a large pool of local demand as well as excellent connectivity to destinations across the U.S. and the rest of the world via the carrier’s own network and those of its partners.
 **High Quality**  **of Service**  . It is especially im portant that air service me ets or surpasses certain basic passenger expectation levels (i.e. good operational reliability and adequate aircraft comfort) so that customers will be willing to utilize the service and not seek other options.
 **Frequency of**  **Se rvice**  . Due to the frequent services available at com peting airports any service at ABE mu st offer schedule d frequency that allows reasonable convenience . **The Proposed Service** The objective of this grant is to secure funds that will encourage an airline, by eliminating all or a portion of a carrier’s risk of financial loss, to begin new nonstop air service at ABE to a hub airport not presently served from ABE where the carrier currently operates a connecting hub complex or flies in partnership with a carri er that operates a connecting hub complex at that airport. The goal of such service is to provide ABE with quality, affordable and reliable airline service that offers nationwide connectivity to significantly increase the num ber of destinations available to those passengers who choose to use ABE . It is the belief of the Authority that the existence and eventual long term f inancial viability of this new air service will serve as a vehicle for increasing the region’saccessibility by air and act as a catalyst to promote future airline service expansion

to additional destinations. The diagram services. Potential Hub Airport Services

Frontier Airlines has indicated their Airport’s grant application as planning horizons , it is quite feasible that new airline service could be secured as

ABE - DEN Beyond DEN Total

Lehigh-Northampton Authority

– Lehigh Valley International Airport

Small Community Air Service Development Program Grant Application

17 by air and act as a catalyst to promote future airline service expansion

The diagram below depicts a ma p of potential new hub Potential Hub Airport Services

indicated their support of Lehigh Valley International as indicated by their letter of support . Based on airline it is quite feasible that new airline service could be secured as

YE 3Q 2011 ABE Passenger Pool O&D PDEW Avg. Fare DEN 11 ,360 16 $182.55 Beyond DEN 153,620 210 $205.26

164,980 226 $203.70

Lehigh Valley International Airport Program Grant Application by air and act as a catalyst to promote future airline service expansion below depicts a ma

p of potential new hub

Lehigh Valley International

. Based on airline it is quite feasible that new airline service could be secured asLehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 18 early as May 2013 since new services such as these tend to be started at the beginning of the busy spring/summer travel season. One of the mo st attractive aspects of our pursuit of the specific markets in this application is their similarity to Harrisburg International Airport . Furthermore , the geographic location of these points allows Lehigh Valley International Airp ort to have circuitous access to the most potential connecting destinations as possible . **Past Experience Shows ABE**  **Will Support Service** ABE’s ability to support new air service is shown by its past history experience with the AirTran to Orlando International Airport . At its peak, AirTran offered two daily nonstop flights to its Orlando hub along with connectivity to Jamaica, San Juan, and Montego Bay . The diagram below shows ABE’s market history with Denver .



### IV. **P rogram** **Goals, Structure, & Adm in** **istration**Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 19 **Goals** The Lehigh-Northampton Airport Authority’s overriding objective is to establish a connection to the national and international air transportation system via the hub of a low cost carrier on a long -term, self - sustaining basis that provides increased connectivity to the west coast for more destinations than the airport’s current system . The Airport believes that service to one of the proposed airline hubs shown in diagram above presents the greatest opportunity for success ; however, the Airport realizes that other viable opportunities may be presented by airlines and all potential markets will be reviewed . The Lehigh Valley is a growing comm unity whose residents and visitors are today force d to make long drives on congested roadways in order to access air service. This new proposed air service directly from ABE will save significant amounts of driving time and reduce hassle for the region’s air travelers. C onvenient air transportation will also serve as a further catalyst for the region’s economic development by increasing the Lehigh Valley’s attractiveness to companies and potential new residents and tourists alike. The program ’s goal is not only to attract new hub airline service but als o to create maxim um c ommunity and tourism awareness of the new air service in order to increase its likelihood of success both during the period covered by the grant and in the long -term . The plan for achieving these goals is outlined below. **Structure** This year, the Airport is requesting $ 300,000 to fund a revenue guarantee to support the new air service for its initial twelve months of operation . The Air port will provide $ 138,000 to fund a com prehensive marketing plan , plus an additional $50,000 from Discover Lehigh Valley for inbound marketing to the Lehigh Valley Region, as well as $75 ,000 worth of fee waivers from the Lehigh-Northampton Airport Authority . Details of the marketing plan that would be supported by grant funds are provided in the section below entitled, “Marketing Plan.” While effective marketing will be crucial to the success of service at Lehigh Valley International Airport, it is just one part of an overall support program j ointly developed and funded by the Airport and the community. In accordance with the criteria for priority consideration under the Small Community Program, this structure features a public -private partnership as well as funding by local; nonairport-revenue sources:Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 20 Funding Elements o f the ABE Proposal. Item Airport Grant Total Marketing $ 138,000 $ 1 38 ,000 Revenue Guarantee $ 300,000 $ 30 0,000 Start- Up Expenses $75,000 $75 ,000 **Total $213**  **,000 $3**  **00,000 $**  **5 13**  **,000** The total value of the support program is $ 5 13,000 . This support plan will form the basis of an aggressive recruitment cam paign directed at different carriers to obtain frequent hub service utilizing regional equipment . As indicated earlier in this application, strides have already been made as the Airport has attended many po sitive meeting s with the prospective carriers at their headquarters or during route development conferences . **Marketing Plan** Airline service cannot be successful without extensive community awareness. The Airport propos es to launch a m ulti - faceted pre - and post- launch marketing program at a total cost of $ 238 ,000 .

