# Application Under the Small Community AirService Development Program, Docket DOTOST-2012-0069

by the 

# Metropolitan Airport Authority of Peoria

for the

# General Wayne A. DowningPeoria International Airport

DOCKET DOT-OST-2012-0069

Duns 049139736

Illinois 18th Congressional District

Prepared June, 2012PIA	SCASDP	Application	 Page	2 TABLE OF CONTENTS

Section 1 Executive Summary Page 3

Section 2 PIA Background Page 4

Section 3 Immediate Air Service Issues Page 11

Section 4 Proposed SCASD Program For PIA Page 14

Section 5 Summary Information Sheet Appendix APIA	SCASDP	Application	 Page	3 EXECUTIVE SUMMARY

Peoria and its Central Illinois service area have been adversely affected by changes in the airline industry over the past fe w years. Analysis of origin and destinatio n data for the

Central Illinois and Peoria market areas rev eals significant leakage to other airports from

the Peoria market area.

As the largest city in Central Illinois, Peoria is a critical and vita l air transportation link

for Central Illinois. More than 1.6 million people live within the service area of the General Wayne A. Downing Peoria Internationa l Airport. The service area of the Airport encompasses a radius of 75 miles. Peoria 's core MSA population is over 379,000 within 25 miles of the General Wayne A. Down ing Peoria International Airport.

The Metropolitan Airport Authority of Peor ia (MAAP), in cooperation with the Peoria Area and Pekin, IL Chambers of Commerce, ar e beginning efforts to extensively market the General Wayne A. Downing Peoria Intern ational Airport with two goals in mind:

first to maintain the servi ce levels currently enjoyed in the community, and second, to identify gaps in air service that need to be filled to fully serve the economic development and transportation needs of the service area.

In order to meet these goals, MAAP and th e two Chambers have embarked on a project

to work with area businesses to more closel y identify their existing travel patterns and future needs. A detailed air service study is needed to carry this effort beyond the memberships of the two Chambers and be yond the two communities directly involved. MAAP is requesting $350,000 to carry out this study, which will be matched by $100,000 of MAAP funds as well as an as-yet to be determined in-kind match of staff

time of MAAP and the two chambers.PIA	SCASDP	Application	 Page	4 GENERAL WAYNE A. DOWNING PEOR IA INTERNATIONAL AIRPORT

BACKGROUND

The General Wayne A. Downing Peoria Inte rnational Airport is a Non-Hub Airport which carried 513,573 total passengers in 2011 (258,425 enplaned passengers and 255,148 deplaned passengers). The Peoria MSA is home to the world headquarters of Caterpillar, Maui Jim Sunglasses, RLI In surance and many other important economic interests. Peoria’s economy is diversifying and includes gains in the medical, retail, finance, and other industries.

MAAP embarked on a process to improve the airline terminal infrastructure in 2005. This process resulted in th e construction of a new terminal building which opened in April, 2011. The old terminal is being pa rtially demolished and converted into a temporary stand-alone Air Traffic Control Tower while we pursue funding for a new replacement tower. In addition, the Air port Authority is working aggressively on retaining and improving air serv ice for the community.

PIA Current Schedule

Average

Airline Destinations Frequencies Aircraft Seats

Allegiant Las Vegas, NV 4 per week MD

‐ 80 150/166

Allegiant Tampa

‐ St. Petersburg,

FL 3 per week MD

‐ 80 150/166

Allegiant Phoenix

‐ Mesa, AZ 2 per week MD

‐ 80 150/166

Allegiant Punta Gorda

‐ Ft. Myers,

FL 2 per week MD

‐ 80 150/166

American Chicago

‐ ORD, IL 4 daily Embraer RJ

series 50/44

American Dallas

‐ Ft. Worth, TX 3 daily Embraer RJ

series 50/44

Delta Atlanta, GA 3 daily CRJ

‐ 200 50

Delta Detroit

‐ DTW, MI 4 daily CRJ

‐ 200 50

Delta Minneapolis

‐ St. Paul,

MN 1 daily CRJ

‐ 200 50

United Chicago

‐ ORD, IL 4 daily CRJ

‐ 200 50

United Denver, CO 2 daily CRJ

‐ 200 50

For more than 75 years, Caterpillar Inc. has been building the world's infrastructure and, in partnership with its worldwide dealer network, is driving positive and sustainable change on every continent. Caterpillar is a technology leader and the world's leading manufacturer of construction and mining equi pment, diesel and natural gas engines and industrial gas turbines. A majority of all Caterpillar sale s are generated from international business. Caterpillar experi enced a pull-back du e to the recession at the end of 2008, which impacted travel until late in 2009. Cat’ s travel returned to normal levels in 2010, and has increased again in 2011 and 2012.PIA	SCASDP	Application	 Page	5 Despite Peoria's strong industrial and commer ce base, Peoria has struggled for years to compete with neighboring regions to provide convenient and affordable access to the national air transportation system. In orde r for Peoria, its economy, trade, commerce and tourism to compete globally, it is essential that the General Wayne A. Downing Peoria International Airport offer air service that competes in terms of access, price, and reliability with other available alternatives within its region. Peoria's limited access to the national transportation system (specifically to the West, Northeast, and the nation’s capital) impacts all communities in its service area. 

