June 11, 2012

Sponsor: McClellan-Palomar Airport, Carlsbad, California

Peter Drinkwater, Director of County Airports, County of San Diego

Congressional Code: CA-50

Dun & Bradstreet Number: 1870326770000

Tax Identification Number (EIN): 95-6000934

McCLELLAN-PALOMAR AIRPORT, CARLSBAD, CA

Application Under the Small Community Air Service Development Program

Docket DOT-OST-2012-0069

Application for Federal Support for New Air Service via Advertising and Marketing
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 2

TABLE OF CONTENTS

Introductory Letter of Support 3

Summary Information – Appendix C 4

Introduction 7

The Carlsbad Air Service Market 8

Current and Historical Service 9

Passenger Leakage and Retention 11

Air Service Development Efforts 16

Air Service Needs and Deficiencies 17

Regional Fare Environment 17

Regional Airline Capacity 19

Per Capita Capacity 20

Strategic Marketing Plan 22

Funding Plan 25

Implementation Timeline 27

Public/Private Partnership 28

Letters of Support 30

Conclusion 38

Section Page Number
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 3

INTRODUCTORY LETTER OF SUPPORT
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 4

SUMMARY INFORMATION – APPENDIX C

Small Community Air Service Development Program

Docket DOT-OST-2012-0069

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: _______________________

Federal Funds Requested: ______________________

Carrier(s) Service Obtained: ____________________

Destination(s) Served: __________________________

B. Public/Private Partnership

Public:

1. County of San Diego and McClellan-Palomar Airport

Private:

1. California Pacific Airlines

2. Carlsbad Chamber of Commerce

3. San Diego North Convention and Visitors Bureau

4. San Diego North Chamber of Commerce

5. San Diego North County Economic Development Council

6. Palomar Airport Association
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 5

C. Project Proposal

 Marketing Upgrade Aircraft New Route

 Travel Bank Service Restoration Subsidy

 Surface Transportation Regional Service Revenue Guarantee

 Launch New Carrier Start-Up Cost Offset First Service

 Study Secure Additional Service Other (Specify)

D. Existing Landing Aids at Airport

 Full ILS Outer/Middle Marker Published Instrument Approach

 Localizer Other: GPS Approach

E. Project Cost

1. Federal amount requested: $ 500,000

2. State cash financial contribution: $ 0

Local cash financial contribution:

3a. Airport cash funds: $ 150,000

3b. Non-Airport cash funds: $ 250,000

3. Total local cash funds: $ 400,000

4. TOTAL CASH FUNDING: $ 900,000

In-Kind Contribution:

a. Airport In-Kind contribution: $ Various

b. Other In-Kind contribution: $ Various

5. TOTAL IN-KIND CONTRIBUTION: $ Undetermined

6. TOTAL PROJECT COST: $ 900,000 + In-Kind

F. In-Kind Contributions

For funds in lines 7a (airport in-kind contribution) and 7b (other in-kind contribution), 

please describe the source(s) of fund(s) for each.

Advertising and marketing match money (airport and media companies)
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 6

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

 This application was made available to the state under the Executive Order 12372 Process 

for review on ______.

 Program is subject to E.O 12372, but has not been selected by the state for review.

 Program is not covered by E.O 12372.

H. Is Applicant Delinquent on any Federal Debt?

 No
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 7

INTRODUCTION

The McClellan-Palomar Airport in Carlsbad is ideally located to serve the northern half of San 

Diego County. It has easy access to Interstate 5, and is surrounded by major southern California 

company headquarters, including Callaway Golf, Qualcomm, Geico, Sony, Northrop Grumman, 

the Gemological Institute, ViaSat, Cobra Golf, Taylor Made Golf, and Cox Communications. The 

potential passenger base includes 11% of the population of Southern California – more than 1.1 

million unique residents.

The Airport’s True Market Study quantified the size of the passenger market. It found just 1.6% of 

total passengers generated in the area closest to the McClellan-Palomar Airport, actually use 

the Airport. The catchment area “leaks” an average of 4,400 passengers per day each way to 

other airports, clogging already congested Southern 

California freeways and increasing the carbon footprint of 

travelers throughout the region.

The Airport did see its passengers grow in the last year, 

despite rising fares. An average of 127 passengers per day 

each way used McClellan-Palomar Airport in 2011 – up by 

64% over 2010. At the same time, the average fare at McClellan-Palomar Airport went up by 

19% to $172 each way – the third highest of all airports in Southern California.

The Airport, nonetheless, is scratching the surface of its potential. One carrier – a new carrier for 

the West Coast – has seen the potential of the market. The Department of Transportation has 

given California Pacific Airlines (also known as “CP Air” and, simply, “California Pacific”) its 

economic authority to operate, using McClellan-Palomar Airport as their base of operations. 

California Pacific plans daily non-stop service, beginning this fall, to Oakland, San Jose, 

Sacramento, Las Vegas, and Phoenix. The Airline will take delivery of the first of four new 

Embraer E170 jets at the end of June 2012. California Pacific has pledged $250,000 in cash for 

marketing and advertising under this proposal.

