Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 APPLICATION UNDER
SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 2013

- 0120

SUMMARY INFORMATION

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

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

. Legal Sponsor Name: City of Idaho Falls

- Idaho Falls Regional Airport
DUNS Number:
09

- 202

- 7010 EIN/Tax ID:
86

- 6000208

B. L IST THE N AME OF THE COMMUNITY OR CONSORT IUM OF COMMUNITIES A PPLYING : 1

. I DAHO F ALLS R EGIONAL A IRPORT , I DAHO F ALLS , I DAHO

C. P ROVIDE THE FULL AIRP ORT NAME AND 3

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

PROVIDE CODES FOR TH E AIRPORT ( S ) THAT ARE ACTUALLY SEEKING SER VICE ).
1. Idaho Falls Regional Airport (IDA )Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013

D. L IST THE 2

- DIGIT CONGRESSIONAL DISTRICT CODE APPLIC ABLE TO THE SPONSORI NG ORGANIZATION , AND IF A

CONSORTIUM , TO EACH PARTICIPATIN G COMMUNITY

. 1. ID

- 02

E. A PPLICANT I NFORMATION : (C HECK A LL T HAT A PPLY )
Not a Consortium Interstate Consortium Intrastate Consortium Community now receives subsidized Essential Air Service Community (or Consortium member) previously received a Small Community Air Service Development Program Grant
If previous recipient: Year of grant(s): 2005 & 2010

F. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )
PUBLIC PRIVATE
1. City of Idaho Falls

- Idaho Falls Regional Airport 1. Idaho National Laboratory
2

. 2. Idaho Falls Chamber of Commerce
3. 3. Grow Idaho F alls Economic Development A gency 4. 4. Post Register newspaper 5. 5. Various local radio stations

G. P ROJECT P ROPOSAL : ( CHECK ALL THAT APPLY ) Marketing Upgrade Aircraft New Route
Travel Bank Service Restoration Subsidy Surface Transportation Regional Service Revenue Guarantee Launch New Carrier Start

- up Cost Offset First Service Study Secure Additional Service Other (explain below)

H. E XISTING L ANDING A IDS AT L OCAL A IRPORT : Full ILS Outer/Middle Marker Published Instrument Approach
Localizer Other (specify) 

### XProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013

I. P ROJECT C OST : D O NOT ENTER TEXT IN SHADED AREA
L INE D ESCRIPTION S UB T OTAL T OTAL A MOUNT
1 Federal amount requested $5 00,000
2 State cash financial contribution $0
Local cash financial contribution
3a Airport cash funds

3b Non

- airport cash funds $50 ,000

3 Total local cash funds ( 3a + 3b ) $50 ,000

4 TOTAL CASH FUNDING ( 1+2+3 ) $550 ,000

In

- Kind contribution
5a Airport In

- Kind contribution** $37,500
5b Other In

- Kind contribution** $10,000
5 TOTAL IN

- KIND CONTRIBUTION ( 5a + 5b ) $47,500
6 TOTAL PROJECT COST ( 4+5 ) $597,5 00

J. IN

- KIND CONTRIBUTIONS** For funds in lines 5a (Airport In

- Kind contribution) and 5b (Other In

- Kind contribution), please describe the source(s) of fund(s) and the value ($) of each. Airport will waive landing fees for additional flights; local media companies will offer discounts on
advertisi ng.Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013

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

a. This application was made available to the state under the Executive Order 12372 Process for review on (date) _____________.
b. Program is subject to E.O. 12372, but has not been selected by the state for review.

