Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 APPLICATION UNDER
SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 2014

- 01 1 3

SUMMARY INFORMATION

A. P ROVIDE THE LEGAL SPO NSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL NUMBE RING SYSTEM (DUNS)

NUMBER , INCLUDING +4, EMPLOYEE IDENTIFICAT ION NUMBER (EIN) OR TAX ID

. Legal Sponsor Name: Routt County, Colorado Name of Signatory Party for Legal Sponsor: Mr. David Ruppel, Airport Manager
DUNS Number:
8247622280000 EIN/Tax ID:
84

- 6000801

B. L IST THE N AME OF THE COMMUNITY OR CONSORTIUM OF COM MUNITIES APPLYING : 1. H AYDEN AND STEAMBOAT S PRINGS , C OLORADO

C. P ROVIDE THE FULL AIRP ORT NAME AND 3

- L ETTER IATA A IRPORT C ODE FOR THE APPLICAN T ( S ) AIRPORT ( S ) (O NLY

PROVIDE CODES FOR TH E AIRPORT ( S ) THAT ARE ACTUALLY SE EKING SERVICE ).
1. Yampa Valley Regional Airport HDN

D OES THE AIRPORT SEEK ING SERVICE HOLD AN AIRPORT OPERATING CE RTIFICATE ISSUED BY THE F EDERAL A VIATION A DMINISTRATION UNDER 14 CFR P AR T 139? (I F “ NO ,” PLEASE EXPLAIN WHETH ER THE AIRPORT INTEN DS TO APPLY FOR A CERTIFICATE OR WHETH ER AN APPLICATION UN DER P ART 139 IS PENDING .)

Yes No (explain) 

### XProposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014

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. CO

- 03

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: Provide Year of grant(s): 200 4

a nd, the te x t of the Grant agreement section(s) setting forth the scope of the grant project:
“Restore adequate year - round air access to Northwest Colorado.” “Add competitive scheduled airline service at Steamboat Springs during the fall of the year to ensure year - round service.”

F. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )
PUBLIC PRIVATE
1. Yampa Valley Regional Airport 1. Steamboat Ski and Resort Corporation
2

. Local Marke t ing District 2. Catamount Ranch and Club
3. C ITIES OF S TEAMBOAT S PRINGS , C RAIG AND H AYDEN 3. T WENTY M ILE C OAL C OMPANY 4. Routt County Economic Development Coop 4. Atlantic Aviation
5. Routt C o unty and Moffat County 5. Avis/Budget, Hertz & Enterprise Rental Car
6. Steamboat Springs Chamber 6. Go Alpine

G. P ROJECT P ROPOSAL : 1. G RANT G OALS : ( CHECK ALL THAT APPLY )
Launch New Carrier Secure Additional Service Upgrade Aircraft First Service New Route Service Restoration Regional Service Surface Transportation Professional Services Other (explain below) 

### XProposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 2

. F INANCIAL T OOLS T O B E U SED : ( CHECK ALL THAT APPLY )

Marketing (including Advertising): promotion of the air service to the public
Start

- Up Cost Offset: offsetting expenses to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration)
Revenue Guarantee: an agreement with an air service provider setting forth a minimum guaranteed prof it margin, a portion of which is eligible for reimbursement by the community Recruitment of Air Carrier: air service development activities to recruit new air service, including expenses for airport marketers to meet with air service providers to make the
case for new air service
Fee Waivers: waiver of airport fees, such as landing fees, to encourage new air service;
counted as in

- kind contributions only Ground Handling Fee: reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers
Travel Bank: travel pledges, or deposited monetary funds, from participating parties for the purchase of air travel on an air carrier, with define d procedures for the subsequent

use of the pledges or the deposited f unds; counted as in

- kind contributions only
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 (specify)Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014

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 $ 4 00,000
2 State cash financial contribution $0
Local cash financial contribution
3a Airport cash funds $0
3b Non

- airport cash funds $ 3 5 0 ,000
3 Total local cash funds ( 3a + 3b ) $ 3 5 0,000
4 TOTAL CASH FUNDING ( 1+2+3 ) $ 75 0,000
In

- Kind contribution
5a Airport In

- Kind contribution** Various
5b Other In

- Kind contribution** Various
5 TOTAL IN

- KIND CONTRIBUTION ( 5a + 5b ) Various
6 TOTAL PROJECT COST ( 4+5 ) $ 750 ,000

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.
L ocal media companies will offer discounts on advertising; partner airlines will offer free tickets for giveaways, etc.

K. I S T HIS A PPLICATION S UBJECT T O R EVIEW B Y AN AFFECTED S TATE U NDER E XECUTIVE O RDER 12372 P ROCESS ?

a. This application was made available to the S tate 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 S tate for review.

