## 1 APPLICATION UNDER

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 201 3

- 0120

SUMMARY INFORMATION

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: City of Stillwater, Oklahoma

DUNS Number: 071230569

EIN/Tax ID: 73 6005444

B. L IST THE 

## N AME OF THE COMMUNITY OR CONSORTIUM OF COM MUNITIES APPLYING 

## :
1. S TILLWATER 

## , O KLAHOMA



## 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 FO R THE AIRPORT 

## ( S 

## ) THAT ARE ACTUALLY

SEEKING SERVICE 

## ).

1. Stillwater Regional Airport ( SWO ) 2

. 3

. 4

.

## 2 D. L IST THE 

## 2

- DIGIT CONGRESSIONAL DISTRICT CODE APPLIC ABLE TO THE SPONSORI NG

ORGANIZATION 

## , AND IF A CONSORTIUM 

## , TO EACH PARTICIPATIN G COMMUNITY



## . 1. OK

- 03 2

. 3

. 4

.

E. A PPLICANT 

## I NFORMATION 

## : (C HECK 

## A LL 

## T HAT 

## A PPLY 

## )

Not a Consortium Interstate Consortium Intrastate Consortium
Community now receives subsidized Essential Air Service
Community (or Consortium member) previously received a Small Community Air Service Development Program Grant

If previous recipient: Year of g rant(s):

F. P UBLIC 

## /P RIVATE 

## P ARTNERSHIPS 

## : (L IST 

## O RGANIZATION NAMES 

## )

PUBLIC PRIVATE

1. City of Stillwater, OK 1. Stillwater Chamber of Commerce

2. Stillwater Regional Airport Authority 2. Oklahoma State University

3. Stillwater Convention & Visitors Bureau 3.

G. P ROJECT 

## P ROPOSAL 

## : ( CHECK ALL THAT APPLY 

## ) Marketing Upgrade Aircraft New Route

Travel Bank Service Restoration Subsidy
Surface Transportation Regional Service Revenue Guarantee

Launch New Carrier Start

- up Cost Offset First Service
Study Secure Additional Service Other (explain below)

H. E XISTING 

## L ANDING 

## A IDS AT 

## L OCAL 

## A IRPORT 

## :
Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other ( Approaches: ILS RW 17, Loc RW 17, NDB RW 17,
RNAV/GPS RW 17, RNAV/GPS RW 35, VOR RW 17, VOR/DMA RW 35; Approach Lighting: MALSR RW 17, REIL RW 35, PAPI RW 17, RW 35, & RW 4 VASI RW 22 )

## 3 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 $447,000

2 State cash financial contribution $36,000
Local cash financial contribution

3a Airport cash funds $0

3b Non

- airport cash funds $3,365,000

3 Total local cash funds ( 3a + 3b ) $ 3,365,000

4 TOTAL CASH FUNDING ( 1+2+3 ) $3, 8 48,000

In

- Kind contribution

5a Airport In

- Kind contribution** $160,600

5b Other In

- Kind contribution** $250,000

5 TOTAL IN

- KIND CONTRIBUTION
( 5a + 5b )

6 TOTAL PROJECT COST ( 4+5 ) $4, 2 58,600

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.
5a: Airport fee waivers including landing fees and terminal rent fees.

5b: Marke ting campaign.

## 4 K. I S 

## T HIS 

## A PPLICATION 

## S UBJECT 

## T O 

## R EVIEW 

## B Y 

## S TATE 

## 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 state for review.

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

L. I S 

## T HE 

## A PPLICANT 

## D ELINQUENT 

## O N 

## A NY 

## F EDERAL 

## D EBT 

## ? (I F 

## “Y ES 

## ”, P ROVIDE



## E XPLANATION 

## )

No Yes (explain)

______________________________________________________________________________

______________________________________________________________________________

# Stillwater Regional Airport Stillwater, Oklahoma

Contact: Gary Johnson Airport Director 2020-1 West Airport Road Stillwater, Oklahoma 74075 Phone: (405) 372-7881 Fax: (405) 372-8460 Email: gjohnson@stillwater.org 

# A PPLICATION 

# U NDER THE 

# S MALL 

# C OMMUNITY


# A IR 

# S ERVICE 

# D EVELOPMENT 

# P ROGRAM

D OCKET 

## DOT-OST-2013-0120

### Prepared by 

# T ABLE OF 

# C ONTENTS

P AGE



### Section 1. Applicat ion Highlights ........................................... 1 Lack of Access to the National Air Transportat ion System ............................ 1 Community Cost Contribut ion ........................................................................ 1 Public-Private Partnership.............................................................................. 1 Material B enefits ............................................................................................ 2 Use of Funds in a Timely Fashion .................................................................. 2


### Section 2. Air Serv ice Environment ....................................... 3 Airport Catchm ent Area ................................................................................. 3 Proximity to Alternate Airports ........................................................................ 4 Growing Pop ulation ........................................................................................ 4 Business Co mmunity ..................................................................................... 4 Oklahoma State Universi ty............................................................................. 5


### Section 3. Air Service N eeds and Deficiencies ........................ 6 Major Destination Markets Not Served Adequately ........................................ 6 Need for Local, Conve nient Air Service ......................................................... 7 

### Section 4. Strategic Plan – Air Service

.................................... 8 Project G oals ................................................................................................. 8 Proposed Air Se rvice ..................................................................................... 8 Airline Partic ipation ........................................................................................ 9 Detailed Market Analysis ............................................................................... 9 Alternate Plan .............................................................................................. 10 Past Air Service Deve lopment E fforts .......................................................... 10 

