# August 27, 2010 An Integrated Program of New Service Development via: Start-Up Cost Offsets, Advertising/ Marketing, and Revenue Guarantees In Support of New Scheduled Air Service to/from San Jose

Sponsor: McClellan-Palomar Airport Carlsbad, California Peter Drinkwater, Director of County Airports, County of San Diego Congressional Code: CA-050
Dun & Bradstreet Number: 1870326770000 

# McCLELLAN-PALOMAR AIRPORT, CARLSBAD, CA
Proposal Under the Small Community Air Service Development Program Docket: DOT-OST-2010-0124 Before the Office of the Secretary of Transportation US Department of TransportationMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 2 TABLE OF CONTENTS

Section Page Introductory Letter of Support 3 Summary Information 4
Introduction 7 Primary Objectives of Proposal 8 Executive Summary 9 Detailed Explanation of Proposal 14 Expected Results 17 Letters of Support 21
Current Air Service 24
Air Service Deficiencies 27 Extenuating Factors Affecting Air Service 31 Availability of Alternate Airports 34
Use of Local/Federal Funds 35 Public/Private Partnerships 36 Implementation Timeline 39 Air Service Advisory Groups 40 Local Air Service Development Efforts 41 In-kind Services from the Community 42
Performance Measures 43 Legal Sponsor 44
Financial Controls 45
Return on Investment 46 DOT Exit Strategy 47
Alternate Plan 48 Airport Information 49 Community Profile 50 Comparison to Other Commun ities in Region 58
Conclusions 60McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 3 INTRODUCTORY LETTER OF SUPPORTMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 4 SUMMARY INFORMATION

Small Community Air Service Development Program
Docket DOT-OST-2010-0124



### A. Applicant Information

Not a Consortium Community now receives EAS subsidy
Interstate Consortium Intrastate Consortium Community previously received a Small Community Grant If previous recipient, date of Grant: ____________________________ expiration date of Grant: ___________________



### B. Public/Private Partnership

Public:

1. County of San Diego
2. McClellan-Palomar Airport

Private:

1. Carlsbad Chamber of Commerce
2. San Diego North Convention and Visitors Bureau
3. San Diego North Chamber of Commerce
4. San Diego North County Economic Development Council
5. Palomar Airport Association
6. Horizon AirMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 5 C. Project Proposal

Marketing Upgrade Aircraft New Route
Personnel Increased Frequency Low Fare Service
Travel Bank Service Restoration Subsidy Surface Transportation Regional Service Other (Specify)
Revenue Guarantee Launch New Carrier Start Up Cost Offset First Competitive Service Study Secure Additional Carrier



### D. Existing Landing Aids at Airport

Full ILS Outer/Middle Marker Published Instrument Approach
Localizer Other: GPS Approach



### E. Project Cost

1. Federal amount requested: $ 500,000
2. State cash financial contribution: $ 0
3. Local cash financial contribution: $ 50,000 3a. Airport cash funds: $ 25,000 3b. Non-Airport cash funds: $ 25,000
3c. Total local cash funds: $ 50,000
4. TOTAL CASH FUNDING: $ 550,000
5. Local funds contributed from already existing Programs of projects included in line 3c: $ 0
6. Local funds contributed from new commitments
Or new resources included in line 3c: $ 50,000
7. Airport In-Kind contribution: $ Various Description: Fee waivers: landing and terminal fees
8. Other In-Kind contribution: $ Various Description: Advertising and marketing match money
9. TOTAL IN-KIND CONTRIBUTION: $ Undetermined
10. TOTAL PROJECT COST: $ 550,000McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 6 F. Enplanements at Airport

2000: 73,383
2001: 67,815
2002: 55,864
2003: 51,801
2004: 52,583
2005: 49,586
2006: 55,645
2007: 52,598
2008: 40,683
2009: 24,705



### G. Is Application Subject to Review by State Under Executive Order 12372 Process?

This application was made available to the State on ______. Program is subject to review, but has not been selected by the State. Program is not covered.



### H. Is Applicant Delinquent on any Federal Debt?

NoMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 7 INTRODUCTION

The McClellan-Palomar Airport in Carlsbad, Califo rnia has seen dramatic passenger declines in the last two years. That doesn’t mean the mark et is shrinking, and demand for air service is declining. The reality is, with seat cuts and flight frequency re ductions at the McClellan-Palomar Airport, more and more Carlsbad area passengers are being forced to use other airports in the region to access the national air transportation system.

While this passenger “leakage” is common in markets with smaller airports served by fewer carriers, it creates a unique problem in southern California. The Carlsbad area of north San Diego County features some of the most congested freeways in the country. Passenger leakage to both San Diego Lindbergh Field and Los Angeles International (LAX) adds to this congestion, creating a situation where accessing the national air transportation system is especially difficult
for Carlsbad area travelers.

To better quantify this “leakage” of passengers, the McClellan-Palomar Airport commissioned a True Market/Leakage Study that was completed for this Grant proposal in August of 2010. The Study was designed to better determine the size of the Carlsbad market and the potential for additional air service. The study found that the immediate Carlsbad catchment area generates a total of almost 3.3 million origin and destination passe ngers per year. The Mc Clellan-Palomar Airport retains less than 2% of those passengers. It is clear additional service is needed.

The McClellan-Palomar Airport proposes to use a combination of locally raised funding in conjunction with federal Small Community Air Se rvice Development Grant funding in support of
the addition of a new airline to the market: Horizo n Air. In the Airport’s discussions with Horizon Air, most recently at an in-person meeting at the Airport in June of 2009, the Airline indicated an interest in flying its Bombardier Q400 aircraft on a routing from Carlsbad to San Jose. Horizon is a partner is this application, writing a letter of supp ort. This routing fills a major need for Carlsbad service, by linking the Carlsbad region non-stop, for the first time, to the San Francisco Bay Area. The Bay Area ranks as Carlsbad’s top combined de stination. But Horizon has indicated it must have risk mitigation in place to consider this unproven market. The Airport seeks a partnership
with the DOT to ensure this new service is launched. 

## “...the immediate Carlsbad catchment area generates a total

of almost 3.3 million... passengers per year [but]... the Airport retains less than 2% of those passengers.”McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 8 PRIMARY OBJECTIVES OF PROPOSAL

Objectives for Program:

 Increase connectivity between California intrastate markets

 Create better opportunit ies for business connections to and from Carlsbad

 Increase connections

 Recruit a competing airline to the market

 Increase the use of local air service

 Decrease inefficient leakage to other airports

Means to Achieve Objectives:

 Continue discussion with Horizon Air an d other potential carriers about entrance
into the market

 Develop risk mitigation package

 Work towards launch of routes by summer of 2011

Course of Action to Support Means:

 Provide start-up cost offsets

 Make available revenue guarantee in first 12-months of new service

 Initiate marketing and advertising ca mpaign to publicize new air service

 Work with local business partners to ensure new service successMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 9 EXECUTIVE SUMMARY

Despite serving one of the largest catchment areas in southern California, the McClellanPalomar Airport in Carlsbad, California has be en underserved for the last several decades compared to the other airports in the region. The Airport only has service on one route – to Los Angeles International Airport (LAX) – on one airline, SkyWest operating as United Express.

The Carlsbad catchment area, seen in orange in Figure 1, is home to almost 1.15 million people as of the latest US Census estimates. The Carlsbad area comprises 12.3% of the overall population of the entire
shaded area – the area that includes San Diego, Carlsbad, Orange County, and Long Beach. The total population of the shaded area in Figure 1 – which is entirely within
an hour’s drive of the
McClellan-Palomar Airport – is 9.3 million, making it one of the most populous one-hour catchment areas of any airport in the country. Despite comprising 12% of the region’s population, most of
Carlsbad catchment area passengers fly from other airports in the region, largely due to the
breadth of service offered at those other airports.

Despite the relative size of the Carlsbad catchment area, the Airport has much less service than
other California markets home to more than a milli on people. As of July of 2010, the McClellanCatchment Area Population Share of Pop. Carlsbad/McClellan-Palomar Airport 1,146,522 12.3% Santa Ana-Orange County/John Wayne Airport 2,635,931 28.3% Long Beach/Daugherty Field 3,621,575 38.9% San Diego Lindbergh International 1,902,720 20.4% Total of Region 9,306,748 100.0% 

### FIGURE 1: The McClellan

‐ Palomar Airport Catchment Area Relative to the Catchments of Other Southern California AirportsMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 10 Palomar Airport had service to just one non-stop destination – LAX (see Figure 2). As other markets are finally seeing a rebound in seats during the summer of 2010, Carlsbad is still having flights and available seats trimmed from the market . In July of 2009 the Carlsbad market had an average of 6.2 departures per day to LAX, with 184 daily available departing seats. By July of 2010, SkyWest cut daily departing flights to 5.4 – a loss of 21 departing seats per day, on average, or 11.4% of all
Carlsbad seats.

The McClellan-Palomar Airport has seen dramatic passenger
declines in the last two years, after a near
record 2007. That
doesn’t mean the market is shrinking, and
demand for air service is declining. The reality is, with seat cuts and flight frequency
reductions at the McClellan-Palomar Airport, more and more Carlsb ad area passengers are being forced to use other airports in the region to access the national air transportation system.

In the year ended first quarter 2007 the McClellan-Palomar Airport saw an average of 199 passengers per day each way (PDEW) at an average fare of $147 each way (see Figure 3 on next page). The number of passengers using the Airport dropped to just 73.5 passengers per day each way (PDEW) on average by the year ended first quarter 2010 – a loss of 125.5 passengers per day each way. Non-Stop Departures Seats Departures Seats Capacity Carrier Destination Per Day Per Day Per Day Per Day Change
United LAX 6.2 185 5.5 164 -11.4%
United Total 6.2 185 5.5 164 -11.4%
Carlsbad Total 6.2 185 5.5 164 -11.4% Jul-09 Jul-10 

### FIGURE 2: Current Service at the McClellan

‐ Palomar Airport, July 2010; Source: Airline Schedule DataMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 11 Most of those “lost” passengers found their way to service at other airports in the region, such as San Diego International and John Wayne Airport in Orange County. Fares are up since 2007 – and are much higher than the fares found at ot her airports in the region – helping to spur passenger “leakage.” Moreover, available seats are down 32% in the last two years at the McClellan-Palomar Airport.

Of all southern California mark ets, Carlsbad has the third highest average fare for the year ended first quarter 2010, at an average of $151 each way (see Figure 4 on next page). Only Los Angeles and Palm Springs had higher fares in th e same period. Carlsbad’s average fare is higher than the fare at San Diego, Ontario, an d Orange County – the main airports that most Carlsbad catchment area passengers use.

