Application of 

DOCKET OST-2011-0119

036223100
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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THE POCATELLO CHALLENGE ........................................................... 3

THE HARBINGER IS ALREADY IN PLACE ................................................... 3

THE GRANT REQUEST............................................................................ 3

ADMINISTRATION & MANAGEMENT OF THE GRANT ................................... 4

AIR SERVICE DEVELOPMENT ACTIVITIES AT PIH...................................... 4

PROJECT SPONSOR ............................................................................... 5

II. POCATELLO & THE MARKET........................................................... 6

IT’S A MATTER OF AIRLINE STRATEGIES .................................................. 6

SCHEDULE THEM & THE PASSENGERS WILL COME.................................. 7

FARE LEVELS ........................................................................................ 8

FARES ARE NOT A CONSIDERATION IN THE RETIREMENT OF TURBOPROPS8

THE POCATELLO GRANT PROPOSAL................................................ 9

OBJECTIVE: FACILITATE TURBOPROP REPLACEMENT .............................. 9

Cost/Revenue Benchmarks .............................................................. 9

Program Management ...................................................................... 9

Revenue Determination ...................................................................10

OBJECTIVE: NET-NEW STIMULATION ......................................................10

THE ALTERNATIVE: LOSING NETWORK AIRLINE SERVICE COMPLETELY.....10

IV. GRANT ADMINISTRATION .............................................................11

MAJORITY OF FUNDS ARE FOR RISK-OFFSET.........................................11

THE PROGRAM ADMINISTRATION ...........................................................11

MARKETING & ADVERTISING SUPPORT...................................................12

POST-GRANT SUPPORT ........................................................................12

V. SUMMARY OF APPLICATION..........................................................13
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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The Pocatello Challenge

Pocatello Regional Airport today faces major challenges to its future air 

connectivity to the US and to the global economy.

Historically, the market has been attached to the Delta hub at Salt Lake 

City. But changes in airliner economics, airline strategies, and fleet 

decisions within the Delta Air Lines system now have combined to 

threaten Pocatello’s air service.

Current service is provided via four daily round trip flights operated by 

SkyWest/Delta Connection using 30-seat Embraer 120 airliners. It is a 

near-certainly that these aircraft will be retired from the SkyWest fleet 

sometime in the next five years – or, more likely, sooner.

The Harbinger Is Already In Place

In July, 2011, Delta announced it was “adjusting” service at 24 airports 

across the nation. Translating this, the airline is retiring all of the 34-seat 

Saab-340 turboprops in its regional fleet by the end of the year. In some 

of the 24 affected airports, Delta may seek EAS subsidies to support 50-

seat jets. In others, it simply wants to leave the market.

The current service at Pocatello is not affected by this action, but the 

message it sends is very clear: the “floor” for air service in the near future 

will be more-expensive 50-seat jets. 

SkyWest is a superb company which operates with the highest standards 

of reliability and customer service in the industry. However, it is not 

immune from the raw emerging economics of its fleet of Embraer 120s. 

This is already taking place at Pocatello, with SkyWest reducing 

frequencies in the fourth quarter of 2010 from four daily flights to just 

three. The writing is on the runway: PIH must prepare to support 50-seat 

jets, or it may lose viable air service.

The Grant Request

As a result, Pocatello Regional Airport is herein requesting a grant in the 

amount of $500,000 to be matched by $100,000 - $80,000 in hard in local 

dollars plus $20,000 in-kind - for the purpose of upgrading two of the 

current SkyWest flights to 50-seat jets. 

It is believed that PIH can actually support three 50-seat jets daily to the 

Delta Air Lines hub at Salt Lake City. In fact, the replacement of the 

turboprops with regional jets will stimulate traffic and recapture portions of 

the passenger base that is now leaking to Idaho Falls.

Delta is already 

“adjusting” service 

in small 

communities served 

by turboprops.

This grant will assist 

Pocatello in moving 

up to jet service.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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The grant would be used primarily to support the initial replacement of 

two of the existing turboprops with 50-seat CRJ-200 airliners operated by 

Delta/SkyWest. The operator would agree not to reduce frequencies 

below three daily flights. (Two CRJ flights and one EMB-120, or three 

CRJs.)