### Section 5. Strategic Plan – Implementation and Funding ...................................................................... 11 Public-Private Partnersh ip............................................................................ 11 Incentive and S upport P lan .......................................................................... 11 Project Continuation an d Sustaina bility ........................................................ 13 Strategic Plan Funding ................................................................................. 14 

### Section 6. Schedule and Monitoring ..................................... 15 Schedule and Mile stones ............................................................................. 15 Monitoring Pr ogram ..................................................................................... 16 

### Appendix A. Community Support ......................................... 17 Public-Private Partnersh ip............................................................................ 17 Governme nt ................................................................................................. 17 Local Busine sses ......................................................................................... 17

### T HIS SECTION CONTAINS 

### : Highlights of the grant application and identification of the project goals and associated Strategic Plan.



# 1 

# S ECTION 

# 1. A PPLICATION 

# H IGHLIGHTS

his Small Community Air Service Development Program (SCASDP) grant application for the Stillwater Regional Airport (SWO) meets the criteria of Docket DOT-OST-2013-0120. The City of Stillwater, Oklahoma, the legal sponsor, is requesting $447,000 in federal assistance to implement a $ 4,258,600 air service initiative. The project goal is to introduce commercial air service for the Stillwater community to allow access to the national air transportation system. The Strategic Plan, American Eagle SWO-Dallas/Fort Worth service, will achieve the project’s goal.



### L

ACK OF 

### A CCESS TO THE 

### N ATIONAL 

### A IR 

### T RANSPORTATION 

### S YSTEM

The Stillwater community has no local commercial air
service and thus lacks adequate access to the national air transportation system. This makes the community disadvantaged economically compared to other communities in the region by having to rely upon driving over 75 miles or 1.5 hours each way to Tulsa or Oklahoma City to access air service. With Tulsa and Oklahoma City limited in their air service offerings as small hub airports, some travelers feel the need to make the four-hour one-way trip to access the nearest medium/large hub airport,
Dallas/Fort Worth.

A recent air service study showed that the Stillwater area generates nearly 500,000 annual passengers or 674 passengers daily each way (PDEW). These
travelers are forced to drive a minimum of 90 minutes to the closest commercial service airports, adding to roadway congestion and pollution that could be reduced by having direct service into SWO. While
there is cost for the direct value of their time, the drive also adds direct expense for Stillwater area travelers, adding an extra $90 or more to every roundtrip flight. 

### C OMMUNITY 

### C OST 

### C ONTRIBUTION

To support this air service initiative, the City of Stillwater, Oklahoma State Univ ersity and others from the Stillwater community will fund 90 percent of the proposed $4,258,600 Strategic Plan. Non-airport revenue sources will fund 88 percent ($3,401,000)
This is a very of the $3,848,000 cash requirement. strong commitment by the local community to
introduce airline service.



### P UBLIC 

### -P RIVATE 

### P ARTNERSHIP

The City of Stillwater, Stillwater Regional Airport Authority, Stillwater Chamber of Commerce, Stillwater Convention and Visitors Bureau, and Oklahoma State University have formed a public-private partnership. This partnership is dedicated to the success of thisinitiative, as indicated by the significant local, nonairport financial contributions. 

# T

## S ECTION 

## 1. A PPLICATION 

## H IGHLIGHTS



# 2 M ATERIAL 

### B ENEFITS

Nonstop air service from SWO will benefit a broad segment of the traveling public, including businesses, Oklahoma State University and other enterprises. Within the SWO catchment area, approximately 195,000 people reside in the area. The Stillwater population is in line with other markets served by
American Airlines from Dallas/Fort Worth.

Importantly, Oklahoma Stat e University employs
over 5,000 people and has over 23,500 students. The University has a high demand for Dallas/Fort Worth service with significant numbers of North

Texas students and Alumni.

The growing population of Stillwater, Oklahoma State University and many businesses in the region desperately need the proposed service. Dallas/Fort Worth is one of the community’s top destinations with the ability to connect on American Airlines to more than 185 destinations on greater than 800 daily departures. In a survey of local businesses, 89 percent of respondents indicated that local access to the national air transportation is important to them, with 47 percent indicating it is very important. Nearly one in two respondents listed Dallas/Fort Worth as one of their top five destinations. 

### U SE OF 

### F UNDS IN A 

### T IMELY 

### F ASHION

All of the elements are in place to ensure the timely use of grant funds. SWO has a 7,400 foot runway with an Instrument Landing System and a terminal facility with airline positions available. No operational restrictions are anticipated. In short, SWO is ready and waiting for an airline to begin service.

A detailed market analysis has been completed for American Eagle service to Dallas/Fort Worth. Preliminary discussions with American have already taken place. It is reasonable to expect that this service could be implemented in spring/summer 2014.

# 3 T HIS SECTION CONTAINS 

### : Description of the Stillwater community in relation to air
service to demonstrate the benefit to a broad segment of the traveling public. 

# S ECTION 

# 2. A IR 

# S ERVICE 

# E NVIRONMENT

he Stillwater community is in need of local access to commercial air service. SWO has no commercial air service and passengers must rely upon significant driv es to access the nearest commercial service airport. Oklahoma State University’s proximity to SWO and the solid and growing business and population base in the Stillwater area is driving local demand for air service improv ements. This section reflects the broad segment of the traveling public, including businesses, educational institu tions and other enterprises th at will benefit from the proposed Strategic Plan.



### A IRPORT 

### C ATCHMENT 

### A REA

SWO is located in north-central Oklahoma in the City of Stil lwater. The Stillwater area is located about 75 miles from Oklahoma City and Tulsa. SWO’s catchment area, shown in blue in Exhibit 2.1 , has a population of over 195,000. Within a 40-mile radius of SWO is a populat ion of almost 240,000 (source: Diio Mi).

