### APPENDIX B Page 1

APPLICATION UNDER
SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2013-0120

SUMMARY INFORMATION

All applicants must submit this Summary Information schedule, as the a pplication coversheet, a completed standard form SF424 and the full applic ation proposal on www.grants.gov. For your preparation convenience, this Summary Info rmation schedule is located at http://www.dot.gov/policy/aviation-policy/small-com munity-rural-air-service/SCASDP

A. P ROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET 

### (D&B) DATA UNIVERSAL

NUMBERING SYSTEM 

### (DUNS) NUMBER 

### , INCLUDING 

### +4, EMPLOYEE IDENTIFICATION NUMBER 

### (EIN)

OR TAX ID


### . Legal Sponsor Name: C APITAL 

### R EGION 

### A IRPORT 

### C OMMISSION


### DUNS Number: 082871534

EIN/Tax ID: 54-1004464

B. L IST THE 

### N AME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES A PPLYING 

### :
1. R ICHMOND 

### , VA
2.

3.
4.

C. P ROVIDE THE FULL AIRPORT NAME AND 

### 3-L ETTER 

### IATA A IRPORT 

### C ODE FOR THE APPLICANT 

### ( S 

### )

AIRPORT 

### ( S 

### ) (O NLY PROVIDE CODES FOR THE AIRPORT 

### ( S 

### ) THAT ARE ACTUALLY SEEKING SERVICE 

### ). 1. Richmond International Airport (RIC) 2.

3. 4.

### APPENDIX B Page 2

D. L IST THE 

### 2 -DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO TH E SPONSORING
ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIP ATING COMMUNITY.


### 1. VA-03 2. VA-07
3. 4.

E. A PPLICANT 

### I NFORMATION: 

### (C HECK 

### A LL 

### T HAT 

### A PPLY)



###  Not a Consortium □ Interstate Consortium □ Intrastate Consortium 

## D

□ Community now receives subsidized Essential Air Se rvice

 Community (or Consortium member) previously receive d a Small Community Air Service Development Program Grant
If previous recipient: Year of grant(s): 2004

F. P UBLIC 

### /P RIVATE 

### P ARTNERSHIPS: 

### (L IST 

### O RGANIZATION NAMES) 

### PUBLIC PRIVATE 1. Capital Region Airport Commission 1. Greater Ric hmond Chamber 2. 2. 3. 3. 4. 4. 5. 5.

G. P ROJECT 

### P ROPOSAL: (CHECK ALL THAT APPLY) 

##  Marketing **** Upgrade Aircraft **** New Route **** Travel Bank **** Service Restoration **** Subsidy **** Surface Transportation **** Regional Service 

##  Revenue Guarantee **** Launch New Carrier **** Start-up Cost Offset **** First Service **** Study 

##  Secure Additional Service **** Other (explain below)
H. E XISTING 

### L ANDING 

### A IDS AT 

### L OCAL 

### A IRPORT:



### Full ILS   Outer/Middle Marker

** ** Localizer   Other: WAAS LPV

** ** Published Instrument Approach

### APPENDIX B Page 3

I. PROJECT COST: DO NOTENENTER TEXT IN SHADED AREAS

J. IN-KIND CONTRIBUTIONS** For funds in lines 5a (Airport In-Kind contribution ) and 5b (Other In-Kind contribution), please describe the source(s) of fun d(s) and the value ($) of each.
Airport In-Kind contributions would include in-airp ort display media such as dioramas ($500-3000/month
, based on size and location), digital displays ($100 0-3000/month), wall murals ($2000-3000/month), and others. Additionally, the airport would include out -of-home (billboard) at airport entrance ($2000/mon th), website banners ($250-500/month), and e-newsletter banners ($500-750/month). New service would also be eligible for consideration of landing fee reimburse ment after twelve months of service. Landing fee reimbursement amounts vary due to frequency and typ e of aircraft used.

