# June 11, 2012 Sponsor: Springfield Airport Authority – Springfield, Illinois Mark Hanna, Executive Director Congressional Code: IL - 18

Dun & Bradstreet Number: 782263383 Tax Identification Number (EIN): 37-6002051 

### Application for Federal Support to recruit New Air Service via: A Low Cost Ground Handling program Advertising/Marketing Program 

### To Support New Non-Stop Service from Springfield, Illinois 

# SPRINGFIELD AIRPORT AUTHORITY, SPRINGFIELD, ILLINOIS Application Under the Small Community Air Service Development Program, Docket DOT-OST-2012-0069

Docket DOT-OS T-2012-0069Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 2 TABLE OF CONTENTS

Section Page Introductory Letter of Support 3 Summary Information – Appendix C 5

Introduction 8 Springfield: Location, Population and Economy 9 Current and Historical Springfield Air Service 12

Current Air Service 12 Air Service History 12 Alternative Airports and Traffic Leakage 15 Springfield Air Service Deficiencies and Needs 16 A Strategic Plan to Restore Spring field Air Service 20 Proposed New Service 20 Springfield’s Ground Handling and Marketing Program 21 Grant Funding Plan 22 Implementation Timeline 22 Examples of Springfield Leisure Markets 23 Air Service Recruitment Efforts and Marketing Support 24

Previous Grant Awards 26

Public/Private Partners hip and Legal Sponsor 27

Conclusion 28

This document is 28 pages. The cover is one pa ge, the letter of support is two pages and the Summary of Information is three pages, leav ing an application length of 22 pages.Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 3 INTRODUCTORY LETTER OF SUPPORTSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 4Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 5 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 First Grant: 9/5/2006 Expiration date of Grant: 9/5/2009 but closed 6/13/2008 Federal Funds Requested: $390,000 Carrier(s) Service Obtained: United Express Washington IAD Destination(s) Served: Target was Washington D.C.____________

Date of 2 nd Grant: 9/19/2008 Expiration of 2nd Grant: 12/31/2011 extended to 1/31/2012

2 nd Grant closed 4/17/2012 Federal Funds Requested: $750,000 Carrier (s) Service Obtained: American Eagle to Dallas DFW Destination Served: Dallas___________________________________



### B. Public/Private Partnership

Public:

1. Springfield Airport Authority
2. City of Springfield, Illinois
3. Sangamon County
4. Springfield Convention and Visitors Bureau Private:

1. Greater Springfield Chamber of Commerce
2. Q5 Quantum Growth Partnershi p, Economic Development Grou pSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 6 C. Project Pro 

### posal

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:



### E. Project Cost

1. Federal amount requested: $ 250,000

2. State cash financial contribution: $ 0

Local cash financial contribution: 3a. Airport cash funds: $ 50,000 3b. Non-Airport cash funds: $ 50,000

3. Total local cash funds: $ 100,000

4. TOTAL CASH FUNDING: $ 350,000

In-Kind Contribution:

a. Airport In-Kind contribution: $ 35,000 Utilization of Airport owned marketing assets ($35,000) First year of airport terminal and land ing fee waivers per route ($ unknown)

b. Other In-Kind contribution: $ 35,000 In-kind finacial co-op advertising an d awareness with private media

5. TOTAL IN-KIND CONTRIBUTION: $ 70,000

6. TOTAL PROJECT COST: $ 420,000Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 7 F. In-Kind Contributions

For funds in lines 4a (airport in-kind contri bution) and 4b (other in-kind contribution), please describe the source(s) of fund(s) for each. 4a Utilization of Airport owned marketing assets ($35,000) 4a Wavier of first year Airport terminal an d landing fees for each new route ($ unknown) 4b In-kind finacial co-op advertising and awareness with private media



### 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?

NoSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 8 INTRODUCTION I N TRODUCTION

The Springfield, Illinois, Abraham Lincoln Capita l Airport has experienced firsthand the harsh realities of the airline industry. Springfield’s 2011 air service capacity was down 46% from 2004 totals. And that was before the devastating loss of Direct Air public char ter service in March of 2012. Including Direct Air, six different airline br ands have served Springfield since 2003, offering flights on nine different routes. But circumstances well beyond Springfield’s control have forced the elimination of many local air services, leaving Springfield today with only United Express service to ORD and American Eagle service to DFW.

This has happened despite the Springfield market giving each of its services strong support. This has happened despite the Springfield Airport Authority having a laser beam focus on supporting its air service, with the lowest airport costs in Central Illinois and an aggressive and nimble advertising program that promotes local air service locally and regionally. This has happened despite the Airport’ s tireless efforts to recruit new air service, including pioneering new service to Myrtle Beach, Punta Gorda and to Lakeland. In each case

the new service was the first from Central Illinois to that airport and its leisure attractions.

Direct Air’s shutdown in March has left Springfield with only six network carrier regional jet departures per day to two hubs. In August of 20 12 Springfield capacity will be down 14% from August of 2011, due to the loss of Direct Air. As already noted above, this is on top of 2011 market capacity being down 46% from 2004 levels . Also, the shutdown of Direct Air comes just before this summer’s already announced wi thdrawal of AirTran service from nearby Bloomington. On a regional basis, Ce ntral Illinois low fare capacity in August of 2012 will be down 39% from August of 2011, despite modest AirTra n replacement services st arting at Bloomington.

To address this devastating loss of low fare capacity, both locally and regionally, the Springfield Airport submits this Grant proposal. Building on our proven ability to recruit and support air service we propose to use modest Grant funding of $250,000 (with a $100,000 local cash match and $70,000 in local in-kind contributions) to fund a first year no-cost ground handling and marketing program to support a new low cost air se rvice at Springfield. The air service we recruit will replace the locally popular Direct Air service in form, if not exact destination, and provide low fare air travel options for residents of Spring field, the St. Louis metro area and all of Central Illinois including Decatur, Champaign, Bloomington and Peoria. 