EXHIBIT 2.1 SWO CATCHMENT AREA 

# T

## S ECTION 

## 2. A IR 

## S ERVICE 

## E NVIRONMENT



# 4 P ROXIMITY TO 

### A LTERNATE 

### A IRPORTS

Since SWO has no commercial air service, the SWO
catchment area must divert from the area and use other surrounding airports including Oklahoma City, Tulsa, Wichita
and Dallas/Fort Worth. Table 2.1 shows the drive miles and estimated drive time from the Stillwater community to each of these airports. The primary diversionary airport is Oklahoma City with 61 percent of the catchment area making the 76-plus mile trip at almost 1.5 hours each way.
The Stillwater-Tulsa drive is similar to the drive to Oklahoma City; however, Tulsa has less service offerings than Oklahoma City. Both airports are classified as small-hub airports and the drive times can be significantly longer depending on traffic. The nearest medium or large hub airport is Dallas/Fort Worth, requiring a drive of over four hours each way.



### G ROWING 

### P OPULATION

The Stillwater Micropolitan Stat istical Area (Micro) has an estimated 2012 population of 77,547. From 2000 to 2010, Stillwater’s population grew by 13 percent (source: Woods & Poole Economics, Inc.). This growth rate exceeded the state of Oklahoma’s nine percent growth and the US growth of 10 percent. Similarly Stillwater’s per capita income is up 39 percent since 2000, compared to 24 percent for the state of Oklahoma, and retail sales have increased 18 percent since 2000, compared to 13 percent for the state of Oklahoma.
Stillwater has received several accolades in the last few years including being named the "6th Fastest Growing Small Town in America" by Forbes.com.

Many communities of similar size have local commercial air
service. As shown in Table 2.2 , the Stillwater population is in line with other markets served by American Airlines from
Dallas/Fort Worth.



### B USINESS 

### C OMMUNITY

Although Stillwater is a sm all community, it has been successful in turning the area into a diversified economy that includes aerospace, education, medical, technology and service sectors. Stillwater is also the county seat of Payne County, Oklahoma. While the major economic driver in the area is Oklahoma State University (discussed on the f ollowing page), Stillwater is home to multiple large local
businesses. Table 2.3 provides a list of top employers in the Stillwater area. TABLE 2.1 PROXIMITY TO ALTERNATE AIRPORTS

AIRPORT DRIVE MILES DRIVE TIME Oklahoma City, OK (OKC) 76 1:25 Tulsa, OK (TUL) 78 1:20 Wichita, KS (ICT) 128 2:06 Dallas/Fort Worth, TX (DFW) 262 4:18

TABLE 2.2 POPULATI ON COMPARISON

AIRPORT CSA/MSA/MICRO 2012 ESTIMATED POPULATION GCK Garden City, KS 37,058 ROW Roswell, NM 67,502 GRI Grand Island, NE 73,056 SWO Stillwater, OK 77,547 SJT San Angelo, TX 112,919
MHK Manhattan, KS 131,164
Source: Woods & Poole Economics, Inc.

TABLE 2.3 TOP EMPLOYERS EMPLOYER INDUSTRY Oklahoma State University Education Stillwater Medical Center Health Care ASCO Industries Aerospace Stillwater National Bank Financial Kicker Manufacturing Armstrong Flooring Manufacturing National Standard Manufacturing Ocean Dental Headquarters Health Care Frontier Electronics Manufacturing Meridian Technology Center Education FLIR Technology Manufacturing
Source: Stillwater Chamber of Commerce

## S ECTION 

## 2. A IR 

## S ERVICE 

## E NVIRONMENT



# 5 The following highlights a few of the many businesses that
would benefit from local commercial air service:

 ASCO Industries provides manufacturing of aerospace components. The new facility in Stillwater is the first plant in the US for this Belgium company.

 has facilities located throughout FLIR Technology the US, with its corporate headquarters outside Portland, Oregon.

 Kicker is a worldwide leader in music and speaker systems. Based in Still water, the company has travel needs both domestically and internationally that would be met with nonstop Dallas/Fort
Worth service.



### O KLAHOMA 

### S TATE 

### U NIVERSITY

Stillwater is home to the campus of Oklahoma State University. With over 5,000 faculty and staff and more than 23,500 students (19,000 under graduate and 4,722 graduate students), Oklahoma State Unive rsity drives significant economic benefits for the community. The University currently has more than $495 million in research and sponsored programs active in the community.

As part of the Big 12 conference, the University has nationa l recognition and has substantial travel needs. With nearly 240,000 alumni from around the country (reference Exhibit 2.2 ), Oklahoma State University drives a significant amount of inbound travel for sporting events. North Texas is especially important to the U niversity, with a significant push for student recruitment over the past few years, and the largest number of alumni outside of Oklahoma.

EXHIBIT 2.2 OKLAHOMA STATE UNIVERISTY ALUMNI

0 - 100

101-500

501-1,000

1,001-2,500

2,500-125,000

125,000+

# 6 T HIS SECTION CONTAINS 

### : Description of the Stillwater community’s air service needs
and deficiencies.



# S ECTION 

# 3. A IR 

# S ERVICE 

# N EEDS AND 

# D EFICIENCIES

he Stillwater area has no air service and is forced to make an approximately 80-mile drive to its nearest commercial service airport. The Air Service Needs
and Deficiencies section identifies the deficiencies in air service at SWO and what air service improvements are
needed to correct these deficiencies. This section demonstrates that the Stillwater community is underserved
and in need of access to the national air transportation system.



