DOT Docket OST-2012 - 0069 

BEFORE THE OFFICE OF THE SECRETARY 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

Proposal for A Grant Under The 

Small Community Air Service 

Development Program 

Submitted by 

DUNS # 067207746 

Congressional District # 13 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 2 

Table of Contents 

Contents 

Proposal Data At-A-Glance 3 

1. Proposal Summary 4 

The Southwest Decision To Drop 360,000 Annual SRQ Passengers 4 

A Deficiency That Cannot Be Reversed By Incumbents 5 

AirTran Losses Are Not Recapturable Without Additional Capacity 5 

Westbound Service Shortfalls Are Additive To AirTran Losses 6 

Grant Funding: Attract New Hub Gateway Service & Address Westbound Shortfall 6 

Traffic Trends - Not Encouraging 7 

Westbound Fares Are High 8 

2. The Grant Application 9 

Target Airports & Airlines Are Identified 9 

3. Plan for Grant Implementation ......................................................................... 11 

Plan and Timeline 11 

Ensuring Self- Sufficiency 11 

Summary of SRQ Air Service Recruitment Efforts 12 

4. Grant Administration & Management ............................................................... 13 

Term of Grant 13 

Funding Sources and Allocation 13 

Risk Abatement Funding 13 

Marketing and Advertising Program 14 

In-Kind 14 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 3 

Proposal Data At-A-Glance 

A. Airport and Community Name 

Sarasota Bradenton International Airport 

Official Sponsor: Sarasota Manatee Airport Authority 

Tel: (941) 359-5200 

B. Additional Community Members 

The Airport is joined by the Sarasota Convention And Visitor Bureau and the Bradenton Area 

Visitors Bureau in submitting this application and in the administration of the grant. 

C. Project Sponsor 

The Sarasota Bradenton International Airport is the official sponsor of this grant application. 

D. Project Description 

The grant will be used to implement and market new service to alleviate significant air 

service deficiencies represented by lack of access to a Western US airline gateway, and 

concurrently by the decision by Southwest to pull AirTran - representing nearly one-third of 

SRQ's passengers - out of the market. 

The Sarasota Bradenton International Airport and the community appreciate this 

opportunity, and look forward to favorable consideration by the Department. 

Correspondence regarding this document should be directed to: 

Mr. Fredrick Piccolo 

President & Chief Executive Officer 

Sarasota Manatee Airport Authority 

6000 Airport Circle 

Sarasota, Florida 34243 

Tel: (941) 359-5200 

Email: Frederick.piccolo@srq-airport.com 
Proposal under the Small Community Air Service Development Program OST-2012 - 0069 4 

1. Proposal Summary 

Statement of Deficiency 

Sarasota Bradenton suffers from a lack of access to a westbound airline gateway. This 

forces local consumers to drive to other airports, thereby inflicting economic damage on the 

local economy. A secondary, but much more immediate and damaging deficiency, is the lost 

traffic resulting from the unexpected departure of AirTran Airways from the SRQ market. 

The Sarasota Bradenton International Airport is requesting a grant in the amount of 

$500,000 to address this major air service deficiency, which is a material economic hardship 

on the region's competitiveness in the global economy. The Airport, and the community led 

by the Sarasota Convention and Visitors Bureau and the Bradenton Area Convention and 

Visitors Bureau, are contributing an additional $500,000, representing a hard-dollar 100% 

match. As outlined in the DOT Appendix C, an additional $315,000 in in-kind support is also 

being provided. 

This grant will address both deficiencies, and the Community would respectfully submit that 

these fit the intent of Congress when it initiated the Small Community Air Service 

Development Grant Program. 

Service January 2012 Service September 2012 

The Southwest Decision To Drop 360,000 Annual SRQ Passengers 

The map indicates that the westbound access issue has been exacerbated by the loss of 

AirTran, which carried over 120,000 passengers annually to Chicago/Midway. 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 5 

AirTran Airways was purchased by Southwest Airlines in 2010. In the filing, Southwest 

stated that existing AirTran markets would not be adversely affected by the merger. This 

statement made to the DOT did not turn out to be accurate. Subsequent to DOT approval of 

the merger application, Southwest announced it would close 15 former AirTran stations, 

including Sarasota Bradenton. 