Unlike most other proposals, this Grant project will also lead to the creation of several hundred

new jobs in Carlsbad. With its headquarters near the Airport, CP Air plans to have a little over 

100 employees working full-time in Carlsbad at service launch, by the fourth quarter of 2012. This 

number is projected to grow to 500 employees by the fifth year of service.

“...this Grant project will also 

lead to the creation of 

several hundred new jobs in 

Carlsbad.”
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 8

THE CARLSBAD/NORTH SAN DIEGO COUNTY AIR SERVICE MARKET

Current and Historical Air Service

McClellan-Palomar Airport lies at the center of one of the most densely populated air service 

catchment areas in the country. Yet, despite a large local population, decreasing air service 

throughout the region, rising fares, and difficult freeway traffic to reach alternate airports, 

McClellan-Palomar has been unable to secure service beyond turboprops flying to LA.

The revised Carlsbad catchment area, seen in green in map 1, is home to 1,143,326 people as of 

the 2010 US Census. The Carlsbad area comprises 11.2% of the overall population of the entire 

shaded area – the 

area that includes 

San Diego, Carlsbad, 

Orange County, and 

Long Beach. The 

total population of 

the shaded area is 

10.2 million, making it 

one of the most 

populous catchment 

areas of any airport in 

the country. Despite 

comprising 11% of the 

region’s population, 

most of Carlsbad 

catchment area 

passengers fly from 

other airports in the 

region, largely due to 

the breadth of 

service offered at 

those other airports, 

and in spite of the 

clogged freeways 

that lead to those airports.

MAP 1: The McClellan-Palomar Airport Catchment Area

Sources: Sixel Consulting Group; 2010 US Census
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 9

As of July of 2012, the Airport 

has just six departing flights per 

day on average, all on 30-seat 

turboprop aircraft, with an 

average of only 189 daily 

outbound seats (see figure 1). 

Service is only provided to a 

single destination – Los 

Angeles International (LAX). 

The service is clearly not 

designed for local passengers 

– but relies entirely on onward 

connections. Despite the 

relative size of the Carlsbad 

catchment area, the Airport 

has much less service than 

other California markets home to more than a million people. Overall Carlsbad airline capacity 

is down more than 20% since the summer of 2008 when the market had eight departures per 

day, instead of six.

There were signs of a passenger turnaround at McClellan-Palomar Airport in 2011. For the first 

time since 2006 the market saw a large spike in origin and destination passengers. The Airport 

saw the largest number of passengers since 2007, up 64% over 2010. In 2011, the Airport saw an 

average of 127 passengers per day each way, which was up by an average of 49.5 passengers 

per day each way over 2010 (see figure 2 on next page). Still, total passengers are well off the 

high mark set in 2006 of almost 180 passengers per day each way. Since that time, passengers 

in the Carlsbad market have dropped by 29%.

The 2011 passenger increase happened despite rising fares. The one way average fare at 

McClellan-Palomar Airport was $172 in 2011 (see figure 2 on next page). This ranked as the third 

highest in Southern California for the period. The Airport’s average fare was up by $27 each way 

since 2009, or 19%. But the market did not follow the trend of most non-hub airports with rising 

fares in 2011 as it was strong enough to show a passenger increase despite the high fares.

FIGURE 1: Scheduled Service at McClellan-Palomar Airport

July 2011 vs. July 2012; Source: OAG Schedule Data, May 2012
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 10

The Airport has seen a marginal increase in capacity, as SkyWest added its sixth LAX per day 

flight back into the schedule at the beginning of 2011. Despite the extra seats, passengers 

stayed relatively steady. This resulted in an overall load factor of just 67% for the 12 months 

ended February 2012 – illustrating the market has only so much demand for the short connector 

flight to LAX (see figure 3 on next page).

It should be noted there was a downward spike in available seats and passengers at the Airport 

from January of 2010 through July of 2010, with the downward valley in May and June of that 

year (see figure 3 on next page). This was due to runway construction that necessitated 

periodic runway closure – not a move by SkyWest or United to trim the market’s capacity.

While 2011 passengers did increase at McClellan-Palomar Airport, passenger retention was still 

low. The vast majority of passengers in the Airport’s catchment area use other airports to access 

the national air transportation system. In preparation for its application for Grant funding, the 

McClellan-Palomar Airport commissioned a True Market/Leakage/Retention study, so that it 

could better understand its local air travel market before requesting federal funding for 

FIGURE 2: O&D Passengers and Average One Way Fares at McClellan-Palomar Airport,

Source: US DOT Table OD1A; Calendar Year 2003 – Calendar Year 2011
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 11

additional flights. The study results show that the Airport retains just 1.6% of the passengers 

generated by its local, immediate catchment area.

Most of those “lost” passengers 

found their way to service at 

other airports in the region, 

such as San Diego International 

and John Wayne Airport in 

Orange County. The majority 

of Carlsbad area passengers, in 

fact, currently fly out of San 

Diego’s Lindbergh Field. As of 

the year ended first quarter 2010, according to the Airport’s True Market/Leakage Study, the 

McClellan-Palomar Airport’s catchment area generated 2,485,803 total passengers who flew 

out of San Diego, or an average of 3,405 passengers per day each way (see figure 4). 