### “Springfield’s 2011 air service capacity was

down 46% from 2004Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 9 SPRINGFIELD: LOCATION, POPULATION & ECONOMY I NT

Location and Population – Springfield is located in central Illinois, about 100 miles from St. Louis and 200 miles from Chicago. It is the state capita l and has the largest population of any city in Illinois outside the Chicago metro area. Springfie ld lies aside the main interstate (I-55) and passenger rail lines between Chicago and St. Loui s and has always been a transportation center for the region. It is the regional health care and retail trade cent er for an area 40 miles in any

direction and even further to the west. Interstate highway I-55 meets I-72 and state highways 29, 54 and 125 at Springfield.

The one hour drive radius for the Springfield Airport has a population of 417,451 and includes nearby Decatur. The two hour drive radius from the Airport has a population of 3,266,524 because it encompasses much of the St. Louis area, as well as Bloomington, Champaign, and Peoria. It is this location, conven ient to both St. Louis and the rest of Central Illinois, that makes Springfield an optimum location for low fare air service. The Airport is convenient to all major highways and 3.3 million people live within an ea sy and mostly freeway drive of two hours or less.Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 10 Springfield’s Economy – Springfield is blessed with a diverse and somewhat recession resistant economy anchored by the State government of Illinois, a large heath care and health
education infrastructure and the Illinois National Guard headquarters facility. Altogether the State government and the various education, health care, military
and social services functions in the metro

area account for 44% of total area employment.

Other key economic sectors include insurance and financial services, light manufacturing and telecommunications.

The stable economy means population growth, the Springfield MSA population is up 4% between 2001 and 2010.

The diversity of the economy and sizable portion that is government or health care related means Springfield handled the 2008 - 2009 recession relatively well. Unemployment only rose modestly during the recession and has starte d the downward arc related to recovery. It currently stands as the second lowe st rate in the state of Illinois. 

## SPRINGFIELD'S UNEMPLOYMENT RATE IS THE SECOND LOWEST IN ILLINOIS

SPI SPI SPI SPI SPI SPI SPI SPI SPI

0% 2% 4% 6% 8% 10% 12% 14%

2003 2004 2005 2006 2007 2008 2009 2010 2011Annual Unemployment Rate SPI BMI CMI DEC PIA Illinois Employer Workers Sector State of Illinois 18,300 Government Memorial Health System 6,047 Health Care St. Johns Hospital 3,004 Health Care Springfield Clinic 2,075 Health Care Illinois National Guard 1,819 Military Southern Illinois Univeristy 1,587 Education University of Illinois Springfield 1,166 Education Blue Cross/Blue Shield 1,146 Health Care Horace Mann Companies 1,050 Insurance AT&T 852 Telecommunications The Hope Institute 620 Education American General Life 410 Financial Services Express Personnel Services 401 Employment Services

Freeman United Mining 400 Mining Lincoln Land Community College 400 Education Levi, Ray and Shoup, Inc 400 Software Bunn

‐ O

‐ Matic 300 Beverage Equipment Honeywell Hobbs 200 Auto Parts 

### SPRINGFIELD MAJOR EMPLOYERS: 2011Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 11 Springfield and the surrounding region are home to a dozen institutions of higher learning, all within 90 miles of Springfield. These colleges and universities have a total of nearly 114,000 full time students, supported by about 25,000 faculty, administration and support staff.

Springfield is also a tourism destination in its own right. Eight major local to urism sites document or pay tribute to the life of Abraham Lincoln. In 2011 just over 2.1 million visitors were recorded at the eight sites listed below. This equates to 5,756 visitors per day divided over 365 days.

Springfield’s economy is one of the strongest in Illin ois. Transportation is important to most of the key sectors of this economy, the state government, health care and universities, the National Guard headquarters and inbound tourism. Unfort unately, and for a variety of reasons beyond Springfield’s control, its local air service has not kept pace with local and regional economic growth. 

### Institution Undergrad Post Grad Faculty/Staff Total University of Illinois 32,200 9,300 11,000 52,500 Illinois State 18,400 2,600 3,500 24,500 Eastern Illinois 10,000 1,700 2,000 13,700 Western Illinois 11,300 2,300 2,200 15,800 Lincoln Land CC 8,860 800 9,660 Bradley University 5,301 800 1,320 7,421 University of Illinois Springfield 3,200 2,000 1,200 6,400 Millikin University 1,950 450 1,400 3,800 Quincy University 1,169 200 1,369 Benedictine University Springfield 900 100 500 1,500 Illinois College 1,000 400 1,400 Southern Illinois Med School 610 400 1,010 Area Total 94,280 19,860 24,920 139,060 

## SPRINGFIELD AREA INSTITUTIONS OF HIGHER LEARNING

2011 Visitors Site Attendance Per Day Dana Thomas House 31,140 85.3 Illinois State Museum 174,310 477.6 Lincoln Herndon Law Office 46,580 127.6 Lincoln Presidential Museum 409,877 1,123.0 Lincoln's Home 476,510 1,305.5 Lincoln's Tomb 373,820 1,024.2

New Salem 422,119 1,156.5 Old State Capital 166,480 456.1 Total Area Visitor Events 2,100,836 5,756 

### SPRINGFIELD TOURISM SITE VISIT PROFILE 2011Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 12 CURRENT AND HISTORICAL SPRINGFIELD AIR SERVICE NT

Air Service: Current air service at Springfield consists of United Express regional jet service to Chicago ORD, American Eagle regional jet serv ice to DFW and a summer seasonal twice weekly Vision Airlines 737 service to Myrtle Beach. The Vision Myrtle Beach service is a hastily conceived stopgap service, put together in cooperation with the Myrtle Beach Chamber of Commerce, to attempt to fill the gap left in a host of Myrtle Beac h markets by the sudden March 2012 shutdown of Direct Air. The service runs until late August of this year. The shutdown of Direct Air has had a significant negative impact on Springfield air service, with the loss of summer Myrtle Beach service, year round Lakeland, Florida, service and winter only Punta Gorda service. The network carrier services shown operate year round, however, United Express has indicated they will reduce ORD service from four daily trips to three from October of 2012 to May of 2013.

