# Application Under the Small Community

Air Service Development Program

Docket DOT-OST-2012-0069

Legal sponsor: City of Redmond, Oregon c/o Redmond Municipal Airport DUNS: 09-720-4072 Tax ID: 93-6002242 Congressional District Code: OR-02

Contact: Kim Dickie, CM Redmond Municipal Airport

· 2522 SE Jesse Butler Circle #17

· Redmond, OR 97756-8643

(541) 504-3496

· kim.dickie@ci.redmond.or.us 

# Redmond Municipal Airport Redmond, OregonApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport Table of Contents

Prepared by 

# Table of Contents

Page

Application Highlights ............................ ............................1

Air Service Not Keeping Pace With Growth .......... .....................................1 Solid Strategic Plan with Significant Community Com mitment ..................1 Experienced and Successful Partnership ............ ........................................2 Material Benefits to an Isolated Region ........... ..........................................2


### Air Service Environment ........................... ..........................3

Geographically Isolated Catchment Area ............ ......................................3 Long and Difficult Drive to Alternate Airports..... .......................................3 Rapidly Growing Population ........................ .............................................4 Robust Economy .................................... ..................................................4 

### Air Service – Existing and Historical ............. .....................6

Existing Air Service ..............................

................................................... ..6 Historical Air Service ............................

................................................... ..6 Past Air Service Development Efforts .............. ...........................................8 

### Air Service Needs and Deficiencies................. ...................9

Underserved Market ................................ .................................................9 Market Need/Demand for Direct Flights to Southern C alifornia .................9 Higher Than Average Airfares to Los Angeles ....... ................................... 10 

### Strategic Plan – Air Service ...................... ........................11

Project Goal ......................................

................................................... .. 11 Proposed Air Service .............................. ................................................. 1 1 Detailed Market Analysis .......................... .............................................. 11 Alternate Plan ....................................

................................................... . 13 Previous SCASDP Goals Successfully Achieved........ ................................. 13 

### Strategic Plan – Implementation and Funding ....... ........15

Public-Private Partnership......................... ............................................... 15 Incentive and Support Plan ........................ ............................................. 15 Strategic Plan Funding ............................ ................................................ 19 Project Continuation and Sustainability ........... ........................................ 19 

### Schedule and Monitoring ........................... ......................20

Strategic Plan Schedule and Milestones ............ ...................................... 20 Strategic Plan Monitoring Program ................. ........................................ 21 

### Appendix A. Marketing Plan ........................ ....................22

Target Audience ...................................

.................................................. 22 Air Service Support Program – Los Angeles ......... .................................... 22 Marketing to Central Oregon’s Business Community .. ............................ 25 

### Appendix B. Community Support ..................... ...............26

Government ........................................

................................................... 26 Public-Private Partnership......................... ............................................... 26 Businesses and Organizations ...................... ........................................... 26Application Under the Small Community Air Service Development Program City of Redmond/Redmond Municipal Airport

Application Highlights 

### 1



# Application Highlights

he City of Redmond, the sponsor of this Small Commu nity Air Service Development Program (SCASDP) grant application, in cooperation with its private partners, is requesting $500,000 in federal assistance to implement a $1,235,000 air service initiative. The City of Redm ond, Economic Development for Central Oregon, and the Central Oregon Visitors Ass ociation have formed a publicprivate partnership. This partnership has a history of air service success, including a 2003 SCASDP grant award. This application is reques ting assistance with a different project and goal.

The goal of this grant application is to acquire no nstop southern California service. To achieve this goal, the Strategic Plan targets no nstop service by American Airlines, Delta Air Lines, or United Airlines to Los Angeles International Airport.



### Air Service Not Keeping Pace With Growth

The population and business activity in Central Ore gon has been growing rapidly, putting strain on transportation in the region. The population in Central Oregon is growing over three times faster than the US average . Plus, over three million people visit Central Oregon annually. The loss of Alaska A irlines’ nonstop Los Angeles
service in 2010 combined with other cuts in service during the recession and Allegiant Air’s recent announcement of ceasing Redm ond service has caused Redmond Municipal Airport to fall short of meeting market demand and the growing needs of the population.

Without nonstop service, Central Oregon travelers d estined for southern California
are forced to connect or drive over mountainous roa ds to alternate airports, creating significantly longer travel times and high er travel costs. Because of this, travel to Los Angeles International Airport has dro pped by over 50 percent since the loss of nonstop service. Reinstating nonstop southe rn California service is a top priority of the Central Oregon community.



### Solid Strategic Plan with Significant Community Com mitment

The Strategic Plan for meeting the project goal is sound, sustainable, and supported by the Central Oregon community. The Strategic Plan is supported by the following:



### • For year ended June 30, 2010, an average of 33.3 Proven market : passengers daily each way or over 24,000 origin and destination passengers annually were destined for Los Angeles a nd used Alaska’s once 

# T This section contains:



### • Project goals



### • Description of the Strategic Plan



### • Highlights of the grant applicationApplication Under the Small Community Air Service Development Program City of Redmond/Redmond Municipal Airport

Application Highlights 

### 2

daily, nonstop service. This passenger volume can e asily sustain one roundtrip daily in a 44- to 50-seat regional jet.



### • To support the Strategic Plan, the Tested and proven support program : risk sharing plan proposed by the public-private pa rtnership includes a community-funded marketing campaign, an Airline Tra vel Bank®, fee waivers, and a revenue guarantee funded by the US D epartment of Transportation (DOT) and the Central Oregon communi ty.

• Sixty Non-airport sources funding 36 percent of cash requ irement : percent of total project funds will be contributed by the Central Oregon community including: $300,000 cash from non-airport sources, $25,000 from the Redmond Municipal Airport, and in-kind ser vices (i.e. Airline Travel Bank® and program administration) of $365,00 0 by publicprivate partners.



### • The schedule proposed will ensure timely use of Realistic timetable : grant funds.



### Experienced and Successful Partnership

The City of Redmond/Redmond Municipal Airport, Cent ral Oregon Visitors Association, and Economic Development for Central O regon are a proven partnership. These partners have experience with ai r service development efforts and effectively used funds from a 2003 SCASDP award to add eastbound air service to Central Oregon. Shortly after grant award in lat e 2003, Redmond Municipal Airport secured two daily roundtrips by Delta Air L ines to Salt Lake City International Airport. Aided by a $626,000 Airline Travel Bank®, the service was a quick success and Delta added a third roundtrip within the first year. At the end of the first year of service, because of the instant success, the rev enue guarantee funded by the US DOT through the SCASDP was not needed and was retur ned for alternate uses.



### Material Benefits to an Isolated Region

Access for Central Oregon’s remote population excee ding 230,000 to larger centers of air service entail a difficult drive through pre dominantly two-lane mountain roads, which necessitate the use of traction tires during much of the winter. Central Oregon is one of the largest metro areas in the US not on an interstate. With a growing population and thriving business community, the air service improvement plan proposed in this grant application will benefi t a broad segment of the traveling public, including business, educational institution s and tourism. 

## Non-airport sources are funding 36 percent, $300,000, of the cash requirement. Sixty percent of the total project funds will be contributed by the Central Oregon community.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport Air Service Environment 

### 3



# Air Service Environment

his section provides Central Oregon’s community pro file highlighting the economic and demographic attributes of the Redmond Municipal Airport catchment area. It identifies the businesses, insti tutions, government branches, and population that will benefit from imp roved access to the national air transportation network.



### Geographically Isolated

Catchment Area

Redmond Municipal Airport serves a geographically isolated area east of the Cascade Range. The core of the catchment area is made up of Crook, Deschutes, Jefferson, and Wheeler counties. In addition, portions of Grant, Harney, Lake, and Klamath counties also use Redmond Municipal Airport. Overall, the catchment area ( Exhibit

2.1 ) is 21,411 square miles, larger than Vermont and New Hampshire combined, and includes a population of 232,800, the majority of whom live in Deschutes County.



### Long and Difficult Drive to Alternate Airports

Based on a study completed by Mead & Hunt for calen dar year 2011, an estimated 22 percent of Redmond Municipal Airport catchment a rea passengers, almost 120,000 origin and destination passengers annually, use Portland International Airport and an additional 13,125 annual passengers use the Eugene Airport rather than the local airport. From Redmond, traveling to Eugene requires a 136-mile drive (approximately three hours), and driving to Portlan d requires a 142-mile drive (approximately three hours, 15 minutes) ignoring th e impact of weather and major traffic congestion. Both alternatives entail a diff icult drive through predominantly two-lane mountain roads, which necessitate the use of traction tires during much of the winter. With such a geographically large catchm ent area, drive times to all three airports vary; however, driving to Portland or Euge ne requires an unacceptable time outlay, expense, and risk passing over the Cascade Range. 