Other In-Kind contributions: various contributions via Greater Richmond Chamber communications and events. With previous award, we were fortunate to s ee additional community support, including grocery bag promotions, spot radio, TV and print support. L INE 

### D ESCRIPTION 

### S UB 

### T OTAL 

### T OTAL 

### A MOUNT 

### 1 Federal amount requested 

### 750,000 2 State cash financial contribution 

### 40,000 Local cash financial contribution 3a Airport cash funds 

### 90,000 3b Non-airport cash funds 

### 20,000 3 Total local cash funds (3a + 3b) 

### 110,000 110,000 4 TOTAL CASH FUNDING (1+2+3) 

### 900,000 In-Kind contribution 5a Airport In-Kind contribution** 

### 75,000 5b Other In-Kind contribution** 

### 10,000 5 TOTAL IN-KIND CONTRIBUTION (5a + 5b) 

### 85,000
6 TOTAL PROJECT COST (4+5) 

### 985,000

### K. I S 

### T HIS 

### A PPLICATION 

### S UBJECT 

### T O 

### R EVIEW 

### B Y 

### S TATE 

### U NDER 

### E XECUTIVE 

### O RDER 

### 12372

P ROCESS 

### ?

□ a. This application was made available to the state under the Executive Order 12372

Process for review on (date) _ .

□ b. Program is subject to E.O. 12372, but has not be en selected by the state for review.

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

L. I S 

### T HE 

### A PPLICANT 

### D ELINQUENT 

### O N 

### A NY 

### F EDERAL 

### D EBT 

### ? (I F 

### "Y ES 

### ", P ROVIDE


### E XPLANATION 

### )

** ** No □ Yes (explain)

# Proposal u nder the

Air Service Development Docket #DOT



# R ICHMOND 

# I NTERNATIONAL

Joint Application of the Capital Region Airport Commission DUNS #082871534 and the Greater Richmond Chamber Vir ginia Congressional District Docket DOT-OST-2013- 0120



# nder the Small Community Air Service Development Program Docket #DOT -OST-2013-0120

for


# ICHMOND 

# (RIC) NTERNATIONAL 

# A IRPORT

Commission

and the Greater Richmond Chamber ginia Congressional District s VA-03/VA-07

0120 

# Small Community

Program



# IRPORT2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 2 

# Table of Contents

1. TECHNICAL OUTLINE OF PROPOSAL ...................... ........... 3

Contact Information ................................... ................................. 3 Legal Sponsor of Application ................................... ....................... 3 Community Partner in Application ........................... ......................... 3 Project Description ..................................... ................................ 3



## 2. GRANT PROPOSAL SUMMARY .......................... ................ 4
Statement of Air Service Deficiency ..................... ............................. 4 Limited Westbound Air Service Access ....................... ........................ 5



## 3. RIC MARKET AREA AND CURRENT AIR SERVICE ............ ........ 7

RIC Market Area .................................... ..................................... 7 Passenger Traffic Levels To/From West Coast are Concerning .. ................. 8 Western U.S.: Top RIC O&D Markets..................... ............................. 9 RIC Fare Comparison vs. Similar Sized Airports: Deficiency ......... ........... 10 Previous Air Service Development Efforts .................... ..................... 11 Self Sufficiency of Proposed Service is the Goal ................. ................. 11



## 4. GRANT ADMINISTRATION ............................ ................. 13
Requested Term of Grant .............................. .............................. 13 Program Fund Allocation .................................... ......................... 13 Risk Mitigation/Revenue Guarantee Terms ................... ..................... 13 Marketing and Promotional Activities ....................... ....................... 14 Proposed Grant Differs from Previous Grant Award in FY 2004 ....... ......... 152013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 3 

# 1. Technical Outline of Proposal

Contact Information

All contact regarding the grant application of the Capital Region Airport Commission should be
directed to:

Mr. Jon E. Mathiasen, AAE President and Chief Executive Officer Capital Region Airport Commission 1 Richard E. Byrd Terminal Drive, Suite C Richmond International Airport, VA 23250-2400 P: 804-226-3001 E: jon-mathiasen@flyrichmond.com



## Legal Sponsor of Application

The legal sponsor of this Small Community Air Servic e Development Program grant application is the Capital Region Airport Commission.



## Community Partner in Application

The Greater Richmond Chamber joins the Capital Regi on Airport Commission in support of the grant application, and is the community partner res ponsible for the community match portion of the grant.