Air Service History : Looking at the past nine years, Springfield air service saw huge capacity declines from 2003 to 2006 and then a stable capacity picture from 2006 through 2011. 

### Springfield Capacity, Domestic Traffic and Average Fare: 2003 ‐ 2011

The capacity stability of the past few years reflects gradual increases in capacity from new Direct Air service basically cancelling out cont inuing capacity reductions by network carriers 592

504 385

299 288 308 286 299 317 341 305

225 178 169 155 161 168 198 $138 $140 $172 $187 $183 $190

$172 $173 $182

$100 $110 $120 $130 $140 $150 $160 $170 $180 $190 $200

0 100 200 300 400 500 600 700

2003 2004 2005 2006 2007 2008 2009 2010 2011 A verage Fare

Seats and Passengers per Day Each Wa y Seats per Day Each Way Traffic PDEW Domestic Avg Fare 

### Weekly Carrier Route Frequency Seats United Express ORD 54 2,700 American Eagle DFW 26 1,144 Vision Air MYR 4 544 84 4,388 

## SPRINGFIELD AIR SERVICE: JUNE 2012

Total June 201 2Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 13 United Express and American Eagle. In the midst of all the network capacity declines and gradual Direct Air service increases, overall mark et traffic has grown from a low of 155 PDEW in 2008 to 198 PDEW for year 2011, a 28% increase! (note: capacity SDEW and O&D PDEW on the traffic chart reflect the operations and traffic of all carriers. The average fare shown is for domestic network carrier O&D only, as average fa re data is not publically available for the Direct Air services at Sp ringfield for 2009 – 2011).

Low cost carriers had no operations at Springfield from 2003 to 2006. Allegiant Air had a brief Las Vegas operation in 2007 and again there were no low cost carrier operations in 2008. In 2009, Springfield successfully recruited Direct Air to begin the first nonstop service from anywhere in Central Illinois to Myrtle Beach (summer) and Punta Gorda (winter). After a tentative first year this service expanded in 2010 and, in 2011, year round Lakeland Florida service (another pioneering effort) was added and low cost service constituted 19% of total Springfield capacity, even though Lakeland service did not start until summer.

The loss of Direct Air is another unfortunate chapte r in Springfield’s continuous efforts to recruit and support air service.

American Trans Air Midway service was very popu lar; however the carrier went bankrupt. Big Sky Airlines operated briefly and inconsistently to Midway, exited the market, and then shut down. Allegiant entered the Las Vegas market in 2007 as part of a regional strategy to combat AirTran expansion at Bloomington. Fuel prices rose and Allegiant stopped Springfield service. Springfield worked very hard to recruit and support the pionee ring services of Direct Air. Springfield was a strong market for Direct Air, however, th e carrier shut down in March of 2012. Destination 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ORD UA UA UA UA UA UA UA & AA UA & AA UA UA MDW TZ TZ GQ GQ

STL AA AA AA AA AA AA DFW AA AA IAD UA UA LAL D1 LAS G4 MYR D1 D1 D1 D1 PGD D1 D1 D1 D1 

### SPRINGFIELD AIR SERVICE HISTORY: 2003 TO 2012 Year Network Carrier Low Cost Carrier 2003 100% 0% 2004 100% 0% 2005 100% 0% 2006 100% 0% 2007 95% 5% 2008 100% 0% 2009 93% 7% 2010 91% 9% 2011 81% 19% Capacity percent CAPACITY ALLOCATION BY CARRIER TYPESpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 14 St. Louis service was lost due to a merger. Midway service was lost to a bankruptcy. The sudden shutdown of Direct Air cost Springfield dearly. In 2011 22% of Springfield O&D traffic was Direct Air. The carrier was generating record traffic volu mes on all SPI routes at the time of shutdown. 

## SPRINGFIELD TRAFFIC: 2001 ‐ 2011

Top Markets and Average Fares: Three of Springfield’s 2011 top ma rkets were Direct Air markets. 

## Springfield’s Top 20 Domestic Destinations: 2011 0 50,000 100,000 150,000 200,000 250,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 210,105 171,497 163,765 130,001 114,463 112,484 108,448 107,554 112,546 38,944

51,192

8,517

9,150 14,921 31,736 Network O&D Low Cost Carrier O&D

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Punta Gorda Dallas Lakeland Myrtle Beach Washington D.C. DC A San Francisco

Los Angeles

San Diego

Phoeni x Orlando Minneapolis New York LGA Boston Denve r Philadelphia Seattle Austin Las Vegas Houston IAH San Antonio 14,363 12,260 10,637 6,746 4,440 2,650 2,460 2,330 2,310 2,220 2,180 2,160 2,080 2,050 1,990 1,970 1,880 1,860 1,780 1,740 38.4 14.2 11.7 8.2 8.1 8.0 7.3 6.7 6.6 6.4 6.1 5.9 5.6 4.4 4.1 3.6 3.3 3.1 3.0 2.9 Annual O&D PDEWSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 15 Direct Air average fares for Punta Gorda, La keland and Myrtle Beach are estimated. 