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

L. I S T HE A PPLICANT D ELINQUENT O N A NY F EDERAL D EBT ? (I F “Y ES ”, P ROVIDE E XPLANATION )
No Yes (explain)

__________________________________________________________________ ___________________________Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 1

TABLE OF CONTENTS

Legal Sponsor 1
Introduction 2
The Idaho Falls Air Service Market 4 Idaho Falls Leakage Problem 9 The Idaho Falls Economy 11 Major National Parks Near Idaho Falls 13 History of Minneapolis Service 14 Service Development Plan: Idaho Falls

- Minneapolis 1 5 Proposed Budget and Timeline 18 Public/Private Partnership 19
Conclusion 20



## LEGAL SPONSOR

Idaho Falls Regional Airport is the legal sponsor responsible for administering the proposed air service development program. The Airport is a government agency, operated by the City of
Idaho Falls

.
Idaho Falls Regional Airport 2140 North Skyline Drive Idaho Falls, Idaho 834 05 Craig Davis , Airport Director (208) 612

- 8221 chdavis@idahofallsidaho.gov 

### Section Page NumberProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 2

INTRODUCTION

Idaho Falls Regional Airport is seeking a federal Small Community Air Servic e Development (SCASD) Grant. T he Airport has been tremendously active in air service development over the
last decade , recruiting new air service on eight new routes. Five of those eight routes remain in service today. Unfortunately four routes from Idaho Falls have been discontinued du e to the difficult economic and airline industry environment over the last five years. Airlines are becoming increasingly risk

- averse in selecting and beginning new routes. The Airport now finds
itself in an environment where additional air service devel opment is very challenging without the help of a SCASD Grant.

The Airport s erves a large area in eastern Idaho that is home to more than 66 0,000 people. It ha s seen its network airline seats decline by 29 % in the last five years, causing far es to jump to an average of $230 each way

– which ranks as the third highest avera ge fare in the Mountain West

. Because of this challenge the Airport has seen a temporary dip in traffic since 2007. However, traffic is beginning to improve. In 2012
, 314,000 passengers were travelling through the airport. This is only 4,000 fewer passengers than the Airport ’ s record year in 2007.

Idaho Falls Regional Airport benefits from regular scheduled nonstop service to six destinations as of August 2013. All of these markets are in the
West . Four of the six markets are Allegiant markets that offer no beyond connectivity. The remaining two markets, Salt Lake City and Denver, offer limited connectivity to the Midwest and
East Coast
, respectively. These hubs ’ primary mission is to connect travelers to communities in
the West and c ommuniti es on the western edge of the Midwest

. Minneapolis/St. Paul is the largest market from Idaho Falls that is within range of regional jet aircraft and is east of the Mountain West region. This combination makes Minneapolis the closest and largest h ub that would allow access not only to the Minneapolis local market
, but to the vast array of destinations east of Minneapolis. Today many of these destina tions require two stops, have only one competitor , or both. This results in very high air fares in these markets. Because of the potential of this market, Northwest Airlines (now Delta Air Lines) served this route from 2005

- 2009. The service was discontinued in the midst of record high fuel prices and the subsequent
economic recession. 

## “ Unfortunately four routes from Idaho
Falls have been discontinued due to the difficult economic and airline industry environment over the last

five years .”Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 3

The Airport is seeking $ 5 00,000 in federal assistance to provide a revenue guarantee to
reestablish service to Minneapolis/St. Paul . The Airport has put together a coalition of local support to help provide matching dollars for the project, and to provide broad outreach to ensure new service is immediately supported. The Airport has worked with many of these part ners in the past to ensure support and cooperation for new service to previous markets. Two of these markets were supported by SCASD grants. In 2005 a SCASD grant was
awarded for Denver service. This market was so successful that United
Airlines never c ollected the grant money in the Denver market . Even though the SCASD grant funds were not used, the grant was successful because it gave United Airlines the risk abatement it needed to begin the service.
That service has doubled in seats and is thriving today. The community came together again for

a second SCASD grant for San Francisco service that was obtained in 2010. United Airlines began that market the following year. The market successfully generated new traffic and used the full value of the gra nt. This delivered the promised community benefits of the service for 18
months
, at which time the service was discontinued. With traffic levels growing at Idaho Falls the Airport believes the time is right to provide the risk abatement needed to reinsta te service to Minneapolis/St. Paul

. 