### 0 100,000 200,000 300,000 400,000 500,000 600,000 

## PIA Total Passengers

0 100,000 200,000 300,000 400,000 500,000 600,000

200020012002200320042005200620072008200920102011 

## PIA Total PassengersPIA	SCASDP	Application	 Page	6 PIA Service Area

The impact is a negative economic developmen t impact and a higher cost of securing air travel due to a high degree of canceled and de layed flights via one of the Airport's key hubs at Chicago O'Hare. The General Wayne A. Downing Peoria Inte rnational Airport is the most convenient gateway for businesses and travelers traveling to and from the Central Illinois region. This limited access weig hs heavily in the proliferation of the current negative impact Peoria's air service ha s on economic development. It is the goal of the Metropolitan Airport Authority of Peoria to util ize the Small Community Air Service Grant program in conjunction with its community partners to secure additional

air service.PIA	SCASDP	Application	 Page	7 PIA Current Route Map

The proposal seeks to improve air service to and from the Peoria and Central Illinois region by funding a market analysis study to determine what the roadblocks are to obtaining new service. In a ddition, this study will identify the hubs and flights that would stand the best chance of supporting se rvice over the long term, and which would not harm the existing service currently enjoye d by the community. One key item in this study is to quantify the leakage from the Peoria market and id entify to which airports this leakage is occurring. Leaked passengers pose the greatest potential for sustaining new

service.PIA	SCASDP	Application	 Page	8 CURRENT CHALLENGES TO ACCESSING THE NATIONAL AIR TRANSPORTATION

SYSTEM

Most of Peoria's service is to the imme diate North and South and accesses relatively congested hubs.

GREATER PEORIA SERVIC E AREA POPULATION

Communities within Peoria's Service Area MSA Population

Peoria 377,000 Champaign -Urbana 217,320 Springfield 204,468 Bloomington-Normal 156,879 Decatur 111,175 Galesburg 72,737 Pontiac 39,208 Canton 37,658 Lincoln 30,717

PEORIA'S CURRENT AIR SERVICE

 PIA retains the greatest share of pa ssengers located in and immediately surrounding the city of Peoria (refe rred to as Primary Catchment).

 These passengers are considered the core tr affic for PIA. This is an important area as it makes up 79% of the total catchment's booking activity.

 In 2008, leakage from PIA was estimated to be 51.5% to competing airports (21% to Chicago Airports), mainly to ORD.

 Currently, PIA generates about 678 passenge rs daily each way. A total of 623 (91.9%) of these are domestic passengers , and 55 (8.1%) are international, a significantly larger proportion than othe r small-hub or non-hub airports in the

state.

 The number that is not known is the pr oportion of boardings from the Peoria region that are taking place at other air ports, including those nearby as well as directly to major hubs.

 Legacy carriers such as AA, DL, and UA are likely to consider continuing to reduce system capacity. This could affect PIA.

 As recently as 2008, PIA enjoyed service from five airline brands. Due to airline mergers, PIA's current service consists of four carriers providing flights to nine destinations (two carriers serve ORD), w ith no one carrier dominating the market.

 At the same time, existing PIA carrier s are operating under severe financial distress and have been reducing capacity system-wide.

 About 83% of PIA's capacity is provided by Regional Jet (RJ) airc raft (50 seats or smaller).PIA	SCASDP	Application	 Page	9  PIA's year to date load factor is 76%.

 From 2003 to 2005, PIA's enplanements grew by 39%, due mainly to the

introduction of G4's low fare service to LAS. In addition to its primary service area, the Airport draws passengers from as far as 100 miles away (population of this geographic range is 2.5 million)

 From the summer of 2005 m onthly available seats grew until a peak of 38,336 in December of 2007. Monthly seats were reduc ed by the airlines in September of 2008, and they fluctuated up and down, averaging 28,281 until February of 2012. With the returned vigor of the Peoria area economy, monthly available seats has increased to 35,610. This is 25% abov e the 2008-2012 average, but still about

7.1% below the number of seats avai lable in December of 2007.

 Even with the reduced seats available, Peoria has experienced the second best

March ever attained in Ma rch 2012, and the second best April ever attained in 2012 (best April in 33 years.