A Deficiency That Cannot Be Reversed By Incumbents 

While this was a business decision on the part of Southwest, it nonetheless was a major 

blow to the air service and economic competitiveness of the region served by Sarasota 

Bradenton International Airport. AirTran accounted for over 360,000 passengers (nearly 

30%) at SRQ in 2011, and achieved load factors of nearly 80%- and well over that figure to 

its hubs at ATL and BWI. A view of carrier shares at SRQ in 2011 is instructive of the air 

service deficiency that the AirTran departure has created: 

Carrier 

Note that AirTran generated almost 1,000 passengers per day (498 each way). With the 

high load factors at the remaining incumbents, this demand simply cannot be recaptured, 

and the majority of these passengers will become leakage to Tampa, in the process inflicting 

enormous economic impact damage to the Sarasota Bradenton economy.' 

AirTran Losses Are Not Recapturable Without Additional Capacity 

With current capacity, most of the 360,000 passengers being lost due to AirTran are not 

recapturable on existing incumbent service, which is at, or over, 80% load factors. 

IAirTran Pax Lost 

I 

I 

1,078,939 

908,091 

170,848 

363,476 

In fact, if illl the remaining SRQ carriers recaptured AirTran passengers with illl of the (few) 

empty seats they have available (which functionally is not possible, but is reviewed here to 

show the gravity of the deficiency), over 190,000 passengers that formerly used SRQ would 

need to drive to other airports. 2 

1 Source: US DOT data, analyzed by Aviation DataMlner. Fares are average OW, including federal fees and taxes. 2 Based on year 2011 capacity & seats occupied on all other carriers, compared to the passenger traffic carried by 

Air'Tran. 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 6 

This loss of capacity cannot be shifted to other carriers. Firstly, SRQ enjoys service primarily 

with mainline-size aircraft. Therefore, in most cases incumbents don't have the option of 

shifting to larger-gauge airliners. Secondly, adding frequencies for the network carriers -

Delta and US Airways - is not possible, as such flights would not meet connecting banks at 

their hubs. The remaining carrier, JetBiue, focuses mainly on traffic to New York City. 

The only option for SRQ to meet the challenge is recruitment of access to additional network 

airline service. This is the focus of the grant application. 

Westbound Service Shortfalls Are Additive To AirTran Losses 

Prior analyses by the Airport indicate that the loss of passengers that use Tampa instead of 

SRQ to access points west of the Mississippi exceed 70,000 annually. In addition, the loss of 

the connectivity of AirTran over its Atlanta hub represents another 18,000 passengers to 

points in the West. 

Therefore, in addition to the traffic lost locally due to AirTran, the deficiency in SRQ 

westbound access adds nearly another 100,000 lost passengers. 

The Airport and the Community are confident that the funding requested herein will, in a 

very short timeframe, begin to address and reverse this situation. 

Grant Funding: Attract New Hub Gateway Service & Address Westbound Shortfall 

Analyses by SRQ indicate that the best option for filling the AirTran gap is to recruit service 

to an additional west-oriented hub. As noted above, the two major East Coast hubs 

currently served from SRQ (US/CLT and DL/ATL) have little potential for additional 

capacity. 3 

Other, non-served East Coast hubs - in particular UA/IAD and UA/EWR - do not offer the 

geographical connectivity needed, and two of the major markets - New York and Boston 

already have nonstop service. Part of the AirTran gap will be filled by United, which is 

adding a single daily flight to Chicago/O'Hare in November.4 

Therefore, the main goal for SRQ is to gain access to one of three specific airline connecting 

hubs: United/Denver, Frontier/Denver, United/Houston, or American/DFW. 5 

The intent of the grant is to provide a revenue guarantee to support full-year service 

between SRQ and one of these gateways. This will help reverse a major and continuing 

decline in air service capacity at Sarasota Bradenton International Airport. 