# T This section contains:



### • Description of Central Oregon in relation to air
service

Exhibit 2.1 Airport Catchment Area and Proximity to Competing AirportsApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport Air Service Environment 

### 4



### Rapidly Growing Population

From 2000 to 2010, the Central Oregon population (m easured by Deschutes County) grew 36 percent, triple Oregon’s 12 percent growth and the nation’s 10 percent growth ( Table 2.1 ). Most of Central Oregon’s growth is due to inmigration of new residents drawn by predominantly s unny weather and year-round recreational activities that have made Central Oreg on a top tier place to live and play in the US. These same attributes have resulted in a number of smaller businesses (particularly in the high technology sec tor) to relocate or create start-up
businesses in the catchment area.



### Robust Economy

Central Oregon is focused on economic and business development and tourism expansion. Over the past decade, the region has see n strong growth in professional and business services, education and health service s, and financial activities. Other areas of strength include pharmaceutical research, software, electronics and brewing. With a growing tourism base, the leisure a nd hospitality sector has also experienced strong year over year growth. The area’ s key employers dependent on
air service are shown in Table 2.2 , next page.



### Leisure, Hospitality, and Second Homes

Central Oregon has become a year-round destination resort area for visitors and
tourists worldwide. It is estimated that over 3.2 m illion overnight visitors come to Central Oregon annually. The area served by Redmond Municipal Airport offers premiere skiing (Mt. Bachelor, Willamette Pass, and Mt. Hoodoo), golfing (over 30 courses, some ranked among the top 10 in the US), o ther numerous outdoor activities, and world-class destination resorts (in cluding 12 large scale developments). Over $800 million in resort developm ent has been completed in Central Oregon in the past 10 years. In addition to Central Oregon vacationers, thousands of people own second homes in the area.



### Financial

Financial firms generate a significant amount of ai r travel; few small communities have a financial sector as strong as Central Oregon . The region supports 19 banks, credit unions, savings and loan organizations with a total of 79 branch locations. Three institutions, Bank of the Cascades, Mid-Orego n Federal Credit Union, and High Desert Bank, are headquartered in the area, an d an additional five organizations are headquartered elsewhere in Oregon . Reflecting higher than average deposit wealth, Central Oregon supports a s ignificant number of financial planning and investment firms. Table 2 .1 Population Growth Comparisons

Rank Oregon County Population

Growth 2000

- 10 2010

- 20 1 Deschutes 36% 29% 2 Polk 21% 15% 3 Washington 19% 30% 4 Yamhill 17% 14% 5 Linn 14% 8% 6 Jefferson 13% 10% 7 Columbia 13% 10% 8 Jackson 12% 10% 9 Multnomah 12% 4% 10 Clackamas 11% 13% OREGON 12% 12% US 10% 10% Source: Woods & Poole Economics, Inc.



## Redmond Municipal Airport’s air service has struggled to keep up with population growth and the robust economy.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport Air Service Environment 

### 5

High Technology

Numerous companies from the Silicon Valley, southern California, Portland-Vancouver Metropolitan Area, and Puget Sound have relocated or expanded in Central Oregon escaping skyrocketing utility, wage and other operating costs. Many of these firms are smallbut extremely innovative, producing nichemarket products from semiconductors to
software and medical instruments to recreational equipment. These firms have strong ties to southern California, particularly the Orange County area. As air service improves, these businesses will be better equipped to access their clients, customers, suppliers, and
other facilities.



### Local Government, Education, and

Healthcare

Not only will improved air service be used by growing tourism, financial, and high-tech industrie s, it will serve a broad spectrum of government and institutional employees as well. These sectors are growing to support the needs of the expanding population. In t he past decade hospitals have spent over $120 million in new construction. The re gion is home to Oregon’s fastest growing higher education institutions, Central Oreg on Community College (COCC), which was among the 50 fastest growing colleges in the country over the past five years and OSU Cascades, which grew at a rate of 54 percent over the past five years. COCC is just completing $42 million in campu s expansion projects, and OSU Cascades is embarking on a $111 million campaign to become a full branch campus of Oregon State University. Table 2 .2 Large Air Service Dependent Employers Leisure/Hospitality Black Butte Ranch JELD-WEN Development, Inc. Kah-Nee-Ta Mt. Bachelor, Inc. Pronghorn Sunriver Resort The Riverhouse Financial/Services Bank of the Cascades Clear Choice Health Plans Community First Bank High Desert Bank Isky Lifewise Healthplan Manufacturing/High-Tech

Apple Bend Research, Inc. BrightWood Corporation Columbia Aircraft Manufacturing Contact Industries Deschutes Brewing Edge Wireless Facebook JELD-WEN Windows & Doors Keith Manufacturing Les Schwab Tire Centers Nanometrics PCC Structurals Woodgrain Millwork Healthcare/Education Bend Memorial Clinic Mt. View Hospital District Oregon State University Pioneer Memorial Hospital St. Charles Medical CenterApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Air Service – Existing and Historical 

### 6



# Air Service – Existing and Historical

his section presents a record of existing and histo rical air service at Redmond Municipal Airport. The existing air service discuss ion highlights: service frequency, direct and connecting destinations, and equipment types. The historical air service section includes a descripti on of historical destinations, traffic levels, service providers, and any extenuating fact ors that might have affected traffic in the past or that can be expected to influence se rvice needs in the near to intermediate term. Redmond Municipal Airport’s past air service development
efforts are also covered in this section.



### Existing Air Service

Four airlines served Redmond Municipal Airport duri ng the first half of 2012: Allegiant Air, Alaska Airlines, Delta Air Lines, an d United Airlines ( Table 3.1 ). Allegiant is suspending service in the fall. Allegi ant offers twice weekly service to Phoenix-Mesa, AZ (seasonally) operated with MD-80 a ircraft. However, Allegiant recently announced that effective August 2012 they will no longer serve the Redmond market. Alaska operates 76-seat turboprops to Portland and Seattle. Delta has twice daily service to Salt Lake City with the Canadair Regional Jet 200. United operates turboprop service to Portland, regional je ts to Denver, and a combination of turboprops and regional jets to San Francisco. D enver, San Francisco, Seattle, and Salt Lake City offer good connecting opportunities; however, high load factors on eastbound flights have caused the market to be sign ificantly capacity constrained.

Table 3.1 Current Air Service

Hub Carrier Aircraft Weekly Departures Weekly

Seats Denver, CO United CRJ-200 13 650 Phoenix-Mesa, AZ* Allegiant MD-80 2 300

Portland, OR Alaska Dash 8 Q400 20 1,520

United EMB-120 21 630 Salt Lake City, UT Delta CRJ-200 14 700 San Francisco, CA United EMB-120/CRJ-200 21 910 Seattle, WA Alaska Dash 8 Q400 20 1,520

Total 111 6,230 Source: Diio Mi; Note: June 2012; * Seasonal servic e June-August; G4 ceasing service effective August 2012



### Historical Air Service

Air service at Redmond Municipal Airport since 2008 has markedly declined. While the number of nonstop destinations has changed only slightly, the loss of Los Angeles International Airport service in 2010 was a major blow to the Airport’s 

# T This section contains:



### • Description of existing air
service



### • Synopsis of historical air
service



### • Description of air service development effortsApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Air Service – Existing and Historical 

### 7

ability to serve the needs of remote Central Oregon . Departures and seats have been declining since 2007/2008.



### Destinations, Service Providers, and Traffic Levels

Historically, Redmond Municipal Airport offered ser vice to Portland, San Francisco, and Seattle. Little growth in air service occurred from the 1990’s through 2004. From 2004 through 2008, Redmond Municipal Airport’s air service improved significantly with service gains to Denver, Las Veg as, Los Angeles, and Salt Lake City ( Table 3.2 ). Since 2008, however, the Airport has suffered se veral air service losses with Alaska Airlines pulling their Los Angeles serv ice in 2010 and Allegiant Air ceasing Las Vegas service in 2012. Allegiant also r educed the Phoenix-Mesa service
to summer seasonal service and has announced the se rvice will be totally withdrawn after August 2012. At the same time many carriers r educed departures with significant reductions by both Alaska and United Ai rlines at Portland and Seattle. Overall, since the peak in July 2007 departures hav e decreased by 34 percent. Seats peaked year ended June 2008 and decreased 18 percen t by 2012 ( Exhibit 3.1 ).