Proposed Marketing Program Budget. Advertising $138 ,000 InKind $ 49, 000 Public Relations $50,000 **Total Budget $**  **238 ,000**  The marketing camp aign would begin the mo ment the service is announced and continue throughout the first year of service. Focusing on ABE and its neighboring communities as the primary service area, the following market segments have been identified as core target audiences:
 Business travelers

– Convenience oriented and receptive to time - saving/ease of use benefits;Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 21  Leisure travelers

– Price sensitive travelers who are looking for the best value and are receptive to unique cost- saving benefits;
 Sands Casino Resort & Event Center

– Many tourists rely on the property to provide recommendations for transportation. The Sands can either recommend the new air service to customers or pre -purchase blocks of tickets to resell to customers.
 Travel agents

– Receptive to benefits that will save their customers time and/or money and who can encourage prospective travelers to utilize Lehigh Valley International Airport . It takes more than one exposure to win a customer, so ensuring consistent, repeated messages that are visible across all me dia formats will establish and solidify the new carrier’s position as one of the community’s air carriers . **Advertising Campaign** The purpose of the advertising cam paign is to increase public awareness of Lehigh Valley International Airport and the new air service. In support of the new service , the Airport intends to use a strategy involving print, broadcast, and outdoor advertising to inform the public of the new service and encourage its patronage. **Print** Print advertising is still an efficient way to reach a broad, general consumer base within a defined geographical area , while delivering an abundance of information at the same time. Print advertisements will be written and produced for local publications promoting the new service and em phasizing the ABE advantage, including a convenient location (compared to other airports within the region) and feature s such as easy access parking, full servi ce restaurant and bar, and no congestion. The Airport will pursue print advertising not only in general audience editions, such as local daily newspapers and tourism publications, but also memb er- specific publications, such as Chamber of C om merce newsletters and Convention and Visitor Bureau publications. Advertisements will also be place d in publications focused on specific groups, including frequent gamers and senior citizens.Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 22 Telephone directories, although not typically considered members of the me dia, are an im portant part of any print advertising cam paign. We will ensure accurate information about the new carrier and Lehigh Valley International Airport is readily accessible in all community phone b ooks, including service carrier and third-party directories. **Television** This me dium

allows the Airport to reach out to its entire market in one advertising cam paign. Also, it has the capability to complement a print advertising cam paign. Television can be used in a limited, cost- effective manner during selective seasons. Cable and commercial television provide for successful outlets to remind the market about the new air service and Lehigh Valley International Airport . **Radio** This me dium

has the ability to achieve the highest me ssage frequency among the primary target groups since so many who live within the catchment area spend a large sum of time comm

uting to and from work in Philadelphia. Radio will greatly enhance the overall cam paign, particularly when used in combination with the print and television advertisements. Stations will be selected that are the mo st effective in reaching the target groups. The schedule design will be pulsed to increase weight during im portant travel periods. Additional value - added incentives including events, sponsorships, and contests will be negotiated , as well. The goal of the radio cam

