Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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## DOCKET OST

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Grant Application Under The 2010



# Small Community Air Service



# Development Grant Program

Submitted By

DUNS # 120 250 345

Congressional District # 6Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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## TABLE OF CONTENTS

I. KEY INFORMATION

II. THE BATON ROUGE COMMUNITY

III. AIR SERVICE ISSUE S IN BATON ROUGE

IV. CURRENT AND HISTORICAL AIR SERVICE

V. MARKETING AND PUBLIC AWARENESS CAMPAIGN AND ADMINISTRATION

VI. REVIEW AND SUMMARY

APPENDIX

LETTER OF SUPPORT FROM US AIRWAYSGrant Application Under the 2010 Small Community Air Service Development P rogram OST

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## I. Key Information

A. Airport and Community Name :

Baton Rouge Metropolitan Airport, 9430 Jackie Cochran Drive, Baton
Rouge, Louisiana 70807

All correspondence should be sent to Mr. Anthony Marino, Director of Aviation.

B. Community Support:

Baton Ro uge Chamber of Commerce & Bat on Rouge City Council.

C . Project Sponsor :

The Baton Rouge Metropolitan is the official project sponsor.

D . Gran t Intent:

Airline seating capacity reductions at the Baton Rouge Metropolitan Airport (BTR) have resulted in 3 consecutive years of declining enplanements, including a decrease of

- 17% in 2009. However, the passenger volume decreased at a lower percentage t han the seating capacity reductions, resulting in higher load factors for BTR carriers. Subsequently, the reduced capacity and higher fares exacerbated the historical problem of passenger leakage from Baton Rouge Metro Airport to New Orleans.

On June 24 th of this year, US Airways Express entered the market with 3 daily CRJ flights to their Charlotte hub. The new Charlotte flights provide BTR with service to a second network

- carrier hub in the East, providing more competition and seating capacity. Prior to t he US Airways service, only one BTR carrier provided connecting service via a hub in the East; the other two BTR carriers require a backhaul for connecting service to eastern U.S. destinations. In the first full month of US Airways service (July, 2010), BT R enplanements were up 13.58%, reversing the 3

- year decline in passenger volume and moderating the passenger leakage to New

Orleans.

For BTR to sustain this turnaround, it is critical that the US Airways service be successful. The Baton Rouge Metropolitan Airport is requesting a grant to fund a comprehensive advertising and community support program to ensure that the US Airways load factors continue to improve.

The airport is requesting a grant in the amount of $100,000, which will be supplemented with a 20% local funding match. We will utilize the $120,000 in a diverse media and community awareness campaign to extol the benefits of using the Baton Rouge Metro Airport in gener al, and the new US Airways service in particular. US Airways has limited advertising funds available for a market of BTR’s size, but the carrier needs more exposure in the Baton Rouge area to reach profitable load factors. The growth of US Airways in Baton Rouge will be instrumental in maintaining the reversal of our previously declining passenger numbers, and putting BTR in a position to build the existing service and attract additional capacity. Failure of the US Airways flights would likely put BTR in a difficult position for many years to come in terms of passenger growth and expanded

airline service.Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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## II. The Baton Rouge Community

Baton Rouge is the capital and second largest city in the state of Louisiana. The nine

- parish MSA population was proj ected to be 786,947 in 2009; and approximately 1.6 million people are located in BTR’s catchment area. Baton Rouge is the seat of government for the state of Louisiana, with state government accounting for approximately 30,000 local employees and spending approximately $14 million in air travel annually.

The Baton Rouge area is also a major industrial, petrochemical, biomedical and port center. A number of Fortune 1000 companies are headquartered in Baton Rouge including the Shaw Group, Albemarle Corpora tion, Turner Industries, and Amedisys Corporation. The ExxonMobil refinery in Baton Rouge is the second largest in North America; and petrochemical companies Dow Chemical, Dupont, BASF, Honeywell, Shell, DSM Copolymer and Novartis have major operations in the area as well. The area plays host to statewide hospital systems, world

- renowned biomedical research centers such as the Pennington Biomedical Research Center, and specialty surgical facilities. As the farthest inland deep

- water port on the Mississippi River, the Port of Greater Baton Rouge ranks among the top ten U.S. Ports and 32 nd in the world in total tonnage annually.

