Proposal under the 

Small Community Air Service Development Program

Docket DOT-OST-2010-0124

Community: Great Falls International Airport 

Authority

Great Falls, MT 

DUNS #: 15-6130148

Congressional 

District Code: 01
Great Falls International Airport Authority Strategic Plan

Proposal Under the 

Small Community Air Service Development Program Docket DOT-OST-2010-0124

August 26, 2010

1.0 Background: 

Great Falls is the second largest City in Montana with a population of approximately 60,000. The 

Great Falls International Airport (“GTF”) is a non-hub airport with approximately 140,000 

annual enplanements making it the forth largest airport in the state. Average ticket prices at GTF 

have historically been significantly higher than nearby Billings. As a result of the pricing 

discrepancy, GTF has experienced significant passenger leakage. The market leakage is 

particularly strong in California and large city markets along the east coast.

2.0 Goals and Objectives: 

The Great Falls International Airport hopes to employ an $850,000 Small Community Air 

Service Grant to help recapture our market leakage. We believe that our plan is particularly 

attractive because the results of the grant will not only enhance the viability of existing service 

by increasing passenger activity, but we will also be employing the results in a marketing plan to 

achieve a long-term solution to high airfares at GTF.

We plan to establish a ticket rebate program that will provide rebates to passengers using our 

airport to travel to specific California and east coast cities. We believe that a relatively small 

rebate has the potential to retain the majority of our leakage because it will bring the GTF ticket 

prices in-line with ticket pricing in Billings. The markets selected for this program have an 

average leakage rate of 35 percent and our stated goal is to recapture 15 percent of the existing 

leakage to the rebate markets. The program will run 18 months unless rebate funds are 

exhausted prior to that timeframe.

We will measure the passenger response to a relatively small change in ticket prices, so we can 

gauge the price elasticity of our market. We believe that the elasticity and stimulation 

information we receive from this program will be invaluable to discussions with our current 

carriers about their pricing in our market. In addition, the data that we collect will be integrated 

into a marketing proposal for low cost carrier service to the east coast and California. 

The cities that we have chosen to provide a rebate for are not only high leakage cities, but they 

are also cities that can be easily reached by several low cost carriers with a one-stop connection 

from their existing hubs. Since our rebate cities are the same cities that we will include in our 

proposal for service from low cost carriers, we will have fresh data about their likely impact on 

our market. Currently Billings and Bozeman are the only Montana cities with daily low cost

carrier service which is provided by Frontier Airlines.
3.0 Demonstration of Need:

3.1 GTF has Demonstratively High Ticket Prices

The FAA Northwest Region is home to 81 airports with passenger service, including 28 

airports with over 50,000 annual enplanements. As shown in the table below, 

Department of Transportation data collected for the March 2009 to March 2010 

timeframe, shows that GTF has the eighth highest average ticket prices amongst all 

Northwest airports with more than 50,000 passengers. This data is presented in a tabular 

format below along with a comparison of average ticket prices for Billings.

Enplaned Average Ticket Price

Rank Airport Passengers Ticket Price as a % of GTF

1 Helena, MT 85,130 $244.23 15.4%

2 Vail, CO 161,550 $237.34 12.2%

3 Kalispell, MT 150,720 $233.04 10.1%

4 Aspen, CO 205,230 $229.99 8.7%

5 Idaho Falls, ID 126,780 $217.56 2.8%

6 Casper, WY 68,110 $215.80 2.0%

7 Jackson, WY 261,330 $213.06 0.7%

8 Great Falls, MT 137,160 $211.58 0.0%

9 Bozeman, MT 317,090 $208.84 -1.3%

10 Montrose, CO 88,270 $207.98 -1.7%

Billings, MT 368,980 $176.34 -16.7%

Northwest Region Airports Exceeding 50,000 Annual Enplanements

Top Ten Airports Ranked by Highest Average Ticket Prices

Year Ended March 31, 2010

From Data Prepared by Mead & Hunt, Inc

It seems intuitive that higher ticket prices might be a result of higher airline fees or longer 

stage lengths at GTF relative to peer airports. However, GTF has a low cost philosophy 

and the airline cost per enplanement last year was a low $5.81. As for longer stage length 

flights, the best way to compare airports is based on an average fare yield basis, which is 

simply the fare revenue divided by seat miles. 