Peoria's current service pattern is heavily weighted to the North and South. Of the 9 nonstop destinations, none are to th e Northeastern United States.

This deficiency is forcing travelers to add additional drive time; it also increases their safety risk factors and increases their co st of accessing the national air transportation system from having to use airports outside th eir service area (mainly Chicago O'Hare and Midway Airports).

PIA DAILY DEPARTING SEATS

Total capacity at PIA has decreased2To/o since peaking in 1999, atwhich time TW provided over 500 seats per day to STL and Access Air provided over 420 seats per day

from

the market.

CURRENT MARKET COMMENTARY

 Under the existing dynamics, PIA is disadvantaged

 PIA continues to be in more of a "defensive" position

 PIA has done well in comparison with nei ghboring airports in maintaining seat availability. PIA has also maintained its LCC, while neighboring airports have lost theirs due to corporate acquisitions.

 Existing PIA carriers are operating under severe financial distress (with one in the midst of bankruptcy proceedings. The cu rrent financial climate for the airlines increases the risk of Peoria losing se ats or possibly even entire hub cities.

 Congestion and flight delays at ORD c ontinue to plague Peoria, which makes flying from PIA appear unrel iable. Access to alternative hubs is imperative to maintain our reliability factor as compared to drivable hubs.

 Service to these hubs could harm existing se rvice. Planning is critical to targetPIA	SCASDP	Application	 Page	10 the appropriate new serv ice that would be addi tive, not duplicative.

 Exception: Allegiant Airlines service to LAS, PIE, and AZA continues to perform very well and is among Allegiant's best ro utes. This service has performed well enough for G4 to add service from Peoria to PGD.PIA	SCASDP	Application	 Page	11 IMMEDIATE AIR SERVICE ISSUES FOR

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

PIA exists to serve the business and leisure trav elers of Central Illinois. An increasingly diversified economy demands as much point-t o-point and hub and s poke service as can be profitable.

 Caterpillar has expanded plants in Texa s, has acquired a co mpany and facilities in Milwaukee, and has an increasingly international focus on its operations and profits.

 Many business travelers are forced into double-connecting flights or driving significant distances to conduct their business.

 Access to European and Latin American hubs has become much more important in recent years.

 Price competition still exists after th e departure of Air Tran from regional markets. Several carriers are following in the wake of LCC departures to pick up market segments abandoned through corporate mergers and acquisitions.

 Allegiant Airlines is expected to grow sharply over the next few years -including new Florida, Caribbean a nd/or Mexico service.

 The removal of large jets and the overa ll reduction in capacity in the Peoria market, coupled with the air traffic de lays at Chicago O'Hare has caused significant changes in travel patterns for Peoria and Ce ntral Illinois travelers.

 Capacity in the region's airports has declined since 2001. These emerging trends in the Central Illinois region suggest incr eased downward pressure on the ability for businesses to conveniently and competitively access key markets throughout

the United States.

AIR SERVICE DEVELOPMENT STRATEGIC PLAN

The Metropolitan Airport Authority of Peoria has had an air service development plan in place for the past six years. The plan works to identify community air service deficiencies and needs. It works to provide all airlines the support required to ensure short and long

term success in Peoria and Central Illinois.

Our current air service plan provides an effective am ount of marketing support and airport operational cost abatements for the fi rst year of new servic e. This plan also provides incentives for existing airlines to grow their service portfolio at PIA.

Our strategic plan for meeting our community 's needs through the Small Community Air Service Development Program involves a community outreach effort between the Metropolitan Airport Authority of Peoria , the local business community, and local

Chambers of Commerce.

In developing this strategic plan, the Ai rport Authority's management staff, inPIA	SCASDP	Application	 Page	12 conjunction with its community partners, rou tinely conducts a series of meetings with key shareholders in the Peoria business comm unity to solicit input and travel data to identify gaps in air service avai lability. The deficiency in this process is a lack of data for who is flying from somewhere else.

Available Resources:

 The experiences, knowledge and airline netw ork of the Director of Airports and Air Service Development Manager

 The resources of the local area governme nts, chambers and businesses.

 The support and commitment of Ai rport Authority Board members.

 Resources of the Federal Government (i.e. SCASD Program designed to help smaller communities to enhance their air service).

DESCRIPTION OF PEORIA'S AIR SERVICE DEVELOPMENT EFFORTS

Recent Air Service Successes:

 2012 – April, Allegiant announces new se rvice from PIA to Punta Gorda/Fort Myers, FL to begin June 28.

 2012 – April, Delta resumes direct servic e to Atlanta, which ended in July 2009 due to the merger with Northwest (loa d factors were in the high 70% range).

