# August 27, 2010 An Integrated Program of New Service Development via: Advertising/Marketing and Revenue Guarantees In Support of New Horizon Air Service to/from San Jose

Sponsor: Jackson County/Rogue Valley International – Medford Airport Medford, Oregon Bern Case, Airport Director Congressional Code: OR-002
Dun & Bradstreet Number: 155788276 

## ROGUE VALLEY INTERNATIONAL – MEDFORD AIRPORT MEDFORD, OREGON 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 TransportationRogue Valley International – Medford Airport – 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 15 Expected Results 17 Letters of Support 22
Current Air Service 26
Air Service Deficiencies 30 Extenuating Factors Affecting Air Service 32 Availability of Alternate Airports 34
Use of Local/Federal Funds 35 Public/Private Partnerships 36 Implementation Timeline 38 Air Service Advisory Groups 39 Local Air Service Development Efforts 40 In-kind Services from the Community 41
Performance Measures 42 Legal Sponsor 43
Financial Controls 44
Return on Investment 45 DOT Exit Strategy 46
Alternate Plan 47 Airport Information 48 Community Profile 49 Comparison to Other Commun ities in Region 57
Conclusions 59Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 3 INTRODUCTORY LETTER OF SUPPORTRogue Valley International – Medford Airport – 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. Rogue Valley International – Medford Airport
2. Jackson County
3. City of Medford

Private:

1. Horizon Air
2. Medford/Jackson County Chamber of Commerce
3. Southern Oregon Regional Economic Development, Inc.
4. Medford Visitors Convention BureauRogue Valley International – Medford Airport – 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:



### 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: One year without 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: $ 550,000Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 6 F. Enplanements at Airport

2000: 228,860
2001: 209,160
2002: 204,700
2003: 218,470
2004: 237,250
2005: 271,330
2006: 273,820
2007: 284,840
2008: 262,130
2009: 253,330



### 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?

NoRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 7 INTRODUCTION

The Rogue Valley International – Medford Airport saw tremendous passenger growth from 2004 to 2008, with total passengers up 60% in that time period. At the same time the Medford community grew at a rapid pace – adding almost 25% more residents. The Airport has come through the challenge of providing service to a much larger community with a new terminal and a strong service pattern. But, since 2008, seats on network carriers – the primary carriers responsible for the commerce that is so important to the economy of an isolated community such as Medford – are down by 15%. This trend is disturbing, as it indicates Medford is not as well connected to the national air transportation system
as it once was.

With Horizon working to “right size” its service in Medford to the current hubs it serves – cutting seats to each of its destinations including Portland, Los Angeles, and Seattle – Medford has initiated
discussions with the airline to increase service th rough adding a new focus city route. The route
of mutual interest is between Medford and San Jose. The Rogue Valley has close ties with the Bay Area, and has worked for several years to land service to an additional access point outside San Francisco International (SFO). Medford travelers frequently experience delays on service to and through SFO due to fog and the runway layout of that airport. An alternate access point – at San Jose – would be widely supported.

Moreover, the number of average daily departures between Medford and San Francisco has fallen from 9.1 in August of 2008 to 5.7 in April of 2010 – a loss of 3.4 daily departures from
Medford to San Francisco – or a decline of 37%. The market does not have the capacity it once had – with seats down 20% in the same time pe riod. The Bay Area ranks as Medford’s second largest combined market, but it does not have sufficient seats to support the demand between
the cities.

The Rogue Valley International – Medford Airport has recruited seven new routes in the last 15 years without ever asking the DOT for a Small Community Air Service Development Grant. As you will see in this application, the environmen t has changed, and the Airport must now have support to make additional service a reality. 

## “The Airport has recruited seven new routes... without ever asking the DOT

for a... Grant. The Environment has changed, and the Airport must now have support...”Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 8 PRIMARY OBJECTIVES OF PROPOSAL

Objectives for Program:

 Increase connectivity in southern Oregon

 Create better opportunitie s for business connections

 Recruit additional network service to the market

 Increase the use of local air service

 Decrease average fares

Means to Achieve Objectives:

 Continue discussion with Horizon Air, and other targeted carriers, about additional market opportunities

 Develop risk mitigation package

 Develop local marketing package to offer to interested carriers

Course of Action to Support Means:

 Make available revenue guarantee in first 24-months of new service

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

 Work with local business partners to make sure new service is successfulRogue Valley International – Medford Airport – Small Co mmunity Air Service Development Grant – August 2010 

## 9 EXECUTIVE SUMMARY

The Rogue Valley International – Medford Airport is an air service hub for a large region of southern Oregon and northern Cali fornia. The Airport is one of the few in the country that has no other air service options within a two hour drive. The region is also isolated by it topography. Medford is surrounded by mountains – located in the Rogue Valley which is sandwiched by the Siskiyou Mountains to the south and west and the Cascade Mountains to the north and east.

The Rogue Valley International – Medford Airport catchment area includes the area defined by the US Census Bureau as the Medford Metropolit an Statistical Area (MSA), along with other regions where Medford is the nearest airport with
commercial air service – including all areas of southern Oregon and
northern California within a
two hour drive of the airport. The one-hour
Medford catchment area is home to 276,586 people
as of the latest US Censusestimates, while the twohour catchment area is home to 479,030 people.
There are no true competing airports within
three hours of Medford. The Rogue Valley International Airport catchment area is the second largest in the State of Oregon, but Airport is still classified as a
non-hub.

The Rogue Valley International – Medford Airport has long had service from the west coast two largest airlines serving regional markets – United and Alaska/Horizon . Each Airline provides about
40% of the available seats in the Medford market. But, in recent years, Horizon has been cutting 

### FIGURE 1: The Rogue Valley International Airport’s immediate (60 minute) and extended (120 minute) catchment areasRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 10 back its service profile in the Rogue Valley as it retired its fleet of smaller, 48-seat Dash 8-200 turboprops. Horizon’s frequencies in the Medford ma rket have fallen signific antly in the last three years, and the number of seats it offers has fallen, as well.

At the same time, United has slightly increased its presence, but not enough to make up for the seat losses on Horizon. The only airline in the Medford market that has been expanding aggressively is Allegiant. Allegiant has been an excellent partner with the Airport, spurring much new travel. But it must be noted that Allegiant does not provide the network connectivity that is so important to most of the region’s travelers. Now the Airport must work to improve that network connectivity.

From September 2009 to September 2010, Horizon will have cut its available seats in the Medford market by 25% - a loss of 146 departing seats per day, as Medford-Eugene was cut from the network and as service to Los Angeles and Portland will be reduced (see Figure 2). At the same time, Delta service to Salt Lake City will be flat, with two departures per day. United will increase its service slightly year-over-year, as will Allegiant. Still, the net result is a loss of 6.4% of seats 

### FIGURE 2: Scheduled Service at the Rogue Valley International

– Medford Airport September 2009 vs. September 2010; Source: Airline Schedule Data

Non-Stop Departures Seats Departures Seats Capacity Carrier Destination Per Day Per Day Per Day Per Day Change
Horizon/Alaska LAX 2 148 1 74 -50.0% EUG 1 74 0 0 -100.0% PDX 3 222 2.9 212 -4.5% SEA 1.8 136 2 148 8.8%
Horizon/Alaska Total 7.8 580 5.9 434 -25.2%
Delta SLC 2 100 2 100 0.0% Delta Total 2 100 2 100 0.0%
United DEN 1 71 1.6 102 43.7% PDX 2.9 88 2.9 88 0.0% SFO 4.9 211 5.8 246 16.6%
United Total 8.8 370 10.3 436 17.8% Allegiant LAS 0.25 40 0.25 40 0.0% LAX 0.25 40 0.34 50 0.0% IWA 0.25 40 0.25 40 0.0% Allegiant Total 0.75 120 0.84 130 8.3%

Medford Total 19.35 1170 19.04 1100 -6.4% Sep-09 Sep-10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 11 departing Medford from September 2009 to September 2010, or 70 departing seats per day. These cuts happen as most markets in the west are seeing flight and seat increases.

As of September 2010, Medford will have non-stop service to eight destinations (see Figure 3). There is competition on just two routes from
Medford – the service to Portland which is operated by both United Express/SkyWest and Horizon, and the service to Los Angeles (LAX) which is operated by both Horizon and Allegiant.

When analyzing Medford’s overall passenger traffic over the last several years it is important to note the impact Allegiant Air has had on
the market. While overall fares have gone down since Allegiant arrived, average fares on network carrier have not declined at the same rate. Essentially, the only true “fare relief” the Medford market has seen has been to specific Allegiant non-stop markets – Las Vegas, Phoenix/Mesa, and Los Angeles.

Between the year ended first quarter 2004 and the year ended first quarter 2008, Medford saw strong passenger growth on its network carriers. During that time period, passengers increased by 60% or 243.4 passengers per day each way (see Figure 4 on next page). The real challenge has appeared in the two years following 2008, as network carrier passengers at Medford are down 12% or almost 55,000 total passengers.

This network carrier passenger decline has been somewhat mitigated, from the Airport’s perspective, by the increase in the number of passengers traveling on Allegiant. Between the year ended first quarter 2008 and the year ended first quarter 2010, Allegiant has increased its passengers from just 24,830 per year to 81,050 per year – a growth rate of 226% (see Figure 4 on next page). But it appears some of this growth is driven merely by low fares, and not by the convenience or connectivity provided by the service. 

### FIGURE 3: Medford’s Scheduled Service September 2010; Source: Airline Schedule DataRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 12 Overall, the year ended first quarter 2010 saw an average of 650 passengers per day each way in and out of the Rogue Valley In ternational – Medford Airport, which was up very slightly over the previous high of 648 passengers per day each way in the year ended first quarter 2008 (see Figure 4). Still, network carri er passengers – the primary passengers responsible for the commerce that is so important to the economy of an isolated community such as Medford – were down by 12%. This trend is disturbing, as it indicates Medford is not as well connected to the national air transportation system as it once was. The Airport realizes it must do something about this reduced connectivity.

As network carrier passengers have been in de cline, network carrier airfares have generally increased. It is important in the Medford market to analyze airfares by carrier type – and not just average out the airfares over all carriers. Allegi ant’s fare structure is much different than those of the network carriers, and it brings down the overall Medford average. Allegiant does not, however, offer Medford travelers the wide range of destinations offered by the network carriers. This wide array of service re quires a higher average fare. 374,040 346,600 336,900 295,610 303,140 372,100 440,860 448,450 396,780 393,760 24,830

38,580 81,050

512.4

474.8 461.5

404.9 415.3 509.7 603.9 648.3

596.4 650.4

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

YE1Q01 YE1Q02 YE1Q03 YE1Q04 YE1Q05 YE1Q06 YE1Q07 YE1Q08 YE1Q09 YE1Q10 PDEW Alle g iant Network 

### FIGURE 4: Network and Allegiant Passengers at the Rogue Valley International

– Medford Airport YE1Q01

– YE1Q10; Source: US DOT Table DB1ARogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 13 Since its low point in the year ended first quarter 2003, Medford network carrier fares, seen in red in Figure 5, have increased by $12 each way, or $24 roundtrip – an increase of 8%. During the same period, the overall average fare in the market fell by $6 each way, or $12 roundtrip – a drop of 4% (see in yellow in Figure 5). The fare decrease was caused by the entrance of Allegiant’s low fare model, and low cost point to service into Medford. Allegiant’s average fare was just $55 each way as of the year ended first quarter 2010 (see in blue in Figure 5), which brought the overall Medford average fare to $18 below the network average fare.

