## Dun & Brad street DUNS Number : 15

- 6130148 Tax Identification Number: 81

- 0347136 Two Digit Congres sional District Code: None (at Large Representation) 

# Great Falls International Airport Authority

Great Falls, Montana

Proposal u nder the Small Co mmunity Air Service Development Program

Docket DOT

- OST

- 2011

- 0119

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 2 

## TABLE OF CONTENTS

INTRODUCTORY LETTER

................................ ................................ ................................ .................... 4
EXECUTIVE SUMMARY

................................ ................................ ................................ ........................ 5
AIR SERVICE OVERVIEW

................................ ................................ ................................ ..................... 7
Catchment Ar ea and Population

................................ ................................ ................................ ............................ 7 Alternate Airports

................................ ................................ ................................ ................................ ................... 8 Great Falls' Existing Air Service

................................ ................................ ................................ ............................. 9 Air Service Development Efforts

................................ ................................ ................................ .......................... 11 

### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

................................ ............................. 12 Capacity Trends

................................ ................................ ................................ ................................ ................... 12 Fewer Delta Seats per Departure

................................ ................................ ................................ ........................ 14 Fewer Delta Departures per Day

................................ ................................ ................................ ......................... 15
Combine d Delta Seats per Departure and Departures per Day

................................ ................................ .......... 16
Traffic Trends

................................ ................................ ................................ ................................ ....................... 17 Leakage to Other Airports in the Region

................................ ................................ ................................ .............. 19
Domestic Fare Trends

................................ ................................ ................................ ................................ .......... 21 High Fares Relative to Other U.S. Lower 48 Airports

................................ ................................ .......................... 22 

### STRATEGIC PLAN

................................ ................................ ................................ .............................. 23 Proposed New Route

................................ ................................ ................................ ................................ ........... 23
Goals

................................ ................................ ................................ ................................ ................................ .... 23 Target Airlin e Support

................................ ................................ ................................ ................................ .......... 23
Great Falls

- San Francisco Bay Area Traffic and Fare Trends

................................ ................................ ............. 24 Connecting Traffic and Revenue Via San Francisco

................................ ................................ ........................... 28 Grant Amendments/Alternate Strategies

................................ ................................ ................................ ............. 31 

### PROJECT IMPLEMENTATION, MONITORING AND FUNDING

................................ .......................... 32 Public / Private Partnerships

................................ ................................ ................................ ................................ 32 Project Funding

................................ ................................ ................................ ................................ .................... 33 Implementation Timeline

................................ ................................ ................................ ................................ ...... 34
Start

- Up Period and Sustainability of the Market

................................ ................................ ................................ . 34 

### PROJECT MONITORING AND FINANCIAL CONTROL

................................ ................................ ...... 35
Success Metrics

................................ ................................ ................................ ................................ ................... 35 Legal Sponsor

................................ ................................ ................................ ................................ ...................... 36
Financial Controls

................................ ................................ ................................ ................................ ................ 36

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

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### APPENDIX A: REQUIRED SUMMARY INFORMATION

................................ ................................ ..... 37

A. Applicant Information

................................ ................................ ................................ ................................ .... 37
B. Public/Private Partnerships

................................ ................................ ................................ .......................... 37
C. Project Proposal

................................ ................................ ................................ ................................ ........... 37
D. Existing Landing Aids at Local Airport

................................ ................................ ................................ .......... 38
E. Project Cos t

................................ ................................ ................................ ................................ .................. 38
F. In

- Kind Contributions**

................................ ................................ ................................ ................................ . 38
G. Is this application subject to review by state under Executive Order 12372 Process?

................................ 38
H. Is this applicant delinquent on any federal debt?