### M AJOR 

### D ESTINATION 

### M ARKETS 

### N OT 

### S ERVED 

### A DEQUATELY

A Passenger Demand Analysis (i.e. retention/diversion stud y) based on passenger bookin g data and US Department of Transportation (DOT) reported origin and destination data estimated a true market of over 490,000 annual passengers to/from the SWO catchment area ( Table 3.1 ), or approximately 674 PDEW. Almost 15,000 air travelers annually from the catchment area drive to Dallas specifically to access air service, a four-hour drive to the south. Service to a hub airport such as Dallas/Fort Worth is impor tant to allow for connections to the top destinations which
are omni-directional in nature.

TABLE 3.1 CATCHMENT AREA DIVERSION OF PASSENGERS

TOP TRUE MARKETS ORIGIN AIRPORT % TRUE MARKET PDEW OKC TUL DFW Las Vegas, NV 71 27 2 20,617 28.2 Washington, DC (DCA) 21 79 0 20,503 28.1

Houston, TX (HOU) 75 24 0 20,006 27.4 Denver, CO 71 29 0 19,214 26.3 Orlando, FL (MCO) 62 36 2 17,027 23.3 Phoenix, AZ (PHX) 55 43 2 15,249 20.9 Dallas, TX (DFW/DAL) 68 32 0 14,858 20.4

Chicago, IL (ORD) 60 39 1 12,101 16.6 Atlanta, GA 57 40 3 12,024 16.5 Baltimore, MD 64 36 0 11,545 15.8 San Diego, CA 74 25 1 11,240 15.4 San Antonio, TX 65 28 7 10,797 14.8 Total Domestic 61 37 2 455,881 624.5 Total International 63 30 7 36,431 49.9 Total True Market 61 36 3 492,312 674.4 

# T

## S ECTION 

## 3. A IR 

## S ERVICE 

## N EEDS AND 

## D EFICIENCIES



# 7 In order for SWO to have long- term, effective access to the national air transportation system, it must be able to prove that the catchment area can support airline service. This is best accomplished by adding American Eagle service to Dallas/Fort Worth, allowing for connections to most of its top destinations with a single connection, as well as meeting the needs of Oklahoma State University by having nonstop service to its most important out of state market,
North Texas.



### N EED FOR 

### L OCAL 

### , C ONVENIENT 

### A IR 

### S ERVICE



### Airport Use

As shown in the previous subsection, air travelers use Oklahoma City, Tulsa and Dallas/Fort Worth for access to the national air transportation system. Exhibit 3.1 shows the percentage use by airport for SWO catchment
area travelers. There is no local access to the national air transportation system.



### Cost of Travel

While access to the Oklahoma City and Tulsa airports (both small hub airports) require a roundtrip drive of three or more hours, to access Dallas/Fort Worth (the nearest medium/large hub airport) requires a drive of more than ei ght hours roundtrip. Building in time for parking and busy security areas an extra two or more hours must be added to the travel time. In addition, although there is nonstop service to major destinations from the Oklahoma City and Tulsa airports, many destinations require a connection at an airlines’ major hub, thereby greatly increasing the total trav el time for many Stillwater area residents. While there is cost for the direct value of their time, the drive also adds direct expense for Stillwater area travelers, adding an extra $90 or more to every roundtrip flight, when using the standard IRS mileage rate of 56.5 cents per mile.



### Business Travel Survey

Recently, a survey of local businesses was conducted to gain a better understanding of the Stillwater area’s air travel needs. The Stillwater Chamber of Commerce, one of the privat e partners in the public-private partnership, conducted the survey. Over 900 surveys were completed. For an area of this size, survey response was very high indicating a strong interest in obtaining local commercial air service.

Eighty-nine percent of respondents indicate d that local access to the national ai r transportation is important to them, with 47 percent indicating it is very important. Nearly o ne in two respondents listed Dallas/Fort Worth as one of their top five destinations. Ninety-three percent of respondents ar e also willing to pay a premium to fly out of SWO of at least $50 showing the value of avoiding the long drives and added travel time to access air service at Oklahoma City
or Tulsa. EXHIBIT 3.1 SWO CATCHMENT AREA AIRPORT USE

Oklahoma City (OKC) 61% Tulsa (TUL) 36% Dallas/Fort Worth (DFW)

3%

# 8 T HIS SECTION CONTAINS 

### : A detailed description of the project goals and a primary and alternate plan for attaining those goals.



# S ECTION 

# 4. S TRATEGIC 

# P LAN


# – A IR 

# S ERVICE

his Strategic Plan – Air Service section provides a detailed description of the go als of the project and a primary and alternate plan for attaining those goals. The City of Stillwater has never applied for, and therefore never received, a SCASDP grant.



### P ROJECT 

### G OALS

The following goals will be accomplished by the proposed Strategic Plan:

 Secure air service to a major airline’s hub allowing
much needed access to the national air transportation system for the Stillwater community including Oklahoma State University.

 Mitigate the need to drive long distances to access commercial air service at alternate airports.



### P ROPOSED 

### A IR 

### S ERVICE

The proposed Strategic Plan to meet the project’s goals is nonstop SWO-Dallas/Fort Worth service with two or three daily, regional jet roundtrips on American Eagle. The proposed air service is the primary target to meet the project’s goals because:

 American’s Dallas/Fort Worth hub will provide the region with direct access to the national air transportation system with over 800 daily departures to more than 185 single connect destinations. Exhibit
4.1 provides a depiction of the proposed service an d the top 20 markets that would be served over
Dallas/Fort Worth.