Table 3.2 Historical Destinations and Service Provi ders

Destination Airline Annual Departures 2004 2005 2006 2007 2008 2009 2010 2011 2012 Denver, CO United 34 13 8 211 365 365 430 Eugene, OR Alaska 151 364 174 55 155 Las Vegas, NV Allegiant 89 108 106 104 102 36 Los Angeles, CA Alaska 299 720 525 365 233 Phoenix-Mesa, AZ Allegiant 20 106 105 56 26

Portland, OR Alaska 1,911 2,012 1,833 1,814 1,606 1,040 1,044 1, 041 1,044

United 1,755 1,756 1,693 1,732 1,628 1,401 1,294 1, 083 1,096 Salt Lake City, UT Delta 632 908 815 722 687 694 699 694 San Francisco, CA United 732 864 1,080 1,086 1,086 877 780 1,071 1,006 Seattle, WA Alaska 1,629 1,737 1,740 1,503 1,288 1, 039 1,039 1,039 1,043 Total departures 6,027 7,001 7,738 8,136 7,165 5,88 7 5,813 5,456 5,470 Total seats 205,590 248,913 295,865 356,345 359,305 339,714 349,454 321,020 312,852

Source: Diio Mi

Exhibit 3.1 Redmond Municipal Airport Seat/Flight T rends

3,000 4,000 5,000 6,000 7,000 8,000 9,000

150,000 200,000 250,000 300,000 350,000 400,000 450,000

2005 2006 2007 2008 2009 2010 2011 2012FlightsSeats

12-Months Ended Seats FlightsApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Air Service – Existing and Historical 

### 8

Extenuating Factors That Have Affected Air Service

Several factors have affected air service at Redmon d Municipal Airport. First, geographic location has always been a major influen ce. Located in Central Oregon on the east side of the Cascade Range, the Airport serves a vast area. With no major airports nearby and Portland International Airport over 140 miles away on the other side of the mountains, the Airport has succeeded in retaining 78 percent of its catchment area potential. However, the modest catch ment area size has limited the amount of air service available to this isolated po pulation. While Alaska seats to Portland and Seattle have remained relatively stabl e, time-of-day travel options and connecting opportunities have suffered as 76-seat a ircraft replaced smaller aircraft.

Another factor is the explosive economic developmen t and population growth. Although this resulted in much needed air service g ains from 2004 to 2008, improvements failed to keep pace with market demand s and service losses during the recession result in a broad based need for impr oved air service.



### Past Air Service Development Efforts

Over the last three years, the City of Redmond, Cen tral Oregon Visitors Association, and Economic Development for Central Oregon have be en active in air service development efforts ( Table 3.3 ). Despite those efforts, air service has been declining with the loss of Los Angeles and Las Vega s service in the last two years and Phoenix-Mesa service by the end of the summer. To counter this, the community has been very active meeting with airline s seeking replacement nonstop service to one of its top markets, Los Angeles.

Table 3.3 Past Air Service Development Efforts
Year Initiative Result 2009 Quarterly Performance Monitor Completed; updat ed on market performance

2010 Delta Air Lines Air Service Performance Analysis Results shared with Delta and issues rectified

True Market Estimate - YE 6/30/10 (retention/diversion study) Completed; 24% of catchment area diverting to alternate airports 2011 United Airlines' Headquarter Meeting RDM-DEN 2 RT added seasonally in 2012

2012 True Market Estimate - CY 2011

(retention/diversion study) Completed; 22% of catchment area diverting to alternate airports Allegiant Air Conference Completed; updated on mark et performance

ACI-NA JumpStart Air Service Development Program (meetings with AS, DL, and UA) Discussed potential LAX service with carriers; need incentive program for headquarters

meetingsApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Air Service Needs and Deficiencies 

### 9



# Air Service Needs and Deficiencies

his remote Central Oregon community has a unique se t of air service needs and deficiencies due to their geographic location a nd rapidly growing population. The Air Service Needs and Deficiencies section identifies the deficiencies in air service at Redmond Municipal Ai rport and what air service improvements are needed to correct these deficienci es. This section demonstrates that Central Oregon is underserved, and the average airfares in this community are higher than other comparable communities to one of Central Oregon’s top destinations, Los Angeles.



### Underserved Market

Like most airports of its size, Redmond Municipal A irport has a number of air service
needs. The most critical need for both business and leisure travelers in Central Oregon is nonstop service to southern California. F rom 2006 to 2010, Alaska Airlines provided nonstop service to Los Angeles In ternational Airport. When Alaska operated nonstop Los Angeles service, Los Angeles a ccounted for approximately 75 percent of the combined Los Angeles Basin origin an d destination traffic or approximately 41,600 passengers. When nonstop servi ce was eliminated, Los Angeles origin and destination passengers dropped t o 40 percent of the combined airports or approximately 20,000 passengers. With n onstop service in the Los Angeles market, more than half of the traffic that previously used other Los Angeles Basin airports gravitated to the nonstop service. T his is compelling evidence of the importance of nonstop service to southern Californi a.



### Market Need/Demand for Direct Flights to Southern California

Access to the southern California market represents a critical market for the Central Oregon region. As noted, much of the region's growth has been fueled by in-migration, and the leading state for in-migration is California (see Exhibit 4.1 ).

Southern California is a leading metro area for in-migration from California to Central Oregon. As a result, there is strong demand for family, 

# T This chapter contains:



### • Description of Central Oregon’s air service
needs and deficiencies

Exhibit 4.1 Migration to Central OregonApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Air Service Needs and Deficiencies 

### 10

business and leisure travel; however, this demand i s somewhat elastic. Without nonstop service, multiple connecting flights can be logistically too complicated or financially too costly, and demand drops - people s imply choose not to travel. A good example is the option of using connecting flig hts to southern California through San Francisco (SFO), an option not often us ed because of frequent and significant weather and congestion delays at that a irport.

There are also several companies in the area with c lose connections to parent or headquarter locations in southern California such a s Microsemi (semiconductor manufacturing), Accelrys (drug discovery software), CV International (aerospace), Sony (gaming software) and Sunriver Resort (Oregon' s largest destination tourism development). Additionally, a significant number of Oregon employers have strong
business connections to southern California with ma jor customers and suppliers.

Other unique demand in the region is generated by a disproportionately large percentage of the workforce that is self-employed. Deschutes County is more than 50 percent higher than the national average. Accord ing to the US Census (American Community Survey), that equates to more than 11,000 members of the workforce and 13,436 for the three-county region. Many of the se independent contractors work outside the area and anecdotally it is underst ood that a healthy percentage commute (or would like to) on a weekly or monthly b asis to southern California. Without nonstop service, these commuting patterns f or professionals become barriers to travel. There are too many variables wi th connecting service due to weather, mechanical or other delaying issues which discourage air travel.



### Higher Than Average Airfares to Los Angeles

The Order Soliciting Community Proposals indicated that the US DOT will compare the local community’s airfares to the national aver age airfares for all communities using the Bureau of Transportation Statistics (BTS) database. The BTS report for calendar year 2011 shows Redmond Municipal Airport with an average gross roundtrip fare of $352, slightly lower than the nat ional average of $364. Allegiant Air’s low-fare point-to-point service and Alaska Ai rlines’ low-fare service to the north significantly reduce Redmond Municipal Airpor t’s average fare.

However, Redmond Municipal Airport’s fare to one of its top five destinations, Los Angeles, is markedly higher than the average. For s tage lengths of 1,000 miles or less, Redmond Municipal Airport’s fare exceeds the averag e by 36 percent (source: Diio Mi calendar year 2011). When Redmond had nonstop service to Los Angeles, the fare was 14 percent lower between Redm ond and Los Angeles. 

## The most critical
need for both
business and leisure
travelers in Central Oregon is nonstop
service to southern
California.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Air Service 

### 11



# Strategic Plan – Air Service

he previous section, Air Service Needs and Deficiencies , identified nonstop southern California service as Central Oregon’s pri mary air service need. This section establishes the project goal and lays out a plan for its achievement. An in-depth analysis of the proposed air service is summarized in this section along with an alternate plan. Because Redmond Munic ipal Airport participated in two prior grant awards, a summary of those projects and how they differed from and compliment this application is presented at the end of this section.



### Project Goal

The goal of Redmond Municipal Airport’s Strategic P lan is to acquire nonstop southern California service to adequately serve the business and leisure markets in Central Oregon, improve the quality of service to a top priority market, and continue economic development in Central Oregon.



### Proposed Air Service

Central Oregon would best be served to southern Cal ifornia with nonstop service to Los Angeles International Airport provided by Ameri can Airlines, Delta Air Lines or United Airlines. American has had recent growth at Los Angeles International Airport and has a commitment to continuing to grow their cornerstone hubs. American and their codeshare partners would provide quality service between the two communities and would provide connecting opport unities to 67 domestic and
international destinations. Delta and their codesha re partners offer connecting opportunities to 58 domestic and international dest inations, and United and their codeshare partners offer service to 83 domestic and international destinations from Los Angeles International Airport.