Pocatello Regional Airport has no misconceptions about the future of 

regional air service. The financial requirements to support viable 

connectivity to the national and global air transportation systems are 

going up. Turboprops are being retired, and there are no replacements on 

the horizon. If the community waits, there is a very strong potential for the 

region to get completely cut off from access to the air transportation 

system.

Pocatello is a vibrant market that has seen enplanements decline entirely 

due to changes in the levels of air service provided. Capacity has been 

continuously reduced over the past five years, not due to market demand, 

but due to fleet changes within the Delta Air Lines system.

Historic data clearly indicate that the PIH market has the traffic to 

ultimately support at least three 50-seat jet flights to the Delta hub at SLC.

The community would ask favorable consideration of this grant request. It 

will incubate and rebuild traffic at PIH. Without the service upgrade made 

possible by this grant, the ultimate retirement of turboprops from the Delta 

fleet could render the market completely unserved by a network carrier.

Administration & Management of The Grant

The City of Pocatello will be the sponsor of the grant application, and will 

be responsible for its direct administration and for all liaison with the 

Department. 

The City of Pocatello will be the community partner, and will be 

responsible for mobilizing businesses in the region to support the 

upgraded service. It will be responsible for administration of the local hard 

dollar match.

Air Service Development Activities At PIH

Pocatello actively monitors air service opportunities. However, it 

understands the nature and the context of the airline industry in the 

region:

 Alaska/Horizon has retired its 37-seat turboprops, and now only 

has 70-seat jets and 74-seat turboprops as the smallest aircraft in 

their fleet. Combined with the fact that the airline’s connecting hub 

is at Seattle, and is relatively weak, this carrier is not in the 

foreseeable future a candidate for PIH service.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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 To support air service, PIH needs the traffic aggregation that a 

connecting hub provides. Other than the current service to Salt 

Lake City, there simply are no other airline connecting hubs in the 

region. The nearest are the United and Frontier hub operations at 

Denver. The challenge for this option is that the stage length –

461 miles is long for a market of the small size of PIH.

United has opted to serve the region from Idaho Falls, and has no 

interest in adding PIH to its route system. Frontier’s smallest 

aircraft at its Denver hub is 100 seats, far too large for the size of 

the PIH market.

 There is some very limited demand for service to Boise. 

Alaska/Horizon once routed aircraft across Idaho, including PIHBOI. Today, they have ceased such flying. SeaPort, an operator of 

9-seat, single engine turboprops has stated flatly they have no 

interest in operating at Pocatello.

The Airport will continue to review and analyze opportunities, but as a 

practical matter within the structure and context of the US airline industry

the future is connectivity with Delta at SLC. It is for this reason this grant 

is so important to the economy of the region.

Project Sponsor

The official sponsor of this project is the City of Pocatello.

The Air Service Development Committee, a coalition of local businesses 

and civit organizations, including the Greater Pocatello Chamber of 

Commerce, will be the community leaders in this project. They will be 

responsible for community outreach and management of the promotional 

activities to assure program success.

Please direct any correspondence regarding this matter to

Mr. David Allen 

Director

Pocatello Regional Airport

1950 Airport Way

Pocatello, Idaho 83205

(208) 234-6154
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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II. Pocatello & The Market

It’s A Matter of Airline Strategies

Unlike some rural 

communities, the 

passenger 

generation in the PIH 

region is not 

declining. 

But the capacity 

offered is falling, 

forcing consumers 

to use other airports.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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Schedule Them & The Passengers Will Come

2006 2007 2008 2009 2010 2011 (Est)

Capacity 143,762 116,778 102,860 86,108 83,802 75,422

Pax 66,099 51,020 54,270 51,193 42,193 37,974

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Pocatello Historic & Forecast 

Capacity & Passengers

There is sufficient 

traffic to support 

upgrade to CRJs.

