1 APPLICATION UNDER

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2013-0120

SUMMARY INFORMATION

All applicants must

submit this Summary Information schedule, as the a pplication coversheet, a completed standard form SF424 and the full applicat ion proposal on www.grants.gov

.
For your preparation convenience, this Summary Info rmation schedule is located at http://www.dot.gov/policy/aviation-policy/small-com munity-rural-air-service/SCASDP

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

NUMBERING SYSTEM (DUNS) NUMBER , INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN)

OR TAX ID

. Legal Sponsor Name: Wilkes-Barre/Scranton International Airport

DUNS Number: 042623728

EIN/Tax ID: 23-1736989

B. L IST THE N AME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES A PPLYING :

1. W ILKES -B ARRE /S CRANTON I NTERNATIONAL A IRPORT

2. L ACKAWANNA C OUNTY

, PA

3. L UZERNE C OUNTY

, PA

4.

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

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

SEEKING SERVICE ).

1. AVP 2.

3. 4.2

D. L IST THE 2- DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING

ORGANIZATION , AND IF A CONSORTIUM , TO EACH PARTICIPATING COMMUNITY

. 1. 17 (Primary) 2. 11 (Surrounds AVP)

3. 10 (Surrounds AVP) 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 Ser vice

Community (or Consortium member) previously receive d a Small Community Air Service Development Program Grant

If previous recipient: Year of grant(s): 2004

F. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )

PUBLIC PRIVATE

1. Wilkes-Barre/Scranton International Airport 1. Greater Hazleton Chamber of Commerce

2. Lackawanna County 2. Greater Pittston Chamber of Commerce

3. Luzerne County 3. Greater Pocono Chamber of Co mmerce

4. Greater Scranton Chamber of Commerce

5. Greater Wilkes-Barre Chmbr. of Commerce

6. Lackawanna County Conv. & Visitors Bur.

7. Luzerne County Conv. & Visitors Bur.

8. Wyoming County Chamber of Commerce

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)3

H. E XISTING L ANDING A IDS AT L OCAL A IRPORT :

Full ILS Outer/Middle Marker Publish ed Instrument Approach

Localizer Other (specify)

I. P ROJECT C OST : D O NOT ENTER TEXT IN SHADED AREA

L INE D ESCRIPTION S UB T OTAL T OTAL A MOUNT

1 Federal amount requested $ 575,000

2 State cash financial contribution $ 0

Local cash financial contribution

3a Airport cash funds $ 100,000

3b Non-airport cash funds $ 200,000

3 Total local cash funds ( 3a + 3b ) $ 300,000

4 TOTAL CASH FUNDING ( 1+2+3 ) $ 875,000

In-Kind contribution

5a Airport In-Kind contribution** $ 280,000 (est.)

5b Other In-Kind contribution** $ 29,395

5 TOTAL IN-KIND CONTRIBUTION

( 5a + 5b ) $ 309,395 (est.)

6 TOTAL PROJECT COST ( 4+5 ) $1,184,395 (est.)

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. minimum 6 month waiver of landing fees/space rentals, billboard usage, direct mail

campaigns

5b. ad placements, trade show exposure, staff fulf illments, mailings, web site exposure/ads,

newsletter inserts4

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 un der 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)

___________________________________________________ ______________________________

___________________________________________________ ________________________5 

## Proposal Under the Small Community Air Service Development Program

Date: July 19, 2013 Applicants: Wilkes-Barre/Scranton International Airport

Luzerne County, PA; Lackawanna County, PA

DUNS Number: 042623728

+4 Number: 7531 Employee Identification Number: 23-1736989 Congressional Districts: 17 (Primary), 11, 10

Contact: Barry J. Centini Wilkes-Barre/Scranton International Airport 100 Terminal Drive, Suite 1 Avoca, PA 18641 Phone: (570) 602-2000

E-mail: airport@flyavp.com

Docket #: DOT-OST-2013-01206

I. EXECUTIVE SUMMARY

The Wilkes-Barre/Scranton International Airport and the Counties of Luzerne and Lackawanna are submitting this application for gran t funds available under the Small Community Air Service Development Program to address the deficiencies in the Airport’s air service, including high fares and an insufficient level of service. These deficiencies are the result of the unique cha racteristics of the air transportation system in the Greater Northeastern P ennsylvania region.

Air travelers using the Wilkes-Barre/Scranton Inter national Airport (AVP) pay among the highest fares of any similar sized airpor t around the globe. AVP has aggressively recruited both legacy and low cost air lines to enter its market for many years, but few carriers are willing to enter e ven AVP’s top O&D markets. This is in part because there are multiple airports served by low cost carriers, as well as legacy carriers with more flights, which su rround the WilkesBarre/Scranton International Airport. As a result, AVP’s fares are not only high, but they are not competitive with the other airport s. The lower fares and increased number of flights at the surrounding airp orts are sufficient to lure passengers from Wilkes-Barre/Scranton International Airport to airports more than 100 miles away, but these airports are not clo se enough to genuinely offer

convenient service.