paign is to complement the print and television cam paigns and raise awareness among the local community . Advertisements for a variety of local radio stations will be written and produced to expand awareness among the target markets. **Outdoor** Advertising on billboards, transit buses, and bus shelters/benches will be used to reach the general public, including each target market, with a high num ber of repeat exposures. The goal of this campaign is to expand awareness and promote the new service, in turn enhancing top - of - mind awareness. Advertisements for outdoor displays in proximity to the Airport, on-board transit, billboards, and bus shelters will be prepared to expand awareness among the target markets.Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 23 **Promotions Campaign** The goal of the promotions cam paign is to communicate to the public the convenience and cost advantages associated with flying on this new air service from Lehigh Valley International Airport on an ongoing basis so that when the need for travel arises, passengers turn to us. The promotional strategy will focus on the subtle, sometimes indirect, exposures that the target markets receive on a recurring basis, including me ssages they hear while on-hold at the Airport, the information they find while surfing the Internet, and a postcard on the refrigerator listing the local sports schedule. The promotions cam paign also includes travel agent contests, to ensure they think of ABE whenever they research and book travel for their clients. **Internet** In this electronic age, the widespread use of the Internet for both researching and purchasing air travel mu st play a key ro le in the promotion of this new air service. The Airport’s web site will include promotional information about the new service . News, fare com

parisons, travel agent contests, and other timely content will be added and updated frequently to keep the information fresh for repeat visitors. The Airport’s newsletter is also available on the web site, and is available via e -mail to reach an extended subscriber base. Social Media will also play a large role in promoting the service. A direct link will be provided to the carrier’s web site for online travel planning and booking, as well as links to other relevant resources such as local lodging, ground transportation, key destinations, and tourism resources. **Direct Mail** Direct mail is a low- cost, high- im pact method of advertising. S everal direct mail cam paigns will be developed targeting different market segments and their unique motivators. **Travel Agents** A database listing travel agencies and individual agents has already been developed, and a series of postcards promoting the Airport’s convenience and the new flight schedule and competitive fares will be mailed out once service is announced . The goal is to encourage travel agents within both the Airport’s primary service areas to book passengers via ABE .Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 24 In addition to the postcards, promotional giveaway items will be designed, purchased, and distributed to travel agents and gaming properties to promote the airport and maintain top - of -mind presence. These items will accompany contest notification mailings to ensure they get noticed. **Cham ber Mem**  **bers** A database listing Cham

ber of C ommerce memb ers within the catchment area will be obtained and a series of postcards promoting the Airport’s convenience and com petitive fares will be distributed. **Public Relations Campaign** Public relations is a multi - faceted function, incorporating activities such as corporate communicati ons, public affairs, and even advertising. The unifying element is the development of a positive image for the Airport and the new air service within the community. The public relations cam paign will include the following strategies: media releases, arti cles in the trade or industry press, trade shows, me dia kits, newsletters, and speaker’s bureau. The goal for the overall public relations campaign is to increase public awareness and support of the Airport. **Media Releases and Feature Articles** A ma jor asp ect in generating publicity is to attract the interest of news reporters who can tell the Airport’s story to the public in an editorial forum . The key ingredient for a successful press release is to include a “news peg” or a hook to capture the reporter or editor’s attention. **Start -** **up Expenses** The carrier selected will be provided with landing fee, terminal rent & terminal fee waivers during the first year of operations at Lehigh Valley International Airport . These funds can be utilized towards ticket counter and gate furnishings, installing communication lines and computer equipment, acquiring ground service equipment or any other applicable cost of starting service at the Airport. The cost of setting up a new station can be quite costly and the Airport would like to minimize such barriers to entry at ABE . Should the carrier not wish to base staff at the Airport , affordable ground service contractor options will be presented to the carrier .Lehigh -Northampton Authority

– Lehigh Valley International Airport Small Community Air Service Development Program Grant Application 25 **Monitoring Project Progress** Executive Director Charles R. Everett, Jr. will prepare quarterly briefs for the DOT, discussing progress, outcomes, and mi lestones. The Airport will also monitor the performance of the new flights on a monthly basis via statistical reports provided by the carrier. This will enable the DOT to measure the success of its investment in ABE . **Contingency Plan** Since the Airport has many potential carriers in mind for these funds the chances of not attracting one of them are slim ; however, should these carriers not show an interest in ABE even with these funds , the Airport will continue to pursue other airlines for similar hub access to the national transportation system and focus on those which would provide service a logical market based on network strength and the availability of suitabl e aircraft types. **Designation of Legal Sponsor** Charles R. Everett, Jr. , Executive Director for the Lehigh-Northam pton Airport Authority will act as the designated legal sponsor for this application. As the program ’s legal sponsor, Mr. Everett will be responsible for ensuring that any spending on behalf of the Airport , Authority or local com munity is done as prescribed in this grant application.