In fact, if the 

increased capacity 

and higher 

consumer 

acceptance can 

recapture traffic to 

2006 levels, this 

program will 

generate 80%+ load 

factors.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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Fare Levels

Fares Are Not A Consideration In The Retirement of Turboprops

PIH TWF IDA

Rank Market

1 SEA $209.80 $93.91 $242.42

2 SLC $93.11 $88.70 $167.87

3 PDX $174.68 $128.56 $238.82

4 PHX $165.46 $144.85 $251.06

5 SAN $110.43 $165.77 $251.58

6 LAS $180.16 $48.23 $88.21

7 DEN $127.00 $154.89 $236.19

8 SFO $178.23 $156.89 $272.25

9 DFW $183.85 $189.06 $320.69

10 GEG $147.38 $105.91 $245.87

11 SMF $151.65 $217.75 $233.88

12 ATL $132.50 $251.54 $327.08

13 DCA $195.30 $128.60 $418.87

14 OMA $287.44 $118.67 $274.20

15 LWS $184.35 $119.14 $260.45

16 LAX $160.32 $169.31 $211.68

17 PSC $219.60 $78.98 $272.55

18 RNO $92.55 $147.72 $215.55

19 IAH $133.85 $177.17 $362.78

20 SNA $128.56 $159.44 $310.50

Total $171.06 $134.96 $241.25

Regardless of what 

PIH consumers are 

now paying, without 

a grant to incubate 

jet service, this is 

what the airport will 

eventually look like.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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The Pocatello Grant Proposal

Objective: Facilitate Turboprop Replacement

The reduction in E-120 service at PIH over the past five years is the result 

of fundamental fleet shifts within the Delta Air Lines system. If PIH does 

nothing, the reduced seats will allow the local ridership to completely 

atrophy.

The Airport and the community are requesting a grant in the amount of 

$500,000, matched by $80,000 hard dollars locally, to set up a revenue 

offset for the phase-in of 50-seat jet service at PIH.

The Airport has discussed this grant with both SkyWest and Delta Air 

Lines, which are supportive of its goals. There are no guarantees, 

however.

The program will be as follows:

Cost/Revenue Benchmarks

The Airport will negotiate with SkyWest/Delta in regard to the true, fullyallocated costs of operation of two 50-seat CRJ airliners on the 150-mile 

SLC-PIH segment.

 Cost: The net variance in flight sector costs between the E-120 

and the CRJ will be the “hurdle” which the intended increased 

ridership must generate. 

 Revenue: The increased revenue metric will be that generated by 

all flights in the PIH-SLC market.

From this, revenue levels necessary to meet the carrier’s agreed-upon 

costs plus a profit margin will be established.

Despite the net increase in seat capacity, the carrier will agree to retain at 

least three daily flights in the SLC-PIH market. While this is relatively low, 

the implementation of jet service can be expected to recapture traffic now 

using other airports in the region.

Program Management

The Airport will monitor traffic on the new flights on a daily basis, and 

liaise with the community partners to assure that the service has wide 

recognition in the region.

The numbers are 

compelling. 

If the implementation 

of two jet flights in 

the market (along 

with one turboprop) 

can restore traffic to 

that of five years 

ago, the net load 

factor will be in 

excess of 83%.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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Revenue Determination

The service upgrade will be expected to increase the total PIH-SLC 

market. Therefore the revenue determinations will be made comparing 

the total revenues generated by PIH with those in the year-prior period. 

It can be logically expected that the new service may not be profitable 

from the start. The grant will be used to make up shortfalls, computed at 

the end of each three-month period. 

Objective: Net-New Stimulation

The objective is to restructure service to stimulate more ridership at PIH. 

For example, the simple replacement of one E-120 with 50-seat RJ will 

result in a 44% increase in seats. For the program to be deemed a 

success, the net new ridership in the market must be in excess of this 

figure.

The program offers opportunity for the Delta Air Lines system. The jet 

service will potentially recapture traffic now driving to Idaho Falls, Delta 

has less than 50% market share at IDA, and therefore the leakage from 

PIH to IDA does not all board Delta flights. But every single passenger recaptured at PIH will be a Delta passenger.

The raw numbers are compelling. The replacement of two of the 30-seat 

turboprop flights with 50-seat jets will generate a total of approximately 

81,000 annual seats in the PIH-SLC market. If this can restore the traffic 

levels of 2006 (66,099 passengers) the net load factor will be in excess of 

80%.

The additional seats and the attractiveness of jet service can recapture 

much of the passenger base now using Idaho Falls.

The Alternative: Losing Network Airline Service Completely

As was demonstrated with the Delta Air Lines announcement about 

“adjusting” service at 24 rural airports, there are very few alternatives to a 

local airport when the incumbent decides to pull out.