The Northeastern Pennsylvania Region is a diverse e conomic region worthy of attention. Within the Wilkes-Barre/Scranton MSA, AV P serves a population of over 1.7 million people. The Wilkes-Barre/Scranton MSA’s population is near 500,000 on its own. Further fueling the region’s ec onomic growth into the next 20 years is the massive Marcellus Shale Industry.

The Marcellus Shale is a black shale formation exte nding deep underground from Ohio and West Virginia northeast into Pennsylvania and southern New York. Although the Marcellus Shale is exposed at the grou nd surface in some locations in the northern Finger Lakes area, it is as deep as 7,000 feet or more below the ground surface along the Pennsylvania border in the Delaware River valley. In Pennsylvania, production from Marcellus wells is ex ceeding expectations and some of the wells are among the most productive in the w orld. Pennsylvania has 240,000 jobs related to the Commonwealth’s oil and natural gas extraction activities. When it comes to production numbers, Standard & Poor’s o wn words confirm that this is a “mere drop in the bucket” of the Marcellus’ full potential. This growth is expected to increase rapidly over the next several years, which will provide the Commonwealth of Pennsylvania with a steady supply o f affordable, clean-burning

energy.

The Wilkes-Barre/Scranton International Airport (AV P) is the gateway airport to the heart of the Marcellus Shale Industry in northe astern Pennsylvania and the Commonwealth of Pennsylvania as a whole.7

Successful attraction of a low cost air carrier to AVP’s key markets has a track record of improving the cost differential in some A VP markets. Successfully retaining those low cost carriers long-term has pro ven difficult. Approximately one year ago, Allegiant began twice weekly nonstop service from AVP to OrlandoSanford.

Maintaining legacy air carrier service to other AVP key markets has improved cost differentials in those markets. However, the numbe r of seats on the legacy carriers has been steadily decreasing, which is for cing air travelers to travel to another airport for their air service needs. Our d escribed program is designed to

address these concerns.

With this in mind, the Airport continues to provide exceptional service to the region, while having no control or responsibility o ver the main variable in air travel – the customer. Currently, AVP has three le gacy carriers and one low-cost carrier. While airlines have in the past been more prone to provide their own employees for ground handling and customer support positions, the last few years have put that in jeopardy as airlines consolidate t heir employees at smaller airports.

For several years, the U.S. airline industry has be en struggling to control costs. Controllable costs have been dropping over the last half-decade, with carriers using methods, such as reducing airline employee wa ges and the actual outsourcing of on-airport jobs. Many carriers are opting not to start additional markets without the Airport and community picking u p the charges for those start-up costs. Also, many carriers that have serv ice at airports are decreasing their flights dramatically to control costs.

The current trend is a continued increase in the AV P passenger market leaking to alternative airports and a serious imbalance in Pen nsylvania’s airport system. With no air carriers operating in some of AVP’s top O&D markets, there is a significant gap between the demand for service and the level of service being provided. Past experience in these markets has pro ven they can be operated successfully and profitably, however, current carri ers at AVP have chosen not to seek operating to those markets from AVP.

The results of past efforts utilizing Air Service De velopment funds have been positive. Delta Connection’s (formerly Northwest A irlink’s) nonstop Detroit service, which began in April 2005, continues to pr ovide a good destination to business travelers, with acceptable fares.

Wilkes-Barre/Scranton International Airport and its supporting communities have continually been engaged in marketing the airport a nd look forward to improving the air service at AVP with the additional support of the DOT Small Community Air Service Development Program.8

II. SERVICE DESCRIPTIONS

A. Wilkes-Barre/Scranton International Airport’s Servi ce Area

Wilkes-Barre/Scranton International Airport (AVP) i s a non-hub airport located in Northeastern Pennsylvania serving a surr ounding population of approximately one million residents. AVP is within a two-hour drive of several major east coast cities including Philadelp hia and New York, is approximately eight (8) miles from Wilkes-Barre, PA and Scranton, PA, and is centrally located among four (4) major interstat e highways.

(Source – Google Maps)

The Wilkes-Barre/Scranton/Hazleton metro-area has a population of over 600,000. There are over one million potential air passengers within a onehour drive time and just fewer than three million l ocated within a 90-

minute drive time.

Wilkes-Barre/Scranton’s airport service is bound by Philadelphia International Airport and Lehigh Valley Internation al Airport to the south, each offering substantially greater numbers of sche duled flights and often significantly lower fares. These two airports are approximately a 100- and 60-mile drive, respectively, from the Wilkes-Barre/ Scranton International Airport. One factor of great concern to the Partne rship submitting this application is that several low-cost airlines offer competing service at Philadelphia International Airport and are offering significantly lower fares to many of AVP’s top markets. An additional factor is that Allegiant provide low fare options to multiple leisure destin ations at Lehigh Valley International Airport.