## Project Description

The community is requesting a grant in the amount o f $750,000 with a community match of $150,000 (20%) for a total cash contribution of $90 0,000. The air service deficiency that exists
at RIC is the limited westbound U.S. air service ac cess, and the intent of the grant is to incubate new westbound service to Denver (DEN) or Sa lt Lake City (SLC) to improve connectivity and access to the national transportat ion system. The purpose is primarily for risk mitigation with a portion of the funding going towards marke ting/advertising this new service.2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 4 

# 2. Grant Proposal Summary
Statement of Air Service Deficiency

The Capital Region Airport Commission, which owns a nd operates the Richmond International Airport (RIC), respectfully submits its grant appli cation for the Small Community Air Service Development Program. Richmond, being the capital of the Commonwealth of Virginia, experiences high demand for air travel from both bu siness and leisure travelers, whether traveling to or from the region on vacation or business trips

.

However, over the last several years the airport has experienced a disturbing trend in decreasing enplanements coupled with significantly decreased capacity. This grant proposal aims to help rectify this situation and restore enp lanement levels, while providing increased air service access to the national transportation system.



# RIC Enplanement Trend CY 2007 – CY 2012

Source: Federal Aviation Adminis tration

As the table above indicates, enplanements have dec reased by over 12% since 2007, which is of great concern to the Greater Richmond Region. Decre asing scheduled seat capacity and

1,400,000 1,500,000 1,600,000 1,700,000 1,800,000 1,900,000

RIC Enplanements

2007 2008 2009 2010 2011 2012 2012 vs. 2007 % Decrease RIC Enplanements 1,805,992 1,733,668 1,649,284 1,651,131 1,571 ,155 1,581,617 -12.4%2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 5 departures have greatly impacted the enplanement le vels, and while the Capital Region Airport Commission fully understands the changing dynamics in the U.S. aviation industry over the last several years, specific deficiencies have been iden tified and can be addressed to alleviate this
downward trend.



## Limited Westbound Air Service Access

The grant proposal respectfully requests $750,000 f or revenue guarantee and marketing of the
new air service for increased access to the western United States. Specifically, the western U.S. hubs of Denver and Salt Lake City will both mee t this pressing RIC deficiency, and allow for greater air travel to and from this portion of the countr y.

As the current service map indicates, there is an air service deficiency in terms of access to the larger western U.S. region. While access to the wes t is achievable through the westbound connecting hubs such as DFW, IAH, ATL, and ORD, ther e are limited available seats which make accessibility increasingly difficult for passengers to/f rom the greater Richmond region.

Source: Innovata, LLC via Aviation Da taMiner

As evidence of the stated deficiency in westbound a ir service access, we would point to the high load factors experienced at RIC for CY 2012. T he primary westbound gateways at RIC, illustrated in the table on the following page, ach ieve very high load factors, with the summer months being particularly high with load factors in the high 80% range. Therefore, passengers



## Air Service Deficiency Area2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 6 wishing to travel to and from the Richmond region m ust look for alternative options, including Washington Dulles International Airport (IAD) and other W ashington, DC-area facilities. 

# RIC Load Factors for Nonstop Flights Which are Primary Connections to/from Western U.S.

CY 2012

Sour ce: Aviation DataMinerTM analysis of DOT/BTS Form 41 Traffic

A Small Community Air Service Development Program g rant award would allow Richmond International Airport to recapture a portion of the passengers that would prefer to fly to RIC, in addition to stimulating net new demand that will ha ve an economic benefit on the region as a
whole. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 2012

DL - DTW 61.1% 67.7% 84.2% 85.4% 85.6% 88.9% 86.9% 83.6% 78.0% 86.1% 8 0.1% 74.1% 80.4% DL - ATL 66.0% 70.5% 82.2% 83.1% 82.8% 85.5% 84.9% 82.3% 75.0% 81.6% 8 3.4% 80.9% 80.1% DL - MSP 68.1% 75.0% 75.0% 75.0% 75.0% 89.2% 83.3% 80.1% 75.7% 78.5% 7 1.8% 71.3% 78.1% UA - ORD 68.6% 68.9% 75.7% 81.3% 84.8% 87.8% 88.0% 86.3% 81.2% 87.7% 8 2.7% 79.6% 81.5% UA - IAH 72.3% 75.1% 74.5% 70.3% 89.6% 85.1% 84.2% 88.9% 84.3% 94.2% 8 4.1% 88.6% 83.1% UA - IAD 67.6% 71.2% 76.3% 80.5% 74.5% 83.1% 78.4% 78.6% 82.7% 82.6% 8 2.7% 82.5% 78.0% US - CLT 72.7% 75.1% 77.1% 81.8% 82.3% 85.4% 83.2% 85.2% 79.9% 87.4% 8 6.7% 83.5% 81.5% AA - DFW 70.5% 66.9% 77.9% 83.4% 82.7% 85.9% 87.3% 77.6% 68.6% 87.0% 8 1.5% 79.4% 79.1%2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 7 