Despite very inexpensive weekend flights provided by Allegiant to Las Vegas and 

Phoenix, which are the first and second largest O&D markets for GTF, the average nonstop yield to GTF’s top-ten markets is an excessive 19.60 ₵ per mile with one market 

exceeding 54 ₵ per mile. When the 28 Northwest airports with more than 50,000 annual 

enplanements are compared on this basis, GTF has the fifth highest yield amongst the 

airports, further demonstrating the fare discrepancy experienced by Great Falls 

passengers. This data is provided in tabular form below and in the simplest terms, it 

illustrates that GTF passengers aren’t getting as much as most passengers in the 

Northwest Region for their ticket buying dollar.
Enplaned Fared Avg Fared Yield

Rank Airport Passengers Avg Yield as a % of GTF

1 Casper, WY 68,110 $20.12 18.6%

2 Aspen, CO 205,230 $19.73 16.3%

3 Idaho Falls, ID 126,780 $19.11 12.6%

4 Helena, MT 85,130 $18.55 9.3%

5 Great Falls, MT 137,160 $16.97 0.0%

6 Vail, CO 161,550 $16.93 -0.2%

7 Durango, CO 144,270 $16.91 -0.4%

8 Lewiston, ID 55,110 $16.43 -3.2%

9 Grand Junction, CO 205,400 $15.88 -6.4%

10 Missoula, MT 263,730 $15.85 -6.6%

Billings, MT 368,980 $14.74 -10.3%

Northwest Region Airports Exceeding 50,000 Annual Enplanements

Top Ten Airports Ranked by Highest Fared Average Yield

Year Ended March 31, 2010

From Data Prepared by Mead & Hunt, Inc

3.2 Great Falls Experiences Leakage

GTF conducted a comprehensive air service study that was completed in August 2008 by 

The Boyd Group, Inc. The study indicated that while GTF experiences roughly 20 

percent overall leakage, the majority of leakage from GTF is highly concentrated in a 

handful of markets on the east and west coasts as well as Chicago as presented in the 

table below. 

Actual True Calculaed Leakage

Rank Airport Passengers O&D Leakage Percentage

1 Chicago 5,453 9,490 4,037 43%

2 Atlanta 5,027 7,504 2,477 33%

3 Consolidated New York/New Jersey 6,423 8,791 2,368 27%

4 San Francisco 3,934 6,087 2,153 35%

5 Orlando 4,790 6,457 1,667 26%

6 Santa Ana/Orange County 2,891 4,514 1,623 36%

7 Boston 3,114 4,658 1,544 33%

8 Oakland 2,111 3,418 1,307 38%

9 Minneapolois 8,065 9,242 1,177 13%

10 Philidelphia 2,673 3,779 1,106 29%

11 Detroit 2,520 3,554 1,034 29%

12 San Jose 2,410 3,394 984 29%

13 Cincinnati 1,501 2,342 841 36%

14 Sacramento 4,043 4,878 835 17%

15 Burbank 1,488 2,310 822 36%

Great Falls International Airport

Top 15 Markets Leakage Cities *

O&D Traffic Stastics for 2007

As the above table illustrates, GTF has significant leakage in many of its top destination 

markets, which is a concerning trend. Adding to this concern, GTF has convenient, oneconnection service to all of the markets in the above table, so pricing is likely the sole 
factor accounting for the leakage. Many of these destinations are important business 

connections for Great Falls businesses and maintaining competitive air service to these 

cities is vital to the health of our community. The markets listed above are also major 

origin cities for tourist visiting Glacier National Park and other nearby Montana 

attractions. Competitive air fares are vital to realizing the economic impact of these 

travelers for the Great Falls community. This economic impact is essential to the Great 

Falls community with an average annual wage of $30,356, which is 17% below the 

average wage of Billings and 36% below the U.S. national average wage.