In the case of PIH, this grant will allow the Airport to recapture sufficient 

passenger traffic to support additional jet lift and capacity that will deliver 

sufficient system revenue to Delta to avoid the Airport suffering 

“adjustments.”

The situation is just that serious. This grant will re-establish ridership that 

will make Pocatello a strong point on the Delta system and will keep the 

region connected to the national and global air transportation systems.

This is not a drill. 

Fleet changes are 

threatening service 

at PIH.

This grant will 

proactively re-build 

traffic levels to 

assure that Pocatello 

does not lose 

network carrier 

access.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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IV. Grant Administration

Majority Of Funds Are For Risk-Offset

The higher sector costs of operating a 50-seat jet between SLC and PIH 

also bring additional seats and a more attractive consumer choice to the 

market.

These dollars are joined by $20,000 in-kind support, making the package 

to the carrier $600,000.

The Program Administration

Pocatello Regional Airport will be directly responsible for all liaison with 

the Department of Transportation in regard to the program. The 

community partners will be responsible for directing all regional 

promotions and marketing efforts to support the new capacity.

 PIH will monitor passenger traffic and keep records to track 

increases in ridership.

 The carrier will provide passenger revenue data for local PIH-SLC 

traffic as well as system feed traffic. This will determine the 

change in revenue contribution the new service is generating.

 At the end of each three-month period, any shortfall between the 

agreed-upon revenue levels and the costs of operation will be 

settled.

Revenue 

Guarantee

Marketing 

Program Total

PIH Local 

Funds $75,862 $4,138 $80,000

Grant 

Program $474,138 $25,862 $500,000

TOTAL $550,000 $30,000 $580,000

In addition to hard 

dollars, the 

community and the 

Airport offer a range 

of non-cash 

incentives to attract 

airlines.
Application of Pocatello Regional Airport

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Marketing & Advertising Support

Pocatello is not an expensive media market. Therefore, the dollars 

allocated to the support of the program will go far to assure that all 

sectors of the regional economy are aware of the new service.

Basically, the community partners will approach the marketing of the 

program based on the following:

 Print media – weekly advertisements starting 60 days from start of 

service upgrade, focusing on the fact that jet service is coming to 

PIH.

 Direct contact – key employers in the region such as Union Pacific 

will be contacted on a routine basis to assure that a larger share 

of their travel dollars are spent using PIH.

 Civic meetings – the Airport and the community will present the 

benefits of new upgraded service at civic meetings. 

Post-Grant Support

At the end of the grant period of one year from the implementation of both 

jet flights, the service will continue to be promoted by both the Airport and 

the Chamber of Commerce.

It is noted that the re-capture of traffic at PIH will be the main driver of 

new passengers at PIH. Therefore, during and subsequent to the grant 

period, the focus of marketing efforts will be on the following:

 The comparative cost-efficiency of using Pocatello Regional 

Airport.

 Key connectivity destinations and fares offered.

 Routine civic meetings and events promoting the global 

connectivity offered by Delta via its SLC hub and the rest of its 

route system.
Application of Pocatello Regional Airport

The Small Community Air Service Development Program OST – 2011 - 0119

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V. Summary of Application

The Pocatello Regional Airport and its community partners would 

summarize this proposal, and its importance as follows:

 Delta Air Lines and Its SkyWest partner will retire EMB-120 

turboprops in the future. There are no replacements, and when 

this occurs there is a possibility that service to PIH will be ended.

 This proposal will implement jet service ahead of the 

turboprop retirement. The jet service can be supported with the 

traffic generated at PIH. 

 The proposed upgrade will recapture leakage to other 

airports. As the traffic history clearly proves, cuts in capacity have 

caused much of the traffic base at Pocatello to use other airports. 

 It represents an opportunity for the Delta Air Lines system. All 

of the traffic this program will re-capture will be to the Delta 

system. Much of the current leakage to Idaho Falls uses other 

carriers. Therefore, this program represents net-new system 

revenue for Delta

 The program is viable and meets the context of the future 

airline industry. This program postures Pocatello for the future. 

Being pro-active, it addresses a near-term challenge in the future, 

and does so with results that are entirely consistent with the intent 

of Congress in establishing the Small Community Air Service 

Development Grant Program.

Pocatello Regional Airport appreciates the Department’s time in 

considering this application.

This grant will 

assure that PIH air 

service grows and 

prospers in the 

future.