The more important number to look at is the network carrier average fare, which is seen in red in Figure 5. These network carriers provide all the Medford market’s national connectivity, and as such it is clear that the average fare for access to the national air transportation system is well above the overall market average – and increasing.

With Horizon working to “right size” its service in Medford to the current hubs it serves – cutting seats to each of its destinations including Po rtland, Los Angeles, and Seattle – Medford has
initiated discussions with the airline to increase service through adding a new focus city route. 

### $155 $152 $148 $155 $155 $165 $170 $167 $175 $160

$65 $55 $55 

## $155 $152 $148 $155 $155 $165 $170

$162 $165 $142

$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200

YE1Q01 YE1Q02 YE1Q03 YE1Q04 YE1Q05 YE1Q06 YE1Q07 YE1Q08 YE1Q09 YE1Q10 Network Allegiant Average Fare 

### FIGURE 5: Average Fares by Airline Type at the Rogue Valley International

– Medford Airport YE1Q01

– YE1Q10; Source: US DOT Table DB1ARogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 14 The route of mutual interest is between Medfor d and San Jose. The Rogue Valley has close ties with the Bay Area, and has worked for several ye ars to land service to an additional access point outside San Francisco International (SFO). Medford travelers frequently experience delays on service to and through SFO due to fog and the runway layout of that airport. An alternate access point – at San Jose – would be widely supported.

The Airport must offer Horizon some kind of risk mitigation to ensure the route’s profitability in the start-up phase. While the Airport has mined very specific data, showing the route will be successful, Horizon will require some insurance to ensure it doesn’t lose money. It should be noted, 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 Medford – San Jose market between now and the beginning of 2012. 

## “Horizon is a partner in this project,

submitting a letter of support to the Airport, and to the Department of Transportation.”Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 15 DETAILED EXPLANATION OF PROPOSAL

The Rogue Valley International – Medford Airport pr oposes to use a combination of locally raised funding, including fee waivers and marketing support, in conjunction with federal Small Community Air Service Development Grant funding in support of the addition of ne w service on Horizon Air to San Jose. In the Airport’s discussions with Horizon Air the Airline indicated an interest in flying its Bombardier Q400 aircraft on a routing from Medford to San Jose, adding SJCto its current Medford service profile that includes nonstops to Los Angeles, Seattle, and Portland (see Figure 6).

The Rogue Valley International – Medford Airport seeks a Small Community Air Service Development Grant, in the amount of $500,000, to help mitigate Horizon’s initial monetary risk in serving San Jose. Additionally, the Airport has committed to fee waivers for a period of one year from the start of the new non-stop service and additional marketing cash and in-kind to advertise the new service throughout northern California and southern Oregon.

The Airport proposes one daily flight on the route in each direction. The route between Medford and San Jose would cover 349 miles in a flight time of 52 minutes, on average, assuming an average groundspeed of 350 knots on a BombardierDash 8 Q400 aircraft seating 74 in an alleconomy layout.

Origin Destination Departs Arrives Block Time Equipment
MFR SJC 6:00am 7:15am 1:15 DH4 SJC MFR 8:00pm 9:15pm 1:15 DH4 

### FIGURE 6: Proposed Route: Medford

– San Jose

FIGURE 7: Proposed Flight Schedule: Medford

– San JoseRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 16 The proposed schedule aims to connect Medford to San Jose’s largest connecting banks, in order to ensure optimum connection options for travelers heading beyond San Jose (see Figure 7 on previous page). The schedule is also desi gned with the Medford-based business traveler in mind, with an early morning Medford departure an d a late evening return, allowing for a full day of business in the Bay Area. The flight times do not take into account upper level winds or weather. For the purposes of these schedules it is assumed the aircraft would overnight at Medford, where Horizon can take advantage of much lower overnight parking rates.

The Rogue Valley International – Medford Airport proposes that a relatively small portion of the cost of starting the new service be supporte d up-front with federal funds from the Small Community Air Service Development Program. None of the Grant award going to immediate start-up costs. The federal share of the project will be $500,000, all of which will be used for the airline revenue guarantee.

The Rogue Valley International – Medford Airport projects that the bulk of the grant money be available to provide insurance in case Horizon Air incurs a loss during the first year of operations. With demand for additional Bay Area serv ice in the Medford market, and demand for connectivity over the Alaska/Horizon focus cities, the Airport projects the new flights will be profitable within one year.

If, for some unforeseen reason, service is not commenced in a timely manner by Horizon, the Rogue Valley International – Medford Airport pr oposes to use federal grant money awarded under the Small Community Air Se rvice Development Program to he lp another carrier launch a currently unserved route. Among the options that would be considered are US Airways service to Phoenix, Horizon Air service to Las Vegas, American service to Dallas/Ft. Worth, and United service to Chicago O’Hare.

Should these options, for an unforeseen reason, not be available for new service at the Rogue Valley International – Medford Airport, the Airpor t will continue its discussions with all other carriers than can provide additional seats to a hub not currently served. Since the community has never before received a Small Community Air Service Development Grant, it will have no
limitations on which new hub the DOT could fund. 

## “The schedule is... designed with
the Medford-based business traveler in mind, with an early morning Medford departure and a late evening return.”Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 17 EXPECTED RESULTS

Route Specific Data: Medford – San Jose

Medford area travelers have long support service to and through the San Francisco Bay Area. The challenge is using Bay Area service in the last several years has been a reduction in the number of flights and available seats between Medford and San Francisco International (SFO) – not to mention frequent delays due to poor weather at SFO.

San Jose’s Mineta International Airport does not have the weather challenges seen at SFO, and it now offers strong connectivity as Horizon and Alaska have started to build a small focus city there. San Jose has gone from being a true se condary airport in the Bay Area, to a small hub,
which could immediately access
about a third of
available Medford
area passengers.

Connections through San Jose would give
Medford travelers onestop access to a
number of markets in
which there is little current competition. Moreover, the Bay Area currently ranks as
Medford’s second largest origin and destination passenger market, averaging almost 16,000 annual passengers, or 21.7 passengers per day each way as of the year ended first quarter 2010. Horizon service from Medford to San Jose would provide connections to 11 markets be yond the SJC focus city operation, from Los Angeles – which recently saw Horizon cut service in half, to just one non-stop per day – to Maui and Minneapolis (see Figure 8). 

### FIGURE 8: Connections Available Beyond San Jose Source: Sixel Consulting Group Hub Builder, YE1Q10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 18 The Medford market currently prod uces 223 unstimulated origin and destination passengers per day each way to destinations that naturally co nnect over the Alaska Airlines/Horizon Air San Jose focus city – not taking into account any stimulation from additional non-stop service. As of the year ended first quarter 2010, Medford prod uced 163,260 total origin and destination passengers that would flow over San Jose (see Figure 9).

In all, the Medford – San Jose route has the potential to capture 30% of the current passengers flying in and out of Medford, itself, without taking into account any passenger leakage (see Figure 9). At the same time, the San Jose focus city could capture 26% of the current revenue generated in the Medford market . Currently, Alaska/Horizon ma rkets from Medford that flow over the San Jose focus city generate more than $23.9 million in annual airline revenue, or $32,781 in revenue per day each way (RDEW) to and from Medford (see Figure 9).

The Alaska/Horizon focus city at San Jose has pote ntial to capture large portions of traffic in 11 of Medford’s largest origin and destination markets. The San Jose focus city is especially well positioned to capture traffic traveling to destinat ions in the southwest, Hawaii, and the Midwest – including large markets such as Los Angeles, which produces 133.5 passengers per day each way (PDEW) as of the year ended first quarter 2010; the Bay Area, itself, which produces 21.7 PDEW; Chicago, which produces 13.6 PDEW; Dallas/Ft. Worth, which produces 11.1 PDEW; Salt San Jose 30%

Other Hubs 70% San Jose 26%

Other Hubs 74%

Medford O&D Revenue $91,491,890 100% Revenue Flowing Over San Jose $23,930,120 26% Medford O&D Passengers 542,853 100% Passengers Flowing Over San Jose 163,260 30% 

### FIGURE 9: Medford Passengers and Revenue Flowing Over SJC on Alaska/Horizon Source: Sixel Consulting Group Hub Builder, YE1Q10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 19 Lake City, which produces 10.4 PDEW; and Maui/Kahului, which produces 9.3 PDEW as of the year ended first quarte r 2010 (see Figure 10).

It is likely Horizon would stimulate the passenger market significantly
between Medford and San Jose, with a projected
stimulation rate in its market of, at least, 50%.
Horizon’s low fare
structure has been shown to have a similar impact in
other markets in the west. This gives the Airport reason to be optimistic that the service can be self-sustaining in as li ttle as 12 months from the start of flights.

Medford’s top nine revenue markets that would flow over San Jose on Alaska/Horizon each produce more than $1,000 in RDEW (see Figure 11). The top potential Medford revenue market over Alaska/Horizon’s San Jose focus city is Los Angeles, producing more than $14,200 in revenue per day each way (RDEW) as of the year ende d first quarter 2010. The Bay Area ranks as
Medford’s secondlargest revenue

market that Alaska/Horizon would access, generating $3,957
in RDEW as of the year ended first quarter 2010. 97,430
15,840
9,960
8,090
7,560
6,790
4,810
4,540
3,730
3,310
1,200 133.5

21.7

13.6

11.1

10.4

9.3

6.6

6.2

5.1

4.5

1.6

0 10000 20000 30000 40000 50000 60000 70000 80000 90000 Los An g eles Basin - 1 San Francisco Bay Area - 2

Chica g o Area - 3

Dallas/Ft Worth Area - 4 Salt Lake City - 5

Minneapolis - 6

Kahului - 7

Atlanta - 8

Kona - 9

Austin - 10

Sacramento - 11 Annual Passengers 

### FIGURE 10: Medford’s Top Passenger Markets Over SJC on Alaska/Horizon Source: Sixel Consulting Group Hub Builder, YE1Q10

$10,388,470
$2,888,460
$2,034,560
$1,966,220 $1,486,390
$1,322,440
$1,204,870
$1,001,930
$815,990 $618,250
$202,540 $14,231
$3,957
$2,787
$2,693 $2,036
$1,812
$1,651
$1,373
$1,118
$847
$277

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 Los Angeles Basin - 1 San Francisco Bay Area - 2

Chica g o Area - 3
Dallas/Ft Worth Area - 4 Salt Lake City - 5

Minneapolis - 6

Atlanta - 7

Kahului - 8

Kona - 9

Austin - 10

Sacramento - 11 Annual Revenue 

### FIGURE 11: Medford’s Top Revenue Markets Over SJC on Alaska/Horizon Source: Sixel Consulting Group Hub Builder, YE1Q10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 20 The Alaska/Horizon focus city at San Jose is in a unique position to generate additional traffic and revenue to any number of Medford’s top orig in and destination mark ets. Alaska/Horizon service from the Rogue Valley International – Medford Airport to San Jose has the potential to capture as much as $23.9 million in current airline revenue, not taking into account any revenue stimulation through lower fares and additional no n-stop service. Moreover, the San Jose focus city of Alaska/Horizon is also designed to connec t to codeshares on many other airlines, such as
American and
Delta.

