**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 1 

# Pangborn Memorial Airport

Wenatchee, Washington


# Submission of Application Under The 2012 

# Small Community Air Service Development Program

**Docket OST -**  **2012 -** **0069** DUNS # 832579945 Congressional District: WA
- 04**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 2 

### SUMMARY OF PROPOSAL 3 **Background 3**  **North Central Washington Economy 3**  **Capturing the Local Traveler Just as Critical as Inbound Visitors 4**  **A Precise Solution: Targeted Marketing 4**  **Contact Information 4**  

### I. MARKET & SERVICE AREA 5 **Pangborn Memorial Airport Air Service Influence Area 5**  **Current Air Service 6**  

### II. PASSENGER TRAFFIC HISTORY AT PANGBORN 7 **Long Term Tren d: Lower Capacity**  **7 SEA and GEG**  **– The Allure of Higher Levels of Air Service**  **7 Recapturing Inbound Traffic**  **9 Load Factors**  **– Room For Traffic Recapture**  **10 Pangborn Memorial Load Factor Performance**  **10 Pangborn Memorial: Higher Fares**  **11** 

### III. THE GRANT IMPLE MENTATION 12 **The Marketing Plan 12**  **Marketing & Communication Strategy 12**  **Eligibility 13**  **Continuing Community Support 13**  **Past Air Service Efforts 13** **Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 3 

## Summary of Proposal The Ports of Chelan and Douglas Counties, Washington, and the Pangborn Memorial Airport, herein respectfully submits an application for a grant under the 2012 Small Community Air Service Development Grant Program. 

### Background The Pangborn Memorial Airport is located in north central Washington, with Seattle approximately three hours drive time to the west and Spokane approximately three hours drive time to the east. Because of the proximity to these larger metropolitan areas with much greater levels of air service, significant passenger traffic leakage occurs to both Seattle and Spokane. Pangborn Memorial Airport currently has Alaska Airlines nonstop service with three daily to Seattle

–

Tacoma International (SEA), and SeaPort Airlines service to Yakima and Portland International (PDX). The SeaPort service is new in 2012, and is valuable for the business community and the inbound tourism economy as there is a strong community of interest between north central Washington and the Portland region. While it is clear that traffic leakage exists to the larger metropolitan airports in Washington state, there are steps that can be taken through a marketing/advertising campaign to ensure that Pangborn Memorial Airport maintains its current levels of air service into the future and that the north central Washington region’s economy stays strong with continued air service. 

### North Central Washington Economy The economy of north central Washington is based strongly on agriculture. However, tourism is a rapidly growing number two industry, with numerous outdoor activities to partake in as well as major arts and cultural f estivals. From f armers markets and wine tasting to museums, galleries, and studios, the Wenatchee region is a venerable cultural and outdoor paradise for those looking to escape the hustle and bustle of city life. As a tourism based economy with thousands of annual inbound visitors, air service is a critical component in the overall health of the regional economy served by Pangborn Memorial Airport

. Today, a very high percentage of visitors use SEA and GEG to access the region
. A goal of this grant is to identify key tou rism generators and apply marketing and advertising efforts to boost use of air service directly to Pangborn Memorial Airport.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 4 With higher levels of service at these larger airports, and a general unawareness of the capabilities of Pangborn Memorial Airport, tourists often fly into these alternative airports, rent cars, and drive the approximate three hours to the Wenatchee region. This is unnecessary with the excellent levels of air service between Pangborn and SEA and PDX, and a marketing/advertising cam paign will bring awareness to the public about the usefulness of the Pangborn Memorial Airport. 

### Capturing the Local Traveler Just as Critical as Inbound Visitors While the economy in the region is largely based on tourism, it is equally as important for Pangborn Memorial Airport to capture the local traveler, ones who may be tempted to utilize SEA or GEG, so that quality levels of air service persist into the future. With the new SeaPort Airlines service connecting north central Washington to Portland, and the established Alaska Airlines service to SEA, there is little reason for local residents not to use Pangborn for their travels, and a portion of this grant will aim at recapturing the segment of travelers currently utilizing alternative airports for their travels. 

