# Hector International Airport

Fargo, North Dakota

Proposal Under the Small Community Air Service

Development Program Docket DOT

- OST

- 2010

- 0124

Dun & Brad street DUNS Number 116119731 Two Digit Congres sional District Code: None (At Large Representation)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## TABLE OF CONTENTS

INTRODUCTORY LETTER

................................ ................................ .................. 4 EXECUTIVE SUMMARY

................................ ................................ ...................... 5 AIR SERVICE OVER VIEW

................................ ................................ ................... 6

Catchment Area

................................ ................................ ................................ ................................ ..................... 6 Other Commercial Airport Locations in the Region

................................ ................................ ............................... 7 Leakage

................................ ................................ ................................ ................................ ................................ .. 8 Routes Served from Fargo

................................ ................................ ................................ ................................ ..... 9 November 2010 Frequenc ies by Carrier and Market

................................ ................................ ........................... 10 Air Service Development Efforts

................................ ................................ ................................ .......................... 10 Airport Marketing and Promotion

................................ ................................ ................................ ......................... 11 

## AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES

......................... 12
Capacity and Traffic Growth

................................ ................................ ................................ ................................ . 12
Fare Trends

................................ ................................ ................................ ................................ .......................... 14 

## STRATEGIC PLAN

................................ ................................ ............................ 16

Goals

................................ ................................ ................................ ................................ ................................ .... 16 Target Airline Support

................................ ................................ ................................ ................................ .......... 16 Fargo

- Dallas/Ft. Worth Traffic and Revenue

................................ ................................ ................................ ....... 17 Largest Dallas/Ft. Worth Market Under 1,000 Miles withou t Nonstop Service

................................ .................... 19 Connecting Traffic and Revenue Via American's Dallas/Ft. Worth Hub

................................ .............................. 20 Proposed Schedule

................................ ................................ ................................ ................................ .............. 22 Alternate Strategies

................................ ................................ ................................ ................................ .............. 22 

## PROJECT FUNDING, IMPLEMENTATION AND MONITORING

....................... 23
Public / Private Partnerships

................................ ................................ ................................ ................................ 23
Pr oject Funding

................................ ................................ ................................ ................................ .................... 24 Implementation Timeline

................................ ................................ ................................ ................................ ...... 25
Start

- Up Period and Sustainability of the Market

................................ ................................ ................................ . 26 

## PROJECT MONITORING AND FINANCIAL CONTROL

................................ .... 27

Success Metrics

................................ ................................ ................................ ................................ ................... 27 Legal Sponsor

................................ ................................ ................................ ................................ ...................... 27
Financial Controls

................................ ................................ ................................ ................................ ................ 28 Expiration of Grant Funding Prior to Self Sustainability

................................ ................................ ....................... 28Fargo Hector International Airport, Fargo, North Dakota

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## APPENDIX A: REQUIRED SUMMARY INFORMATION

................................ ... 29

A. Applicant Information

................................ ................................ ................................ ................................ .... 29
B. Public/Private Partnerships

................................ ................................ ................................ .......................... 29
C. Project Proposal

................................ ................................ ................................ ................................ ........... 29
D. Existing Landing Aids at Local Airport

................................ ................................ ................................ .......... 30
E. Project Cost

................................ ................................ ................................ ................................ .................. 30
F. Enplanements

................................ ................................ ................................ ................................ ............... 30
G. Is this application subject to review by state under Executive Order 12372 Process?

................................ 30
H. Is this applicant delinquent on any federal debt?

................................ ................................ ......................... 31 

## APPENDIX B: COMMUNITY BACKGROUND

................................ .................. 32
Airport Information

................................ ................................ ................................ ................................ ................ 32 The Cities of Fargo and Moorhead

................................ ................................ ................................ ...................... 33
Economic Overview

................................ ................................ ................................ ................................ ............. 33 Higher Education

................................ ................................ ................................ ................................ .................. 38
Points of Intere st

................................ ................................ ................................ ................................ .................. 40Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## INTRODUCTORY LETTERFargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## EXECUTIVE SUMMARY

Fargo Hector International Airport is proposing a Small Community Air Service Development Grant in the amount
of $750,000 to supplement community and airport funding totaling $ 291,899 to provide a minimum rev enue guarantee for one roundtrip between Fargo and Dallas/Ft. Worth on 50

- seat regional jets operated by American Eagle.

Fargo is an isolated market with an immediate catchment area serving a population of 220,782 residents and an
extended catchment area

– up to a two hour drive time from the airport

– with a population of 591,890 residents. Fargo immediate and extended catchment area includes parts of Eastern North Dakota, Northeastern South
Dakota and West Central Minnesota. It is not uncommon for residents of Southern Manitoba in Canada to use air service at Fargo Hector International Airport.

Network carriers serving Fargo include American/ American Eagle with service to Chicago, Delta/Delta connection to Minneapolis/St. Paul and Salt Lake City , and United/United Express to Chicago and Denver. Fr ontier began service in the Fargo market in May 2008, but exited the market in February 2010. Frontier's service was important to the community because Frontier was the only low

- cost carrier in the market, and Frontier's pricing structure brought the only real competitive network carrier pricing to the market. Allegiant Air also serves Fargo with service to Las Vegas, Mesa/Phoenix, Los Angeles and Sanford/Orlando, but Allegiant caters to outbound leisure travelers and operates only point

- to

- point service without connectivity to a larger network.