# 3. RIC Market Area and Current Air Service

RIC Market Area

Richmond, as the capital of the Commonwealth of Vir ginia, is characterized as a highly populated area with major business and government i nterests, as well as several higher
educational institutions within its service area. T he population within a 45-minute drive time to Richmond International Airport is approximately 1.1 million and increases to 1.5 million within a 60-minute drive time. Clearly, efficient a ir service is the lifeblood of the Greater Richmond Region, with several entities relying heav ily on domestic and international air service

access. 

# RIC Extended Market Area

Source: Microsoft MapPoint RIC

PHF

ORF IAD DCA2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 8 Several commercial airports are within a two – thre e hour drive from Richmond, which causes passenger traffic leakage to these markets due to l ack of available westbound seats. The objective of this grant application is to recapture some of these leaking passengers, creating a more efficient mode of transportation for those who would prefer to utilize Richmond International Airport over the other neighboring ai rports, but either have a difficult time finding available seats or the ticket prices are prohibitiv e due to limited availability.



## Passenger Traffic Levels To/From West Coast are Conc erning

The westbound deficiency is unmistakably evident wh en analyzing the passenger traffic levels at Richmond International Airport and Washington Du lles International Airport. Dulles is used as a comparison because it is the airport with the hig hest levels of air service where RIC experiences traffic leakage. Overall, based on RIC’ s top 10 westbound O&D markets from CY 2012 (LAX, LAS, SFO, DEN, PHX, SAN, SEA, SLC, PDX, HNL) , RIC suffers from approximately 135,000 fewer O&D passengers than would be expected based on Metropolitan Statistical Area (MSA) population comparisons. 

# RIC vs. IAD Westbound Traffic Capture

CY 2012

Source: US Census Data and Aviation DataMinerTM analysis of DOT/BTS O&D S urvey

While disappointing, this data is not particularly surprising due to the lack of available seats to westbound connecting hubs at RIC. Increased westbou nd capacity to either Denver or Salt Lake City would greatly improve the efficiency with whic h business and leisure passengers travel to



### IAD - MSA Population 5,636,232 RIC - MSA Population 1,208,101 Total Region Population 6,844,333 IAD Western US O&D - Key Cities 2,959,173 RIC Western US O&D - Key Cities 467,229 Total Region US Western O&D - Key Cities 3,426,403 Ratio of Region Western O&D To Population 0.50 RIC Population x Western US O&D Ratio 604,798 Current RIC Capture: 467,229 Net RIC Traffic / Service Deficiency: 137,5692013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 9 and from the Greater Richmond Region. The effects o f increased options to/from the west coast would be numerous for the region, ranging fro m widespread economic and economic development benefit, reduced contribution to conges tion on the I-95 corridor above Fredericksburg, and increased productivity for trav elers no longer forced to take to the interstate highway system for better flight options.



## Western U.S.: Top RIC O&D Markets

Western US markets accounted for approximately 20% o f the total passenger traffic during CY 2012. Markets such as Los Angeles, Las Vegas, San Fr ancisco, Denver, Phoenix, San Diego, and
Seattle all had over 50 PDEW and were in the overal l top 20 O&D markets at RIC. The fact that these cities all graced the top 20 O&D markets indi cate that there is significant demand to/from the western US, and that increased capacity will not only reduce leakage but stimulate net new passenger traffic. 