Should it launch
service between
Medford and San Jose, Horizon
would be competing in
markets that have
current fares averaging $147 each way (see Figure 12). Horizon would provide
much-needed competition for Medford catchment area residents traveling to most of the market’s top destinations, where fares top the regional average, such as the San Francisco Bay Area, where the average roundtrip fare was $365 as of the year ended first quarter 2010; Chicago, where the average roundtrip fare was $409 as of the year ended first quarter 2010; Dallas/Ft. Worth, where the average roundtrip fare was $486 as of the year ended first quarter 2010; Salt Lake City, where the average fare was $393 roundtrip as of the year ended first quarter 2010; Minneapolis/St. Paul, where the average roundtrip fare was $390 as of the year ended first quarter 2010; and Atlanta, where the average roundtrip fare was $417 as of the year ended first quarter 2010. $107 $182
$204 $243
$197 $195

$208 $265

$219
$187 $169

$0 $50 $100 $150 $200 $250 Los Angeles Basin - 1 San Francisco Bay Area - 2 Chicago Area - 3
Dallas/Ft Worth Area - 4 Salt Lake City - 5

Minneapolis - 6

Kahului - 7

Atlanta - 8

Kona - 9

Austin - 10

Sacramento - 11 

### Average Over SJC: $147 FIGURE 12: Average One Way Fares in Medford’s Top Passenger Markets Over SJC Source: Sixel Consulting Group Hub Builder, YE1Q10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 21 The only real chance at fare relief in markets that flow over San Jose on Alaska/Horizon is for an additional airline to offer competing service. Horizon’s low fare service would go a long way towards providing enough competition to bring fa res in-line with those found in other western
markets.

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 Medford to be competitive – even fares slightly higher
than those found in other western markets would be considered low for local Medford travelers. The Rogue Valley International Airport believes in the Medford – San Jose/Bay Area market, and must develop a risk mitigation package to ensu re Horizon can enter th e market without major up-front investments.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 22 LETTERS OF SUPPORTRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 23Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 24Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 25Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 26 CURRENT AIR SERVICE IN MEDFORD

Medford is one of the few markets to report passenger increases in 2010. But those increases aren’t exactly what they might seem on the surface. All passenger growth in the market is being fueled by the low fare, point-to-point service of Al legiant Air. Network carriers, as illustrated in the Executive Summary of this proposal, have seen their passengers continue to decline for the last three years. While Allegiant service has been good for Medford-area vacationers, it does little to support business travel, and economic activity, in and out of the Rogue Valley. The Airport must work to increase the business travel connectivity that has been lost since 2008.



### Current Passenger Traffic in the Medford Market

Since the summer of 2008, when fuel initially spiked and airlines began the process of reducing capacity, the Rogue Valley International Airp ort has gone from an average of 28 daily departures to an average of 18.8 daily departures, as of April 2010 – a loss of 33% of daily flights (see Figure 13). During the same time period Medford has seen a loss of an average of 195 daily departing seats – or 15%.

1,345 1,347

1,254 1,206 1,212

1,117 1,090 1,067 1,111 1,132 1,196 1,217 1,284 1,308 1,277
1,202 1,173 1,136

1,004 1,008 1,093 1,123 1,152

984 953 932

809 796
727 741

619 651 722 744 837 1,025 1,009 991

893 865 804 750

654 697 774 796

400 600 800 1,000 1,200 1,400

Available SDEW Onboard PDEW Flights DEW 28.0 27.8 25.6

22.2 21.9 20.5 19.9 19.3 20.0 20.5 21.5 21.3 21.8 21.7 21.7 19.7 19.0 18.0 16.4 16.3 17.8 18.5 18.8 

### FIGURE 13: Average Daily Departures, Daily Available Seats, Daily Onboard Passengers Source: US DOT T100 Data, June 2008

– April 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 27 While flights in Medford are down 33%, daily seats are down just 15%, indicating that airlines are using larger aircraft at the Rogue Valley International – Medford Airport with less frequency. This is a direct reflection on the impact of Allegian t Air on the Medford market. Allegiant operates just seven frequencies a week to three destinations, but offers more than a tenth of all Medford departing seats.

The Allegiant impact on the market can also be seen in Medford’s top 20 origin and destination passenger markets. In what used to be a market dominated by bu siness travel, three of the top five markets have been fueled by vacation tr avel on Allegiant – number one Los Angeles, number three Las Vegas, and number five Phoenix/Mesa (see Figure 14). This growth has been good for the Airport, but as leisure markets move up the list, and an average fares come down due to the Allegiant influence, it has become increasingly difficult for Medford to argue that it can support additional network carrier seats.

84,860 47,770 41,590 38,870 25,550 16,050 14,690 12,810 11,790 9,760 8,090 7,560 7,130 6,790 6,590 6,560 5,760 5,470 5,200 5,130 116.2
65.4
57.0
53.2
35.0
22.0
20.1
17.5
16.2
13.4
11.1
10.4
9.8
9.3
9.0
9.0
7.9
7.5
7.1
7.0

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Los Angeles (LAX)
Portland
Las Ve g as Seattle
Phoenix/Mesa
Denver
San Francisco Phoenix (PHX)
San Die g o Chicago O'Hare
Dallas/Ft. Worth

Salt Lake Cit y Anchorage Minneapolis/St. Paul
Boston Spokane
Orlando Orange County Washington Dulles
Honolulu Annual Passengers PDEW 

### FIGURE 14: Medford’s Top 20 O&D Passenger Markets Source: US DOT Table DB1A, Year Ended First Quarter 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 28 Medford has seven current markets, as of the ye ar ended first quarter 2010, with at least 20 passengers per day each way (see Figure 14). Nine of Medford’s top 20 markets would be served through, or connect through, th e Alaska/Horizon operation at San Jose.

The fare disparity between Medford’s Allegiant ma rkets and non-Allegiant markets is clear when the average fares to Medford’s top 20 O&D passenger markets are analyzed. The non-Allegiant average fare in Medford is $160 each way. The Allegiant average fare is $55 each way – a third of the network carrier average (see Figure 15). In the two markets Allegiant serves without competition – Las Vegas and Phoenix/Mesa – average fares are well below those found in
markets where network connectiv ity is required for access.

The Allegiant impact has been good for leisure tr avelers in the Rogue Valley and for the Airport, but it does not provide the network connectivity that is so important for business travelers. It has also depressed the average fare – taking into account all airlines – meaning network carriers worry their yields will be too low on new routes to and from Medford, when the non-Allegiant average fare would indicate otherwise. $100 $94 $76 $106 $53 $175 $183 $124 $174 $204 $243 $197

$207 $195 $187 $127 $197 $150 $229 $240

$0 $50 $100 $150 $200 Los An g eles ( LAX )
Portland Las Vegas
Seattle
Phoenix/Mesa
Denver
San Francisco Phoenix (PHX) San Diego Chicago O'Hare
Dallas/Ft. Worth

Salt Lake City

Anchorage Minneapolis/St. Paul
Boston Spokane
Orlando Orange County
Washin g ton Dulles
Honolulu Allegiant Market 

### FIGURE 15: Average Fares in Medford’s Top 20 O&D Passenger Markets Source: US DOT Table DB1A, Year Ended First Quarter 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 29 Air Carrier Market Share in Medford

Allegiant continues to carve out a profitable an d growing niche in the Me dford market. As of September of 2010, Allegiant will move up to the rank of the third largest carrier in Medford, in terms of available seats (see Figure 16). Over the past year, Horizon/Alaska has fallen from a strong number one in the market to number two, as it now sits behind United in terms of
available seats.

While United and Horizon each have about 40% of the Medford market, in terms of available seats in September of 2010, Delta has a 9% share, while Allegiant has an 11% share (see Figure 16). Allegiant’s share will likely continue to grow. It is clear for Horizon to maintain a competitive market presence it will need to add service – and the Airport believes the best option for additional
service is to a new destination: San Jose. 

### Horizon 39.46%

United 39.64% Delta 9.09% Allegiant 11.82% 

### FIGURE 16: Available Seat Share by Airline at Medford Source: Airline Schedules, September 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 30 AIR SERVICE DEFICIENCIES IN MEDFORD

The Medford – San Francisco route used to be a high frequency service, with flights every hour
and a half in each direction. But in the two years since 2008, United has realigned how service flows through the San Francisco hub. This has been excellent for connecting passengers, as connecting banks are now optimized. However, for local passengers, the frequency loss has made traffic to the Bay Area more difficult. Th e result is that onboard passengers on the route have declined by 20% in the last two years (see Figure 17).

Another factor in the passenger decline betw een Medford and San Francisco has been the declining number of available seats. Since the summer of 2008, the number of average daily seats between Medford and the Bay Area has declined by 13% (see Figure 17). This seat decline has come as the number of average daily departures has fallen from 9.1 in August of 2008 to 5.7 in April of 2010 – a loss of 3.4 daily departures from Medford to San Francisco – or a decline of
37%. 302 305 309

269 270 275 275

227 247 253 256 254 254 247 244 240 237

203 221 201 198 209 201 217 232 260 246

206 207 245

211 220 270 286 268
243 238 245

210 195 189 189

152 169 168 168 172 194 179 184 178 172

145 167

135 141 158 145 163 192 205 194

166 162 178 161 151 181 212 197

0 50 100 150 200 250 300 350

Available SDEW Onboard PDEW Flights DEW 8.8 8.9 9.1

7.7 7.6 7.4 7.4

5.8 7.1 7.8 7.9 7.8 7.8 7.6 7.5

6.2 6.0 5.6 5.8 5.6 5.5 5.8 6.0 5.9 5.9 6.0 6.0
4.9 4.6 4.7 4.4 4.3 5.4 5.9 5.7 

### FIGURE 17: Average Daily Departures, Daily Available Seats, Daily Onboard Passengers MFR

‐ SFO; Source: US DOT T100 Data, June 2008

– April 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 31 Moreover, despite service increases by Allegiant, Medford still ranks as one of the most underserved markets in the Pacific Northwest. As of the year ended first quarter 2010, Medford had just 2.11 available departing airline seats per capita of its Metropolitan Statistical Area (MSA) (see Figure 18). Medford had fewer available departing seats than Bend/Redmond, Portland, Spokane, and Seattle/Tacoma.

The Pacific Northwest average number of available departing airline seats per capita was 4.03 as of the year ended first quarter 2010 (see Figure 18). Medford’s available departing seats per capita was roughly half that average – meaning Medford is underserved when compared to its surrounding region.

The same can be said about enplaned passengers per capita. Medford is ahead of Bend/Redmond on that list – meaning Medford fills a higher percentage of its available departing seats than Bend/Redmond – but it still lags behind all other major Northwest cities of as the year ended first quarter 2010 (see Figure 19).

These indicators illustrate how the Rogue Valley International – Medford Airport is relatively underserved when compared to corollary cities in its own region. The challenge for the Airport in recruiting additional service is the statistical impression of fare decreases caused by specific leisure fares offered only by Allegiant.