### A Precise Solution: Targeted Marketing
In order to ensure that Pangborn Memorial Airport retains the current levels of air service well into the future, the airport is requesting a SCASD grant to implement a targeted marketing/advertising campaign to increase both inbound visitor traffic and to recapture the outbound portion of the local population that is using alternative airports in the region. 

### Contact Information Pangborn Memorial Airport will serve as the legal sponsor and be responsible for administering the grant. All correspondence regarding this proposal should be referred to: Mr. Ron Russ Interim Airport Director Pangborn Memorial Airport One Pangborn Drive East Wenatchee, Washington 98802 Tel: (509) 884
-2494 Email: ron.russ@pa ngbornairport.com**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 5 

## I. **Market & Service Area**  Pangborn Memorial Airport Air Service Influence Area Pangborn Memorial Airport is located in north central Washington, with the closest airports with high levels of air service being three hours away in Seattle and Spokane. However, this still draws local residents and inbound tourists alike to these larger metropolitan centers for their travels due to general unawareness of the capa bilities of Pangborn Memorial Airport.



## Pangborn Memorial Airport

Service Area

Prior analyses have found that the core population served by Pangborn Memorial Airport is approximately 214,000. This population base generates over 231,000 annual passengers. Based on year 2011 data, this indicates a leakage rate of over 60%. The activities that this grant will make possible will be a major factor in recapturing some of this lost traffic.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 6 

### Current Air Service Pangborn is currently served by Alaska Airlines, with service to its hub at Seattle. In 2012, the community welcomed SeaPort to the market. The 9

-seat turboprops provide access to Portland with a stop in Yakima. Both of these cities are important business destinations for north central Washington. The Alaska Airlines flights are operated with the Bombardier Q400 aircraft, while the SeaPort flights are operated with 9 seat Cessna Caravan and Pilatus PC12 aircraft. Again, the addition of another airline such as SeaPort is excellent for the community, but in order to ensure not only the success of SeaPort, but also the continued success of Alaska a marketing and advertising campaign can be implemented. There is very high leakage to other airports, predominantly Seattle. In order to aid in the success of the current Pangborn Memorial air service, it is important to understand why travelers use alternative airports for their travels to the north central Washington region. This grant is important to these efforts.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 7 

## II. Passenger Traffic History a**t Pangborn**
A review of the passenger traffic at Pangborn reveals some interesting trends. The first trend is that approximately 61% of the passenger traffic originates at Pangborn, meaning that only 39% of the passenger traffic is inbound visitors. This is unusual for a market of this size, which typically has more of a 50/50 distribution of inbound vs. outbound air travelers. The table below shows the top 25 O&D markets for Pangborn Memorial

. 

### Long Term Trend: Lower Capacity The Alaska Airlines service at Pangborn Memorial has been performed fairly well over the last several years, but a review of the scheduled departures and seats over the last four years reveals a disturbing trend

.

**Ca rri** **er De** **st 2009**  **2012 Ch** **an ge**  **% Cha**  **ng 2009**  **2012 Cha**  **nge %**  **Ch an** **g Al** **ask a**  SEA 1,187 983 (204) -1 7.2% 87,838 74,708 -1 3,130 -14.9% **Se apor** **t** YKM 650 650 6,410 6,410 **1,187 1,633**  **446 37.6%**  **87,838 81,118**  **-6 ,720**  **-7 .7%**  **To tal**  **De part**  **ur es**  **Se at** **s**

The Alaska scheduled departures and seats in 2012 are 17.2% and 14.9% lower than the 2009 levels, respectively. The addition of Seaport has offset these numbers to some degree, but it is the Alaska flights that provide connectivity to bring consumers to the region. These data are a very compelling indication of the importance of this grant to the north central Washington economy. This is even more im portant in light of the fact that fuel costs in the past year are up more than 50%, while load factors and traffic have remained stagnant. 