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

L. I S T HE L EAD A PPLICANT OR ANY C O - A PPLICANTS D E LINQUENT O N A NY F EDERAL D EBT ? (I F “Y ES ”, P ROVIDE E XPLANATION )
No Yes (explain)

_____________________________________________________________________________________________Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 1

TABLE OF CONTENTS

Legal Sponsor 1
Introduction 2 Location, Population and Economy 3

- 4
Current and Historical Air Service 5

- 7
Air Service Needs and Deficiencies 8

- 1 2 Air Service Development Plan and Implementation Timeline 1 3

- 1 7 Public/Private Partnership 1 8 Funding Proposal 1 8 Air Service Development Efforts and New Air Service Marketing 1 9
Previous Grant Award and Conclusion 20



## LEGAL SPONSOR

Routt County, Colorado, operator of the Yampa Valley Regional Airport
, is the legal sponsor responsible for administering the proposed Grant and air service development program. The Airport is a lso a government agency, operated by the Routt County

.

Routt C ounty, Colorado 522 Lincoln Ave, Steamboat Springs, Colorado 8 0477 Grant Administrator; Thomas Sullivan, County Manager ( 970 ) 879

- 0108 tsullivan@co.routt.co.us 

### Section Page NumberProposal of Yampa Valley Regional Airport • Hayden

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## 2

INTRODUCTION

The Yampa Valley Regional Airport and its community partners are seeking a Small Community Air Service Development (SCASD) Grant for the purpose of recruiting a second airline to provide eastbound service outside of the winter season. The Airport, working closely with a collaborati on of community partners called the Local Marketing District (LMD) has been very active in winter season air service recruitment for many years. That activity has been focused on winter season service recruitment to support the Steamboat Ski Resort. The ec onomic benefit of ski resort visitors by air makes it possible for the LMD and the Airport to recruit winter season service from multiple carriers on reasonable economic terms.

Unfortunately, air service outside of winter (roughly April to the third week of December) is very limited, consisting historically of low frequency United Express se rvice to Denver. This seasonal imbalance of service, capacity, and most importantly competition, is damaging to the local economy and limits the ability of local residents and businesses to travel by air outside of
the winter season.

The lack of market competition outside of winter is illustrated by the very high fares that our market endures from April to December each year . For the period April to December 2013 our domestic average fare was $267 ; this compare s to $155 at Denver ( our primary traffic lea kage point ) and $182 for all domestic passengers nationwide during that same period

.

Our Airport serves all of Northwest Colorado
, an isolated five county area with 59,000 year

- round residents. The area population doubles in summer due to extended

- stay tourists and second
home owners. Key economic sectors include tourism, mining/power generation and healthcare.

Our need for additional non

- winter air service from a second airline is clear. We have a detailed plan to recruit such air service. We beli eve this is exactly the type of air service challenge for which the SCASD Grant program was designed. We are seeking $ 4 00,000 in Grant funding, to be matched by $3 5 0,000 in local non

- airport funding, for the purpose of recruiting a second airline to provid e non

- winter service. Our target carriers and routes are : American Airlines and Chicago

or Dallas or Delta Air Lines and Atlanta or Minneapolis. 

### “For the period April to December of 2013 our average domestic fare

was $267; this compares to $155 at Denver.......and $182 for all domestic passengers nationwide”Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 3

LOCATION, POPULATION AND ECONOMY

Market Location and Population

– The Northwest Colorado catchment area of the Airport
consists of five counties : Grand, Jackson, Moffat, Rio Blanco and Routt.

The total 2012 population of these counties was 58,934. Area population has grown 11% since 2000, with Routt, Grand and Rio Blanco counties up between 14% and 19% each. Only Jackson County showed a decline in population while Moffat had no change

The Hayden

- Steamboat Springs area is very isolated . The nearest interstate highway (I

- 70) (from downtown Steamboat Springs) is a 97 minute drive covering 87 miles over scenic
, but slow
, Rabbit Ears Pass. The Vail/Eagle Airport is a 1:43 drive covering 87 miles while Denver, the primary alternative airport, is a 3:11 drive covering 179 miles, again over Rabbit Ears pass. The significant isolation of the Hayden

- Steamboat Spring s area from alternative airports, and indeed just from an interstate highway, makes local air service that much more important to the local economy.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 4

The Hayden

- Steamboat Springs Economy

– Key economic sectors in the Hayden

- Stea mboat Springs region are : tourism, energy/utilities, healthcare, government and education. Four of the five counties in the catchment area had unemployment rates below 4.6% in April of 2014 and
the combined five

- county unemployment rate for that month was 4.5%, well below the state rate of 6.0 and the national rate of 6.3% for that month.