## “ The Airpor t has put together a coalition of local support...and has worked with many of these partners in the past....for new service to previous markets .”Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 4

THE IDAHO FALLS AIR SERVICE MARKET Current and Historical Air Service

The Idaho Falls Regional Airport is the main gateway for air travel in the eastern Idaho corridor. As the only airport in its region with service on more than one carrier, and the only airport with low cost airline service, the Airport has a large role in connecting dozens of cities to the national air transportation system.

Due to its relative isolation, Idaho Falls’ service can draw from a very large geographic area

– farther than even the two hour catchment represented in gray in Map 1

. This area is home to 665,359 people as of
the 2010 US Census. There are 294,557 people within one hour of the airport which is represented
in red . The nearest

c ompeting airports with year

- round low cost carrier service are in Boise, ID, which is over four hours away by car, and Sal t Lake City, UT, which is nearly four hours away by car.

Due to the large number of people in the Ai rport’s catchment area, several carriers hav e chosen to serve Idaho Falls Regional Airport. As of July 2013, the Airp ort is served by Delta Air
Lines
, U nited Airlines
, and Allegi ant Air. Altogether, Idaho Falls Regional Airpo rt has non

- stop service to six cities (see Map 2 , next page ). Only four of those cities are year

- round service as the Allegiant service to both Oakland (OAK) and Los Angeles (LAX) a re flown in the summer season only. 

### MAP 1: Idaho Falls Airport Catchment Area Source: Sixel Consulting Group, 2010 US Census EstimatesProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 5

As of August of 2 013, carriers serving Idaho Falls Regional Airport will offer 13 % fewer seats than they offered at the same
time last year (see Figure 1). United’s available seats are
down 21 %, with the
cancellation of non

- stop service to San Francisco

.

Additionally
, Allegiant has
reduced significant capacity in the Oakland market. This change will force westbound
traffic from Idaho Falls to use Delta connecting service via Salt Lake City to reach points on
the West Coast . With Delta’s capacity being flat to Salt Lake City, these changes will have the effect of reducing the seats available for eastbound passengers connecting in Salt Lake City. This will further tighten the supply of seats to reach important destinations for travelers in Idaho Falls.
The result of these
cap acity shifts is that
Delta offer s about half
of Idaho Falls available seats as of August 2013 (see Figure 2). Allegia nt capacity has

rem ained stable at approximately 22 %. United has also held steady with about 29%
of Idaho Falls available airline seats. 

### FIGURE 1 : Scheduled Service at Id aho Falls Regional Airport, 8/12 vs. 8/13 Source: Sixel Consulting Group; OAG Schedule Data, August 2013 MAP 2 : Current Service at Idaho Falls Airport Source: Sixel Consulting Group; OAG Schedule Data, July 2013

Idaho Falls

OAK

AZA LAS

LAX SLC

DENProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 6 Ai rline capacity at Idaho Falls Regional Airport has experienced a dip as have origin
and des tination passengers. Since 2007
, Idaho Falls passengers dipped and then largely recovered . In 2012 there were 430 passengers per day each way (PDEW) (see Figure 3). The recovery can be attributed primarily to Allegiant

. However
, network carrier passengers are very recently beginning to grow again. Idaho Falls now has growth in both the low fare leisure end of the market and the higher fare business portion of the market

. This simultaneous growth illustrates the broad st rength of the economy and travel market in Idaho Falls.



### FIGURE 3 : O&D Passengers, Average One Way Fares, and Network Carrier Fares

- Idaho Falls Regional Airport Source: US DOT OD1A, Calendar Year 2004

– Calendar Year 2012 FIGURE 2 : Seat Capacity Share by Carrier, Idaho Falls Regional Airport Source: Sixel Consulting Group; OAG Schedule Data, August 2013Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 7 An analysis of average one way fares in
Mountain West markets shows th at Idaho Falls has the third highest average fare in the region as of 2012. The one way average in Idaho Falls is $230 (see Figure 4 ). Only Jackson Hole and West Yellowstone, Wyo ming
, had a higher average fare in 2012 than Idaho Falls. Both Airports have the
absence of low fare carriers. In addition
, Jackson Hole is primarily a very high

- end ski destination that mostly brings in

- bound tourists as opposed to serving the local
pop ulation. West Yellowstone is a summer seasonal market with limited service by props.