5.10

4.25

3.59

2.22

2.11

012345 

### SEA

GEG

PDX

RDM

MFR Northwest Average: 4.03 

### FIGURE 18: Departing Seats Per Capita Source: US DOT T100, US Census, YE1Q10

4.14

3.19

2.81

1.52

1.45

01234 

### SEA

GEG

PDX

MFR

RDM Northwest Average: 3.19 

### FIGURE 19: Departing Passengers Per Capita Source: US DOT T100, US Census, YE1Q10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 32 EXTENUATING FACTORS AFFECTING AIR SERVICE

A major extenuating factor making travel between Medford and the San Francisco Bay Area more difficult, and one of the main arguments for service to be split between at least two Bay Area airports, is the on-time performance of the service. The San Francisco International Airport is known across the west – especially in markets th at have service on United to its SFO hub – as an Airport that has frequent weather delays. SFO is constrained by its frequent fog and its parallel runways that are too close to permit simultaneous approaches in low visibility. When fog sets in, SFO is constrained to half its normal a rrival rate, which means airliners are held on the ground at their outstations – such as Medford. It is interesting to note that often, while SFO is shrouded in fog, San Jose is clear and accepting arrivals at its normal rate.

While these weather delays are certainly not the fault of the airlines providing service into SFO, they do negatively impact the impression of the service reliability, and they make it more difficult for local passengers – traveling between Medford and the Bay

Area, itself – to make their scheduled appointments on either end of the route. Frequent Bay Area – Medford travelers
seek service to an alternate airport that they can use to avoid delays – especially on quick business day trips.

The national average on-time performance for th e twelve months ended June 2010, according to US Department of Transportati on statistics, was 81.6% (see Figure 20). In the western region, SFO is ranked among the worst airports in terms of on-time performance, with just 69.8% of flights arriving within 15 minutes of their scheduled arriva l. At the same time, San Jose posted on time performance almost 12 points higher, at 81.3%. It should also be noted, Medford’s on-time performance was well below the national average for the twelve months ended June 2010, at just 73.6%. Roughly 25% of all Medford departur es and arrivals are to and from San Francisco, which appears to reduce Medford’ s overall on-time performance. 81.3%
80.9%
79.8%
79.7%
73.6%
69.8%

50% 55% 60% 65% 70% 75% 80% 85% 

### SJC
PDX
LAX
DEN
MFR
SFO Nat’l Average: 81.6% 

### FIGURE 20: Percentage of On

‐ Time Arrivals at Select Airports Source: US DOT, Year Ended June 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 33 SkyWest provides the service, as United Express, between Medford and San Francisco. SkyWest, likely through no fault of its own – but due to th e weather at San Francisco, has the worst on-time performance of the three carriers discussed in this proposal at SFO. As of the twelve months ended June 2010, 68.7% of SkyWest’s SFO flights arrived on time (see Figure 21). United, itself, posted better overall performance at SFO, with 77.2% of its flights arriving on time. Alaska/Horizon posted the best on-time perfor mance at San Francisco International of the
airlines discussed in this proposal, with 81.5% of its flights arriving within 15
minutes of their scheduled
arrival time.

While on-time performance is just one of the factors travelers consider when choosing what airline to fly, and what airport to fly into, chronic delays have a negative impact on returning, frequent travelers. Frequent flyers in the Medford market would like to see another option to the Bay Area – especially during times of the year with typically bad
weather. It is clear San Jose would offer a better on-time alternate for local travelers, allowing United to carry more connecting passengers through SFO, itself. 81.5%

77.2%

68.7%

50% 55% 60% 65% 70% 75% 80% 85% 

### Alaska/Horizon

United Airlines SkyWest Average at SFO: 69.8% 

### FIGURE 21: Percentage of On

‐ Time Arrivals at SFO Source: US DOT, Year Ended June 2010Rogue Valley International – Medford Airport – Small Co mmunity Air Service Development Grant – August 2010 

## 34 AVAILABILITY OF ALTERNATE AIRPORTS

The Rogue Valley International – Medford Airport catchment area includes the area defined by the US Census Bureau as the Medford Metropolit an Statistical Area (MSA), along with other regions where Medford is the near est airport with commercial air service – including all areas of southern Oregon and northern California within a two hour drive of the airport (see Figure 22). There are no true alternate airports within three hours of Medford.



### FIGURE 22: Medford’s Location in Southern Oregon Source: Sixel Consulting GroupRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 35 USE OF LOCAL FEDERAL FUNDS

Marketing and Advertising

The Rogue Valley International – Medford Airport pr oposes to spend at least $50,000 in funds on marketing and advertising promotions in support of new service introductions. The goal is to increase ridership and usage of new servic e through targeted regional campaigns.



### Revenue Guarantee

The Rogue Valley International – Medford Airport proposes to make available at least $500,000 in funds for a revenue guarantee to Ho rizon Air, to cover start-up lo sses that may occur during the
first twelve months of service on the San Jose ro ute. Subject to negotiation, payments will be made to Horizon 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 gr ant funds are used.



### Additional Costs

As part of this program, the Rogue Valley In ternational – Medford Airport understands that additional expenses will be incurred, such as mo nitoring 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 Horizon to fly the San Jose route. The Airport will use other sources of funding to pay for these efforts, ensuring the DOT funding goes to the revenue guarantee.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 36 PUBLIC/PRIVATE PARTNERSHIPS

The City of Medford, Jackson County, and th e Rogue Valley International – Medford Airport consistently work together on air service development projects. Other local partners will be working with the Airport to promote and market this proposed new service. The Airport will manage and coordinate the marketing program.

Among the partners in this application are Horizon Air, which supports this effort for additional air service in Medford, Southern Oregon Re gional Economic Development, and the Medford/Jackson County Chamber of Commerce. These partners will all play vital roles in ensuring new service is a success.

The Airport’s partners are listed below, including their role in the effort to retain current air service
and recruit additional air service.



### Horizon Air and the Alaska Air Group

Horizon Air and the Alaska Air Group have been partners with the Rogue Valley International Airport since the early 1980s, when Horizon fir st served Medford. 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 Medford.



### Southern Oregon Regional Economic Development, Inc.

Southern Oregon Regional Economic Development, Inc. (SOREDI) is the primary economic development agency for Jackson County and the rest of southern Oregon. Covering a wide geographic region, SOREDI assist s local and relocating companies with a variety of business resources and services including business attr action and creation; business retention and expansion; site location, commercial property ac quisition, and building permits; international trade and import and export issues.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 37 Medford/Jackson County Chamber of Commerce

The Medford/Jackson County Chamber of Comm erce is a totally independent non-profit corporation (not affiliated with government or any ot her agency). It is uniquely able to serve the needs of its southern Oregon me mbers. Over 1,500 small and large businesses collectively work together to achieve this goal by promoting th e community, providing networking opportunities and representing business issues through lobbying and political action.

The Chamber is the number one business resource citizens look to in the community. The area's economic well-being benefits from the work performed by The Chamber. The Chamber seeks to have a major impact on business, income an d future growth of the Medford/Jackson County

area.



### Medford Visitor Convention Bureau

The Medford Visitor Convention Bureau works to promote the Rogue Valley throughout the country. The Bureau spends much time and mo ney publicizing the region’s outdoor activities, unique festivals, exciting events and spectacular scenery. The Bureau works with the Airport to spur additional inbound travel to southern Oregon.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 38 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 Rogue Valley International – Medford Airport will conduct an additional airline meeting to secure a new service that is mutually beneficial. Based on airline planning lead times and the need for advance bookings, we assume the new ca rrier would not be able to begin service until at least August of 2011.

The first three milestones on the Airport's timeline are to execute the grant agreement with the Department of Transportation, meet with Horizon Air to negotiate for service, and sign the minimum revenue guarantee agre ement with Horizon Air. Once service is announced and schedules are published, the Airport would begin marketing the new route and working with the new carrier to monitor advance bookings. The Ai rport will continue its marketing program and
continue to work with the new carrier to moni tor the route once service begins. The Airport would submit grant status repo rts on a quarterly basis to the Department throughout the proposed two year term of th e 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 2011 Negotiate Minimum Revenue Guarantee (MRG) With Airline March 2011 Announce Service May 2011 Publish Schedule May 2011 Begin Marketing of New Route June 2011 Monitor Advance Bookings May - August 2011 Service Launch August 2011 MRG Available for Service August 2011- March 2014 Monitor Route Performance August 2011 - March 2014 Submit Grant Status Reports to DOT Quarterly Q1 2011 - Q1 2014 Close Grant April 2014Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 39 AIR SERVICE ADVISORY GROUPS

The Rogue Valley International – Medford Airport has an airport advisory committee. Established on October 14, 1981, the Airport Ad visory Committee was formed to serve as an advisory group for the purpose of advising the Board of County Commissioners on matters of public concern and to help formulate and recommend priorities for the capital improvement and further expansion of the Airport.

The Airport Advisory Committee expanded it s recommendations to include Master Plan development, economic develo pment, air service, and comm ercial and general aviation.

The committee membership includes a broad re presentation of the community. Membership positions include, to the extent possible, the following: an airline representative, a pilot, a tenant, a member at-large, a local corporate repres entative, a member to represent community leadership, a member to represent economic de velopment, a member to represent fixed base operations, and a hangar owner. The Board of Commissioners reserves the right to vary membership positions.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 40 LOCAL AIR SERVICE DEVELOPMENT EFFORTS

For the last 15 years, the Rogue Valley International – Medford Airport has been very active in working to attract new air service, and ensure th e new service is supported in the community. The Airport meets with a number of airlines each year, in one-on-one headquarter settings. In 2010, the Airport has met with Frontier, SkyWest, and Allegiant.

The Airport has had much success in bringing a dditional service to the Rogue Valley. Among the new routes recruited by the Airport is Delta’s se rvice to Salt Lake City, Horizon’s service to Los Angeles, and Allegiant’s routes to Las Vegas, Los Angeles, and Phoenix/Mesa. The Airport also
worked with America West on service to both Phoenix and Las Vegas before that Airline’s merger with US Airways.

The Airport will continue to recruit new service where it makes sense. The Airport is focused on sustainable service opportunities. That is why it has never before applied for a Small Community Air Service Development Grant. But the reality no w is that, for service to be expanded – even where there’s a strong business case – a revenue guarantee is required in a market of Medford’s
size.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 41 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.

 Southern Oregon Regional Economic Development, Inc.

 Medford/Jackson County Chamber of Commerce

 Medford Visitor Convention Bureau

 City of Medford

 Jackson County

 Various local Medford media outletsRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 42 PERFORMANCE MEASURES

The success of new service under this proposal will be based on three measurable variables: the increase in available seats in the market, the number of enplanements, 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.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 43 LEGAL SPONSOR

The Jackson County/Rogue Valley Internationa l – Medford Airport is the legal sponsor responsible for administering the program. Th e Jackson County/Rogue Valley International – Medford Airport is a government entity.

Jackson County/Rogue Valley International – Medford Airport 1000 Terminal Loop Parkway, Suite 201 Medford, Oregon 97504 Bern Case, AAE, Airport Director 541.776.7222 CaseBE@jacksoncounty.orgRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 44 FINANCIAL CONTROLS

As the sponsor, the Rogue Valley International – Me dford Airport will be the responsible party 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 Rogue Valley International – Medford 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.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 45 RETURN ON INVESTMENT

The Rogue Valley International – Medford Airport has developed a cost effective and achievable strategy to increase enplanements at the airport and to lower fares on network carrier service. 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 competition with airfares by adding service is a major goal of the Small Community 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.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 46 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 negotiation. It is projected that the service on the route will be financially self-sustaining within the second twelve months of service.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 47 ALTERNATE PLAN

If, for some unforeseen reason, service is not commenced in a timely manner by Horizon, the Rogue Valley International – Medford Airport pr oposes to use federal grant money awarded under the Small Community Air Se rvice Development Program to he lp another carrier launch a currently unserved route. Among the options that would be considered are US Airways service to Phoenix, Horizon Air service to Las Vegas, American service to Dallas/Ft. Worth, and United service to Chicago O’Hare.