FIGURE 4: Carlsbad Area O&D Passengers by Airport Used

Source: Sixel Consulting Group True Market Study; YE1Q10

FIGURE 3: Average Daily Available Seats, Daily Onboard Passengers, and Load Factor

Source: US DOT T100 Data; January 2010 – February 2012

Airport Passengers PDEW Share

1 SAN San Diego, CA 2,485,803 3,405.2 76.0% 

2 LAX Los Angeles, CA 518,394 710.1 15.8% 

3 SNA Orange County, CA 184,677 253.0 5.6% 

4 ONT Ontario, CA 59,393 81.4 1.8% 

5 CLD Carlsbad, CA 53,520 73.3 1.6% 

6 LGB Long Beach, CA 6,403 8.8 0.2% 

Total Carlsbad Area Passengers 3,270,633 4,480 100.0% 

Rank
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 12

The Airport’s catchment area generated an additional 518,394 passengers, or 710 passengers 

per day each way, who flew out of Los Angeles International (LAX); 184,677 passengers, or 253 

passengers per day each way, who flew out of John Wayne Airport in Orange County; 59,393 

passengers, or 81 passengers per day each way who flew out of Ontario; and 6,403 passengers, 

or nine passengers per day each way, who flew out of Long Beach (see figure 4 on previous 

page). Only 53,520 Carlsbad-area 

passengers, or 73 passengers per day 

each way, actually flew out of the 

McClellan-Palomar Airport as of the year 

ended first quarter 2010 – or 1.6% of the 

catchment area’s total passengers. In 

other words, Carlsbad leaks 98.4% of its 

origin and destination passengers to other 

airports in Southern California. That 

leakage represents an average of 4,407 

passengers per day each way.

In most markets that experience poor 

passenger retention, the reason local 

catchment area residents drive to other 

airports is due to lower fares available at 

those other airports. That does not appear 

to be the primary reason for passenger leakage in Carlsbad. In fact, the average fare paid by 

Carlsbad catchment area residents at McClellan-Palomar Airport was $151 each way, 

according to the True Market Study reflecting data from the year ended first quarter 2010 (see 

figure 5). During that period, passengers actually paid more to fly out of their number one “leak 

point” – San Diego International – than they paid to fly from Carlsbad, itself. The San Diego 

average fare was calculated at $172 each way, while the Los Angeles International (LAX) fare 

was $171 each way.

It appears passengers who live in the McClellan-Palomar Airport catchment area are more likely 

to leak to other airports for more convenient service, rather than over concerns about the fare 

at that airport. San Diego has current non-stop service to more than 40 cities, with an average 

of more than 28,000 daily departing seats. Los Angeles has non-stop service to more than 130 

non-stop cities and more than 100,000 daily departing seats. Carlsbad area passengers are 

FIGURE 5: Average One Way Fares by Airport Used

Source: Sixel Consulting Group True Market Study; YE1Q10
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 13

much more likely to find the service they need, that works with their schedules, at either San 

Diego or Los Angeles, and that is why they choose those airports. It’s important to note that 

future service at McClellan-Palomar Airport must fly non-stop to top passenger markets to be 

successful. Fare is not as important a factor as convenience for this catchment area.

Seven of McClellanPalomar Airport’s top 

ten origin and 

destination passenger 

markets are on the West 

Coast. It is clear 

passengers in the area 

most value convenient, 

frequent flights to cities 

in the West – with a 

particular focus on the 

San Francisco Bay Area. 

The market’s number 

one true origin and 

destination passenger 

market is San Francisco, 

with an average of 

almost 257 passengers 

per day each way

according to the 

Airport’s True Market Study reflecting data from the year ended first quarter 2010 (see figure 6). 

Among other Bay Area markets, Oakland ranks as the number two passenger market, 

generating an average of 204 passengers per day each way, while San Jose ranks as the eighth 

largest passenger market, with an average of 156 passengers per day each way. In all, the 

Carlsbad – Bay Area market generates an average of almost 618 passengers per day each way, 

only including passengers to and from the McClellan-Palomar Airport catchment area. Less 

than 3% of current catchment area passengers to and from the Bay Area use McClellanPalomar Airport.

FIGURE 6: Carlsbad’s Top True O&D Passenger Markets 

Source: Sixel Consulting Group True Market Study; YE1Q10
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 14

Generally, passenger retention from the local catchment area is poor to all of Carlsbad’s top 20 

true markets. McClellan-Palomar Airport’s best passenger retention is to markets on the East 

Coast. The Carlsbad – Orlando market retains 5% of local catchment area passengers, the 

Washington Dulles route retains 4% of passengers, and the Baltimore route retains 3% of 

passengers. The reason these routes retain better than West Coast routes is that, even with the 

connection time taken into account, the total travel time is close to what it would be flying from 

another airport in the 

region.