When Allegiant passengers are removed from the Idaho Falls analysis, the average network carrier fare jumps to an astronomical $316 each
way in 2012 ( see Figure 3, previous page ) ! This is a whopping 65% increase since 2004. This is much higher than even high

- end Jackson Hole.
The mark et’s non

- Allegiant fare is the highest average network carrier fare in the Mountain
West in 2012
, bar none

. Indeed
, it is one of the highest aver age fares in the country. However, it
is interesting that the high fares in Idaho Falls do
not appear to be suppressing traffic, as the market has nearly recovered to within striking 

### FIGURE 5: Average One Way Fares at Top 25 Markets at IDA Source: US DOT OD1A, Calendar Year 2012 FIGURE 4 : Avg. One Way Fare in Mountain West Markets Source: US DOT OD1A, Calendar Year 2012Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 8

distance of its record passenger year in 2007 even as fares have risen i n the last few years

.

Allegiant’s impact is also seen in the list of Idaho Falls ’ top origin and destinati on passenger markets. The four markets to which Allegiant has provided non

- stop servic e

– Las Vegas, Phoenix/Mesa, Los Angeles, and Oakland

– all rank in the top four larges t ma rkets for 2012 (see Figure 6 ). Idaho Falls Regional Airp ort generated an average of 45 PDEW to and from Las Vegas in 2012, 44 PDEW to and from Phoenix/Mesa, 35 PDEW to and from L os Angeles, and 29 PDEW to and from Oakla nd

. These markets also have very low fares (Figure 5, previous page) . The average Allegiant fare to all of these markets is less than $100. In contrast, all of the other top 25 markets have fares in excess of $200 without any exceptions.

While Allegian t’s service at Idaho Falls Regional Airport provides the region with a low cost alternative for leisure travel, the core of the Idaho Falls market is driven by eastern Idaho businesses. Large nuclear research and technology companies
, such as Idaho National Lab (INL), genera te vast amounts of passengers each day. These travelers fly primarily on network
carriers.

Allegiant’s presence, as noted , brings down the overall average fare in the Idaho Falls market, but network carriers rarely match Allegiant on price. The result is high fares on all other carriers, even in markets where they directly compete with Allegiant. If you travel for business , and must



### FIGURE 6: Top 25 O&D Passenger Markets at Idaho Falls Airport Source: US DOT OD1A, Calendar Year 2012Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 9

travel on specific days of the week, or at specific times, Allegiant is rarely an option. The Idaho
Falls business travelers subsequently pay much more for access to the national air transportation system than the average fares would illustrate.

Despite some of the highest fares in the West , passenger traffic in Idaho Falls is growing . From 2011 to 2012 traffic grew over 7%. This is at an increased pace from the prior year and marks the
fourth year in a row of consecutive traffic gr owth.

If we take a look at airline seat deployment we find two distinctly different trends. Since 2007 Allegiant Air has grown 256% in seat capacity in Idaho Falls. On the other hand, network carrier capacity is down 29% over that same period. This is putting an increasing squeeze on passengers that rely on that network carrier access, which is the only way to get to the vast majority of destinations in the United States and
, indeed
, the world.

The market ’s respectable traffic growth , coupled with high average fares, indicate the ability of the market to profitably support its air service. It also illustrates t he need for additional competition

. There has been be a gap in non

- stop connecti vity with the loss of Minneapolis
service o n Northwest, and that gap would be best filled by a network carrier offering daily flights.