Although Fargo's average domestic ex

- Allegiant fare declined in the year

- end first quarter 2010 from $225 to $191 each way, analysis of quarterly data over the last year indicates Fargo fares are trending back up. After declining to a low of $180 each way in second quarter 2009, the average one

- way fare increased to $199 in first quarter
2010.

Dallas/Ft. Worth is Fargo's third largest ex

- Allegiant market American Eagle could serve with nonstop Fargo

Dallas/Ft. Wor th service with 18.0 PDEW at an average fare of $176 each way in the year

- end first quarter 2010. Quarterly data indicates the Fargo

- Dallas/Ft. Worth market size increased from 13.4 PDEW in first quarter 2009 to 17.7 PDEW in first quarter 2010 while the a verage fare decline d from $197 to $176 over the same period.

From American Eagle's perspective at its Dallas/Ft. Worth hub , Fargo is the largest market under 1,000 miles
from Dallas/Ft. Worth with out nonstop service from Dallas/Ft. W orth.

American's hub in Dallas/Ft. Worth would provide connectivity to at least 97 destinations American and American Eagle serve nonstop from Dallas/Ft. Worth and the 30 largest Fargo markets American Eagle could serve via Dallas/Ft. Worth generated 229 PDEW at an average fare of $194 in the year

- end first quarter 2010.Fargo Hector International Airport, Fargo, North Dakota

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## AIR SERVICE OVERVIEW

Catchment Area

Fargo Hector

International Airport is the primary airport serving Southeastern North Dakota and West Central Minnesota. 220,782 r esidents live within a one hour d rive of the airport, and 591,800 residents live within a two hour drive of the airport (Exhibit 1).

Exhibit 1: One and Two Hour Drive Time Catchment Area s of Fargo Hector International AirportFargo Hector International Airport, Fargo, North Dakota

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## Other Commercial Airport Locations in the Region

Fargo Hector International Airport is the primary airport for travelers in the Fargo area (Exhibit 2). The airports in Bismarck, Jamestown and Grand Forks have less service than Fargo, while Sioux Falls, located 243 miles to the south, has slightly more capacity Mi nneapolis/St. Paul International Airport is located 255 miles from Fargo and serves as Hector International Airport's primary competitive airport. Delta operates a large hub in Minneapolis/St. Paul with nonstop service at lower fares in Fargo's largest or igin and destination markets.

Exhibit 2 : Location of Fargo Hector International Airport Relative to Other Airports in the Region, Distances and Drive Times from Fargo to Other AirportsFargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## Leakage

Fargo Hector International Airport retains 75.5% of the traffic in its catchment area, but 14.3% of the traffic is lost to Minneapolis/St. Paul , a four hour drive 255 miles from Fargo. Other commercial airports in the region are located in Bismarck, Jamestown, Grand Forks and Sioux Falls; however, traffic lost to these airports is fragmented and collectively capture the rem aining 10.2% of Fargo's traffic (Exhibit 3).

Exhibit 3 : Fargo Catchment Area Traffic Captured by Fargo Hector International Airport and Airports Surrounding FargoFargo Hector International Airport, Fargo, North Dakota

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## Routes Served from Fargo

Fargo is served by three legacy carriers and by Allegiant Air. Legacy carrier service is operated by Delta /Delta Connection to Minneapolis/St. Paul and Denver; United/United Express to Chicago O'Hare and Denver and by American/American Eagle to Chic ago O'Hare (Exhibit 4 ) . Not illustrated on the map below are Allegiant's routes to Las Vegas, Los Angeles, Mesa/Phoenix, Sanford/Orlando and St. Petersburg/Tampa. It should be noted that Frontier Airlines exited the Fargo market in early 2010, and fares are expected to rise as a result. As a low

- cost carrier, Frontier's presence in the market kept downward pressure on Fargo fares

.
Exhibit 4 : Legacy Carrier Route s Operated from Fargo Hector International AirportFargo Hector International Airport, Fargo, North Dakota

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## November 2010 Frequencies by Carrier and Market

The network carriers serving Fargo will operate a total of 18 5/7 departures per day in November 2010. American/American Eagle will operate three daily flights to Chicago on 50

- seat regional jets, Delta will operate 6
4 /7 flights to Minneapolis/St. Paul with a mix of regional jets and mainline airc raft and two daily 70

- seat regional jet flights to Salt Lake City. United will operate 3 1/7 flights per day to Denver and four daily flights to Chicago

– all on 50

- seat regio nal jets (Exhibit 5 ).