### SEA and GEG

– The Allure of Higher Levels of Air Service
A simple understanding of the number of nonstop destinations offered at SEA and GEG illustrates why air travelers would be tempted to use these airports as opposed to Pangborn. However, Pangborn allows for easy connections over SEA, and it is reasonable to expect that a marketing/advertising campaign would recapture local travelers while also using targeted ma rketing in key tourism markets to increase inbound visitors, and by extension fully utilize the current air service offered by the incumbent airlines.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 8 The combined schedules of SEA and GEG reveals that there are approximately 440 daily departures, making frequency a major contributor when air travelers are choosing which airport to use when visiting or traveling from the north central Washington region. 1 A review of Pangborn’s top current O&D markets gives extensive direction to how the grant will be used to recapture traffic. 

## Pangborn Memorial Top 25 O&D Markets CY 2011

**R a nk**  **M a rk**  **et P s**  **gr P D**  **EW %**  **Or igina**  **ti ng**  **@ EA**  **T Gr** **o s s**  **OW**

**F a re**  **N e t**  **OW**

**F a re**  **% o f** 

**P a x**  **N e t**  **R e ven**  **ue** 1 SEA 22, 252 30. 5 54. 0% $84. 57 $69. 00 24. 5% $1, 448, 196 2 PD

X 4, 532 6. 2 46. 8% $160. 65 $130. 10 5. 0% $556, 170 3 PHX 4, 024 5. 5 71. 0% $227. 57 $192. 15 4. 4% $640, 364 4 LAS 3, 960 5. 4 91. 3% $213. 03 $178. 64 4. 4% $616, 827 5 LAX 3, 262 4. 5 56. 8% $213. 96 $179. 46 3. 6% $526, 181 6 SAN 2, 946 4. 0 70. 1% $203. 17 $169. 54 3. 2% $445, 727 7 ANC 2, 849 3. 9 55. 7% $376. 32 $330. 63 3. 1% $724, 544 8 SMF 2, 721 3. 7 48. 4% $231. 82 $196. 16 3. 0% $508, 037 9 SJ C 2, 376 3. 3 47. 1% $216. 10 $181. 64 2. 6% $396, 617 10 DEN 2, 201 3. 0 53. 1% $208. 39 $174. 45 2. 4% $360, 987 11 SFO 2, 115 2. 9 57. 5% $198. 22 $164. 96 2. 3% $330, 208 12 SNA 2, 078 2. 8 73. 7% $200. 68 $167. 26 2. 3% $299, 949 13 OAK 1, 548 2. 1 45. 9% $207. 73 $173. 53 1. 7% $241, 964 14 BOI 1, 424 2. 0 53. 6% $167. 32 $136. 27 1. 6% $181, 540 15 OGG 1, 277 1. 7 92. 7% $292. 04 $251. 69 1. 4% $258, 468 16 RNO 1, 276 1. 7 80. 8% $196. 31 $163. 19 1. 4% $178, 275 17 ORD 1, 256 1. 7 73. 4% $310. 73 $269. 21 1. 4% $316, 177 18 ATL 1, 207 1. 7 64. 0% $341. 46 $297. 65 1. 3% $330, 046 19 ONT 1, 200 1. 6 48. 3% $208. 50 $174. 34 1. 3% $196, 812 20 MSP 1, 181 1. 6 59. 9% $307. 43 $266. 49 1. 3% $241, 516 21 BUR 1, 105 1. 5 51. 4% $195. 14 $162. 11 1. 2% $157, 845 22 PSP 1, 066 1. 5 80. 7% $206. 76 $172. 65 1. 2% $135, 652 23 FAT 1, 018 1. 4 55. 7% $219. 98 $184. 73 1. 1% $172, 930 24 MCO 978 1. 3 85. 2% $343. 72 $299. 49 1. 1% $233, 490 25 DCA 975 1. 3 81. 2% $359. 87 $314. 72 1. 1% $243, 071 **Tot al**  **70, 829**  **97. 0**  **60. 6%**  **$181. 53**  **$152. 56**  **77. 9%**  **$9, 741,** **592** While it is of course unrealistic for Pangborn to compete on a frequency basis with these larger airports, there is excellent connectivity over SEA when flying to/from Pangborn and a marketing/advertising campaign will help clarify the advantages of using the local airport. From this data, we can ascertain some key marketing opportunities:

1 Based on schedules filed the week of May 28th, 2012**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 9  **Phoenix** is a major destination from Pangborn. Over 70% of the passenger traffic originates at EAT. Therefore, given the high leakage that the airport experiences, this sector of the traveling public can be targeted with the grant funds.