Since almost 99% of the 

passengers from the 

McClellan-Palomar Airport 

catchment area leak to 

other airports for their trips, a 

more accurate way to look 

at the fare in the region is to 

average it over all the trips 

taken by local catchment 

area passengers at all the 

airports they choose to use. 

This “true average” fare was 

$173 each way for the year 

ended first quarter 2010 –

the study period for the 

Airport’s True Market 

Analysis (see figure 7). The 

“true average” fare is brought down by the presence of low cost carriers at airports Carlsbad 

area passengers leak to, with Southwest, Virgin America, JetBlue, and others at most Southern 

California airports besides McClellan-Palomar.

Higher fares often arise from a lack of competition. There is no current airline competition at the 

McClellan-Palomar Airport. But, while United Express/SkyWest has a 100% market share of both 

passengers and revenue at the McClellan-Palomar Airport, United does not rank as the top 

airline for Carlsbad catchment area passengers when all catchment area passengers, traveling 

from all airports, are taken into account.

FIGURE 7: True Average One Way Fares at Top Passenger Markets

Source: Sixel Consulting Group True Market Study; YE1Q10
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 15

The Airport’s True Market/Leakage 

Study shows that most Carlsbad 

catchment area passengers use 

Southwest Airlines – not United service 

provided directly at the Airport, itself 

(see Figure 8). These Southwest 

passengers are leaking, primarily, to 

San Diego and Los Angeles 

International (LAX). Despite the fact 

that Southwest does not serve 

Carlsbad, it captures almost a third of 

all Carlsbad catchment area 

passengers at other airports in 

Southern California. United ranks as 

the market’s second largest carrier, 

with 14% of the total market, while 

American ranks third with 12.5% of the 

market’s origin and destination 

passengers. Somewhat surprisingly, 

low cost carriers not named Southwest draw just a combined 6.6% of Carlsbad area passengers, 

which again suggests fare is not the major consideration in choosing which airline and airport to 

use.

The data points to the fact that passengers in the McClellan-Palomar Airport catchment area 

seek convenient service, with few stops, and short travel time, above all else. The contradiction 

in this thinking is forgetting about the frequently snarled traffic on southern California freeways, 

and the cost of gas to get travelers to their airport of origin. As fuel prices rise, and as the 

population grows, McClellan-Palomar Airport will be an essential gateway to northern San Diego 

County as local passengers work to avoid the drive to other airports.

FIGURE 8: Carlsbad’s True Airline Passenger Share

Source: Sixel Consulting Group True Market Study; YE1Q10
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 16

AIR SERVICE DEVELOPMENT EFFORTS

In preparation for this application, McClellan-Palomar Airport and San Diego County held an air 

service support meeting and roundtable in May of 2012 at the Carlsbad Chamber of Commerce

(see figure 9). Virtually all major users of air service, including all local chambers, local 

governments, and many local businesses, took part. Also taking part was the leadership team 

from California Pacific Airlines.

The Airport had its air service 

development consulting firm 

present to the attendees on the 

state of local air service, the needs 

and deficiencies of service at 

McClellan-Palomar Airport, and 

the potential for success of the 

California Pacific model. The 

meeting also helped to develop 

the matching funds for this 

application. At the meeting, 

California Pacific leadership 

committed $250,000 in private 

matching funds to this project. The 

County of San Diego also 

committed $150,000 in funding.

In addition to this meeting, the Airport has been working to develop air service for the last five 

years. It has held meetings with various airlines, and the Alaska Air Group has visited the facility 

for a meeting. Service on other carriers is not imminent, but is still part of the long-term air service 

development plan.

FIGURE 9: McClellan-Palomar Airport Presentation

Source: Sixel Consulting Group; May 2012
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 17

AIR SERVICE NEEDS AND DEFICIENCIES

The key deficiency in air service at McClellan-Palomar Airport has been discussed extensively in 

this application – passenger leakage to other airports in Southern California. Carlsbad retains 

just 1.6% of the passengers generated in its catchment area as of its latest True Market Study. 

98.4% of Carlsbad catchment area passengers travel from other airports. This extensive 

passenger leakage from the Carlsbad catchment area puts a large burden on the already 

saturated freeway system of Southern California. The region is known for its traffic bottlenecks. 

The more than three million annual passengers generated in the local catchment area could be 

much better served by the McClellan-Palomar Airport. Moreover, it would likely save the 

Department of Transportation further funding for the Southern California roadway system should 

it support further development of the McClellan-Palomar Airport.

While much of the passenger leakage from the 

McClellan-Palomar catchment area is based on the 

breadth of non-stop service offered from other 

airports, passengers are beginning to be suppressed 

and forced away from the local airport by rising 

fares. The average fare in the Carlsbad market in 

calendar year 2011 was $172 each way (see figure 

10). That fare is up by an average of $27 each way 

in the last two years, or 19%. The Carlsbad fare now 

ranks as the third highest in Southern California, after 

Palm Springs, which is a historically high fare market 

due to affluent inbound passengers, and Los 

Angeles, which has the longest average length of 

haul of any airport in the region due to the breadth 

of its international service. The average 2011 fare at Orange County/Santa Ana was 4.2% below 

the fare at McClellan-Palomar Airport, while the average fare at Long Beach was 50.9% below 

the Carlsbad average.