4.0 Proposed Use of Funds:

4.1 Market Identification

To make the best of use of the proposed grant funds, GTF has identified those markets 

where we have the best opportunity to effect a long-term change in the ticket rate 

structure. In addition, GTF also reviewed these markets to ensure i) the market has a 

leakage rate of at least 25 percent, ii) multiple existing carriers at GTF provide one-stop 

service, iii) that an existing low cost carrier could easily provide one-stop service from an 

existing hub city, and iv) no existing carriers provide direct service to the market because 

this would be too much of a direct benefit to a specific carrier. These criteria were 

developed to support our two-tiered marketing plan, which is to first work with existing 

carriers to achieve lower rates and if this is unsuccessful we would approach low cost

carriers with marketing proposals for these markets. In effect, our program will be a 

combined existing service and new service marketing effort. The markets that meet the

combined screening criteria are:

• Chicago

• Atlanta

• New York/New Jersey

• Santa Ana/Orange County

• San Francisco

• Boston

• Burbank

4.2 Application of Funds

As described earlier in this proposal, GTF plans to offer relatively small ticket rebates in 

an effort to simulate lower cost service and develop price elasticity modeling for our air 

service marketing initiatives. We believe that $35 per ticket rebates would provide the 

needed stimulus to effect decision making. At times, GTF’s fares are likely to exceed 

competing airports even with the rebate in place, but this environment would simulate a 

limited number of low cost flights when we would still leak some passengers to 

competing airports. We believe that $35 rebates on the selected markets would provide 

the ideal environment to stimulate retention and develop a strong argument for lower 

fares in our market.

As the table below demonstrates, approximately 43,000 passengers would be eligible for 

a rebate under our proposed structure and assuming that all of these passengers apply for 

the rebate, the cost would be approximately $1.5 million. GTF plans to offer rebates until 

$1 million is dispersed. We are requested a grant of $850,000 with the remainder of the 
funds committed from the Airport and its local partners. Of the matching funds, 

$100,000 is already committed. 

Leakage Actual True Calculaed Leakage

Rank Airport Passengers O&D Leakage Percentage

1 Chicago 5,453 9,490 4,037 43%

2 Atlanta 5,027 7,504 2,477 33%

3 Consolidated New York/New Jersey 6,423 8,791 2,368 27%

4 San Francisco 3,934 6,087 2,153 35%

6 Santa Ana/Orange County 2,891 4,514 1,623 36%

7 Boston 3,114 4,658 1,544 33%

15 Burbank 1,488 2,310 822 36%

Total 43,354 15,024 35%

Market Stimulation Goal: 6,503 15%

Rebate: $ 35.00

Annual Cost $ 1,517,390

Proposed Grant Funding: $ 850,000

Local Match $ 150,000

Total Program Funding $ 1,000,000

Great Falls International Airport

Estimated Cost of Stimulus Program

4.3 Data Mining

Once the program is established, the Airport can begin collecting valuable data. Using 

regression analysis, we will compare growth rates in our stimulus markets against growth 

rates to all other airport to markets determine how the lower cost tickets would stimulate 

traffic. We can also compare growth in rebate markets to nearby markets like Boston to 

Philadelphia and Washington D.C. for further edification. 

With an average leakage rate to the selected markets of 35 percent, the program is 

unlikely to recapture all O&D passengers flying from competing markets. Many 

passengers will not recall that there is a rebate when booking their flight. However, the 

Airport anticipates that the rebate will also stimulate some passengers that may not have 

otherwise taken a trip. In total, we hope the program can stimulate the chosen markets by 

15 percent or approximately 6,500 passengers per year. 