 Nonstop service to Dallas/Fort Worth will reduce t he number of passengers that are now diverting to other airports to access the national air transportation system. Currently, almost 500,000 origin and destination passengers annually divert to an alternate ai rport. This creates cong estion and pollution on the roadways.

 The SWO catchment area is accustomed to flying with American Airlines/American Eagle with 25 percent of the travelers using American when they fly out of alt ernate airports providing brand and airline loyalty. 

# T

EXHIBIT 4.1 PROPOSED AIR SERVICE

## S ECTION 

## 4. S TRATEGIC 

## P LAN


## – A IR 

## S ERVICE



# 9 A IRLINE 

### P ARTICIPATION

Recently, members of the publi c-private partnership met with American Airlines/American Eagle regarding nonstop service
to Dallas/Fort Worth. Because this is a new market without proven air service in the past, an airline’s willingness toserve SWO depends heavily on offsetting the airline’s startup risk. A grant award for this application would provide the necessary tools to lower the risk for an airline to initiate service between SWO and a major airline hub such as
Dallas/Fort Worth.



### D ETAILED 

### M ARKET 

### A NALYSIS

A detailed market analysis has been completed for American Eagle service to Dallas/Fort Worth International Airport. Key points of the analysis are described below. Projections were completed for a two roundtrip schedule on a 50-seat Embraer Regional Jet. The operating and market assumptions are
listed below:

 Existing passengers are based off of the Passenger Demand Analysis total passenger estimate. Connecting/flow markets are capped at 20 percent of the total true market potential. The local Dallas/Fort Worth passenger traffic was assumed to be just 50 percent of the total true market potential, and includes no stimulation. Based on other regional markets similar to SWO, it’s assumed that local traffic will ultimately be eq ual to or greater than the current true market estimate.

 The average fare was estimated based on Oklahoma City’s average fare plus $35 each way.

 American Eagle’s fully allocated operating costs between SWO and Dallas/Fort Worth were estimated using Diio Mi Form 41 data for American Eagle, as well as Essential Air Service bids, adjusted by the manufacturer’s cost curve and American Eagle feedback.

Table 4.1 provides a summary of the American Eagle Dallas/For t Worth market analysis for two roundtrips per day on a 50-seat regional jet. Passenger projections were based on a mature market (i.e., passenger projections would be at 100 percent on the first day of service). Two roundtrips per day are projected to ge nerate $259,707 (five percent margin) in segment profit for American Eagle. The SWO-D allas/Fort Worth route is foreca st to be a strong economic performer for both American Eagle and American after ra mp-up is complete. With an estimated eight percent fully allocated system profit margin for two roundtrips,

. this market will be self-sustaining

Although it is estimated that American Eagle will earn a profit after the SW O-Dallas/Fort Worth market matures, American Eagle will not generate this am ount of profit at start-up. New market s typically have losses during the first year or two of operation; hence the need for a revenue guar antee to temper the airline’s risk, and this is especially true in a community that has never had commercial air service. The uncertainty in t he airline industry including the fluctuating cost of fuel will play a large part in t he revenue guarantee negotiations with American Eagle. TABLE 4.1 SWO-DALLAS/FORT WORTH MARKET ANALYSIS

ITEM STATISTICAL CATEGORY 2 RT

1 Available seats per departure 50

2 Segments per day 4 3 Onboard passengers 59,788 4 Load factor 82% 5 Average fare all markets $207
6 Segment 1 revenue $5,022,957
7 Segment 1 cost $4,763,250
8 Segment 1 profit margin $ $259,707
9 Segment 1 profit margin % 5% 10 System revenue $12,860,558
11 System cost $11,817,090
12 System profit/loss $1,043,467 13 System margin 8%
Source: Mead & Hunt, Inc.

## S ECTION 

## 4. S TRATEGIC 

## P LAN


## – A IR 

## S ERVICE



# 10 For purposes of estimating the shortfall, for the first month of service, it is estimated that 60 percent of the projected passengers in a mature market will be attained. It is
estimated that the market will reac h full maturity after the first nine months of service. The ramp-up period is speculative and may differ depending on the effectiveness of the marketing campaign.

To calculate the effect of t he ramp-up period on net profit,
Table 4.2 shows revenue by month with an April 2014 start date, the associated cost per month, and the net shortfall. With a first year estimated cost of $11.8 million, the service will incur an estimated shortfall of $1.5 million.

TABLE 4.2 SERVICE RAMP-UP/START-UP PERIOD

MONTH DAYS OPERATING ESTIMATED O&D PAX RAMPUP % RAMP-UP ADJ. PAX REVENUE ESTIMATED COST NET SURPLUS/ SHORTFALL April 30 4,914 60% 2,948 $609,355 $971,268 ($361,912) May 31 5,078 64% 3,272 $676,309 $1,003,643 ($327,334) June 30 4,914 69% 3,385 $699,630 $971,268 ($271,637) July 31 5,078 73% 3,724 $769,593 $1,003,643 ($234,050) August 31 5,078 78% 3,949 $816,235 $1,003,643 ($187,408) September 30 4,914 82% 4,040 $835,043 $971,268 ($136,225)

October 31 5,078 87% 4,401 $909,519 $1,003,643 ($94,124) November 30 4,914 91% 4,477 $925,318 $971,268 ($45,950) December 31 5,078 96% 4,852 $1,002,803 $1,003,643 ($840) January 31 5,078 100% 5,078 $1,049,445 $1,003,643 $45,802 February 28 4,586 100% 4,586 $947,886 $906,517 $41,370

March 31 5,078 100% 5,078 $1,049,445 $1,003,643 $45,802 Total 365 59,788 N/A 49,792 $10,290,584 $11,817,090 ($1,526,506)



### A LTERNATE 

### P LAN

If SWO fails to obtain American Eagle service to Dallas/Fort Worth, the secondary target is United Airlines’ service to either Denver International Airport or Houston’s George Bush Intercontinental Airport. Consis tent with the intent of the air service initiative proposed, United’s Denver and Housto n hubs would fill the need for service to a hub airport providing access to the national air transportation system. Serv ice on another airline to its hub allowing access to the national air transportation system would als o meet the goals of this project.



