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August 25, 2010

Subject: Proposal under the Small Community Air Service Development Program

Docket OST-2010-0124

Telluride Regional Airport Authority, San Miguel County, Colorado

Duns Number – 180571739

Town of Telluride/Town of Mountain Village/San Miguel County

Telluride Montrose Regional Air Organization/Marketing Telluride Inc.

Dear Ms. Ley:

Accompanying this letter is the Telluride Regional Airport’s Small Community Air Service Development 

Program grant application. Our application has a well thought-out plan, proactive community 

involvement and a realistic timetable. The plan proposes a comprehensive strategic plan to add 

additional air carrier service and increase frequency of service and available seats to meet demand at 

the Telluride Regional Airport. 

This proposal will address the fact that Telluride lacks consistent competitive airline service of more than 

one carrier serving the Telluride Airport for most of the calendar year; which contributes to airfares 

much higher than those experienced by the majority of airports serving the national transportation 

system. Additionally the Telluride flight schedule lacks a flight which will connect to eastbound air 

service from a hub airport that can arrive before about 10pm on the east coast. This impacts 

enplanements to the Telluride Airport and adds to leakage to other regional airports quite a drive away 

from Telluride

Telluride Airport’s application meets the program priorities as established by the Secretary of 

Transportation (Order 2010-7-16):

A. The Plan proposed will meet the community goals of improving air service access and 

 create competition to help pressure lower fares. Additionally it will help diminish local and 

 destination traveler’s needs to drive to alternate airports when trying to travel to or from the 

 Telluride region that are a long distance away in order to find competitive airfares or 

 convenient flight schedules.

B. The Telluride community will fund 33% ($200,000) of the total proposed air service program 

 in the form of cash and in-kind services 25% ($100,000) of the total plan cash requirement is 

 from non-airport or grant fund sources.

C. The community will be working with an experienced public organization focused for years on 

 air service development (Telluride Montrose Regional Air Organization a 501c6 Non-Profit 
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 formed in 2004) as a part of a diverse public-private partnership committed to completing 

 the proposal submitted herein.

D. This proposal includes a thorough market analysis.

E. The proposed service would provide material benefits to a wide segment of the remote 

 Telluride Community including to the tourism industry, local businesses competing on a global 

 basis, local resident travelers and other enterprises whose access to the national 

 transportation system is limited by the Telluride Regional Airports present air service 

 condition.

We appreciate the US Department of Transportation’s understanding of the importance of commercial 

air service in smaller and more remote communities like Telluride and look forward to your review of 

our Small Community Air Service Development Program Grant Application.

Sincerely,

Rich Nuttal

Airport Manager, Telluride Regional Airport
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Table of Contents

Proposal Highlights

Limited Service with High Fares Pg. 6

Challenged to attract Aircraft Equipment Eligible to Fly to Telluride Pg. 7

Airport improvements expand Aircraft Eligibility by Fall 2011 Pg. 7

Uneven Passenger Demand Pg. 7

Well Considered Plan with a realistic Timeline Pg. 8

Active Community Involvement and Financial Support Pg. 9

Material benefits to overall population Pg. 9

Air Service Environment

Telluride Airport’s Catchment Area Pg. 9

Catchment area proximity to other Airports (Leakage) Pg. 10

Home to Telluride Ski Resort/Close to National Parks Pg. 10

Important to Tourism Reliant Economy Pg. 10

Air Service Existing and Historical

Existing Air Service Pg. 11

Historical Air Service Pg. 13

Past Air Service Development Efforts Pg. 15

Air Service Deficiencies and Needs

Only One Year-round Carrier Pg. 16

High Airfares Pg. 16

Circuitous Routings Pg. 16

Underserved Markets Pg. 17

Strategic Plan – Air Service

Project Goals Pg. 17

Proposed Air Service Pg. 17

Airline Participation Pg. 18

Market Analysis Pg. 19

Alternate Plan Pg. 21

Strategic Plan – Implementation and Funding

Public/Private Partnership Pg. 21

Incentive and Support Plan Pg. 21

Strategic Plan Funding Pg. 24

Project continuation and sustainability Pg. 25

Schedule and Monitoring

Milestones Pg. 25

Monitoring Pg. 25

Appendix A. Airline and Community Support Pg. 27
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Summary Information

A. Applicant Information: (Check all that apply)

X_ Not a Consortium __ Interstate Consortium __ Intrastate Consortium

__Community Now Receives EAS Subsidy 

X_ Community (or Consortium member) previously received a Small Community Grant

 If previous recipient, expiration date of grant: Received 2002/Expiration 2004

B. Public/Private Partnerships: (List organization names)

Public: Private:

1. Town of Telluride 1. Telluride Montrose Regional Air Organization

2. Town of Mountain Village 2. Telluride Ski Resort

3. Telluride Regional Airport Authority 3. Telluride Alpine Lodging - Telluride

4. Marketing Telluride Inc. 4. Franz Klammer – Telluride

5. San Miguel County 5. Mountain Lodge – Mountain Village

C. Project Proposal: (Check All That Apply)

X_ Marketing __ Upgrade Aircraft X_ New Route

__ Personnel X_ Increase Frequency X_ Low Fare Service

__ Travel Bank __ Service Restoration __ Subsidy

__ Surface Transportation X_ Regional Service

X_ Revenue Guarantee __ Launch New Carrier

X_ Start-up Cost Offset __ First Service

__ Study X_ Secure Additional Carrier

__ Other

D. Existing Landing Aids at Local Airport:

__ Full ILS __ Outer/Middle Marker __ Published Instrument Approach

X_ Localizer __ Other

E. Project Costs:

1. Federal Amount Requested: $400,000_________________________

2. Total Local Cash Financial Contribution: $100,000_________________________

3. Local Cash Financial Contribution:

 3a. Airport Cash Funds: $0__________________________

 3b. Non-Airport Cash Funds: $100,000_________________________

 3c. Total Local Cash funds (3a. +3b.): $100,000_________________________

4. TOTAL CASH FUNDING (1.+2.+3c.): $500,000_________________________

5. Local funds contributed from already- existing

 programs or projects included in line 3c. amount: $100,000*________________________

6. Local funds contributed from new commitments

 or new resources included in line 3c. amount: $0*
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7. Airport In-Kind contribution: $0______________________________

8. Other In-Kind Contribution: $100,000 – Local Tourism/Hotels Marketing Support

9. TOTAL IN-KIND CONTRIBUTION (7. + 8.): $100,000_______________________________

10. TOTAL COST OF PROJECT (4. + 9.): $600,000_______________________________

F. Enplanements:

2000__17,125___ 2004__19,736___ 2008__13,325___

2001__18,754___ 2005__19,596___ 2009__7007____+

2002__18,338___ 2006__17,529___

2003__15,750___ 2007__17,537___

G. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER 12372 PROCESS?

__ a. This application was made available to the State under Executive Order 12372 Process 

 for review on (date) _________.

__ b. Program is subject to E.O. 12372 but has not been selected for State for Review.

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

H. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? (IF “YES’, PROVIDE EXPLANATION)

X_ No __ Yes (explain) _____________________________________________

*TMRAO Funds are derived about 65% from a 2% lodging and restaurant tax in the towns of 

Mountain Village and Telluride and 35% from annual individual contributions. In essence TMRAO 

has a permanent funding mechanism in place to provide the local funding support for its air service 

development efforts and this grant request, although new funds come in every year via the 

voluntary individual contributions.