Fares have risen throughout Southern California as airlines have cut capacity. The two closest 

airports to McClellan-Palomar Airport, San Diego Lindbergh Field and John Wayne/Orange 

County have both seen available airline seats cut by more than 10% in the last two years. 

FIGURE 10: Average One Way Fares

Source: US DOT OD1A; Calendar Year 2011
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 18

Specifically, in San Diego, airlines have cut an average of 5,167 departing seats per day since 

the summer of 2010 – or 17% of total capacity (see figure 11).

At the same time, airlines serving San Diego have cut their daily departures by an average of 60 

per day since summer of 2010 (see figure 11). Airlines have trimmed the number of total flights 

offered at San Diego by 17% since June of 2010. McClellan-Palomar Airport is well positioned to 

help shift the travel patterns of the region, and to enhance service in north San Diego County, 

reducing congestion on area freeways.

Capacity hasn’t been cut as dramatically at John Wayne Airport in Orange County as it has in 

San Diego, mainly because airlines have to fly their slots at Orange County in order to hold those 

assets. Nonetheless, available seats at John Wayne have been cut by 10% since summer of 

2010, or an average of 1,632 departing seats per day (see figure 12 on next page). 

FIGURE 11: Available Seats, Passengers, and Departures per Day Each Way at San Diego (SAN)

Source: US DOT T100 Data; June 2010 – January 2012
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 19

John Wayne Airport has also lost an average of ten departures per day since the summer of 

2010 (see figure 12). In August of 2010, airline offered an average of 116 departures per day in 

Orange County, but they now offer just 106 departures per day – a loss of 9% of the market’s 

flights. The capacity cuts make Orange County a less desirable alternate airport for passengers 

living in the McClellan-Palomar Airport catchment area.

For a catchment area of more than a million residents, McClellan-Palomar Airport does a poor 

job of retaining local passengers, mainly due to the lack of competitive service. With only one 

destination and all service on turboprop aircraft, McClellan-Palomar flights are often not even 

considered when north San Diego County residents book travel. This is evidenced by the 

Airport’s passenger retention to its top markets.

FIGURE 12: Available Seats, Passengers, and Departures per Day Each Way at Orange County (SNA)

Source: US DOT T100 Data; June 2010 – January 2012
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 20

In each and every one of the 

Carlsbad’s catchment area’s top 20 

origin and destination passenger 

markets, McClellan-Palomar Airport 

retains less than 4% of passengers (see 

figure 13). The best retention, as 

mentioned earlier in this application, is 

on longer haul destinations where the 

connection time at LAX is mitigated 

over a longer length of haul. 

Examples include Chicago, 

Washington, DC, Honolulu, and 

Philadelphia.

McClellan-Palomar Airport retains 

particularly poorly to destinations in 

the West – including those along the 

immediate West Coast. The Airport 

retains just 1.6% of San Francisco 

passengers, none of the passengers 

traveling to Oakland, less than 1% of passengers to Sacramento, and only 0.6% of passengers to 

and from San Jose (see figure 13). The service target in this proposal would directly address this 

deficiency by offering multiple daily non-stop jet flights to each of those cities.

The Carlsbad market’s poor retention is 

directly related to the amount of air service 

offered by its single carrier. In fact, the 

market ranks as one of the most underserved 

in the country. Airlines offered just 0.06 seats 

per capita at McClellan-Palomar Airport in 

2011 (see figure 14). By contrast, airlines 

offered 5.25 seats per capita in San Diego –

86 times more seats per capita than they 

offered in Carlsbad. The regional average for seats per capita was 1.73 in 2011 – 28 times more 

seats per capita than airlines provided at McClellan-Palomar Airport.

FIGURE 13: CLD Retention to Top 20 O&D Passenger Markets

Source: Sixel Consulting Group True Market Study; YE1Q10

FIGURE 14: Airline Seats per Capita in Southern California

Sources: 2010 US Census; US DOT T100 Data, CY2011
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 21

Similarly, McClellan-Palomar Airport 

boarded just 0.04 passengers per 

capita in 2011 (see figure 15). The 

average airport in the region boarded 

1.39 passengers per capita of its 

catchment area in the period – 34 

times the number of passengers 

boarded in Carlsbad. Again, of 

adjacent airports, San Diego saw the 

highest number of passengers per 

capita of its catchment area, with 4.32 – 107 times the number of passengers per capita as 

McClellan-Palomar Airport.

While McClellan-Palomar Airport faces a number of challenges to its air service, it did report a 

64% increase in passengers in 2011. It is clear there is demand for additional service in the 

market. But the Airport has found it difficult to entice airline partners into working to meet the 

needs of the market.

FIGURE 15: Passengers per Capita in Southern California

Sources: 2010 US Census; US DOT T100 Data, CY2011
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 22

STRATEGIC MARKETING PLAN

The passenger retention statistics in this application demonstrate the need for additional service 

at McClellan-Palomar Airport. Moreover, they demonstrate that passenger leak to other airports 

mainly for the breadth of non-stop destinations, and not on fare. This means the solution to 

overcoming the regional air service deficiencies is for a carrier to establish a business travel 

based set of non-stop markets to which current passenger leakage is highest. This carrier must 

also offer “big jet” service to compete with service at San Diego and in the Los Angeles Basin, 

with relatively high frequency allowing for business travelers to complete their trip in a single day.