The lower fares found at other airports in the re gion cause Carlsbad catchment area passengers to clog southern California freeways to accessair service at other airports. The McClellanPalomar Airport commissioned a leakage study th at was completed for this Grant proposal in August of 2010, to better determine the size of the Carlsbad market and the potential for 150,640

118,830

94,330 89,980 80,870 79,670 132,940

102,230

58,710 47,220 7,240

6,670

6,450 6,190

6,050 5,470 12,300

10,900

9,010

6,430 216.3

171.9

138.1 131.7

119.1 116.6 199.0

155.0

92.8

73.5

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000

YE 2001-Q1 YE 2002-Q1 YE 2003-Q1 YE 2004-Q1 YE 2005-Q1 YE 2006-Q1 YE 2007-Q1 YE 2008-Q1 YE 2009-Q1 YE 2010-Q1 PDEW International Domestic

$181

$168 $172 $177 $180 $186

$147
$139 $156 $151 

### FIGURE 3: O&D Passengers and Average Fares at McClellan

‐ Palomar Airport, YE1Q01

– YE1Q10; Source: US DOT Table DB1AMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 12 additional air service. The study found that the immediate Carlsbad catchment area, as seen in Figure 1, generates a total of almost 3.3 million origin and de stination passengers per year.

The majority of Carlsbad area

passengers currently fly out of the San Diego airport at Lindbergh Field. As of the year ended first quarter 2010, the McClellan-Palomar Airport’s catchment area generated 2,485,803 total passengers who flew out of San Diego (see Figure 5). The Airport’s catchment area generated an additional 518,394 passengers who flew out of Los Angeles International (LAX); 184,677 passengers who flew out of John Wayne Airport in Orange County; 59 ,393 passengers who flew out of Ontario; and 6,403 passengers who flew out of Long Beach. Only 53,520 Carlsbad-area passengers actually flew out of the McClellan-Palomar Airport as of the year ended first quarter 2010 – or 1.6% of the catchment area’s total passengers. In other words, Carlsbad leaks 98.4% of its origin and destination passengers to other ai rports in southern California.

It will be difficult for a new airline in the market to re-capture these “leaked” passengers. That is why it is essential the Airport offer risk mitigation to the new carrier – to make sure the new carrier has a sufficient “ramp up” phase to win back passengers to the

McClellan-Palomar Airport.

The Airport has recently hosted Horizon Air officials, on field, for a tour and an in-person meeting in the summer of 2010 to explore $182

$175

$151

$150

$141

$140

$133

$124

$111

$102

$75 $95 $115 $135 $155 $175 Palm Springs, CA

Los Angeles, CA

Carlsbad, CA

San Die g o, CA

Oran g e County, CA

Ontario, CA

Imperial, CA

Burbank, CA

Long Beach, CA

Visalia, CA 

### FIGURE 4: O&D Average Fares at Southern California Airports YE1Q10; Source: US DOT Table DB1A

Airport Passengers PDEW Share
1 SAN San Diego, CA 2,485,803 3,405.2 76.0% 2 LAX Los Angeles, CA 518,394 710.1 15.8% 3 SNA Orange County, CA 184,677 253.0 5.6% 4 ONT Ontario, CA 59,393 81.4 1.8% 5 CLD Carlsbad, CA 53,520 73.3 1.6% 6 LGB Long Beach, CA 6,403 8.8 0.2%
Total Carlsbad Area Passengers 3,270,633 4,480 100.0% Rank 

### FIGURE 5: Carlsbad Area O&D Passengers by Airport Used YE1Q10; Source: Sixel Consulting Group True Market Study, 2010McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 13 options for new service. Horizon has indicated it does find interest in the Carlsbad market. It would like to serve San Jose non-stop from Carlsbad, but it will not enter the market without marketing support, start-up cost offsets, and a revenue guarantee. The McClellan-Palomar Airport seeks this Small Commun ity Air Service Development Grant to provide this start-up support, and to move Carlsbad up Horizo n’s list of communities for new service.

Horizon is a partner in this project, submitting a letter of support to the Airport, and to the Department of Transportation. If Grant money is awarded, it is likely Horizon will enter the Carlsbad market by the summer of 2012.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 14 DETAILED EXPLANATION OF PROPOSAL

The McClellan-Palomar Airport proposes to use a combination of locally raised funding in conjunction with federal Small Community Air Se rvice Development Grant funding in support of
the addition of a new airline to the market: Horizo n Air. In the Airport’s discussions with Horizon Air, most recently at an in-person meeting at the Airport in June of 2009, the Airline indicated an interest in flying its Bombardier Q400 aircraft on a routing from Carlsbad to San Jose (see Figure 6).

This routing fills a major need for Carlsbad servic e, by linking the Carlsbad region non-stop, for the first time, to the San Francisco Bay Area. The Bay Area ranks as Carlsbad’s top combined destination, when taking into a ccount all passengers traveling to all of the Bay Area airports – San Jose, San Francisco, and Oakland. The route also provides one-stop connection s to many of Carlsbad’s major origin and destination passenger markets on Horizon, Alaska, and its partners, American and Delta. It effectively adds four brands to the Carlsbad market, as well, through airline codeshares on the route.

The McClellan-Palomar Airport seeks a Small Community Air Service Development Grant, in the amount of $500,000, to help mitigate Horizon’s initial monetary risk in launching service in an unproven
market.

The Airport proposes two daily flights on the ro ute in each direction. The route between the McClellan-Palomar Airport and San Jose’s Mineta International Airport would cover 393 miles in a flight time of one hour and three minutes, on average, assuming an average groundspeed of
325 knots on a Bombardier Dash 8 Q400 aircraft seating 76 in an all-economy layout (see Figure 7). The block time on the flight, from gate to gate, will be one hour and 30 minutes, with 27
minutes added for total taxi time. 

### FIGURE 6: Proposed Route: Carlsbad

– San JoseMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 15 The proposed schedules work within the framework of current Alaska Airlines, American Airlines, Delta Air Lines, and Horizon Air service at San Jo se. The flight times do not take into account upper level winds or weather. For the purposes of these schedules it is assumed an aircraft would overnight at Carlsbad, where Horizon might be able to take advantage of free overnight parking offered as part of th is proposal (see Figure 7).

Origin Destination Departs Arrives Block Time Equipment
CLD SJC 5:30am 7:00am 1:30 DH4 SJC CLD 12:00n 1:30pm 1:30 DH4 CLD SJC 2:15pm 3:45pm 1:30 DH4 SJC CLD 8:00pm 9:30pm 1:30 DH4

The scheduled is timed to connect into the first set of flights offered by Alaska/Horizon in the morning, including early morning Hawaii flights (see Figure 7). Additionally, the flights are timed to offer connectivity to the Pacific Northwest and the east coast. The flights are also timed for the Carlsbad business traveler, with an early morning Carlsbad departure and a late evening return flight.

The McClellan-Palomar Airport proposes that a small portion of the cost of starting the new service be supported up-front with federal funds from the Small Community Air Service Development Program. Of the total Grant request of $500,000, the entire amount will be used for a revenue guarantee and start-up cost offsets. The Airport’s local share, which is $50,000, will be used for marketing and advertising projects, with only a small portion of the Grant award going to immediate start-up costs. The federal share of the project will be $500,000.

The McClellan-Palomar Airport projects that the bulk of the grant money be available to provide
insurance in case Horizon Ai r incurs a loss during the first year of operations. With demand for intras tate service in the Carlsbad market, and demand for connectivity over the Alaska/Horizon focus cities, the Airport projects the new flights will be profitable within one year. 

### FIGURE 7: Proposed Schedule, Carlsbad

– San Jose



## “The flights are... timed for the Carlsbad business traveler, with an early morning Carlsbad departure and a late evening return...”McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 16 If, for some unforeseen reason, service is not commenced in a timely manner by Horizon, the McClellan-Palomar Airport proposes to use federal grant money awarded under the Small Community Air Service Development Program for ot her carriers that can provide connections to a large origin and destination market in the west, or connectivity through a large hub. The Airport will continue its discussions with all ot her than can provide additional seats to strong markets. Since the community has never befo re received a Small Community Air Service Development Grant, it will have no limitation s on which new hub the DOT could fund. Among the options are California Pacific Airlines servic e to intra-state California destinations; Delta service to Salt Lake City; US Airways service to Phoenix; Frontier Airlines service to Denver; and/or United service to Denver. The Airport will not, however, be limited by this list of potential destinations, as the landscape for service co uld change before the Grant is awarded.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 17 EXPECTED RESULTS

Route Specific Data: Carlsbad – San Jose

Horizon service to San Jose would offer the McClellan-Palomar Airport its first shot at true competition in several years – since US Airways left the market after the merger with America West Airlines. Moreover, the San Francisco Bay Ar ea currently ranks as Carlsbad’s largest origin and destination passenger market, averaging more than 434,000 annual “true” passengers, including those flying from other airports in th e region – but not includ ing those who make the drive. The service would offer one-stop connections in 13 markets over San Jose (see Figure 8)



### FIGURE 8: Connections Over San Jose on Alaska/Horizon and Codeshare Airlines, YE1Q10; Source: Sixel Consulting Group Hub BuilderMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 18 The Airport’s August 2010 True Market/Leakage St udy shows that the Carlsbad market currently produces 1,531 unstimulated origin and destination passengers per day each way to destinations that naturally connect over the Al aska Airlines/Horizon Air San Jose focus city, including 595 passengers per day each way to an d from the San Francisco Bay Area (see Figure 9).

In all, the Carlsbad – San Jose route has the potential to capture 38% of the current passengers flying in and out of the Carlsbad region (see Fi gure 9). This includes a large majority of passengers who currently fly from other airports in southern California to the Bay Area. At the same time, the San Jose focus city could capture 26% of the current revenue generated in the
Carlsbad market – most of which is generated at other airports in the region, such as San Diego and Los Angeles International (LAX).

Currently, Alaska/Horizon markets from Carlsbad that flow over the San Jose focus city generate more than $127 million in annual airline revenue, or $174,000 in revenue per day each way (RDEW) to and from Carlsbad (see Figure 9). Th is includes revenue that is “leaking” from the Carlsbad market to other airports in southern California. San Jose

37%

Other Hubs 63% San Jose 26%
Other Hubs 74%

Estimated Carlsbad O&D Revenue $566,074,685 100% Revenue Flowing Over SJC $147,179,418 26% Estimated Carlsbad O&D Passengers 3,270,633 100% Passengers Flowing Over SJC 1,117,531 37% 

### FIGURE 9: O&D Passengers and Revenue Over San Jose on Alaska/Horizon and Codeshare Airlines, YE1Q10; Source: Sixel Consulting Group Hub BuilderMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 19 The Alaska/Horizon focus city at San Jose has pote ntial to capture large portions of traffic in 14 of Carlsbad’s largest origin and destination market s. The San Jose focus city is especially well positioned to capture traffic traveling to the Ba y Area, the Pacific Northwest, and the middle of the country, from
the
intermountain
west to the
Midwest – including large
markets such as
the San Francisco Bay Area, itself, which produces 595
passengers per day each way (PDEW) to and
from Carlsbad as of the year ended first quarter 2010,; Sacramento, which produces 171 PDEW; Seattle/Tacoma, which produces 154 PDEW; Chicago, which pr oduces 147 PDEW; Dallas/Ft. Worth, which produces 91 PDEW; and Salt Lake City, which produces 79 PDEW as of the year ended first quarter 2010 (see Figure 10). All of those figures are generated by the Airport’s August 2010 Leakage Study, and focus city connection analys is completed using the Sixel Consulting Group
Hub Builder software.