Should these options, for an unforeseen reason, not be available for new service at the Rogue Valley International – Medford Airport, the Airpor t will continue its discussions with all other carriers than can provide additional seats to a hub not currently served. Since the community has never before received a Small Community Air Service Development Grant, it will have no
limitations on which new hub the DOT could fund.Rogue Valley International – Medford Airport – Small Co mmunity Air Service Development Grant – August 2010 

## 48 AIRPORT INFORMATION

The Rogue Valley International – Medford Airport is a public airport located 3 miles (5 km) north
of downtown Medford in Jackso n County, Oregon, USA. In addition to Jackson County, the airport serves seven nearby counties in southwes t Oregon. It is owned an d operated by Jackson County's Aviation Authority. The Rogue Valley Inte rnational – Medford Airport is the third busiest airport in Oregon.

The Airport’s new 100,000 square foot terminal was built with the future of southern Oregon/northern California air
service in mind. The new terminal hosts an observation deck on the second floor, as well as a restaurant for screened and unscreened passengers. Also, second-story loading bridges have been put in place for easier loading and unloading of passengers. Now that the new terminal is complete, there is a main concourse, and two open-air concourses. The terminal lobby houses five rental car agencies, a gift shop, a restaurant/lounge, and airline operations. Coincided with the construction of a new terminal, a new control tower was built as well.

The new $3.6 million, 100 foot tall control tower was completed in late 2008. The Rogue Valley International – Medford Airport is equipped with two runways, available space in the air carrier termin al, and an excellent location with nearby highway access.

The $35 million terminal was funded in such a way as to divert the cost from the air carriers serving the Medford market. The Airport’s main air carrier runway is Runway 14/32, which is 8,800 feet in length and 150 feet wide. The main runway features an ILS/DME approach. The Airport has a shorter, crosswind, secondary runway, 9/27, which is designed for general aviation op erations. This runway is 3,136 feet long. 

### FIGURE 23: Rogue Valley International Airport, Source: Google EarthRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 49 MEDFORD/ROGUE VALLEY COMMUNITY PROFILE

Medford is the major economic and cultural capital of a huge swath of southern Oregon and northern California. Due to the City’s relative isolation – located about halfway
between San Francisco and Portland – it has become the de-facto hub of influence for a huge area that’s home to more than 500,000 people.

Due to the Rogue Valley’s mild climate, its attractive geographic position at the base of the Cascades and the Coast Range, and its lower co st of living than nearby Napa and Sonoma, Medford is increasingly becoming a retirement destination.

Nearby Ashland – a suburb of Medford just south of the City – is a huge tourist destination, drawing 100,000 visitors each year for its famed Oregon Shakespeare Festival. Medford is also the gateway to Crater Lake National Park, as the closest commercially served airport – a Park that draws more than 500,000 annual visitors.

Medford benefits from a diversified economy, wh ich smoothes out highs and lows in the “boom and bust” cycle. The largest direct marketer of fruits and food gifts in the United States, Harry & David, is based in Medford. Musician's Friend , America's largest direct response retailer of musical instruments and related gear, is also headquartered in Medford. Medford and the surrounding area is home to the expanding Oregon wine industry that includes a large variety of Bordelaise, Rhone, and Burgundian varietals.

Ashland is also home to Southern Oregon University, which is one of the State’s premier liberal arts institutions, enrolling roughly 5,000 full-time students. Medford, itself is home to Rogue Community College, and 4,300 full-time students.

As there are no towns of equal or larger size within several hours' drive, Medford is a regional hub for medical services.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 50 Medford Economic Overview

Medford’s economy is doing extremely well, desp ite the nationwide rece ssion. Medford is one of the few national markets to post job growth in the last year, adding 1,100 full-time jobs. The Medford catchment area has seen some of the strongest job growth in the west in the last decade – adding 19.7% more jobs in the last nine years.
The median family income in Medford is $57,100 in 2009 – holding steady from 2008. The median home price in Medford in 2009 is just $245,000 – 20% less than the national median price of $294,000.

The Medford community is well educated, with almost 61% of those living in the catchment area having graduated from college. Medford ACA residents spend an average of $7,200 on vacation each year – about $1,200 above the national average spent on vacation.

Employer* # of Employees
Lithia Motors 3,500 Asante Health Systems 3,000 Harry & David 2,000 Rogue Valley Medical Center 1,638 Providence Health Systems 1,300
Medford School District 914
Boise Cascade 875 Jackson County 874 Southern Oregon University 600 Amy’s Kitchen 450 Rogue Valley Manor 450
WalMart 450
Cascade Wood Products 425
Veterans Administration 418 City of Medford 405
Knife River Materials 400 

### FIGURE 24: Top Employers in the Medford Area, bold font indicates corporate headquarters location. Source: The Chamber of Medford/Jackson County, 2010Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 51 Big R Stores 350 Rogue Community College 309
CostCo 305 Embarq Communications 275 Oregon Shakespeare Festival 250
Premier West Bank 204
Seven Feathers Hotel and Casino 201
Musicians Friend 180 Associated Fruit Company 175 Sierra Pine, Ltd. 158
CDS Publications 150

Select Company Profiles

Lithia Motors, Inc.
Lithia Motors is an automotive dealership network headquartered in Medford, Oregon, primarily serving the western United States. It is the seventh largest automotive retailer in the United States, and ranks as number 615 on the Fortune 1000 list of the largest companies in the U.S. for 2007. They ranked fourth in their industry for America's Most Admired Companies in 2007. The corporate offices in Medford employ 330, while nearly 2,500 additional people are employed at local Lithia dealerships throughout the country.

Until recently, Lithia Motors had its headquar ters scattered around separate buildings in downtown Medford – but now construction has begun on centralizing the Lithia headquarters into a four-story building in downtown Medford. The project includes a Lithia office building, two city blocks of park space and a promenade, an d a pedestrian thoroughfare through a Sixth Street city parking garage. Construction is expected to begin in late 2010.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 52 Asante Health System and Ro gue Valley Medical Center As the largest healthcare provider in nine counties, Asante provides comprehensive medical care to more than 580,000 people throughout southern Or egon and northern California, through local facilities and additional healthcare partnerships throughout the region. Asante Health System is headquartered in Medford and is governed by lo cal volunteers and physicians. The headquarters employs nearly 3,000 people an d with facilities throughout the area, regional air travel is a necessity.

Asante’s facilities include Rogue Valley Medi cal Center in Medford, which employs an additional 1,638 people. In May 2008, Rogue Valley Medical Center (RVMC) celebrated its fiftieth year serving the region. With 378 licensed beds, RVMC continues to uphold its national reputation for expertise in cardiology, stroke ca re, and other medical specialties. RVMC also offers advanced orthopedic care through the Joint Replacement Center and state-of-the-art oncology care at the Dubs Cancer Center.

Harry & David Harry & David was
founded in Medford and to this day is headquartered here as one of Southern Oregon's largest employer. The extensive 55 acre campus is comprised of numerous buildings, each housing some aspect of the vertically integrated operations which are the strength and tradition of Harry & David's companies.

The most visible landmark is the 1937 art deco packing house, a local attraction prominently located along the main highway. The campus cons ists of administrative offices, an information technology building, packing houses, storage fa cilities, a candy kitchen and bakery complex, an employment and education center, customer service call center, marketing offices, an inhouse advertising agency and much more. Addi tionally there are 2,700 acres of orchards located around the Rogue Valley. Here, the normal workforce of about 2,000 swells to over 6,700 at the peak of the holiday season, with as many as 100,000 calls received in a single day.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 53 The company also operates a 500 seat seasonal call center in Eugene, Oregon, which is instrumental in handling the call volume during our busy holiday season. There is also a second campus in Hebron, Ohio, as well as more than 125 stores nationwide.

Amy’s Kitchen Amy's Kitchen is a privately held corpor ation which began operation in 1987 in Medford, with the purpose of making healthy, organic, and easy-to-prepare frozen food. Owned and run by Andy and Rachel Berliner, Amy's Kitchen took its name from their then-newborn daughter. While the headquarters are now in Petaluma, CA, the company still operates one of its two processing plants in Medford (the other in Santa Rosa, CA). The company employs over 1,500 people; more than 450 of those in Medford. Nearly all U.S. mainstream supermarkets carry Amy's soups, sauces and/or frozen food.



### Tourism in the Medford Area

Medford, southern Oregon's larges t city, offers visitors an array of year around attractions, outdoor activities, unique festivals, exciting events and spectacular scenery. Located just 27 miles north of the Oregon/California border, Medfor d is surrounded with historic wealth, cultural attractions, and rich agricultural land. Visitors are invited to explore mile after magnificent mile of this beautiful southern Oregon valley.

Crater Lake National Park Crater Lake is the major tourist draw for all of southern Oregon, bringing in more than a halfmillion visitors from around the world each year. It is located in Southern Oregon on the crest of the Cascade Mountain range, 100 miles (160 km) east of the Pacific Ocea n. Crater Lake is 86 miles from the Rogue Valley International - Medford Airport – a drive of 2 hours and 20
minutes.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 54 It lies inside a caldera, or volcanic basin, created when the 12,000 foot (3,660 meter) high Mount Mazama collapsed 7,700 years ago fo llowing a large eruption, with no inlets or outlets to the lake. Crater Lake, at 1,943 feet (592 meters) deep, is the seventh deepest lake in the world and the deepest in the United States.

Open year round, this nation al park offers something for every visitor. The endless options include watching the sunrise over the lake or spending a quiet evening by the fireplace at Crater Lake Lodge, gazing at the lake from more than 20 scenic overlooks during a breathtaking trip around Crater Lake on Rim Drive, exploring the park by hiking up mountain peaks, cruising through the volcano area on daily boat tours, or learning more ab out the area’s natural and cultural history on a guided walk.

Oregon Shakespeare Festival

Founded in 1935, the Tony Award-winning Oregon Shakespeare Festival (OSF) is among the oldest and largest professional non-profit theatres in the nation. Each year OSF presents an eight-and-a-half-month season of eleven plays in three theatres plus numerous ancillary activities, and undertakes an extensive theatre education program. Operating on a budget exceeding $26 million, OSF presents more than 780 performances annually with attendance of approximately 400,000.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 55 Wine Country Southern Oregon is quickly emerging as one of the premier wine regions of the country. Surroun ded by Southern Oregon’s vast collection of mountains, rivers and green forests, the area boasts nearly sixty vineyards and cellars, most open to the public to
draw in visitors to the area. The area also features a diverse array of fine restaurants with talented chefs who often prepare locally grown cuisine to pair with our award winning wines.

The rugged mountain valleys and diverse climates allow for a wide variety of intensely flavored wine grapes to be grown. The cooler areas of Southern Oregon produce wonderful Pinot Noir, Pinot Gris, Riesling, Sauvignon Blanc, Chardonna y, and Gewürztraminer while the warmer, more arid regions ripen big reds such as Cabernet Sauvignon, Cabern et Franc, Tempranillo, Merlot, Malbec, Dolcetto, Zinfandel, Grenache and Syra h; making Southern Oregon one of the most diverse winegrowing regions in the world.