 2011 – MAAP initiates feasibility study fo r constructing a US Customs Federal Inspection Service facility.

 2011 – April, new terminal opens and goes into full operation.

 2008 – Construction begins on ne w passenger airline terminal.

 2007 -Secured new non-stop service to Detr oit via Northwest Airlines and new nonstop service to Denver via United.

 2006 -Secured additional service from American Eagle to DFW & additional service and increase in aircraft type fro m United to ORD, both efforts increased the available seat capacity for resident s and businesses in Peoria and Central,

Illinois.

 2006 -Secured an additional daily non-stop flig ht to LAS from Allegiant Airlines.

 2006 -Secured new low-fare non-stop service to PIE (a new destination for PIA) from Allegiant Airlines. This service regained access to Central Florida for the

residents and businesses of Pe oria and Central Illinois.

 2004 -Allegiant Airlines initia tes non-stop low-fare jet se rvice to Las Vegas with 5 weekly departures. Daily passengers grew from 10 passengers per day in the 4'n quarter of 2003 (PDEW) to 101 passengers per day (PDEW) in the 2no quarter of

2005. The fare in this market decreased 31%.

 2004 -American initiates non-stop servi ce to Dallas-Fort Worth, doubling thePIA	SCASDP	Application	 Page	13 local PIA-DFW passenger demand.

 2001 -Delta Air Lines initia tes non-stop service to A tlanta. Local passenger

demand increased 145%.

PLAN FOR CONTINUED SUCCESS

Communications with local co rporations, travel agents, and business leaders have

indicated the need for additional hub connect ions. Additional connections to the south, northeast, and the nation’s capital have been sugg ested as desirable. A market analysis is needed to determine the feasibility of these reque sts, as well to forecast as the effect these actions would have on existing levels of service.PIA	SCASDP	Application	 Page	14 PROPOSED SCASD PROGRAM FOR PIA

FINANCIAL SUPPORT

The goal of the Metropolítan Airport Authority of Peoria and its public/p rivate partners is to secure air service from one of the potential airlines (existing or ne w) that will provide regional jet service flights to a new destination hub. Th is project is proposed to be an analysis of market data, trends, and other methods to determine which targets would be best approached, and what additional trav el new hub service would generate. The Airport Authority is requesting $350,000 in funding from the SCASD program and will provide $100,000 in matching funds to carry out this program.

PROPOSED FUNDING REQUEST

The Airport Authority's Marketing and Deve lopment Department, under the direction of the Airport Authority's Director of Airports will have resp onsibility for development and management of this program. The Airport Authority and its public/private partners request a $350,000 grant under the terms of The Small Community Air Service Development Program to attempt to secu re competitive air service to a new hub

destination within the United States. Th e $350,000 of requested federal money is being matched by a contribution of $100,000 or 28% of the federal funds requested.

We are asking the Department to help Peoria and our business travel partners identify and quantify our next marketing and air service de velopment efforts and begin the process of consolidating the gain s we have made in the last two years.

TOTAL PROGRAM FUNDING BREAKDOWN

Public Private Federal Contribu tion Contribution Contribution

Consultant fees $300,000

Data Costs 50,000

Marketing Costs 100,000

TOTAL PROGRAM FUNDING $450,000PIA	SCASDP	Application	 Page	15 APPENDIX A Summary Information SheetSMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT

- OST

- 2012

- 0069

SUMMARY INFORMATION

All applicants must submit this information with their proposal, a long with a completed form

SF424 on www.grants.gov

.

A. A PPLICANT I NFORMATION : (C HECK A LL T HAT A PPLY )

Not a Consortium Interstate Consortium Intrastate Consortium

Community now receives EAS subsidy

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

If previous recipient: Date of grant: Expiration date of grant: Federal Funds Requested:

Carr ier(s) Service Obtained: Destination(s) Served:

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

PUBLIC PRIVATE

1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

C. 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)D. E XISTING L ANDING A IDS AT L OCAL A IRPORT :

Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other (specify)

E. 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

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 )

In

- K ind contribution

5 a Airport In

- Kind contribution **

5b Other In

- Kind contribution **

5 TOTAL IN

- KIND CONTRIBUTION

( 5

a + 5b )

6 TOTAL PROJECT COST ( 4+ 5 )

F. IN

- KIND CONTRIBUTIONS **

For funds in lines 5 a (Airport In

- Kind contribution) and 5 b (Other In

- Kind contribution), please

describe the source(s) of fund(s) for each.F

. 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 the s tate for review.

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

G. I S T H E A PPLICANT D ELINQUENT O N A NY F EDERAL D EBT ? (I F “Y ES ”, P ROVIDE

E XPLANATION )

No Yes (explain)

______________________________________________________________________________

______________________________________________________________________________