It is likely Horizon would stimulate the passenge r market significantly in Carlsbad, while curbing the huge amounts of leakage by a significant rate . Horizon’s low fare structure has been shown to have a similar impact in other markets in th e west. This gives the Airport reason to be optimistic that the service can be self-sustaining in as little as 12 months from the start of flights.

Carlsbad’s top eight true revenue markets that would flow over San Jose on Alaska/Horizon, including “leaked” revenue from the Carlsbad catchment area that currently flows through other southern California airports, each produc e more than $10,000 in revenue per day each way (RDEW) (see Figure 11). The top potential Carlsbad revenue market over Alaska/Horizon’s 434,164

124,934

112,634

107,491

66,247

57,924

53,237

50,335

40,628

27,490

14,399

11,530

11,160

5,358 594.7

171.1

154.3

147.2

90.7

79.3

72.9

69.0

55.7

37.7

19.7

15.8

15.3

7.3

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 San Francisco Bay Area - 1

Sacramento - 2

Seattle/Tacoma - 3

Chicago Area - 4

Dallas/Ft Worth Area - 5
Salt Lake City - 6

Portland - 7
Minneapolis - 8

Atlanta - 9

Austin - 10
Spokane - 11

Boise - 12

Kahului - 13

Kona - 14 Annual Passen g ers PDEW 

### FIGURE 10: Top O&D Passenger Markets Over San Jose on Alaska/Horizon, YE1Q10; Source: Sixel Consulting Group Hub BuilderMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 20 San Jose focus city is the San Francisco Bay Area, itself, producing more than $47,000 in revenue per day each way (RDEW).

The Alaska/Horizon focus city at San Jose is in a unique position to generate additional traffic and revenue to any number of Carlsbad’s to p true origin and destination markets. Alaska/Horizon service has the potential to capt ure as much as $127 million in current airline revenue, not taking into

account any

revenue stimulation through lower
fares and
additional nonstop service. Moreover, the
San Jose focus city of

Alaska/Horizon is also designed
to connect to codeshares on many other airl ines, such as American and Delta, whose connections are included in this analysis.

The Airport believes there is sufficient passen ger traffic and revenue that would flow over Alaska/Horizon’s San Jose focus city to make th e service profitable. Alaska/Horizon would not be forced to offer rock-bottom fares in Carlsbad to be competitive – even fares slightly higher than those found in other western markets, and at other southern Californ ia airports, would be
considered low for local Carlsbad travelers. Th e McClellan-Palomar Airport believes in the San Francisco Bay Area market, and must develop a risk mitigation package to ensure Horizon can
enter the market without ma jor up-front investments. 34,385,925

17,138,958

13,705,641

11,313,907

10,848,933

8,083,719

7,402,696

7,384,977

5,810,995

3,730,360

2,754,319

1,838,959

1,389,356

1,294,971 47,104.0

23,478.0

18,774.9

15,498.5

14,861.6

11,073.6

10,140.7

10,116.4

7,960.3

5,110.1

3,773.0

2,519.1

1,903.2

1,773.9

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 San Francisco Bay Area - 1

Chica g o Area - 2

Seattle/Tacoma - 3

Dallas/Ft Worth Area - 4

Sacramento - 5

Atlanta - 6
Minneapolis - 7

Portland - 8
Salt Lake City - 9

Austin - 10

Kahului - 11
Spokane - 12

Boise - 13

Kona - 14 

### FIGURE 11: Top O&D Revenue Markets Over San Jose on Alaska/Horizon, YE1Q10; Source: Sixel Consulting Group Hub BuilderMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 21 LETTERS OF SUPPORTMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 22McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 23McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 24 CURRENT AIR SERVICE IN CARLSBAD

The McClellan-Palomar Airport has seen continuous flight reductions over the last three years, resulting in fewer local available seats, and ulti mately, fewer passengers. Many markets can tell the same story. But the story in Carlsbad is punctuated by the fact that the flight reductions have drastically increased the region’s passenger “leakage” to other airports in southern
California. This is a more critical situation in so uthern California than in almost any other part of the country, due to the heavy congestion on virt ually all freeways in and out of Carlsbad, at virtually all times of day. The McClellan-Palomar Airport must do a better job serving its local 1.13 million population by attracting additional air service.



### Current Passenger Traffic in the Carlsbad Market

Since the beginning of 2007 th e McClellan-Palomar Airport has gone from an average of 7.4 daily departures to an average of 4.3 daily departures as of April 2010 – a loss of 42% of daily flights (see Figure 12). During the same time pe riod Carlsbad has seen a loss of an average of 95 daily departing seats – or 42%.



### FIGURE 12: Average Daily Departures, Daily Available Seats, Daily Onboard Passengers Source: US DOT T100 Data, June 2008

– April 2010

225 226 225 229 229 226 223 229

213 216 238 233

219

208

184 189 185 208

195 201

172 185

165 173 184

163 189 180 172 204

182 192

171 183

169

156 160

145 170

130 111 123 123 131 128 125 131

118 112 113 138

119

97 98 99 96 89 101 98 103

83 88

74 74 66 61 69 73
62 69 71 66 62 73 66 59 60 61 78

61

0 50 100 150 200 250

Available SDEW Onboard PDEW Flights Per DEW 7.3 7.3 7.3 7.4 7.4 7.4 7.3 7.4

6.9 7.0 7.6 7.5 7.1 6.8

6.1 6.3 6.2 6.9
6.5 6.7

5.7 6.2

5.5 5.8 6.1

5.4 6.3 6.0 5.7 6.8

6.1 6.4

5.7 6.1
5.6
5.2 5.3
4.8 5.7

4.3McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 25 While flights in Carlsbad are down 42%, and da ily seats are down an identical 42%, onboard passengers haven’t fallen as far. This means flights are going out with more passengers per flight – or a higher load factor. Carlsbad’s onboard passengers have fallen by 32% - which is a large loss in passengers flowing through th e airport – but it is 10% less than the loss in seats and flights in the market (see Figure 12).

In preparation for this application for Gr ant funding, the McClellan-Palomar Airport commissioned a True Market/Leakage study, so that it could better understand its local air travel market before requesting federal funding for additional flights. The study results, released in August of 2010, show that the Airport retains just 1.6% of the passengers generated by its local,
immediate catchment area.

This is illustrated very clearly when passenger retention is analyzed in Carlsbad’s top 20 true passenger markets (see Figure 13). San Franci sco ranks as Carlsbad’s top true passenger market, generating more than 187,000 total pass engers per year as of the year ended first quarter 2010. But just 5.7% of those passengers used the McClellan-Palomar Airport, with most using service provided by airlines at San Diego.

This passenger “leakage” makes the Carlsbad market appear to be much smaller than it really is. When the airlines considering Carlsbad servic e pull DOT data, and it shows San Francisco as a market with just 6.4 passengers per day each way (PDEW), they immediately lose interest in serving the market (see Figure 13). But that simple analysis is missing the 260 passengers per day Total Rank Airport Paxs PDEW Paxs PDEW Paxs PDEW Paxs PDEW Passengers

1 San Francisco, CA 142,542 195.3 10,590 14.5 29,726 40.7 4,688 6.4 187,546 2 Oakland, CA 113,413 155.4 8,426 11.5 23,651 32.4 3,730 5.1 149,220 3 New York J F Kennedy, NY 111,717 153.0 8,300 11.4 23,298 31.9 3,674 5.0 146,988 4 Seattle/Tacoma, WA 104,528 143.2 7,766 10.6 21, 798 29.9 3,438 4.7 137,529 5 Las Vegas, NV 102,711 140.7 7,631 10.5 21,420 29.3 3,378 4.6 135,140 6 Sacramento, CA 94,932 130.0 7,053 9.7 19, 797 27.1 3,122 4.3 124,905 7 Phoenix, AZ 87,602 120.0 6,508 8.9 18,269 25.0 2,881 3.9 115,260 8 San Jose, CA 86,701 118.8 6,441 8.8 18,081 24.8 2,852 3.9 114,075 9 Denver, CO 76,754 105.1 5,702 7.8 16,007 21.9 2,524 3.5 100,988 10 Chicago O'Hare, IL 64,285 88.1 4,776 6.5 13,406 18.4 2,114 2.9 84,582 11 Dallas/Fort Worth, TX 54,184 74.2 4,025 5.5 11,300 15.5 1,782 2.4 71,291 12 Boston, MA 50,901 69.7 3,782 5.2 10,615 14.5 1,674 2.3 66,971 13 Portland, OR 50,767 69.5 3,772 5.2 10,587 14.5 1,670 2.3 66,795 14 Washington Dulles, DC 48,800 66.8 3,625 5.0 10,177 13.9 1,605 2.2 64,207 15 Salt Lake City, UT 47,907 65.6 3,559 4.9 9,991 13.7 1,576 2.2 63,033 16 New York New ark, NJ 43,619 59.8 3,241 4.4 9,096 12.5 1,435 2.0 57,391 17 Honolulu, HI 43,505 59.6 3,232 4.4 9,073 12.4 1,431 2.0 57,241 18 Atlanta, GA 41,471 56.8 3,081 4.2 8,649 11.8 1,364 1.9 54,565 19 Minneapolis, MN 32,779 44.9 2,435 3.3 6,836 9.4 1,078 1.5 43,128 20 Philadelphia, PA 32,542 44.6 2,418 3.3 6, 786 9.3 1,070 1.5 42,816 San Diego, CA Los Angeles, CA Other Airports Orange County, CA 

### FIGURE 13: Carlsbad’s Top 20 O&D Passenger Markets by Airport Used YE1Q10; Source: Sixel Consulting Group True Market/Leakage Study, August 2010McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 26 each way (PDEW) flying out of other southern Califo rnia airports. It is a fair assumption that the right service pattern would retain, at least, a small portion of these “leaking” passengers.



### Air Carrier Market Share in Carlsbad’s “True Market”

While United Express/SkyWest has a 100% market share of both passengers and revenue at the McClellan-Palomar Airport due to its position as the only carrier offering service at the Airport, United does not rank as the top airline for Carlsbad catchment area passengers. It is important in markets such as Carlsbad to analyze not just the market share at the local Airport, but the market share including those passengers who “leak” to other
airports in the region.