 Note that destinations in **central and**  **southern California**  are important to the region. These, then are key destinations that can be targeted with the marketing funds.

 **SNA** shows a very high local trip origination rate. This would indicate either some community of business interest between north central Washington and that part of the Los Angeles Basin, or strong tourist traffic to leisure points (Disneyland, etc.) located near SNA. This also represents potential to recapture leakage with the targeted marketing this grant will support. These are only a few examples of how the Airport and the community will make use of important travel data to assure that the grant dollars are effectively spent. 

### Recapturing Inbound Traffic
Of the 70,829 top 25 market O&D passengers at Pangborn in 2011, the outbound visitors accounted for 42,922. If the market were more balanced, approximately 35,415 passengers would be inbound as opposed to the 27,907 that is currently achieved. The SCASD grant award would be utilized to increase the inbound passengers in top markets on the west coast. The second trend indicates that of the top 25 O&D markets, only four of them can be considered midwestern or eastern markets (ORD, MSP, MCO, DCA). By far the majority of the passengers are west coast or western United States passengers. While it is known that east coast residents visit the north central Washington region, it is clear that they are using alternative airports and that there is a deficiency in east coast ridership at EAT. These passengers are unaware of the ease of travel that Pangborn affords the air traveler.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 10 

### Load Factors

– Room For Traffic Recapture While fuel costs at the airline industry have gone up substantially in the past year, load factors at Pangborn Memorial have remained level. This points to another imperative that this grant will address: increased ridership to assure Alaska service remains strong
. Every net new passenger that this grant will help attract represents entirely new revenue to the Alaska Airlines system, with low or no additional expense to the airline

. The prog ram will also be valuable in assuring that the SeaPort service to Portland is also successful. The community is confident that in identifying key passenger sectors for recapture, very rapid results will be seen.



### Pangborn Memorial Load Factor Performance

Three Year Trend: 2009
- 2011

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

Hor izon

- SEA
This clearly is a situation that can be addressed by the grant requested in this application. The recapture of even a low percentage of the current leakage will materially increase the incumbent airline’s load factors.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 11 

### Pangborn Memorial : Higher Fares One of the realities that persists in today’s aviation industry is the general pattern of higher fares at smaller, regional airports than at larger metropolitan airports. This pattern exists at Pangborn. While it is unrea listic to expect fare parity with SEA and GEG at Pangborn, high fares are a reason why travelers choose to use these larger airports over Pangborn. However, when factoring in time savings of being able to fly directly into north central Washington vs. flying into the other regional airports and renting a car (and the associated cost of fuel), it becomes clear that the higher fares that persist at Pangborn can be offset by the elimination of rental car fuel expense and the time it takes to drive to and from north central Washington.