# RIC’s Top Western U.S. O&D Markets

CY 2012

Source: Aviation DataMinerTM analysis of DOT/BTS O&D Sur vey

It should also be noted that DEN and SLC had 81.9 an d 31.2 PDEW each, respectively, for CY 2012. This is a critical point, because airlines of ten look at the local O&D passenger traffic when analyzing the potential for nonstop service fr om any airport, and the higher the number Rank Market Psgr PDEW Gross OW Fare Gross Revenue % of Pax Rank Market Psgr PDEW Gross OW Fare Gross Revenue % of Pax 8 LAX 81,192 110.9 $278.51 $22,612,909 2.8% 107 BZN 3,031 4.1 $321.73 $975,139 0.1% 9 LAS 69,863 95.4 $265.44 $18,544,642 2.4% 108 PSP 2,991 4.1 $ 356.70 $1,067,065 0.1% 10 SFO 61,726 84.3 $290.82 $17,951,258 2.1% 113 OGG 2,653 3.6 $602.05 $1,597,177 0.1% 11 DEN 59,920 81.9 $231.64 $13,879,627 2.1% 114 GEG 2,613 3.6 $422.98 $1,105,369 0.1% 12 PHX 52,904 72.3 $241.61 $12,782,259 1.8% 128 FAT 1,797 2.5 $376.17 $675,898 0.1% 17 SAN 44,793 61.2 $278.98 $12,496,511 1.5% 133 FAI 1,642 2.2 $626.50 $1,028,443 0.1% 19 SEA 41,203 56.3 $304.95 $12,564,659 1.4% 135 LIH 1,569 2.1 $575.85 $903,413 0.1% 35 SLC 22,844 31.2 $321.53 $7,344,861 0.8% 136 EGE 1,560 2.1 $ 364.59 $568,879 0.1% 39 PDX 19,178 26.2 $339.02 $6,501,711 0.7% 146 SBA 1,367 1.9 $ 326.10 $445,639 0.0% 43 HNL 13,607 18.6 $571.02 $7,769,613 0.5% 147 KOA 1,330 1.8 $ 556.53 $740,333 0.0% 48 SMF 12,009 16.4 $359.11 $4,312,464 0.4% 148 MRY 1,330 1.8 $ 462.86 $615,595 0.0% 51 SNA 9,777 13.4 $386.57 $3,779,488 0.3% 152 EUG 1,240 1.7 $31 6.32 $392,098 0.0% 55 COS 8,318 11.4 $347.17 $2,887,841 0.3% 162 OAK 1,039 1.4 $4 00.59 $416,100 0.0% 57 ABQ 8,026 11.0 $323.54 $2,596,712 0.3% 168 GJT 960 1.3 $309 .81 $297,493 0.0% 63 SJC 7,677 10.5 $362.95 $2,786,375 0.3% 170 FCA 932 1.3 $372 .58 $347,162 0.0% 71 TUS 6,786 9.3 $380.23 $2,580,437 0.2% 172 HDN 871 1.2 $315. 82 $275,154 0.0% 82 ONT 5,309 7.3 $400.32 $2,125,304 0.2% 174 MSO 859 1.2 $418. 59 $359,709 0.0% 88 ANC 4,541 6.2 $506.03 $2,297,878 0.2% 178 PSC 802 1.1 $407. 23 $326,702 0.0% 92 RNO 4,361 6.0 $378.41 $1,650,130 0.2% 179 ASE 796 1.1 $343. 34 $273,464 0.0% 99 BOI 3,354 4.6 $388.55 $1,303,245 0.1% 180 BIL 783 1.1 $383. 78 $300,459 0.0% 100 JAC 3,354 4.6 $355.42 $1,192,002 0.1% Total 570,907 779.9 $302.45 $172,671,221 19.6%2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 10 of local passengers the better in order to capture higher revenues that are allocated solely to that segment. While Denver clearly has a higher loc al component, both hubs appear to provide opportunity based on its local O&D traffic. Passeng ers traveling beyond the hub are important as well, and are well represented in the western U.S. O&D mar kets table.



## RIC Fare Comparison vs. Similar Sized Airports: Defici ency

A RIC air service deficiency has already been illus trated in terms of passengers per population compared to IAD. However, that is not the only area where an air service deficiency exists which can potentially be remedied by the award of a SCASD gran t. When examining the average one way gross airfares for the RIC top 10 western O &D markets for CY 2012, and comparing to airports that are of similar size in terms of enpla nements and air service access, it is clear that RIC has higher fares than its peer set of airports. The peer group of airports were also chosen based on geographic location, and are all airports on the east coast or in the eastern portion of
the U.S. 