A visit to a winery in Southern Oregon can involve much more than just tasting wine. Located in beautiful valleys with stunning vistas, a family member or winemaker may be pouring wine in the tasting room, or be nearby to share stories and special wines with you.

And for those for whom hops are more intriguing than grapes, the Southern Oregon Brewing Company provides a great addition to a wine tour of the region.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 56 Higher Education

Southern Oregon University SOU’s main campus is located in Ashl and, Oregon, an ideal college town with its own rich heritage of culture and outdoor activities that complement life on campus. The school has an enrollment of 4,460 students and faculty and staff that number 976.

Situated in sunny Ashland, Southern Oregon University combines quality education with a spectacular location. Surrounded by rugged mountains, rivers, and lakes, the beautiful 175-acre campus is home to 5,500 students from around the world. SOU, a four-year university specializing in liberal arts, sciences, and select graduate and professional programs, offers 100 areas of study, including 37 majors in the schools of ar ts and letters, sciences, social sciences, and business. Southern specializes in individual attention offering small class sizes.

The school's sports teams are called the Raiders with the Red Tailed Hawk as a mascot. They have twelve varsity teams and participat e in the NAIA and in the
Cascade Conference. SOU’s football team is an NAIA independent. It is the host to Patrick Voigtsberger, who not only is the youngest NCAA coach, but is the first to officially coach two colleges in the same conference. SOU's wrestling team competes in the NAIA West Regional and has won the National Wrestling Championship four times: in 1978, 1983, 1994, and 2001. SOU's teams compete in men's and women's cross country, women's soccer, volleyball, men's and women's basketball, men's and women's track and field, women's tennis, and softball.Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 57 COMPARISON TO OTHER COMMU NITIES IN THE NORTHWEST

FIGURE 25: Top 60 Northwest Region Airports Ranked by O&D Passengers YE1Q10, Source: US DOT Table DB1A

Airport

1 Seattle/Tacoma, WA 2,612,600 2,931,710 2,309,960 2,039,350 22,410 -1.2% 39.2% 10,174,870 9,893,620 27,106 -2.8% 2 Portland, OR 1,305,520 1,444,290 1,235,230 1,072,280 11,783 0.2% 20.6% 5,283,6 40 5,057,320 13,856 -4.3% 3 Spokane, WA 345,070 378,370 347,570 315,500 3,467 0.1% 6.1% 1,501,4 30 1,386,510 3,799 -7.7% 4 Anchorage, AK 403,590 534,140 329,960 297,730 3,272 2.1% 5.7% 1,733,8 60 1,565,420 4,289 -9.7% 5 Boise, ID 312,380 335,070 310,490 280,170 3,079 -3.3% 5.4% 1,342,710 1,238,110 3,392 -7.8% 6 Bellingham, WA 82,170 87,900 80,640 86,540 951 34.7% 1.7% 267,690 337,250 924 26.0% 7 Bozeman, MT 69,110 103,590 63,710 80,680 887 1.1% 1.6% 321,360 317,090 869 -1.3% 8 Fairbanks, AK 92,610 111,320 88,380 78,150 859 4.2% 1.5% 387,940 370,460 1,015 -4.5% 9 Billings, MT 93,110 112,740 89,490 73,640 809 1.8% 1.4% 374,480 368,980 1,011 -1.5% 10 Eugene, OR 74,120 84,910 77,790 68,190 749 11.6% 1.3% 291,150 305,010 836 4.8% 11 Jackson, WY 46,750 116,400 33,880 64,300 707 0.0% 1.2% 270,250 261,330 716 -3.3% 12 Pasco, WA 57,720 63,310 63,900 62,390 686 26.1% 1.2% 214,580 247,320 678 15.3% 13 Medford, OR 67,190 74,760 65,780 57,620 633 12.4% 1.1% 252,480 265,350 727 5.1% 14 Missoula, MT 64,690 85,010 61,060 52,970 582 6.6% 1.0% 258,910 263,730 723 1.9% 15 Redmond, OR 46,740 55,430 50,020 46,160 507 4.0% 0.9% 201,770 198,350 543 -1.7% 16 Juneau, AK 58,170 70,650 42,960 42,080 462 9.0% 0.8% 229,110 213,860 586 -6.7% 17 Great Falls, MT 33,060 39,500 33,530 31,070 341 7.2% 0.6% 132,770 137,160 376 3.3% 18 Kalispell, MT 36,240 53,350 30,810 30,320 333 1.3% 0.6% 168,490 150,720 413 -10.5% 19 Idaho Falls, ID 31,900 35,720 31,230 27,930 307 -4.4% 0.5% 129,720 126,780 347 -2.3% 20 Bethel, AK 32,200 34,280 36,010 27,560 303 11.8% 0.5% 131,250 130,050 356 -0.9% 21 Helena, MT 19,670 25,360 22,260 17,840 196 17.7% 0.3% 77,530 85,130 233 9.8% 22 Kenai, AK 18,420 24,510 18,960 17,780 195 -2.1% 0.3% 87,650 79,670 218 -9.1% 23 Casper, WY 15,980 16,700 19,610 15,820 174 7.5% 0.3% 68,890 68,110 187 -1.1% 24 Sun Valley, ID 9,080 14,980 8,250 15,470 170 5.3% 0.3% 55,380 47,780 131 -13.7% 25 Ketchikan, AK 22,440 34,640 17,450 14,790 163 7.3% 0.3% 95,650 89,320 245 -6.6% 26 Kodiak, AK 18,260 23,750 16,390 12,740 140 -2.0% 0.2% 74,270 71,140 195 -4.2% 27 Yakima, WA 11,770 11,440 13,890 12,590 138 -10.8% 0.2% 57,140 49,690 136 -13.0% 28 Lew iston, ID 14,450 14,070 14,380 12,210 134 -10.9% 0.2% 56,320 55,110 151 -2.1% 29 Nome, AK 12,060 14,160 11,960 11,960 131 6.6% 0.2% 53,170 50,140 137 -5.7% 30 Kotzebue, AK 11,800 14,000 14,160 11,900 131 12.1% 0.2% 56,370 51,860 142 -8.0% 31 Sitka, AK 15,580 17,930 11,180 10,210 112 5.4% 0.2% 58,460 54,900 150 -6.1% 32 Wenatchee, WA 11,130 11,510 11,400 9,770 107 -12.8% 0.2% 42,460 43,810 120 3.2% 33 Barrow , AK 9,190 10,150 10,160 8,190 90 4.9% 0.2% 38,430 37,690 103 -1.9% 34 Pullman/Moscow , WA 6,860 5,780 9,240 7,880 87 16.4% 0.2% 28,410 29,760 82 4.8% 35 Prudhoe Bay/Deadhors e 7,910 8,140 6,100 7,340 81 1.0% 0.1% 81,330 29,490 81 -63.7% 36 Homer, AK 8,930 12,170 7,760 7,180 79 -4.3% 0.1% 40,460 36,040 99 -10.9% 37 Walla Walla, WA 7,550 7,180 8,370 6,390 70 -12.0% 0.1% 27,760 29,490 81 6.2% 38 Gillette, WY 6,510 6,450 6,840 6,370 70 12.3% 0.1% 26,950 26,170 72 -2.9% 39 Tw in Falls, ID 5,750 5,800 6,050 5,720 63 0.4% 0.1% 23,030 23,320 64 1.3% 40 Seattle Boeing Field, W A 8,590 8,690 6,240 5,110 56 10.4% 0.1% 25,440 28,630 78 12.5% 41 Dutch Harbor, AK 7,500 7,000 6,330 4,840 53 -5.5% 0.1% 25,870 25,670 70 -0.8% 42 North Bend, OR 6,220 7,440 4,870 4,790 53 -3.0% 0.1% 32,720 23,320 64 -28.7% 43 Butte, MT 6,030 6,500 5,290 4,770 52 8.2% 0.1% 24,330 22,590 62 -7.2% 44 Rock Springs, WY 4,170 3,670 4,910 4,750 52 -2.3% 0.1% 24,090 17,500 48 -27.4% 45 Klamath Falls, OR 4,910 5,610 5,660 4,740 52 -0.4% 0.1% 24,380 20,920 57 -14.2% 46 Dillingham, AK 7,060 10,940 5,990 4,720 52 8.3% 0.1% 30,240 28,710 79 -5.1% 47 Pocatello, ID 5,200 5,070 4,720 3,940 43 -9.6% 0.1% 20,910 18,930 52 -9.5% 48 Cody, WY 7,260 8,770 5,220 3,530 39 -11.1% 0.1% 23,340 24,780 68 6.2% 49 Riverton, WY 3,510 3,550 3,500 3,210 35 0.9% 0.1% 15,840 13,770 38 -13.1% 50 Sheridan, WY 3,310 3,770 3,580 3,140 35 4.0% 0.1% 16,290 13,800 38 -15.3% 51 King Salmon, AK 9,530 21,650 4,550 3,100 34 5.1% 0.1% 40,090 38,830 106 -3.1% 52 Aniak, AK 3,450 4,160 3,800 2,970 33 0.7% 0.1% 15,890 14,380 39 -9.5% 53 Cordova, AK 3,710 5,030 2,980 2,700 30 20.5% 0.1% 14,460 14,420 40 -0.3% 54 Valdez, AK 3,630 4,530 2,900 2,690 30 -5.9% 0.1% 14,300 13,750 38 -3.8% 55 Petersburg, AK 3,320 5,480 3,070 2,580 28 -1.5% 0.0% 15,760 14,450 40 -8.3% 56 Emmonak, AK 2,110 2,280 2,440 2,240 25 31.8% 0.0% 7,490 9,070 25 21.1% 57 Cheyenne, WY 2,800 2,680 2,530 2,210 24 -7.1% 0.0% 12,810 10,220 28 -20.2% 58 Unalakleet, AK 2,290 2,990 2,580 2,200 24 22.9% 0.0% 10,540 10,060 28 -4.6% 59 Galena, AK 1,670 1,590 1,810 2,200 24 41.0% 0.0% 7,220 7,270 20 0.7% 60 Port Angeles, WA 4,870 3,360 2,480 1,990 22 -2.0% 0.0% 11,370 12,700 35 11.7% 2 Q 09 3 Q 09 4 Q 09 1 Q 10 Regional Passengers 6,303,540 7,293,88 0 5,794,460 5,197,800 57,119 1.1% 100.0% 25,564,710 24,589,680 67,369 -3.8% 1 Q 10 Mar-09 Mar-10 Mar-10 ? Qtr/Qtr Share Total Paxs YE PDEW YE YE/YE 2009-2010 PDEW Rank ? 2 Q 09 3 Q 09 4 Q 09 1 Q 10 1 Q 10Rogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 58 FIGURE 26: Top 60 Northwest Region Airports Ranked by O&D Revenue YE1Q10, Source: US DOT Table DB1A