## Pangborn Memorial One Way Average **Gross Fares vs. SEA and GEG**

CY 2011

Ma rk et Psgr Gross Fare Gross Rev. Psgr Gross Fare Gross Rev
. Psgr. Gross Fare Gross Rev. PD X 4, 532 $160. 65 $686, 804 208, 839 $120. 42 $24, 622, 455 188, 108 $107. 12 $19, 602, 708 PHX 4, 024 $227. 57 $758, 409 774, 386 $180. 31 $126, 017, 231 134, 186 $182. 26 $22, 125, 644 LAS 3, 960 $213. 03 $735, 543 861, 753 $152. 23 $124, 283, 493 128, 577 $175. 41 $20, 810, 293 LAX 3, 262 $213. 96 $627, 332 1, 001, 185 $169. 11 $161, 087, 681 91, 191 $177. 65 $15, 008, 688 SA N 2, 946 $203. 17 $534, 147 634, 019 $171. 17 $102, 052, 591 76, 963 $199. 57 $13, 849, 654 ANC 2, 849 $376. 32 $824, 671 290, 854 $335. 86 $81, 084, 752 35, 604 $351. 91 $9, 493, 998 SMF 2, 721 $231. 82 $600, 391 388, 037 $163. 94 $59, 070, 724 56, 607 $192. 93 $10, 016, 697 SJ C 2, 376 $216. 10 $471, 852 487, 705 $151. 84 $70, 904, 996 27, 125 $194. 86 $4, 847, 925 DEN 2, 201 $208. 39 $431, 203 675, 056 $168. 02 $106, 980, 890 133, 474 $150. 61 $19, 006, 356 SFO 2, 115 $198. 22 $396, 786 944, 189 $145. 52 $131, 776, 634 33, 189 $244. 32 $7, 477, 758 **Total 30,** **987 $195.80**  **$6, 067,** **139.02 6,266,024**  **$157. 66**  **$987,881,445.37 905,** **026 $157.**  **17 $142,** **239,722.82 EA** **T SE**  **A GE** **G Department of Transportation Docket OST** **- 2012** **- 0069** 

Application of Pangborn Memorial Airport 12 

## III. **The Grant Implementation** The Community and the Airport are requesting a grant in the amount of $200,000 to facilitate the implementation of a comprehensive marketing and advertising plan which will increase ridership for both inbound and outbound air travelers at Pangborn Memorial Airport. The community is matching the grant dollars with $40,000, for a total in hard dollars of $240,000. 

### The Marketing Plan Currently, 61 % of all traffic in the market is originated at Pangborn

. Therefore, the marketing efforts will be concentrated on both increasing the awareness of top inbound markets, such as Phoenix, Santa Ana, Sacramento, Portland and Seattle, of the outstanding tourism opportunities in north central Washington, as well as increasing the awareness of the levels of air service offered at Pangborn among the local residents. The recapture of local passengers using alternative regional airports will be critical to the future success of Pangborn. 

### Marketing & Communication Strategy The marketing plan will include aggressive advertising and promotional tactics, with the primary audiences being the general public and local businesses:  General Public: Advertising campaign around the convenience and ease of travel that the Pangborn Memorial Airport affords the local community. This will include the merits of an uncongested terminal, minimal drive time when compared to other regional airports, excellent con nectivity through the hubs served from EAT, and the short check
-in and security lines.

 Business Community: The Business community will also be targeted via the marketing and advertising campaign. Specific data will be utilized to demonstrate how the air service at EAT has had a direct and significant impact on the local economy. Examples of the types of marketing a nd advertising tactics use include billboards, print advertisements in local media, radio advertisements, and social media marketing to espouse the virtues of Pangborn Memorial Airport.**Department of Transportation Docket OST -**  **2012 -** **0069**

Application of Pangborn Memorial Airport 13 

### Funding Distribution The grant requested is for $200,000, with a match of $40,000 from the local community for a total of $240,000. The cash distribution will be as follows:

**Ca te** **gor y**  **SC AS** **D Gr** **an t**  **% of** 

**To ta**  **l Ma** **tc hi** **ng**

**Fu nds**  **% of** 

**To ta**  **l TOTA**  **L Ma**  **rk eti** **ng/ Ad** **verti si** **ng Pr** **ogr am**  $200,000 83.3% $40,000 16.7% $240,000 **TOTA L**  **$200,000 83.3%**  **$40,000 16.7%**  **$240,000** 

### Eligibility Pangborn Memorial Airport is in complete compliance with the eligibility requirements as outlined in DOT Docket 2012
-0069. 

### Continuing Community Support The community believes that the success of the incumbent airlines and the increased ridership which would accompany the use of the SCASD grant funds will be critical to its future success as a commercial airport. The funding from this grant will establish a marketing approach that will be used after the end of the grant period. The Airport and the community fully understand the dynamics of the market, and will be able to focus future efforts on consumer sectors and geographic points that can expand both business and tourism travel at Pangborn Municipal. 