The Airport’s recently completed True Market/Leakage Study
shows that most Carlsbad catchment area passengers use
Southwest Airlines – not United service provided directly at the Airport, itself (see Figure 14). These Southwest passengers are “leaking,” primarily, to San Diego and Los Angeles International (LAX). Despite the fact that Southwest does not serve Carlsbad, it captures almost a third of all Carlsbad catchmen t area passengers at other airports in southern California. United ranks as the market’s second largest carrier, with 14% of the total market,
while American ranks third with 12.5% of the market’s origin and destination passengers. Somewhat surprisingly, low cost carriers not na med Southwest draw just a combined 6.6% of Carlsbad area passengers, which suggests fare is not the major consideration in choosing with airline and airport to use.

In direct reference to this propos al, it must be noted that Alaska Airlines and Horizon Air capture just 5.9% of Carlsbad area passengers as of the year ended first quarter 2010 (see Figure 14). This is an indication that both airlines need a strong er brand presence in the Carlsbad market, and it further explains why service to Carlsbad might be attractive to the Alaska Air Group. Airline Passengers PDEW Share

1 Southw est 1,062,528 1,455.5 32.5% 2 United 456,948 626.0 14.0% 3 American 408,645 559.8 12.5% 4 Delta (+Northw est) 331,287 453.8 10.1% 5 US Airw ays 213,731 292.8 6.5% 6 Continental 206,610 283.0 6.3% 7 Alaska 191,451 262.3 5.9% 8 jetBlue 86,228 118.1 2.6% 9 Virgin America 67,919 93.0 2.1% 10 Frontier 62,240 85.3 1.9%

Total of Above 3,087,587 4,230 94.4% Total Carlsbad Area Passengers 3,270,633 4,480 100.0% Rank 

### FIGURE 14: Carlsbad’s True Airline Passenger Share YE1Q10; Source: Sixel Consulting Group True Market StudyMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 27 AIR SERVICE DIFFICIENCES IN CARLSBAD

The McClellan-Palomar Airport’s recently comple ted True Market/Leakage Study shows that the Carlsbad catchment area produces enough passengers – almost 3.3 million as of the year ended first quarter 2010 – to fill an average of 59 departing Q400 aircraft everyday of the year. This large, and growing, market has been underserved for years. But the lack of service is more apparent as the community grows (now 1.13 mi llion residents in the immediate catchment area), and as freeways in southern California become more congested and difficult to navigate.

When Carlsbad’s combined origin and destination passenger
market areas and analyzed the level by which the region is
underserved becomes even more apparent. The San Francisco Bay
Area’s combined market area generates almost 618 passengers per day each way (PDEW) to
and from Carlsbad as of the year ended first quarter 2010 (see Figure 15). Enough passengers
travel between Carlsbad and the Bay Area each day to support 10 flights
in each direction on 76- seat Q400 aircraft with an average load factor of 91%.

While San Jose is the least used Bay Area airport for Carlsbad catchment area passengers, it still generates 156 passengers per day each way (PDEW) as of the year ended first quarter 2010 (see Airport Area Paxs Airport Paxs Share of Total PDEW
1 San Francisco Bay Area 450,840 13.8% 617.6 San Francisco, CA 187,546 41.6% Oakland, CA 149,220 33.1% San Jose, CA 114,075 25.3% 2 New York/Newark 221,344 6.8% 303.2 New York J F Kennedy, NY 146,988 66.4% New York Newark, NJ 57,391 25.9% New York La Guardia, NY 16,964 7.7% 3 Seattle/Tacoma 137,529 4.2% 188.4 4 Las Vegas 135,140 4.1% 185.1 5 Sacramento 124,905 3.8% 171.1 6 Washington/Baltimore 118,845 3.6% 162.8 Washington Dulles, DC 64,207 54.0% Baltimore, MD 33,778 28.4% Washington National, DC 20,860 17.6% 7 Phoenix 115,260 3.5% 157.9 8 Chicago 114,318 3.5% 156.6 Chicago O'Hare, IL 84,582 74.0% Chicago Midway, IL 29,736 26.0% 9 Denver 100,988 3.1% 138.3 10 Dallas/Fort Worth 79,997 2.4% 109.6 Dallas/Fort Worth, TX 71,291 89.1% Dallas Love Field, TX 8,706 10.9% 11 Boston 66,971 2.0% 91.7 12 Portland 66,795 2.0% 91.5 13 Salt Lake City 63,033 1.9% 86.3 14 Honolulu 57,241 1.8% 78.4 15 Houston 56,336 1.7% 77.2 Houston Intercontinental, TX 38,493 68.3% Houston Hobby, TX 17,843 31.7%

Total Carlsbad Area Passengers 3,270,633 4,480 Rank 

### FIGURE 15: Carlsbad’s True Airline Passenger Share, Top 15 Markets YE1Q10; Source: Sixel Consulting Group True Market StudyMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 28 Figure 15). Even if none of the passengers us ing San Francisco International or Oakland decided to trade airports for the convenience of a non-stop, the San Jose market alone generates enough Carlsbad passengers to support three Q400 flights per day with an average load factor
near 80%.

There are two key reasons behind Carlsbad’s “leaka ge” to other airports in southern California.
One: a lack of sufficient available seats in the ma rket to allow local trav elers to use their local airport. And two: airfares that are much hi gher than those found at competing airports. Average fares in Carlsbad aren’t accurately reported, as SkyWest does not report fare information to the DOT as part of Table DB1A. As SkyWest operates Carlsbad service “at risk,” average fares reported by the DOT in the Carlsbad are arbitrarily assigned by on stage length. Due to these fare reporting issues, a simple comparisons of average fares in the Carlsbad market
is not accurate.

When comparing Carlsbad fare data to the main airp orts its passengers use, it is important to dig deeper than the DOT data. A better illustration is the lowest published fare from each airport for a set period of time. This data shows, essentially, exactly what passengers trying to book a flight would see if they checked multiple airports – which more passengers in the Carlsbad catchment
area have been
demonstrated to do.

When fares for a one week period in August of 2010 are compared, looking at Carlsbad, Los Angeles International (LAX),and San Diego sideby-side, it becomes
clear that Carlsbad’s lowest published fares are typically higher
than the lowest published fares at the other airports – especially on the busies t days of the week for passenger demand. $335 $375 $375

$208 $395

$208

$150 $286 $286

$109 $109 $286

$172 $172 $335 $335

$131 $131 $335

$175

$119

$75 $125 $175 $225 $275 $325 $375 $425

Wed, Aug 18 Thu, Aug 19 Fri, Aug 20 Sat, Aug 21 Sun, Aug 22 Mon, Aug 23 Tue, Aug 24 CLD-SFO

LAX-SFO

SAN-SFO 

### FIGURE 16: Lowest Published Fares to San Francisco (SFO) August 2010; Source: Farecompare.comMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 29 Between southern California and San Francisco In ternational Airport, from Wednesday, August 18 through Tuesday, August 24, Carlsbad’s lowest pu blished fare is higher than the fares found at LAX and San Diego on all but one day (see Figure 16). On the peak days of the week, Carlsbad’s lowest published fare is si gnificantly higher. On Friday, August 20 th , the lowest published fare between Carlsbad and SFO was $375 roundt rip before taxes and fees.

On the same day, San Diego’s lowest published fare to SFO was just $131, while LAX’s lowest published fare was even lower – at just $109 roundtrip before taxes and fees (see Figure 16). On peak days in August of 2010, Carlsbad’s lowest published fare to SFO averages 65% higher than the same fare from San Diego and 71% higher than the same fare from LAX.

The same dynamic is at play between southern
California and San Jose – although this disparity is not quite as pronounced. While
Carlsbad’s lowest published fares to San Jose are relatively on par with those found at San Diego for the period between August
18 th and August 24 th
, the fare from the McClellan-Palomar Airport is much higher than the same fare from LAX (see Figure 17).

On Friday, August 20 th , the lowest published fare between Carlsbad and San Jose was $405 roundtrip before taxes and fees (see Figure 17). On the same day, the lowest published fare from San Diego was marginally lower, at $403 ro undtrip. However, the lowest published fare
from LAX to San Jose was 60% lower than the fare from Carlsbad, at $161 roundtrip before taxes
and fees.

With this fare disparity between southern Califo rnia and the San Francisco Bay Area it is very difficult for local Carlsbad travelers to justify the extra expense of flying locally – especially when $365 $405 $405 $405 $425

$365

$231 $314 $314

$161 $161 $161 $314

$161 $370 $403 $403 $403 $430

$370

$217

$100 $150 $200 $250 $300 $350 $400 $450

Wed, Aug 18 Thu, Aug 19 Fri, Aug 20 Sat, Aug 21 Sun, Aug 22 Mon, Aug 23 Tue, Aug 24 CLD-SJC LAX-SJC SAN-SJC 

### FIGURE 17: Lowest Published Fares to San Jose (SJC) August 2010; Source: Farecompare.comMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 30 the service to any of the Bay Area airports is non-stop from either San Diego or LAX. Only an airline such as Horizon, with a low cost structure and a low fare structure, will be able to retain Carlsbad area passengers at the McClellan-Palomar Airport. Non-stops to and from the Bay Area – the Carlsbad catchment area’s number one market – are, and will continue to be, the Airport’s top priority.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 31 EXTENUATING FACTORS AFFECTING AIR SERVICE

It has been established in this proposal that the McClellan-Palomar Airport has lost 42% of its available airline seats and daily departures on sc heduled air carriers in the last two years. While this, in and of itself, represents a hardship for the Airport and the community it serves there are additional extenuating circumstances regarding seat loss and flight declines to consider in the larger region.

At the same time Carlsbad, itself, sees airline service declines, San Diego’s Lindbergh International Airport has see its most significant seat cuts since the recession in the early 1990s. Since the summer of 2008, San Diego has lost an average of almost 65 daily departures – a loss of 23% of that Airport’s daily flights (see Figure 18). During that same time period, San Diego has lost an average of 6,873 daily outbound available seats, or 19% of all the market’s available airline capacity.

34,028 35,410 35,447

34,508

30,849 30,774 30,361

29,333 28,800 29,240 29,534 29,585 30,423 32,070 32,330 31,560

29,200 29,008 28,302 27,994

26,667 27,057 28,017 28,604

25,783 28,259 28,038 27,842

22,585 23,534

21,919 21,718

19,713 21,476 22,732 23,943 23,227 25,835 27,307

26,250

22,611 23,579

22,496 21,989

20,193 20,684 22,741 23,127

17,000 22,000 27,000 32,000 37,000

2008-05 200 8 -06 200 8 -0

7 2008-0 8 2008-09 2008-10 200 8 -11 200 8 -12 2009-01 2009-02 2009-03 2009-0 4 2009-05 2009-0 6 2009-0 7 2009-08 2009-09 2009-10 2009-11 2009-1 2 2010-01 2010-02 201 0 -03 201 0 -0

4 Available SDEW Onboard PDEW Flights Per DEW 277.1 286.7 286.3 276.9

241.4 240.1 233.8 227.4 225.3 229.0 230.9 232.7 236.5 247.7 249.2 244.0

225.8 223.8 218.0 216.3
205.9 211.0 218.4 222.1 

### FIGURE 18: Available Seats, Flights, and Passengers Per Day at SAN May 2008

– April 2010; Source: US DOT T100 DataMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 32 These overall air carrier flight and seat losses not only hurt the immedi ate San Diego catchment area, but also Carlsbad. As Carlsbad has seen its flights and seats cut even more drastically over the last two years, Carlsbad area travelers have had to rely more on service provided at San Diego for access to the national air transportation system. This access is becoming more difficult as the region, as a whole, sees huge cuts in airline service.