Tourism is the largest area economic sector, powered by the globally renowned Steamboat Springs Ski Resort. Tourism has two peak seasons : winter and summer

. There are over 3,400 resort/hotel/motel/B&B rooms in the area with about 12,000 beds and 21,000 pillows. This economic sector employs almost 3,000 full

- time or seasonal employees. Winter season tourists are drawn to the world class ski resort at Steamboat Springs wh ile summer activities include mountain hiking and biking, dude ranches, fishing and river rafting.

The impact of non

- winter tourism in the Hayden

- Steamboat Springs region is measurable. The Steamboat Springs Chamber Resort Association Summer Visitor Report, published in December of 2013, shows that the average summer visitor group consists of 3 visitors, 3.8 days average stay and $1,046 in local spending. This translates to $275 in spending per day and $92 per day per person. Thus, drawing additional
tourism visitors outside winter has a significant impact on the local
economy. The domestic traffic origin chart clearly shows the significant influx of tourists during the ski season (Q1). However, even outside of winter, Hayden

- Steamboat Springs is still an inbound origin market with far more visitors with inbound origin travel than local resident s with local origin outbound travel. Thus, new, non

- winter air service will bring more tourism to the region and the economic impact of that new visitor local sp ending is significant. Every new non

winter visitor to the region has a value of $92 per day in local spending.

Energy mining and utilities is another large sector with coal mining operation and a power plant operation. The Peabody mine and other nearby m ines plus the power plant employ about 1,200. Healthcare is another major local employer, anchored by the Yampa Valley Medical Center in Steamboat Springs and the Memorial Hospital in Craig. Combined local employment for the two medical centers and associated satellite offices totals nearly 1,000.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 5

HISTORICAL AND CURRENT AIR SERVICE

Traffic History

– Driven by growing energy mining in the Yampa Valley and the opening of the Steamboat Ski Re sort in the early 1960s, the various communities of the Valley came together and built the current Airport in 1966 . Frontier Airlines CV

- 580 services to Denver began on October 9, 1966. In 1986 the runway was extended to allow for use by 757

- size aircraft. With the longer runway
, the community began to recruit additional airline service, with winter season service being the easiest to gain and support. The results of the growth in winter season service were initially dramatic with traffic peak ing at 269,610 O&D passengers in 2007.

The chart shows traffic history for the past 21 years with year

- over

- year, five year
, and total period change for domestic, international and total traffic. Airport traffic peaked in 2007 and has declined significa ntly since. 2013 total traffic is down 32% from 2008 and 19% from 1993.

Service History

– While United air service to Denver has been the only year

- round constant, the Community has recruited a wide variety of winter season nonstop services, some that ha ve succeeded and some that have failed, sometimes simply due to airline hub closures or realignments.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 6

Community recruiting efforts, airline availability of equipment during the slow first quarter
, and the dramatic draw of the Steamboat Ski Resort have en abled Hayden

- Steamboat Springs to support a variety of winter season air services. T he Atlanta, Chicago, Dallas, Denver, Houston and Minneapolis winter services are daily. The other winter routes are weekend only.

However, the 21

- year summary of Airport air service paints a clear picture of capacity decline. 2013 total seats are down 17% from 2012, down 36% from 2008 and down 16% from 1993. Flight frequency has also declined as equipment gauge has increased, consistent with national trends.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 7

While the Hay den

- Steamboat Springs air service map may look impressive, all the dashed lines represent seasonal service and that service to Seattle, Los Angeles, and New York City is weekend only.

While Steamboat Springs is a seasonal market ( winter and summer peaks) the drop

- off in local
air service from winter to other seasons, even peak summer, is
dramatic.

The Airport seat capacity by month chart below illustrates the dramatic drop in air service that occurs each year when the snow melts.

A startling 63% of ann ual capacity is offered in first quarter and 74% of capacity is offered in those months plus December. In some months of the April to mid

- December period
, the Airport sees one flight per day . During this eight

- month period each year all service is via one airline.

Another significant “snow melt” shift occurs each year with domestic average fares. During the April to mid

- December period ( the second, third and fourth quarter of each year)
, Hayden

Steamboat Springs domestic market fares increase dramatically

. For the past four years market fares have gone up an average of 33.5% each second quarter, held those high levels for the balance of the year
, and gone back down significantly the following first quarter. The clear
driver of this consistent annual shift is competition, or
the lack of it
, during the second, third and fourth quarters of the year.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 8

AIR SERVICE NEEDS AND DEFICIENCIES

The Yampa Valley Regional Airport serves a large and isolated area of Northwest Colorado. The area has a vibrant economy pow ered by tourism, energy mining and healthcare, three economic sectors that rely upon air transportation. The Airport and its community partners have worked diligently for two decades to recruit additional air service, finding the most success recruiting winter season service.