### Detailed Market Analysis

History speaks for itself with regard to the market analysis for nonstop southern California service. Southern California service is not new to Central Oregon. From August 2006 to August 2010, Alaska Airlines provide d nonstop service between Redmond Municipal Airport and Los Angeles Internati onal Airport with the 76-seat Bombardier Q400 aircraft.

Exhibit 5.1 , next page, provides the number of onboard passeng ers and the average load factor on a 12-month ended basis for t he last two years of service. 

# T This chapter contains:



### • A Strategic Plan for meeting Central Oregon’s air service
needs and deficiencies



### • A discussion of how the new goal materially
differs from Redmond Municipal Airport’s previously awarded projects



### • Alternate plan to meet the goalApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Air Service 

### 12

Onboard passengers averaged over 20,000 annually. L oad factors continued to improve averaging over 80 percent for most of 2010.

Exhibit 5.1 Alaska Airlines’ RDM-LAX Onboard Passen gers and Load Factor Performance

Source: Diio Mi

In 2010, Horizon Air, the regional operator for Ala ska Airlines at Redmond Municipal Airport, moved to an all capacity-purchas e agreement (CPA) with Alaska. What that meant to markets served by Horizon is a s hift from Horizon conducting their planning efforts into new and existing market s to Alaska making those decisions. One of the first major shifts by Alaska was to cease north-south service into Los Angeles International Airport from many sm aller markets. From 2010 to 2011, many markets lost service including: Arcata, CA; Boise, ID; Flagstaff, NM; Redding, CA; and Reno, NV. Alaska’s current focus a t Los Angeles International Airport is primarily international with multiple Me xico destinations.

While the cessation of Redmond-Los Angeles service was largely due to Alaska’s shift in operations at Los Angeles International Ai rport, it left Central Oregon with a major deficiency in air service to the south. For y ear ended June 30, 2010, an average of 33.3 passengers daily each way or over 2 4,000 origin and destination passengers annually were destined for Los Angeles a nd used Alaska’s once daily, nonstop service. Historically proven passengers wou ld support a 44- or 50-seat regional jet. Historically local traffic just to Lo s Angeles would be sufficient to support a single roundtrip to Los Angeles. The avai lable connecting opportunities
would further enhance demand for the service.

Although projected passengers are robust, it is unl ikely an airline will breakeven the first year of service due to ramp-up and service aw areness. For purposes of estimating the shortfall, it is assumed that one da ily roundtrip will be provided with the Embraer Regional Jet 140. For the first month o f service, it is estimated that 60 percent of the projected passengers in a mature mar ket will be attained. It is estimated that the market will reach full maturity by the ninth month of service. The 50 60 70 80 90

10,000 15,000 20,000 25,000 30,000

2009 2010Load factor %Onboard passengers

12-Months Ended Onboards Load Factor



## Historically proven passengers would support a 44- or 50- seat regional jet.
Local traffic to Los Angeles would be sufficient to support a single roundtrip. The available connecting opportunities would
further enhance
demand for the
service.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Air Service 

### 13

ramp-up period is speculative and may differ depend ing on the effectiveness of the marketing campaign.

To calculate the effect of the ramp-up period on ne t profit, Table 5.1 shows revenue by month with a June 2013 start date, the a ssociated cost per month, and
the net shortfall. Revenue was estimated based on t he Redmond-Los Angeles average fare for calendar year 2011. With a first y ear estimated cost of $4.0 million, the service will incur an estimated shortfall of $6 42,261.

Table 5.1 Service Ramp-Up/Start-Up Period

Month Estimated

O&D Pax RampUp % Ramp-Up

Adj. Pax Load

Factor Revenue ERJ

- 140 Estimated Cost Net

Surplus/ Shortfall June 2,124 60.0% 1,274 48% $189,897 $325,829 ($135,932) July 2,348 64.4% 1,513 55% $225,484 $336,690 ($111,206) August 2,341 68.9% 1,613 59% $240,267 $336,690 ($96,423) September 1,866 73.3% 1,369 52% $203,934 $325,829 ($121,895) October 2,198 77.8% 1,709 63% $254,676 $336,690 ($82,014) November 2,225 82.2% 1,829 69% $272,584 $325,829 ($53,245) December 2,460 86.7% 2,132 78% $317,706 $336,690 ($18,984) January 2,180 91.1% 1,986 73% $295,967 $336,690 ($40,722) February 2,049 95.6% 1,958 79% $291,791 $304,107 ($12,316) March 2,347 100.0% 2,347 86% $349,703 $336,690 $13,013 April 2,188 100.0% 2,188 83% $325,957 $325,829 $128 May 2,376 100.0% 2,376 90% $354,024 $336,690 $17,334 Total 26,703 N/A 22,295 69% $3,321,990 $3,964,250 ($642,261) Source: O&D PAX = Diio Mi AS-LAX segment pax 6/30/1 0 + 10% add-on connect traffic; Revenue based on Di io Mi average RDM-LAX fare CY 2011; Note: Ramp-up = 60 percent fi rst month increasing up to 100% in first nine month s; Load factor capped at 90% in individual months.



### Alternate Plan

If American, Delta or United do not provide nonstop service to Los Angeles International Airport by December 31, 2013, alterna te carriers will be approached for service to a Los Angeles Basin airport includin g Burbank, Long Beach, Ontario, and Orange County or San Diego. While nonstop servi ce to Los Angeles International Airport is preferred, any service to a Los Angeles Basin airport or San Diego will fulfill the goals of this grant applicat ion.



### Previous SCASDP Goals Successfully Achieved

Building on the community’s previous air service su ccesses, this project will alleviate the most pressing air transportation constraints fa cing Central Oregon. Table 5.2

, next page, compares this application with prior SCA SDP projects. This project clearly has different goals than the previous SCASDP grant projects.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Air Service 

### 14

Table 5.2 SCASDP Project Comparisons

Year Goals Plan Outcome Status

2003 1) Improved eastbound

service; 2) Reduce passenger leakage to PDX Delta Air Lines’ Salt Lake City service Salt Lake City service started May 2005. Delta added a third trip without support. DOT-funded revenue guarantee not used. Complete / closed out

2005 1) Develop a self-help air

service development program; 2) Implement the air service development program 1) Develop an air service tool kit; 2) Complete a market analysis; 3) Determine a strategy for improving air service Determined Central Oregon can sustain additional capacity to San Francisco. United Airlines upgraded turboprop service to regional jets in June 2009. Complete / closed out

2012 Acquire nonstop service to

southern California American Airlines, Delta Air Lines or United Airlines service to Los Angeles International Airport Pending Pending

The SCASDP has produced phenomenal results for Cent ral Oregon. The result of the 2003 SCASDP was Delta Air Lines’ twice daily servic e to Salt Lake City beginning in March 2005. Passenger diversion decreased by 23 per cent, and the overall Central Oregon air service market grew by 29 percent, as a result of the new service. In
fact, Delta’s service was so successful that the re venue guarantee funds authorized by the grant award were not used and the money was returned

Bolstered by the results of the initial Salt Lake C ity service, Delta to the US DOT. added a third daily roundtrip nine months later wit hout US DOT support. Furthermore, the success of the Salt Lake City serv ice served as a catalyst for new
service to Denver.

In a 2005 SCASDP grant award, Redmond Municipal Air port was a consortium member airport in the Northwest Regional Air Servic e Initiative (NWRASI). The market analysis completed as part of the NWRASI det ermined that Central Oregon’s next air service priority was more capacity to San Francisco. In June 2009, United Airlines upgraded Redmond-San Francisco service to 50-seat regional jets. Then in November 2010, United added a third regional jet ro undtrip. Total capacity increased approximately 67 percent and was supporte d by the NWRASI which was funded partially by the SCASDP. 

## The 2003 program was
so successful that:
- Delta added a third flight 10 months after
the service started
- No SCASDP dollars
were used
- It led to United
Airlines’ Denver serviceApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Implementation and Funding 

### 15



# Strategic Plan – Implementation and Funding

here the previous section provided details and anal ysis associated with the proposed service, this section, Strategic Plan – Implementation and Funding , details Central Oregon’s plan for effectively add ressing the associated risk. Organization, community involvemen t, risk mitigation, and a plan to continue the project if it is not self-sustaining a fter the grant expires are included.



### Public-Private Partnership

The City of Redmond, a public entity, owner of Redm ond Municipal Airport, and the sponsor of this application, has teamed up with Economic Development for Central Oregon and the Central Oregon Visitors Asso ciation to create a publicprivate partnership. Letters of support are include d in Appendix B to document each partner’s commitment to accomplishing the Strategic Plan. These three organizations have a long history of working togeth er to improve air service in Central Oregon. They partnered in the successful 20 03 SCASDP application that resulted in Redmond-Salt Lake City service.