# RIC Top 10 Western O&D Markets Fares

vs. Peer Group Airports

CY 2012

Source: Aviation DataMinerTM analysis of DOT/BTS O&D Survey 

### Market RIC DAY SDF PVD MHT
LAX $278.51 $235.91 $291.64 $286.87 $283.63
LAS $265.44 $215.92 $227.00 $241.00 $245.92 SFO $290.82 $245.30 $276.87 $292.04 $273.71
DEN $231.64 $184.71 $196.30 $222.64 $201.45
PHX $241.61 $223.15 $236.60 $232.99 $230.91
SAN $278.98 $271.91 $273.53 $278.54 $269.69 SEA $304.95 $249.58 $307.79 $308.72 $309.14
SLC $321.53 $273.07 $236.21 $304.29 $268.64
PDX $339.02 $281.47 $303.97 $300.75 $299.65 HNL $571.02 $519.17 $548.40 $634.78 $577.83 

### Total $283.48 $232.30 $254.71 $271.93 $252.972013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 11 Of the 10 markets above, RIC has higher average gro ss one way fares in 6 of the 10, including both Denver and Salt Lake City. In the markets wher e RIC is not the highest, it is near the top. Overall, RIC has the highest average one way gross fare for th ese 10 markets, which are the top markets at the airport. Increased capacity and a ne w hub destination could help bring fare discipline into the RIC marketplace.



## Previous Air Service Development Efforts

RIC has been conscientious and steadfast in its air service development efforts over the last several years, recognizing the importance of this f unction to ensure adequate air service levels for the community. In addition to having dedicated staff focused on marketing and air service development, the following activities help RIC stay updated and knowledgeable of not only its air service landscape, but also that of the U.S. aviation industry.

• Attend annual air service development conferences w hich include Network USA and ACI Jumpstart, in addition to other aviation-related co nferences such as the Boyd Group
International Aviation Forecast Summit. These confer ences allow for RIC management to meet one on one with incumbent and potential car riers, in addition to learning from top airline executives, aircraft manufacturers, and other industry stakeholders.

• Proactively monitor performance of incumbent airlin es’ flights at RIC to address potential issues/concerns/opportunities in a timely mann er.



## Self Sufficiency of Proposed Service is the Goal

The Capital Region Airport Commission and the Great er Richmond Chamber fully understand that any new air service must achieve self sufficie ncy in order to be successful long term. Changing dynamics in the U.S. aviation industry can impact new service, and the Capital Region Airport Commission is prepared to be proactive to e nsure that these changes, whether through consolidation of carriers, high fuel prices, or cha nging aircraft fleet mix do not have a negative effect on the performance of the proposed new route . The following are tactics that will be employed to ensure self sufficiency:

• Regularly scheduled monthly calls with the carrier to discuss issues/concerns in order to proactively address potential traffic/revenue sh ortfalls. It is expected that from2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 12 these discussions will come a plan to address these problems, if they should exist, and an action plan will be put into place immediately to rectif y the situation.

• Continued marketing efforts on behalf of the commun ity to bring awareness within the community of the new service, and to encourage pote ntial travelers to utilize the new service in order for long term success. Should there be a passenger or revenue shortfall, marketing efforts will be redirected to bett er target potential passengers.

It should be noted, that based on analyses of the a irport and regional traffic levels, that the proposed route(s) has a high probability of achievi ng self sufficiency based on current traffic leakage and latent demand which is not being met. Sh ould the performance become problematic, the Capital Region Airport Commission stands ready to assist in any way possible to achieve the sustainable performance levels.2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 13 

# 4. Grant Administration

Requested Term of Grant

The Capital Region Airport Commission respectfully requests that the term of the grant be for one year from the start of the new service. Thereaf ter, any unused funds will be relinquished back to the U.S. Department of Transportation.


## Program Fund Allocation

The primary purpose of the grant request is for ris k abatement/offset funding for increased western US hub access. The community strongly believ es that this service will be successful, with a portion of the funding going towards a marke ting/advertising program to increase and build awareness within the community of the new service.



## Risk Mitigation/Revenue Guarantee Terms

The Capital Region Airport Commission already has a n action plan in place to immediately contact potential carriers upon acknowledgement of the grant award. The steps to implement the grant award are as follows:

• Funding would be available to an airline providing nonstop service to a western US hub, specifically Denver or Salt Lake City.