Exhibit 5 : Fargo Legacy Carrier Departures per Day, Seats per Departure and Seats per Day

– November 2010



## Air Service Development Efforts

Fargo Hector International Airport meets with both incumbent and prospective airlines on a regular basis. Over the last year, the Airport has met with Air Canada, AirTran, Alaska, Allegiant, American, American Eagle, Delta, ExpressJet, Frontier, SkyWest, Southwest, United and WestJet.Fargo Hector International Airport, Fargo, North Dakota

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## Airport Marketing and Promotion

In addition to meeting w ith airlines to promote the attribute of the community and highlight the success of carriers serving Fargo
, Fargo Hector International Airport also markets airport's existing service to travelers in the
catchment area. The Airport's marketing efforts inclu de print, radio and television advertising to increase both overall awareness of the airport and the convenience of the airport and targeted marketing for spec ific airline and/or destination (Exhibits 7 and 8).
Exhibit 6

– Airport Awareness and Convenience Print Advertising

Exhibit 7 : Airline and Destination

- Specific Print AdvertisingFargo Hector International Airport, Fargo, North Dakota

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## AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacity and Traffic Growth

Fargo's e x
- Allegiant capacity has trended up over the last ten years to 1,149 seats per day each way in the year

end first quarter 201 0. E x
- Allegiant traffic grow th has also trended up with over the last ten years to 767 domestic
and intern ational PDEW (Exhibit 8 )

Exhibit 8 : Ex

- Allegiant S eats per Day Each Way and D omestic a nd International PDEW at Fargo Hector International Airport

– Year

- End First Quarter 2001

- 2010 ( T

- 100 and DB1B data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 13 Examination of quarterly ex
- Allegiant capacity and traffic data indicates first quarter 2010 capacity came in slightly higher than first quarter 2009 capacity, and Fargo generated 64 more PDEW in first quarter 2010 than it generated in first quarter 2009 (Exhibit 9 )

.
Exhibit 9 : Ex

- Allegiant Seats per Day Each Way and Domestic a nd International PDEW at Fargo Hector International Airport

– Quarterly Data

-- First Quarter 2008 through First Quarter 2009 ( T

- 100 and DB1B data)Fargo Hector International Airport, Fargo, North Dakota

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## Fare Trends

Fargo's average domestic ex

- Allegiant one

- way fare fell below $200 for the first time in the year

- end first quarter 2010, but still stood at $191 when the average domestic one

- way fare among lower 48 airports was $143. Furthermore, although Fargo's average fare declined $34 from $225 in the year

- end first quarter 2009 to $191,
domestic tr affic incr eased by only 16 PDEW (Exhibit 10 ).

Exhibit 10 : Ex

- Allegiant Seats per Day Each Way
, Domestic PDEW and Average Domestic Fare at Fargo Hector International Airport

– Year

- End First Quarter 2001

- 2010 (DOT T

- 100 and DB1B data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

– 2010 

### 15 Although Fargo's average ex
- Allegiant domestic one

- way fare in the year

- end first quarter 2010 declined year

over
- year from $225 to $191, the one

- way domestic fare is trending back up from a two

- year low of $180 in
second quarter 2009 to an average of $199 in first quarter 2010 (Exhibit 11 ).

Exhibit 11 : Ex

- Allegiant Seats per Day Each Way and Aver age Domestic Fare at Fargo Hector International Airport

- Quarterly Data

– First Quarter 2008 through First Quarter 2010 (DOT T

- 100 and DB1B data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## STRATEGIC PLAN

Goals

Fargo has three goals for its Small Community Air Service Development Grant proposal for service to Dallas/Ft.
Worth on American Eagle:

 Nonstop service from Fargo to Dallas/Ft. Worth

 Lower fares in the markets served via Dallas/Ft. Worth

 Market size growth in markets served via Dallas/Ft. Worth 

## Target Airline Support

American Eagle h as expressed some interest in operating the proposed service from Fargo to Dallas/Ft. Worth

. As a matter of policy, American Eagle does not write letters of support for proposals under the Small Community Air Service Development Program and would not make an exception to its policy in this case. Based on
discussion s in September 2009, when the Airport negotiated incentives for American Eagle service to Chica go, the Airport believes a minimum revenue guarantee, marketing incentives and fee waivers will be necessary for American Eagle to begin service in the Fargo

- Dallas/Ft. Worth market.Fargo Hector International Airport, Fargo, North Dakota

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## Fargo

- Dallas/Ft. Worth Traffic and Revenue

As the average fare has trended down, the Fargo

- Dallas/Ft. Worth market size has trended up over the last ten years to a new high of 18.0 PDEW in year

- end first quarter 2010 (Exhibit 12 )

. Market size growth, even without the benefit of nonstop service, ind icates a strong demand environment for the service, and the introduction of nonstop service would likely increase the size of the market even further. The nonstop service would also likely drive the average fare down.

Exhibit 12 : Fargo

- Dallas/Ft. Worth PDEW and Average Fare

– Year

- End First Quarter ( DB1B data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 18 Quarterly data, as illustrated in Exhibit 13
, is encouraging and should peak American Eagle's interest because traffic increased in first quarter 2010 to 17.7 PDEW versus 13.4 PDEW in 2009 and 12.5 PDEW in 2008. The market size grew 31.4% from first quarter 2009 to 2010, but the fare declined only $15, or 7.9%.

Exhibit 13 : Fargo

– Dallas/Ft. Worth PDEW and Average Fare

– Q uarterly Data

– First Quarter 2008 through First Quarter 2010 (DB1B data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 19 

## Largest Dallas/Ft. Worth Market Under 1,000 Miles without Nonstop Service

With a market size of 18 PDEW, Fargo is the largest Dallas/Ft. Worth market under 1,000 miles from Dallas/Ft. Worth without nonstop service (Exhibit 14 ) . The 1,000 mile perime ter is an important distinction for markets with and without service to a hub because it is generally considered to be the maximum economical distance a 44

- seat regional jet can operate without significant payload restrictions in a market with relatively h igh yields. American Eagle recently began Dallas/Ft. Worth service to Sioux Falls and Augusta, markets with less traffic than Fargo, but slightly shorter distances. Dallas/Ft. Worth

- Sioux Falls generated 16 PDEW (737 miles), and Augusta generated 14 PDE W (874 miles) .