Spring, summer and fall air service at the Airport has been of limited frequency and characterized by very high air fares. This lack of air service outside of winter is detrimental to the long term economic health of the region.

Ev ery spring when the snow melts and the Ski Resort closes, most Yampa Valley Regional Airport air service melts away as well.

Over the past three years the Airport has averaged fewer than four flights a day
, in and out
, during both May and November. Much of April also has very reduced service since the monthly average is inflated by end of ski season flights the first week of that month. In 2013 the Airport had only one arrival and on e departure per day for much of April and all of May and
November. Even s ummer service is limited, relative to the spike in tourist visitor demand
, with a
June

– August average of only just over 6 flights per day in and out.

One

- flight a day schedules, or even two

- flight a day schedules, are not adequate for the needs
of the H ayden

- Steamboat Springs region. This is particularly true for both locally based and inbound origin business travelers, given the region’s significant isolation from alternative airports.

Furthermore, from April to mid

- December Hayden

- Steamboat Springs i s a one airline market and
airfares increase dramatically during that monopoly period e ach year

. During the April to mid

December period Hayden

- Steamboat Springs domestic fares are well above those of Denver (primary leakage point) and are among the highes t for all Colorado mountain markets.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 9

Airline competition at Denver International is intense with United, Southwest and Frontier each having significant flight operations and service. So it certainly makes sense that the Hayden

Steamboat Springs domestic market fares would be higher than those at Denver.

The chart shows that over the past four years Hayden

- Steamboat Springs domestic fares during first quarter have been between 17% and 30% higher than fares at Denver. However, during
second quarter, third quarter and fourth quarter Hayden

- Steamboat Springs fares are between 46% and 77% higher than at Denver. Not only is the percentage of differential high
, but the actual dollar difference reached $11 7 in fourth quarter of 2013. On a round tri p basis, with taxes and fees added in, that is at least a $270 round trip difference.

A comparison of quarterly average domestic fares with Hayden

- Steamboat Springs’s peer group
of six other Colorado mountain airports again illustrates that outside of win ter, Hayden

Steamboat Springs residents and ar e a visitors pay some of the highest fares in the region.

During first quarter each year HDN has the lowest average fare in the group. However, during the balance of the year Hayden

- Steamboat Springs avera ge rank is 3 rd highest among the group of seven, with Aspen consistently first by a wide margin.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 10

Clearly Hayden

- Steamboat Springs air service is deficient outside of winter, during second, third and fourth quarters. Frequency of air service drops to thr ee, two or even, for several months, one trip per day. Domestic airfares so ar to be some of the highest in Colorado, with the airfare gap with Denver (primary leakage point) exceeding $115 one

- way net or about $270 gross round trip
with taxes and fees adde d in.

The result is about 8.5 months per year of substandard air service with often non

- competitive pricing. And the result of that ongoing service situation is very high traffic leakage. In 2013 the Yampa Valley Regional Airport commissioned a comprehensive stu dy of resident true market
demand and leakage to other airports during second , third and fourth quarters.

The study focused exclusively on resident or local origin traffic and excluded first quarter, when Hayden

- Steamboat Springs has significant air servi ce options. The study period was 2012 Q4 plus 2013 Q2 and Q3. The study utilized ARC data, DOT data and a macroeconomic formula to calculate true resident and local origin traffic demand for the three quarter period. The study

area was the 20

- zip

- code regi on surrounding the Airport, encompassing all principal cities and
towns in the five

- county area. The study excluded some zip codes of eastern Grand County due to proximity and eas e of drive from those areas to Denver.

Key findings of the study include :

 The catchment area generated 152 local origin PDEW during the three quarters sampled
 Only 1 7 % of domestic passengers use the HDN Airport, 77 % drive to Denver for air service
 Passengers using HDN paid an average fare of $247, those using Denver paid $152
 United captured 37% of leaked traffic at Denver an average fare of $242
 Southwest captured 24% of leaked traffic at Denver at an average fare of $133
 Frontier captured 15% of leaked traffic at Denver at an average fare of $129

The study’s data clearly sup port several conclusions :

1) Market average fares are so high that significant numbers of local residents prefer the three hour plus drive to Denver over two mountain passes to using the local airport. 2) Even local business travelers, who would typically be le ss price sensitive, are driving to Denver to fly United and pay about the same fare ($242) as they pay at HDN ($247).Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 11

The chart below illustrates the geographic demand of the leaked traffic defined by the study.