+Telluride was closed from April 7, 2009 – November 3, 2009 for runway construction work. It is a 

one runway airport which impacted normal enplanements in the 2009 calendar year.
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Proposal Highlights:

Telluride Regional Airport in conjunction with the Telluride/Montrose Regional Air Organization 

(TMRAO) is applying for the Small Community Air Service Development Program grant for $400,000. The 

community match will be $200,000 in cash and in-kind contribution. This money will be used to increase 

airline service and airline service competition to the Telluride Regional Airport. The Project goals are to:

 - 1st Objective: Obtain a new 2nd Summer Air Service and carrier via a different hub airport 

 than is presently serving Telluride. This service will provide feed into the national 

 transportation system, on one of the limited aircraft types that qualifies to fly commercially 

 into the Telluride Regional Airport.

- Reduce the high airfares into the Telluride Regional Airport in summer via creating more 

competition in the marketplace.

- 2nd Objective: Improve air flight schedules to meet demand for a morning flight to a 

connecting hub heading east that would allow passengers to arrive back on the east 

coast at a more reasonable hour (5p-6p) than the present post 10pm arrival time via 

these connections. This would also reduce the need for air travelers to drive long 

distances to access air service at competitive airfares.

The Strategic Plan to accomplish the project goals is to do the following:

+ Objective One: Add summer service from Telluride on a 2nd carrier via a hub airport 

 (USAirways is the number-1 priority) during the summer and expand the period Telluride has 

 service with two carriers to about 7 months. (Note: Market and carrier options are limited 

 due to the limited number of airport that can operate commercially into Telluride)

+ Objective Two: Add a Telluride to Denver flight that departs earlier in the day on a carrier 

 that flies to a connecting hub that can get passengers back in a more reasonable time of day 

 (5p-7p). Denver would be the first priority for hub with Great Lakes/United the first priority 

 carrier option, other United Codeshare/United 2nd priority and other carrier/hub final priority 

 of service that can meet earlier east coast arrival goal. 

Limited Air Service that has been declining...with High Airfares

Presently, Telluride is limited to 2X daily service to Denver on Great Lakes airlines year-round and 2X 

daily service to Phoenix on US Airways in winter (Mid-December to End of March). Additionally, flight 

schedules tend to occur during the middle of the day when airlines tend to have more aircraft available, 

making it difficult for local business flyers to efficiently complete business trips. Business and leisure 

flyers heading to the East Coast often see post 10pm arrivals based on present flight schedule available 

connecting times (And sometimes have to overnight for some markets). Due to the limits on Telluride 
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airline service due to operational conditions (9070 foot plus high runway elevation/7111 foot long 

runway) and the limits on flight schedules, approximately 60% of Telluride Catchment area travelers fly 

out of other airports. This often means driving long distances over rural mountain roads to get to 

alternate airports to gain access to flight times that work and competitive fares to/from the region. 

Alternate airports that draw significant travelers from Telluride include: Montrose (1 Hour/20 Minutes), 

Grand Junction (2 Hours/30 Minutes) and even Denver (6 Hours/30 Minutes).

The combination of one carrier service for 75% of the year which limits competition, limited flight 

schedules and circuitous routings often with multiple air carriers, causes the high percentage of leakage 

and high airfares from the Telluride Regional Airport. 

Challenged to attract aircraft equipment eligible to Fly to Telluride

The Telluride Regional Airport (TEX) has unique air service needs. Telluride is the highest commercial 

airport in the United States (Elevation 9.070’) that has a part 139 operating certificate. The airport 

category is B-3 which presently limits the commercial air service to a few very specific turbo-prop 

aircraft that typically can only fly to/from a short range. This limits the hub airports and airlines that can 

be sought to provide air service to Telluride. Telluride has dropped from a high of almost 28,000 

enplanements over 10 Years ago to around 13,999 in 2008 due to the aircraft limitations which in turn 

have limited schedules, competition and raised airfares. Presently the forecast is for Telluride to just 

barely achieve 10,000 enplanements in 2010. The limitation on aircraft types that can fly to Telluride

also limits commercial air service retention... particularly as aircraft are retired and airlines are trending 

towards a reduction of regional oriented service due to high fuel costs that make it more difficult to 

profitably operate. 

Airport improvements expand access to qualified aircraft by Fall 2011

The Telluride Regional Airport is presently in the process of an airport runway improvement project. 

Phase I of the projected was completed in 2008, Phase II was started the spring of 2009 and completed

in October 2009. This required a runway closure during this period (Telluride is a one runway airport). 

The last phase of this project has recently begun and is scheduled for completion in November 2010. 

This last phase will require much shorter runway closure periods. 

When this project is completed Telluride’s classification will change from a B-3 airport to a D-3 airport. 

Upon approval of C & D approaches this will open up Telluride to new aircraft that can operate here on a 

commercial basis including the Q-400. Commercial airline service will, however, remain limited to mostly 

regional service within a maximum 600-650 mile distance from Telluride at best.

Uneven passenger travel demand

Another challenge to commercial air service to Telluride is that Telluride is a heavy leisure travel 

destination with an uneven passenger demand when looking at this demand throughout the year. 
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Telluride sees the greatest amount of travelers during the winter and to a lesser extent the summer due 

to skiing in the winter and other outdoor recreational opportunities in the summer. Spring and fall see a 

drop-off on traffic demand which adds to the challenge of getting new air service and retaining present 

air service. The Telluride Montrose Regional Air Organization (TMRAO), a partner in this grant request 

with the Telluride Regional Airport Authority, has been successful in the past years via air guarantee 

programs in attracting and retaining air service. TMRAO (A multi-community member 501c6 Non-profit) 

would provide the local air guarantee match to the federal grant to help acquire new air service to 

create more competition at the Telluride Regional Airport, improve flight times on current air service 

particularly for east bound travelers or extend present service with USAirways by adding summer airline 

service in addition to the winter service presently operating successfully on a revenue guarantee. 

Well considered plan with a realistic timeline

Our strategic plan to meet our goals is designed to obtain an early morning outbound flight via a hub 

airport with many connections into the national transportation system and a second carrier for summer 

service to provide competition and help lower airfares. The primary targeted service, in order to add an 

early morning flight summer and winter seasons, is with Great Lakes Aviation/United from Telluride to 

Denver. Our alternate plans would be to obtain an early morning flight with another United operated or 

code-share flight from Telluride to Denver or any eastbound carrier that could provide a connectable 

flight from Telluride that could get business and leisure travelers to major mid-west and east coast cities 

at reasonable times on the same date of departure. The primary targeted service in order to add a 

second summer service carrier is with US Airways from Telluride to Phoenix. Our alternate plan is to 

attract a 2nd summer service on another carrier (Not Great Lakes/United) that can provide many 

connections via a hub airport. These targets take into consideration the limited aircraft type options and 

thus the limited air carrier and market options. Key components of the strategic plan include the 

following:

• Revenue guarantee and marketing plan to offset new service start-up and to give time and 

focus to capture present traveler leakage and mature market for visiting destination guests.

• An in-depth market analysis including historical data indicates a profitable and sustainable 

effort after initial two to three year ramp-up period.

• Grant funds will be used in a timely manner

• The local community is committed to seeing this project succeed on service it has been 

working to obtain over the past few years and is a financial stakeholder.

Active community involvement and financial stakeholder

The Telluride Montrose Regional Air Organization (TMRAO) is the main community funding partner and 

focuses on stimulating the regional economy by increasing air service to meet the growing demand for 

travelers to and from the region and the region’s airports in Telluride and Montrose. TMRAO has utilized 

air service guarantee programs and marketing support to meet these goals.
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Contributing members of TMRAO include:

• All Hotels and Restaurants in the Town of Telluride (About 50)

• All Hotels and Restaurants in the Town of Mountain Village 

(About 50)

• Telluride Ski Resort

• More than 70 additional voluntary air service program 

contributing businesses

• City of Montrose

• Town of Telluride

• Town of Mountain Village

Telluride Ski and Golf and the local 

convention and visitor’s bureau 

(Marketing Telluride Inc & 

Montrose Visitors Bureau) are 

major supporters of the air service 

by their marketing of the local air 

service. These agencies/businesses 

are supported in marketing the 

local flights by many lodging and 

other businesses in the region.