## IDAHO FALLS MARKET LEAKAGE PROBLEM
In addition to Idaho Falls having very high average fares it also has the unenviable distinction of losing

– or leaking

– the majority of its traffic to other airports. A mammoth 70 % of Idaho Falls area travelers are not using Idaho Falls Regional Airport

. This equates to over 1,000 passengers per day each way! These passengers are not leaking to some of the geographicall y close airports such as Pocatello, ID
, or Jackson Hole, WY. They are crossing state boundaries by driving almost four hours to Salt La ke City International Airport. Salt Lake City is the primary airport for 67.7% of Idaho Falls area travelers (see figu re 7 next page). There is a minimal amount of traffic, 1.8%, that leaks to Boise, ID
, and only a handful of people leak to other airports in the region.Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 10

Keep talking about leakage for As can be seen in the figure below, if we look at the revenue picture of Idaho Falls area travelers we find that they create a $212 million market annually. $71.7 million or 33.8% of that revenue is originating at Idaho Falls Regional Airport. A look at the average fare at Salt Lake City reveals a $192 average fare. This compares to Idaho Falls at a much higher $230 average fare. This shows that high fares are a factor in passengers’ decision s to drive almost four hours to Salt Lake City to catch a flight.

Although fares are certainly a
factor in the
Idaho Falls leakage there is
another element
at work here. We see that Boise, ID
, 

### FIGURE 7: Airport usage for Idaho Falls area passengers as measured in PDEW Source: Sixel Consulting Group Ticket Analysis, CY2012

FIGURE 8: Average fares paid and revenue generated by Idaho Falls area passengers Source: Sixel Consulting Group Ticket Analysis, CY2012Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 11

which is both closer to
, and has lower average fares than
, Salt Lake City is receiving only a tiny 1.5% of the Idaho Falls area revenue (see Figure 8, previou s page) . This suggests access is another factor in the travelling public’s decisions. Right now Boise and
, especially
, Idaho Falls
, offer limited access to the East Coast and Midwest . Many of these passengers are leaking to the much larger Salt Lake Cit y because it has either one

- stop or non

- stop service to most points in
the US. This Idaho Falls access shortfall can be improved with a link to Minneapolis/St. Paul.



## THE IDAHO FALLS ECONOMY

Idaho Falls features an economy that has high

- education, high

- income jobs. Idaho Falls is the
national center for nuclear and high

- tech energy

– home to more than 4,000 engineers working for various companies at the Idaho National Laboratory , which is operated by th e Department of Energy (see Figure 9)

. Idaho Falls is uniquely positioned as the home to groundbreaking future
research and, as such, the Inland Northwest Research Alliance chose the City as its home.

The Idaho National Lab

– the world’s leading nuclear r e search facility

– continues to grow in
2013 with two new l aboratories

. The Energy Systems Laboratory will add jobs for 40 new
scientists. It focuses on three main research areas: biofuels an d renewable energy, energy storage and transportation systems, and Hybrid Energy Systems Testing

. Facility researchers will work on developing safer and longer

- lasting batteries and energy storage. That capability will
allow researchers to work with the

a utomotive industry in hybrid vehicle development.

A second new building, the
Research and Education Laboratory , will be completed by Septe mber 2013. At the facility, researchers will study how various scientific equipment behaves with
nonradioactive fue ls and materials. Once the tests are completed, the equipment will be taken to the 

### FIGURE 9: Top employers in Idaho Falls Period: CY2012Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 12

Department of Energy's desert site, where it will be subjected to radioactive elements. Research at the facility also will focus on energy and the environment, in labs such as a battery test lab.

Much new investment is focused on the Eastern Idaho technology corridor (see Map 3 ) , with
Idaho Falls at i ts heart

. Flanking Interstate 15 from Pocatello to Rexburg, the Eastern Idaho Technology Corridor constitutes a unique collection of assets providing a rich environment for technology

- based companies . Eastern Idaho is gaining national recognition as home to a growing number of companies whose products and services are based on the development or application of technology in a wide array of industries ranging from the improvement of agricultural practices to software and systems development. Areas of expertise that are particularly prevalent in the area include:
I nformation security, subsurface technology, environmental remediation, integrated circuit design, radiation sciences, and particle acceleration.

The median family income in Idaho Falls is among the highest in the nation at $59,850

– moreover that income translated to the purchasing power of more than $69,400 due to the low cost of living. CNBC named Idaho Falls one of the top ten most
affordable cities in the US in 2012. Idaho Falls average cost of living is just 86% of the
nation al average.