Baton Rouge is also a center of higher education with four institutions of higher learning that include Louisiana State University, Southern University and A&M College, Baton Rouge Community College, and our Lady of the Lake College.Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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## III. Air Service Issues in Baton Rouge

The Baton Rouge Metropolitan Airport enplaned 356,140 passengers in 2009, a 17% decline YOY. Despite having a core service area encompassing a population of nearly 800,000 people, a diversified economy, and

the 11 th strongest job market in the U.S. according to a recent Bloomberg Businessweek report, BTR has experienced reductions in flight frequencies and seating capacity over the past 3 years.

The service reductions were due more to airline industry dynamics and other events unrelated to the economy of

the BTR service area. The BTR passeng er numbers

have declined less than the capacity reductions on a percentage basis, resulting in higher flight load factors and higher than average fare
levels. In short, the decline in BTR enplanements was

attributable more to the

service reductions than th e
vibrant area market.

The reduced service in turn exacerbated the problem of p assenger leakage to New Orleans, with over 50% of passengers generated in the BTR service area using other airports

— but primarily MSY. With estimated leakage in the top 25 markets representing over 1 million passengers annually, recapturing even a modestGrant Application Under the 2010 Small Community Air Service Development P rogram OST

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- 0124 percentage of this traffic will put BTR in a position to expand service to levels commensurate with the size of the community.

Pax BTR Expected BTR

Pax Passengers

Lost Percent

Lost

Dallas 76,003 191,695 115,692 60.4%

Atlanta 41,732 112,482 70,751 62.9%

Washington 39,088 176,584 137,496 77.9%

LA Basin 34,790 110,469 75,679 68.5%

Chicago 23,120 106,242 83,122 78.2%

New York 21,510 209,222 187,712 89.7%

Houston 19,123 243,594 224,472 92.1%

Denver 19,065 66,947 47,882 71.5%

Las Vegas 18,816 67,030 48,215 71.9%

Bay Area 15,953 76,214 60,261 79.1%

Philadelphia 14,067 65,221 51,154 78.4%

Seattle 13,750 38,045 24,295 63.9%

Boston 12,736 50,931 38,195 75.0%

Austin 12,627 36,833 24,206 65.7%

Phoenix 10,716 37,017 26,301 71.1%

Kansas City 10,242 32,538 22,296 68.5%

San Antonio 9,703 34,017 24,314 71.5%

Minneapolis 9,436 31,132 21,695 69.7%

San Diego 9,208 37,005 27,797 75.1%

Salt Lake 8,641 19,879 11,238 56.5%

Richmond 8,485 16,839 8,354 49.6%

Orlando 8,364 95,578 87,213 91.2%

Raleigh Durham 8,291 32,424 24,132 74.4%

Detroit 8,053 33,741 25,688 76.1%

Pittsburgh 8,035 24,496 16,461 67.2%

Total 461,554 1,946,175 1,484,621 76.3%Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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## IV. Current and Historical Air Service

BTR has service to five major connecting hubs on four major airlines

— American (DFW), Continental (IAH),

Delta (ATL & MEM), and now US Airways (CLT). Regional jet equipment is utilized on all routes with the
majority being 50

- seat CRJ aircraft.

With the addition of US Airways, BTR is beginning to reverse the decline in flights and seating capacity. The

service is also helping to reduce BTR’s historica lly higher than average air fares with the availability of more

discount seats caused by the additional capacity and new competition.

The major service reductions BTR experienced over the past 3 years were due in large part to outside events

and indust ry challenges. They include:

**•** Frontier Airlines entered bankruptcy and discontinued service to its Denver hub in 2008.

**•** Delta significantly scaled back service at its Cincinnati hub, including the BTR flights.

**•** American eliminated BTR service to Chicago as part of a discontinuation of virtually all Chicago
nonstop flights from secondary cities in the Gulf Coast and Deep South.