McClellan-Palomar Airport is fortunate to have a partner in this application with the same goals 

and objectives. The Airport has developed a partnership with California Pacific Airlines (“CP Air” 

and “California Pacific”) in support of this strategic plan for additional air service in north San 

Diego County. CP Air is providing part of the local matching cash for this plan – one of the very 

few Small Community Air Service Development plans for new air service that is being supported 

by direct airline cash. 

California Pacific has been in existence for four years. Its planning process is nearly complete

and it has achieved the Department of Transportation’s economic authority to operate, 

essential passing phase one of 

the certification process. All 

the Airline still has to do 

before it can launch service is 

complete the process to gain 

certification from the FAA. 

The Airline expects to have 

certification complete in the 

fall of 2012. The timeline for 

new service under this plan is 

the beginning of fourth 

quarter of 2012. CP Air has 

the financial backing to take 

delivery of the Embraer E170 

aircraft it has on order, and to 

begin service on this timeline. 

MAP 2: Proposed Routes - Carlsbad to OAK, LAS, SMF, PHX, and SJC

Source: California Pacific Airlines; Map: Sixel Consulting Group
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 23

The first jet will arrive at McClellan-Palomar Airport in June of 2012, with three more to follow over 

the next 18 months.

This strategic plan for improved service does not include simple flights through a new hub. It 

includes a number of routes non-stop from the McClellan-Palomar Airport to destinations of top 

demand for catchment area passengers. The plan includes new, non-stop service on California 

Pacific Airlines to five of the Airport’s top eight origin and destination passenger markets (see 

map 2. These markets include Oakland, ranked number two; Las Vegas, ranked number five; 

Sacramento, ranked number six; Phoenix, ranked number seven; and San Jose ranked number 

eight.

Collectively, the markets targeted by both California Pacific and the Airport generated almost 

640,000 total origin and destination passengers according to the Airport’s True Market Study 

representing data for the year ended first quarter 2010. Together, the five markets average 875 

passengers per day 

each way, and only 

0.6% of the current 

Carlsbad catchment 

area passengers 

traveling to the 

markets use 

McClellan-Palomar 

Airport.

The largest of the target markets is Carlsbad – Oakland. The Airport catchment area generates 

an estimated 150,000 annual origin and destination passengers to and from Oakland, or an 

average of almost 205 passengers per day each way (see figure 16). Las Vegas is the second 

largest of the target markets, generating an average of 185 passengers per day each way. 

Sacramento generates an average of 171 passengers per day each way, while Phoenix 

generates almost 158 passengers per day each way, and San Jose generates an average of 

156 passengers per day each way.

FIGURE 16: Carlsbad’s Top True O&D Passenger Markets on CP Air

Source: Sixel Consulting Group True Market Study; YE1Q10
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 24

McClellan-Palomar Airport passenger retention to 

each of these markets is exceptionally low. Less 

than 1% of total passengers traveling to these 

markets from the Carlsbad catchment area use 

their local airport. The highest retention is to Las 

Vegas, where 1.3% of passengers use McClellanPalomar Airport according to the Airport’s True 

Market Study which included the year ended first 

quarter 2010 (see figure 17). McClellan-Palomar 

retains less than 1% of passengers to and from all 

other markets, including Oakland, Sacramento, 

Phoenix, and San Jose.

In each of the targeted 

markets the lowest 

published fare from 

McClellan-Palomar Airport is 

higher than the lowest 

published fare on all carriers 

from San Diego’s Lindbergh 

Field. The lowest published 

Oakland fare from 

McClellan-Palomar is $298 

roundtrip while the San 

Diego fare is $160 – a 

premium of 86% to fly from 

Carlsbad (see figure 18). Fares are closer to Sacramento, San Jose, and Phoenix, where the 

Carlsbad premium averages at 29%. But to Las Vegas, the lowest published fare from Carlsbad 

is $96 more roundtrip than the fare from San Diego - 209% more to fly from McClellan-Palomar. 

In all cases, additional competition flying non-stop from Carlsbad to these destinations will help 

to bring fares in line with those found at San Diego.

FIGURE 17: CLD Retention to CP Air Passenger Markets

Source: Sixel Consulting Group True Market Study; YE1Q10

FIGURE 18: Lowest Published Fares from CLD and SAN

Source: ExpertFlyer.com; June 2012
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 25

The area surrounding McClellan-Palomar Airport should be able to support additional air service 

as it has the highest concentration of major employers in all of San Diego County – a higher 

concentration than 

even downtown 

San Diego, where 

San Diego 

International Airport 

is located. 19 of 

San Diego County’s 

top 35 employers, in 

terms of total 

employees in the 

region, are located 

within seven miles of 

McClellan-Palomar 

Airport (see map 3). 