Exhibit 14 : Dallas/Ft. Worth Market Size, Revenue Data, Distance, Nonstop Service Indicator and Equipment Type Indicator in Markets Less than 1,000 Miles from Dallas/Ft. Worth

– Year

- End First Quarter 2010 (DB1B Data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## Connecting T

raffic and Revenue Via American 's Dallas/Ft. Worth Hub

Service connecting Fargo to American's Dallas/Ft. Worth hub would connect Fargo with at least 9 7 markets American serves from Dallas/Ft. Worth, primarily in the Texas, the Southwest, Southeast, Mexico and othe r destinati ons in Latin America (Exhibit 15 ).

Exhibit 15 : Non

- Circuitous Markets American Could Serve with Fargo

- Dallas/Ft. Worth Service (based on circuity not greater than 67%)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 2 1 As illustrated in Exhibit 16 , the largest markets American could flow via Dallas/Ft. Worth are Phoenix, Los Angeles, Dallas/Ft. Worth, Orlando and Atlanta. Excluding Allegiant Air data, th e 30 largest markets American could flow via Dallas/Ft. Worth gener ated 229 PDEW at an average fare of $194 in the year

- end first quarter
2010. Many of the markets served by American via Dallas/Ft. Worth are currently not served with a single connection via hubs currently served from Fargo.

Exhibit 16 : Ex

- Allegiant Ann ual O&D Passenger s, PDEW and Average One

- Way Fares in the 30 Largest Markets American Could Serve with Fargo

- Dallas/Ft. Worth Service

– Year

- End First Quarter 2010 Data ( DB1B data)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## Proposed Schedule

Fargo Hector International Airport proposes a one roundtrip schedule timed to capture flow traffic fr om markets east, west and south of Dallas/Ft. Worth . A single roundtrip in the market operated as an early morning departure from Fargo and an early evening departure from Dallas/Ft. Worth (Exhib it 17 ) w ould maximize connecting traffic
and compliment American Eagle's existing Fargo

- Chicago service with one

- connection service in markets not served by American nonstop from Chicago.

Exhibit 17 : Proposed American Eagle Fargo

- Dallas/Ft. Worth Schedules



## Alternate Strateg ies

If a Small Community Air Service Development Grant were awarded to Fargo Hector International Airport, and the Airport were not successful in securing American Eagle service to Dallas/Ft. Worth, the Airport would like to the ability t o use grant funding to pursue service on SkyWest Airlines for service to Milwaukee on the AirTran code. SkyWest service from Fargo feeding AirTran flights in Milwaukee would likely stimulate traffic in markets s erved by AirTran from Milwaukee. As a low

- co st carrier, AirTran's pricing strategy in connecting markets via Milwaukee would likely stimulate Fargo's origin and destin ation markets served by AirTran via Milwaukee.Fargo Hector International Airport, Fargo, North Dakota

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## PROJECT FUNDING, IMPLEMENTATION AND MONITORING Public / Private Partnerships

Great er Fargo

- Moorhead Economic Development Corporation

The Greater Fargo Moorhead Economic Development Corporation (GFMEDC) supports business development, growth, and diversification to improve the qua lity of life in Cass County, North Dakota and Clay County, Minnesota
communities. GFMEDC's goals are to grow employment opportunities, population, and tax base to strategically position communities and businesses to better compete in the global economy, to facilitate the creation of high

paying jobs for our large ly underemployed workforce, and to retain graduates of our higher education institutions.

Fargo

- Moorhead Convention and Visitors Bureau
The Fargo

- Moorhead Convention & Visitors Bureau promotes Fargo, North Dakota, and Moorhead, Minnesota as
a destination for visitors, tour groups, business travel, conventions, sporting events and trade shows. The FMCVB promotes and markets everything the community has to offer: excellent, affordable lodging, over 300 restaurants, shopping, great golf, unique attractions, y ear
- round festivals, concerts, theatre and entertainment.

Chamber of Commerce of Fargo

- Moorhead and West Fargo
The Chamber of Commerce of Fargo Moorhead and West Fargo is a regional federation of 1,800 private, public
and non

- profit member firms that colle ctively em ploy more than 89,000 people. The chamber has members in twenty Minnesota communities, twenty North Dakota communities, South Dakota, Manitoba and beyond. The
mission of the Chamber is to unify and advance business and community interests in th e region.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## Project Funding

In addition to the Small Community Air Service Development Grant of $750,000 requ ested from the Department, the Greater Fargo

- Moorhead Economic Development Corporation is willing to provide cash of $109,589 to American Eagle f or reimbursement of airport expenses and fees incurred during the first year of service to
Dallas/Ft. Worth . I n
- kind community funding is valued at $107,310 and will be provided by discounting six crew hotel rooms per night by $49 to a nightly rate of $50 for one year at the Ramada Plaza and Suites.

Fargo Hector International Airport will provide cash of $75,000 to the project to market Dallas/Ft. Wor th service.

The total value of cash and in

- kind contributions from the communi ty and the A irport is valued at $291,899 or 28% of total project ( Exhibit 1 8 )

.

