### PROPOSAL UNDER THE S MALL COMMUNITY AIR SERVICE DEVELOPM ENT PROGRAM Docket Number OST

- 2013

- 0120

Prepared for:

U.S. Department of Transportation

Docket Operations and Media Management Division

Prepared by :

Applicant Community:
City of Wichita, Wichita Airport Authority

455 N. Main
Wichita, Kansas 67202
Legal Sponsor:
Wichita Airport Authority
2173 Air Cargo Road
Wichita, Kansas 67209

DUNS # 1249706 41

July 20132

Wichita Metro Area Demographics

Wichita Metropolitan Statistical Area (MSA) encompasses Sedgwick, Butler, Harvey and Sumner counties, and is the largest metro area in Kansas with 20 12 population of 628,242 persons.
Wichita houses a variety of industries, providing products and services that are recognized world

- wide. Thousands of talented, creative entrepreneurs also call Wichita home. There are approximately 15,000 business establishments in the Wichita metro

area, 97% of which are small

- to medium

- sized firms with less than 100 employees.

Companies in Sedgwick County are responsible for more than 60 percent of the world's general aviation aircraft, but Wichita's diverse exports reach well beyond airplanes. Manufactur ers here produce everything from motorcycles to computer storage devices, earning Sedgwick County companies the Kansas Exporter of the Year Award for the past two years.

Wichita is the regional economic hub of south

- central Kansas and northern Oklahoma. It provides financial, medical and business services to more than half a million people in the Wichita MSA alone. Manufacturing accounts for roughly 19% of Wichita metro area employment

– over double the national percentage (10%.)

According to a Milken Inst itute study, Wichita has the highest concentration of aircraft and aircraft parts manufacturing employment (skills) in the nation. Wichita area manufacturers also utilize these precision production skills to produce high value

- added products such as indust rial

- commercial machinery, computer equipment, fabricated metal products, instrumentation and controls, photographic equipment, plastic and composite products, chemicals, petroleum refining equipment and electronic equipment.

Because of the diverse industr y and high concentration of manufacturing in Kansas, affordable and convenient access to the air transportation system is vital to the businesses of Kansas.

Wichita Mid

- Continent Airport

The Wichita Mid

- Continent Airport is a s m a l l h u b a irport, as designat ed by the FAA, which carr ied 731,033 enplanements in 2012 . Wichita ranks 9 8 th in the U.S. in terms of domestic O&D passengers.

Wichita Mid

- Continent Airport is isolated from large hub airports.3

Mileage & Drive Times to Competing Airports from Wichita :

Kansas City 217 Miles 3.3 Hours
Oklahoma City 173 Miles 2.7 Hours

Tulsa 187 Miles 2.9 Hours

Amarillo 417 Miles 6.4 Hours

Wichita Mid

- Continent Airport is the largest airport in the State of Kansas. Its natural
catchment area geographically covers roughly two

- thirds of the state , a portion of northern Oklahoma and more than 2.8 million residents

.

POPULATION IN PRIMARY CATCHMENT AREA IS 963,293;

TOTAL CATCHMENT IS : 2,853,118

Primary

Secondary4

A ir Service Needs/Deficiencies

Wichita has lost 19% of its capacity since 2008 and nonstop service to 3 cities: Memphis, St. Louis and Detroit. Enplanements are down 7% from 2008, which was a record year for ICT.

Alt hough ICT is isolated from other airports, 32 % of passengers in ICT’s catchment area
leak to out

- of

- state airports, namely Kansas City and Oklahoma City. Inbound and outbound leakage amounts to 491 PDEW.