Another eight 

companies are 

located within 14 

miles of the Airport. 

A total of 28 of the 

35 largest 

companies in San 

Diego County are 

located closer to 

McClellan-Palomar Airport than they are to San Diego International Airport. This business travel 

demand would be better met at McClellan-Palomar Airport – but that will take non-stop service 

to the specific points of demand for those businesses, which includes the Bay Area, Phoenix and 

Las Vegas.

California Pacific Airlines has committed $250,000 in direct cash to this strategic plan. 

Additionally, the County of San Diego has committed $150,000 in direct cash to match federal 

funds. McClellan-Palomar Airport is seeking a Small Community Air Service Development Grant

MAP 3: Location of San Diego County’s Top Employers

Source: County of San Diego; May 2012
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 26

in the amount of $500,000 as the federal share of the project. Altogether, local funding, already 

committed, makes up 44% of the overall project cost.

The entire funding of the program will be focused on marketing and advertising projects to 

support expanded service, specifically, at McClellan-Palomar Airport. One goal of the 

marketing and advertising campaign will be to convert Carlsbad catchment area passengers 

from users of the San Diego International Airport to users of the McClellan-Palomar Airport. This 

part of the campaign will focus on north San Diego County.

The second goal of the campaign will be to bring out-of-market travelers to San Diego County 

into the region through McClellan-Palomar Airport. The Airport will focus the out-of-market 

advertising on the five markets listed in this application: Oakland, San Jose, Sacramento, Las 

Vegas, and Phoenix. The campaign will highlight the convenience of McClellan-Palomar Airport 

in relation to sites to visit and major company locations in northern San Diego County. The 

campaign will also focus on the convenience of new non-stop service on California Pacific.

This strategic plan is unique in that it has the potential to create a large number of new jobs in 

the Carlsbad area – many more new jobs than most other proposals. Because the airline will be 

using the McClellan-Palomar Airport 

as its base of operations, it already 

employs a full headquarters staff 

within a few miles of the Airport. That 

staff currently numbers almost 100 

employees. California Pacific Airlines 

will have an estimated $90 million 

annual economic contribution to the 

North County economy. This figure is 

projected to grow to over $200 million 

by the Airline’s fifth year of operation. 

Once the airline is up and running, CP Air will employ over 150 people (see figure 19). 

Employment is forecasted to grow to more than 500 people by year five, creating many new 

jobs in North County. 

The proposed implementation timeline for the project assumes the Department of Transportation

will award Small Community Grant Funding in September 2012 (see figure 20 on next page).

Once the award is announced, McClellan-Palomar Airport will enter into a service agreement 

FIGURE 19: Projected Job Growth at California Pacific Airlines

Source: California Pacific Airlines
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 27

with California Pacific Airlines, providing detail on the marketing plan. Based on CP Air’s timeline 

for certification and service start, McClellan-Palomar Airport expects flights to begin in the fourth 

quarter of 2012.

Once service is announced and 

schedules are published, the 

Airport will begin marketing the 

new routes and working with 

California Pacific Airlines to 

monitor advance bookings.

Once service begins, the Airport 

will continue its marketing 

program and continue to work with the new carrier to monitor the routes. Throughout the 

proposed two year term of the minimum revenue guarantee, the Airport will submit grant status 

reports on a quarterly basis to the Department of Transportation.

If, for some unforeseen reason, service is not commenced in a timely manner by California 

Pacific Airlines, McClellan-Palomar Airport proposes to use federal grant money awarded under 

the Small Community Air Service Development Program to promote service on other carriers that 

can provide connections to a large origin and destination market in the West, or connectivity 

through a large hub. The Airport will continue its discussions with all other airlines that can 

provide additional seats to strong markets. 

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. Among the options are 

Alaska Airlines/Horizon Air service to San Jose or Sacramento; Delta service to Salt Lake City; US 

Airways service to Phoenix; Frontier Airlines service to Denver; and/or United service to Denver. 

The Airport will not, however, be limited by this list of potential destinations, as the landscape for 

service could change before the Grant is awarded.

FIGURE 20: Grant Implementation Timeline

Source: McClellan-Palomar Airport

Activity/Project Milestone Estimated Date

SCASD Grant Award Announcement September 2012

Executive Grant Agreement with DOT October 2012

Develop Creative October 2012

Develop Comprehensive Placement Strategy October 2012

Launch Campaign December 2012 - December 2014

Sustain Campaign December 2012 - December 2014

Monitor Service Performance December 2012 - December 2014

Submit Grant Status Reports to DOT Quarterly Q4 2012 - Q4 2014

Close Grant January 2015
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 28

PUBLIC/PRIVATE PARTNERSHIP

McClellan-Palomar Airport consistently works with community organizations, area businesses, 

and other government agencies on air service development projects. Many local partners have 

committed to work with the Airport to promote and market the new service under this 

application. The Airport and the County will manage and coordinate the marketing program in 

partnership with Grant partners.

Major partners are listed below, with profiles of their organizations. Other, smaller partners, 

including many area businesses, will also work with County Airports to promote and support 

additional local air service, beyond the major organizations listed below.