TRUE MARKET STUDY DEMAND DISTRIBUTION FOR HAYDEN

- STAMBOAT SPRINGS

Clearly
, market traffic demand has an eastward orientation. Three of the top ten leakage markets are in Texas (DFW, IAH and AUS). New York/Newark is the third largest leakage market, Minneapolis is the fourth , Boston is the seven th, Atlanta the eighth, Washington/Baltimore ninth and Chicago tenth.
HDN YEAR 2013 DOMESTIC O&D BY DESTINATION This eastward market orientation is confirmed by measuring existing O&D traffic flow by region of the country.

The map at right shows
actual 2013 domestic traffic by destination, with
each destination bubble
sized to show relative
traffic demand.

The cities of Minneapolis, Chicago and Atlanta, theProposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 12

states of Texas and Florida and the broader Northeast region are significant traffic gener ators for Hayden

- Steamboat Springs.

Taking the visual display of actual traffic and converting it to data further clarifies that Hayden

Steamboat Springs domestic non

- winter traffic flows are eastward oriented.

This chart breaks down Hayden

- Steamboat Sp rings traffic by region of the country. The period measured is 2013 Q2, Q3 and Q4, the non

- winter period.

A full 81.2% of domestic traffic and 82.3% of domestic revenue was exchanged with the northeast, southeast, south central or Midwest regions. Only 18 .8% of traffic and 17.7% of revenue was exchanged with the mountain or far west regions of the country.

Average fares paid for travel involving the northeast ($284), southeast ($286), south central ($261) and Midwest ($247) are very high, for a n intermoun tain leisure destination market like Hayden

- Steamboat Springs.

In summary, Hayden

- Steamboat Springs air service is completely inadequate in the April to mid

December time frame each year. Flight frequency falls to as low as one flight per day during several months of that period. Even the June

– August summer period, when inbound tourism traffic is strong, averages only three flights per day. And
, most importantly, during this 8.5 month period the market only receives service from one carrier and airf ares soar in that monopoly
environment.

Our market badly needs two air service improvements during some or all of the 8.5 month non

winter period, a second airline to provide airfare competition
, and a new eastbound hub as an
alternative to Denver.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 13

The residents and businesses of the Hayden

- Steamboat Springs area, working through the Local Marketing District (LMD) organization, have worked hard for many years to expand local air
service. The most success in that undertaking has happened during winter. This is due to the support of the Steamboat Ski Resort, the powerful draw of that leisure venue, and the fact that network airlines have more seasonal service capability and flexibility in the mi d

- December to early April time frame than they have in most other periods of the year.

The LMD has not found an airline, other than year

- round incumbent United, willing to commit scarce peak spring summer season aircraft and crew resources to the Hayden

- S teamboat Springs market outside of the ski season. We believe that a significant minimum revenue guarantee (MRG) program, combining local non

- airport cash funding with SCASD Grant funding, can change that viewpoint at American Airlines or at Delta Air Line s.

The detailed market research we have performed and have summarized in this report suggests that eastbound service to a network carrier hub would have an excellent potential for initial and long term success. Our primary air carrier/route combination ta rgets will be American Airlines to Chicago ORD or Dallas/Fort Worth DFW or Delta Air Lines to Minneapolis MSP or Atlanta ATL.

American Airlines Options

– American Airlines has large connecting hub operations at both Chicago ORD and at Dallas/Fort Worth DF W. The carrier operates from both hubs to Hayden

Steamboat Springs during the mid

- December to early April ski season. We believe that grant supported American non

- winter service to either of Chicago or Dallas/Fort Worth would be
successful.

For both marke ts
, we envision up to a 37

- week annual operating time frame from early April to
mid

- December, service of five flights per week and the use of 76

- seat E175 equipment. Chicago service would connect on to up to 60 cities that currently (Q2, Q3 and Q4 of 2013) generate 26,620 HDN O&D at $273. The leakage study estimated 3,732 leaked local Chicago O&D and 156,000 leaked domestic conne ct O&D that could connect via American and Chicago ORD.

Dallas service would have the same service pattern, equipment and time frame

. Dallas service could connect onward to 89 cities that currently (Q2, Q3, Q4 of 2013) generate 40,660 O&D at 

## AI R SERVICE IMPROVEMENT PLAN AND IMPLEMENTATION TIMELINEProposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 14

$272. Leakage is estimated at 3,869 local and 190,000 connect O&D that could connect via American and Dallas/Fort Worth DFW.