Exhibit 1 8 : Sources and Types of Program FundingFargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## Implementation Timeline

Our proposed implementation timeline for the project, as shown in Exhibit 19
, assumes the Department will award Small Community Grant Funding in December 2010. In addition to a dependency on the award announcement, the timeline is highly dependent on successf ully negotiating an agreement for American Eagle to begin service in the Fargo

- Dallas/Ft. Worth market. Delays in negotiating the agreement or the start

- up date of the service will cause shifts in implementing the tasks on the project timeline.

Once the aw ard is announced
, Fargo Hector International Airport will begin discussions with American to begin service. Based on airline planning lead times and the need for advance bookings, we assume American would not be able to begin service until at least June 2 011. The first two milestones on the Airport's timeline are to execute the grant agreement with the Department and the minimum revenue guarantee agreement with
American . Once service is announced and schedules are published, the Airport would begin marke ting the new route and working with American to monitor advance bookings. The Airport will continue its marketing program
and continue to work with American to monitor the route once service begins. The Airport will submit grant status reports on a quart erly basis to the Department throughout the proposed two year term of the minimum revenue guarantee.

Exhibit 19 : Proposed Project Timeline (assumes grant announcements in December 2010 and service launch in June 2011)Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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## Start

- Up Period and Sustainability of the Market

The Airport will aggressively market the new service to business and leisure travelers in the catchment area. A benefit of beginning service in June 2011 is to capture the peak of traffic seasonality in the U.S. domestic and international air travel market. Beginning service in the summer will provide a strong start for the service and provide two

- and

- a
- half to three months to build business traffic in the market before leisure traffic demand falls in
mid

- August to early Sep tembe r. B usiness travel will become more important for the success of the route as leisure travel declines in the Fall. The Airport expects the route to be self

- sustaining within the first two years of

ser vice and will include Dallas/Ft. Worth as part of its on

- going marketing and promotional campaigns of the airport.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 27 

## PROJECT MONITORING AND FINANCIAL CONTROL
Success Metrics

The s u ccess of th e progra m will be b ased on achieving the goals of the program . The Airport will continuously
monitor the performance of the route. Even before service begins , the Airport will communicate with American Eagle on a regular basis to monitor advance bookings and week

- over
- week of advance bookings. Marketing and promotional activities can be adjusted if adva nce bookings are weak or are not booking at a rate comparable to
other American Eagle Dallas/Ft. Worth markets.

Project Goals Success Metric

 Nonstop service from Fargo to Dallas/Ft. Worth  American Eagle launches Fargo

- Dallas/Ft. Worth service

 Lower fares in the markets served via Dallas/Ft. Worth  Lower quarterly year

- over
- year average fares in the markets American serves via Dallas/Ft. Worth

 Market size growth in markets served via Dallas/Ft. Worth  Quarterly year

- over
- year traffic growth in the
mar kets American serves via Dallas/Ft. Worth

Once service begins, the Airport will rely on traffic and revenue data provided directly by the airline and the amount of reimbursements requested by the airline as indications of project success. T

- 100 data and DB1B data will also be analyzed to compare year

- over
- year market size growth on a quarterly basis. In addition, the airport will analyze leakage once the service has operated for a full year to determine the trend in leakage to other airpor ts. The Airport will report its success metrics in the quarterly grant reports to the Department. 

## Legal Sponsor

The Municipal Airport Authority of the City of Fargo is the legal sponsor responsible for administering the program and is a government entity.

Municipal Airport Authority of the City of Fargo

P. O. Box 2845
Fargo , ND 58108
Shawn A. Dobberstein, Executive Director

701

- 241

- 1501Fargo Hector International Airport, Fargo, North Dakota

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## Financial Controls

As the sponsor, the Municipal Airport Authority of the City of Fargo and its governing body, the Municipal Airport Authority board , will be the responsible partie s for all fiscal matters and the Department's reporting requirements. The Municipal Airport Authority of the City of Fargo is established as a public governing body. As a public entity
, the Department can be assured that proper financial controls are in place to guarantee that the Department ’s Grant will be used in accordance with any subsequent agreement. The Municipal Air port Authority of the City of Fargo understands that the g rant is a reimbur sable grant, meaning the Authority is responsible for program expenditures and will submit invoices to the Department for reimbursement, based on a percen tage of the total grant req uest.



## Expiration of Grant Funding Prior to Self Sustainability

Given the market size growth of the Fargo

- Dallas/Ft. Worth market over the last ten years and over the last year, coupled with the breadth and the depth of markets American and American Eagle serve from Dallas/Ft. Worth, the service proposed in this application is anticipated to be successful.Fargo Hector International Airport, Fargo, North Dakota

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## APPENDIX A: REQUIRED SUMMARY INFORMATION

A. Applicant Information

Not a Consortium

Interstate Consortium

Intrastate Consortium
Community now receives EAS subsidy
Community (or Consortium member) pr eviously received a Small Community Grant
If previous recipient: Date of Grant: September 12, 2005 Expiration Date of Grant: September 12, 2008


## B. Public/Private Partnerships

Public
Municipal Airport Authority of the City of Fargo

Private

Greater Fargo

- Moorhead Economic Development Corporation
Fargo

- Moorhead Convention and Visitors Bureau
Chamber of Commerce of Fargo

- Moorhead and West Fargo

Ramada Plaza and Suites


## C. P roject Proposal

Marketing Upgrade Aircraft New Route Personnel Increase Frequency Low Fare Service Travel Bank Service Restoration Subsidy Surface Transportation Regional Service Other (specify) Revenue Guara ntee Launch New Service Start