The same is true, specifically, of service betwee n San Diego Lindbergh International and the San Francisco Bay Area. In June of 2008, San Diego averaged 53.3 daily departures to airports in the Bay Area, including San Francisco International (SFO), San Jose Mineta International, and Oakland (see Figure 19). By April of 2010, the number of daily departures had fallen to 41.9 – a loss of 11.4 daily departures, or 21% of all San Diego – Bay Area flights.

At the same time, available seats between San Diego and the Bay Area have fallen from an average of 6,768 daily departing seats in June of 2008 to an average of 5,747 daily departing seats in April of 2010 – a loss of 15% of the market’s total seats (see Figure 19). 6,837 6,768 6,750
6,573

6,356 6,353 6,391 6,271 6,208 6,188 6,294 6,230 6,129 6,275 6,272

6,007

5,582 5,584 5,519 5,511 5,377 5,497 5,603 5,747

4,763 4,877
4,689 4,787

4,207 4,358

4,066 4,060

3,504 3,980 4,160 4,478

4,262 4,530 4,615 4,487

4,171 4,272 4,250 4,166

3,655 3,741 4,062 4,182

3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500

2008-05 2008-06 2008-0 7 200 8 -08 200 8 -09 200 8 -10 200 8 -11 2008-12 2009-01 2009-02 2009-03 2009-0 4 2009-05 2009-06 2009-0 7 2009-08 2009-09 2009-10 2009-11 2009-12 201 0 -01 2010-02 2010-03 2010-0 4 Available SDEW Onboard PDEW Flights Per DEW 53.2 53.3 53.0
51.5
49.8 49.5 49.2 48.5 47.9 48.1 49.0 49.2 48.2 49.3 49.4

46.7

40.5 40.5 40.6 40.4 39.1 40.4 41.3 41.9 

### FIGURE 19: Available Seats, Flights, and Passengers Per Day Between SAN and the Bay Area May 2008

– April 2010; Source: US DOT T100 DataMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 33 The San Diego – San Jose route has seen similar cuts to the overall Bay Area market. In July of 2008, airlines offered an average of 1,519 daily departing seats from San Diego to San Jose (see Figure 20). By April of 2010 that number had fallen to 1,314 daily departing seats between the
two markets – a loss of 13% of availabl e seats between San Diego and San Jose.

Flight cuts between San Diego and San Jose have been even more dramatic. In July of 2008 airlines offered an average of 14.3 daily non-stop departures in each direction between the two markets (see Figure 20). By April of 2010 that number had fallen to just 9.6 daily departures – a loss of a third of all flights between San Diego and San Jose.

The result of these flight and seat cuts between San Diego and the Bay Area has been to make
access to service between these two areas more d ifficult to obtain. Should non-stop service be
launched between Carlsbad and San Jose the new flights wouldn’t even begin to make up for the capacity lost in the last two years. This gives the Airport extra confidence new service will be successful – as it merely re places a small portion of capa city lost in recent years. 1,502 1,517 1,519 1,476 1,485 1,482 1,478

1,410 1,461 1,479 1,491 1,513 1,477 1,505 1,508

1,443

1,265 1,267 1,244 1,237 1,200 1,249 1,290 1,314

1,146 1,175 1,139 1,146

1,054 1,080

972

915

822 933 986 1,095

980 1,104 1,101 1,104

946 957 943 954

812 862 946 976

500 700 900 1,100 1,300 1,500 1,700

200 8 -0

5 2008-0 6 2008-0 7 2008-0 8 2008-09 2008-10 2008-11 2008-12 200 9 -01 200 9 -0

2 2009-0 3 2009-0 4 2009-0 5 2009-0 6 2009-07 2009-08 2009-09 200 9 -1 0 200 9 -11 2009-1 2 2010-01 2010-0 2 2010-0 3 2010-0 4 Available SDEW Onboard PDEW Flights Per DEW 14.1 14.3 14.3 13.9 14.0 13.8 14.0 13.5 13.9 14.1 14.2 14.4 14.1 14.4 14.3

13.1

9.3 9.3 9.1 9.1 8.8 9.2 9.5 9.6 

### FIGURE 20: Available Seats, Flights, and Passengers Per Day Between SAN and SFO May 2008

– April 2010; Source: US DOT T100 DataMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 34 AVAILABILITY OF ALTERNATE AIRPORTS

Carlsbad, California is serviced by the McClellan-Palomar Airport, located 2.9 miles off Interstate
5. The Carlsbad catchment area , seen in orange (See Figure xx ), is home to almost 1.15 million.

• The Carlsbad area comprises 12.3% of the overall population of the entire shaded area – the area that includes San Diego, Carl sbad, Orange County, and Long Beach.

• The total population of the shaded area – which is entirely within an hour’s drive of the McClellan-Palomar Airport – is 9.3 million, ma king it one of the most populous one-hour catchment areas of any airport in the country.

• Despite comprising 12% of the region’s popu lation, most of Carlsbad catchment area passengers fly from other airports in the region, largely due to the breadth of service offered at those other airports.



### FIGURE 21: Location of San Luis Obispo County in relation to other Southern California airportsMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 35 USE OF LOCAL FEDERAL FUNDS

Marketing and Advertising

The McClellan-Palomar Airport proposes to spend $50,000 in funds on marketing and advertising promotions in support of new serv ice introductions. The goal is to increase ridership and usage of new service through targeted regional campaigns.



### Revenue Guarantee

The McClellan-Palomar Airport proposes to make available at least $500,000 in funds for a revenue guarantee to the new carrier, to cover st art-up losses that may occur during the first twelve months of service. Subject to negotiation, payments will be made to the new airline quarterly when income derived from passengers and cargo is less than agreed expenses on the route. Revenue generated that exceeds expenses will be carried forward and tapped before any grant funds are used.



### Startup Cost Offsets

The McClellan-Palomar Airport prop oses to spend only existing ai rport funds and matching funds to pay for start-up costs in support of new service introductions. The Airport, and its partners, will provide essential terminal space and equipment to handle the new service.



### Additional Costs

As part of this program, the McClellan-Palomar Airport understands that additional expenses will be incurred, such as monitoring the results of the program and reporting those results back to the US DOT. In addition, the Airport expects to incur some expenses in the recruitment of the new carrier. The Airport may choose to use DOT funding in these efforts.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 36 PUBLIC/PRIVATE PARTNERSHIPS

San Diego County and the McClellan-Palomar Airport consistently work together, with several community organizations, on ai r service development projects. Many local partners have committed to work with the Airport to promote and market the new service. The Airport and the County will manage and coordi nate the marketing program.

Major partners are listed below, with profiles of their organizations. Other, smaller partners, including many area businesses, will also work with the Airport and the County to promote and support additional local air service, beyond the major organizations listed below.



### San Diego North County Economic Development Council

The San Diego North County Economic Developm ent Council has a mission is to grow and sustain the economy of San Diego North County through attraction, retention and new business development. The group is a member-driven coalition of the private and public sectors working together to sustain and carefully grow the economic base of San Diego North. The Group’s main goal is to market the area internally and exte rnally in an effort to retain and attract quality businesses and create additional, higher payi ng jobs. The San Diego North EDC works with businesses, chambers of commerce, health orga nizations, local governments and educational institutions to improve the quality of life and economic sustainability of North County. The EDC
also undertakes initiatives to establish North Coun ty as a "business-friend ly" region and promote a regional approach to marketing North County as "San Diego's Smart Place to Grow" a business.



### San Diego North Chamber of Commerce

The San Diego North Chamber of Commerce is the steward for business in the region’s communities, supporting businesses of every size through proven programming, a unified voice in front of government, and dedicated committees . Strong support from membership allows the Chamber to thoroughly focus on each individual community while providing the benefit of a regional Chambe r of Commerce.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 37 The Chamber has three main areas of focus:

1. Business Development - To identify and promote poli cies and programs that allow companies to invest in the region either through retention or expansion.
2. Workforce Development – Provide a regional workforce that is capable and competent through collaboration with business and education.
3. Infrastructure – Develop and implement strategies to ensure regional capacity in six business critical categories: water, ho using, energy, transportation, economic competitiveness and environmental stewardship.



### Carlsbad Chamber of Commerce

With more than 1,600 member businesses employing 65,000 or more, the Carlsbad Chamber is the second largest chamber in San Diego County and the 10th largest in California. It truly is an influential force for the region’s business communi ty. It’s important to note that the Carlsbad Chamber is independent from go vernment. The Chamber receives no operating funds from the City of Carlsbad or any other government agency.



### San Diego North Convention and Visitors Bureau

The San Diego North Convention & Visitors Bureau is a full-service organization providing information and assistance to the region's touris m and hospitality industries, including the areas of La Jolla north to Oceanside, Rancho Bernardo north to Fallbrook, Julian and the Anza-BorregoDesert. The CVB works closely with its members to promote San Diego North as a premier, yearround resort destination, including the McClellan-Palomar Airport.



### Palomar Airport Association (PAA)

The Palomar Airport Association (PAA) is an all- volunteer California Corporation. The PAA is a general-interest, public-benefit community service or ganization for pilots and non-pilots alike, for McClellan-Palomar Airport. The PAA is an avia tion resource for the community, government agencies and the press for the Palomar Airport.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 38 The PAA works together with neighboring aviation organizations and supporters for the benefit of McClellan-Palomar Airport. The Group’s focus is airport preservation and education, and it promotes balanced public airport use for all types/classes of aviation--from small private aviation through commercial operations. PAA hosts community programs, events, education, public relations and coordination of volunteer support activities. The PAA believes that when everyone gets together, things are better for all; for aviation users, businesses and the community.



### Horizon Air/Alaska Air Group

Horizon Air and the Alaska Air Group have made a commitment, under this Grant application, to work towards a partnership with the McClellan- Palomar Airport. Today, Horizon is 4,000 employees strong and serves more than 45 cities in Arizona, California, Colorado, Idaho, Montana, Nevada, Oregon, Washington, Britis h Columbia, and Alberta. The company is recognized as one of the leading regional airlines in the country and holds the highest rank of all regional airlines in Condé Nast Traveler Magazine's Readers Choice Awards list. Horizon supports this application, as noted in its letter of support , and hopes to work with the Airport, the DOT, and the SCASD Grant program to launch additional service in Carlsbad.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 39 IMPLEMENTATION TIMELINE

The proposed implementation timeline for the project assumes the Department of Transportation will award Small Community Grant Funding in De cember 2010. Once the award is announced, the McClellan-Palomar Airport will conduct additi onal airline meetings to secure a new service that is mutually beneficial. Based on airlin e planning lead times and the need for advance bookings, we assume the new carrier would not be able to begin service until at least March of
2012.