Seeing that air service at the Telluride Regional Airport stimulates economic activity in the area of over 

$140 Million Dollars* the local community is very much behind sustaining and growing air service to 

help facilitate a healthy local economy. Adding service that can help diversify the local economy which is 

predominately tourism based is another focus of the community support.

*Based on a 2008 economic impact study by the Colorado Department of Transportation – Aeronautics 

Division conducted by Wilbur Smith Associates.

Material benefits to overall population

The addition of an early morning flight to a hub city will benefit the overall traveling public; including 

local businesses competing in the national and global marketplace, independent entrepreneurs and 

consultants and visitors who need to travel back east and get back at a reasonable time on the same day 

for business and/or personal business. A second carrier service in the summer will be a benefit for 

visitors and locals alike in that the increase in air service competition will help drive down excessively 

high airfares at the Telluride Airport. Both improved access and lower airfares will benefit a diverse 

remote local population of about 35,000 who presently often have to travel long distances over rural 

mountain roads when they drive to alternate airports that can provide better access and fares. 

Additionally, due to the high local economic activity driven by air service, increasing air service to 

Telluride and it’s usage by visitors to this tourism destination also provides a critical economic benefit.

Air Service Environment

Telluride Airport Catchment area

The Telluride catchment area includes all of San Miguel County as well as West Montrose County, West 

Ouray County and Dolores County. Surrounding area catchment populations include: San Miguel County 

(7684), Montrose County (40,263), Ouray County (4510) and Dolores County (1937). An additional 

45,000 travelers and other communities also benefit economically from the Telluride air service when 

considering the flow of economic benefits through-out the region. The City of Montrose, for example 

fills the role of a service center for Telluride and San Miguel, Ouray, Montrose and Dolores Counties all 

provide employees who work in Telluride (About 80% of the workforce per the US Census Commuter 

Shed Report).
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Catchment area proximity to other airports

Based on a 2008 airport survey and 2009 local residents survey, passenger leakage is estimated at 60 

percent of the Telluride Catchment area. Being located in a rural mountain community does not provide

an easy drive for residents and visitors alike and the leakage occurs due to the much higher than 

average airfares and choice of airlines and schedule convenience at Telluride vs. other airports. Of the 

diverted passengers, it is estimated that 40% use the Montrose Regional Airport (1Hr 20Min away), 30% 

use the Grand Junction Airport (2Hr 30Min Away) and 25% use the Denver International Airport (6Hr 

30Min Away). An additional 5% use multiple other airports that are from 1Hr 30Min to over 8Hr away. 

The top three reasons for local residents using 

other airports include:

1) Airfare (59%), 

2) Airline Schedule (20%) and 

3) Direct Flight Availability (11%)

When local flyers were asked to use the Telluride 

Airport more often, (92%) said they would if prices 

were lower, (26%) said they would if Flight times 

were more convenient. When the question was 

asked what desired changes the local residents 

would like to see at the Telluride Airport (80%) answered lower airfares, (58%) answered more non-stop 

destinations and (38%) answered better flight schedules and more choice of airlines. 

In the winter, (93%) of the users of the Telluride Airport are visitors or part-time second homeowners. In 

Summer (91%) of the users of the Telluride Airport are visitors or part-time second homeowners. (59%) 

of these travelers in the winter cited convenience as the main reason for selecting Telluride when flying 

to the region in the winter and this goes up to 74% in the summer. Price/Value is the least cited reason 

followed closely by availability/selection of flights.

The results of the various surveys of local flyers and guest flyers clearly indicates that lower airfares and 

more choice in convenient flight schedules and air carriers would lead to increased usage of the 

Telluride Regional Airport. 

Home to Telluride Ski Resort and Many National Parks and Wild Life Areas

Telluride is home to the world class Telluride Ski Area and a short driving distance from many national 

parks and wildlife areas including: Mesa Verde National Park and Black Canyon of the Gunnison National 

Park. Telluride itself is located in a beautiful box canyon and attracts many visitors year-round with its 

outdoor treasures including hiking and mountain biking trails and gold metal waters for fisherman. 

Air Service – Important to Tourism Reliant Economy

Tourism plays a key role in the economy of the Telluride Region. It is estimated that 65% of the 

employment in Telluride is driven by Tourism. Additionally, many full-time and part-time local residents 

work for national companies or have self-employed businesses that require travel to their client base 

great distances away from Telluride. For these established business sectors improved air service that is 

more accessible and convenient and offers more options for more periods of the year is critical. It is also 

felt that improving air service access from this remote rural mountain region is critical to diversifying the 
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local economy. Without major highway access, Telluride, due to its geographic isolation is very 

dependent on the local airport for both visitor and local resident transportation needs. Many assume 

Denver (6 Hr 30Min from Telluride) is the closest major Metropolitan area to Telluride when in fact 

Albuquerque (6 Hr from Telluride) is. When Tourism makes up 65% of your economy and the drives are 

long and on non-super highway roads, air service remains critically important. 

Air Service – Existing and Historical

Existing Air Service

Non-Stop Marketing Weekly Weekly Connecting 

Season Destination Carrier Aircraft Departures Seats Destinations

Spring/Fall Denver Great Lakes B1900 14 266 140

Summer Denver Great Lakes B1900 14 266 140

Winter Denver Great Lakes B1900 14 266 140

Winter Phoenix US Airways Dash 8 14 518 72

As you can see, airline service is completely offered by small turboprop aircraft at this time. This is due 

to limitations on aircraft that can qualify to fly into the Telluride Regional Airport. With the completion 

of the Telluride Regional Airport Runway project (Projected in the late fall of 2010) the classification of 

the airport is expected to change to a D-3 status. This will open up the aircraft types we can pursue air 

service to Telluride to include the Q-400 Turboprop aircraft which has a seating capacity of (74). 

Additionally, other aircraft types may become more economically viable as the changes will improve 

operating characteristics that will reduce limits (Mainly Weight Restrictions) on the present aircraft 

operating thus making this service a little easier to gain and/or sustain.

Air Service Development – Presently Restricted

Due to the limits of commercial aircraft qualified to fly to Telluride; and because these aircraft have a 

small flight distance range, Telluride is very limited as to the operators, markets and aircraft it can try to 

attain to improve its air access into the national transportation system. Due to these limitations, airline 

revenue guarantees are critical to the efforts to acquire the new airline service and to place Telluride in 

a more competitive position for air service with the operating carriers. Essentially, Telluride is limited to 

at most about a 600-650 mile range and 3-4 aircraft types that can operate commercially into Telluride 

from this range. Only 3 connecting hub airports meet this set of criteria (Denver/Phoenix and Salt Lake 

City) and only 2 of these (Denver/Phoenix) have a hubbing carrier with the aircraft type that can fly into 

Telluride in the summer. Presently, only one market and carrier (Denver/Great Lakes-United) has service 

in the summer.

Lack of Diversity of Air Service and High Fares

At one time, the Telluride Regional Airport had operations with three different air carriers and was 

producing nearly 28,000 yearly enplanements (1994). While these flights were full and profitable, 

changes by airlines in their route networks and the retirement of aircraft like the Dash 7 have 
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contributed to the decline in qualified aircraft that can operate to Telluride. With this reduction in air 

service and thus competition between multiple carriers, this has contributed to Telluride’s much higher 

than average airfares and enplanements dropping to about 13,000 yearly about two years ago and 

perilously close to being under 10,000 enplanements the last year or two.