## Average Fare in Springfield’s Top 20 Markets: 2011

Alternative Airports and Traffic Leakage: There are six commercial air service airports within a two hour drive of Springfield. However, air service at these airports varies greatly, and as will be

discussed in the Air Service Deficienc ies and Needs Section, is changing.

A 2010 Springfield leakage study concluded that Spri ngfield retains only 14.8% of its true traffic generation. The Study estimated that nearly 60% of Springfield’s traffic generation leaks to St. Louis. Changes in air service patterns in the Springfield region will cause modest shifts in leakage patterns. Springfield’s Direct Air service was actually reversing some leakage, but that service is no longer in operation. 

### Airport Distance Drive Time Air Service Decatur DEC 38 :50 EAS Bloomington BMI 66 1:07 AA, DL, G4, F9 Peoria PIA 71 1:13 AA, DL, UA, G4 Champaign CMI 85 1:36 AA

St. Louis STL 98 1:51 AA, DL, UA, US, WN, F9 Quincy UIN 112 2:00 EAS 

## SPRINGFIELD ALTERNATIVE AIRPORTS $0 $50 $100 $150 $200 $250 Punta Gorda Dallas Lakeland Myrtle Beach Washington D.C. DCA San Francisco

Los Angeles San Diego Phoenix Orlando Minneapolis New York LGA Boston Denve r Philadelphia Seattle Austin Las Vegas Houston IAH San Antonio $110 $154 $87 $112 $192 $201 $177

$183 $189 $153 $183

$190 $176 $195 $187 $178

$189 $183 $169 $191

Airport of Use O&D Capture Percent of Total SPI 106,830 14.8% STL 427,405 59.2% BMI 82,574 11.4% PIA 69,999 9.7% ORD/MDW 26,002 3.6% CMI 6,214 0.9% Other Airports 2,545 0.4%

Total O&D 721,569 100.0% 

### SPRINGFIELD TRUE TRAFFIC LEAKAGE: 2010Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 16 SPRINGFIELD’S AIR SERVICE DEFICIENCIES AND NEEDS

Springfield’s Air Service Deficiencies – The shutdown of Direct Air has left Springfield, on an annualize basis, without 20% of its air service seat capacity. Compounding the impact of this loss, north of Springfield at Bloomington, AirTran has ended all service as of June, 2012. South of Springfield in St. Louis American Airlines has eliminated all semblance of the once large TWA connecting hub and only operates 30 departures per day (excluding 26 daily Cape Air code share EAS flights). Southwest Airlines has become St. Louis’s largest airline, in part by buying AirTran, which eliminates any pricing competition between those two carriers.

In short, all of these events and circumstances leave measurably less air service capacity at Springfield and nearby airports and combined, th e result is, and will continue to be, higher

airfares.

This August Springfield capacity will be down 14 % from August of 2011. It would be down 25% if not for the hastily arranged Vision Air twice-weekly Myrtle Beach service, which was patched together by the Springfield Airport Authority working closely with the Myrtle Beach Chamber of Commerce in April of 2012. As a side note, the very last advance booking report received by Springfield from Direct Air, dated 3/5/2012 showed 1,847 advance bookings for Myrtle Beach service the summer of 2012, with June already booked to 40% load factor.

The picture of the winter of 2013, in comparison to the winter of 2012, is even more depressing for Springfield. On top of losing Lakeland and Punta Gorda service provided by Direct Air, SkyWest has indicated to Springfield that they will reduce OR D service from four daily trips to three during that period. The net result is Springfield’s Febr uary 2013 capacity, comp ared to that month in 2012, is projected to be down 36%. 

### Route 2011 Seats 2012 Seats Change Route 2012 Seats 2013 Seats Change ORD 12,000 12,000 0.0% ORD 10,400 8,400

‐ 19.2% DFW 6,200 5,104

‐ 17.7% DFW 4,578 4,576 0.0% LAL 1,946 0

‐ 100.0% LAL 2,480 0

‐ 100.0% MYR 2,598 2,448

‐ 5.8% PGD 2,700 0

‐ 100.0% Total 22,744 19,552

‐ 14.0% Total 20,158 12,976

‐ 35.6% August 2011 to August 2012 February 2012 to February 2013 

## SPRINGFIELD CAPACITY COMPARISONSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 17 The impact of the loss of Direct Air cannot be unde rstated. At shutdown the carrier was in its third
winter of Punta Gorda service and about to start its fourth summer of Myrtle Beach service while year round Lakeland service, having just started in June of 2011, was showing solid load factor performance.

The first season of Punta Gorda service showed a 71% load factor, the second year an 83% load factor and the third year, although cut short, would have been at least 85%. (red indicates advance bookings at shutdown). 

### Oct Nov Dec Jan Feb Mar Apr Season O&D 983 1,266 1,524 2,014 1,808 2,425 1,603 11,623 Load Factor 40.9% 48.9% 77.7% 82.0% 84.9% 85.9% 74.3% 70.7% Segments 16 17 13 16 14 20 14 110

O&D 686 1,704 2,178 1,923 2,177 2,024 10,692 Load Factor 76.3% 63.1% 80.7% 91.5% 94.1% 90.1% 82.6% Segments 6 18 18 14 18 16 90

O&D 1,892 1,993 1,866 2,226 2,647 2,647 2,993 16,264 Load Factor 66.3% 81.4% 74.9% 93.0% 98.0% 97.0% 82.0% 84.7% Segments 18 16 16 16 18 16 16 116 2009 ‐ 2010 