**•** Delta service to Washington/Reagan was eliminated when fuel prices reached historical highs, making the long

- haul flights with CRJ 2 00 regional jets unprofitable.

**•** Existing carriers replaced the limited remaining mainline j et flights with regional jet service.Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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- 0124 Service levels spiked at BTR following Hurricane Katrina, subsequently increasing traffic and service at BTR as it became the primary alternate airport for MSY. However, as carriers resumed service to MSY and priced the market aggressively to rebuild passe nger volume, the fare disparities between BTR and MSY grew and leakage from BTR reached historic levels from 2007 through 2009. BTR is only beginning to recover from this

3

- year decline with the addition of US Airways Express service to Charlotte.



## V. Ma rketing and Public Awareness Campaign Structure and Administration

The marketing and public awareness campaign will build support for US Airways and the airport, in turn helping to reduce the passenger leakage. Recapturing as little as 10% of the leakage will vault BTR passenger traffic to levels comparable to 2006 before the 3

- year decline began. This will improve BTR’s opportunities for securing both larger aircraft on existing routes getting commitments for new ones. For example, expansion of nonstop US Airways service from BTR to Washington Reagan National would provide a much needed route for residents of Louisiana’s capital city.

Baton Rouge will use this grant to develop a focused program to reverse public misconceptions regarding service options from BTR, and to attain stronger public support for the new US Airways service. Key issues

that will be addressed include:

 Fares

— The US Airways service combined with new capacity added by incumbent carriers in response are resulting in more competitive fares

. Low fares are available from BTR; and the goal is to get area travelers

to check BTR first.

 Schedules

— For the majority of domestic and international destinations, BTR offers competitive connecting service that does not differ significantly from MSY . In many instances, passengers are connecting over the same hubs to the same flights as they would when flying from BTR.

 Market Message: The advertising objective is to take perceived disadvantages of the Baton Rouge Metropolitan Airport and turn them i nto advantages compared to larger airports. Convenience and customer service advantages offered by the hometown airport in terms of ease of access, shorter lines, nearby parking

— all of which shaves precious time from the travelers’ schedule. We will appeal to community pride and ownership of the airport while communicating the fact that BTR offers frequent flight choices that can take travelers to most destinations worldwide with a single connection. The new US Airways service will be

featured within all a ds and communications to confirm that the airport is an important economic engine for the community that offers better service options and fares than perceived by many residents.

 Corporations & Institutions with High Travel Volume: The airport will focus on companies and institutions generating the highest passenger volume such as Shaw Industries, State Travel Office, Turner Industries, Albemarle Corporations, Amedisys, ExxonMobil, LSU, and Southern University among others.

 Key Dem ographics: The campaign will utilize a range of media channels to reach broader consumer segments, including both business and leisure travelers. Television, radio, outdoor, print and internet media

sources will be selected according to audience share and key demographic criteria.

 Other Tools: Incentive programs such as the Thanks Again traveler loyalty program will be utilized to reward travelers for dollars spent at BTR. Additional marketing tools will include direct mailing, email alerts, and key civic event sponsor s hips.

 Fare and Service Monitoring : Fares will be monitored closely, particularly for top destinations in the Eastern U.S. The airport staff will interact with carriers, particularly US Airways, to advise them of fare disparities that are creating the most passenger leakage.

 Program Progress : 1) Attain a 78% + load factor on US Airways wi thin 12 months of the program implementation. 2) Within 12 months of program initiation, recapture a minimum of 100,000 passengers previously lost to MSY.Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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- 0124 The Airport and the community are requesting a grant in the amount of $100,000, to be matched with $20,000

in local dollars. The grant will fund these market activities and be expended over a 12

- month period.

The Airport will provide the Department with a detailed program spending plan for app roval that will cover the projected one

- year grant tim eframe. Q uarterly reports with US Airways load factor and BTR passenger enplanement data applicable to the 12

- month period of the campaign will be provided as well.



## VI. Review and Summary

Airline industry and other events not related to the Baton Rouge core customer base have resulted in capacity reductions at BTR exceeding 26% over the past 3 years followed by a comparable percentage decline in enplanements.