Fared Avg Fared Avg Fared Avg Fared Avg

Airport Fare 2009 Fare 2008 Yield 2009 Yield 2008

Telluride $282.06 $285.80 27.02 Cents 27.15 Cents

Total NW Region Airports $167.98 $169.07 13.72 Cents 13.81 Cents

Telluride vs. NW Region +67.91% +69.04% +96.94% +96.60%

The table above shows a Mead/Hunt study of the Northwest Region that Telluride is a part of. Telluride 

has airfares that are more than 67% higher than the average airfares in the region and yields that are 

more than 96% higher...almost double those of other regional airports. Even when compared against 

those airports of a similar enplanement size Telluride airfares are high (See Chart Below):

**Year Ended - March 31 Pax Pax

Fared 

Avg

Fared 

Avg

2009 2008 Fare 2009 Fare 2008

Riverton WY 15840 16030 $221.92 $221.24 

Friday Harbout WA 12820 5560 $45.54 $39.38 

Cheyanne WY 12810 16520 $214.55 $191.62 

Port Angeles WA 11370 4930 $46.50 $46.50 

Telluride CO 11280 13480 $282.06 $285.50 

Seattle Lake Union WA 11180 2940 $52.74 $52.46 

Salem OR 10930 16590 $181.84 $204.18 

It should be noted that 

of the 74 Markets with 

commercial air service 

in the Northwest 

Region only Butte, 

Montana had higher 

average airfares than 

did Telluride in 2009 in 

the Northwest Region.

USAirways Great Lakes USAirways Great Lakes Total Increase Summer

Carriers Mkt Share Mkt Share Avg. Fare Avg. Fare Avg. Fare 08 vs. 04 vs. Winter

Summer 2008 Great Lakes 0% 100% n/a $416.58 $416.48 19.34% 30.83%

Summer 2004 Great Lakes/USAir 24.43% 75.57% $236.08 $398.00 $348.99 13.42%

Winter 2008/2009 Great Lakes/USAir 50.37% 49.63% $276.93 $357.57 $318.33 3.46%

Winter 2004/2005 Great Lakes/USAir 39.87% 60.13% $261.81 $341.95 $307.69 

The above table tracks the 2008 and 2004 summer and winter season’s market share and average fare. 

In the winter in both 2004 and 2008 there were (2) different airlines serving (2) different non-stop hub 

markets that connected with many cities in the national transportation network. Despite cost and other 

increases that drove up average airfares there was only a $10.64 (3.46% Increase) in the average airfare 

during the winter season when there was some competition. In the summer, however, when there was 
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a shift from (2) different air carriers in 2004 to one in 2008 the average fare in 2008 saw an increase of 

$67.49 (19.34% Increase). 

**Year Ended - March 31 Pax Pax Fared Avg Fared Avg

Neighboring Airports 2008 2007 Fare 2008 Fare 2007

Grand Junction 201500 157040 $202.11 $230.83 

Montrose 82010 87350 $223.16 $230.25 

Telluride 11280 13480 $282.06 $285.50 

Durango 129680 103400 $212.07 $249.71 

Cortez 7160 10260 $188.24 $180.92 

The chart to the left 

shows how Telluride 

compares in average 

fare to neighboring 

airports. Telluride is 

as much as 50% 

higher in airfare 

(Cortez).

With the above noted airports in the chart being within 1hr 30min to 2hr 30min drive...these airports 

become very viable alternatives to Telluride (Particularly Spring through Fall when the weather doesn’t 

impede driving on the rural roads as much) because of their lower airfares. It should be noted that the 

two regional airports that saw increases in the number of airlines operating and available seats from 

2007 to 2008 (Grand Junction/Durango), also saw average airfares decrease the most and passenger 

enplanements increase the most.

Historical Air Service

Air service over the past fifteen years has declined to an enplanement level of less than half of what it 

was in 1994. This trend has continued over the last five years with acceleration over the last three years 

with Great Lakes Aviations reductions to their peak winter/summer schedule of flights from Denver 

(They have reduced service to Telluride – A Non-EAS City in order to take on additional EAS Routes &

Subsidies). 

Year Enplanements

% 

Change

2000 17125

2001 18754 9.51%

2002 18338 -2.22%

2003 15750 -14.11%

2004 19736 25.31%

2005 19596 -0.71%

2006 17529 -10.55%

2007 17357 -0.98%

2008 13999 -19.35%

2009 7007 -49.95%
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Note: In the winter of 2004 Telluride added service with USAirways (2X Daily – Via a revenue guarantee 

program and an SCASD award)that helped with the uptick of enplanements between 2003 and 2004. 

Unfortunately, after the summer of 2005 USAirways pulled non-guaranteed non-winter summer service 

out which in conjunction with Great Lakes Aviation reduction in peak season service from 5-6 flights to 2

flights daily has accelerated the downward enplanment performance of the last couple of years.

Extenuating Factors that have affected air service

There are three primary factors that have impacted air service levels at the Telluride Regional Airport:

1) Retirement of the Dash 7 aircraft and other limitiations on the availability of aircraft that are 

 qualified to fly to the Telluride Regional Airport has reduced available seats into Telluride and 

 thus reduced yearly enplanements. 

2) Reduction in the number of airlines flying to Telluride has reduced competition to Telluride 

 and thus airfares have risen to a level that is well above the nations average airfare and is the 

 second highest in the Northwest Region of the country further depressing demand. 

3) The last, and recently most significant reason is the acquisition of additional B1900 aircraft 

 and EAS Subsidy contracts by Great Lakes Aviation. Due to an aggressiveness on acquiring 

 these contracts that exceeds the number of aircraft their fleet can serve, Great Lakes has 

 downsized the service to Telluride (What has been non-subsidized airline service) in order to 

 gain aircraft they can use to meet their EAS subsidy contractual agreements. (Great Lakes 

 does not presently and has never received a subsidy or guarantee from the Telluride

 Community for air service – They have very recently indicated that an airline guarantee would 

 increase Telluride’s chances of regaining some of the lost service to Telluride but only when 

 their aircraft is better matching their service market needs).

Telluride has an air service development organization (Telluride Montrose Regional Air Organization)

that has been actively pursuing additional air service to Telluride. This effort has been handicapped by 

the factors above in acquiring new air service and in retaining air service at the Telluride airport. What 

accounts for the qualified aircraft challenge for the most part is the fact that at 9070 Elevation and just a 

7111 foot runway Telluride is the highest commercially served airport in the country...limiting aircraft 

qualified to operate to Telluride. Market changes by Great Lakes Aviation does provide hope for better 

access to equipment that can operate into the Telluride airport.

It should be noted that there have been some recent changes in some primary Telluride airlines 

situations: (Great Lakes/USAirways). They have commercial aircraft that can get into Telluride (And in 

a market that is within range of Telluride and is a Hub Market that can feed into the national 

transportation system). Aircraft availability may improve in the future based on present conditions at 

these airlines thus the focus of the strategy of this proposal. Additionally, possibly by Summer/Fall 

2011 other air service possibilities may open up with the expansion of aircraft types that can serve 
15 | Page

Telluride increasing to include the Q-400 Aircraft. This is due to the present Telluride Airport Runway 

Improvement project and the subsequent look at TEX C & D approaches. 

Telluride air service development efforts

The Telluride Montrose Regional Air Organization has attempted to increase service to the Telluride 

Regional Airport since 2004 with mixed results. 

Year Initiative Guarantee Offered Result

2004 Add USAirways Winter Service Yes Service Obtained/Still Operating

 (SCASD Grant Assisted Service Start-up – Low to no guarantees have been pd most yrs.) 