## SPRINGFIELD ‐ PUNTA GORDA MARKET METRICS

2010 ‐ 2011

2011 ‐ 2012

May Jun Jul Aug Sep Oct Season O&D 468 1,208 1,617 1,329 549 206 5,377 Load Factor 55.7% 72.0% 86.0% 70.2% 52.3% 50.3% 69.3% Segments 8 16 18 18 10 4 74

O&D 107 1285 1,658 1,631 4,681 Load Factor 53.4% 87.5% 87.7% 80.0% 84.2% Segments 2 14 18 19 53

O&D 359 2,312 2,187 1,611 275 6,744 Load Factor 66.8% 89.2% 84.4% 62.0% 45.7% 78.8% Segments 4 18 18 18 4 62

O&D 132 962 738 415 38 2,285 Load Factor 15.0% 40.0% 27.0% 15.0% 15.0% 24.0% Segments 6 16 18 18 2 60 2012 ADVANCED BOOKINGS AT SHUTDOWN MARCH 2012 200 9 

## SPRINGFIELD ‐ MYRTLE BEACH MARKET METRICS

201 0

2011Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 18 Like Punta Gorda in the winter, the summer season Myrtle Beach route built up traffic and load factor from year to year.

The first summer had a 69% load factor, the second an 84% load factor and the third a 79% load factor, with the carrier choosing to operate into September with disappointing results. The 2012 numbers (in red) indicate advance bookings and operational plan as of the March 5, 2012 Direct Air booking report, just pr ior to the carrier’s shut down.

Lakeland service did not perform as well as Punta Gorda or Myrtle Beach, however it was part of the first air service ever at Lakeland, was flown year round and involved some capacity allocation errors by the carrier, notably in the late summer and early fall of 2011. Despite all that, Lakeland service had a 66% load factor in 2011 and February and March of 2012 combined exceeded 90%, either actual or on the books.

So the sum of Direct Air’s service history at Sp ringfield is one of pioneering air service that produced solid load factors, despite occasional ca pacity missteps by the carrier. But all that is gone now and Springfield must to start from sc ratch and rebuild its low fare air service.

Direct Air’s shutdown has occurred as leisure mark et air fares in St. Louis, which is Springfield’s primary leakage point, have increased dramatically . St. Louis is no longer characterized by low fares and extensive competition. American’s wi thdrawal of hub operations (now down to 30 mainline or regional jet flights per day and only to American hubs or focus cities) combined with Southwest acquiring AirTran (which combined the two main LCCs at that airport) has measurably reduced the intensity of competition in that market. 

### Jun Jul Aug Seo Oct Nov Dec Season O&D 428 2,847 762 1,138 1,463 2,016 1,983 10,637 Load Factor 63.1% 73.2% 49.6% 65.0% 51.2% 63.2% 76.1% 65.8% Segments 5 28 10 14 22 22 19 120

Jan Feb Mar Apr May Jun Jul Period O&D 1,647 1348 2,861 1,658 966 2,207 1,262 11,949 Load Factor 53.4% 87.5% 95.0% 61.0% 40.0% 61.0% 32.0% 63.3% Segments 18 16 20 18 16 24 24 136 

## SPRINGFIELD ‐ LAKELAND MARKET METRICS
2011

201 2Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 19 Comparing 2009 to 2011, in only two years the changes in primary St. Louis leisure markets are significant:
 Capacity is down 15%, declines are double digit at Orlando, Las Vegas and Fort Myers.
 Traffic is up 1% overall and only down significantly in Fort Myers.
 Average fare for the group of leisure markets is up 17% and up by double digits in all

markets.
 The St. Louis – Fort Myers city pair now has more PDEW than SDEWS, implying large scale

connect flow in a traditional leisure market.

Springfield’s Air Service Needs – Springfield is the State Capital of Illinois. Illinois is the fifth largest state in the Union in terms of population and by most common economic metrics. Air service is essential for a city of this importance.

Yet today Springfield clings to its two network carri ers and a total of six regional jet flights a day (five in winter) to two network hubs. The loss of Direct Air eliminated about a fifth of Springfield’s air service. In 2011 Direct Air service generated about 16,000 enplanements and 32,000 total
market O&D. This matters because low cost carrier service creates critical mass at the Springfield airport; it has a magnetizing effect on the entire region and in that manner it helps preserve and grow the network regional jet service that is essential to the function of the state capital of the fifth largest economy in the nation.

Springfield needs to rebuild its low fare air servic e. We worked very hard to create what we had and the failure of Direct Air management means it is gone. We are working hard to recruit replacement low fare service. We believe our strategic plan to do so will be successful. The proposed Grant funding and recrui tment plan will enable us to restore what we have lost and thus preserve the whole of our network air service. 

### 2009 2011 Change 2009 2011 Change 2009 2011 Change MCO 799 592

‐ 26% 498 493

‐ 1% $107 $126 18% LAS 644 504

‐ 22% 414 424 2% $139 $163 17% PHX 847 778

‐ 8% 372 379 2% $139 $156 12% TPA 309 280

‐ 9% 252 273 8% $121 $137 13% RSW 265 165

‐ 38% 213 191

‐ 10% $112 $140 25% SE FL 515 555 8% 394 404 3% $124 $145 17% Total 3,379 2,874

‐ 15% 2,143 2,164 1% $124 $145 17% 

## MAJOR ST. LOUIS LEISURE MARKET CAPACITY, TRAFFIC & AVERAGE FARE

SDEW PDEW AVG FARESpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 20 A STRATEGIC PLAN TO RE STORE SPI AIR SERVICE

The Springfield Abraham Lincoln Capital Airport is perfectly positioned to offer low cost carriers’
access to both Central Illinois and the St. Louis me tro area. Decatur is less than an hour’s drive, Bloomington, Champaign and Peoria are in the ra nge of a 90-minute driv e or less and Quincy and much of the huge St. Louis metro area is le ss than a two hour drive from SPI. This optimum location drew high traffic counts to Direct Air se rvice to Florida and Myrtle Beach. The Springfield Airport Authority, working with its public and private partners, believes that low cost service can be recruited to replace Direct Air.