### P AST 

### A IR 

### S ERVICE 

### D EVELOPMENT 

### E FFORTS

In recent years SWO has taken a proactive approach to improving air service. Several community meetings have been held to discuss SWO air service. SWO has also comp leted multiple market analyses including a Passenger Demand Analysis to assess retention/diversion and a Business Travel Survey to gather qualitative data in the community. After identifying the top market opportunities, a route forecast was completed for SWO-Dallas/Fort Worth service. Subsequently, multiple airline meetings were con ducted including airline meetings at Mead & Hunt’s Annual Air Service Development Conference and Network USA 2013. A representative from Americ an visited the Stillwater
area in 2013 and met with SWO and Ok lahoma State University staff.

### T HIS SECTION CONTAINS 

### :Identification of the publicprivate partnership, designation of a legal sponsor, funding and sustainability of the project.



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# F UNDING

his section, Strategic Plan - Implementation and Funding , details the incentive and support plan required to implement the Strategic Plan. A legal sponsor has bee n designated and a public-private partnership that will actively participate in implementing the proposed project has been formed. Also, this section addresses the self-sufficiency of the service and provides a description of the community’s plan to continue the project if it is not self-sustaining after the grant funds are expended. A project budget and breakdown of the sources of funds
is included.



### P UBLIC 

### -P RIVATE 

### P ARTNERSHIP

The City of Stillwater, Oklahoma, is the sponsor of this grant application. For the purpose of th is application, the City of Stillwater, Stillwater Regional Airport Authority, Stillwater Chamber of Commerce, Stillwater Convention and VisitorsBureau, and Oklahoma State University have formed a publicprivate partnership (refer to community support letters in Appendix A ). Collectively, this par tnership is committed to completing the Strategic Plan.

All partners in the public-private partnership will be involved in the execution of the Strategic Plan ( Table 5.1 ). The City of Stillwater will execute all federal grant offers, process associated reimbursement requests, oversee grant administration, and manage the revenue guarantee. The Stillwater Chamber of Commerce, Stillwater Regional Airport Authority, Stillwater Convention and Visitors Bureau, and Oklahoma State University will assume responsibility for the implementation and management of the marketing program associated with the proposed service.



### I NCENTIVE AND 

### S UPPORT 

### P LAN

The public-private partnership proposes a community su pport package that has been tested and proved to be successful in acquiring airline service and generating ne w passengers. To reduce the breakeven period and offset the economic risk, the public-private partner ship proposes the following incentives ( Exhibit 5.1 , next page): • Revenue guarantee: reduce airline economic risk • Marketing campaign: create new service awareness for American Eagle • Fee waivers: reduce airline start-up costs • Airside equipment: reduce airline start-up costs 

# T

TABLE 5.1 PUBLIC-PRIVATE PARTNER ROLES PUBLIC-PRIVATE PARTNER ROLE

Public Partner
City of Stillwater, OK Grant and revenue guarantee administration Stillwater Regional

Airport Authority Coordination of the marketing program Stillwater Convention and Visitors Bureau Private Partner Oklahoma State University Coordination of the marketing program Stillwater Chamber of Commerce

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# 12 Revenue Guarantee

To reduce airline risk and provide an incentive for American Eagle to provide nonstop service to Dallas/Fort Worth, this Strategic Plan includes a revenue guarantee. Although pro forma projections for the Dallas/Fort Worth hub service are positive, service ramp-up and breakeven can take up to two years (reference Table 4.2 on page 10). While the calculations show a loss of $1.53 million in the first year, it is anticipated that Americ an Eagle will require a significantly larger revenue guarantee for the first two years of service to mitigate the risk of starting this
new market.

In unproven markets like SWO, there are many factors that can impact the profitability of the market. In other similar markets, American has historically required significant guarantees. One example of this is the
initiation of American Airlines service at Columbia Regional Airport to Chicago O’Hare and Dallas/Fort Worth in March 2013. The Columbia community provided a revenue guarantee of $3.3 million for a two-year period in addition to up to $250,000 in fee waivers and $400,000 of marketing. Unlike SWO, this is a market that previously had air service yet still required the subs tantial guarantee and other incentives. Similarly, when American began nonstop Ro swell-Dallas/Fort Worth service in September 2007, a $4.2 million revenue guarantee was provided over two years.

Due to the above, the air service support program includes a revenue guarantee of up to $3.2 million, largely funded by non-airport, community resources. This level of commi tment demonstrates the Stillwater community’s need for
commercial air service. The exact terms of the revenue guarantee agreement are subject to further negotiations.



### Marketing Campaign

The success of the proposed service between SWO and
Dallas/Fort Worth will live or die based on the success of the marketing program. With SWO having never had commercial air service, it will be of utmost importance to educate the local community of the new, nonstop regional jet service to Dallas/Fort Worth and influencing the
thousands of travelers that are now driving to alternate airports to use SWO. The importance of an aggressive promotion campaign cannot be overemphasized. This is the reason why the marketing program is such a large portion of the budget, accounting for $600,000 over two years.