The destination ticket data that the airport will use to determine the effectiveness of the 

rebate program is commercially available with a two to three month delay; however, once 

O&D data is available for time period of the rebate program, the Airport plans to also 

acquire O&D data and check the overall market leakage rate during the rebate program. 

We will also evaluate monthly and seasonal changes to provide insight into the program’s 

effectiveness among leisure travelers versus business travelers.

Since the rebate funds will require passengers to submit a ticket stub and contract info, 

we will have a means of contacting these passengers to determine how important pricing 

was in their decision to use GTF and ascertain their travel demographics so we can 

further understand how the pricing is impacting different market segments (i.e., family or 
groups traveling together versus individuals, etc). This will provide a qualitative crosscheck of the stimulation data that is collected. Our goal for this portion of the program 

would be to interview 100 passengers from divergent market segments during the 18-

month program.

Using the data collected during the rebate program, the Airport will attempt to quantify 

the price elasticity of these key markets. We will construct revenue models for each 

existing carrier that demonstrates the change in gross revenue based on price reductions 

on existing flights. We will attempt to identify the price reductions that optimize gross 

revenue. The elasticity information will be combined in an air service presentation for 

our existing carriers with the goal of showing that lower fares enhance the performance 

of the Great Falls market. This same data would also be valuable to determine the 

stimulation effect that low cost service would have in proposals to low cost carriers. 

Accordingly, the marketing data collected will support both an existing service and a new 

service marketing effort, increasing our chances of achieving successful outcomes.

4.4 Investing in our Future

Currently, GTF’s annual load factors on the major carriers fall slightly below the national 

average demonstrating a need to generate more passengers to support current flights. Our 

fleet mix is dominated by fifty-seat equipment flying to the large hub cities. Most U.S. 

carriers have announced plans to reduce and even eliminate aircraft smaller than 70 seats 

from their fleet due to the efficiencies of the larger airframes. Orders for 50-seat jets are 

nearly unheard of and the ERJ-145 is the only commercial jet with less than 70 seats that 

remains in production. All of these factors point toward a tenuous future for airports like 

GTF.

Countless airports have lost service in the past ten years as the Dash-8, Beech-19 and 

other smaller equipment has timed-out or been otherwise divested of. Currently, no 

equipment is being manufactured or purchased to replace service from these smaller 

airframes. As commercial airlines divest of their 50-seat equipment, it appears likely that 

many more airports will loose service. Although the 6,500 new enplanements that we 

hope to generate with our program seems like an insignificant number, it is almost 

exactly the number of additional daily passengers that would support the transition from a 

50-seat jet currently serving GTF to a 70-seat jet. If we can demonstrate that a relatively 

minor decrease in ticket prices will stimulate demand and support additional seats, we 

stand a much better chance of preserving GTF’s air service over the next decade of 

transition.
Appendix A: Existing Air Service

Great Falls International Airport

Airline Flight # Equipment Departing To Days per Week

Delta 5743 ERJ-145 Minneapolis 7

Delta 4554 CRJ-200 Salt Lake City 7

United 6600 CRJ-200 Denver 7

Horizon 2321 Q-400 Seattle 7

Delta 5824 ERJ-145 Minneapolis 7

Delta 4675 CRJ-200 Salt Lake City 7

Alegiant 649 MD-80 Phoenix 2

United 6615 CRJ-200 Denver 7

Horizon 2322 Q-400 Helena/Seattle 7

United 6870 CRJ-200 Denver 7

Delta 4592 CRJ-200 Salt Lake City 6

Alegiant 591 MD-80 Las Vegas 2

Horizon 2324 Q-400 Helena 7

Total Flights per Week 80

Weekly Flight Schedule August 2010
Appendix B: Historical Air Service/Enplanements