Reference Table 6.1 each member of the public-private partnership has an active role in the Strategic Plan. As the grant sponsor, t he City of Redmond will manage the grant, execute all federal grant offers, proces s all associated reimbursement requests, and submit quarterly progress updates to the US DOT. Central Oregon Visitors Association will develop and manage the or igin and destination marketing program. Economic Development for Central Oregon ha s the responsibility for generating support within the Central Oregon busine ss community through the
commission of an Airline Travel Bank®.



### Incentive and Support Plan

As shown in Table 5.1 , page 13, it is highly unlikely that an airline wi ll breakeven during the first year of service due to passenger r amp-up and service awareness. Considering Central Oregon’s well-documented, high demand for southern California service, this incentive and support plan has two primary objectives: first, to effectively market the service to the general pu blic, inbound travelers, and business community; and second, to offset an airlin e’s liability during the passenger ramp-up period. In short, Central Oregon’s task is to market the improved service and cover the airline’s risk while passenger traffi c builds. Exhibit 6.1 , next page, provides a depiction of the comprehensive incentive plan Central Oregon will provide for nonstop southern California service. 

# W

Table 6 .1 Roles of Public

- P rivate Partners Public

- private partner Role

Public:

City of Redmond (sponsor) Grant

administration; Strategic Plan monitoring and performance tracking Private: Central Oregon Visitors Association Develop and

administer the marketing plan

Economic Development for Central Oregon Generate support

from Redmond’s business community; Coordinate the Airline Travel Bank® program This section contains:



### • Description of the public-private partnership



### • Designation of a legal

sponsor



### • Funding necessary for implementation of the Strategic Plan



### • Sustainability of the projectApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Implementation and Funding 

### 16

Exhibit 6.1 Incentive Plan



### Revenue Guarantee

An airline’s consideration of nonstop service betwe en Redmond Municipal Airport and southern California depends heavily on financia l support. In the current airline and economic environment, it has become expected th at a small community share in an airline’s risk of service start-up. Depending on the aircraft used and frequency, airlines are typically requesting $500,000 to $1 mi llion revenue guarantees. Like most communities, Central Oregon does not have the funds available to offer such a guarantee without the assistance of the US DOT th rough this program.

The Redmond-Los Angeles market is a proven market w ith historical traffic that will support a 44- or 50-seat regional jet. While a reve nue guarantee will be necessary to entice an airline to serve the market, the commu nity is confident that it is unlikely
the monies will be used similar to the 2003 SCASDP grant whereby Central Oregon was successful in getting the service and the servi ce was so strong that the revenue guarantee wasn’t needed at the end of the first yea r of service.

Based on preliminary estimates of the shortfall in the first year of service ( Table 5.1

, page 13) and recent information on revenue guarante es in other similar markets, it is anticipated that a minimum $600,000 revenue guar antee will be required. Terms of the revenue guarantee agreement are subject to f urther negotiations and changing industry conditions.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Implementation and Funding 

### 17

Marketing Program

The goal of the marketing campaign is to increase v isiting, local, and business traveler awareness of nonstop southern California s ervice. The Central Oregon Visitor Association’s $230,000 Marketing Plan targe ting local and inbound travelers
is included in Appendix A along with Economic Development for Central Oregon’ s plan for reaching Central Oregon’s business flyers.

MARKETING PLAN

A complete marketing/advertising plan will be devel oped prior to any expenditure of marketing dollars. The marketing plan will be struc tured for a fourteen-month program prior to and during the first year of servi ce. The comprehensive plan will focus on public awareness of the new service for bo th inbound (visitor) and outbound (local/business) markets. Emphasis will be placed on the ability of the new service to make air travel more convenient, less ti me-consuming, and less costly, while providing more direct access to primary desti nations. Resources will also be allocated for the marketing of all carriers and all services for a one-year period. This will include other business development actions, a complete public relations campaign launch, research and case development, and other air service development activities.

MARKETING SCHEDULE

The program will begin 60 days prior to the initiat ion of service. The initial program will focus on the target audience, solidify travel agent interest, establish meetings to
advise Airline Travel Bank ® partners and local area businesses of service and schedule, and begin the print and radio advertiseme nts. A significant share of the budget will be expended in the first 60 days. The t otal advertising and promotion program is planned for fourteen months. Promotion o f the service will be expanded through the image and brand development advertising that will run throughout the year in print, radio and television.



### Airline Travel Bank ®

To aggregate the support of the business community, change existing travel habits including frequent flyer loyalty programs, and redu ce the airline’s breakeven period, Economic Development for Central Oregon will commit to the creation of a $350,000 Airline Travel Bank®. This commitment leve l is made based on experience. In 2004 Economic Development for Centra l Oregon successfully
solicited commitments and received funds from 112 l ocal businesses totaling $626,000 to support Delta Air Lines Redmond-Salt La ke City service. Sixty-nine percent of Airline Travel Bank® funds were used by Airline Travel Bank® partners in the first 90 days of Delta’s service. This high “bu rn rate” of funds contributed directly to the exceptionally high load factors and the early success of the service. The superior performance prompted Delta to add a th ird flight with no requirement 

## The marketing plan
will be structured for a
fourteen-month program prior to and during the first year of
service.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Implementation and Funding 

### 18

for an additional revenue guarantee. At the end of the first year of service, revenue guarantee funds were not needed in large part due t o the success of the Airline Travel Bank® program, and the 2003 SCASDP funds wer e returned unused to the
US DOT.

An Airline Travel Bank® is a money-in-the-bank fina ncial commitment of a business community to support a specific air service initiat ive for a specified period. Unlike subsidies or pledges that do not guarantee that new service initiatives will be used by the flying public, the Airline Travel Bank® guar antees that travelers will use a specific air service offering by securing a “use-it -or-lose-it” financial commitment. The strength of the Airline Travel Bank® concept is the broad-based financial commitment of the business community. It is a simpl e, logical program that
communities and airlines seem to like. Exhibit 6.2 provides a depiction of the
Airline Travel Bank ®

process.

Similar to the 2004 program, Economic Development f or Central Oregon will use Mead & Hunt’s proven Airline Travel Bank® program. Over the last 10 years, Mead & Hunt has implemented multiple successful programs including the PensacolaAtlanta AirTran Airways program that finished with $2.1 million and 219 participating companies. The Eugene, OR business co mmunity has supported three Airline Travel Bank® programs in recruiting service to Los Angeles, Phoenix, and Salt Lake City. These are just some of the examples of t he successful programs using this method. This is not a pledge program, an Airline Tr avel Bank® locks in the community financial commitment that pledges lack.

Exhibit 6.2 Airline Travel Bank® Process



### Fee Waivers

The incentive program includes a landing fee waiver for the first 12 months of service. The fee waiver will vary depending on the type of aircraft used and the frequency of service. The fee waiver is estimated t o be a minimum of $40,000.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Strategic Plan – Implementation and Funding 

### 19



### Strategic Plan Funding

The City of Redmond is seeking $500,000 in US DOT f unding as part of a support program associated with nonstop southern California service. SCASDP grant funds will be used for a revenue guarantee. Central Orego n’s public-private partnership will fund a $230,000 marketing program and provide in-kind services associated with an Airline Travel Bank®, landing fee waivers, and grant administration. Table

6.2 provides the Strategic Plan budget broken down by element and sources of funding. NonThe community will fund 60 percent of the total pr ogram. airport funding sources will provide 36 percent of the cash requirement and 54 percent of the funding for the total program includ ing in-kind services.

Table 6.2 Strategic Plan Budget

Description Funding Source

Total US DOT Airport Non-Airport Cash Cash In-Kind Cash In-Kind Airline Incentive Program:
Revenue Guarantee $500,000 $100,000 $600,000 Marketing Campaign $25,000 $200,000 $5,000 $230,000 Airline Travel Bank $350,000 $350,000 Landing Fee Waiver $40,000 $40,000 Implementation/Monitoring Program: Staffing $5,000 $10,000 $15,000 Total $500,000 $25,000 $45,000 $300,000 $365,000 $1,235,000 Percent of Total Project 40% 2% 4% 24% 30% 100% Percent of Cash Contribution 61% 3% N/A 36% N/A 100%



### Project Continuation and Sustainability

The preliminary analysis indicates that after the r amp-up period, daily jet service to Los Angeles International Airport will be profitabl e (i.e. self-sustaining). However, a continued rise in fuel costs or any number of facto rs could result in fewer passenger or less ticket revenue than anticipated. During the course of the project, the City of Redmond will track the performance of the service, and, if at the end of the first nine months of regional jet service it is not meeti ng expectations, the partners will evaluate the program and draw up a plan that target s the shortcomings. At a minimum, Central Oregon Visitors Association and th e Redmond Municipal Airport will commit an additional $50,000 and $25,000, resp ectively, for continued marketing. Depending on the specifics at the time, the public-private partners will consider other appropriate support mechanisms. In a ddition, an additional six months of landing fee waivers will be considered as part of the sustainability initiative following the one-year anniversary of se rvice.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport Schedule and Monitoring 

### 20



# Schedule and Monitoring

realistic timetable has been developed to achieve the goals of this SCASDP application. This section provides critical milesto nes to be achieved by the public-private partnership, including target dates for: the marketing campaign development and initiation; the Airline Tr avel Bank® program implementation; nonstop southern California service start-up; alternate plan; and revenue guarantee contract completion. A monitoring program is also provided to track the progress of the project.