................................ ................................ ......................... 39

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 4 

### INTRODUCTORY LETTER

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 5 

### EXECUTIVE SUMMARY

Great Falls International Airport is proposing a Sma ll Community Air Service Develo pment Grant in the amount of $500,000 to supplement Airport and community

- matching cash and in

- kind contribution s of $180,918 to provide a minimum revenue guarantee for regional jet service between Great Falls and San Francis co on United Airlines or SkyWest

. Great Falls has no nonstop service to any destination in California, and service to San
Francisco would connect Great
Falls travelers with the Great
Falls' eighth largest market when ranked by market size.
The combined Great Falls market size of airports in the San Francisco Bay Area stood at 8.7 PDEW at an average fare of $186 in each direction
in 2010 . In addition to the local market, Great Falls

- San
Francisco service could provide connections to at least
29 other mar kets United and United's Star Alliance partners serve from San Francisco including other destinations in California, Hawaii, and inte rnational destinations in Asia.

Airport officials met with United in June 2011 at United's headquarters in Chicago to discu ss the viability of service from Great Falls to San Francisco. While United could not commit to beginning service if the community were to win a SCASD award, airport officials were told a minimum revenue guarantee would reduce United's risk and
could caus e the Great Falls

- San Francisco opportunity to rank higher among all opportunities in United's network in general and among San Francisco opportunities in particular. United affirmed service to its hub in San Francisco is much more likely than service to its hub in Chicago.

Great Falls lost a significant amount of the capacity Delta and Northwest operated prior to the Delta and Northwest bankruptcies in 2005 and the subsequen t merger of Delta and Northwest in 2008. Not only has Delta
d own
- gauged aircraft size, but Delta is also operating fewer flights than Delta and Northwest previously operated. In fact, Delta's capacity was down 67.8% in 2010 to 232 seats per day each way versus the 720 seats per day

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 6 each way operated in 2004. Alaska's capacity was up sl ightly in 2010 versus 2005. United's entry in the Great
Falls

- Denver market in 2005 dampened the impact of Delta's reductions, but Great Falls' domestic ex

- Allegiant
traffic is down 27.3% from its 2005 level.

As ex
- Allegiant capacity has trended down since 2005, fares have trended up, and the average ex

- Allegiant one

way domestic fare was $241 in 2010. At $241, the average Great Falls do mestic fare ranked as the seventh highest domestic fare am ong all airports in the lower 48 United States with at lea st 100,000 domestic origin and
destination ex
-

Allegiant passengers in 2010.

Allegiant entered the Great Falls

- Las Vegas market in 2007 and the Great Falls

- Phoenix market in 2009, but Allegiant's point

- to

- point ser vice in these markets benefits only leisu re travelers and does not provide connections to markets beyond Las Vegas and Phoenix/Mesa.

Great Falls is a relatively isolated market; however, high fares and limited service drive traffic to other airports in the region. Based on a leakage study of tra vel originating in the immediate Great Falls catchment area in 2010, Great Falls International Airport retains just 51.4% of traffic. Nearly 30.6% of traffic leaks to Missoula and 7.0% leaks to Billings, where Fr ontier service enables Billings to enjoy th e lowest average domestic ex
- Allegiant fare in
Montana.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 7 

### AIR SERVICE OVERVIEW

Catchment Area and Population

More than 82,000 residents live within a one hour drive of Great Falls International Airport, and nearly 154,000
residents live within a two hou r drive of the airport.

The size of Montana and the relative isolation of Great Falls creates a relatively large catchment area, especially to the north and northeast of Great Falls. Great Falls is the closest U.S. airport with commercial service to man y locations in southern Alberta, and relatively high taxes and fee structures on Canadian airline tickets makes Great Falls International Airport an attractive alternative airport for many travelers in Alberta when traveling to U.S. and
even some Mexican d estinations. Allegiant's service in Great Falls is especially appealing to Canadian travelers, and the airport estimates as much as 50% of Allegiant's Great Falls traffic is Canadian traffic, especially residents of the Lethbridge area.

Exhibit 1: One, T wo an d Three H our Drive T imes from Great Falls International Airport

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 8 

### Alternate Airports

No other airport is located within a one hour drive of the Great Falls, and only Helena, at a distance of 87 miles
, is
located within a two hour drive. Bozeman is a 176

- mile drive from Great Falls at an estimated drive time of two
hours and 45 minutes. Missoula, which captures nearly 31% of the traffic generated in the Great Falls catchment
area is a three hour drive from Great Falls.