To the east, John F. Kennedy International Airport, Newark Liberty International Airport, LaGuardia Airport and Stewar t International Airport also compete with AVP, offering travelers numerous low fare options. As9 large hubs, John F. Kennedy International, Newark L iberty International and LaGuardia offer substantially more scheduled fl ights and direct service options both domestically and internationally.

In addition, to the northwest, Allegiant provides l ow fare options to leisure destinations at Elmira Corning Regional Airport.

B. Description of Economic Growth in Northeastern Penn sylvania

The Wilkes-Barre/Scranton International Airport (AV P) is the gateway airport to the heart of the Marcellus Shale Industr y in northeastern Pennsylvania and the Commonwealth of Pennsylvania a s a whole. As shown on the map below, much of the activity in the Commonwealth over the past few years has been near AVP.

Two of the sweet spots for tapping that natural gas are in Northeastern Pennsylvania and the Pittsburgh area. To reach the gas, drillers use a process called hydraulic fracturing – or fracking, for short – in which they shoot millions of gallons of water, laced with chem icals and sand, into the ground. Much of that water comes back to the surfac e along with the gas it

releases.

Companies eager to tap into the gas already have tr ansformed large swaths of rural Pennsylvania, and future gas production ha s the potential to change residents’ lives for a generation or more. Marcellu s shale gas has shifted global energy supplies, created instant wealth for some landholders, stimulated the state’s economy by creating jobs and raised environmental concerns about toxins going into the air and water.10 A problem that we are finding with the travel needs of these workers is the need to get across the Commonwealth of Pennsylvania . Northeastern Pennsylvania and the Pittsburgh area are the concen trated areas for drilling in the Commonwealth. To do business on bot h sides of the state, workers have to drive, rather than fly, losing valu able time in that five-hour trip, when they could fly in approximately one hour

.

As seen below, over half of the work being done wit hin the Marcellus Shale in the Commonwealth of Pennsylvania is being perfor med in Northeastern Pennsylvania, specifically in six counties.

Source: Pennsylvania Department of Enviro nmental Protection

C. Description of Community’s Existing Air Service

There are currently three (3) major airline network s, and one low-cost airline, serving the Wilkes-Barre/Scranton Internat ional Airport. These carriers are Allegiant, Delta, United and US Airway s. Combined, these carriers serve a total of seven (7) destinations, i ncluding Atlanta, Charlotte, Chicago, Detroit, Newark, Orlando-Sanford and Phila delphia.

The table below indicates the type of aircraft flow n by each carrier, equipment type, seats and frequency at AVP. It is important to note that all service to and from AVP is flown with either a regi onal jet or turboprop (with the exception of Allegiant Air), yet O&D rese arch and previous experience indicate that many AVP markets can suppo rt significantly larger aircraft such as Boeing 737 or the Embraer 170/190 series.11 Current AVP Service

Carrier Market Code A/C Stops Daily Daily Monthly Monthly Seats/ Type Depts Seats Depts Seats Flight

DL Atlanta ATL CR9 0 0.9 69 28 2,128 76

DL Atlanta ATL CR7 0 0.1 6 3 195 65
DL Detroit DTW CRJ 0 2.8 142 88 4,400 50

G4 OrlandoSanford SFB M80 0 0.3 43 8 1,328 166

UA Chicago ORD ERJ 0 1.9 97 60 3,000 50 UA Newark EWR DH2 0 2.0 74 62 2,294 37
US Charlotte CLT CR9 0 1.0 76 30 2,370 79 US Charlotte CLT CRJ 0 1.2 58 36 1,800 50 US Philadelphia PHL CRJ 0 0.8 42 26 1,300 50 US Philadelphia PHL DH8 0 5.1 189 158 5,846 37

TOTALS 19.6 796 499 24,661 49

Source: OAG Schedule Tapes, July 2013, via Sabre Ai rline Solutions

AVP Primary Catchment Area Usage, Retention & Total Booked

Rank Market PDEWs AVP
Retention AVP Primary

Leakage (PDEWs) Total

Booked (PDEWs)

1 CLT 43.4 87% 6.7 50.1
2 SFB 41.9 N/A N/A N/A
3 ORD 39.6 53% 35.1 74.7
4 DTW 28.9 69% 13.2 42.1
5 ATL 22.2 44% 28.8 51.0
6 MCO 19.4 17% 92.8 112.2
7 DFW 16.5 34% 31.7 48.2
8 LAX 15.2 44% 19.6 34.8
9 PHL 14.7 57% 11.0 25.7
10 LAS 14.2 29% 35.3 49.5
11 EWR 13.0 66% 6.8 19.8
12 TPA 12.9 29% 31.8 44.7
13 DEN 12.0 35% 22.7 34.7
14 SFO 10.4 31% 22.9 33.3
15 FLL 10.2 21% 38.1 48.3
16 PHX 9.5 33% 19.6 29.1
17 MSP 8.9 50% 8.8 17.7
18 IAH 8.9 28% 23.2 32.1
19 RSW 8.2 34% 15.7 23.9
20 SAN 7.4 40% 11.2 18.6
21 SEA 7.3 29% 18.3 25.6
22 BNA 7.2 57% 5.5 12.7
23 CVG 6.7 72% 2.6 9.3
24 PBI 6.7 29% 16.2 22.9
25 STL 6.3 58% 4.6 10.9
26 LIT 6.0 47% 6.8 12.8
27 JAX 5.8 35% 10.8 16.6
28 IND 5.8 46% 6.9 12.7
29 MCI 5.6 64% 3.2 8.8
30 CUN 5.5 8% 59.3 64.8