### Strategic Plan Schedule and Milestones

The following target dates are proposed to track th e progress of this air
service initiative:

Table 7 .1 Strategic Plan S chedule

Date Action I tem Description

October 2012 - January
2013 Airline

meetings/negotiations After grant award, Redmond Municipal Airport will meet with American Airlines, Delta Air Lines, and United Airlines at their headquarters to discuss nonstop Los Angeles service. Upon airline interest, the terms of the airline incentive package will

be negotiated.

FebruaryMarch 2013 Marketing campaign

development Development of the marketing campaign will be completed in February/March 2013 in order to begin the marketing campaign 60 days prior to new service initiation.

March – May

2013 Airline Travel Bank® The Airline Travel Bank® program takes approximately 12 weeks from initiation to contract completion and will be kicked off in

March 2013.

April 2013 Marketing initiation It is anticipated that the marketing campaign will begin by April 2013 and continue throughout the first year of nonstop southern

California service.

June 2013 Nonstop southern

California service The service start date is the critical date for the rest of the Strategic Plan. It is anticipated that, with successful airline negotiations,
service would start in June 2013. Service startup is dependent on airline route planning and aircraft availability for the Redmond/Bend

market. 

# A This section contains:



### • The schedule for timely completion of the project



### • How the community
will monitor the progress of the projectApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport Schedule and Monitoring 

### 21

Table 7 .1 Strategic Plan S chedule

Date Action I tem Description

December

2013 Alternate plan If American, Delta, or United has not implemented nonstop Los Angeles service by December 31, 2013, the City of Redmond will contact other potential carriers to provide
service to southern California which would meet the goals of this grant application.

May
2014 Revenue guarantee

contract completion At the end of the first year of nonstop service, with a service start date of June 2013, the revenue guarantee will be calculated. If the service start date changes due to airline circumstances and/or equipment availability, the revenue guarantee contract term will

change accordingly.



### Strategic Plan Monitoring Program

The monitoring program includes: service performanc e tracking; assessing the effectiveness of the marketing campaign; impact on airfares; and determining the influence of nonstop southern California service on retention at the Airport. Table

7.2 provides the action items and frequency to monitor the Strategic Plan.

Table 7.2 Strategic Plan Monitoring Frequency Action I tem Description

Monthly Airfares Track walk

- up, business, and leisure published fares for top 25 markets to ensure fares are competitive with competing airports (i.e. Portland and Eugene). Fare issues will be
communicated to incumbent airlines.

Airline performance Load factors by flight, enplanements, flight cancellations Market performance Passenger ramp

- up Revenue guarantee indicators Ticket revenue, cost, drawdown

3 months/
6 months Marketing Complete a phone survey to assess the effectiveness of the marketing program in the Central Oregon community and adjust as necessary.

9 months Program assessment Complete an overall assessment of the program to determine if additional community support is needed beyond

one year.

12 months True Market Estimate Complete a true market estimate to evaluate the use of Redmond Municipal Airport by local travelers compared to their use of Portland and Eugene. Analyze output and
communicate with airline.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Appendix A 

### 22



# Appendix A. Marketing Plan

he Central Oregon Visitors Association (COVA) has s erved as the Destination Marketing Organization for Central Oregon since 197 1. COVA will commit to manage and fund a $225,000 marketing program to inc rease awareness of Central Oregon in Los Angeles and key connecting ma rkets. However, COVA expects to fund this marketing program at a much hi gher level and that there will
be substantial in-kind contributions from media out lets. COVA will also manage a $25,000 local campaign, funded by Redmond Municipal Airport, to increase Central Oregon’s awareness of the Los Angeles service.

Economic Development for Central Oregon (EDCO) is a private non-profit organization dedicated to building a vibrant and th riving regional economy by attracting new investment and jobs. EDCO will take on the responsibility of marketing improved service to the Central Oregon bu siness community. EDCO has a wide network of business contacts locally by which to market new air service opportunities. Rather than using a media based adve rtising campaign, EDCO will leverage its contacts to inform business owners and key decision makers in the private sector about nonstop Los Angeles service.



### Target Audience

The target audience for the Los Angeles air service initiative includes:

• Destination visitors with the discretionary income and propensity for multiple-night stays

• Spend $1,500 plus on travel annually

• Household income of $100,000 or more, between the a ges of 28 to 65

• Primary emphasis in Western state markets of Califo rnia and Oregon

• Secondary emphasis on one-stop airline markets over Los Angeles; specifically the Pacific Rim and Oceania



### Air Service Support Program – Los Angeles

COVA’s marketing efforts will center around seven d istinct and mutually cooperative programs designed to provide a region-w ide, cohesive marketing, promotion, and sales plan.

1. Destination image advertising

2. Cooperative advertising with private sector

3. Public relations and promotional programs

4. Special event product development 

# TApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Appendix A 

### 23

5. Official Visitor Information Center

6. Reservations center operations and inquiry fulfillm ent
7. Tourism industry representation and research



### Destination Image Advertising

Image advertising develops and supports the brand a wareness of Central Oregon as an outdoor recreation destination and COVA’s objectives. Broadcast, cable, print and digital med ia are all components of COVA’s development of the Central Oregon brand. The added value and paid web advertising includes banner ads, page placement, email blasts, and direct mail/web-g enerated inquiries from partner host sites. In addition, paid advertis ing and promotional messaging via social media will be a component of t he strategy via Facebook, Twitter, YouTube, Google+, etc.

COVA image advertising can be seen in multiple publ ications and more than a dozen West Coast newspapers and seasona l television spots throughout the Pacific Northwest and select t arget markets. COVA’s advertising In support of the Los Angeles se rvice is expected to
run in the outlets shown in Table A.1 . Local and distant outlets are separated, and a projected budget and in-kind value for each outlet is shown. The local advertising production and circula tion costs will be paid by Airport funds. Advertising placed in Los An geles and select connecting markets will be funded by COVA.



### Cooperative Advertising With Private Sector

Cooperative advertising leverages the Central Orego n destination brand message with a call-to-action partnership bet ween COVA and marketing partners who share in the financial inves tment and message representation in targeted advertising campaigns. Table A.2 lists partnership marketing programs that will include pl acements to benefit the air service campaign. Most cooperative efforts leverage the COVA
investment with at least a dollar for dollar match.



### Public Relations and Promotional Programs

COVA staff and member representatives regularly par ticipate in sales missions in target market areas designed to educate and inform the travel industry partners and media on Central Orego n as a destination.
These missions are often scheduled in coordination with editorial calendars and/or tradeshow missions to leverage tra vel resources. The trade shows that COVA is planning on attending are shown in
Table A.3

. Table A.1 Image Advertising

Media Outlet Project ed Cost Projected

In-Kind Local media outlets 1859 – Oregon’s Magazine $10,000 $20,000 Central Oregon Magazine $5,000 $30,000 KTVZ Channel 21 $7,500 $0 Fox KOHD $7,500 $0 Combined Comm. $2,500 $0 Horizon Broadcasting $2,500 $0 Cascade Business News $2,500 $0 The Bulletin $7,500 $0 Target market media outlets AAA Tour Book $18,900 $5,000 Golf Digest - West Region $80,544 $47,500 Golf Digest Index $57,000 $93,000 Golf World $35,650 $0 Angeleno magazine $79,000 $30,000 Sunset Summer Trips $0 $50,000 LA Media/Sales blitz $15,000 $0 Destinations Guide, Travel Oregon $37,500 $68,000
Comcast SportsNet $450,000 $0 Meetings West/ Smart Meetings $15,139 $13,000

The Travel Channel International $37,000 $155,000

The Travel Channel web video links $0 $50,000

Table A.2 Cooperative Marketing Partners

Partner Mt. Bachelor Sunriver Alliance Sisters Country AAA Tour Book for OR and WA Travel Oregon Oregon Golf Directory Multiple radio and television stations

Table A.3 Trade Shows and Sales

Trade Show Projected Cost Projected

In-Kind HSMAI Long Beach $3,500 $3,500 MPI Cascadia Conference $3,000 $3,000 JATA - Japan $3,500 $3,500
WTM

- United Kingdom $6,000 $6,000 ITB - Germany $6,000 $6,000 Pow Wow - US $5,000 $2,500Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Appendix A 

### 24

On a year-round basis, COVA hosts familiarization t rips to the region inviting qualified feature travel writers, tour operators, t ravel agents, and meeting planners to Central Oregon to acquaint them with Central Ore gon’s unique and exceptional year-round vacation product.