Exhibit 2 : Location of Great Fa lls International Airport , One, Two and Three Hour Drive Times from Great Falls International Airport and the Locations of Other Airports in Montana.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 9 

### Great Falls' Existing Air Service

G reat Falls is served by three network carriers, Delta, United and A laska. Delta serves its hubs in Salt Lake City and Minneapolis/St. Paul, United serves its hub at Denver, and Alaska operates service from Great Falls to Seattle (with some flights operating to S eattle on single

- plane service via Helena). Allegiant also serves Great
Falls with less

- than

- daily service to both Las Vegas and Phoenix/Mesa.

Exhibit 3 : Current Routes Operated from Great Falls International Airport

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 10 The number of departures per day, average seats per departure and seats per day by market a nd by carrier are displayed in the table in Exhibit 4. Based on August 20 11 data, Delta provides the most capacity at Great Falls International airport, with an average of 260 seats per day each way, or 34.6% of the airport's total capacity.
Alaska is t he second largest carrier at Great Falls with 29.6% of the airport's capacity. Alaska operates two nonstop flights from Great Falls to Seattle complemented by a third Seattle flight which operates via Helena before continuing to Seattle. United operates about one

- fifth of the capacity at Great Falls with three 50

- seat regional jet flights to its hub in Denver. Allegiant operates less

- than

- daily service to both Las Vegas and Phoenix/Mesa using MD

- 80 aircraft. Although Allegiant's capacity varies througho ut the year, it will operate two flights per week to Las Vegas and four flights per week to Phoenix/Mesa in August. Unlike Alaska, Delta and United, Allegiant does not offer connecting service beyond Las Vegas and Phoenix/Mesa

– all Allegiant traffic is
p oint

- to

- point traffic.

Exhibit 4: Departures per Day *
, Seats per Depart ure and Seats pe r Day by Market and Carrier at Great Falls

– August 2011

* T he number of departures per day is displayed in increments of sevenths (because there are seven days in a week) . "1 3 /7" is read as one flight seven days a week wi th a second flight operated three of the seven days in a week.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 11 

### Air Service Development Efforts

Great Falls International Airport is aggressively pursuing new air service an d has met with ei ght airlines in 11

me etings since December 2010

. Great Falls has met with Allegiant and United airlines at their headquarters
offices

. Great Falls also attended both the Sixel Consulting Small Airports Conference in Salt Lake City and the JumpStart Confe r ence in Cleveland where the Airport Director presented business cases for new service at Great
Falls to each airline. Great Falls' meetings with airlin es are illustrated in Exhibit 5 :

Exhibit 5 : Great Falls International Airport Air Service Development M eetings with Airlines

– December 2010 through July 2011

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 12 

### AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacit y Trend s

Total capacity for all airlines (including Allegiant) serving Great Falls was down 34.3% since its peak in 2005 to 694 seats per da y each way in 2010. When Allegiant's capacity is excluded, capacity was down even more in
2010

– 45.3%, or 478 seats per day each way since the peak in 2005. While Allegiant's capacity is important, and Allegiant offers an important service for leisure t ravelers at Great Falls International Airport, Allegiant serves only two destinations from Great Falls and does not connect traffic beyond these two destinations.

Exhibit 6: Seats per Day Ea ch Way at Great Falls International Airport (All Carriers
, Ex

- All egiant and Allegiant ) Year

- End Fourth Quarter 2001

- 2010 (DOT T

- 100 data)

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 13 Closer analysis of Great Falls capacity reveals most of the total decline since 2005 is result of Delta and
Northwest reduc ing capacity. In 2005, Delta/Northwest operated an average of 720 seats per day each way at Great Falls. In 2010, Delta operated just 232 seats per day each way, a decline of 488 seats per day each way or
67.8%.
Among the other carriers serving Great F alls, United entered the Great Falls market in 2005 and has consistently operated two or three flights per day each way to its hub in Denver. Big Sky was a 19

- seat operator that served destinations mostly in Montana, but discontinued operations in 2006 wh en the company shutdown all operations. Alaska's capacity has been relatively consistent over the last ten years, and of course, Allegiant has increased its capacity since entering the market in 2007 to Las Vegas and the inauguration of Phoenix/Mesa servi ce in 2009.