Subtotal 420.3 43% 609.2 987.6 *
Other 206.1 32% 439.2 645.3
Total 626.4 38% 1,048.4 1,632.9 *

Note: Figures for this chart do not inclu de AVP Leakage & Total Market for SFB. Therefore, the totals marked wit h an "*" are below actual levels.

Source: Adjusted SABRE MIDT and D.O.T. 10 % Coupon Sample12 For 2012, Wilkes-Barre/Scranton International Airpo rt reported 445,593 combined enplaned & deplaned passengers. However, the true Primary
Catchment Area size is estimated to be well over dou ble that number (see table above), which indicates that AVP is leaking p assengers to surrounding airports, with the primary reasons, based on market research, being competition from low-fare markets, frequency and av ailable seats.

US Airways has traditionally dominated the AVP mark et, however, all legacy air carriers at AVP have decreased service i n some capacity:

• US Airways has decreased its Charlotte service (Dec ember 2012) from three daily flights to two, and have decreased daily seats to Philadelphia, via smaller aircraft, over the past y ear (from approximately 287 to 235 daily seats).

• Delta Connection eliminated all Cincinnati service (January 2009), and eliminated all Atlanta service (August 2009). The airline also decreased its Detroit service from four flights to three (September 2012), and then to two flights (December 2012).

• United Express decreased its Chicago O’Hare service (August 2011) from three daily flights to two, and decreased its Newark service) from four flights to three (January 2013), and then to two flights (June 2013).

• American Eagle decreased its Chicago O’Hare service (August 2011) from two daily flights to one daily flight plus one flight four times a
week. The airline left the AVP Market in November 2011.

New service in the past few years include:

• Direct Air to Myrtle Beach (June 2008)

• United Express/Continental Connection to Newark (Oc tober 2008)

• American Eagle to Chicago O’Hare (June 2010)

• Delta Connection to Atlanta (September 2011)

• Allegiant to Orlando-Sanford (June 2012)

Note: Direct Air and American Eagle service are no longer active at AVP.

Source: OAG Schedule Tapes July 2013; Wilkes-Barre/ Scranton International Airport, YE May 201313 AVP New Service During the Past Eight Years

New Service Airline Began Ended Reason for Ending (1)

Washington-Dulles, DC United Express October 2004 A ugust 2005 Shuttle America became US Airways
carrier – United did not have other
aircraft to maintain route Detroit, MI Northwest Airlink April 2005 N/A Orlando, FL Hooters Air October 2005 March 2006 Ris ing Fuel Costs Fort Lauderdale, FL Hooters Air October 2005 March 2006 Rising Fuel Costs St. Petersburg, FL Hooters Air October 2005 March 2 006 Rising Fuel Costs Myrtle Beach, SC Hooters Air March 2006 March 2006 Rising Fuel Costs

Boston, MA Continental Connection March 2005 March 2007 Reduction of Continental Connection flights into BOS system wide Pittsburgh, PA US Airways Pre-1980 June 2007 Reduct ion of US Hub Myrtle Beach, SC Direct Air June 2008 August 2008 S easonal service

Cleveland, OH Continental Connection May 2003 Octob er 2008 Moving AVP’s service from #3 CO
Hub to #1 CO Hub Newark, NJ Continental Connection October 2008 N/A Cincinnati, OH Delta Connection March 1995 January 2009 Reduction of DL Hub

Atlanta, GA Delta Connection May 2002 August 2009 Poor load factors; AVP-ATL route over 700 NM (too far for CRJ) Chicago, IL (O’Hare) American Eagle June 2010 Novem ber 2011 Poor load factors; not making $ Atlanta, GA Delta Connection September 2011 N/A Orlando-Sanford, FL Allegiant June 2012 N/A (1) “Reasons for Ending” comments were given by Airline Representatives to AVP

AVP Outbound Seats History

Annual Percent
Outbound Change vs.