The high quality jobs, high incomes, and low cost of living create a powerful economic magnet that continuously attracts people and businesses to the area. It also indicates growth in the number of people who will be able to afford to travel. With these factors in place, it stands to reason the market can support additional air service. It is now up to the Airport to bring additional air service to the region to help support its continued economic growth. 

### MAP 3: Eastern Idaho Technology CorridorProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 13

MAJOR NATIONAL PARKS NEAR IDAHO FALLS

More than eight million annual visitors are drawn to the attractions surrounding Idaho Falls, including Yellowstone and Grand Teton Parks. Idaho Falls is uniquely located as an easy access point to two national parks , a number of national forests , the Snake River wild lands , and the
Teton Wilderness . Idaho Falls serves as the western gateway to both Grand Teton National Park
and Yellowstone National Park . The gate to Yellowstone is just 107 miles , by car, from the Idaho Falls Regional Airport

– a drive of an hour and 50 minutes. The gate to Grand Teton National Park is just 90 miles from the Airport

– a drive of just over two hours (slower than average due to mountainous terrain).



## AIR MAP 4 : Yellowstone and Grand Teton National Park

Source: Six el Consulting GroupProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 14

HISTORY OF IDAHO FALLS

– MINNEAPOLIS

Northwest Airlines (who has since merged with Delta Air Lines) has served the Idaho Falls

– Minneapolis market in the past. They began the service in June 2005 and the route generated new passengers in the local market. It also increased access to points in the Midwest and East
Coast . In fact
, before Northwest Airlines served IDA

- MSP non

- stop
, there were only 4.5 PDEW in the market. The nonstop service greatly stimul ated the market to where it became the 6th largest market from Idaho Falls with an average of 10.5 PDEW (see Figure 10). This is a 135% increase from the period prior to nonstop service.

The data shows that the loads carried on the previous Minneapolis service were higher than what Idaho Falls saw on an average at that time. The MSP loads averaged 3.2 load factor points higher than the Idaho Falls market average during the period the market was served. This shows that there is proven demand for this service that exceeds existing markets from Idaho Falls.
It also shows that the likelihood of this being a valuable travel asset to the communit y is high.



### FIGURE 10: Minneapolis

– Idaho Falls average fare and PDEW history Source: US DOT OD1A, Q1 2004

– Q4 2010Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 15

Northwest Airlines pulled the market in April 2009. This was during the time of two devastating events for air service. The record high fuel spike occurred in 2008 and , shortly thereafter, was followed by the economic recession. These two events changed the economic viability of flying across the nation. In particular
, it drastically changed the economics of the 50

- seat jet flying long routes such as Idaho Falls

- Minneapolis. Airlines’ regional jet fleets have been readjusted
and retool ed to larger aircraft in the 65

- 90 seat range . These aircraft have improved the viability of long regional jet markets. This change
, combined with the slow but progressing economic
recovery , improves conditions for the Idaho Falls

– Minneapolis market. However there are still risks that only a SCASD grant combined with Idaho Falls community support can overcome.



## SERVI CE DEVELOPMENT PLAN: IDAHO FALLS

- MINNEAPOLIS

Idaho Falls Regional Airport seeks the restoration of nonstop service from Idaho Falls to Minneapolis/St. Paul. As Minneapolis/St. Paul is northeast of Idaho Falls
, the Airport has identified it as a key to serve markets that are either not served or inadequately served today. The Airport
has identified that Delta Air Lines would be an id eal airline to help fill the service void that Idaho Falls currently has in its air service. Delta Air Lines operates a hub at MSP with as many as 500 departures per day. Delta Air Lines has signed a letter of support this grant

. This grant would
allow risk sharing on a market that the airline is evaluating for potential new service. This service would provide superior access to the Midwest and East Coast.

Idaho Falls only current options are to access the Midwest and East Coast via United’s Denver
hub and Delta’s Salt Lake City hub. Delta at Salt Lake City has a very minimal schedule to point s in the Midwest and East Coast . Denver offers slightly better options but is still compromised
, and in many cases only serves a connecting city once per day
, rendering flight schedules for time

sensitive business travelers problematic.