Exhibit 7 : Seats per Day E ach W ay by Carrier at Great Falls International Airport

– Year

- End Fourth Quarter 2001

- 2010 (DOT T

- 100 data)

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 14 

### Fewer Delta Seats per Departure

Exhibit 8 illustrates Delta/Nort hwest has down

- gauged the size of aircraft operated at Great Falls over the last ten years from 115 seats per departure (per flight) in 2001 to just 58 seats per departure in 2010. Since 2005, when Great Falls' total airline capacity peaked, Delta's avera ge seats per de parture declined from 70 to 58 in 2010 . As Alaska replaced CRJ

- 700 regional jets with larger Bombardier Q

- 400 turboprops beginning in 2005 , Alaska's seats per departure increased from 70 in 2001 to 76 in 2010. United's capacity per departu re, while down from the first year it operated service in Great Falls, has been flat at approximately 50 seats over the last five years.

Exhibit 8 : Seats per Departure (Flight) Operated by Delta/Northwest, Alaska and United at Great Falls International Ai rport 2001

- 2010 (DOT T

- 100 Data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 15 

### Fewer Delta Departures per Day

In addition to down

- gauging its average aircraft size, Delta/Northwest has also cut the number of flights it operates at Great Falls International Airport. In 2001, Delta and Northwest operated a total of 6 flights per day in
Great Falls , increased the number to approximately 10 in 2004 and 2005, but by 2 010, Delta operated just four flights per day in Great Falls. Alaska's flights per day are also down from 3 5/7 flights per day in 2 001 to 3 flights per day in 2010, but Alaska's overall decline in capacity has been significantly less than the Delta/Northwest
decline.

Exhibit 9 : Departures (Flights) per Day Operated by Delta/Northwest, Alaska and United at Great Falls International Ai rport 2001

- 2010 (DOT T

- 100 Data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 16 

### Combined Delta Seats per Departure and Departures per Day

When the combined Delta and Northwest seats per departure and departures per day are illustrated on the same chart, as in Exhibit 10 below, it is apparent that both fewer seats per departure and fewer departures per day

came together to result in the 67.8% decline in Delta/Northwest's capacity in Great Falls.

Exhibit 10 : Delta and Northwest Seats per Departure and Departures (Flights) per Day at Great Falls Int ernational Airport 2001

- 2010 (DOT T

- 100 Data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 17 

### Traffic Trend

s

Great Falls domestic ex

- Allegiant traffic peaked in 2005 when capacity peaked. Between 2005 and 2010, the
domestic ex

- Allegiant traffic is down 27.5% from 294,570 origin and destination passengers to 213,630 origin and destination passengers in 2010. Although Allegiant traffic has enabled total airport traffic to rebound to near the 2005 peak, all of the Allegiant traffic is to either local Las Vegas or local Phoenix/Mesa traffic

.

Inter national traffic is up slightly since 2005, but international traffic accounted for just 3.3% of total traffic in Great
Falls in 2010.

Exhibit 11 : Annual D omestic and International Origin and Destination (O&D) Passengers at Great Falls International Air port Year

- End Fourth Quarter 2001

- 2010 ( DB1B data)

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 18 The origin and destination traffic translates to 293 domestic ex

- Allegiant PDEW, 105 Allegiant and 14 PDEW in
2010. While the downward trend in the domestic ex

- All egiant traffic between 2005 and 2009 was reversed in 2010, it should be noted that the 2010 tr affic increased by just 15 PDEW and domestic ex

- Allegiant traffic stood at just 72.2% of its 2005 level.

Exhibit 12 : Annual Domestic and International Passengers per Day Each Way (PDEW) at Great Falls International Airport Year

- End Fourth Quarter 2001

- 2010 (DB1B data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 19 

### Leakage to Other Airports in the Region

Great Falls International Airport retains only 5 1.4 % of the traffic generated in its immediate catchmen t area (the Great Falls metropolitan statistical area). 4 8

. 6 % of the traffic Great Falls International airport could capture is lost to other airports in Montana, with nearly one

- third of the traffic lost to Missoula. Billings captures 7.0% of the
traff ic , Bozeman and Helena each capture 4.6%
, and Kalispell captures slightly less than 2% of the traffic.