Year Seats Prior Year

2005 396,224 17.0%

2006 331,991 -16.2%

2007 291,678 -12.1%

2008 278,908 -4.4%

2009 265,041 -5.0%

2010 268,488 1.3%

2011 297,348 10.7%

2012 304,819 2.5%

Seats

Month ('13 vs. '12) Diff (+/-) % Change

January -825 -3.5%
February -2,578 -11.3%

March -2,145 -7.9%
April -859 -3.4%
May -80 -0.3%

Total for Period -6,487 -5.2%

Source: Wilkes-Barre/Scranton International Airport

Losses in the past few years include:

• United Express to Washington-Dulles (August 2005)

• Hooters Air to Orlando, Fort Lauderdale, St. Peters burg and Myrtle Beach (March 2006)14 • Continental Connection to Boston (March 2007)

• US Airways to Pittsburgh (June 2007)

• Direct Air to Myrtle Beach (August 2008)

• Continental Connection to Cleveland (October 2008)

• Delta Connection to Cincinnati (January 2009)

• Delta Connection to Atlanta (August 2009)

• American Eagle to Chicago O’Hare (November 2011)

With these losses, plus the increase in passenger e nplanements (shown below), an increase in load factors, and the econom ic growth in Northeastern Pennsylvania, the problem arising is the limited am ount of seats remaining in the market, which will, in turn, force air trave lers to, once again, use other nearby airports for their air travel needs.

AVP Enplanement History

Percent
Annual Change vs.

Year Enplanements Prior Year

2005 221,348 9.7%

2006 212,865 -3.8%

2007 220,893 3.4%

2008 223,130 1.3%

2009 207,168 -7.2%

2010 217,706 5.1%

2011 233,990 7.5%

2012 224,530 -4.0%

Enplanements

Month ('13 vs. '12) Diff (+/-) % Change

January -278 -1.7%
February -1,452 -8.5%

March -955 -5.0%
April -382 -2.0%
May 76 0.4%

Total for Period -2,991 -3.3%

Source: Wilkes-Barre/Scranton International Airport

As seen below, since the loss of nonstop Orlando se rvice in 2006, AVP has been on a steady decline of passengers to a top O&D Market – Orlando. In 2005, AVP had over 45 PDEWs to Orlando, retaining n early 50% of the Primary Catchment Market. In 2011, AVP captured ap proximately 23 PDEWs. Now, AVP captures almost 56 PDEWs, with rete ntion on the rise in the Primary Catchment Market. Although Allegiant’s low-cost service is bringing passengers back to AVP with their twice we ekly service, there are airports with low cost daily service to the Orlando area surrounding the AVP market, which is a major detriment to AVP.15 AVP – ORLANDO AREA PROFILE

Source: U.S. DOT O&D Survey, via Data base Products, YE May 2013

To the south of AVP, Lehigh Valley International Ai rport has been increasing seats, which we feel is a detriment to A VP. Within the past year

at ABE:

• Delta has increased seat capacity to Atlanta with 7 6-seat aircraft

• Delta has increased service to Detroit from three t o four daily flights using 50-seat aircraft

• Allegiant has increased service to Orlando-Sanford from three-to-four weekly flights to one daily flight using 166-seat a ircraft

• Allegiant has increased service to Tampa-St. Peters burg from two weekly to four weekly flights using 166-seat aircra ft

• Allegiant has increased service to Myrtle Beach fro m two weekly to four weekly flights using 166-seat aircraft

• United has increased service to Chicago O’Hare from three to four daily flights using 50-seat aircraft

• US Airways has increased daily seat capacity to Phi ladelphia with 50-
seat aircraft

D. Analysis of Greater Northeastern Pennsylvania Needs and
Deficiencies

Over the past several years, AVP experienced a seve re reduction in jet service to Philadelphia and Pittsburgh, which inclu ded a reduction in the number of seats available. Additionally, Atlanta, another AVP top O&D market, continued to perform well since returning t o AVP in 2002, but ended in August 2009. One daily flight to Atlanta d id return in September 2011. Although the airline states the AVP market is underserved, they have yet to add additional service.

American, which began service at AVP in June 2010, cut back their flights beginning in August 2011. American went from two da ily flights to one daily flight plus one flight four times a week, then disc ontinued all service in November 2011, citing poor load factors and an inab ility to increase

revenues.16 Delta has had recent growth to Detroit, adding a fo urth flight in March 2012. This was the first growth of the route since they began with three daily flights in April 2005. However, the service was cut back to three daily flights in September 2012, and then to two daily fl ights in December 2012. Although the third flight returned in March 2013, f lights to Detroit are still below where they were one year ago.

United has had no growth to Chicago since they bega n with three daily flights in October 1998. In May 2003, the Chicago flights decreased to twice daily, and United has been satisfied with the perfo rmance to date with no additional increase in service. In April 2011, the third daily flight was added, however, in August 2011, the flights returne d to twice daily.

US Airways has had recent growth to Charlotte. The service began with one daily flight in April 2005, and went to twice daily in January 2011, and has been performing well. The airline added a third da ily flight to Charlotte in July 2012. However, since the AVP departure time wa s late in the day (not getting into Charlotte until approx. 9 PM which mis sed mostly all connecting flights), the flight loads did not perfo rm well, and the flight was

eliminated.