The Baton Rouge Metropolitan Airport has an opportunity to capitalize on the new US Airway s service by using it as a catalyst to build a more positive perception of the airport, counter misperceptions about service options, and change the buying behavior of area residents so that they begin to check BTR first when in need of air

travel.

Ensuri ng the success of the US Airways service will allow BTR to reverse the large 3

- year decline in enplanements by rebuilding passenger volume and recapturing a significant percentage of the passenger leakage. This will lead to more opportunities for additiona l flight service and/or upgrades to larger aircraft while mitigating the fare disparities with MSY.

The Baton Rouge Metropolitan Airport appreciates this grant opportunity , and we look forward to the potential

assistance with the BTR turnaround.Grant Application Under the 2010 Small Community Air Service Development P rogram OST

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### APPENDIX B Page 1

Order: 2010

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Docket DOT

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SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

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SUMMARY INFORMATION

All applicants mus t submit this information with their proposal , along with a completed form SF424 on

http:// www.grants.gov.

A. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)



### X Not a Consortium ⁭ Interstate Consortium ⁭ Intrastate Consortium

⁭ Community now receives EAS subsidy

⁭ Community (or Consortium member) previously received a Small Community Grant

If previous recipient, expiration date of grant: ___________________________

B. P UBLIC 

### /P RIVATE 

### P ARTNERSHIPS 

### : (L IST ORGANIZATION NAMES 

### )

Public Private

1. Baton Rouge Metropolitan Airport______

_ 1.______________________________________

2.____________________________________ 2.______________________________________

3.____________________________________ 3.______________________________________

4.____________________________________ 4.______________________________________

5.____________________________________ 5.______________________________________

C. P ROJECT 

### P ROPOSAL 

### : (CHECK ALL THAT APPLY)



### X Marketing ⁭ Upgrade Aircraft ⁭ New Route

⁭ Personnel ⁭ Increase Frequ ency ⁭ Low Fare Service

⁭ Travel Bank ⁭ Service Restoration ⁭ Subsidy

### APPENDIX B Page 2

⁭ Surface Transportation ⁭ Regional Service ⁭ Other (specify)

_________________ ⁭ Revenue Guarantee ⁭ Launch New Carrier

_________________

_________________ ⁭ Start Up Cost Offset ⁭ First Service

_________________

_________________ X Study ⁭ Secure Additional Carrier



### D. E XISTING 

### L ANDING 

### A IDS AT 

### L OCAL 

### A IRPORT:



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

X Localizer X Other (specify ) RNAV “GPS”

E. PROJECT COST :

1. Federal Amount Requested: $100,000

____________________

2. State cash financial contribution :

_____________________________
3. Local cash financial contribution...

3a. Airport cash funds: $20,000

_____________________
3b. Non

- Airport cash funds:

_____________________________ 3c. Total local cash funds (3a. + 3b.) :

_____________________________ 4. TOTAL CASH FUNDING (1. +2.+3.) $120,000

_____________________
5. Local funds contributed from already

- existing

programs or projects included in line3c. amount:

_____________________________
6. Local funds contributed from new commitments

or new resources included in line 3c. amount :

_____________________________ 7. Airport In

- K ind contribution:

_____________________________ (amount & description)

8. Other In

- Kind contribution:

_____________________________ (amount & description)

9. T OTAL IN

- KIND CONTRIBUTION (7.+8.) :

_____________________________ 10. TOTAL PROJECT COST (4.+9.) $120,000

_____________________

### APPENDIX B Page 3

F. ENPLANEMENTS:

2000 ____435,233

______ 2004_____ 375,412

________ 2008____ 433,135

____________ 2009___ 356,140____________

2001____ 379,843

______ 2005_____523,417

________

2002____ 380,503_

_____ 2006_____ 534,709

_______________

2003____ 362,766

______ 2007_____ 491,836

_______________

G. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER 12372

PROCESS? No

⁭ 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.

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



### H. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? (IF “YES”, PROVIDE EXPLANATION)

X No ⁭ Yes (explain) _______________________________________________________________