 MCI has over 4.5 times the number of daily nonstops

 With nearly 4.9 times as many O&D markets, M CI is more attractive

Atlanta is the second top destination from ICT and is served only by Delta Air Lines on a

non

- stop basis. AirTran Airways served the Atlanta market from May 2002 until June 1, 2013 and provided competitive fares to Atlanta and a ma jority of eastern destinations. The acquisition of AirTran by Southwest helped to bring Southwest Airlines service to Wichita in June 2013. However, Southwest Airlines is not serving the Atlanta market.
Fares to Atlanta have increased substantially :

 Fo r example, a 14

- day advance purchase fare in April on Delta was $225.80;

 I n July, the 14

- day advance purchase fare on delta.com was $721.80, a 180%
increase.
Denver is the third top destination from ICT and is served only by United Airlines on a nonstop basis. Frontier Airlines, operated by Republic Airways, served the Denver market from October 2007 until November 2012 with Embraer aircraft. Frontier provide d competitive fares to Denver and a majority of western destinations. Frontier discontinued the service due to lack of aircraft availability, as Republic which owns Frontier had obligated the Embraer aircraft to other airlines. Also, Frontier, knowing

700,000 720,000 740,000 760,000 780,000 800,000 820,000

2008 2009 2010 2011 2012

Enplanements

0 200000 400000 600000 800000 1000000 1200000 1400000

2008 2009 2010 2011 2012

Capacity 2008

- 20125

t hat Southwest was going to enter the Wichita market, decided to place their aircraft in
other markets. Fares to Denver have increased substantially :

 A 14

- day advance purchase fare to Denver used to cost about $168 (flyfrontier.com);

 I n July, the 14

- day advance purchase fare on united.com was $654 (a 289% increase).
Phoenix is our fourth top destination and is not served on a daily basis by any airlines. Allegiant Air serves the Phoenix

- Mesa airport on a by

- weekly basis. There is sufficient demand for d aily nonstop service to Phoenix. There were 71,560 O&D passengers to
Phoenix in 2012.

W ichita Mid

- Continent Airport is served by five airlines: Allegiant Air, American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. American, Delta a nd United have a history of charging high fares in our market. Although Allegiant Air is a low

- fare carrier, their service is not daily, does not offer connections, and does not impact a majority of destinations. Southwest Airlines is needed to keep the c ompetitive pressure on fares to a majority of destinations offered on all airlines.
Southwest began service in Wichita on June 2, 2013 to Dallas Love, Chicago Midway, and Las Vegas , bringing much needed capacity and competition to our market . United and American competes with Southwest on the Chicago route, and American competes with Southwest on the Dallas route. With rising fuel, labor, and other costs, airlines need to be profitable within one year after starting service in a new market, or the service will terminate.
In order for Kansas businesses, its economy, trade, commerce and tourism to compete globally, it is essential that Wichita Mid

- Continent Airport offer quality, affordable air service that competes with alternate levels of ai r service within its region and with similar communities on the national level.

Any air service development efforts over the past 3 years and the results of those efforts (including marketing and promotional efforts)

Prior to 2002, average one

- way airfare s at Wichita Mid

- Continent Airport were $219

- the 10 th highest in the nation. W henever a low

- fare airline had entered the Wichita market, the legacy carriers lowered their fares, added frequency, and/or increased aircraft size, in order to compete. Passengers we re then split between the airlines, resulting in less revenue for the airlines yet costs remain high. The low

- fare airline is unable to sustain the losses and leaves the market, causing fares to increase.6

After several unsuccessful attempts to convince the airlines to lower fares, the business and community leaders throughout our catchment area launched a travel bank campaign called “Fair Fares” with the goal of attracting low

- fare carrier(s) to Wichita
Mid

- Continent Airport that would lower fares to eastern and western destinations and to Chicago.
The Fair Fares campaign was successful in attracting AirTran Airways in May 2002 and Frontier in September 2003. Frontier’s operating carrier had operational iss ues and left the Wichita market in April of 2004 before returning in October 2007. The City of Wichita, later joined by Sedgwick County, provided the revenue guarantee funds for
AirTran and Frontier.
Since Wichita was attracting passengers from two

- third s of the State of Kansas, and because ICT provides a significant economic impact for the State with tax revenue, job creation, and enhanced economic development opportunities, legislators from South Central Kansas lobbied for and were successful in adopting the Affordable Airfares for Kansas program in 2006. This was a five

- year program that provided $5 million each
year in revenue guarantees from the State for affordable airfares in Kansas. The City of Wichita and Sedgwick County provide matching funds. The funds we re used as a revenue guarantee for AirTran and to a less er degree, Frontier.
The results of having affordable airfares at Wichita Mid

- Continent Airport show significant success:

 Average one

- way fares are 28% less from 4 th quarter 2000 to 4 th quarter 2012.