So fa r in 2013, the Airport has attended two airline planning conferences and has spoken to a
number of carriers about additional service. A common theme from these discussion s is the need for the community to share the risk on a new route. This is particularly true with Minneapolis/St. Paul Service mainly due to its stage length

– 939 miles

– and potential regional jet fuel burn over that stage length. The funding plan conta ined in this application constitutes the risk sharing necessary for the service to begin.Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 16

Network carrier
service to Minneapolis would
not only serve the origin and destination market,
it would also be
able to connect
Idaho Falls to a number of new

one

- stop destinations not served through
current hubs. When analyzing the
connection package on Delta Air Lines, there are
95 one

- stop destinatio ns that could be served over the MSP hub (see Map 5 ). The Idaho Falls
market curre ntly generates an average of 130 passengers per day each way (PDEW) to and from these connecting cities and Minneapolis, itself. Currently the fares in these markets are
in credibly high. They average $313 one way.

New Delta Air Lines service to Minneapolis will also bring much needed competition to United Airlines. There are currently 27 markets that can only be served

one

- stop via United Airlines ’
Denver hub (see Map 6 ). These markets currently have a stratospheric fare of $348 one way! These are good examples
of markets that
, because of limited competition
, are driving 

### MAP 6 : Newly Competitive One

- Stop Markets via MSP, CY12 Source: Sixel Consulting Group Schedules Analysis, July 2013 MAP 5 : Connections over MSP on Delta Air Lines Source: Sixel Consulting Group Hub Builder Software, July 2013Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 17

to Salt Lake City in search for more attractive fares.

Delta Minnea polis service will connect to 38 unique one

- stop cities (see Map 7 ). These cities all currently require two stops to be reached today. These markets have an average fare today of $352 one way. These markets are in great need of better competition and access.

As can be seen
, a verage fares in many of the Idaho Falls
markets that could be served by Delta over MSP are incredibly high

– they clearly reflect a general lack of competition and service options at Idaho Falls

. As mentioned earlier
, t he overall average fare paid by
pas s engers that could flow

over MSP on Delta, for 2012, was $313 each way. S ervice to and through Minneapolis on Delta
Air Lines would be targeting many current high fare markets, providing additional competition in
Idaho Falls

.

Idaho Falls has been awarded two previous grants. In 2005 a grant was awarded for Denver service. That market has been wildly successful. Demand for Denver service exploded by 123% (see Figure 11, next page). It went from 8.8 PDEW to 19.6 PDEW in its first full year of service.
U nited entered the market with 2 flights per day. This market was so successful that United Airlines never collected the grant money in the Denver market. Even though the SCASD grant funds were not used, the grant was successful because it gave United Air lines the risk abatement it needed to begin the service . The route continues to be successful as evidenced by United more than doubling service to the current 4.5 flights per day.

The second SCASD grant was awarded in 2010 for San Francisco service. United Airlines began that market the following year. The market successfully generated new traffic and used the full value of the grant. This delivered the promised community benefits of the service for 18 months
, 

### MAP 7 : Unique One

- Stop Markets via MSP, CY12 Source: Sixel Consulting Group Schedules Analysis, July 2013Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 18 at which time the service
was discontinued. As in
Denver
, there was sizeable market stimulation of 116% in
the local market. The market ballooned from 6.5 PDEW to 14 PDEW (see Figure 11).

An emerging pattern of
market simulation is remarkably similar when new
service is added at Idaho Falls Regional Airport. The previous Northwest Minneapolis service stimulated the market by 135%, the new United Denver service stimulated
the market 123%, and finally the new United San Francisco service stimulated the market by 116%.