2006 Add USAirways Summer Service Yes Cost Prohibitive/Lack of Planes

2007 Add USAirways Summer Service Yes No Aircraft Available

2007 Add Delta Summer Salt Lake City Yes No Aircraft Available

2007 Add AM Great Lakes Denver No No Aircraft Available

2008 Add USAirways Summer Service Yes No Aircraft Available

2008 Add AM Great Lakes Denver in Winter Yes No Aircraft Available

2008 Add Delta Summer Salt Lake City Yes No Aircraft Available

2009 No Effort for Summer/Airport Shutdown n/a n/a

2009 Add AM Great Lakes Denver in Winter Yes Under consideration but 

 ultimately no aircraft available

 2010 Add AM Great Lakes Denver in Summer Yes Didn’t get aircraft back in time

 from EAS Market Pull-Down

 2010 Add USAirways Summer Service Yes No Aircraft Available

 2010 Add AM Great Lakes Denver in Winter Yes In Process/Pending

 (Would make 3rd Flight Daily)

 2011 Add USAirways 2nd Summer Carrier Yes In Process/Pending

Since 2004 in almost all instances where air service efforts were not successful, the cause was that there 

were no aircraft available. In one instance where we were not successful the cost for the service was 

made exhorbitant by the airline for the revenue guarantee causing a decline by TMRAO of the service. 

(It was felt the carrier didn’t really want to serve based on costs that were 60% higher then what would 

be considered fair at that time for the market service).

The key thing to note with past air service efforts is that 1) On the successful service which is still 

operating, (Winter USAirways Phoenix Telluride) an SCASD grant was instrumental in helping with the 

start up costs and priming the pump of the market and this service still operates today, 5 years later. 2) 

The other item of note is that if a) aircraft is available, b) a strong guarantee is offered, c) the airline 

extends a fair guarantee cost and d) there is a public/private partnership, then Telluride has not only 

been successful in obtaining the service but in sustaining and continuiing the service for years 

afterwards. Today in 2010, Telluride is finding that potential airlines for service appear to have more 
16 | Page

aircraft available (Or Anticipate having more available) which makes this a good year to attempt to 

expand air service.

WHY This Proposal is different then the Telluride SCASD Grant Award in 2002

The 2002 grant award had Three Goals:

1) Expanding service with Existing Carriers to increase enplanements

2) New airline service to/from Albuquerque that would connect with Southwest Airlines

3) Fly Telluride Marketing Program to generate more local and destination awareness of present 

 service and any new service TEX could obtain....focused on comprehensive Telluride air 

 service.

It should be noted that the 2002 grant request was very generally worded so in our opinion actual 

execution should be considered when looking at the differences.

The 2002 grant had the below results:

1) Telluride was able to obtain a 2nd winter service 2X Daily with America West/Now USAirways 

 and existing carrier by the start of winter 2004. This service is still operating to this day and 

 has for most of the last few years operated at little to no guarantee. Restaurant and lodging 

 tax collections which are driven by these visiting guests go to TMRAO for funding its air 

 service development program. NOTE: While this expansion of existing service occurred in 

 2006 Telluride saw the loss of Spring/Summer/Fall non-guaranteed USAirways service and 

 despite efforts since has been unable to regain service during any of these seasons to date.

 Also...Great Lakes (A non-guaranteed service) has dropped from 5 Daily flights to 2 Daily over 

 this period.

2) Unable to obtain new Albuquerque service as the cost was too high via a guarantee 

 arrangement and with new security requirements requiring passengers to go back through

 security to check their bags on the connecting carrier in ABQ (WN has no interline 

 agreements) and then go through security a second time on their trip this experience was

 prohibitive to having this service be successful

3) Fly Telluride Marketing Program was a success as based on equipment load factors and flight

 revenues were good in subsequent high-seasons. The general awareness of overall Telluride 

 air service goal saw good results. 

This 2010 Grant Request Goals: (Goals more focused)

1) Reduce airfares via increased airline competition (Winter only season with 2 Carriers serving 

 Telluride) via adding a 2nd summer carrier. 

2) Add additional seats and provide more customer convenience via a 3rd Great Lakes/United 

 Flight (or via another carrier/aircraft type if Great Lakes continues to not have the 

 equipment) with an early morning Telluride to Denver departure.

3) Support above specific efforts with marketing support to insure sustainability of these service

 additions/enhancements
17 | Page

This 2010 request is different in that:

1) The 1st goal specifically is to add a new 2nd summer carrier (2002 had a general goal to 

 increase existing service and in its actual RESULT was an increase in WINTER service adding a 

 2nd carrier-America West/USAirways)

2) The 2nd goal specifically is to add a 3rd flight with an early morning Telluride departure on 

 Great Lakes or to add a new carrier with an early morning Telluride Departure to 

 increase seat capacity access and with a flight schedule that meets demand (2002 2nd goal 

 was to add Albuquerque service to connect with Southwest in Albuquerque-a more direct 

 route from Texas – additionally this goal is customer request driven)

3) The Marketing component is to specifically support the incremental service obtained in goals 

 one and two above vs. all the Telluride Airports service as a whole (2002).

 NOTE: Without the addition of service on America West in the Winter to Phoenix (Via the 2002 

 SCASD Grant) the reduction of TEX enplanements since 2002 would have been more severe 

 and to the level where Telluride would have been consistently hovering at or below the 

 10,000 enplanement level since 2007 when Great Lakes starting taking aircraft from Telluride 

 to operate new EAS markets it had gotten committed to. In 2002 neither the Spring-Fall 

 USAirways service nor the year-long Great Lakes service was on a revenue guarantee into 

 Telluride. In winter 2004 we added guaranteed USAirways service via the 2002 grant that is 

 very solid and sustainable via local funding mechanisms. USAirways Spring – Fall service 

 wasn’t guaranteed and was dropped in 2006 due to a reduction of Dash 8 Aircraft in 

 USAirways fleet. (No other aircraft USAirways has can presently operate into TEX). Great Lakes 

 (Not Guaranteed) has dropped to 2 Daily flights from 5 Daily flights due to new EAS 

 commitments flights it has acquired the last couple of years. By 2010 the Telluride situation 

 has changed in regards to what is an “Existing service”. USAirways summer service in 2011, if 

 obtained would be basically a NEW service offering a 2nd summer carrier since it hasn’t 

 operated since 2006 and because it would require a revenue guarantee to obtain this service. 

 An early morning departure, since one hasn’t operated since 2005 (Regardless of whether it 

 operated on Great Lakes or another Carrier) would also be a new service as it regards meeting 

 passenger demand requests and adding additional seats. If it works out to be Great 

 Lakes/United, which is the primary target for the service, it will require a revenue guarantee 

 to offset EAS subsidies Great Lakes receives from other markets to gain this service based on 

 Great Lakes present fleet and EAS community commitments. The net result of both air service 

 additions would be an increase in seats, competition and a lowering of airfares to travelers to 

 Telluride which should get the Telluride airport to an enplanement level that is consistently 

 above 13,000 yearly...well above the 10,000 enplanement goal of the airport.

 NOTE2: Based on an estimated 4676 additional enplanements, 90% visitors/2nd homeowner use and

 an average trip spend of $2500 the flight goals would drive just shy of $10 Million Dollars 

 additional direct economic activity for the region yearly!

 Note3: Limitations on aircraft and markets that can operate to Telluride also limit approaches to 

 improving enplanements and the high airfares into the Telluride airport. We feel that within 
18 | Page

 this limited scope of solutions to these problems our proposed strategy is different than in 

 2002 and can be effective in improving Telluride air service.