As seen below, here are the latest load factors fro m AVP to specific destinations, most destinations have load factors a t 80% or higher or a 12 month period.

Sources: U.S. D.O.T. T-100 Reports and Wilkes-Barre /Scranton International Airport

Another challenge for AVP is the fact that competin g airports are marketing
their low-fare service to travelers in the AVP mark et area, through television, newspaper, radio and billboard. In ligh t of these circumstances, AVP continues to actively pursue competitive low-fa re service, as well as maintaining or even increasing legacy air service, to its top markets.

AVP’s air fares remain extraordinarily high for the level of service offered and the economic demographic of the area as evidenc ed in the table below. As shown on the charts below, AVP’s fares remain ab ove average and significantly higher than select markets with simil ar sized O&D passengers.17

AVP vs. Selected World Cities

- O&D Passengers & Avg

. Fare (+/

- 10 Ranking of AVP’s Enp. Psgrs.)

T otal Daily Avg. O&D Daily O&D

Rank Market Code Enp. Psgrs

. Enp. Psgrs

. Fare Psgrs

. Psgrs

. 1 Noumea, New Caledonia NOU 220,136 603 $968 439,938 1,205 2 Newman, Australia ZNE 215,139 589 $449 430,288 1,179 3 Gaborone, Botswana GBE 209,896 575 $432 418,744 1,147 4 Linz, Austria LNZ 220,783 605 $316 444,845 1,219

5 Wilkes-Barre/Scranton, PA AVP 216,034 592 $282 434,194 1,190 6 Samarkand, Uzbekistan SKD 210,373 576 $270 394,839 1,082 7 Neuquen, Argentina NQN 222,198 609 $206 445,229 1,220 8 Nejran, Saudi Arabia EAM 221,449 607 $199 426,892 1,170 9 Jayapura, Indonesia JMK 222,367 609 $182 425,304 1,165 10 Mikonos, Greece BRM 210,707 577 $178 425,305 1,165 11 Tabriz, Iran TBZ 214,091 587 $176 428,240 1,173 12 Luang Prabang, Loas LPQ 221,176 606 $164 437,494 1,199
13 Joinville, Brazil JOI 215,797 591 $159 431,858 1,183 14 Shonai, Japan SYO 220,615 604 $145 441,163 1,209 15 Temico, Chile ZCO 221,950 608 $144 452,751 1,240 16 Carcassonne, France CCF 214,137 587 $142 427,428 1,171 17 Datong, China DAT 209,870 575 $123 420,106 1,151 18 Xichang, China XIC 211,330 579 $107 422,605 1,158 19 Alor Setar, Malaysia AOR 215,303 590 $104 431,474 1,182 20 Tanjung Pandan, Indonesia TJQ 222,062 608 $66 443,315 1,215 21 Dumaguete, Philippines DGT 218,992 600 $56 437,998 1,200

Average 216,876 594 $232 431,429 1,182
Source: O&D Survey YE May 2013, via Sabre Airline S olutions, OAG Schedule Tapes

AVP vs. Selected North American Cities

- O&D Passengers & Avg

. Fare

T otal Daily Avg. O&D Daily O&D

Rank Market Code Enp. Psgrs Enp. Psgrs Fare Psgrs Psgrs 1 Appleton, WI ATW 213,026 584 $357 426,666 1,169 2 Rapid City, SD RAP 228,317 626 $315 465,470 1,275 3 Bangor, ME BGR 233,705 640 $309 459,599 1,259 4 Peoria, IL PIA 276,908 759 $285 548,657 1,503

5 Wilkes-Barre/Scranton, PA AVP 216,034 592 $282 434,194 1,190 6 Missoula, MT MSO 277,709 761 $279 553,307 1,516 7 Cozumel, Mexico CZM 209,099 573 $274 418,609 1,147 8 Allentown, PA ABE 334,397 916 $264 667,755 1,829 9 Bloomington-Normal, IL BMI 191,808 526 $249 378,550 1,037 10 Ixtapa/Zihuatanejo, Mexico ZIH 194,715 533 $233 388,237 1,064 11 Newburgh, NY SWF 148,741 408 $227 300,613 824 12 Redmond, OR RDM 200,846 550 $225 401,411 1,100
13 Acapulco, Mexico ACA 255,904 701 $223 513,397 1,407 14 Daytona Beach, FL DAB 282,011 773 $222 561,570 1,539 15 Medford, OR MFR 300,888 824 $217 602,820 1,652 16 La Paz, Mexico LAP 254,873 698 $212 501,108 1,373
17 Juneau, AK JNU 272,536 747 $195 543,046 1,488 18 Aguadilla, PR BQN 202,775 556 $190 401,752 1,101 19 Abbotsford, BC, Canada YXX 257,442 705 $190 515,030 1,411 20 Ketchikan, AK KTN 195,898 537 $181 391,869 1,074

Average 237,382 650 $247 473,683 1,298
Source: O&D Survey YE May 2013, via Sabre Airline S olutions, OAG Schedule Tapes18

Here are a few examples of AVP’s average one-way fa res to specific destinations, when compared to AVP’s top five leakage airports: PHL, E WR, JFK, ABE and LGA.