Airport
1 Seattle/Tacoma, WA $366,810 $450,900 $340,950 $313,040 $1,720 7.9% 38.2% $1,616, 490 $1,471,700 $2,016 -9.0% 2 Portland, OR $181,340 $220,830 $189,610 $163,420 $898 7.5% 19.9% $819,180 $755,200 $1,035 -7.8% 3 Anchorage, AK $89,600 $125,950 $74,600 $67,790 $372 2.1% 8.3% $402,150 $357,940 $490 -11.0% 4 Spokane, WA $45,030 $53,580 $46,370 $43,130 $237 4.8% 5.3% $208,620 $188,110 $258 -9.8% 5 Boise, ID $39,480 $45,330 $43,030 $39,620 $218 7.3% 4.8% $183,160 $167,460 $229 -8.6% 6 Fairbanks, AK $21,600 $27,480 $20,440 $17,280 $95 5.9% 2.1% $88,330 $86,800 $119 -1.7% 7 Bozeman, MT $11,930 $18,600 $12,540 $15,320 $84 3.2% 1.9% $66,410 $58,390 $80 -12.1% 8 Billings, MT $15,200 $18,030 $15,430 $12,410 $68 0.3% 1.5% $69,000 $61,070 $84 -11.5% 9 Jackson, WY $8,160 $20,270 $7,410 $11,850 $65 4.2% 1.4% $58,010 $47,690 $65 -17.8% 10 Pasco, WA $11,260 $12,030 $11,500 $10,840 $60 11.8% 1.3% $45,580 $45,630 $63 0.1% 11 Eugene, OR $11,640 $13,840 $12,550 $10,730 $59 8.9% 1.3% $51,660 $48,760 $67 -5.6% 12 Missoula, MT $11,590 $15,960 $11,440 $9,240 $51 2.8% 1.1% $51,720 $48,230 $66 -6.7% 13 Bellingham, WA $8,000 $8,920 $8,680 $8,520 $47 33.8% 1.0% $31,650 $34,120 $47 7.8% 14 Medford, OR $9,860 $11,470 $9,770 $8,490 $4 7 6.5% 1.0% $44,170 $39,590 $54 -10.4% 15 Juneau, AK $10,740 $14,210 $7,580 $7,820 $43 7.1% 1.0% $44,960 $40,350 $55 -10.3% 16 Great Falls, MT $6,420 $7,710 $6,690 $6,060 $33 3.9% 0.7% $29,590 $26,880 $37 -9.2% 17 Redmond, OR $6,080 $7,700 $6,670 $6,050 $33 2.2% 0.7% $30,600 $26,500 $36 -13.4% 18 Kalispell, MT $6,770 $10,870 $6,280 $5,800 $32 7.2% 0.7% $36,080 $29,720 $41 -17.6% 19 Idaho Falls, ID $6,180 $7,050 $6,200 $5,720 $31 2.3% 0.7% $26,830 $25,150 $34 -6.3% 20 Helena, MT $4,440 $5,390 $4,760 $3,870 $21 6.0% 0.5% $19,460 $18,460 $25 -5.1% 21 Bethel, AK $3,740 $3,990 $4,030 $3,250 $18 12.8% 0.4% $14,860 $15,010 $21 1.0% 22 Casper, WY $3,510 $3,400 $3,890 $3,110 $17 -7.7% 0.4% $17,950 $13,910 $19 -22.5% 23 Ketchikan, AK $4,740 $7,430 $3,530 $3,040 $17 10.9% 0.4% $20,850 $18,740 $26 -10.1% 24 Sun Valley, ID $1,370 $3,120 $1,480 $2,610 $14 -7.4% 0.3% $11,540 $8,580 $12 -25.6% 25 Prudhoe Bay/Deadhors e $2,850 $2,870 $2,070 $2,560 $14 -0.8% 0.3% $20,100 $10,350 $14 -48.5% 26 Dutch Harbor, AK $3,360 $3,430 $3,010 $2,510 $14 8.2% 0.3% $12,580 $12,310 $17 -2.1% 27 Kodiak, AK $3,420 $4,870 $2,970 $2,410 $13 4.3% 0.3% $14,350 $13,670 $19 -4.7% 28 Lew iston, ID $2,420 $2,370 $2,490 $2,040 $11 -5.6% 0.2% $9,600 $9,320 $13 -2.9% 29 Yakima, WA $1,960 $2,050 $2,170 $1,990 $11 -4.3% 0.2% $10,180 $8,170 $11 -19.7% 30 Nome, AK $2,020 $2,670 $1,850 $1,940 $11 7.8% 0.2% $8,730 $8,480 $12 -2.9% 31 Sitka, AK $3,050 $3,980 $1,920 $1,860 $10 6.3% 0.2% $12,030 $10,810 $15 -10.1% 32 Barrow , AK $1,960 $2,060 $2,050 $1,700 $9 7.6% 0.2% $8,410 $7,770 $11 -7.6% 33 Kotzebue, AK $1,700 $2,160 $1,980 $1,560 $9 4.7% 0.2% $7,800 $7,400 $10 -5.1% 34 Wenatchee, WA $1,600 $1,820 $1,610 $1,370 $8 -14.9% 0.2% $6,790 $6,400 $9 -5.7% 35 Butte, MT $1,540 $1,630 $1,380 $1,360 $7 13.3% 0.2% $6,830 $5,910 $8 -13.5% 36 Kenai, AK $1,550 $2,200 $1,480 $1,330 $7 8.1% 0.2% $6,930 $6,560 $9 -5.3% 37 Gillette, WY $1,430 $1,400 $1,370 $1,220 $7 4.3% 0.1% $6,550 $5,420 $7 -17.3% 38 Pullman/Moscow , WA $940 $820 $1,310 $1,060 $6 14.0% 0.1% $4,130 $4,130 $6 0.0% 39 Rock Springs, WY $860 $770 $1,030 $920 $5 -16.4% 0.1% $5,870 $3,580 $5 -39.0% 40 Walla Walla, WA $1,090 $1,050 $1,220 $900 $5 -7.2% 0.1% $4,530 $4,260 $6 -6.0% 41 North Bend, OR $950 $1,100 $680 $740 $4 -7.5% 0.1% $5,770 $3,470 $5 -39.9% 42 Klamath Falls, OR $760 $840 $770 $720 $4 -10.0% 0.1% $4,390 $3,090 $4 -29.6% 43 Tw in Falls, ID $660 $810 $740 $710 $4 10.9% 0.1% $3,060 $2,920 $4 -4.6% 44 Riverton, WY $720 $740 $730 $660 $4 10.0% 0.1% $3,480 $2,850 $4 -18.1% 45 Homer, AK $700 $1,120 $650 $620 $3 8.8% 0.1% $3,520 $3,090 $4 -12.2% 46 Sheridan, WY $630 $810 $780 $580 $3 -1.7% 0.1% $3,590 $2,800 $4 -22.0% 47 Dillingham, AK $1,180 $1,950 $760 $560 $3 3.7% 0.1% $4,770 $4,450 $6 -6.7% 48 Cody, WY $1,400 $1,790 $820 $500 $3 -42.5% 0.1% $5,720 $4,510 $6 -21.2% 49 Pocatello, ID $610 $690 $550 $490 $3 -5.8% 0.1% $3,310 $2,340 $3 -29.3% 50 Cordova, AK $630 $1,190 $500 $460 $3 17.9% 0.1% $2,690 $2,780 $4 3.3% 51 Petersburg, AK $680 $1,260 $540 $420 $2 -10.6% 0.1% $3,210 $2,900 $4 -9.7% 52 Valdez, AK $500 $710 $420 $410 $2 5.1% 0.0% $2,120 $2,040 $3 -3.8% 53 Laramie, WY $340 $360 $340 $370 $2 27.6% 0.0% $1,620 $1,410 $2 -13.0% 54 Cheyenne, WY $520 $560 $500 $370 $2 -22.9% 0.0% $2,720 $1,950 $3 -28.3% 55 King Salmon, AK $1,530 $3,790 $550 $350 $2 12.9% 0.0% $6,380 $6,220 $9 -2.5% 56 Saint Paul Island, AK $280 $160 $200 $320 $2 10.3% 0.0% $980 $960 $1 -2.0% 57 Wrangell, AK $520 $690 $380 $310 $2 0.0% 0.0% $1,790 $1,900 $3 6.1% 58 Seattle Boeing Field, W A $470 $490 $370 $310 $2 14.8% 0.0% $1,330 $1,640 $2 23.3% 59 Aniak, AK $280 $400 $320 $260 $1 4.0% 0.0% $1,350 $1,260 $2 -6.7% 60 Adak Island, AK $290 $280 $200 $260 $1 62.5% 0.0% $1,020 $1,030 $1 1.0%
2 Q 09 3 Q 09 4 Q 09 1 Q 10 Regional Revenue $937,790 $1,179,350 $902 ,380 $820,320 $4,507 6.5% 100.0% $4,226,900 $3,839,840 $5,260 -9.2% RDEW YE/YE 2009-2010 RDEW Qtr/Qtr Share ? 1 Q 10 Mar-09 2 Q 09 3 Q 09 4 Q 09 1 Q 10 1 Q 10 Mar-10 Mar-10 ? Year Ended Rank 