Great Falls International Airport

Fiscal 

Year Allegiant Big Sky Delta Horizon NWA SkyWest United

Total per 

Year

2002 0 4750 61463 23570 35837 660 0 126,280

2003 0 4307 51742 22515 38483 10467 0 127,514

2004 0 4615 23737 21039 41762 31701 0 122,854

2005 0 4870 0 25674 42134 69215 4002 145,895

2006 0 2996 0 23967 37659 61330 27175 153,127

2007 4447 208 0 22644 37877 49682 31102 145,960

2008 14518 0 42791 26690 36107 0 31110 151,216

2009 27481 0 36644 22690 30123 0 27706 144,644

2010 38030 0 35504 21986 26913 0 31439 153,872

Total per 

Airline

 

84,476 

 

21,746 

 

251,881 

 

210,775 

 

326,895 

 

223,055 

 

152,534 

 

1,271,362 
Appendix C: Prior Air Service Development Efforts

Great Falls International Airport

Past air service development efforts have been a combination of print ads concentrated in various local 

and national publications and efforts undertaken in a previously received Small Community Air Service 

Grant in 2005. 

The previous Great Falls Airport (GTF) marketing plan consisted of three segments. The first segment 

was directed at outbound travelers. The marketing plan promoted existing vacation packages to the 

regional market for each of the airlines servicing GTF. The media of choice for this marketing segment 

was the Great Falls Tribune as it is widely distributed throughout the region including all of the cities 

utilizing the Great Falls Airport. 

The second segment was designed to entice inbound travelers. The target markets were our top 20 origin 

and destination cities and demographics meeting our tourist visitor profile. This segment of the 

marketing plan utilized electronic media. Electronic media allowed us to track effectiveness in order to 

modify the message or target audience accordingly. It also allowed us to target a demographic audience 

that other media vehicles did not. The media message guided the user to our website where various 

packaged travel was accommodated. 

The third segment targeted local partnerships with other marketing efforts to leverage our marketing 

dollars. It includes marketing pieces with Russell Country cooperative buys, a local annual outlook 

publication that is distributed heavily all year long by our hotel operators and other local advertising 

opportunities as they arose. 

Lastly, we have paired with existing airlines and offered advertising dollars to any airline that wishes to 

advertise new service or low fares. 
Appendix D: Program Timeline

Great Falls International Airport

Month 1: Because we have already completed the analysis necessary to identify our target rebate 

markets, our rebate program begins immediately upon receiving grant proceeds. 

Passengers submit a ticket receipt along with contact information at the ticket counters and 

we process their rebate within 30 days. We will also commence Fly Local messaging, 

articulating the importance of using the local Airport and notifying customers of the new 

rebates.

Month 3: Initiate interviews with rebate recipients to begin building qualitative impressions about 

ticket pricing and use of the airport. This effort will include categorizing users by type 

(i.e., leisure traveling alone, business traveling as group) and asking that they provide a one 

to five rating on importance various subjects including ticket pricing etc.

Month 7: Airport commences quantitative analysis of year over year passenger traffic versus results 

in specific markets that have received rebates. The timeline corresponds to the availability 

of Department of Transportation data. We will track these trends monthly as data becomes 

available. The Airport believes that approximately seven months into the program, the 

stimulation effect of the program will reach full maturity.

Month 18: We anticipate that all available rebates will be dispersed by Month 18 providing us with 

enough information to develop price elasticity modeling and evaluate the impact of lower 

fares on all of our markets. Using this data, we will begin building a revenue models for 

each carrier.

Month 24: All market data should now be available and this data will be combined along with the 

airline revenue models into air service presentations for each of our existing carriers. We 

will meet with the carriers along with key members of our community partnerships to 

request reductions in ticket prices on existing routes. Separate air service presentations will 

be constructed using the elasticity data generated from the program for low cost carriers to 

estimate their stimulation impact on our market and demonstrate the financial performance 

of service connecting through their nearest hub city.