Proposed New Service – For Springfield and Central Illinois the well established leisure destinations are Florida, Myrtle Beach, Las Vegas and Phoenix. Four low cost carriers specialize in providing less-than-daily service to these destinatio ns: Allegiant, Spirit Air, Sun Country and Vision

Airlines. In the wake of Direct Air’s demise one or more additional new carriers of this type may emerge, such as Metjet, which has proposed less -than-daily service at Green Bay, Wisconsin.

Springfield proposes to re-establish local low fare air service, targeting all airlines that specialize in that type of service. Targeted routes will include Florida, Myrt le Beach, Las Vegas and Phoenix.Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 21 Springfield’s Ground Handling and Marketing Program – Carriers that operate low fare service of this type are typically very focused on the cost of operation for new services. They are less likely to want minimum revenue guarantee arrangements than network carriers; indeed, Allegiant Air does not even seek or accept minimum revenue guarantee arrangements. These carriers do usually insist upon free or reduced-cost airport ground handling and operating fee arrangements during new route startup and they want airports and communities to invest heavily in local marketing and promotion efforts, since most onboard traffic is of local origin.

Springfield is prepared to invest heavily in a comprehensive ground handling and regional marketing program in support of a new low cost ca rrier. This Grant proposal envisions that Grant funding, combined with local funding, would allow Springfield to offer a low cost carrier a SCASD funded turnkey new service startup package, including a start-up phase zero-cost ground handling arrangement and a multidimensi onal marketing and promotional effort.

Springfield operates its own ground handling program and provides above and below wing service for daily American Eagle re gional jets. This same team prov ided those services for Direct Air prior to its shutdown. For an eight month period , the airport’s true average cost to provide this service was $414 per turn plus a $60 FBO fee for in-to-plane fueling, a to tal of $474 per turn.

Springfield has always aggressively marketed its air service, both network and leisure oriented. For each new leisure route the Airport believes that $75,000 should be spent the first year of service on a year-round route and $35,000 on a seasonal route. In the second year, or second season of a new route, a minimum of $30,000 per year-round route and $20,000 per seasonal

route should be allocated.

Promotional funds would be spent across a wide spectrum of media venues. The allocation of funding varies as media costs and penetration patterns change. Springfield uses traditional media such as newspaper, billboards and radio or TV as well as Facebook, Twitter and website promotions. Local sponsorships and ticket giveaways are also deployed with carrier participation. The Airport has an email blast list of 4,500 local area residents for promoting fare sales or new service. Springfield uses face-to-face sales calls and promotional calls on key leisure travel generators such as Travel Agencies and Institutions of Hi gher Learning. Springfield has not hesitated to promote its leisure services in nearby metro areas, including spot purchases in the St. Louis Post/Dispatch metro additions and radio or TV spots that cover all of Central Illinois.Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 22 A four route program is outlined below. Springfiel d understands that all four routes may not start the same year but might be staggered in start-up over a two or three year period with the success of initial routes paving the way for the success of the latter routes. In the example below four routes receive a first year nurturing to success at a total cost of only $350,824.

Grant Funding Plan – This Grant application requests $250,000 in Department funding. Springfield will provide $100,000 in matching cash funding and another $70,000 of in-kind funding, making total Grant funding of $350,000 in cash and $70,000 of in-kind or $420,000 in total value. Springfield’s local cash match is $50,000

from the Chamber and the Q5 Quantum Growth Partnership and $50,000 from the Airport Authority’s non-aeronautical fund. Iin-kind funding consists of $35,000 of local private co-op advertising and $35,000 in project related use of airport owned marketing assets.

Implementation Timeline – Springfield aggressively recruits new air service, meeting with airlines at conferences, on the phone and in headquarters meetings. We know that the recruitment process can sometimes be fast but more often it is slow. We hope that Grant funding structured

as outlined herein will enable us to secure new leisure air service in time for the winter of 2012 –
2013. We are so confident in our market and in the ground handling and marketing program we have developed that we propose that a Grant award be only until the end of 2013. If we have not seen start-up of at least one Grant supported route by December 31, 2013, we will surrender the Grant back to the Department. Our implementation timeline is built by month. It can be repeated from month one to month six if Grant funding is used for a second, third or fourth new market, in 2013 or beyond that. 

### Service Annual Covered Annual Marketing Total Year Route Type Turns Cost/Turn Turn Cost Spend One Off Set Orlando/Lakeland Annual 52 weeks 104 $474 $49,296 $75,000 $124,296 Las Vegas or Phoenix Annual 52 weeks 104 $474 $49,296 $75,000 $124,296 Punta Gorda Winter 21 Weeks 42 $474 $19,908 $35,000 $54,908 Myrtle Beach Summer 13 Weeks 26 $474 $12,324 $35,000 $47,324 276 $474 $130,824 $220,000 $350,824 

## EXAMPLE: NEW SERVICE MARKETING AND AIRPORT COST YEAR ONE OFF SET

Total

Entity Funding Percent of Total DOT $250,000 71.4% Private Sector Cash Funding $50,000 14.3%

Airport Non

‐ Aeronautical $50,000 14.3% Total Cash Funding $350,000 Local In

‐ Kind Contributions $35,000 Airport In

‐ Kind Contributions $35,000 Grant Total Funding $420,000 

## GRANT FUNDING PLANSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 23 Examples of Springfield Leisure Markets – Direct Air service demonstrated that Springfield is ideally positioned to be a successful leisure service gateway. Springfield, Central Illinois and St. Louis together generate significant traffic to leisure destinations.