 Passenger traffic to low

- fare destinations is up 31% since 2000.

 Passenger traffic to destinations without the low

- fare impact is down 4% since 2000.

 With consolidation in the airline industry and capacity reductions, our passenger traffic is still up 23% over 2000.

 In 2001, 44% of the passengers from the W ichita catchment area used other airports. In 2011, that leakage rate has been reduced to 32%.

The Kansas Department of Transportation’s econo mic impact study in 2009 revealed 2,325 jobs are supported by the spending of visitors arriving on commercial ai rlines at Wichita Mid

- Continent Airport. In addition, the study revealed that the annual payroll from commercial visitor spending amounted to $52,135,400.

The State of Kansas has voted to extend the Affordable Airfares program another year. These funds w ill be available to Southwest Airlines if it chooses to apply for them. Since this program is subject to legislative action each year, the funding is uncertain each year. It is also uncertain as to whether or not Southwest or any airline will want to participate in this type of program. Ideally, the airline will be supported by the region7

without a revenue guarantee program, which is our goal in applying for the SCASD grant.

S trategic Plan for Meeting those Needs under the SCASDP

The gr ant money would be used to promote Southwest in our region. Our plan is multi

faceted.

 With the assistance of the Wichita Chamber, business and civic leaders will lead the effort to educate the business community of the Southwest Airlines business travel
programs and garner support for Southwest. A variety of meetings , networking opportunities, and receptions would be conducted with business leaders and Southwest Airlines representatives and the Wichita Airport Authority.

 We would partner with area Chambers and tourism departments to promote Southwest to their members

.

 A portion of the airport’s advertisin g budget of $450,000 will be used to advertise Southwest throughout our catchment area.

 Wichita Mid

- Continent Airport will be offering a loyalty program in September which rewards travelers for shopping, dining and parking at the airport by earning one mile or point on their frequent flyer program for every dollar spent. For companies whose employees register with Southwest, the airport w ould double the miles or points earned.

 The Airport will offer parking incentives to companies who contract with Southwest Airlines for a temporary period.
We believe these efforts will position Southwest for success and lead to service
enhancem ents, which ultimately will lead to competitive fares to more destinations.
Detailed description of the funding necessary for implementation of the proposed project (federal and non

- federal contributions) This grant request is for $ 50 0,000 for a one

- year project. In

- kind contributions from the Wichita Chamber of Commerce will involve sponsorship s including E XPOsure, the area's premier networking event and tradeshow featuring 200 exhibitors, 1,500 attendees, and numerous face

- to

- face opportunities to showcase Southw est Airlines to businesses. Other grassroots efforts will include monthly networking events , meetings with business leaders, and the annual meeting. Grant funds would be used for miscellaneous expenses and materials for grassroots efforts, sponsorships, an d other Chamber functions.

Go Wichita , Wichita’s tourism board, will provide in

- kind contributions by providing in

house marketing support, graphic design, collateral development, social and electronic media, to partner with the airport’s promotions.
Grant funds would be used to reimburse the Airport for the enhanced loyalty program.8

Grant funds would be used to reimburse the airport for the revenue lost by providing parking incentives.

Grant funds would be used in the airport’s advertising programs.

T he Affordable Airfares of Kansas program should also be taken into consideration as a statewide contribution , although this is not pa rt of any matching funds.

An explanation of how the proposed project differs from any previous projects for which the community received SCASD funds.