• Upon award of grant funds, the Capital Region Airpor t Commission will negotiate with prospective airlines. Upon the decision of which se rvice proposal most closely meets the needs of the RIC community, a risk mitigation agreeme nt will be negotiated. Proposed Grant Activity SCASD Grant Funds Community

Funds TOTAL

Risk Mitigation/Revenue Guarantee $700,000 $100,000 $800,000 Marketing/Advertising Support $50,000 $50,000 $100,000
TOTAL $750,000 $150,000 $900,0002013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 14 • Risk mitigation funds would support the initial pha se of new air service. The Capital Region Airport Commission will negotiate a detailed service agreement with the carrier that is consistent with DOT guidelines for grant fund use.

• The costs of operating the new service will be defi ned in discussions with the selected
carrier and outlined in a contractual manner. Indus try cost data for appropriate aircraft type and stage length will help guide these discu ssions.

• A target for overall revenue associated with the new servi ce and the component of that revenue that will be credited to the new route (loc al and beyond) will be agreed upon. From this, a targeted revenue figure per flight will be esta blished.

• Passenger traffic and revenue will be monitored by the airport for the new service, which will be provided by the selected carrier.

• Any revenue shortfall will be offset with risk miti gation funds upon detailed invoice from the selected carrier. The Capital Region Airpo rt Commission, in turn, will invoice the Department of Transportation for its share of funding in the agreed upon manner.



## Marketing and Promotional Activities

The Capital Region Airport Commission and the Great er Richmond Chamber recognize the critical importance of marketing and advertising ac tivities that must take place to spread
awareness of the new service at RIC. For this reaso n, a comprehensive and all encompassing marketing/advertising plan will be implemented to e nsure the success, and ultimately the self sufficiency, of the new service at RIC. Example ac tivities and tactics which have been used successfully in the past and will be used for this new serv ice include the following:

• Print placements in local newspapers and other publicat ions across the region.

• Television advertisements.

• Out-of-home (OOH) advertising in high traffic corri dors to reach as many potential travelers as possible.

• Radio advertisements during peak periods of the day to again reach as many potential travelers as possible and build awareness.

• Digital campaigns via platforms like Twitter, Facebook, an d others.2013 Small Community Air Service Development Program Gran t Proposal Richmond International Airport (RIC)

Docket DOT-OST-2013-0120 Page 15 

## Proposed Grant Differs from Previous Grant Award in FY 20 04

The Capital Region Airport Commission and the RIC c ommunity were fortunate recipients of a $950,000 SCASDP award during FY 2004. As noted in t he application for that grant, RIC’s average airfare, at the time, was among the highest in the country. RIC used the SCASDP grant primarily for marketing/advertising/promotion of ne w low-fare service and was able to bring two low-fare carriers to the airport.

AirTran utilized a portion of the SCASDP grant in 20 05 when entering the RIC market with MCO, ATL, and PHL nonstop flights. In 2006, JetBlue also u tilized a portion of the SCASDP funds to enter the market with BOS and JFK nonstop service. T his initial investment has had long-term benefits and resulted in a good success story. Both J etBlue and AirTran attained self sufficiency and RIC is proud to have both airlines as incumbent carriers today. JetBlue has increased seat capacity by approximately 75% between 2006 and 2013 , indicating that RIC is a profitable and self sustaining market and AirTran is in the proces s of transitioning to Southwest Airlines in
Richmond.

The current SCASDP application differs substantiall y from the previous grant award nearly ten years ago. The current proposal is for increased we stbound access, where a deficiency clearly exists and is primarily for risk mitigation funding , with a smaller portion going towards marketing/advertising of new service. The prior award was primarily for marketing/advertising, with a lesser portion allocated to offsetting start up costs. Furthermore, the FY 2004 award focused on east coast passenger traffic, and not western US access.

Today’s aviation environment is markedly different than 2004, with the proliferation of airline mergers, increased fuel costs, and changing fleet d ynamics at the remaining carriers. Risk mitigation funding is attractive for carriers who d o not have the tolerance for risk that once may have existed in 2004, and therefore the Capital Region Airport Commission believes that it is necessary to appeal to carriers considering new routes at RIC.