The first three milestones on the Airport's timeline are to execute the grant agreement with the Department of Transportation, meet with prospect ive airlines to negotiate for service, and sign the minimum revenue guarantee agreement with the appropriate airline partner. Once service is announced and schedules are published, th e Airport would begin marketing the new route and working with the new carrier to monitor adva nce bookings. The Airport will continue its marketing program and continue to work with th e new carrier to monitor the route once service begins. The Airport would submit grant status reports on a quarterly basis to the Department throughout the proposed two year term of the minimum revenue guarantee.

While the estimated dates are targets, it is possible service could be secured and launched on a more aggressive timeline once Grant funding is aw arded. It is also possible that new service could slip to 2013 should an airline require addition al risk mitigation, beyond that included in this proposal, from the community.



### Activity/Project Milestone Estimated Date

SCASD Grant Award Announcement December 2010 Executive Grant Agreement with DOT January 2011 Meet With Prospective Airlines February - June 2011 Negotiate Minimum Revenue Guarantee (MRG) With Airline July/August 2011 Announce Service December 2011 Publish Schedule December 2011 Begin Marketing of New Route January 2012 Monitor Advance Bookings January - March 2012 Service Launch March 2012 MRG Available for Service March 2012 - March 2014 Monitor Route Performance March 2012 - March 2014 Submit Grant Status Reports to DOT Quarterly Q1 2011 - Q1 2014 Close Grant April 2014McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 40 AIR SERVICE ADVISORY GROUPS

The McClellan-Palomar Airport has its own Airp ort Advisory Committee. The Palomar Airport Advisory Committee (PAAC) had its first meeting on July 9, 1979. Among other ro l es, including air service development and retention, airport advising, and general aviation monitoring, the PAAC provides a forum for residents with noise concerns and tried to provide them with accurate information about what the County can and cannot mandate. The committee also gave invaluable input to Palomar officials and designers regarding the ne w terminal’s development and design of the bridge. PAAC offered suggestions and input for the new restaurant as well.

Outside the formal Airport Advisory Committee, the Palomar Airport Association (PAA) works together with neighboring aviation organizations and supporters for the benefit of McClellan-Palomar Airport. Th e Group’s focus is airport preservation and education, and it promotes balanced public ai rport use for all types/classes of aviation--from small private aviation through commercial oper ations. PAA hosts community programs, events, education, public relations and coordination of volunteer support activities. The PAA believes that when everyone gets together, things are better for all; for aviation users, businesses and the community. 

## “The PAAC provides a forum for residents... [giving] valuable input to Palomar officials and designers regarding the new terminal’s development.”McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 41 LOCAL AIR SERVICE DEVELOPMENT EFFORTS

For the last several years, the McClellan-Paloma r Airport has been working to retain, expand, and attract new airline service at the Airport. The Airport has seen the number of available seats and the number of daily departures decline. It realizes it must work to recruit additional service, so it can better serve its catchment area of 1.13 million people.

In the summer of 2010, the McClellan-Paloma r Airport commissioned a True Market/Leakage Study, using its own funding, so it could better un derstand the travel patterns of local catchment area residents. The results of this study were co mpleted for inclusion in this Grant application. The Study shows a local market for almost 3.3 million annual passengers.

The Airport also hired an air service development consulting firm to aid in the preparation of specific airline case studies, and to facilitate direct airline one-on-one meetings. In the summer of 2010, the Airport hosted officials from both Horizo n Air and California Pacific Airlines for meetings on field. Additionally, the Airport has met with airlines such as Frontier and Cape Air in the
summer of 2010 to discuss new service opportunities.

The airlines considering serving the McClellan-Palomar Airport have been clear in their message: the Airport must fully develop its risk mitigation program to land additional service. A Small Community Air Service Development Grant is an essential part of this effort. 

## “...the McClellan-Palomar Airport commissioned a True Market/Leakage Study, using its own funding, so it could better understand the travel patterns of
local... residents.”McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 42 IN-KIND SERVICES FROM COMMUNITY

The following organizations will help promote the new service through their various membership groups. There is no estimated value to these services.

 Carlsbad Chamber of Commerce

 San Diego North Convention and Visitors Bureau

 San Diego North Chamber of Commerce

 San Diego North County Economic Development Council

 Palomar Airport Association

 County of San Diego

 City of CarlsbadMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 43 PERFORMANCE MEASURES

The success of new service will be based on three measurable variables: the increase in available seats in the market, the number of enplanements on the route, and the average airfares charged in the affected city pairs. The first two measurements will include a monthly comparison once the program begins to past numbers. The second measurement will be derived from US DOT OD1A reports.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 44 LEGAL SPONSOR

The McClellan-Palomar Airport is the legal sponso r responsible for administering the program. The McClellan-Palomar Airport is a government entity.

McClellan-Palomar Airport 2192 Palomar Airport Road Carlsbad, California 92011 Peter Drinkwater, Airport Director 760.431.4646 Peter.Drinkwater@sdcounty.ca.govMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 45 FINANCIAL CONTROLS

As the sponsor, the McClellan-Palomar Airport, an d the Airport’s operator, San Diego County, will be the responsible parties for all fiscal matters and DOT reporting requirements. As a public entity the DOT can be assured that proper financial controls are in place to guarantee that the DOT’s grant will be used in accordance with any subsequent agreement. The Airport understands that the grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will submit invoices to the DOT for reimbursement, based on a percentage of the total grant request.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 46 RETURN ON INVESTMENT

The McClellan-Palomar Airport has developed a cost effective and achievable strategy to increase enplanements at the airport. The proposal uses proven methods of achieving air service improvements, allowing the DOT to be comfortable with choosing this proposal. The increased competition and access to increased co mpetition with airfares by adding service on a new route is a major goal of the Small Co mmunity Air Service Development Program.

Approximately $50,000 of the $550,000 in cash is committed to being spent. The remaining $500,000 in cash will be available for the revenue guarantee portion of the project. Should the revenue guarantee be unused, or unneeded for the new airline, funding may be used to widen the marketing and advertising program.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 47 DOT EXIT STRATEGY

The Airport has developed this proposal as a on e-time grant. The ad vertising and marketing program will commence a few months before service starts and last for at least twelve months. The revenue guarantee program will also be in place for twelve months, with two additional twelve-month periods available for ne gotiation. It is projected that the service will be financially self-sustaining within the second twelve months of service.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 48 ALTERNATE PLAN

If, for some unforeseen reason, service is not commenced in a timely manner by Horizon, the McClellan-Palomar Airport proposes to use federal grant money awarded under the Small Community Air Service Development Program for ot her carriers that can provide connections to a large origin and destination market in the west, or connectivity through a large hub. The Airport will continue its discussions with all ot her than can provide additional seats to strong markets. Since the community has never befo re received a Small Community Air Service Development Grant, it will have no limitation s on which new hub the DOT could fund. Among the options are California Pacific Airlines servic e to intra-state California destinations; Delta service to Salt Lake City; US Airways service to Phoenix; Frontier Airlines service to Denver; and/or United service to Denver. The Airport will not, however, be limited by this list of potential destinations, as the landscape for service co uld change before the Grant is awarded.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 49 AIRPORT INFORMATION

Expansion has been ongoing since the airport’s op ening in 1959, culminating in the 2008 Grand Opening of a new 18,000 sq. ft. state-of-the-art terminal building. This building combines airline terminal/security screening with a restaurant, Customs facility and other amenities. The terminal’s overhead canopies mimic sailboats and shell-encrusted floors form sweeping conch shell patterns, reminiscent of the ocean only a few miles away. Floor-t o-ceiling windows and several outdoor areas provide passengers the opportunity to watch aircraft come and go. Rocking chairs offer a place to
sit and wait for passengers or take a quick break.

The airport has a single 5,000 ft. runway that is currently undergoing a major renovation with an anticipated August 2010 completion date. With the new terminal building and 5,000-foot runway, McClellan-Palomar Airport will be one of the most modern airports in the country, an airport that the citizens of Carlsbad and all of San Diego County can be proud of, and one of the finest bases for aviation businesses
on the west coast. 

### New Terminal Building McClellan

‐ Palomar AirportMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 50 COMMUNITY PROFILE

The City of Carlsbad prides itself on providin g an exceptionally high level of service to its residents. This mid-sized city has maintained it s small-town feel by carefully managing growth, encouraging community involvement and preserving almost half the city as open space.

Carlsbad is home to 106,804 residents as of 2010 with a median age of 41 years. The median family income in Carlsbad is $104,412 in 2009 – on e of the highest median incomes in the State of
California – and an increase of 9.5% over 2008. Carlsbad CA residents spend an average of $8,000 on vacation each year – almost $2,000 above the national average spent on vacation.

The City offers its residents a thriving Parks and Recreation system as well as an extensive trail system. While the citywide trails system provides many recreational opportunities to enjoy the City's unique natural areas, it also provid es a comprehensive network for non-motorized transportation routes, connecting neighborhoods to commercial and business areas, schools, parks, and Carlsbad beaches.



### Tourism in the Carlsbad Region

Carlsbad is an area worthy of the 30 million visitors it attracts each year. San Diego County enjoys more than 30 million leisure travelers a ye ar and those travelers spend more than $8 billion throughout the county. Boasting nearly seven miles of beautiful beaches, picturesque lagoons and the charm of a European village coupled with world class golf, spas and shopping -- Carlsbad provides something for every travel taste and budget.

Carlsbad is host to unmatched shopping, dining, beaches, golf, nature and attractions such as LEGOLAND® California, sporting ev ents and seasonal festivals.

Major Events: Carlsbad Marathon, Carlsbad 5000, Ju nior Carlsbad, Carlsbad Village Street Faire, Carlsbad Triathlon, Art in the Village, ArtSplash, Beach'n 101 Cruise, Bike MS Bay to Bay Tour, Oktoberfest, Jazz in the Park (seasonal) Shakespeare in the Park (seasonal)McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 51 Beaches

Carlsbad is home to seven miles ofpristine, uncrowded and sundrenched beaches. Renowned as one of the best surf spots in southern California, there’s still plenty of water and sand for all to enjoy. Visitors can walk along the water’s edge, splash in the waves or soak in the sun. For the more adventurous, the area also offers surfing, sailing, jet skiin g, fishing, kayaking, sw imming, boogie boarding, biking, birding, nature walks, go lf, tennis, hiking, whale watching

Resorts

In Carlsbad, golf isn’t just a game, it’s an ex perience. Beautifully desi gned, world-class courses offer unmatched amenities, such as GPS-equipped golf carts that help gauge your next shot, gorgeous clubhouses to relax in, golf classes with top golf pros, and nearby resorts and spas for when you’re done playing and want to unwind.