- Up Cost Offset First Service Study Secure Additional CarrierFargo Hector International Airport, Fargo, North Dakota

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## D. Existing Landing Aids at Local Airport

Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify)



## E. Project Cost

F. Enplanements

2000 230,969 2004 256,004 2008 324,434 2001 217,979 2005 275,200 2009 348,951 2002 230,405 2006 305,218 2003 243,097 2007 297,964



## G. Is this application subject to review by state under Executive Order 12372 Process?

a. This application was made available to the State under the Executive Order 12372 Process for review on (date):
b. Program is subject to E.O. 12372, but has not been selected by the State for review.
c. Program is not covered by E.O. 12372Fargo Hector International Airport, Fargo, North Dakota

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## H. Is this applicant delinquent on any federal debt?

No
Yes (explain)Fargo Hector International Airport, Fargo, North Dakota

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## APPENDIX B : COMMUNITY BACKGROUND Airport Information

On September 9, 1927, Martin Hector leased a quarter

- section of land at the northwest corner of Fargo to the city for five years at $1 per year and scheduled weekly flights into Fargo began on February 1, 1928.
The present terminal was built in 1986. With its construction, the termi nal facility moved from the southeast corner of the airport grounds to the West central area. In 1982, Hector Field became Hector International Airport and U. S. Customs opened an office on the field in 1985.
In 2006, the Municipal Airport Authority initia ted a terminal expansion project to meet the needs of the passenger terminal of the next 20 years. The expansion project was completed in 2008. The Hector International Airport completed the passenger terminal expansion/update project October 2008. The project updated the existing terminal building and added a 5th gate, 3rd baggage claim and expanded the security checkpoint area. The total cost was $14.9M total cost (including EDS room and Coffee Bar project) and added a total of 118,000 ft 2 total termin al space

. The airport has three runways. Runway 18/36 is a 9,000ft. concrete runway. Runway 9/27 is also concrete and measures 6,300 ft. Runway 13/31 is asphalt and is 3,800 ft. long.Fargo Hector International Airport, Fargo, North Dakota

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## The Cities of Fargo and Moorhead

Fargo (which includes its twin sister city, Moorhead, MN that sits just across the state line) is a diverse, stimulating and family

oriented city with all the amenities that make for a satisfying and fulfilling life.

Those with firsthand experience talk about Fargo

- Moorhead's exceptional K

- 12 and higher education systems,
world

- class health care, affordable housing, low cost of living and myriad cultural and entertainment options. They mention stress, crime and traffi c jams, too, but only to say there isn't much of that here.

National Rankings of Life in Fargo

- Moorhead

 Forbes ranked Fargo Moorhead among the top ten small metros for business and

careers in its 2010 report

 The American Lung Association ranked Fargo Moorhead one of America's

cleanest cities in its 2010 State of the Air report

 Fargo Moorhead is among the top 50 most bike

- friendly cities in the United States,

ccording to Bicycling Magazine

 #1 secure mid size U.S. city (150,000 to 500,000 population) in the 6th annual

Most Secure U.S. Places to Live rankings, Farmer's Insurance Group of Companies

 #3 in Children's Health Magazine's list of 100 Best Places to Raise a Family, September 2009

 #5 in AARP's list of healthiest places in America to live and retire, September/October 2008

 #4 in Men's Health Living ranking of U.S. cities in terms of quality of life, Spring 2008

 Sperling's Best Places 2008 lists Fargo Moorhead among the top ten cities for its low cost of living,

good job prospects and high quality of life

 CQ Press ranks North Dakota as the third safest state and tenth most liveable s tate in March

2 008. Minnesota was fourth most livable and grabbed the top spot for healthiest state.

Econom ic Overview

As of 2010, Fargo Metro Area's population is 196,332 people. Since 2000, it has had a population growth of 12.66 percent. The median household income is $45,315 and the median home cost in Fargo Metro Area is $140,680 and unlike many areas of the country hit hard by the recession, Fargo actually saw home prices appreciate last
year.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

– 2010 

### 34 Despite the economic downturn in the rest of the U.S., Fargo

- Moorhead’s economy continues to expand . In 2009, companies in Fargo

Moorhead added more than 300 new jobs, mitigating small job losses in smaller businesses.

Fargo is the economic engine that drives the Upper Great Plains, and a high

- tech center for development that continues to grow:

• Fargo is technological, manufacturing, retail, and educational hub with a regional population of almost 700,000

.

• Fargo has grown more than 20% in the last 15

- years

– and local businesses have created 13,000 new jobs since 2000

.

• The Forum recently wrote, “N orth Dakota’s exports grew by more than 34% [in 2007] alone, giving it one of the fastest rates of export growth in the country .”

• According to the Fourth Quarter 2008 job survey released by Manpower, Inc., the Fargo

- Moorhead area enjoyed the fourth

- stronge st job market in the nation

.

• The Los Angeles Times featured Fargo as an, “improbably stylish, worldly, even luxurious [city].”

• National Public Radio recently reported, “Quietly, Fargo has been flourishing . Fargo has steadily created jobs and over the last few years has consistently posted one of the nation's lowest unemployment rates ."