Source: O&D Survey YE May 2013, via Sabre Airline S olutions

As seen above, of the four destinations, AVP has th e 2 nd highest one-way fare in two instances, and the highest one-way fare to Atlanta (as much as $101 higher) and Orlando (as much as $86 higher).

III. STRATEGIC PLAN FOR USING GRANT FUNDING

A. Program Goals

The primary goals of this grant proposal are to inc rease enplanements at AVP by attracting new service and expanding current service, to address insufficient air service by attracting replacement service for such services recently lost, and to address unreasonably high far es to AVP’s prime markets by increasing competition between existing air carriers and new air carriers. Currently, the AVP markets are underserv ed and it is apparent that travelers in and outside the region are choosi ng to use alternative19 airports offering more scheduled service to a broad er range of destinations
with lower fare service.

Historically, the Northeastern Pennsylvania market has supported new service as it enters the region and it is anticipat ed by all Partners in this program that this trend will continue with a high l evel of success.

Specifically, the three program goals are as foll ows:

1. Secure service to leisure destinations (both domest ic and pre-cleared international), i.e. but not limited to, Tampa/St. Petersburg, Fort Lauderdale, West Palm Beach, Punta Gorda, Las Vegas , Myrtle Beach, Aruba, Bermuda, Freeport and/or Nassau.

2. Restore service to business destinations, i.e. but not limited to, Pittsburgh, Washington (DC) and/or Boston

3. Assist with marketing efforts to new and/or existin g air carriers at AVP to expand their service with additional flights /markets.

From the successful implementation of these program goals, AVP anticipates a direct affect of reduced fares in key markets and a significantly increased level of service.

B. Target Audiences

The following is a list of target audiences for AVP , but not limited to:

• Low-fare carriers

1. Allegiant

2. City Link Air

3. jetBlue Airways

4. PEOPLExpress

5. Southwest Airlines

6. Spirit Airlines

7. Sun Country Airlines

• Legacy carriers

1. American Airlines / US Airways

2. Delta Air Lines

3. United Air Lines

• Regional carriers

1. Colgan Air

2. PenAir

3. Public Charters, Inc.

4. Silver Airways20

C. Plan Implementation and Timetable

Key milestones for the Program will be:

• Securing meetings with carriers to negotiate new se rvice (October 2013 – March 2014).

• Announcing new service with local community marketi ng campaign (January 2014 – June 2014).

• Starting up new service (January 2014 – October 201 4).

• Monitoring and analyzing monthly traffic numbers of new service (January 2014 – June 2015).

• Monitoring and analyzing fares to the target markets (January 2014 – June 2015).

IV. AIRPORT AND BI-COUNTY PARTNERSHIP FUNDING AND
MONITORING ASSURANCES

The Wilkes-Barre/Scranton International Airport wil l act as the sponsor of the program. The sponsorship will be managed by Barry J. Centini, Airport Director, and the program will be managed by an airport admin istration and bi-county partnership representing the counties of Luzerne and Lackawanna. The partnership will meet on a regularly scheduled mont hly basis to review the progress and schedule of the program and more often when the program requires

it.

At each meeting, goals, objectives, and milestones will be evaluated to measure progress. Additionally designated members of the P artnership will be assigned to evaluate any changes in the current market environm ent and to identify any potential obstacles. The Partnership will prepare and submit quarterly reports to provide assurances that both the DOT and community funding are being spent in the manner proposed. At the time that new service is secured and the funding is successfully allocated, the quarterly reports will provide the DOT updates on the
success of the service.

V. FUNDING DESCRIPTION

A. An airline or airlines to provide service to one or more nonstop leisure destinations (domestic and/or pre-cleared internati onal), i.e. but not limited to, Tampa/St. Petersburg, Fort Lauderdale, West Pal m Beach, Punta Gorda, Las Vegas, Myrtle Beach, Aruba, Bermuda, Freeport a nd/or Nassau, minimum two (2) flights per week per destination. Risk abatement subsidy, as well as ground handling and start-up costs for p rovided service.21

FAA: $ 150,000 Luzerne County: $ 50,000 Lackawanna County: $ 50,000 Airport: $ 50,000 Total: $ 300,000

B. An airline to provide nonstop service to one or mo re nonstop business destinations, i.e. but not limited to, Pittsburgh, Washington (DC) and/or Boston service, minimum two (2) daily flights per w eekday per destination. Risk abatement subsidy for weekday service up to si x (6) months.

FAA: $ 150,000 Luzerne County: $ 25,000 Lackawanna County: $ 25,000 Total: $ 200,000

C. Local Market Advertising to provide needed baselin e support for new and/or restored airline service with a new or present airl ine, as well as support of additional flights with present airline service.