Exhibit 13 : Airport Origin for Great Falls Catchment Area Traffic January 2010

– December 2010 (June 2011 Leakage Study)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 20 Airfares in Montana are ge nerally very high. The average fare in all domestic and international markets at Great Falls for the itineraries analyzed in the leakage study was $212 each way

. Average fares among the airports that captured Great Falls traffic ranged from $181 at Boze man (4.6% of the traffic) to $250 at Helena (also 4.6% of the traffic). Missoula captured 30.6% of the traffic generated in the immediate Great Falls catchment area, but the average fare paid at Missoula was $209, just $3 lower than the average fare paid at Great Falls.

Exhibit 14 : A verage Fare Paid by Great Falls Catchment Area Passengers by Originating Airport

– January 2010 through December 2010 (June 2011 Leakage Study)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 21 

### Domestic Fare Trend

s

The average ex

- Allegiant domestic fare is up $74 each way ($148 roundtrip) or 43.9% to $241 each way since its
10

- year low and since Great Falls' capacity peaked in 2005. Over the same period since 2005, domestic ex

Allegiant capacity is down 45.3% and domestic ex

- Allegiant traffic is down 27.3%. Additional ca pacity in Great Falls, especially capacity to a hub such as San Francisco, would likely put downward pressure on both domestic and international fares, given United's network of domestic and international routes flown from San Francisco.

Exhibit 15 : Ex

- Al legiant Passengers per Day Each Way (PDEW), Seats per Day Each Way and Average Domestic One

- Way Fare at Great Falls International Airport

– Year

- End Fourth Quarter 2001

- 2010 (DOT T

- 100 and DB1B data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 22 

### High Fares Relative to Other U.S. Lower 48 Airports

The average domestic ex

- Allegiant Great Falls domestic fare, at $241, was the seventh highest average domestic

ex
- Allegiant fare in the Lower 48 United States among airports with at least 100,000 domestic origin and destination (O&D) ex
- Allegiant passenge rs in 2010. Only Minot, Shreveport, LaCrosse, Bismarck, Lawton and Alexandria had a higher average domestic ex

- Allegiant fare in 2010. The average domestic ex
- Allegiant fare
among all lower 48 airports in 2010 was $ 158 , so the average domestic Great Fall s fare was 52.4 % higher , or $83 higher each way, than the average lower 48 airport

.

Exhibit 16 : Average Domestic Ex

- Allegiant One

- Way Fares at Lower 48 Airports with at Least 100,000 Domestic O&D Passengers

– Year

- End Fourth Quarter 2010 (DB1B data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 23 

### S TRATEGIC PLAN

Proposed New Route

Great Falls International Airport is proposing regional jet service between Great Falls and San Francisco International Airport.



### Goals

Great Falls has three goals with its Small Community Air Service Development Grant p roposal for service to San
Francisco on United:

 Lower fares in the local market and connect markets served via United's San Francisco hub

 Reverse the decline in Great Falls' origin and destination traffic

 Recapture catchment area traffic leaked to other ai rports


### Target Airline Support

United Airlines has expressed interest in operating the proposed service from Great Falls to San Francisco

. While United cannot commit to operating the service if Great Falls International Airport receives a Small Community Air Service Development grant, United has indicated a minimum revenue guarantee will reduce its
financial risk and move Great Falls

- San Francisco above other regional jet new route opportunities without a minimum revenue guarantee. United supports Great F alls' proposal for a small community air s ervice development grant and has indicated a letter of support will be written

. SkyWest Airlines, a regional airline operating as a United Express code share partner has also expressed interest in operating the pro posed service in a pro

- rate agreement with United using the UA code on Great Falls

- San Francisco flights

.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 24 

### Great Falls

- San Francisco Bay Area Traffic and Fare Trends

The three airports in the San Francisco Bay Area generated 8.7 PDEW at an average fare o f $186 in 2010. Traffic is down 2.5 PDEW in 2010 from a peak of 11.2 PDEW in 2007, and the average fare is dow n slightly from its peak of $194 in 2007.