AMERICAN AIRLINES ONLINE CONNECTIONS VIA CHICAGO AND DALLAS

Service to Chicago would provide nonstop service from Hayden

- Steamboat Springs to its 3 rd largest non

- winter O&D destination and its 10 th largest leakage market.

The service is forecast to generate 22,095 O&D the first year (37 weeks of operation from early April to mid

- December). With a seat count of 28,120
, this would forecast as a 78.6% load factor. The first year is forecast to incur a modest segment operating loss.

Service to Dallas/Fort Worth would provide Hayden

- Steamboat Springs with nonstop service to its
2 nd largest non

- winter O&D market and its 9 th largest leakage market.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 15

This service is forecast to generate 21,245 O&D the first ye a r (37 weeks of operation from early April to mid

- December). With a seat count of 28,120 this would forecast as a 75.5% load factor. The first year is forecast to genera te a modest segment operating profit.

Delta Air Lines Options

– Delta Air Lines has large connecting hub operations at both Minneapolis and at Atlanta. The carrier operates from both hubs to Hayden

- Steamboat Springs during the
mid

- December to early April ski season.

DELTA AIR LINES CONNECTIONS VIA ATLANTA AND MINNEAPOLIS

For both markets
, we envision up to a 37

- week annual operating time frame from early April to
mid

- December, service to be 3 to 5 times per week and the use of 76

- seat E175 equipmentProposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 16

(MSP) or 124

- seat 737/700s (ATL). Minneapolis service would 5 times weekly and would connect on to up to 64 cities that currently (Q2, Q3 and Q4 of 2013) generate 30,650 HDN O&D at $273. The leakage study estimated 5,402 leaked Minneapolis local O&D and 1 51 ,000 leaked domestic connect O&D that could connect via Delta and Minneapolis

. Atlanta service would be three times weekly over the same time fram e

. Atlanta service could connect onward to 73 cities that currently (Q2, Q3, Q4 of 2013) generate 24,590 O&D at $2 86 . Leakage is estimated at 4,964 local
and 1 45 ,000 connect O&D that could connect via Atlanta.

Service to Minneapolis would provide nonstop service from Hayden

- Steamboat Springs to its 16 th largest non

- winter O&D destination and its 4 th largest leakage market.

This service is forecast to generate 21,182 O&D the first year (37 weeks of operation from early April to mid

- December). With a seat count of 28,120 this would forecast as a 75.3% load factor. The first year is forecast to generate a modest segment operating profit.

Service to Atlanta would provide nonstop service from Hayden

- Steamboat Springs to its 5 th largest non

- winter O&D destina tion and its 8 th largest leakage market.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 17

This service is forecast to generate 24,161 O&D the first year (37 weeks of operation from early April to mid

- December). With a seat count of 2 7,528 this would forecast as a n 87.8 % load factor. The first year is f orecast to generate a significant segment operating loss

.

The challenges of market entry for a second airline in the Hayden

- Steamboat Springs market are significant. All major hubs for American and Delta are at least 770 miles from HDN, which means

a significant per segment operating cost for any second carrier market entry. Furthermore, United Airlines has the advantage of having the ability to operate multiple daily frequencies to nearby Denver if they choose , a nd Denver is close enough and is a larg e enough hub operation
, to permit United to sell service Omni

- directional via that hub.

We have offered four distinct second

- carrier non

- winter new service options. Those options, per the cursory forecasts herein, appear to have different levels of viability and ultimate success. It is clear that the risks for either American or Delta to become year round service providers in the Hayden

- Steamboat Springs market are significant but manageable, with community and SCASD Grant supported MRG funding.

Im plementation Timeline

– Our LMD has, via the relationships that the Steamboat Ski & Resort Company has developed, a strong relationship with both American
Airlines and Delta Air Lines. We have discussed the concept of service beyond the winter period with both carriers. We
are confident that
, with Grant supported MRG funding in hand
, we will be able to
secure second carrier service in the non

winter period beginning in 2015.

The timeline at the right is based on t wo assumptions : Grant award and contra ct execution in third quarter of 2014
, and conclusion of new service MRG agreement in first quarter of 2015. Based on those assumptions
, Grant supported service will begin in Spring or Summer of 2015 and the Grant should be ready for closure in 2017. Due to the challenges of recruiting new air service we do request a three year timespan on this proposed Grant, to allow for delays in carrier recruiting.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 18

PUBLIC PRIVATE PARTNERSHIP

Hayden

– Steamboat Springs local government bodies, private sector bu sinesses and local citizens are very active, via civic groups, in strengthening the local economy while preserving the quality of life that makes the region such a special place.