FAA: $ 275,000 Luzerne County: $ 25,000 Lackawanna County: $ 25,000 Airport: $ 50,000 Total: $ 375,000

D. TOTALS:

FAA: $ 575,000 Luzerne County: $ 100,000 Lackawanna County: $ 100,000 Airport: $ 100,000

Total: $ 875,000

VI. COMMUNITY ACTIVITIES

The Airport and supporting community organizations have been aggressively and actively marketing the airport for several years. This effort has included many

initiatives all undertaken to ensure that the North eastern Pennsylvania community is served in the best possible way.

Specific activities have included: * Direct subsidy to carriers * Targeted carrier meetings * New service cost reduction incentives including:22 - Advertising and marketing assistance for, but not limited to, television, radio, and newspaper coverage - Waiving of landing fees and space rentals for a n egotiated period - Donate local billboard advertising space and coun ty bus system promotion - Develop and direct a new service information mail ing initiative to local travel agents and community businesses * New service kick-off and promotional meetings wi th local travel agents * New service local community marketing support in itiatives * Annual attendance and participation at ACI’s annu al Marketing “JumpStart” conference and Network USA conference

VII. RESULTS OF PAST AIR SERVICE DEVELOPMENT EFFORT S

The results of past efforts utilizing Air Service De velopment funds are positive. Service continues to Detroit, MI, via Delta Air Lin es’ express carrier Pinnacle Airlines with load factors averaging 88% in 2009, 9 0% in 2010, 87% in 2011 and 81% in 2012. Detroit service began at AVP in April 2005. Service to Orlando, FL, did better than expected despite Hooters Air’s end of service in March 2006 due to its own internal financial issues, with load factor s averaging in the 83% to 86% range by the end of their tenure at AVP.

The Detroit service continues to provide a good des tination to business travelers, however, one-way fares have been on the rise. The Orlando service provided a great level of service for business and leisure tra velers, with a very competitive
fare structure.

With our past history and experience of being able to utilize funds for positive gains, we are confident that an award to Wilkes-Bar re/Scranton International Airport will bring positive results.

VIII. PROGRAM SPONSORS

Program Legal Sponsor: Program Partners:

Barry J. Centini, Airport Director Luzerne County, PA Wilkes-Barre/Scranton Lackawanna County, PA International Airport Greater Hazleton Chamber of Commerce
100 Terminal Drive Greater Pittston Chamber of Co mmerce Avoca, PA 18641 Greater Pocono Chamber of Commer ce 570/602-2000 – Phone Greater Scranton Chamber of Commerce
570/602-2010 – Fax Greater Wilkes-Barre Chmbr. of Commerce bcentini@flyavp.com Lackawanna Co. Conv. & Visitors Bureau
Luzerne Co. Convention & Visitors Bureau Wyoming County Chamber of Commerce Five (5) Attachments follow...23 ATTACHMENT 1

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In-Kind Contributions
Wilkes-Barre/Scranton International Airport

Small Community Air Service Grant

Luzerne County Convention and Visitors Bureau

In-Kind Item Amount

Staff Fulfillment $2,080.00
Mailing and Distribution of Visitor Guide $820.00
Attendance at Trade Shows $2,500.00
Ad Placement - Annual Visitors Guide $2,500.00
Featured Listing – PA State Web Site $ 995.00
Total In-Kind: $8,895.00

Lackawanna County Convention and Visitors Bureau

In-Kind Item Amount

Staff Fulfillment $3,500.00
Mailing and Distribution of Visitor Guide $1,200.00
Attendance at Trade Shows $2,000.00
Ad Placement – CVB Web Site $1,000.00
Total In-Kind: $7,700.00

Greater Pittston Chamber of Commerce

In-Kind Item Amount Insert in Monthly Newsletter for 12 months $3,500.0 0
Total In-Kind: $3,500.00

Greater Pocono Chamber of Commerce

In-Kind Item Amount Ad Placement - Annual Bizzy Awards $2,500.00
Ad Placement – Annual Dinner Program $1,000.00
Total In-Kind: $3,500.00

Greater Scranton Chamber of Commerce

In-Kind Item Amount
Ad Placement in News Briefs Newsletter $2,000.00

Web Site Exposure
Total In-Kind: $2,000.0028 ATTACHMENT 5

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Greater Wilkes-Barre Chamber of Commerce

In-Kind Item Amount Full Page Ad Placement – Annual Dinner Program $500 .00 Full Page Ad Placement – Program/Key Event $500.00
Staff Fulfillment & Web Site Exposure $1,000.00
Total In-Kind: $2,000.00

Greater Hazleton Chamber of Commerce

In-Kind Item Amount Insert in Monthly Newsletter for 3 months $ 900.0 0
Total In-Kind: $ 900.00

Wyoming County Chamber of Commerce

In-Kind Item Amount
Insert of Ad on Chamber Web Site for 12 months $ 900.00
Total In-Kind: $ 900.00