### Past Air Service Efforts The community represents a relatively small population base. Therefore, as a practical matter, only two gateways are within logical reach of Pangborn

. These are the Alaska/Horizon hub at SEA and the large metropolitan center of Portland, OR (PDX)

. Therefore the community has been diligent of the need to stay in communication with their two incumbent carriers in order to aid and assist in any manner feasible.June 6, 2012

Secretary Ray LaHood United States Department of Transportation 1200 New Jersey Avenue SE Washington DC 20590

RE : Support of Pangborn Memorial Airport Application for Funding Under the Department of Transportation Small Community Air Service Development Program
Dear Mr. Secretary;
I am writing to express the support of the Wenatchee Valley Chamber of Commerce for the Pangborn Memorial Airport's 2012 Small Community Air Service Development grant submission

. This Airport serves as a vital link to the national air transportation system for all of North Central Washington, encompassing the east slopes of the Cascade Mountains from Canada to Interstate 90. The airport is an essential public facility that facilitates economic growth within the community and represents a significant asset to the local tourism industry.
The Pangborn Memorial Airport is currently experiencing modest passenger growth after declining passenger enplanements in 2010. However, a significant number of local residents and visitors to North Central Washington are not taking advantage of the convenient transportation services offered by Alaska Airlines and SeaPort Airlines

. The Small Community Air Service Development Program offers the Airport an opportunity to more effectively promote the services offered by its airline partners. The requested grant funding would help the community to preserve the value ?fan important local asset by ensuring the long term sustainability of local air service

. Sincerely,

# 9~**&** Jerrilea Crawford

# ~ Interim Executive Director
2 S. M i ss i on Street, P

. O

. Box 850 , W e natchee, WA 98 807 • 509-662-2 11 6/509
-663
-2022 Fax • info @we natch ee
. o rg/www

.wenatchee

.o rg

The mission of the Wenatchee Va ll ey Chamber of Commerce is to strengthen the economic climate of t he Wenatchee Valley.**PO Box 834 • Cashmere, WA • 98815 • 509.782.7404 50 9.782.1265 Fax • info@cashmerechamber.com**  O FFICERS LAURIE SHORETT, PRESIDENT CASCADE VALLEY I NN ALEX CRUZ, VICE P RESIDENT CASHMERE VALLEY BANK KALE HILL, S ECRETARY H ILL I NSURANCE KEITH WEBB, T REASURER WEBB ACCOUNTANCY D IRECTORS KEN BROWNSTEIN STUDEBAKER’S RESTAURANT DAN DEAN OVERALL KITCHEN & BATH DESIGN VAL GILMOUR RAVENOUS CATERING & THE CONSERVATORY BUMFIELD’S PARTY RENTAL & SUPPLY JAN MEREDITH-EVANS CASHMERE COTTAGE YARN GAIL MORRISON C RUNCH PAK LISA WAREHAM WATERVILLE WINERY/ MISSION DISTRICT DAVID WEBER MARTIN ’S MARKET P LACE MICHELLE WHITFORD APPLE ANNIE’S ANTIQUE GALLERY June 4, 2012 Secretary Ron LaHood United States Department of Transportation 1200 New Jersey Ave. S.E. Washington, D.C., 20590 Dear Mr. Secretary, I am writing to express the support of the CashmereChamber of Commerce for the Pangborn Memorial Airport's 2012 S mall Community Air Service Development grant submission. This airport serves as a vital link to the nationalair transportation system for all of North Central Washington, encompassing the east slopes of the Cascade Mountains from Canada to Interstate 90. It is an essential public facility that facilitates economic growth within th e community and represents a significant asset to the local tourismindustry, including that in Cashmere. Pangborn Memorial Airport is experiencing modest passenger growth after declining passenger enplanements in 2010. However, a significant number of local residents and visitors to North Central Washington still are not taking advantage of the convenient transportation services offered by Alaska Airlines and SeaPort Airlines. The Small Community Air Service Development Programoffers the Pangborn an opportunity to more effectively promotethe services offered by its airline partners. The requested grant funding would help the region preserve the value of an important local asset by e nsuring the long-term sustainability of local air service.
Sincerely,

Laurie Shorett President, Cashmere Chamber of Commerce