Exhibit 17 : Great Falls

- San Francisco Bay Area (SFO, OAK , SJC ) Passengers per Day Each Way ( PDEW )

– Ye ar
- End Fourth Quarter ( DB1B data)

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 25 San Francisco generates the highest amount of Great Falls traffic among the three airports in the Bay Area
, with
3.4 PDEW in 2010. Oakland and San Jose generated 2.9 PDEW and 2.4 PDEW in 2010, respectively.

Exhibit 18 : Great Falls

- San Francisco Bay Area (SFO, OAK, SJC ) Passengers per Day Each Way (PDEW) by Airport

– Year

End Fourth Quarter (DB1B data)

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 26 Fares in the Great Falls

- San Francisco B ay Area market did not deviate significantly in 2010 from the average Bay Area fare when analyzed for each of the three airports in the Bay Area. The average Bay Area fare was $186 each way; San Francisco generated the highest fare at $194, and Oakland ge nerated the lowest fare at $175. All three markets increased in tandem between 2005 and 2006 when the average f are essentially reset from $150

– $160 between 2001 and 2005 to about $190 between 2006 and 2010. The most recent fares are relatively high, with the average $186 one

- way fare translating to $372 roundtrip

– before taxes, surcharges and ancillary fees.

Exhibit 19 : Great Falls

- San Francisco Bay Area (SFO, OAK, SJC) Average One

- Way Fare by Airport

– Year

- End Fourth Quarter (DB1B data)

This Sec tion Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 27 Analysis of traffic and revenue data by quarter indicates the Great Falls

- San Francisco Bay Area market peaked in third and fourth quarter in both 2010 and 2009. At $182 each way, the average fare in fourth quarter 2010 was unchanged from fourth quarter 2009; traffic was down from 10.7 PDEW in fourth quarter 2009 to 8.2 PDEW in fourth quarter 2010.

Exhibit 20 : Great Falls

- San Francisco Bay Area (SFO, OAK, SJC) PDEW and Average Fare

– Fourth Quarter 2008 through Fourth Quart er 2010 (DB1B data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 28 

### Connecting T

raffic and Revenue Via San Francisco

In addition to nonstop service in the local Great Falls

- San Francisco market, the proposed service would provide
connect ing opportunities to at least 3 4 other a irports in 30 metropol itan areas served by United from San
Francisco . While United serves many more cities from San Francisco than the markets displayed on the map below, the transcontinental and semi

- transcontinental markets served from San Francisco are considered to be

too circuitous for Great Falls traffic to flow via San Francisco; these markets could continue to flow via Denver on
United 's existing Great Falls service.

Two

- thirds of the markets United could serve via San Francisco are domestic markets and one

- third of the markets are international markets. The many of the international markets require double connections from Great Falls today; Great Falls

- San Francisco service could make many of the international destinations more accessible with a single connection.

Exhi bit 21 : Non

- Circuitous Markets United Could Serve with Great Falls

- San Francisco Service

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 29 A mong Great Falls markets United could logically flow via its hub in San Francisco, t he three airports in the San
Francisco Ba y Area rank as Great Falls' fourth largest market with 6,350 origin and destination passengers, or 8.7
PDEW in 2010. Las Vegas, Phoenix/Mesa and the Los Angeles Basin are the larger Great Falls markets United
could flow via San Fran cisco.

Exhibit 22 : Ori gin and Destination Passengers and PDEW in the 30 Largest Great Falls' Markets United Could Flow via San Francisco

– Year

- End Fourth Quarter 2010 (DB1B data)

This Section Continued on Next Page

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 30 There are a total of 30 non

- circuitous markets United coul d serve via San Francisco with Great Falls

- San
Francisco service ( in this proposal, non
- circuitous is defined as total trip distance not greater than 66% of the nonstop distance from Great Falls). The total Great Falls market size for these markets was 16 9.2 PDEW in 2010 at an average fare of $137 each way, and 72% of the traffic originat ed in Great Falls.