## PROPOSED BUDGET AND TIMELINE

The total project cost is $597,500 (see Figure 12 ). The majority of that funding, $500,000, will provide a revenue guarantee for the carrier operating the new route. If the route sees immediate success, as would be suggested in the data included in this application, the revenue guarantee portion of the funding would no t be used. In addition to the revenue guarantee, the Airport has earmarked $37,500 for fee waivers, including landing fee discounts. The City of Idaho Falls, Grow Idaho Falls Economic Development Agency, Idaho National Lab, and The Idaho Falls Chamber of Commerce have combined forces to deliver $50,00 0 in direct support for the new
service which will be used for marketin g and advertising . In addition the Post Register newspaper and th e radio stations KLCE, KMGI, and KID

- AM have committed a combined $10,000 in in

- kind support for marketing an d advertising purposes . This is a key to getting people onto the flights as soon as they begin

. 

### FIGURE 12 : Project Budget Source: Idaho Falls Airport, July 2013 FIGURE 11 : New service market simula tion Source: US DOT OD1A, YE 1Q06

- YE 2Q12



## San Francisco

DenverProposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 19

Th e anticipated timeline for the project assumes a Grant would be awarded in September of 2013 (see Figure 13 on next page ). If the Grant agreement with the DOT is finalized in October of
2013
, the Airport will step up its recruitment efforts in the fall, endeavoring to meet with Delta Air
Lines through the winter. In a best

- case scenario, the Ai rport would hope to target April of 2014 for a new service announcement, with creative materials ready for the marketing program shortly after a formal service announcement. The targeted start date for service would be June of 2014, with a two

- year revenue guarantee period, allowing the Grant to be closed by September of 2016.

It is possible the timeline could slip,
based on economic factors, airline planning factors, and
events outside the control of the Airport or prospective
airlines. It is also possible prospective airlines could prefer to use the funding under this p lan for an alternate
route. Idaho Falls Regional Airport would like the grant to be used for alternate airpo rts that would facilitate similar service benefits to Idaho Falls area travelers. Among alternate routes the
Grant co uld be used for would be Chicago
, Houston, or Dallas/Ft. Worth. These markets are
similar in their reach to the Midwest and East Coast an d would provide viable alternatives to Minneapolis.



## PUBLIC/PRIVATE PARTNERSHIP

This application for federal Small Community Air Service Development Grant funding is supported by a group of community partners who have pledged their financial support for the
effort to bring network service to Minneapolis/St. Paul

. These partners include The City of Idaho Falls, Grow Idaho Falls Economic Development Agency, Idaho Nationa l Lab, The Idaho Falls Chamber of Commerce
, Post Register newspaper , and th e radio stations KLCE, KMGI, and KID

AM

. Several of these entities have partnered before on previous successful air service development efforts in the community incl uding supporting previous SCASD grants. 

### FIGURE 13: Project Timeline Source: Idaho Falls Regional Airport, July 2013Proposal of Idaho Falls Regional Airport • Idaho Falls, Idaho • July 2013 

## 20

CONCLUSION

It is clear the current Idaho Falls market can support additional service. It is also clear that Northwest’s previous non

- stop service on the Idaho Falls

– Minneapolis (MSP) route helped to stimulate the market to a level where it can support daily network carrier service. Des pite high fares and less capacity, the Airport has been able to grow passengers in recent years. 2012 was within striking distance of record

- setting 2007
, but this trend will be unsustainable without additional service. The number one target for service that would provide the greatest benefit to the community is Minneapolis /St. Paul. The Airport has conducted discussions with numerous air carriers for increased service. Delta Air Lines has written a letter supporting our application. Given the history of the IDA

- MSP route being entered and then exited during a time of record fuel prices and the beginning of the economic recession
, there is a need for risk sharing to a ffect
a route launch.

Idaho Falls Regional Airport has applied for and successfully us ed Small Community Air Service Development Grants. It successfully launched Denver service and San Francisco service. These two markets service two distinctly different missions. They also serve different purposes than Minneapolis service would. The Ai rport has also had sizable success with Allegiant Air without the aid of SCASD grants. T he Air port realizes
, due to the increasingly risk

- averse position of the airline industry
, it must offer risk sharing on targeted routes. This SCASD Grant application is the key to
additional service in Idaho Falls.