Oversight of ongoing air service recruitment has been the responsibility of the Local Marketing District (LMD), a f ive member elected body . The purpose and duties of the LMD Board is to provide funding for air service/marketing with agreed upo n participation from the Steamboat Ski & Resort Corporation and surrounding municipalities. The LMD works closely with the Steamboat Ski & Resort Co rporation to determine the best air service recruitment strategies and tactics. The
LMD Board meets eight times per year.

The Airport and Routt Coun ty and their community part ners, in cluding the City of Steamboat Springs,
Ste amboat Ski & Resort Co rporation
, the
St ea mboat Springs Chamber Resort Association
and the LMD, have a well thought out plan for recruiting a second carrier, but some community financial support of that carrier will be needed to bring in new competition.



## FUNDING PROPOSAL

T he Yampa Valley Regional Airport and its broad cross

- section of community partners propose to begin to address the glaring non

- winter air service deficiencies by recruiting a second non

winter air carrier to provide flight and price competition for existin g year

- round United service. Grant funding of $ 4 00,000, combined with $3 5 0,000 in non

- airport local cash match
, will provide for a $ 75 0,000 MRG fund with which
to recruit a second network carrier to provide non

- winter service at HDN. The total of $3 5 0,000 in local funding will come from both the LMD funds (which are supported by a local
bed tax) and from local public and private sector parties interested in supporting this important
local initiative. The $350,000 will consist of $300,000 in MRG funding and $ 5 0,000, over two years, in marketing support directly assigned to the recruited carrier and its non

- winter services.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 19

AIR SERVICE DEVELOPMENT EFFORTS AND AIR SERVICE MARKETING

Air Service Development

– The LMD, through the Steamboat Ski & Resort Co rporation
, has regular contact with both its incumbent carriers (United year

- round, American and Delta seasonally) and with potential new entrant carriers, such as Alaska Air which began weekend

only winter season service from Seattle last December.

While the detai ls of these meetings are a confidential matter between the Ski C orporation and the Airline, the Ski Co rporation meets with our airline partners at least twice a year and has phone or email contact at least monthly, if not weekly. The Ski Co rporation does report back t o the LMD Board in executive session on the contacts with our Airline partners.

Air Service Marketing

– The LMD has
, for many years
, market ed Hayden

– Steamboat Springs air services, primarily through coop erative marketing efforts with the Ski Co rporation . The limited nature of spring, summer and fall service has meant that
, historically
, most marketing efforts have been focused on supporting the much larger winter season service pattern.

The marketing of the Hayden

– Steamboat Springs to tourists is a yea r

- round activity. Considerable marketing resources are allocated to key visitor markets, including Texas, Illinois, Minnesota and the southeast United States. This effort utilizes a broad range of media venues :

 Print publications with strong re gional distribution among targeted audiences
 Electronic marketing and eMarketing newsletters using the Ski Corporation ’ s data base
 Radio promotions on stations that serve targeted audiences in select cities
 Websites are designed to attract and retain initial interest
 We are rapidly expanding our social media participation and efforts

Currently
, air service marketing to our local population is limited, simply because
, outside of
winter
, our local air service is limited. Media costs are low in northwest Colo rado and our resident population is modest. New non

- winter air service will be fully supported locally at low cost using print, radio, billboard and our local email data base. We anticipate working closely with the new
year

- round air carrier on marketing e fforts. Our community is close

- knit and
, via a wide range of
channels
, we are very confident in our ability to make sure every citizen knows about improved

non

- winter air service, even before that service makes its first flight.Proposal of Yampa Valley Regional Airport • Hayden

- Steamboat Springs, Colorado • July 2014 

## 20

PREVIOUS GRANT AWARD AND CONCLUSION

Previous Grant

– In 2004, the second year of the SCASD program, the Yampa Valley Regional Airport and its community partners applied for
, and were awarded
, a SCASD Grant. The Grant’s goals and objectives, as stated on page three of the Grant contract, were:  Restore adequate year

- round air access to Northwest Colorado
 Add competitive scheduled airline service at Steamboat Springs during the fall of the
year to ensure year

- round service. The Airport and its community partners use d the Grant to foster Delta Air Lines regional jet service to Salt Lake City during periods outside of winter starting in September of 2005 and running, with shutdowns each spring, until September of 2009. A ll Delta SLC service ended after the winter of
2009

– 2010. The Grant was closed in September 15, 2008

. The 2004 Grant was typical of the in itial years of the SCASD program, with a very broad goals and objectives statement. As the program has matured Grant applicants tend to submit proposals that are more focused and narrow in scope and the Department tends to award grants that have a more nar row focus.