Table 5.2 provides a breakdown of the marketing dollars to be spent on maximizing passenger utilization of new flights between SWO and Dallas/Fort Wo rth. This $600,000 campaign will be funded by non-airport funds through TABLE 5.2 MARKETING BUDGET

DESCRIPTION CASH INKIND TOTAL Kick-Off Phase Public relations $5,000 $5,000 $10,000 Social media $5,000 $5,000 $10,000 On-Going Media Television airtime and commercial production $100,000 $55,000 $155,000
Targeted email

campaign $10,000 $10,000 $20,000
Print media $130,000 $100,000 $230,000 Promotional Event Television airtime $100,000 $75,000 $175,000 Total $350,000 $250,000 $600,000

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# 13 local private cash ($175,000) and in-kind marketing dollars ($250,000), as well as $175,000 from the SCASDP grant. SWO, Oklahoma State University and Stillwater Chamber of Commerce will be responsible for management and implementation of the marketing campaign.

The marketing campaign will include a kick-off phase utilizing public relations and social media, an on-going media campaign and promotional events throughout the two-year process. The marketing campaign will be monitored and adjusted as necessary for maximum results.



### Fee Waivers

The air service support program includes two fee waivers: landing fees and terminal fees. SWO will waive landing fees for the first two years of new service. Landing fees fo r the first 24 months are esti mated at $92,050 assuming the use of the Embraer Regional Jet. The landing fee waiver may vary depending on aircraft type used and the number of roundtrips offered. SWO will also waive terminal fees for the first two years of service. These fees are estimated at $68,550.



### Airside Equipment

Since SWO does not have commercial air service operati ons, for an airline to enter the market, there will be significant up front start-up costs for airside equipment. As part of the air service support program, much of the equipment needed by the airline will be purchased, including:

 Heating, Ventilation, and Air Conditioning (HVAC)/Ground Power Unit (GPU) combo unit

 De-icing unit

 Tugs (two)

 Baggage carts (three)

 Valet cart  Regional jet loading bridge

 Potable water cart

 Potty cart

 Regional jet handicap chair

 Belt loader



### P ROJECT 

### C ONTINUATION AND 

### S USTAINABILITY

Based on positive pro forma projections for American Eagle se rvice to Dallas/Fort Worth, it is anticipated that new service will be self-sustaining after the start-up period whic h can take up to two years. A leading cause of service failure is lack of awareness in the community. The public-private partnership will fund an additional $250,000 marketing campaign if the service is not self-sustaining a fter the first two years of service. The public-private partnership and the Stillwater business community are commi tted to the success of this project and understand the difficulties associated with profitably operating new air service.

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# 14 S TRATEGIC 

### P LAN 

### F UNDING

The public-private partnership is requesting the US DOT’s assistance in funding 10 percent, or $447,000 of the Strategic Plan ( Exhibit 5.2 ). Specifically, US DOT funding will be used to fund a portion of the revenue guarantee, marketing campaign and the strategic plan monitoring. Al l other elements including the airside equipment purchas e, airline negotiations and airport fee waivers will be funded by the community. Table 5.3 provides the Strategic Plan budget by element and sources of funding. SWO and the community will fund 90 percent of the total proposed air service program. Non-airport funding sources will provide 88 percent of the cash requirement and 86 percent of the funding for the total program including in-kind services.

While funding of certain components are identified in Table 5.3 , the public-private partnershi p recognizes that federal and non-federal funds will be applied proportionately to t he entire scope of the project and that communities cannot use non-federal funds to selectively fund certain components of a project.

TABLE 5.3 STRATEGIC PLAN BUDGET

DESCRIPTION FUNDING SOURCE

TOTAL US DOT AIRPORT NON-AIRPORT CASH CASH IN-KIND CASH IN-KIND Airline incentive program:

Marketing campaign $175,000 $175,000 $250,000 $600,000 Revenue guarantee $200,000 $3,000,000 $3,200,000 Airside equipment $175,000 $175,000 Fee waivers:

Landing fees $92,050 $92,050 Terminal fees $68,550 $68,550 Consultant fees:

Airline negotiations $15,000 $15,000 Strategic Plan monitoring $72,000 $72,000 Total $447,000 $0 $160,600 $3,365,000 $250,000 $4,222,600 Percent of total project 11% 0% 4% 80% 6% 100% Percent of cash contribution 12% 0% N/A 88% N/A 100% Cash:NonAirport 80% Cash: US

DOT 10% Cash: Airport

0% In-Kind:NonAirport

6% In-Kind: Airport

4% EXHIBIT 5.2 CASH VS IN-KIND FUNDING

### T HIS SECTION CONTAINS 

### : Schedule and milestones for timely completion of the project and the proposed monitoring program.



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realistic timetable for implement ation of the grant project has been developed to achieve the project goals and ensure the timely use of the grant funds. This section details the milestones and a monitoring progr am to track the progress of the project.



### S CHEDULE AND 

### M ILESTONES

The following milestones are proposed to track the progress of this air
service initiative. A timeline follows on Exhibit 6.1 , next page.

 : After the grant is awarded and Airline negotiations agreement is signed, the public-private partnership will contact American Eagle/Amer ican Airlines and continue airline negotiations.

 : Due to SWO never having scheduled service, an Environmental Assessment Environmental Assessment will need to be performed in order for SWO to be added to the Operations Specifications (Ops Specs) to commence scheduled service. The community will perform this Environmental Assessment once an agreement has been reached and expect it to be a 120-day process.