Recognizing a significant portion of the Great Falls traffic in the markets United could flow via San Francisco is to Las Vegas and Phoenix/Mesa at re latively low fares on Allegiant , the data was also calculated without Las Vegas and Phoenix/Mesa. Excluding Las Vegas and Phoenix, the markets United could flow via San Francisco generated 50.3 PDEW at an average fare of $235 each way, and 59% of the traf fic originated in Great Falls.

Exhibit 23 : Passengers per Day Each Way (PDEW) and Average One

- Way Fares and Great Falls Point

- of

- Origin in the Markets United Could Serve with Great Falls

- San Francisco Service

– Year

- End Fourth Quarter 2010 ( DB1B data)

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 31 

### Grant Amendments/

Alternate Strategies

If Great Falls is successful in its proposal for a SCASD award, but is not successful in securing service to San Francisco on United, Great Falls would like the Department to consider reallocation of the grant fund ing to a different market/airline combination to include service to the San Francisco Bay Area on another carrier, to Los Angeles or to Chicago.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 32 

### PROJECT IMPLEMENTATION, MONITORING AND FUNDING Public / Private Partnerships

Great Falls International Airport Authority has partnered with the Great Falls Development Authority to develop air
service in Great Falls.

Private

 Great Falls International Airport Authority

Public

 Great Falls Development Authority

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 33 

### Project Funding

In addition to the Small Community Air Servi ce Development Grant of $ 5 00,000 requested from the Department, the Airport will provide $20,000 in cash for local media company advertising placement and in

- kind funding valued at $70,000 in the form of waived landing fees

. Various me dia companies and other civic organizations in the area have pledged in

- kind funding valued at $90,918 for marketing, advertising and promotion over the two year life of the project . The total value of cash and in

- kind contributi ons from the community an d the A irport is valued at $180,918

.

Exhibit 24 : Summary of Sources and Types of Project Funding

.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 34 

### Implementation Timeline

The proposed implementation timeline for the project assumes the Department will award Small Communit y Grant
Fu nding in early October 2011 . Once the award is announced
, Great Falls International Airport will begin discussions with United to begin service. Based on airline planning lead times and the need for advance bookings, we assume United would not be able to begin service until April 2012. The first two milestones on the Airport's timel ine are to execute the grant agree ment with the Department and to negotiate the minimum revenue guarantee agreement with United. Once service is announced and schedules are published, United
, the Airport and the community would begin marketing the new route and working with United to monitor advance bookings. The Airport will continue its marketing program and continue to work with United to monitor the route once service begins. The Airpor t will submit grant status reports on a quarterly basis to the Department throughout the proposed two year term of the minimum revenue guarantee.

Exhibit 25 : Proposed Project Timeline (assumes grant announcements in December 2010 and service launch in Jun e 2011)



### Start

- Up Period and Sustainability of the Market

The Airport will m arket , promote and advertise the new service to busin ess and leisure travelers in Great Falls'
immediate catchment area. A minimum revenue guarantee is an effective use of SCAS D funding because a guarantee reduces an airline's risk in the start

- up phase of a market's maturity while traffic in the new market
increases ; a period of time that is often subject to losses. The size of the local Great Falls

- San Francisco market
will i ncrease with the introduction of nonstop service and the connecting traffic that could flow via San Francisco to other destinations will complement the local Great Falls

- San Francisco traffic.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 35 

### PROJECT MONITORING AND FINANCIAL CONTROL
Success Metrics

The s u ccess of th e progra m will be based on achieving the objectives of the program . The Airport will continuously monitor the performance of the route. Even before service begins we will communicate with United on a weekly basis to monitor advance bookings a nd week

- over
- week of advance bookings. Marketing and promotional activities can be adjusted if advance bookings are weak or are not booking at a rate c omparable to
other United San Francisco markets.

Project Goals Success Metric

 Introduction of nonstop service from Great Falls to San Francisco  Announcement and inauguration of service by United from Great Falls to San Francisco.