Air Service Deficiencies and Needs

Only One Year-Round Carrier

Telluride is served by only one year-round carrier (Great Lakes Aviation) and has only one season where 

it has two carriers (Winter). This creates a situation with lack of schedule and airline choices and high 

airfares. Airfares are lower in the winter when there are two carriers serving the Telluride Airport.

High Airfares

Telluride Airfares are over 67% higher than the average for all of the Northwest Regional Airports. This is 

caused by small aircraft serving the market and only one air carrier serving the market for most of the 

year which allows a monopoly on service in many markets and drives up the airfares.

Average Airfares to Select Markets 2008

Destination Telluride Montrose Grand Junction Durango

New York $537.40 $341.67 $297.89 $337.38 

Boston $638.61 $312.63 $326.22 $335.11 

Tampa $354.52 $249.22 $259.20 $286.73 

Chicago $456.30 $293.26 $250.16 $274.11 

Dallas $338.33 $247.47 $239.49 $258.12 

Houston $351.37 $218.04 $309.53 $306.39 

Los Angeles $386.58 $285.50 $231.81 $267.71 

San Francisco $415.06 $295.64 $234.13 $236.50 

Circuitous routings

For local travelers and visitors needing to travel back east, often the earliest departure is around 1pm 

and due to the time change the passenger doesn’t arrive until 10pm or later. If you are heading to a 

major east coast city, with only one airlines route system to work with (Great Lakes/United), to many 

markets you are looking at multiple connecting and changes of planes on multiple airlines to get to your 

final destination. If you are an international traveler you are almost assured of an overnight stay which 

adds to your overall trip cost. Being able to conduct business on the same day and then fly back is 

basically impossible even for regional business trips to Denver based on the limited number of flights 

and narrow mid-day scheduling of present service.

Underserved Markets

For most of the year travelers are limited to a maximum of 140 different markets they can access with 

one change of planes air service via the Great Lakes/United service. An additional 30 markets open up in 

winter with the US Airways winter service addition and the number of markets with more than one 
19 | Page

airline serving from Telluride goes from 0 in Spring-Fall to 70 in the winter and is one of the reasons 

airfares are the least expensive in the winter versus other times of the year. 

Strategic Plan – Air Service

Project Goals

The Strategic Plan proposed by the Telluride Airport and the Telluride Montrose Regional Air 

Organization will achieve the community’s air service improvement goals and help to alleviate the lack 

of a morning flight tailored to eastbound business and leisure travelers as well as help lower airfares 

from the Telluride Airport. 

The Strategic Plan will meet the goals of the community and the Telluride Regional Airport:

• Second air carrier in summer that provides connections through a hub airport

• Air service that provides better scheduling more direct routings and more connecting 

opportunities

• Reducing average airfares for more of the calendar year (Summer as well as winter)

• Reduce the need for travelers to drive long distances to access air service and competitive fares

• Provide a morning flight and increase available seats to better accommodate demand at the 

Telluride airport and passenger desire for flights that can provide more convenient connections 

to Denver, the mid-west and the east coast.

Proposed Air Service

US Airways from Phoenix – Second Summer Air Carrier Service

To improve air service at the Telluride Regional Airport and accomplish the goals of this SCASD grant 

application, a second airline service in summer that connects to a hub airport in the national 

transportation system is needed to better meet traveler needs. US Airways service via Phoenix presently 

operates successfully in winter and has aircraft that has operational abilities to operate into the 

Telluride Regional Airport. Adding US Airways service in the summer where we can build upon a market 

of customers that are already familiar with the winter air service on US Airways from Phoenix can help 

alleviate the deficiency of only one air carrier and one non-stop market in summer and thus help bring 

more competition and lower airfares.

US Airways Phoenix service will help alleviate address the following air service goals:

1) US Airways Phoenix service adds a 2nd summer flight with national hub market 

 connections increasing overall markets that are connected to by 2 carriers.

2) Adds more competition in summer to help reduce airfares

3) Helps reduce the need for air travelers to drive long distances to access air service and 

 competitive airfares
20 | Page

4) Will provide additional markets served and more direct routings and more convenient 

 connections that will also positively help to reduce average airfares.

Great Lakes/United Early Morning Flight – More Convenient East Bound connections/Increase 

available seats from Telluride

Great Lakes Aviation service via a flight schedule with a departure from Telluride before 9am will meet 

the following goals:

1) Helps reduce the need for air travelers to drive long distances to access air service and 

competitive fares.

2) Will provide service with more direct routings and more convenient connections

3) Will provide air service that allows travelers more convenient flight connections heading 

eastbound

4) Will provide air service that allows business travelers to fly to Denver conduct business and 

return in the same day.

5) Will help raise available seats from Telluride towards a more historic level and thus help 

increase overall enplanements from the Telluride Airport.

Note: Airlines consider aircraft arriving in the evening returning early the following morning 

a premium service due to many communities desiring this flight schedule. This creates more 

opportunity costs with an airline to attain this service. Additionally there are more crew and 

other costs with an overnight scenario as well. To get the early morning outbound flight that 

Telluride desires a revenue guarantee is likely to be required. 

Airline Participation

The Telluride Montrose Regional Air Organization (TMRAO) has been in discussions with US Airways 

about summer Phoenix service since 2006. Aircraft availability has been a major impediment until 

recently. While the aircraft situation and airline direction at US Airways is fluid they are presently giving 

more consideration to our service request based on strategic changes at the airline, potential aircraft 

availability and our proposed revenue guarantee program. 

TMRAO has also been discussing with Great Lakes Aviation for the addition of a morning flight (Before 

9a-10a departure time) since 2007. Recently in 2008 TMRAO has offered a revenue guarantee 

arrangement in order to obtain this service but Great Lakes Aviation still had aircraft availability issues. 

Great Lakes aircraft availability is anticipated to improve within the next year as they reduce some of 

their EAS market flying. They now have more consideration to a RON operation or of a morning flight to 

Telluride. 

On-going discussions with US Airways and Great Lakes indicate that the marketing commitment and 
21 | Page

guarantee program proposed herein is required to support the services outlined above. There is still 

somewhat limited aircraft availability and other significant barriers to entry exist. Through the SCASD 

Grant and TMRAO’s community program to support air service development many of the barriers can be 

mitigated and Telluride can share the risk with the air carrier via revenue guarantees. 

Market Analysis – US Airways Summer Phoenix Service

A financial analysis and pro forma route forecast have been developed for US Airways Phoenix summer 

service to provide justification for the east/west connecting service. A one roundtrip summer schedule is 

analyzed using a Dash 8 aircraft. The pro forma analysis for the service is summarized below. The 

analysis included the following operating and marketing assumptions:

• US Airways operating cost for one roundtrip daily for the Dash 8 aircraft is $3800 per one-way 

flight for the 388 mile stage-length between Telluride and Phoenix. 

• US Airways will capture a share of the passengers that are presently driving to a competing 

airport (e.g. Montrose/Grand Junction/Durango) to travel to Phoenix and beyond destinations

• US Airways winter service in 20092010 averaged over 68% load factor making a first year 55% 

load factor a conservative estimate. 

• Gross OW Fare averaged $256.50 1st Quarter of 2009...a period when airfares were depressed 

making the $160 Average OW Yield a conservative forecasted amount.