• Among the major corporations with operations in Fargo are Microsoft, Bobcat, NAVTEQ, Case New Holland, Wells Fargo, US Bank, and Caterpillar.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

– 2010 

### 35 National Rankings of the Far go Moorhead Business Climate:

• #5 in Forbes ranking of the Top College Towns for Jobs in May 2009.

• #7 in Forbes Best Places for Business and Careers in March 2009. The index ranks cities according to cost of doing business, educational attainment of the po pulation, income growth, projected job growth and net migration.

• #1 city in North Dakota for entrepreneurial start ups, according to Business Week.

• #8 in MSN and CareerBuilder.com's October 2008 list of the 25 Best Markets to Find a Job.

• #24 out of the Top 100 Best Places to Live and Launch a Business, according to Fortune Small Business
in April 2008.

• #9 in America's Top 50 Business Opportunity Metros for 2007

- Expansion Mgmt Magazine.

With an Unemployment Rate of Just 3.9%, Fargo Has the Second Lowest Unemployment Rate in the United States

. April 2010 Unemployment Rates

U.S. Average and U.S. MSAs with the Lowest Unemployment Rates

Source: Bureau of Labor StatisticsFargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 36 What’s New in Fargo

Fargo Moorhead’s business environment is evolving rapidly, adding new expertise, facilities and capacity every day. Businesses here are benefiting from world

- class education and research, unique advanced facilities, strong industry

- university partnerships, sophisticated business infrastructure, and hardworking, sk illed and productive employees. Companies are growing, competing globally and profiting in a community that is fully engaged in deliberate, cooperative and business

- focused planning and execution.

Fargo Automation has announced in January 2010 a $1.5 mil lion expansion project. The company plans to add 3,000 square feet of office space and 8,000 square feet of manufacturing space. Fargo Automation currently employs 60 people. The company plans to add an additional 36 jobs within the next three years. Company officials say according to projections, Fargo Automation will total 100 employees in five years. The company builds packaging machinery for pharmaceutical companies in North America. Their customers include Pfizer, Becton Dickinson,
GlaxoSmithKl ine, Johnson & Johnson, Tyco Healthcare, and Warner Chilcott. More than 50% of materials and supplies are purchased from local businesses.

Case New Holland (CNH)

– a leading manufacturer of heavy farm and construction equipment

– continues to see growth , and added 128 employees to its Fargo

- Moorhead operation in 2008 . CNH chose Fargo for expansion over plants in Brazil and Europe.

Microsoft

– one of North Dakota’s largest employers

– has embarked on a major expansion of its Fargo campus . The company will add a new 120,000 square foot building housing as many as 3,800 employees.

Work continues on the development of Concordia College’s new Global Vaccine Institute

. The Greater Fargo

- Moorhead Economic Development Corporation donated $10,000 to demonstrate local support for the project, which researches neglected tropical diseases.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 37 Table 6

– Largest Employers in the Fargo MSA

Employer # of Employees MeritCare Health Systems 3,691 North Dakota State University 2,401
Blue Cross Blue Shield of N.D. 1,800 Fargo Public Schools Education 1,638
Innovis Health 1,285
US Bank Service Center 952
Microsoft 948 Fargo VA Medical Center 830 West Fargo Public Schools 786 Concordia College 750 Minnesota State University

- Moorhead 735 City of Fargo 731
Moorhead Public Schools 675 Phoenix International Corp. 634
Case New Holland 554 Source: Greater Fargo

- Moorhead Economic Development Corporation, August 2010Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 38 Higher Education

Institution Enrollment Foreign Students North Dakota State University

- Fargo 14,189 800 Univesity of North Dakota

– Grand Forks 13,172 500 Minnesota State University

– Moorhead 7,510 425 Concordia College, Moorhead 2,811 98 Total Enrollment, Fall 2009 37,682 1,823 Source: National Center for Education Statistics, Fall 2009

North Dakota State University at Fargo

North Dakota State University at Fargo is the region’s premier center for higher education, consistently ranked as a top university by US News and World Rep ort . It is a public university in and the largest university in North Dakota with 14,189 students. Founded as North Dakota Agricultural College in 1890 as a land grant institution, it sits on a 258 acre campus. The school also operates several agricultural research centers spread over 22,000 acres. NDSU is part of the North Dakota University System. NDSU offers 108 bachelor's, 75 minors, 63 master's, 44 doctoral, and 10 graduate certificate programs. NDSU is a comprehensive doctoral research

u niversity with programs involved in high research activity.

Minnesota State University

– Moorhead

Minnesota State University

– Moorhead is a four

- year, public university located in Moorhead and offers more than 135 degree programs to its students, which come from 38 states and 32 countries around the world. MSUM faculty, staff and students spend about $88.2 million annually in the local economy. This generates, adding secondary effects, an estimated $270 million in economic activity within Cass and Clay Counties. MSUM’s payroll for its 789 employees amounts to $32.4 million annually, which, applying the appropriate multiplier, generates $105,813,798 in economic activity within the two counties. MSUM’s enrollment fall semester totals 7,779 students, wh o pay more than $13 million in tuition and fees. Those students spend about $42.9 million annually in the local market, which has a $132 million impact on the economy. MSUM spends an average of $12 million on goods and services in the local economy, rangi ng from construction and retail trade to transportation and business services. That has a $31 million impact on the local economy.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 39 The University of North Dakota

– Grand Forks

The University of North Dakota

– Grand Forks is just an hour’s drive from He ctor International Airport. The university is best known for its aeronautics programs. The University of North Dakota is the state’s most comprehensive intensive research university and the primary center for professional education and training. UND has brought in more than $353 million for sponsored programs from internal and external sources over the last five years. UND’s economic impact on the state and region is nearly $1 billion a year.