 Reverse the decline in Great Falls ex

- Allegiant traffic at Great Falls  Year

- over
- year quarterly increases in Great Falls traffi c, especially in the markets United could logically flow via its hub in San Francisco

 Recapture traffic generated in the immediate Great Falls catchment area lost to other airports in the region  Less leakage to Missoula, Billings, Helena, Bozeman and Kali spell

 Lower fares to the San Francisco Bay Area and the markets United could flow beyond its hub in San Francisco  Year

- over
- year decreases in average fares to the San Francisco Bay area and the other 27 markets United could logically flow over San Francis co

Once service begins, the Airport will rely on traffic and revenue data provided directly by the airline and the amount of reimbursements requested by the airline as indications of project success. T

- 100 data and DB1B data will also be analyzed to com pare year
- over
- year market size growth on a quarterly basis. In addition, the airport will analyze leakage once the service has operated for a full year to determine the trend in leakage to other airports. The Airport will report its success metrics in th e quarterly grant reports to the Department.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 36 

### Legal Sponsor

Great Falls International Airport Authority is the legal sponsor responsible for administering the program. Great Falls International Airport Authority is a government entity.

Great Falls Inte rnational Airport Authority
Great Falls International Airport

2800 Terminal Drive
Great Falls, MT 59404

John Faulkner
Airport Director

406

- 727

- 3404


### Financial Controls

As the sponsor, Great Falls International Airport Authority and its governing body, Grea t Falls International Authority Board , will be the responsible partie s for all fiscal matters and the Department's reporti ng requirements. The Airport Authority Board is established as a public governing body. As a public entity
, the Department can be

as sured that proper financial controls are in place to guarantee that the Department ’s Grant will be used in accordance with any subsequent agreement. The Great Falls International Airport Authority Board understands that the Grant is a reimbursable grant, meaning the Airport is responsible for program expenditures and will
submit invoices to the Department for reimbursement, based on a percentage of the total grant request.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 37 

### APPENDIX A: REQUIRED SUMMARY INFORMATION

A. Applicant Information

Not a Consortium

Interstate Consortium

Intrastate Consortium
Community now receives EAS subsidy
Community (or Consortium member) previously received a Small Community Grant

I f previous recipient: Date of Grant: ____________________ Expiration Date of Grant: ____________________



### B. Public/Private Partnerships

Public

 Great Falls International Airport Authority

Private

 Great Falls Development Authority



### C. Project Proposal

Marketing Upgrade Aircraft New Route Travel Bank Service Restoration Subsidy Surface Transportation Regi onal Service Revenue Guarantee Launch New Carrier Start

- up Cost Offset First Service Study S ecure Additional Service Othe r (explain below)

Great Falls International Airport is proposing a grant to fund a mini mum revenue guarantee for regio nal jet service between Great Falls and San Francisco on United Airlines or SkyWest.

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 38 

### D. Existing Landing Aids at Local Airport

Full ILS Outer/Middle Marker Published Instrument Approach Localizer Other (specify)



### E. Project Cost

F. In

- Kind Contributions** For funds in lines 7a (Airport In

- Kin d contribution) and 7b (Other In

- Kind contribution), please describe the source(s) of fund(s) for each.
(5a) Great Falls International Airport will waive landing fees for a period of two years. Based on one roundtrip per day on a 50

- seat regional jet, the amount of the waived fees is valued at $70,000 over the two year period. (5b) Various media outlets in Great Falls have pledged in

- kind marketing, advertising and media promotion valued at $90,918 over the two year life of the requested grant.



### G. Is this application subject to review by state under Executive Order 12372 Process?

a. This application was made available to the State under the Executive Order 12372 Process for review on (date):
b. Program is subject to E.O. 12372, but has not been selected by the State for review.
c. Program is not covered by E.O. 12372

# Great Falls I nternational Airport Authority

Great Falls International Airport Authority; Great Falls, Montana Proposal Under the Small Community Air Service Development P rogram; Docket DOT

- OST

- 2011

- 0119 39 

### H. Is this applicant delinquent on any federal debt?

No
Yes (explain)