### Special Event Marketing and Development

COVA has partnered with the community to identify, develop, and support headline events to strengthen Central Oregon as a destinatio n in non-peak periods. COVA’s direct promotions have supported signature events i ncluding, but not limited to, the Golf World Pacific Amateur Golf Classic, USA Cyclin g Nationals, PGA Professionals Championship, the Komen Marathon for a Cause, the P acific Crest Sports Festival, the Sunriver & Cascade Music Festivals, BendFilm, B end’s Summer, Fall and Winter Festivals, The Rally and FMCA motorcoach events at the Expo Center, and the Sisters Quilt Show. These events will be leveraged in support of air service.



### Visitor Information and Inquiry Fulfillment

COVA produces the award-winning, 78-page, magazine- quality, Official Central Oregon Visitors Guide. The COVA Visitors Guide is t he primary response piece to all inquiries received in response to our advertising a nd promotion campaign. The Visitors Guide is distributed to travel agents and tour operators across the nation and internationally, placed in over 4,000 guest roo ms, available at all nine Oregon State Welcome Centers, and distributed as part of p ress kits. The Visitors Guide will have advertisement space dedicated to the Los Angel es service.



### Official Visitor Information and Reservations Cente r

To personally facilitate visitor inquiries and vaca tion planning, COVA operates the region’s Official Visitor Information Center (VIC) seven days a week. The VIC serves a walk-in clientele averaging 3,100 plus visitors p er month. In addition, the COVA Reservations Center provides services to more than 500,000 annual inquiries via telephone, mail, and Web Site User Sessions. The Cl ient Service Representatives
focus air traveler attention to the services availa ble at Redmond Municipal Airport.



### Tourism Industry Representation and Research

COVA is recognized as the regional tourism industry liaison for the tri-county area. This role requires COVA’s active involvement on num erous boards, commissions, committees, and industry-related organizations on a local, statewide, and national level. This participation enables COVA to dissemina te information, trends, statistics, and opportunities to local partners and media conta cts made possible through research partnerships with travel and tourism indus try partners at the highest levels.Application Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Appendix A 

### 25



### Marketing to Central Oregon’s Business Community

Business travelers are extremely important to airli nes. In general, business travelers make up 40 percent of air travelers; however, these travelers generate 70 percent of airline revenue. EDCO will market reinstated, nonst op Los Angeles service to this group. EDCO’s efforts will focus on three distribut ion methods: EDCO’s monthly newsletter, direct marketing, and presentations to civic groups.



### Target Audience

EDCO’s target audience for the Los Angeles air serv ice initiative includes: business travel decision makers; travel agents; and business es which contributed to the
Airline Travel Bank ®

in support of the Delta Air Lines’ service



### Newsletter

The eCon Update, EDCO's monthly newsletter, not onl y provides the latest information from around the region, but also explor es employment trends for Central Oregon, introduces the community's newest b usinesses, and presents EDCO's marketing efforts. EDCO distributes this new sletter to over 1,400 people
across hundreds of businesses. The newsletter will make specific mention of new, nonstop Los Angeles service at Redmond Municipal Ai rport.



### Direct Marketing

In 2005, 120 businesses contributed over $600,000 t o the Airline Travel Bank ® effort which supported Delta service in its infancy . EDCO will contact these businesses again and notify them of the nonstop Los Angeles service. These businesses are key Redmond Municipal Airport users and have a history of supporting new air service initiatives. EDCO will contact this group via e-mail, phone call, or personal meeting.



### Presentations

Local organizations’ meetings will provide a perfect venue to educate local business leaders about the Los Angeles service. A list of civic organizations and business groups where EDCO will present information is provided in
Table A.4. The members of these local organizations understand the impact economic development has on their community and, by extension, the importance
of local air service. Table A .4 Central Oregon C ivic Clubs and Business Groups

Organization Rotary Club Redmond Executive Association Opportunity Knocks Central Oregon Association of

Realtors Commercial Investment Division High Desert Enterprise Consortium

Vistage Bend Chamber of Commerce Redmond Chamber of Commerce Prineville Chamber of Commerce Jefferson County Chamber of Commerce Sisters Chamber of Commerce La Pine Chamber of Commerce Crooked River Ranch Chamber of

CommerceApplication Under the Small Community Air Service D evelopment Program City of Redmond/Redmond Municipal Airport

Appendix B 

### 26



# Appendix B. Community Support

ppendix B includes letters of support for the City of Redmon d’s application to the US Department of Transportation for nonstop southern California service. Support letters were s ubmitted by participants in the public-private partnership and members of the Central Oregon community. The letters of support are included on t he following pages of this Appendix B

.



### Government
Congress of the United States, Congressman Greg Wal den Oregon State House of Representatives, Representati ve Gene Whisnant Oregon State House of Representatives, Representati ve John E. Huffman Oregon State Senate, Senator Chris Telfer Oregon State Senate, Senator Lee Beyer Oregon State Senate, Senator Ted Ferrioli State of Oregon, Governor John A. Kitzhaber, MD Deschutes County Board of County Commissioners, Com missioner Anthony DeBone and Commissioner Tammy Baney City of Redmond, Mayor George Endicott and City Man ager David Brandt



### Public-Private Partnership

City of Redmond/Redmond Municipal Airport (see cove r letter) Central Oregon Visitors Association Economic Development for Central Oregon



### Businesses and Organizations

Bend Chamber of Commerce Deschutes County Fairgrounds and Expo Center Maupin Area Chamber of Commerce Northview Oregon Resorts Redmond Chamber of Commerce and CVB
Redmond Executive Association
Seventh Mountain Resort Sisters Area Chamber of Commerce The Well Traveled Fork, LLC William Smith Properties, Inc. 

# A

## CHRIS TELFER STATE SENATOR
DISTRICT 27



### OREGON 

### STATE SENATE

900 

## couRT sr. NE s-423 

### SALEM, 

## OR 97301 

### May 31 

### ,2012

Aloha Ley


### Associate Director, Small Community Program
Office of 

### Aviation Analysis
US Department of Transportation
1200 New Jersey 

### Ave, SE W86-310 

### Washington, DC 

### 20590



### Subject: Small Community Air Service Development Program Grant 

### Application

Docket DOT-OST-2O1 

### 2-0069 

### City 

### of Redmond, OR - 

### Redmond 

### MunicipalAirport

Dear 

### Ms. Ley:



### As the 

### Oregon State Senator 

### from District 

### 27, I 

### would greatly appreciate your careful

consideration of 

### the City 

### of Redmond's application 

### for Small Community 

### Air Service Development Program grant funds. 

### The proposed plan provides 

### financial assistance to support improved
service 

### to Central Oregon, the fastest 

### growing region in Oregon. 

### The proposed southern
California service 

### will benefit multiple, remote 

### Central Oregon communities and have 

### far reaching

benefits.

A successful grant application 

### will result in 

### significant improvements for the traveling public, including businesses, educational institutions and other enterprises whose access to 

### the national

air 

### transportation system is limited. Given 

### the City 

### of Redmond's outstanding record of success


### with air service development, which has 

### strategically utilized previous 

### federal grants and 

### incorporated 

### solid private and public 

### partnerships, I 

### encourage 

### the US Department 

### of Transportation's consideration and support 

### for such a 

### worthwhile project.

The Small Community 

### Air Service Development 

### Program is 

### greatly 

### appreciated. lmproving 

### air

service in 

### Oregon is 

### a priority of my office. 

### Accordingly, the subject grant 

### application has my full 

### support. Please 

### do not hesitate to 

### contact my 

### office if 

### we can be 

### of 

### assistance in this matter.

Sincerely, 

# Cr;.Te4-

Chris 

### Telfer
Senator District 27

Phone: (503) 986-1727 - Email: sen.christelfer@stâte.or.us

# Board of Coun Commissioners

1300 NW Wall St, Suite 

### 200 • Bend, 

### OR 97701-1960 (541 J 388-6570· Fax 

### (541 J 385-3202 www.co.deschutes.or.us May 30,2012 board@co.deschutes

. or.us Tammy Baney Anthony DeBone Alan Unger Aloha Ley
Associate Director, Small Community Program
Office of Aviation Analysis
US Department of Transportation

1200 New Jersey Ave, SE W86-310 Washington, DC 20590



### Subject: Small Community Air Service Development Program
Docket DOT -OST 

### -2012-0069 City of Redmond, OR

- Redmond MuniCipal Airport

Dear Ms

. Ley:

It is with great pleasure that the Deschutes County Board of Commissioners submits this letter of strong support for the air service proposal detailed in the City of Redmond's Small Community Air Service Development Program grant application. Businesses in Central Oregon depend on nonstop service to
southern California.