Year 1 Year 2

US Airways Phoenix Market Analysis US Airways Phoenix Market Analysis

Statistical Category

Mature 

Market Statistical Category

Mature 

Market

Operational Days 90 Operational Days 90

Operations 180 Operations 180

Cost Per Operation $3,800 Cost Per Operation $3,850 

Available Seats Per Departure 37 Available Seats Per Departure 37

Segments per day 2 Segments per day 2

Onboard Passengers 3663 Onboard Passengers 3996

Load Factor 55% Load Factor 60%

Average Yield $160 Average Yield $160 

US Airways Segment Cost $684,000 US Airways Segment Cost $693,000 

US Airways System Revenue $586,080 US Airways System Revenue $639,360 

Revenue Guarantee Owed $97,920 Revenue Guarantee Owed $53,640 

As the market service matures in year 2 the cost of the guarantee goes down as marketing increases the 

awareness of the service and load factors rise. It is estimated that development of the market brings the 

service to a breakeven or better by year four or five. Additionally, TMRAO receives funds for air service 
22 | Page

development via a 2% tax in Telluride and Mountain Village on Lodging and Restaurants. By year 3 or 4 it 

is estimated that the increase in passengers will generate about $52,000 additional in taxes per year, 

going to the air service development program due to the US Airways Summer service which should more 

than offset ongoing payouts to US Airways after year two. (See Chart Below)

USAirways Year 1 Year 2 Year 3 Year 4 Year 5

Projected Shortfall $97,920 $53,640 $32,328 $9,360 ($11,952)

Additional Passengers 3663 3996 4129 4196 4262

Tax Impact $43,956 $49,018 $51,750 $53,709 $55,690

Detailed Market Analysis – Great Lakes Year-round Denver Morning Service

A financial analysis and pro forma route forecast have been developed for Great Lakes Denver service to 

provide justification for the AM flight. A one roundtrip schedule is analyzed using a Beechcraft 1900 

aircraft. The pro forma analysis for the service is summarized below. The analysis included the following 

operating and marketing assumptions:

• Great Lakes operating cost for one roundtrip daily for the B1900 aircraft is $1400 per one-way 

flight for the 218 mile stage-length between Telluride and Denver. 

• Great Lakes will capture a share of the passengers that are driving to a competing airport (e.g. 

Montrose/Grand Junction/Durango) to travel to Denver and beyond destinations

• Great Lakes averaged over 54% load factor in 2008 when they operated 2.7 flights a day and 

53.1% in 2007 when they averaged 3.15 flights per day. A 41% load factor is a very conservative

estimate for year one based on these statistics. 

• Connecting markets with a significant improvement in connecting opportunities based on a RON 

and/or pre 9am flight departure were stimulated 120 percent on a per flight basis.

Year 1 Year 2

Great Lakes Denver Market Analysis Great Lakes Denver Market Analysis

Statistical Category

Mature 

Market Statistical Category

Mature 

Market

Operational Days 365 Operational Days 365

Operations 730 Operations 730

Cost Per Operation $1,400 Cost Per Operation $1,450 

Available Seats Per Departure 19 Available Seats Per Departure 19

Segments per day 2 Segments per day 2

Onboard Passengers 5687 Onboard Passengers 5964

Load Factor 41% Load Factor 43%

Average Yield $165 Average Yield $165 

Great Lakes Segment Cost $1,022,000 Great Lakes Segment Cost $1,058,500 

Great Lakes System Revenue $938,306 Great Lakes System Revenue $984,077 
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Revenue Guarantee Owed $83,695 Revenue Guarantee Owed $74,424 

Great Lakes Year 1 Year 2 Year 3 Year 4 Year 5

Projected Shortfall $83,695 $51,538 $28,653 ($3,504) ($49,275)

Additional Passengers 5687 6105 6242 6658 6935

Tax Impact $53,261 $58,527 $61,193 $63,918 $66,692

As the market service matures in year 2 the cost of the guarantee goes down as marketing increases the 

awareness of the service and load factors rise. It is estimated that development of the market brings the 

service close to a breakeven or better by year three. Additionally, TMRAO receives funds for air service 

development via a 2% tax in Telluride and Mountain Village on Lodging and Restaurants. By year 2 it is 

estimated that the increase in passengers will generate about $58,000 additional in taxes per year due 

to the AM Great Lakes Denver service which should more than offset projected ongoing payouts to 

Great Lakes after year two. 

Alternate Plan

Telluride, has had preliminary discussions with US Airways and Great Lakes Aviation about both the new 

air service objectives (2nd Carrier Summer/Earlier AM flight Summer/Winter), which is encouraging. 

However, the airline industry is extremely dynamic and ever changing. If these airlines cannot initiate 

service in the summer from Phoenix (US Airways) and service in the early morning (Great Lakes) 

Telluride would look for another carrier new 2nd summer service that provides significant national 

connections via a hub airport into the national transportation system and would offer competition to 

Great Lakes/United. Additionally Telluride would look for an early am flight with any hubbing carrier (1st

with another United Denver code-share option and then with another hubbing carrier) that can provide 

more convenient connections and the ability to fly in one day eastward where the travelers can arrive in 

the same day and/or at a reasonable hour on the east coast. 

Strategic Plan Implementation and Funding

Public/Private Partnership

The Telluride Regional Airport is the acting sponsor of this application. The Telluride Montrose Regional 

Air Organization (TMRAO) is committed to completing the strategic plan outlined herein and will provide 

all of the local cash funds in support of the application and most of the in-kind support. TMRAO’s 

membership is made up of the Governments of Town of Telluride, Town of Mountain Village, City of 

Montrose and key regional businesses like: Telluride Ski Resort, The Peaks Resort, Cappella Hotel and 

over 75 additional supporting businesses in this public/private economic development organization.

Telluride Airport as sponsor, will execute all federal grant offers, process all associated reimbursement 

requests and oversee grant administration. The Telluride Airport, TMRAO, Telluride Ski Resort and 
24 | Page

Marketing Telluride Inc., and the Telluride Airport will administer the marketing campaign. TMRAO will 

solicit and coordinate the revenue guarantee program including paying the local match and assist the 

Telluride Airport in monitoring the strategic plan and performance tracking.

Incentive and Support Plan

The proposed air service plan will require an air carrier to undertake risk during the first year of service. 

This risk reduces as the program matures but the start-up risk over the first couple of years must be 

addressed. A couple of elements are proposed in our plan to mitigate the risk: a revenue guarantee and 

a marketing campaign. The widespread participation in our community partnership via The Telluride 

Montrose Regional Air Organization (TMRAO) helps to further support the plan.

Revenue Guarantee

The Strategic Plan proposes to use a revenue guarantee to limit the risk of the targeted air carriers and 

provide an incentive to attain the targeted air service during this volatile time for the airlines. The pro 

forma projections for the associated service demonstrate a movement to a reduced/eliminated and/or

self-sustainable shortfall within about 3 years. (ie...within 3 years the short fall is projected to fall below 

the tax generation monies that the service will produce for TMRAO funding) Within about 5 years the 

service is projected to reach self-sustainability where there is no short fall. Both the proposed AM 

Denver flight and the summer Phoenix flight; show an approximately $180,000 combined shortfall in 

year one and about a $105,000 combined shortfall in year 2. By year three the shortfall is projected to 

be about $60k combined which is below the projected additional local air service generated tax 

collections. The net short fall over the three year ramp-up of the service is projected to be 

approximately $400,000. To mitigate airline risk for both services the strategic plan proposes a revenue 

guarantee amount of $400,000 total ($300,000 from SCASD grant cash funds and $100,000 from local 

cash funds – The excess is for any potential underestimation of guarantee payments with Telluride 

proposing an 75%/25% split on federal/local guarantee payments) . 

Marketing Plan

It is critical to jumpstart new air service initiatives by creating service awareness in the community and 

in the cases of Destination Tourism markets like Telluride to destination guests in order to change travel 

habits and recapture locals and visitors who have been utilizing competing airports. Air carriers 

predominantly market on a national level with a brand focus and don’t have funds or marketing 

programs for small markets within their systems. This leaves the local community to step-up with a 

marketing program in order to support its local service.