Wichita Mid

- Conti nent has never received a SCASD grant.

Designation of a legal sponsor responsible for administering the proposed project. (Must be a government entity).
The legal sponsor for administering this project und er the Small Community Air Service Grant Program is the Wichita Airport Authority under Kansas Statutes Annotated K.S.A.
3

- 166.

The Wichita Airport Authority, under the direction of the Air Service Development Manager, will have responsibility for developm ent and management of this program on the local level. As the designated community sponsor of this public

- private partnership, the Wichita Airport Authority will serve as a clearinghouse to submit and receive program funding from the department. For Fede ral funds allocated to this grant application, The Airport Authority of the City of Wichita, Kansas will adhere to the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A

- 133 Compliance Supplement as it r elates to Requirements Applicable to Major Federal Awards Programs.

The Airport Authority’s auditing firm will conduct audits on this grant program in accordance with auditing standards generally accepted in the United States of America; the standards appl icable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular
A

- 133, Audits of States, Local Governments, and Non

- Profit Organizations. Those standards and OMB Circular A

- 13 3 require the Authority’s auditing firm to perform an audit to obtain reasonable assurance about compliance requirements that could have a direct and material effect on the federal program(s).1 APPLICATION UNDER

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 201 3

- 0120

SUMMARY INFORMATION

All applicants must submit this Summary Information schedule, as the application coversheet , a completed standard form SF424 and the full application proposal on www.grants.gov

. For your preparation convenience, this Summary Information schedule is located at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/SCASD P

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

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

. Legal Sponsor Name: Wichita Airport
Authority

DUNS Number: 124970641

EIN/Tax ID: 486000653

B. L IST THE N AME OF THE COMMUNITY OR CONSORTIUM OF COM MUNITIES APPLYING :

1.

__ City of Wichita

___________________________________ 2._____________________

_______________________________ 3.____________________________________________

________ 4.____________________________________________________

C

. P ROVIDE THE FULL AIRP ORT NAME AND 3

- L ETTER IATA A IRPORT C ODE FOR THE

APPLICANT ( S ) AIRPORT ( S ) (O NLY PROVIDE CODES FO R THE AIRPORT ( S ) THAT ARE ACTUALLY

SEEKING SERVICE ).

1. Wichita Mid

- Con tinent Airport ICT 2

. 3

. 4

.2

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. 04 2

. 3

. 4

.

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) :

F

. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )

PUBLIC PRIVATE

1. City of Wichita 1. Wichita Chamber of Commerce

2. Sedgwick County 2. Go Wichita Convention & Tourism

3. 3.

4. 4.

5. 5.

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)3

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 $ 500,000

2 State cash financial contribution
Local cash financial contribution

3a Airport cash funds

3b Non

- airport cash funds

3 Total local cash funds ( 3a + 3b )

4 TOTAL CASH FUNDING ( 1+2+3 ) $500,000

In

- K ind contribution

5 a Airport In

- Kind contribution **

5b Other In

- Kind contribution ** $ 30 ,000

5 TOTAL IN

- KIND CONTRIBUTION
( 5 a + 5b ) $30,000

6 TOTAL PROJECT COST ( 4+ 5 ) $530,000

J . IN

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

- Kind contribution) and 5b (Other In

- Kind contribution), please
describe the source(s) of fund(s) and the value ($) of each.

Other In

- Kind: Chamber sponsorships, annual meeting, networking opportunities, business meetings: $15,000 in value

Go Wichita Convention & Tourism incentives to include in

- house marketing support, graphics design, collateral, social and electronic media: $15,000 in value4

K

. I S T HIS A PPLICATION S UBJECT T O R EVIEW B Y S T ATE U NDER E XECUTIVE O RDER 12372

P ROCESS ?

a. This application was made available to the s tate under the Executive Order 12372
Process for review on (date) _____________.

b. Program is subject to E.O. 12372, but has not been selected by th e s tate 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)

_____________________________________________ _________________________________

______________________________________________________________________________