 : While the airline agreement is being finalized, the marketing Marketing campaign development/initiation campaign will be developed. The timing of the marketing campaign is critical; ideally, marketing would begin 90 days prior to new service initiation. Development of the marketing campaign is dependent on the timing of American Eagle’s announcem ent and initiation of daily Dallas/Fort Worth service.

 : The public-private partnership anticipates daily service to Dallas/Fort Worth would begin Service initiation in spring/early summer of 2014 following successful negotiations with American Eagle. The remaining elements of the Strategic Plan depen d on this date. The public-private pa rtnership understands the realities of the airline industry; airline route planning and availa bility of right-sized aircraft are critical to air service initiation and may delay the service start date. 

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# 16  Revenue guarantee contract : The revenue guarantee completion

will be calculated based on the terms of the agreement. Many revenue guarantee agreements are calculated monthly. Assuming an April 2014 start date, the revenue gu arantee contract would expire March 2016. If the service start date changes due to airline circumstances and/or equipment availability, the revenue guarantee contract term will change accordingly.

 : American Eagle Alternate plan

service to Dallas/Fort Worth is the primary target of the Strategic Plan. If American Eagle does not show interest in starting service by May 2014, then
United Airlines’ se rvice to either Houston or Denver will be pursued. If neither air carrier has shown interest in implementin g the proposed service by December 31, 2014, the City of Stillwater will propose an alternate plan th at meets the goals of this grant application.

The timeline proposed in Exhibit 6.1 is highly contingent on the timing of the grant award and successful airline agreement negotiations. If either is delayed, other elements on the timeline will be pushed back.



### M ONITORING 

### P ROGRAM

Monitoring new air service initiatives is critical to success. An aggressive and comprehensive monitoring program is proposed for new SWO-Dallas/Fort Worth service. The monit oring program includes: service performance tracking, assessing the effectiveness of the marketing campaign and determining the impact of the service on retention of catchment area passengers at SWO. The St rategic Plan will be monitored as follows:

 Available service performance indicators will be reviewed on a monthly basis. The indicators are dependent on availability of data reported by the airline to t he US DOT and data reported to SWO. It is anticipated that the following indicators will be reviewed monthly: departures, available seats, enplaned passengers and
load factors.

 On a quarterly basis, average airfares will be compar ed and evaluated to prior quarters. Published airfares
will also be tracked via one of the Global Distr ibution/Computer Reservatio ns Systems (GDS/CRS). Revenue per available seat mile will be reviewed and compared against other markets served by American Eagle at Dallas/Fort Worth.

 After the first year of service, a True Market Estimate will be completed to assess the impact of the service on retention of passengers at SWO. After the second year of service, a full Passenger Demand Analysis will be performed to determine overall impact of the service. EXHIBIT 6.1 PROPOSED TIMELINE
September 30, 2013 Grant award

December 1, 2013 Finalize airline negotiations Commence Environmental Assessment

April 1, 2014 American Eagle initiates daily Dallas/Fort Worth service January 1, 2014 Marketing begins

March 31, 2016 End of revenue guarantee contract; Passenger Demand Analysis performed Monthly/Quarterly/Annual service performance monitoring

### T HIS SECTION CONTAINS 

### : Letters of support from members of the public-private partnership, the local business community, and state government.



# 17 

# A PPENDIX 

# A. C OMMUNITY 

# S UPPORT

ppendix A includes letters of support for the City of St illwater, Oklahoma’s application to the US DOT for establishing commercial air service. Support letters were submitted by participants in the public-private partnership and members of the Stillwater community. The letters of support are included on the following pages of this Appendix A and are listed below.



### P UBLIC 

### -P RIVATE 

### P ARTNERSHIP

City of Stillwater/Stillwater Regional Airport Authority (refer to cover letter) Oklahoma State University
Stillwater Chamber of Commerce
Stillwater Convention and Visitors Bureau



### G OVERNMENT

Congress of the United States, Representative Frank Lucas State of Oklahoma, Oklahoma Aeronautics Commission State of Oklahoma, Secretary of Transportation United States Senate, Senator Jame s M. Inhofe (Submitted Separately)



### L OCAL 

### B USINESSES

BancFirst FLIR Explosives Detection National Learning Systems
National Standard Oklahoma State University - Athletics Stillwater Designs
Stillwater Medical Center Stillwater National Bank and Trust Company 

# A

### National Learning Systems, Inc. PO Box 1815 Stillwater, OK 74076-1815



## July 18, 2013

B rooke Chapman, Associate Director Small Community Air Service Development Program U.S. Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Dear Ms. Chapman,

I am writing in support of the City of Stillwater/Stillwater Regional Airport application for funding through the Small Community Air Service Development Program.

The greater Stillwater area and Oklahoma State University have to drive up to 90 minutes to get to Oklahoma City or Tulsa in order to access the National Transportation System. This places significant time and cost on the nearly 500,000 annual passengers that are generated from the Stillwater catchment area. Stillwater and OSU have been working closely with the local business community to recruit airline service at the Stillwater Regional Airport.

We understand that there are inherent financial risks and significant costs associated with starting schedule airline service at a community that does not currently have service, and that airlines are looking for financial support to help reduce that risk. The funds requested will be matched with significant local dollars that will be used for airline incentives to attract new service at Stillwater Regional Airport, and reinstate access to the National Transportation System by adding service to the Dallas/Ft Worth International Airport.

Again, it is my hope that you will give the Stillwater Regional Airport proposal full consideration and award the funds requested to help Stillwater re-establish access to the National Transportation System by attracting new service to Dallas/Ft Worth with American Airlines.

Sincerely,

Charlcie Cumming Charlcie Cumming