As our community continues to grow and more visitors are drawn to this unique region, our limited transportation options will be further strained unless service is expanded at Redmond Municipal Airport.
As you evaluate the merits of this application, I encourage you to consider how critically important air
service is to Central Oregon.

The Central Oregon region has been hit hard by the recent recession, with unemployment continuing to
hover between 13-15%. With high speed internet we have the opportunity to support a number of careers remotely from our region. The Airport is a vital partner to our economic advancement in Central Oregon, growth in air service is an important component in this equation

. We are pleased to have the opportunity

to support this grant application.

Sincerely,

Commissioner Anthony DeBone

# com~Y

Enhancing the Lives of Citizens by Delivering Quality Services in a Cost-Effective Manner

### 716 SW Evergreen Ave Redmond, OR 97756-0100



# CITY OF REDMOND (541) 923-7710 Fax: (541) 548-0706 info@ci.redmond.or.us www.ci.redmond.or.us

Aloha Ley Associate Director, Small Community Program Office of Aviation Analysis US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Subject: Small Community Air Service Development Program
Docket DOT-OST-2012-0069 City of Redmond, OR - Redmond Municipal Airport

Dear Ms. Ley: May 24, 2012

We strongly support the air service proposal deta iled in the City of Redmond’s Small Community Air Service Development Program grant application to obt ain nonstop service to southern California. Like many businesses in Central Oregon, our agency depends on access to air service to continue to prosper.

Growth in Central Oregon over the past few year s has been fueled by the presence of the Redmond Municipal Airport. As you evaluate the merits of this application, we encourage you to consider how critically important air service is to Central Oregon. As our community continues to grow and more visitors are drawn to this unique region, our limited transportati on options will be further strained unless service is expanded at Redmond Municipal Airport.

The Airport has forged strong ties with the business community to attract better air service. We appreciate the opportunity to expand that partnership to include the US Department of Transportation through the Small Community Air Service Developmen t Program. We are pleased to have the opportunity to support this grant application.

Sincerely,

George Endicott David Brandt Mayor City Manager City of Redmond City of RedmondMay 31, 2012

Aloha Ley Associate Director, Small Community Program Office of Aviation Analysis US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Subject: Small Community Air Service Development Program
Docket DOT-OST-2012-0069 City of Redmond, OR - Redmond Municipal Airport

Dear Ms. Ley:

On behalf of our 500+ member businesses, the Central Oregon Visitors Association (COVA) is privileged to submit this letter of support for the Redmond Municipal Airport grant application for US Department of Transportation funding. COVA has been the non-profit, tourism destination marketing and promotion agencyfor Central Oregon for more than 40 years. In that time, the population of Central Oregon has multiplied sixfold and tourism has developed into the single largest industry in the region, generating in excess of one-half billion dollars annually.

Commercial air service plays a vital role in our ability to position Central Oregon as a competitive, yearround destination. In partnership with Economic Development for Central Oregon (EDCO) and the Redmond Municipal Airport, COVA fully supports the proposed plan for nonstop air service to southern California.

COVA will commit our expertise and resources toward developing and implementing the marketing strategy and media plan to support this air service. Not only will our organization commit $200,000 of COVA’s resources to a marketing, media, and public relations campaign geared toward inbound travel, but we will manage and execute a $25,000 local campaign, directed at residents, to support outbound travel. COVA clearly recognizes the importance of commercial air service to the economy of the region through access for visitors and to support area businesses, organizations, and institutions.

Nonstop southern California service will play a visible and integral role in all aspects of our destination marketing.

Thank you for your consideration and the opportunity to lend strong support to this request.

Sincerely,

Alana Hughson
President & CEO________________________________________________________________________________________________ EDCO ▪ 109 NW Greenwood Avenue, Suite 102 ▪ Bend, OR 97701 ▪ 800-342-4135 ▪ www.edcoinfo.com 

## May 31, 2012

Aloha Ley Associate Director, Small Community Program Office of Aviation Analysis US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Subject: Small Community Air Service Development Program
Docket DOT-OST-2012-0069 City of Redmond, OR - Redmond Municipal Airport

Dear Ms. Ley:

On behalf of Economic Development for Central Oregon (EDCO), I am excited to support the grant application for U.S. DOT funding for the Redmond Municipal Airport. EDCO has been the lead organization for economic and industry development in the tri-county region for more than three decades. Over the past ten years we’ve helped establish new industries, grown our existing manufacturing and technology sectors and launched efforts to be a top location in the country for new ventures. Our efforts have led to the creation of more than 3,400 new, traded-sector jobs and $1 billion in private capital investment.

Given our geographic isolation from other metros in the western U.S. and the fact that no interstate connects Central Oregon to the rest of the country, commercial air services plays a disproportionately important role for our economy. Our traded-sector companies rely heavily on scheduled air service to connect with customers, suppliers, strategic partners and headquarter or satellite operations. Our longstanding partnership with the Central Oregon Visitor’s Association (COVA), area Chambers of Commerce and the Redmond Municipal Airport and other members of COAST (Central Oregon Air Service Team) fully endorses the proposed plan for nonstop air service to southern California. The team will also actively help its success – before, during and following its launch.________________________________________________________________________________________________ EDCO ▪ 109 NW Greenwood Avenue, Suite 102 ▪ Bend, OR 97701 ▪ 800-342-4135 ▪ www.edcoinfo.com 

## E DCO is committed to helping raise matching funds outlined in the grant application for revenue guarantee ($100,000) and a $350,000 Airline Travel Bank (ATB). We have experience in raising hard dollars from local companies in the form of prepaid travel that drives use of the new service and consequently, profitability for the airline. In our last ATB effort to attract the region’s first non-stop eastbound service, we were able to raise more than $620,000 from 120 companies in a three week timeframe. These were actual dollars deposited, not pledges. We believe that this effort was a critical factor in the service being profitable in the first month of operation, which provided the opportunity to return the Redmond Municipal Airport was able to return its last $500,000 DOT EAS grant so it could
be used elsewhere.

For many years, non-stop service to southern California has been our top priority for new flights to and from Central Oregon. We believe this service will be successful, sustainable and will play an important role in our efforts to grow and diversify the regional economy. It could also be a pivotal effort to reverse recent trends that have resulted in an overall reduction in our air service options and available seats.

On behalf of our entire team and Board of Directors, thank you for your consideration and the opportunity to express our strong support to this grant request.

Sincerely,

Roger J. Lee

Executive Director

### The Maupin Area Chamber of Commerce and It’s businesses support the Redmond s Airport

grant application for a Small Community Air Service Development Program Grant. We believe this airport is invaluable to our rural community and any grant or funds that would improve it, is worthy of our support.

Thank you to the Redmond Chamber, EDCO and COVA for working so hard to get the word out there and to gather community support. Without you, we may have missed this opportunity to support such a valuable endeavor.

Sincerely,

Cristie Amaral Maupin Area chamber of Commerce

cristiea @ maupinoregon

. com
P.O. Box 220 Maupin, OR 97037

541-993-1708

### May 31, 2012

Aloha Ley Associate Director, Small Community Program Office of Aviation Analysis US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

Subject: Small Community Air Service Development Program
Docket DOT-OST-2012-0069 City of Redmond, OR - Redmond Municipal Airport

Dear Ms. Ley:

The Redmond Chamber of Commerce & CVB would like to offer its strongest support for the air service proposal detailed in the City of Redmond’s Small Community Air Service Development Program grant application to obtain nonstop service to southern California. With over 720 members, our member businesses depend on access to air service.

The Redmond Municipal Airport is one of Central Oregon’s leading economic engines and plays a crucial role in the regions growth. As you evaluate the merits of this application, I encourage you to consider how critically important air service is to Central Oregon. As our community continues to grow and more visitors are drawn to this unique region, our limited transportation options will be further strained unless service is expanded at Redmond Municipal Airport.

The Airport has built strong ties with the business community to attract better air service. We appreciate the opportunity to expand that partnership to include the US Department of Transportation through the Small Community Air Service Development Program. We are pleased to have the opportunity to support this grant application.

Sincerely,

The Redmond Chamber of Commerce & CVB

Eric Sande
Executive Director