Springfield service need only capture between 6% and 10% of available regional traffic to Orlando, southwest Florida or Las Vegas to hit lo ad factor targets. In 2011 Springfield’s nonstop service to Myrtle Beach captured about two thirds of total regional traffic for that destination. 

### Timeframe Milestone Grant Award Grant Contract Signed Ongoing Carrier Recruitment Process Ongoing File Quarterly DOT reports Month One Agreement with New Carrier Month Two Announcement of First New Service

Month Four Begin marketing and promotion Month Five New Service Begins

Second, Third and Fourth New Route Follow Month One to Six Process for each Meet with carrier and local stakeholders to plan startup and marketing process Month Three

Monitor bookings/adjust marketing efforts as needed Month Six



## GRANT IMPLEMENTATION TIMELINE

Base Month

Variable LAL/MCO/SFB LAS MYR PGD/RSW Season Annual Annual Summer Annual Frequency 2 RT per week 2 RT per Week 2 RT per Week 2 RT per Week Segments 208 208 52 84 Seats @ 150 per Flight 31,200 31,200 7,800 12,600 85% Load Factor 26,520 26,520 6,630 10,710 2011 O&D Traffic SPI (including Direct Air) 12,857 1,860 6,766 14,653 Central Illinois 79,280 69,630 720 20,680 STL 363,710 314,750 2,180 76,270 Total 455,847 386,240 9,666 111,603

68.6% 9.6% 

# SPRINGFIELD LEISURE SERVICE OPERATING PLAN

SPI Share of Total Traffic for 85% Load Factor 5.8% 6.9%Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 24 AIR SERVICE RECRUITMEN T AND MARKETING SUPPORT

The Springfield Airport Authority prides itself on aggressively supporting its incumbent airlines, aggressively recruiting new air service where it ca n be viable and keeping airport costs as low as possible.

Springfield Air Service Recruitment – Springfield is extremely active in recruiting new air service, from both its incumbent carriers and potential new entrant carriers.

2009: February – SPI announced twice we ekly Direct Air non-stop season al service to Myrtle Beach. March – Attended Network USA, met with Americ an Eagle, Delta Airlines and Trans States. April - Headquarters meeting in My rtle Beach, SC, with Direct Ai r. Airport and consultants met
with Direct Air senior staff to discuss future service and market potential to various Florida markets, in particular Ft Myers area and Orlando areas. May - Direct Air begins summer seasonal twice weekly service to MYR. June – Attended Jumpstart Conference, met wi th Gulfstream, Pinnacle/Colgan and Republic. October - Direct Air starts new non-stop seasonal service to Punta Gorda, FL

2010: February – Market presen tation to Allegiant Air.
June – Presentation made to Direct Air regarding Orlando area service. July – Comprehensive Community Air Service Survey conducted October – Attended Sixel Consulting Air Service Conference, presentations made to Direct Air, SkyKing, Pinnacle/Colgan, Republic Airways, Vision and Cape Air. October – Headquarters meeting with SkyWest Airlines, presentation made regarding service and market opportunity to Denver, Washington and sustaining stable service to Chicago. December – Presentation prepared and submitted to Sun Country Airlines.

2011: February – Springfield Ticket Lift and True Traffic Demand and Leakage Study completed February – Attended Network USA, presented to Southwest, Vision, Branson Express, Spirit, Allegiant Air, Pinnacle, and Air Tran. March – Attended Sixel Consulting Air Service Conference, meetings with Frontier and SkyWest. April – American Eagle terminates SPI- ORD route and adds SPI-DFW route.Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 25 June – Attended Jumpstart Confer ence, met with Southwest, United, US Airways, Allegiant Air, Republic and Vision Airlines. June – Direct Air begins thre e times weekly year around service to Lakeland, Florida October – Met with Direct Air principals in Myrtle Beach, SC. Discussions about market opportunities to Nassau, Bahamas and Gulfport, MS. November - Attended Sixel Consulting Air Service Conference, met with Frontier and US Airways. December – Updated presentations prepared and provided to Allegiant Air and Spirit Airlines December – Community Air Service Survey conducted

2012: March – Update presentation sent to Allegiant suggesting service to La s Vegas, Phoenix/Mesa, Tampa/St Petersburg and Sanford/Orlando March – Attended Network USA, met with Allegiant, Spirit, US Airways, United, and PeoplExpress. March – Direct Air abruptly termin ated all service to all markets March/April – Vision Airlines secured to fly the remaining seasonal schedule between SPI and Ft. Myers FL (RSW). April – Attended Sixel Consulting Group Air Service Conference, met with US Airways, American Eagle, and SkyWest Airlines. May – Vision Airlines resumed the summer season al route to Myrtle Beach, SC, abandoned by

Direct Air June – Attended ACI Jumpstart Air Service Conference, met with United, US Airways, Allegiant, PeoplExpress, Spirit and Sun Country.

Annual Marketing Budget – The Springfield Airport Authority supp orts its airlines with a robust and aggressive marketing effort. Marketing efforts in 2011 supported both network carriers and Direct

Air.



### Year Advertising Spend Approximate Allocation of Spending 2009 $285,712 Newspaper/Print: 45% 2010 $366,818 Billboards: 10% 2011 $348,493 Radio: 15% Television: 15% Promotional: 10% Misc./Other: 5% SUMMARY OF SPRINGFIELD AIR SERVICE MARKETING: 2009 ‐ 2011Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 26 PREVIOUS GRANT AWARDS

Springfield has been fortunate to be awarded two previous SCASD Grants. Both Grants were

used to recruit new air service.