### FIGURE 26: Top 60 Northwest Region Airports Ranked by Average Yield YE1Q10, Source: US DOT Table DB1A

Airport
1 Port Angeles, WA 67.39¢ 67.39¢ 67.39¢ 67.39¢ 0.0% 0.00¢ 67.39¢ 67.39¢ 0.0% 0.00¢ 2 Seattle Boeing Field, WA 63.27¢ 62.76¢ 61.85¢ 60.94¢ -1.2% -0.73¢ 64.59¢ 62.34¢ -3.5% -2.25¢ 3 Prudhoe Bay/Deadhorse, AK 51.53¢ 48.99¢ 53.05¢ 52.03¢ 2.9% 1.49¢ 37.78¢ 51.22¢ 35.6% 13.44¢ 4 Emmonak, AK 40.74¢ 39.71¢ 47.12¢ 43.93¢ 9.7% 3.90¢ 41.11¢ 42.68¢ 3.8% 1.57¢ 5 Galena, AK 41.76¢ 41.81¢ 42.29¢ 42.61¢ 2.4% 1.02¢ 41.22¢ 42.14¢ 2.2% 0.92¢ 6 Aniak, AK 39.90¢ 33.95¢ 40.04¢ 39.37¢ -0.9% -0.34¢ 38.55¢ 37.74¢ -2.1% -0.81¢ 7 Bethel, AK 31.40¢ 33.58¢ 34.40¢ 37.45¢ 8.7% 3.00¢ 33.15¢ 33.97¢ 2.5% 0.82¢ 8 Unalakleet, AK 35.02¢ 32.56¢ 33.28¢ 35.92¢ 0.1% 0.02¢ 35.26¢ 33.98¢ -3.6% -1.28¢ 9 Kotzebue, AK 29.30¢ 33.65¢ 33.94¢ 34.88¢ 0.1% 0.03¢ 33.45¢ 32.86¢ -1.8% -0.59¢ 10 Homer, AK 30.02¢ 31.75¢ 32.57¢ 33.48¢ -10.1% -3.75¢ 31.67¢ 31.85¢ 0.6% 0.18¢ 11 Barrow , AK 27.89¢ 29.45¢ 27.40¢ 31.65¢ 0.1% 0.03¢ 30.35¢ 28.96¢ -4.6% -1.39¢ 12 King Salmon, AK 23.88¢ 29.94¢ 33.75¢ 31.52¢ -18.0% -6.90¢ 29.03¢ 28.42¢ -2.1% -0.61¢ 13 Dillingham, AK 24.97¢ 27.73¢ 31.91¢ 31.49¢ 2.5% 0.78¢ 27.14¢ 27.80¢ 2.4% 0.66¢ 14 Kenai, AK 27.60¢ 27.62¢ 30.17¢ 30.92¢ -14.0% -5.02¢ 30.70¢ 28.79¢ -6.2% -1.91¢ 15 Dutch Harbor, AK 28.06¢ 30.06¢ 28.00¢ 30.86¢ 7.6% 2.17¢ 29.11¢ 29.16¢ 0.2% 0.05¢ 16 Nome, AK 26.61¢ 30.28¢ 29.75¢ 30.71¢ 4.8% 1.41¢ 28.61¢ 29.31¢ 2.4% 0.70¢ 17 Valdez, AK 32.65¢ 29.38¢ 30.36¢ 29.95¢ -11.3% -3.82¢ 30.93¢ 30.46¢ -1.5% -0.47¢ 18 Ketchikan, AK 24.20¢ 23.63¢ 24.45¢ 28.70¢ 9.0% 2.38¢ 24.18¢ 24.66¢ 2.0% 0.48¢ 19 Cheyenne, WY 28.53¢ 27.52¢ 26.80¢ 27.64¢ -6.9% -2.05¢ 29.97¢ 27.63¢ -7.8% -2.34¢ 20 Sitka, AK 22.77¢ 23.10¢ 22.34¢ 26.61¢ 3.1% 0.81¢ 23.38¢ 23.45¢ 0.3% 0.07¢ 21 Riverton, WY 21.96¢ 24.76¢ 23.84¢ 24.99¢ 2.3% 0.56¢ 25.39¢ 23.82¢ -6.2% -1.57¢ 22 Sheridan, WY 21.95¢ 21.89¢ 22.37¢ 23.88¢ -4.0% -0.99¢ 24.36¢ 22.43¢ -7.9% -1.93¢ 23 Kodiak, AK 22.23¢ 22.92¢ 22.04¢ 23.68¢ -5.0% -1.25¢ 22.79¢ 22.69¢ -0.4% -0.10¢ 24 Juneau, AK 20.56¢ 20.87¢ 19.38¢ 23.57¢ 4.1% 0.94¢ 21.11¢ 20.96¢ -0.7% -0.15¢ 25 Cordova, AK 21.56¢ 20.75¢ 21.25¢ 22.95¢ 7.3% 1.56¢ 21.45¢ 21.47¢ 0.1% 0.02¢ 26 Petersburg, AK 23.07¢ 20.87¢ 22.32¢ 22.92¢ -11.6% -3.01¢ 23.37¢ 22.17¢ -5.1% -1.20¢ 27 Butte, MT 19.08¢ 19.85¢ 21.14¢ 22.76¢ 9.1% 1.89¢ 22.63¢ 20.58¢ -9.1% -2.05¢ 28 Idaho Falls, ID 18.06¢ 18.71¢ 19.54¢ 20.44¢ 5.1% 1.00¢ 20.48¢ 19.11¢ -6.7% -1.37¢ 29 Rock Springs, WY 21.10¢ 21.06¢ 20.40¢ 19.92¢ -12.9% -2.94¢ 25.84¢ 20.59¢ -20.3% -5.25¢ 30 Casper, WY 21.74¢ 20.19¢ 19.53¢ 19.12¢ -16.0% -3.63¢ 25.45¢ 20.12¢ -20.9% -5.33¢ 31 Fairbanks, AK 17.09¢ 17.66¢ 17.83¢ 18.70¢ 4.0% 0.73¢ 17.22¢ 17.76¢ 3.1% 0.54¢ 32 Helena, MT 19.38¢ 18.05¢ 18.39¢ 18.54¢ -13.1% -2.80¢ 21.01¢ 18.55¢ -11.7% -2.46¢ 33 Pullman/Moscow , WA 16.72¢ 17.89¢ 17.97¢ 18.16¢ 1.6% 0.29¢ 19.76¢ 17.70¢ -10.4% -2.06¢ 34 Sun Valley, ID 15.77¢ 20.03¢ 17.65¢ 18.01¢ -7.1% -1.39¢ 21.28¢ 18.19¢ -14.5% -3.09¢ 35 Gillette, WY 21.06¢ 20.94¢ 19.17¢ 17.86¢ -12.9% -2.64¢ 24.29¢ 19.75¢ -18.7% -4.54¢ 36 Lew iston, ID 15.42¢ 15.81¢ 17.39¢ 17.35¢ 8.7% 1.39¢ 17.94¢ 16.43¢ -8.4% -1.51¢ 37 Great Falls, MT 16.67¢ 16.97¢ 17.42¢ 16.80¢ -5.5% -0.98¢ 18.91¢ 16.97¢ -10.3% -1.94¢ 38 Kalispell, MT 13.51¢ 16.45¢ 16.99¢ 16.18¢ 25.5% 3.28¢ 16.61¢ 15.72¢ -5.4% -0.89¢ 39 Yakima, WA 15.91¢ 16.54¢ 14.93¢ 15.90¢ -3.7% -0.61¢ 17.40¢ 15.79¢ -9.3% -1.61¢ 40 Boise, ID 13.65¢ 14.58¢ 15.30¢ 15.68¢ 9.8% 1.40¢ 15.41¢ 14.77¢ -4.2% -0.64¢ 41 Wenatchee, WA 15.06¢ 16.68¢ 14.80¢ 15.65¢ -6.9% -1.17¢ 18.78¢ 15.57¢ -17.1% -3.21¢ 42 Bozeman, MT 14.51¢ 14.68¢ 16.90¢ 15.59¢ 0.8% 0.13¢ 17.16¢ 15.31¢ -10.8% -1.85¢ 43 Walla Walla, WA 15.91¢ 17.33¢ 14.87¢ 15.50¢ -8.6% -1.45¢ 19.64¢ 15.86¢ -19.2% -3.78¢ 44 Anchorage, AK 13.50¢ 13.61¢ 14.81¢ 15.46¢ 0.6% 0.09¢ 14.47¢ 14.14¢ -2.3% -0.33¢ 45 Missoula, MT 15.64¢ 16.02¢ 16.28¢ 15.32¢ -3.2% -0.51¢ 17.21¢ 15.85¢ -7.9% -1.36¢ 46 Billings, MT 14.57¢ 13.94¢ 15.50¢ 15.28¢ -1.0% -0.15¢ 16.49¢ 14.74¢ -10.6% -1.75¢ 47 Pasco, WA 15.56¢ 15.23¢ 14.78¢ 14.59¢ -12.7% -2.12¢ 17.63¢ 15.03¢ -14.7% -2.60¢ 48 Jackson, WY 13.81¢ 13.87¢ 17.41¢ 14.37¢ 8.0% 1.07¢ 16.58¢ 14.44¢ -12.9% -2.14¢ 49 Medford, OR 13.12¢ 13.56¢ 13.13¢ 13.56¢ -5.2% -0.75¢ 15.78¢ 13.34¢ -15.5% -2.44¢ 50 Eugene, OR 12.67¢ 13.06¢ 13.46¢ 13.52¢ -1.4% -0.19¢ 14.64¢ 13.16¢ -10.1% -1.48¢ 51 Cody, WY 15.40¢ 16.11¢ 13.88¢ 13.42¢ -31.7% -6.22¢ 20.66¢ 15.14¢ -26.7% -5.52¢ 52 Spokane, WA 12.68¢ 13.30¢ 13.30¢ 13.36¢ 0.8% 0.10¢ 14.00¢ 13.15¢ -6.1% -0.85¢ 53 Redmond, OR 12.32¢ 13.07¢ 12.86¢ 12.68¢ -3.7% -0.48¢ 15.19¢ 12.75¢ -16.1% -2.44¢ 54 Pocatello, ID 11.36¢ 13.29¢ 11.45¢ 12.57¢ 4.1% 0.50¢ 14.79¢ 12.17¢ -17.7% -2.62¢ 55 Tw in Falls, ID 11.03¢ 13.05¢ 11.18¢ 12.26¢ 16.3% 1.72¢ 12.47¢ 11.88¢ -4.7% -0.59¢ 56 Portland, OR 10.81¢ 11.55¢ 12.05¢ 12.18¢ 5.5% 0.64¢ 12.36¢ 11.61¢ -6.1% -0.75¢ 57 Seattle/Tacoma, WA 10.09¢ 10.91¢ 10.74¢ 11.24¢ 7.1% 0.74¢ 11.73¢ 10.72¢ -8.6% -1.01¢ 58 North Bend, OR 11.40¢ 11.17¢ 11.58¢ 11.16¢ -11.5% -1.45¢ 17.63¢ 11.33¢ -35.7% -6.30¢ 59 Klamath Falls, OR 10.97¢ 10.08¢ 10.64¢ 11.02¢ -14.8% -1.91¢ 16.50¢ 10.66¢ -35.4% -5.84¢ 60 Bellingham, WA 9.87¢ 10.26¢ 10.63¢ 9.62¢ -4.3% -0.43¢ 12.16¢ 10.09¢ -17.0% -2.07¢ 2 Q 09 3 Q 09 4 Q 09 1 Q 10 $11

. 81 $12

. 57 $12

. 67 $13

. 04 Average Regional Yield 11.81¢ 12.57¢ 12.67¢ 13.04¢ 4.0% 0.50¢ 12.57¢ 12.67¢ 0.8% 0.10¢ YE/YE Year Ended YE/YE 2009-2010 Qtr/Qtr Qtr/Qtr
Mar-09 Mar-10 4 Q 09 1 Q 10 % ? Yld ? 2 Q 09 3 Q 09 % ? Yld ? RankRogue Valley International – Medford Airport – Small Community Air Service Development Grant – August 2010 

## 59 CONCLUSIONS

The Rogue Valley International – Medford Airport ha s been a growth market for several airlines for much of the last decade. Only in the last thre e years has it seen its flights and seats cut. But those cuts have been deep – especially for network carriers. For example, from September 2009 to September 2010, Horizon will have cut its available seats in the Medford market by 25% - a loss of 146 departing seats per day.

Medford ranks as one of the most underserved mark ets in the Pacific Northwest. As of the year ended first quarter 2010, Medford had just 2.11 avai lable departing airline seats per capita of its Metropolitan Statistical Area (MSA). The Pacific Northwest average number of available departing airline seats per capita was 4.03 as of the year ended first quarter 2010. Medford’s available departing seats per capita was roughly half that average.

Medford has an airline part ner for this proposal. Horizon Air has submitted its letter of support, working alongside the Airport to increase service. But with any service increase, there is risk of diluting yields and losing money. Airlines are unwilling to take that risk alone in markets such as Medford.

The only real chance at fare relief in many of Medford’s largest markets is for an additional airline to offer competing service. Horizon’s low fare service would go a long way towards providing enough competition to bring fares in-l ine with those found in other western markets.

It must be noted once again th at the Rogue Valley Internationa l – Medford Airport has recruited seven new routes in the last 15 years without ever asking the DOT for a Small Community Air Service Development Grant. Times have change d, and Medford now see ks the same kind of support that has been afforded to other Northwest cities such as Idaho Falls, North Bend/Coos Bay, Kalispell, and Helena. The Airport will be an excellent steward of SCASD Grant funding, as it works to enhance air service throughout southern Oregon. 

## “Medford ranks as one of the most
underserved markets in the Pacific Northwest... [with] just 2.11 available departing airline seats per capita.”