This 2014 Grant application is narrowly focused on improved non

- winter air service by recruiting a second carrier to provide new eastbound service during that period of the year. Whereas the first Grant was used for Salt Lake City service
, this Grant will be used for service in an easterly direction. Whereas the first Grant targeted “adding competitive scheduled airline
service

. ..during the fall of the year” this Grant is targeting the entire non

- winter period. We believe that this Grant applica tion is materially different than the 2004 Grant.

Conclusion

– The deficiencies of air service at Hayden

- Steamboat Springs are clear and are precisely the type of air service situation for which the SCASD Grant program was designed.
 Market fares during th e non

- winter period are well above the nation al average, over $100 one way more than at Denver and among the highest at all Colorado mountain airports.
 The Airport and its community partners place a very high priority on addressing this issue
and will matc h DOT Grant funding at almost a dollar for dollar ratio

.  The community has had
, and will continue to have
, a powerful public

- private partnership devoted to air service improvement, led by the Local Marketing District.
 The proposed new service will have clear local economic benefit.
 We believe we will be able to use the Grant i n a timely manner.

### July 31 , 2014
Mr. Anthony Foxx, Secretary of Transportation United States Department of Transportation 1200 New Jersey Avenue, Southeast Washington D.C. 20590

Reference: DOT

- OST

- 20 14

- 0113 Small Community Air Service Development Program 2014

Dear Mr. Secretary,
I am writing this letter to express my very strong support for the Small Community Air Service Development (SCASD) Grant application of the Yampa Valley Regional Airport, which serves Hayden and Steamboat Springs and much of northwestern Colora do.
As Chairman of the Local Marketing District, which collects and directs funds for air service, I continue to have significant concerns and frustrations by the poor air service this airport and NW Colorado receives outside of the winter ski season. As the Grant application notes, only on e airline offers air service from April to December and flight frequencies are limited and airfares are extr emely high, well above national averages, well above those at Denver and often well above those at other Colorado airports as well.
The Airport’s Grant application is for a modest $ 4 00,000, matched by $300,000 in local funding. The purpose of the Grant is to recruit a second airline to provide service outside of winter, and thus provide some schedule options and airfare competition in northwest Colorado during that period

. The Airport and Routt County and their community partners, including the City of St eamboat Springs, Steamboat Ski & Resort Corporation, the Steamboat Springs Chamber Resort Association and the L ocal M arketing D istrict , have a well thought out plan for recruiting a second carrier, but some community financial support of that carrier will be needed to bring in new competition.
This seems to me to be a perfect use for the SCASD Grant program, as it is intended to aid smaller cities with higher fares and limited competition.
I urge you to give this Grant application your fullest consideration.
Sincerely,

Charles Porter Chairman, Steamboat Springs Local Marketi ng District 1310 Robert E Lee Ln Steamboat Springs, CO 80487

## COLORADO HOUSE OF REPRESENTATIVES State Capitol Denver 80203 State Representative Committee Member: DIANE MITSCH BUSH Agriculture, Livestock, Colorado State Capitol Natural Resources HD26 Eagle & Routt 200 East Colfax Avenue, Room 271 Transportation & Energy Denver, Colorado 80203 Committee Office: 303-866-2923 Email: diane.mitschbush.house@state.co.us

July 31, 2014 Mr. Anthony Foxx, Secretary of Transportation United States Department of Transportation 1200 New Jersey Avenue, Southeast Washington D.C. 20590 

### Reference: DOT-OST-2014-0113 Small Community Air Service Development Program 2014
Dear Mr. Secretary, I am writing this letter to express my very strong support for the Small Community Air Service Devel

opment (SCASD) Grant application of the Yampa Valley Regional Airport, which serves Hayden and Steamboat Springs and much of northwestern Colorado. I am alarmed by the poor air service this airport and region receives outside of the winter ski season. As the Grant application notes, only one airline offers air service from April to December and flight frequencies are limited and airfares are extremely high, well above national averages, well above those at Denver and often well above those at other Colorado airports as well. The Airport’s Grant application is for a modest $300,000, matched by $300,000 in local funding. The purpose of the Grant is to recruit a second airline to provide service outside of winter, and thus provide some schedule options and airfare competition in northwest Colorado during that period. The Airport and Routt County and their community partners, including the City of Steamboat Springs, Steamboat Ski & Resort Corporation, the Steamboat Springs Chamber Resort Association and the LMD, have a well thought out plan for recruiting a second carrier, but some community financial support of that carrier will be needed to bring in new competition. This seems to me to be a perfect use for the SCASD Grant program, as it is intended to aid smaller cities with higher fares and limited competition. I urge you to give this Grant application your fullest consideration and I wish to be advised of the ulti

mate disposition of this Grant application. Sincerely, Colorado State Representative House District 26 Diane Mitsch Bush