LEGOLAND® California and Water Park

The 128-acre Park is designed specifically to appe al to families with children ages 3 to 12. The Park features roller coasters, LE GO-themed rides, interactive shows, hands-on attractions, LEGObuilding play areas, and the famously breathtaking Miniland, restaurants, shopping, landscaped features and gardens.

Opening June 2010, LEGOLAND® Californ ia Resort will feature the world’s first and only LEGOLAND Water Park. The imagination will really flow at this interactive, splash-filled, fun time for the entire family.

The centerpiece of the Water Park is a 45-foot-tall tower designed to immerse children in the creative world of LEGO®. The park will also in clude The Build-A-Raft river – a lazy river where guests float on their own custom-b uilt LEGO raft as well as several water slides including sixperson raft slide and one-person tube slides as well as slides designed especially for toddlers.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 52 Leo Carrillo Ranch Historic Park

Once part of the original 2,538 acre working rancho
and vacation retreat of Le o Carrillo (who acted in
almost 100 films from 1927n to 1950 and co-starred in the TV series The Cisco Kid,) this historic ranch is an extraordinary educational and recreational resource. The City of Carlsbad has stabilized, preserved and restored many of the buildings on this 27 acre parcel.Historic ranch structures include a visitors center, handcrafted adobe buildings, hacienda, reflecting pool , cabana, cantina, carriage house tack shed, stable, barn and foundry and equipment shed.

SEA LIFE Aquarium

Merlin's SEA LIFE® attractions are an ideal, friendly and authoritative guide to the last great frontier...the seas and oceans of the world and their myriad mysterious and amazing inhabitants. Unri valled display technology, biological expertise and entertainment skills combine to provide seamless journeys through US and tropical waters, and astonishing close encounters with everything from humble shrimps and starfish to seahorses, sharks and stingrays.

SEA LIFE® is designed to be a child’s first interactive guide to the life of the sea, combining active, hands-on learning with fascinating educat ional talks, and opportunities to have up close and personal encounters with a vari ety of sea creatures. A visit to SEA LIFE® is an experience like
no other!McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 53 Carlsbad Economic Overview

At a time when many cities are experiencing population and job losses, Carlsbad is exceeding state and national averages in both areas. Popu lation growth in Carlsb ad has outpaces growth throughout California. As of 2009 it is four po ints better than San Francisco and Los Angeles (see Figure 21).

From 2000 to 2008, jobs in Carlsbad grew by 22.80%. Since February, the Carlsbad/San Diego Economy Has Added 1,100 New Full-Time Jobs – th e Second Best Job Growth in California. 1.5% 2.7% 3.6% 3.9% 4.1% 4.3% 5.3% 6.9% 8.1%

1.04% 0.70% 0.40% 0.17% 0.31% 0.63% 1.58% 2.99% 4.38%

0.42% 0.57% 0.65% 0.34% 0.12%

‐ 0.28% 0.18% 0.97% 1.82%

1.02% 1.90% 2.57% 2.95% 2.92% 2.54% 2.37% 2.98% 3.84%

-2% 0% 2% 4% 6% 8%

2001 2002 2003 2004 2005 2006 2007 2008 2009 Carlsbad-San Diego San Francisco-Oakland San Jose 

### FIGURE 21: Cumulative Population Growth in Southern California Source: US CensusMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 54 Employment in the Carlsbad Area

Select Company Profiles

Callaway Golf Co.

Headquartered in Carlsbad, Callaway Go lf Company is one of the world’s designers and manufacturers of golf equipment, including clubs, balls and apparel. High-end clientele include customers for their custom-made products. With ever-expanding global markets, including India, Korea, China, Europe and Latin America, the need for air service is undeniable.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 55 ViaSat, Inc.

ViaSat, Inc. is a high-technology company, specializing in the design and
manufacture of communications and netw orking equipment with its global headquarters in Carlsbad. Sectors within which they work include the military, aviation, maritime and mass transit. With thirteen additional offices of ViaSat and their subsidiaries around the world, employee air travel is frequent. The company also has a regular presence at industry conferences on both a national and global scale, requiring additional employee travel several times a month.

LEGOLAND® California, LLC

LEGOLAND® California is a 128-acre family theme park located in Carlsbad, featuring more than 15,000 LEGO® models in the Park
created from more than 35 million of the iconic LEGO® bricks. In additional to employing 1,100 people in the Carl sbad office, the park brings in more than 1,750,000 visitors annually.

LaCosta Resort and Spa

Providing employment for 1,000 people in the Carlsbad area, La Costa Resort and Spa, “California 's Playground for All Ages”, brings a taste of the coastal California lifestyle to each and every visitor. Set within a lovely 400- acre village, La Costa Resort and Spa offers 610 spacious and wellappointed guestrooms including luxury Villas and 76 suites. La Costa is a place where high-end clientele with busy schedules escape the everyday to experience a life of play and leisure.
More convenient air service would furnish this destination well.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 56 Life Technologies

The systems, consumables and services of Life Technologies enable researchers to accelerate scientific exploration, driving to discoveries and developments that make life even better. Their customers do their work across the biological spectrum, working to advance personalized medicine, re generative science, molecular diagnostics, agricultural and enviro nmental research, and 21st century
forensics. While the Carlsbad he adquarters employs 960, the co rporation itself employs more than 9,500 company-wide in 60 offices in 28 countr ies, so local, national and global travel is essential for this diverse company.

Gemological Institute of America

Established in 1931, the Gemological Institute of America is headquartered in Carlsbad and is the world’s foremost authority on diamonds, colo red stones, and pearls. GIA exists to protect all purchasers of gemstones, by providing the education, laboratory services, research, and instruments needed to accurately and objectively determine gemstone quality. The he adquarters in Carlsbad, which also includes a laboratory and instrument center, employs 600 peop le, while the organization itself has 17 offices globally.

Military Presence

The Carlsbad Area is Home to a Major Military Installation with 38,000 Active Duty and Over 60,000 Military and Civilian Personnel. Camp Pendleton is located in North San Diego County, in Southern Califo rnia. The base is adjacent to the City of Oceanside, a military town, by the Main Gate in the South. The size of Camp Pendleton is comparable to the size of the State of Rhode Island. The cost of living is high in San Diego County. The mild climate and beautiful scenery attract a lot of new residents and tourists to our area each year.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 57 Marine Corps Base has the responsibility of provid ing housing, training facilities and logistical support for the Fleet Marine Force elements and other units assigned here. In addition, the base conducts specialized schools and other such trai ning as the Commandant of the Marine Corps may direct.

Major commands are Marine Corps Base, 1st Marine Expeditionary Force, 1st Marine Division, 1st Marine Logistics Group, elements of the 3rd Mari ne Aircraft Wing, and many tenant units (Marine Corps Air Station, ACU-5, Naval Hospital, the Marine Corps Tactical Systems Support Activity (MCTSSA), Naval Weapons Station Fallbrook, and a Reserve Support Unit).

The neighboring cities of Carlsbad, Escondido, Fallbrook, Oceanside, San Clemente, San Marcos, Temecula and Vista provide employment, housing and services needed by the Camp Pendleton population.

Many military personnel use commercial flights for their personal travel du ring leaves and other uses. With nearly 100,000 people to accommodate, many of whom are on tight schedules, air service that provides a more convenient location and greater options in schedule would be a major benefit to this base.McClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 58 COMPARISON TO OTHER COMMUNITIES IN REGION

Itinerary Average Airport YE 1Q 08 YE 1Q 09 YE 1Q 10 Mileage Fare 08-10 09-10
1 Grand Canyon, AZ 55.11¢ 51.38¢ 52.05¢ 172 $89.44 -2.8% 1.3% 2 Las Vegas North, NV 52.03¢ 52.03¢ 52.03¢ 172 $89.50 0.0% 0.0% 3 Visalia, CA 23.37¢ 31.21¢ 38.97¢ 263 $102.43 29.1% 24.9% 4 Show Low , AZ 37.14¢ 34.73¢ 37.31¢ 295 $109.93 0.2% 7.4% 5 Vernal, UT 32.06¢ 33.19¢ 28.57¢ 691 $197.31 -5.6% -13.9% 6 Kingman, AZ 19.86¢ 25.94¢ 28.41¢ 409 $116.12 19.6% 9.5% 7 Mammoth Lakes, CA 0.00¢ 25.94¢ 26.84¢ 391 $104.95 100.0% 3.5% 8 Inyokern, CA 20.84¢ 25.88¢ 25.42¢ 1,723 $438.08 10.4% -1.8% 9 Page, AZ 24.83¢ 24.72¢ 22.40¢ 678 $151.83 -5.0% -9.4% 10 Moab, UT 23.54¢ 24.55¢ 21.75¢ 868 $188.86 -3.9% -11.4% 11 Santa Rosa, CA 21.32¢ 20.71¢ 19.96¢ 585 $116.82 -3.2% -3.6% 12 Prescott, AZ 20.20¢ 20.34¢ 19.56¢ 601 $117.65 -1.6% -3.8% 13 Oxnard/Ventura, CA 18.34¢ 20.45¢ 18.10¢ 1,522 $275.53 -0.7% -11.5% 14 Santa Maria, CA 17.59¢ 19.66¢ 17.25¢ 972 $167.75 -1.0% -12.3% 15 Elko, NV 23.55¢ 16.55¢ 16.91¢ 907 $153.45 -15.3% 2.2% 16 Redding, CA 18.52¢ 20.07¢ 16.79¢ 1,163 $195.25 -4.8% -16.3% 17 Yuma, AZ 16.16¢ 16.54¢ 15.87¢ 1,485 $235.60 -0.9% -4.1% 18 Arcata/Eureka, CA 17.51¢ 16.66¢ 15.80¢ 1,254 $198.13 -5.0% -5.2% 19 Burbank, CA 15.05¢ 16.10¢ 15.33¢ 808 $123.93 0.9% -4.8% 20 Bakersfield, CA 15.99¢ 16.13¢ 15.03¢ 1,444 $217.08 -3.0% -6.8% 21 Crescent City, CA 14.62¢ 16.99¢ 14.18¢ 1,199 $170.04 -1.5% -16.5% 22 Salt Lake City, UT 15.10¢ 14.53¢ 13.97¢ 1,130 $157.88 -3.8% -3.9% 23 Santa Barbara, CA 16.21¢ 15.73¢ 13.85¢ 1,385 $191.76 -7.6% -12.0% 24 Flagstaff, AZ 16.76¢ 16.04¢ 13.85¢ 1,199 $166.09 -9.1% -13.7% 25 Stockton, CA 13.79¢ 13.29¢ 13.73¢ 359 $49.28 -0.2% 3.3% 26 San Luis Obispo, CA 14.66¢ 15.24¢ 13.72¢ 1,564 $214.58 -3.3% -10.0% 27 Reno, NV 13.21¢ 14.31¢ 13.68¢ 1,102 $150.72 1.8% -4.4% 28 Monterey, CA 16.84¢ 16.50¢ 13.65¢ 1,363 $186.09 -10.0% -17.3% 29 Imperial, CA 14.54¢ 13.70¢ 13.39¢ 992 $132.89 -4.0% -2.3% 30 Palm Springs, CA 14.74¢ 14.57¢ 13.37¢ 1,360 $181.78 -4.8% -8.2% 31 Fresno, CA 15.67¢ 15.81¢ 13.14¢ 1,418 $186.29 -8.4% -16.9% 32 Tucson, AZ 13.14¢ 13.91¢ 13.12¢ 1,230 $161.34 -0.1% -5.7% 33 Saint George, UT 18.00¢ 13.83¢ 13.01¢ 780 $101.44 -15.0% -5.9% 34 Ontario, CA 13.29¢ 14.21¢ 12.89¢ 1,086 $140.02 -1.5% -9.3% 35 Cedar City, UT 18.51¢ 10.92¢ 12.89¢ 969 $124.84 -16.6% 18.0% 36 Oakland, CA 11.97¢ 13.39¢ 12.89¢ 953 $122.90 3.8% -3.7% 37 Sacramento, CA 12.82¢ 13.33¢ 12.62¢ 1,130 $142.65 -0.8% -5.3% 38 San Jose, CA 12.94¢ 13.12¢ 12.57¢ 1,065 $133.88 -1.4% -4.2% 39 Orange County, CA 13.91¢ 13.78¢ 12.49¢ 1,127 $140.76 -5.2% -9.4% 40 Bull. City/Laughlin, AZ 11.38¢ 11.27¢ 12.28¢ 1,104 $135.53 3.9% 9.0% 41 Phoenix, AZ 12.39¢ 13.00¢ 12.10¢ 1,210 $146.35 -1.2% -6.9% 42 San Diego, CA 11.77¢ 12.15¢ 11.10¢ 1,350 $149.86 -2.9% -8.6% 43 Los Angeles, CA 11.89¢ 12.01¢ 10.90¢ 1,610 $175.48 -4.3% -9.2% 44 San Francisco, CA 12.38¢ 12.09¢ 10.76¢ 1,609 $173.18 -6.8% -11.0% 45 Las Vegas, NV 11.05¢ 11.58¢ 10.75¢ 1,260 $135.40 -1.4% -7.2% 46 Carlsbad, CA 11.81¢ 11.61¢ 10.11¢ 1,437 $145.29 -7.5% -12.9% 47 Modesto, CA 11.02¢ 11.19¢ 10.08¢ 1,432 $144.33 -4.4% -9.9% 48 Chico, CA 10.90¢ 10.46¢ 9.55¢ 1,372 $130.99 -6.4% -8.7% 49 Long Beach, CA 9.98¢ 10.16¢ 9.52¢ 1,169 $111.33 -2.3% -6.3% 50 Mesa Gatew ay, AZ 9.59¢ 8.65¢ 7.90¢ 1,096 $86.61 -9.2% -8.7%
Average Regional Yield 12.35¢ 12.63¢ 11.63¢ 1,299 $151.12 -3.0% -7.9% Avg. Ann. Change Rank 