3 SRQ staff have been In liaison with both airlines in this regard. . 4 While Important, the single daily UA 737-800 will not come close to recapturing the 120,000 annual MDW 

passengers carried by AlrTran from SRQ. 5 Southwest also has a connecting hub at Denver, and would certainly be welcomed back to SRQ. While the airport 

specifically will Include WN as a potential carrier under this grant application, as a practical matter, based on direct 

discussions with the carrier, such is a very distant possibility. 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 7 

Traffic Trends - Not Encouraging 

The Airport is fully aware that the US airline industry is not one in a growth mode. FAA 

forecasts indicate almost no growth in passenger traffic in the coming year, and only slow 

growth thereafter. 

SRQ, while a vibrant market, has seen the effects of this airline capacity shrinkage. What is 

disturbing - and pertinent to this application - is the additional effects of the unexpected 

departure of AirTran. 

Loss of AirTran & Lack of Westbound Access= Service Deficiency 

850,000 

800,000 

750,000 

700,000 

650,000 

600,000 

550,000 

500,000 

450,000 

400,000 

2007 2008 2009 2010 2011 Orig 2012 New 2012 2013 Fest 

The current forecast indicates that, in the absence of additional capacity (which the market 

can demonstrably support), passenger traffic could decline in 2013 by as much as 16% 

compared to year 2011. This is not due to lack of demand, but simply due to the fact that 

the on-going lack of westbound access has combined with the loss of a carrier that was the 

foundation for almost 30% of the traffic at SRQ. 

The solution is accessing additional capacity to the west, as this grant will make possible. 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 8 

Westbound Fares Are High 

Buttressing the above point, a review of fare levels to key points in the US West clearly 

show that SRQ has much higher fares than the airports with which it competes for 

passenger traffic. 

The data is for the full year 2011, and fares are average OW, including federal fees and 

taxes. The service intended to be recruited will be a factor in moving SRQ fare levels 

downward to these and other destinations. 
Proposal under the Small Community Air Service Development Program OST-2012 - 0069 9 

2. The Grant Application 

Target Airports & Airlines Are Identified 

This application is very carefully aimed at specific carriers and gateways. It is not the 

"route" that is important, but the connectivity to the west represented by each specific 

gateway .. 

As part of its active on-going air service development program, SRQ is in contact with the 

carriers targeted by this grant application. None are in a particularly strong growth mode at 

this time, but do express interest in the potential of the SRQ market, if there are substantial 

risk-offsets to entering the market. 

Sarasota-Bradenton International, with high leakage of westbound traffic to Tampa, and the 

departure of AirTran, represents an opportunity to each of these carriers. However, as the 

Department knows, there are changes in strategy going on at each of the targeted airlines. 

American is reorganizing in Chapter-11 bankruptcy. United is re-thinking the role and size of 

its IAH hub, and Frontier is rebuilding Denver. 

Therefore, with the grant award, SRQ will approach each carrier with an aggressive 

marketing program along with an industry-standard revenue guarantee program. 

SRQ is proud that in 2003 it was awarded a SCASD grant which, paradoxically, recruited 

AirTran. The marketing and support of that initial SRQ-ATL market incubated AirTran service 

later on to Indianapolis, Chicago, New York, Boston, and Baltimore, some on a year-round 

basis, and some on a seasonal basis. The point is that SRQ understands how to make a 

SCASD grant deliver new traffic and eliminate air service deficiencies. 
Proposal under the Small Community Air Service Development Program DST-2012- 0069 10 

One such deficiency was the lack of Chicago service. Because of the success of the SCASD 

grant in anchoring AirTran at SRQ, the carrier initiated service to Midway Airport, capturing 

over 120,000 annual passengers. 6 

This aggressive support and implementation process will again be applied to the 2012 grant. 

• It is again emphasized that the AirTran pull-out at SRQ was purely a business decision on the part of Southwest, 

which has much higher costs than AirTran, and apparently intends to try to shift the former SRQ/AirTran 

passengers onto Its flights at Tampa. The SRQ market- by the admission of AirTran management- was successful 

and profitable. 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 11 

3. Plan for Grant Implementation 

Plan and Timeline 

The Sarasota Bradenton International Airport, along with its community partners, have in 

place plans to implement contact with target carriers immediately upon notification of grant 

award. The Airport has forecasts and revenue projections ready. There will be no delays 

waiting for route and market analyses. These have been accomplished. 