The first Grant (awarded 9/5/2006) had project goals and objectives as follows: Increase enplanements, strengthen existing carriers at the airport, begin nonstop service to Washington D.C. and open up the Airport to new one-stop domestic and international routes. The Grant wasin the amount of $390,000 and was matched by $975,000 in local cash and $100,000 in local inkind contributions. Springfield succ essfully recruited United Airlines to begin regional jet service to Washington Dulles. The service operated from Apri l of 2007 to early July of 2008. Unfortunately, during this time fuel prices soared. Also, the United Airlines regional partner assigned to operate the flights had reliability and on-time performance issues. The Grant was closed on 6/13/2008.

The second Grant (awarded 9/19/2008) had projec t goals and objectives as follows: Provide Central Illinois and its Capital City a third option to a major airline hub offering connections to top destinations, increase awareness about local ai r service and to increase availability of seats and provide more competitive airfares. The Grant was in the amount of $750,000 and was matched by $100,000 in local cash and $375,000 of in-kind contributions. The primary target carrier/route combination for the MRG funding of the Grant was Northwest Airlines and service to Memphis. Northwest merged with Delta Air Lines in late 2008 and did not have interest in the market and route concept. Springfield network se rvice was reduced in 2009 to American Eagle and United Express both offering flights to Chicago ORD. In late 2010, Springfield and American Eagle proposed to the DOT that this Grant’s funding be put toward supporting American Eagle service from SPI to DFW. With DOT approval of that proposal, that service began in April of 2011 and continues today. This Grant was closed on 4/17/2012.

Both Grants were for risk abatement and market ing support of risk abated service. Springfield
was able to recruit new service with both Grants and the service supported by the second Grant is still in operation. Springfield knows how to responsibly use Grant funding and how to be successful in recruiting new air service using Grant funding.

This Grant proposal is for ground handling cost offsets and marketing of new low fare service to replace the devastating loss of the very popular Di rect Air service to three leisure destinations.Springfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 27 PUBLIC PRIVATE PARTNERS HIP AND LEGAL SPONSOR

Springfield’s Public Private Partnership for Air Service Recruitment – Springfield cares about its air

service. From the halls of State Government to corporate offices to corner coffee shops, people in Springfield take pride in their city and that includes its air service.

Joining the Airport Authority as public members of Springfield’s public/pri vate Partnership for Air Service Recruitment are the City of Springfield, Sangamon County and the Greater Springfield
Convention and Visitors Bureau.

The private members of this partnership include the Greater Springfield Chamber of Commerce and the Q5 Quantum Growth Partnership. The Chamber has an active membership and air service is high on the list of infrastructure prio rities. The Q5 Partnership is a key driver of local economic development.

Legal Sponsor – The legal sponsor of this Grant appl ication and the administrator of a Grant award will be the Springfield Airport Authority. The Executive Director of the Airport is Mr. Mark Hanna. Mr. Hanna has administered many grant proj ects and directly spea rheads Airport efforts to recruit new air service and improve incumbent air service.

Mr. Mark Hanna, Executive Director, Springfield Abraham Lincoln Capital Airport 1200 Capital Airport Drive, Springfield, IL 62707

217 788 1060 X 2211 mhanna@flyspi.com 

### SPI's PUBLIC / PRIVATE PARTNERSHIP FOR AIR SERVICE RECRUITMENT

The Springfield Airport Authority The City of Springfield

Sangamon County Springfield Convention and Visitors Bureau Greater Springfield Chamber of Commerce Q5 Quantum Growth Partnership Private Members Public MembersSpringfield Airport Authority • Small Community Air Service Development Grant Proposal • June 2012 

## 28 CONCLUSION

The Springfield Airport Authority is one of the mo st innovative in the nation in the matter of supporting incumbent air service and recruiting ne w air service. The Authority works closely with its incumbent carriers and is active in recruiting new carriers. Despite this innovation and hard work, the shutdown of Direct Air leaves Spring field without a vital piece of its air service.

Replacing Direct Air, in form if not in exact service pattern is priority number one for the Airport. It is very important to provide low fare leisure se rvice at Springfield, especially in light of the dramatic air service changes in the region, wi th St. Louis seeing much less competition and much higher fares and Bloomington losing AirT ran this month. Springfield has the optimum location, less than a two hour drive from much of the St. Louis metro area and all of Central Illinois. No other airport in th e region can make that claim.

Replacing Direct Air, and having a low fare leisure service at Springfield, is also about helping preserve the Airport’s network carrier service, which is essential to the function of the Illinois State
Government and local businesses and institutions . Low fare leisure air service magnetizes the Airport, draws travelers to it, and thus creates the critical mass needed to preserve and eventually grow the network service beyond the current two carriers and two hubs.

This modest Grant funding proposal, coupled wi th the local matching funds, will enable the Airport to replace Direct Air promptly. The Grant funded ability to provide a virtually cost free market entry and first year of operation, combined with the proven leisure traffic generating capability Springfield has demonstrated, will ensu re that we can replac e Direct Air in 2013.

Springfield has won two previous Small Community Air Service Grants and used both to recruit new air service. Both were for the more traditional risk abatement approach to supporting new air service. This Grant proposal, in keeping wi th Springfield’s innovative persona, is for a comprehensive program of ground handling and airport cost offsets and an aggressive and multidimensional new service marketing and advertising program.

With Grant funding we will bring low fare leisure service to Springfield in 2013. If we do not we will return the Grant to the Department. We are that confident in our market and our proposal. We urge the Department to reward our confidence and help us promptly replace Direct Air.