California Pacific Airlines

California Pacific Airlines (known as “CP Air” and “California Pacific”) is one of the cash partners

in this Small Community Air Service Development Grant proposal, making a commitment of 

$250,000 in direct marketing money. The Airline already leases space at McClellan-Palomar 

Airport, paying monthly terminal fees for a ticket counter and office space. The Airline is 

committed to its partnership with the Airport.

The Airline will work up to a fleet of four pure-jet aircraft, Brazilian-built Embraer 170s. The Embraer 

is a 70-passenger, twin-engine, which will be the quietest jet aircraft (Stage 4) to fly out of 

Palomar Airport. The aircraft has a 1,550-mile range off the short runway at McClellan-Palomar 

Airport. With a 2-by-2 configuration, the aircraft will have no middle seats and will be designed 

with the local business traveler in mind. 

San Diego North County Economic Development Council

The San Diego North County Economic Development Council has a mission to grow and sustain 

the economy of San Diego’s North County through attraction, retention and new business 

development. The group is a member-driven coalition of the private and public sectors working 

together to sustain and carefully grow the economic base of San Diego’s North County. The 

Group’s main goal is to market the area internally and externally in an effort to retain and 

attract quality businesses and create additional, higher paying jobs. The San Diego North EDC 

works with businesses, chambers of commerce, health organizations, local governments and 

educational institutions to improve the quality of life and economic sustainability of North 
McClellan-Palomar Airport • Small Community Air Service Development Grant Proposal • June 11, 2012 29

County. The EDC also undertakes initiatives to establish North County as a "business-friendly" 

region and promote a regional approach to marketing North County as "San Diego's Smart 

Place to Grow" a business.

San Diego North Chamber of Commerce

The San Diego North Chamber of Commerce is the steward for business in the region’s

communities, supporting businesses of every size through proven programming, a unified voice 

in front of government, and dedicated committees. Strong support from membership allows the 

Chamber to thoroughly focus on each individual community while providing the benefit of a 

regional Chamber of Commerce.

The Chamber has three main areas of focus: 

1. Business Development – To identify and promote policies and programs that allow 

companies to invest in the region either through retention or expansion.

2. Workforce Development – Provide a regional workforce that is capable and competent 

through collaboration with business and education. 

3. Infrastructure – Develop and implement strategies to ensure regional capacity in six 

business-critical categories: water, housing, energy, transportation, economic 

competitiveness and environmental stewardship. 

Carlsbad Chamber of Commerce

With more than 1,600 member businesses employing 65,000 or more, the Carlsbad Chamber is 

the second largest chamber in San Diego County and the 10th largest in California. It truly is an 

influential force for the region’s business community. It’s important to note that the Carlsbad 

Chamber is independent from government. The Chamber receives no operating funds from the 

City of Carlsbad or any other government agency. 

San Diego North Convention and Visitors Bureau (CVB)

The San Diego North Convention and Visitors Bureau is a full-service organization providing 

information and assistance to the region's tourism and hospitality industries, including the areas 

of La Jolla north to Oceanside, Rancho Bernardo north to Fallbrook, Julian and the Anza-Borrego 

Desert. The CVB works closely with its members to promote San Diego North as a premier, yearround resort destination, including McClellan-Palomar Airport.

LETTERS OF SUPPORT
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CONCLUSIONS

North San Diego County ranks as one of the most underserved catchment areas in the country. 

There is less than one-tenth of one available airline seat per resident of its catchment, which is 

home to 1.1 million. Capacity in the region continues to be squeezed – with total regional airline 

seats down almost a quarter in the last three years. Subsequently, fares are up – sitting at their 

highest point in a decade.

The air service story in Carlsbad is punctuated by the fact that the flight reductions have also 

had the impact of drastically increasing the catchment area’s passenger “leakage” to other 

airports in Southern California. The Airport retains just 1.6% of its local passengers. It loses more 

than 4,400 passengers per day each way to other airports in the region – a more critical situation 

in San Diego County than in almost any other part of the country, due to the heavy congestion 

on virtually all freeways in and out of Carlsbad, at 

virtually all times of day.

But, unlike other non-hub airports, McClellanPalomar Airport doesn’t simply leak passengers 

who are looking for lower fares. Most Carlsbad 

passenger leakage happens due to passengers 

looking for more convenient flight options – more non-stops to their destinations on larger jet 

equipment. These passengers will often pay more for convenience. It is these passengers the 

Airport and its partners are targeting in this application.

The Airport has developed a wide ranging community coalition to support the launch of 

California Pacific Airlines, with service to five regional destinations that are among the largest 

markets from north San Diego County. The Airline, itself, has pledged $250,000 in cash to this 

project, while San Diego County has pledged $150,000. A total of 44% of the project cost will 

come from local cash, with $500,000 coming from the Department of Transportation.

McClellan-Palomar Airport has never been awarded a Small Community Air Service 

Development Grant. It has put together its most wide-ranging coalition for this application, in 

hopes of an award in 2012.

“The Airport has developed a 

wide ranging community 

coalition to support the launch of 

California Pacific Airlines...”