Founded by the Dakota Territorial Assembly in 1883, six years before statehood, UND was intended to be, and has remained, a university with a strong liberal arts foundation surrounded by a variety of professional and specialized programs. UND is one of only 47 public universities in the nation with both accredited g raduate schools of law and medicine. It is admired for its spacious, beautiful campus
and extensive resources. The University has earned an international reputation for its academic and research
programs.

UND enrolls 13,172 students (fall 2009) in 217 fi elds of study from baccalaureate through doctoral and professional degrees. 46% come from North Dakota; the rest represent all other states, eight Canadian provinces, and more than 50 nations.

UND athletic teams compete at the NCAA Division I level in men ’s and women’s ice hockey and in 16 other sports, including football and baseball for men, soccer, volleyball, tennis and softball for women, and basketball, swimming and diving, track, cross country, and golf for both men and women. Fourteen of UND’s 20 athletic teams participated in NCAA post

- season competition during the 2007

- 2008 academic year.

Concordia College

As a college of the Evangelical Lutheran Church in America, Concordia is a vibrant learning community of more than 2,800 students, where st udent engagement goes well beyond the classroom. Students frequently join faculty in side

- by

- side research. They also perform in world

- class music ensembles, compete on championship

- caliber sports teams and make their mark in theatre, student government, o r more than 100 other student clubs. Many students also get involved with Campus Ministry, exploring and expressing their faith through worship services, Bible studies and outreach opportunities. The college is also known for its study abroad programs, pla cing thousands of students in France, England, and China.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 40 Points of Interest

The Fargo Air Museum

The Fargo Air Museum

- Our Planes Fly! The skies are always blue inside the Fargo Air Museum home to the only flying F2G

- 1D Super Corsair in the world, one of four flying Japanese Zero's in the world, the DC

- 3 "Duggy

- The Smile in the Sky" airplane, P

- 51 Mustangs, Corsair, TBM Avenger, Stearman and other vintage flying airplanes! Interactive children's exhibits, operations theater, Century of Aviation Wall, restoration area, rotating exhibits and an extensive gift shop offer a pleasant surprise for families, group tours and visitors to the region. There is always something new flying into the Fargo Air Museum.

The Fargo Theater

The 1926 restored Farg o Theatre is the area's only remaining vintage movie palace with a vaudeville stage. The theatre serves as a multi

- purpose facility with capacity for film showings, live productions and meetings, and is a registered historic landmark. It also houses a rest ored theatre pipe organ, the "Mighty Wurlitzer."

Celebrity Walk of Fame

Walk the Walk with more than 100 celebrity signatures, handprints and footprints in cement at this free attraction. Stars from music, the arts, politics, and sports, including Gart h Brooks, Neil Diamond, KISS, Maury Wills, Debbie Reynolds, and Governor Jesse Ventura, have left their mark, with more being added throughout the year.

The Plains Art Museum

This strikingly unconventional museum of fine arts is a brilliantly renovated, turn

- of

- the

- century warehouse in historic downtown Fargo. The Plains Art Museum hosts regional and national exhibits, large permanent collections, special events, performances and art classes.Fargo Hector International Airport, Fargo, North Dakota

Small Community Air Service Development Program Proposal

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### 41 Festivals

The Fargo

- Moorhead area is host to numerous festivals to entice visitors from around the country. Branesville Potato Days is a spud

- tacular festival honoring the potato, food, fun and games. The Island Park Craft Show in Fargo has booths of hand

- made crafts, food and entertainment held at Island Park in Fargo, ND. Rollag, Minnesota is home to the Western Minnesota Steam Threshers Reunion! Every Labor Day weekend since 1954, generations of threshermen & women get together to relive the tradition of the good ol’ days and bring the past to life for the enjoyment of young and old alike. Big Iron takes place every year where visitors can see the newest and best in agricultural equipment at the Midwest's largest agriculture exp o.

Nature and Science

This spectacular area of the country has many attractions for the nature lover. The Minnesota State University Moorhead Planetarium simulates the night sky. It can show the sky from any location on the earth, now or
thousands of years in the past or future. The heart of the planetarium is the Spitz System 512 planetarium projector. Committed to involving participants in hands

- on learning, the Minnesota State University Moorhead Regional Science Center provides programs on science , technology and environmental education for people of all ages. Walk the nature trails, view the vast, tallgrass prairie or visit the bird observatory. Guided trail walks can be scheduled. With 300 acres of bluestem prairie woods, a swimming area, campin g and river communities, Buffalo River State Park is well suited for family fun and environmental education. A variety of free programs and field trips are offered to the public and area school districts.

Golf

Eight golf courses await visitors to the Fa rgo Moorhead area. There is even a championship miniature golf course! Additionally, Access of the Red River Valley provides golfing enjoyment and a yearly tournament for adults and children with
disabilities.