The program envisioned will follow the earlier and very successful revenue-guarantee 

program made possible by the SCASD program at SRQ. This will include: 

+ Performance Standards. It is understood that the carrier will be contractually required 

to provide the service in accordance with pre-determined standards for on-time flights 

and schedule completion. The carriers under consideration are excellent, high-quality 

operators. However, it is important that strict standards be put into the agreement. 

+ Revenue and Cost Determinations. The per-segment costs of the service will be 

determined in advance. These will include an adjustment for up or down shifts in fuel 

costs to the airline. The plan is to establish strict per-flight costs, and weigh these 

against the net-new traffic that SRQ will generate for the target carrier's entire system. 

+ Six-Month Analyses. The airline will be required to provide monthly data regarding 

traffic and revenue generation, with substantiation for all incurred expenses. At the end 

of each six-month period, settlement will be accomplished. If revenue goals are met, no 

funds will be due the airline. 

+ Marketing. SRQ is an airport industry leader in focused marketing research. As just one 

example, should United/Denver or Frontier/Denver be approached, the airport has the 

capability of generating detailed reports regarding second-home ownership levels 

between Colorado and the West Coast of Florida.' (Because this application is a public 

document, the Airport is reluctant to share its air service development approaches with 

other competing airports. However, the fact remains that the marketing and promotional 

efforts at SRQ are unmatched. The success of the earlier SCASD grant is clear proof.) 

Any agreement will be pre-approved by the Department. 

Ensuring Self- Sufficiency 

As seen in the unexpected decision by Southwest to cut out of its system profitable SRQ and 

the 360,000 passengers it generates, SRQ fully understands that the airline industry is 

notoriously unpredictable. Therefore, the Sarasota Bradenton International Airport 

recognizes that changes outside of its immediate control could affect a carrier's decision to 

continue service. 

Should the new air service not achieve satisfactory financial results during the first months 

of operation, or if strategic shifts at the carrier result in the potential that the service may 

be in jeopardy, the community will work with the carrier to pinpoint solutions acceptable to 

the carrier to stay in the market. 

7 This approach was a key factor in the decision of United to implement Chicago/ORO - SRQ service in late 2012. 
Proposal under the Small Community Air Service Development Program OST-2012- 0069 12 

If the shortfall is primarily in one segment of the traffic bases, for example the local 

business community, the Airport will redouble efforts to ensure that a reasonable and 

sustaining portion of local business travel budgets are allocated to the new service. 

In another example, if the new service is not achieving a proportional share of inbound 

Convention and Meeting business, the Airport will work with local resorts to find a 

mechanism to give the new service better access to the Convention & Meeting Planners that 

book air travel. 

Some options for addressing route traffic and revenue performance shortfalls include: 

+ Re-focusing advertising and promotional efforts or, if outside the sequence of planned 

and budgeted events, initiating special service promotion. 

+ One-on-one meetings with the carrier, outlining where SRQ feels energy can be applied 

to assure the carrier finds the market economically-viable. 

The Airport is confident in its forecasts and in its marketing and marketing research. 

Summary of SRQ Air Service Recruitment Efforts 

The Department is familiar with the air service efforts and successes of SRQ 

Since 2003: 

• AirTran service was recruited to Atlanta, Boston, New York, Indianapolis, 

Baltimore/Washington, and Detroit. Some of these markets were seasonal and added 

as the carrier identified the opportunity. 

• JetBiue has initiated low-fare service to New York/JFK and Boston. 

• US Airways has initiated service to Washington/Reagan. 

• American initiated service to its hub in Miami. The service was discontinued as the 

airline shifted significant amounts of turboprop aircraft resources out of MIA. 
Proposal under the Small Community Air Service Development Program OST-2012 - 0069 13 

4. Grant Administration & Management 

Term of Grant 

The service deficiencies outlined in this document are certainly a challenge for SRQ. On the 

other side of the coin, they represent new revenue opportunities for the target carriers. 

Therefore, the term of the grant is requested to be two years. 

Funding Sources and Allocation 

The amount requested in this application is $500,000. The Sarasota Convention & Visitors 

Bureau and the Bradenton Area Convention & Visitors Bureau each have committed a hard 

$100,000 to be spent in marketing and advertising to assure success of the new service. 