Marketing Goals

Increase local awareness of improved air service for east bound business and leisure travelers as well as 

new summer service via a new 2nd carrier to a hub connecting airport. Increase destination guest 

awareness of additional service to the Telluride Airport. The effectiveness of the campaign will be 

measured by changes to the enplanement levels with the goal to increase Great Lakes enplanements by 

about 2350 passengers over the first year, US Airways enplanements by about 1850 passengers and 
25 | Page

total enplanements by about 4200 passengers to a total Telluride Airport enplanement level over 15,000 

yearly enplanements.

Further measurement of the marketing goals for the Great Lakes AM Denver flight and the US Airways 

summer Phoenix flight will include goals of obtaining a 41% load factor for the Great Lakes flight and a 

55% load factor for the US Airways flight in the first year. Second year load factor targets are a 44% load 

Factor on the Great Lakes Denver AM flight in year two and a 60% year two load factor on the US 

Airways flight. Incremental load factor increases are targeted for years 3 – 5. 

Marketing Plan

The Telluride specific marketing plan in support of the proposed new service that would include SCASD 

funds requested would take place over 26-28 months (Ideally two years plus a 2-4 month lead time 

before the introduction of the new service). As with the guarantee element of the strategy, the initial 

effort is considered a start-up effort. 

Upon the completion of the start-up period, local community marketing efforts will continue in support 

of the SCASD obtained air service in perpetuity via various local marketing organizations. A committee 

made up of the Telluride Airport, Marketing Telluride, Inc...(The local visitors bureau), The Telluride 

Montrose Regional Air Organization and Telluride Ski Resort have devised the proposed plan that will 

spend the cash dedicated to this Marketing plan; including utilizing SCASD funds for marketing and the 

Telluride Airport and TMRAO cash dedicated to the marketing plan. In addition, this same committee 

will coordinate the cash driven marketing plan with local in-kind efforts (Approximately $100,000 in 

value) to maximize the effectiveness of the new air service awareness program. While ad plans over this 

period of time need to be somewhat fluid to get the most exposure and program awareness for the 

dollars spent (And taking advantage of advertising buy deals and opportunities that may come up), the 

present plan anticipates spending 25% of the cash funds locally and 75% in a handful of key Destination 

Markets and/or targeted national media. In the Telluride region the local newspapers are the 

predominant media so most of the local expenditures would go to print. This split between local and 

destination efforts mirrors the historical usage of the flights from the Telluride Airport.

Division of Marketing Budget Advertising Type

Budget Local Destination

Print 70% 40%

Internet n/a 20%

Radio 20% 10%

In-Flight n/a 20%

Direct Mail 10% n/a

Other n/a 10%

Print Media is the predominant local source in 
26 | Page

Telluride’s Small Community

Timeline

To benchmark the marketing efforts passenger enplanements will be tracked monthly and reviewed 

quarterly (By Season). Since the goal is to increase the use of the Telluride Airport, enplanements are 

the best indicator of success. Marketing Plan Adjustments will be made pending the results of 

enplanement growth versus our strategic plan growth targets.

Strategic Plan Funding

The Telluride Regional Airport is seeking $400,000 of US Department of Transportation funding to be 

used to address the high air fares, local traveler leakage and insufficient service and competition at the 

Telluride Regional Airport. These funds will go towards airline guarantees and marketing with Telluride 

community support of the strategic plan bringing in another $200,000 (33% of total support) in cash and 

in-kind support. The Telluride Airport and the Telluride Montrose Regional Air Organization is well 

positioned and organized to continue support of the service after the initial start-up assistance from the 

DOT via the SCASD Grant is exhausted. Below is a summary chart of the strategic plan expenditures:

Funding Source

US DOT Airport Non-Airport Non-Airport

Description Cash Cash Cash In-Kind Total

Airline Support Program

 Revenue Guarantee $300,000 $100,000 $400,000 

 Marketing Campaign $100,000 $0 $100,000 $200,000 

Total $400,000 $0 $100,000 $100,000 $600,000 

Percent of Total Project 66.67% 16.67% 16.67%

Percent of Total Cash 

Contribution 80.00% 20.00%

Percent of Revenue Guarantee 75.00% 25.00%

Non-DOT funding sources provide 25 percent of the cash funding and 33 percent of the total support for 

the complete program. 

Non-Airport Funding Source Cash In-Kind Total

TMRAO $100,000 $100,000 

Marketing Telluride, Inc. $50,000 $50,000 

Telluride Ski Resort $50,000 $50,000 

Total $100,000 $100,000 $200,000 

Project continuation and sustainability

The pro-forma and analysis indicate that by year three the air service costs will reduce to a level where 

the taxes generated by the increased visitors can continue to fund the effort. By year five a breakeven 

proposition with no air payment is possible. It should be noted, however that changing conditions like 
27 | Page

rising fuel costs and/or lower than expected onboard passengers or lower ticket revenues as caused by a 

continuation or reversion to a down economy could impact the flight performance in relation to the proforma. The pro-forma, however, is a conservative derived analysis where revenues and average ticket 

costs, for example, are low and based on 2008 results which was a down year for passenger revenue. 

Via the commitment by TMRAO on both the marketing and revenue guarantee side, the community is 

committed to insuring the success of the service in the long term and will work to see it succeed.

Schedule and Monitoring

Milestones

The following milestones are proposed to track the progress of this air service initiative:

Marketing campaign plan completion/initiation

October 2010 / February 2011:

The finalization of the marketing campaign specific ad buys and the start of the advertising of the new 

service that will begin in Mid-December will take place. Finalization of the marketing campaign is 

dependent on the date of the air service announcement and initiation and will take place no sooner 

than 30 days before air service start. The marketing campaign is estimated to run 22-24 weeks during 

the two-year start-up of the new air service. The new AM Great Lakes Flight to Denver would have the 

October 2010 anticipated marketing plan initiation date and the summer US Airways flight from Denver 

the February 2011 initiation date. {If the am Great Lakes/United flight to Denver does not start until 

Summer 2011 then the timing noted here would shift to April 2011}

Service initiation

Mid-December 2010 / Early June 2011:

The service(s) start date is ground zero for the other dates critical to the plan. It is anticipated that 

service would start in mid-December {Great Lakes/United}. The start date of course is dependent on 

finalizing agreements with the airlines and the availability of the right-size aircraft for the market. It is 

targeted for the daily Great Lakes/United Denver AM flight to have the start date of Mid-December 

2010 with the US Airways summer flight starting in Early June 2011. 

Revenue Guarantee Contract Completion

January 2011/May 2011:

Typically, due to ever changing airline conditions the airlines don’t like to run revenue guarantee 

contracts longer than one year and for seasonal service will often terminate the contract at the end of 

the scheduled season. With this in mind, the Great Lakes/United AM Denver Flight would be expected to 

terminate in December 2011 or May/June 2012 if started in summer (as would the US Airways summer 

Phoenix flight terminate in May/June 2012). We would look to re-contract for another year/season just 

after the completion of the previous contract.

Alternate Plan

December 31, 2010
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If the two key air service directions are not met/begun by December 31, 2011, the sponsor will propose 

an alternate plan that meets the overall objectives of this grant application on or before this date

Monitoring the program

Enplanement numbers and Marketing expenditures will be reviewed on a monthly basis in order to 

assess the effectiveness of the program. Also to be evaluated on a quarterly basis, the average airfares 

versus the historical average airfares to Telluride will be reviewed using the DOT Airport data. (Note: 

there will be some lag time on this analysis as it is dependent on the arrival of the DOT data). TMRAO 

will also evaluate on a monthly basis average airfares to key markets to serve as a more current check 

on the DOT average airfare data.

Appendix A - Airline and Community Support