### FIGURE 22: Top 60 Southwest Region Markets Ranked by Average Yield YE1Q10; Source: US DOT Table DB1AMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 59 Itinerary Average Airport YE 1Q 08 YE 1Q 09 YE 1Q 10 Mileage Yield 08-10 09-10
1 Inyokern, CA $359.42 $446.99 $438.08 1,723 25.42¢ 10.4% -2.0% 2 Oxnard/Ventura, CA $266.57 $301.91 $275.53 1,522 18.10¢ 1.7% -8.7% 3 Yuma, AZ $225.13 $244.44 $235.60 1,485 15.87¢ 2.3% -3.6% 4 Bakersfield, CA $215.14 $225.97 $217.08 1,444 15.03¢ 0.4% -3.9% 5 San Luis Obispo, CA $219.35 $239.58 $214.58 1,564 13.72¢ -1.1% -10.4% 6 Arcata/Eureka, CA $196.38 $200.26 $198.13 1,254 15.80¢ 0.4% -1.1% 7 Vernal, UT $145.44 $193.91 $197.31 691 28.57¢ 16.5% 1.8% 8 Redding, CA $198.94 $213.76 $195.25 1,163 16.79¢ -0.9% -8.7% 9 Santa Barbara, CA $214.71 $209.12 $191.76 1,385 13.85¢ -5.5% -8.3% 10 Moab, UT $147.25 $194.93 $188.86 868 21.75¢ 13.3% -3.1% 11 Fresno, CA $199.80 $207.42 $186.29 1,418 13.14¢ -3.4% -10.2% 12 Monterey, CA $218.99 $214.57 $186.09 1,363 13.65¢ -7.8% -13.3% 13 Palm Springs, CA $199.25 $199.61 $181.78 1,360 13.37¢ -4.5% -8.9% 14 Los Angeles, CA $186.30 $191.04 $175.48 1,610 10.90¢ -2.9% -8.1% 15 San Francisco, CA $210.30 $198.61 $173.18 1,609 10.76¢ -9.3% -12.8% 16 Crescent City, CA $152.10 $177.43 $170.04 1,199 14.18¢ 5.7% -4.2% 17 Santa Maria, CA $173.24 $185.63 $167.75 972 17.25¢ -1.6% -9.6% 18 Flagstaff, AZ $211.83 $190.82 $166.09 1,199 13.85¢ -11.5% -13.0% 19 Tucson, AZ $159.46 $170.63 $161.34 1,230 13.12¢ 0.6% -5.4% 20 Salt Lake City, UT $169.47 $161.63 $157.88 1,130 13.97¢ -3.5% -2.3% 21 Elko, NV $238.94 $155.08 $153.45 907 16.91¢ -19.9% -1.1% 22 Page, AZ $141.72 $151.65 $151.83 678 22.40¢ 3.5% 0.1% 23 Reno, NV $140.86 $151.46 $150.72 1,102 13.68¢ 3.4% -0.5% 24 San Diego, CA $157.18 $162.15 $149.86 1,350 11.10¢ -2.4% -7.6% 25 Phoenix, AZ $146.43 $155.57 $146.35 1,210 12.10¢ 0.0% -5.9% 26 Carlsbad, CA $132.70 $153.80 $145.29 1,437 10.11¢ 4.6% -5.5% 27 Modesto, CA $122.73 $156.91 $144.33 1,432 10.08¢ 8.4% -8.0% 28 Sacramento, CA $140.49 $147.32 $142.65 1,130 12.62¢ 0.8% -3.2% 29 Orange County, CA $158.15 $159.10 $140.76 1,127 12.49¢ -5.7% -11.5% 30 Ontario, CA $140.87 $148.86 $140.02 1,086 12.89¢ -0.3% -5.9% 31 Bull. City/Laughlin, AZ $133.17 $130.40 $135.53 1,104 12.28¢ 0.9% 3.9% 32 Las Vegas, NV $138.01 $145.09 $135.40 1,260 10.75¢ -1.0% -6.7% 33 San Jose, CA $139.91 $143.17 $133.88 1,065 12.57¢ -2.2% -6.5% 34 Imperial, CA $133.26 $138.97 $132.89 992 13.39¢ -0.1% -4.4% 35 Chico, CA $132.08 $136.53 $130.99 1,372 9.55¢ -0.4% -4.1% 36 Cedar City, UT $121.78 $98.83 $124.84 969 12.89¢ 1.2% 26.3% 37 Burbank, CA $122.89 $129.64 $123.93 808 15.33¢ 0.4% -4.4% 38 Oakland, CA $124.58 $128.57 $122.90 953 12.89¢ -0.7% -4.4% 39 Prescott, AZ $152.22 $122.54 $117.65 601 19.56¢ -12.1% -4.0% 40 Santa Rosa, CA $119.09 $120.54 $116.82 585 19.96¢ -1.0% -3.1% 41 Kingman, AZ $155.97 $179.10 $116.12 409 28.41¢ -13.7% -35.2% 42 Long Beach, CA $137.73 $126.68 $111.33 1,169 9.52¢ -10.1% -12.1% 43 Show Low , AZ $91.90 $105.26 $109.93 295 37.31¢ 9.4% 4.4% 44 Mammoth Lakes, CA $0.00 $116.45 $104.95 391 26.84¢ 100.0% -9.9% 45 Visalia, CA $145.76 $124.78 $102.43 263 38.97¢ -16.2% -17.9% 46 Saint George, UT $153.09 $102.69 $101.44 780 13.01¢ -18.6% -1.2% 47 Las Vegas North, NV $89.50 $89.50 $89.50 172 52.03¢ 0.0% 0.0% 48 Grand Canyon, AZ $81.23 $89.47 $89.44 172 52.05¢ 4.9% 0.0% 49 Mesa Gatew ay, AZ $106.11 $94.77 $86.61 1,096 7.90¢ -9.7% -8.6% 50 Stockton, CA $55.71 $51.68 $49.28 359 13.73¢ -5.9% -4.6%
Average Regional Fare $157.46 $162.29 $151.12 1,299 11.63¢ -2.0% -6.9% Avg. Ann. Change Rank 

### FIGURE 23: Top 60 Southwest Region Markets Ranked by Average Domestic Fare YE1Q10; Source: US DOT Table DB1AMcClellan-Palomar Airport, Carlsbad, California – Small Community Air Service Development Grant – August 2010 

## 60 CONCLUSIONS

The McClellan-Palomar Airport has seen continuous flight reductions over the last three years, resulting in fewer local available seats, and ulti mately, fewer passengers. Many markets can tell the same story. But the story in Carlsbad is punctuated by the fact that the flight reductions have drastically increased the region’s passenger “leakage” to other airports in southern
California. This is a more critical situation in so uthern California than in almost any other part of the country, due to the heavy congestion on virt ually all freeways in and out of Carlsbad, at virtually all times of day. The McClellan-Palomar Airport must do a better job serving its local 1.13 million population by attracting additional air service.

Flight and seat cuts have also been seen be tween the airport most used by Carlsbad area travelers – San Diego – and the Bay Area. The effect has been to make access to service between these two areas more difficult to obtain. Should non-stop service be launched between Carlsbad and San Jose the new flights wouldn’t even begin to make up for the capacity lost in the last two years. This gives the Airport extra
confidence new service will be successful – as it merely replaces a small portion of capacity lost in recent years.

The Airport has recently host ed Horizon Air officials, on field, for a tour and an in-person meeting in the summer of 2010 to explore options for new service. Horizon has indicated it does find interest in
the Carlsbad market. It would like to serve San Jose non-stop from Carlsbad, but it will not enter the market without marketing support, start-up cost offsets, and a revenue guarantee. The McClellan-Palomar Airport seeks this Small Community Air Service Development Grant to provide this start-up support, and to move Carlsbad up Horizon’s list of commu nities for new service. 

## “The Airport has recently hosted Horizon Air officials, on field, for a tour and an in-person meeting in

the summer of 2010 to explore options for new service.”