The Airport is contributing an additional $300,000 to marketing as well. 8 

-· $500,000 

Risk Abatement Funding 

The structure of the Risk Abatement contract is envisioned as follows: 

+ SRQ will negotiate an agreed-upon target revenue per flight. 

+ SRQ and the airline will develop a structured, scheduled and formalized revenuedetermination formula. This includes the local O&D revenue, plus the SRQ segment's 

portion of system connecting traffic revenue, ancillary fees, cargo revenue and other 

revenue. 

+ A computation will be made on a monthly basis of the progress of the new service. The 

carrier will agree to provide the Airport with advance booking reports and previous 

month's traffic and revenue results every thirty days. 

+ The settlement for the revenue guarantee will be accomplished preferably after each six 

months of service. 

8 By statute, these community organizations are precluded from participating in any revenue guarantee programs. 

This Is the reason they will assume all financial responsibility for the marketing costs. Note that the source of the 

airport funding portion Is in complete compliance with all FAA rules and requirements. The Department will be 

provided periodic summaries of the activities and spending of these funds. 
Proposal under the Small Community Air Service Development Program OST-2012 - 0069 14 

Marketing and Advertising Program 

SRQ, with its ready market forecasts and market research capability, will initiate appropriate 

and timely advertising and promotional efforts upon completion of a signed agreement with 

the carrier to provide service. The $500,000 in total marketing support is allocated to the 

airline for their use in applying the marketing program, and is reimbursed to the airline with 

appropriate invoicing and documentation. 

A multi-dimensional approach is envisioned: 

+ Local print media advertising illuminating the new service, as well as the range of total 

air service options available at Sarasota Bradenton International Airport. 

+ Because the majority of passengers are inbound generated to SRQ, the airport will 

endeavor to identify key decisional drivers at major points on the target carrier's route 

system. The airline will be provided in-depth data regarding traffic and passenger 

demographics, to best focus marketing and consumer awareness efforts. 

+ Presentations will be made at key civic organizations to mobilize them to make outreach 

efforts to their contacts across the target carrier's route system. 

Promotional program specifics will be determined jointly with the airline. 

In-Kind 

The Airport has an aggressive air service recruitment program. As outlined on DOT 

Appendix C, the value of this program to the target carrier is $315,000 in addition to the 

hard dollar support listed above. 
May 30, 2012

Mr. Fredrick Piccolo

President

Sarasota Bradenton International Airport

6000 Airport Circle

Sarasota, FL 34243

Dear Mr. Piccolo:

Visit Sarasota County gives its strong support for your application for the Small Community Air 

Service Development Program grant for Continental/ United direct service into SRQ.

With a unanimous vote of approval from the Sarasota County Tourist Development Council, the 

Sarasota Convention & Visitors Bureau would provide a financial match for this grant in the 

amount of $50,000 annually for two years.

We thank you for taking the initiative to apply for this grant to restore much needed direct air 

service for our community and for its economy.

Sincerely,

Virginia J. Haley, CDME

President
-~:-... -. 

Bradenton Area 

Convention and Visitors Bureau 

June 1, 2012 

Mr. Rick Piccolo, Director 

Sarasota Bradenton lnt'l. Airport 

6000 Airport Circle 

Sarasota, FL 34243-2105 

Dear Rick: 

BACVB.com 

The Bradenton Area Convention & Visitors Bureau (BACVB} strongly supports your application for the 

Small Community Air Service Development Program grant for an additional United Airlines non-stop 

service into SRQ. 

During one of our previous meetings, the Manatee County Tourist Development Council has already 

made a recommendation to the Board of County Commissioners to pledge $50,000 annually for 2 years 

as matching dollars for this grant application. If SRQ receives the grant, the BACVB will quickly move 

forward to the County Commissioners for approval ofthe matching dollars. 

We thank you for taking the initiative to apply for this grant. 

Please feel free to contact me if you have any questions and the best of luck with your grant application. 

Best regards, 

Elliott Falcione 

Executive Director 

EF/mll 

A Department of Manatee County Government 

BRADENTON AREA 

CONVENTION & VISITORS BUREAU 

ONE HASEN BOULEVARD. PALMETTO, FL 34221