## Proposal Under the Small Community Air Service Development Program

Date: August 2, 2011 Applicants: Wilkes-Barre/Scranton International Airport

Luzerne County, PA; Lackawanna County, PA
DUNS Number: 042623728

+4 Number: 7531 Employee Identification Number: 23-1736989 Congressional Districts: 10, 11

Contact: Barry J. Centini Wilkes-Barre/Scranton International Airport 100 Terminal Drive, Suite 1 Avoca, PA 18641 Phone: (570) 602-2000
E-mail: airport@flyavp.com

Docket #: DOT-OST-2011-0119Page 2 of 29

I. EXECUTIVE SUMMARY

The Wilkes-Barre/Scranton International Airport and the Counties of Luzerne and Lackawanna are submitting this application for g rant funds available under the Small Community Air Service Development Program to address the deficiencies in the Airport’s air service, includin g high fares and an insufficient
level of service. These deficiencies are the result of the unique characteristics of the air transportation system in the Greater Nor theastern Pennsylvania region.

Air travelers using the Wilkes-Barre/Scranton Inter national Airport (AVP) pay among the highest fares of any similar sized airpor t around the globe. AVP has aggressively recruited both legacy and low cost airl ines to enter its market for many years, but few carriers are willing to enter ev en AVP’s top O&D markets. This is in part because there are multiple airports served by low cost carriers, as well as legacy carriers with more flights, which surr ound the WilkesBarre/Scranton International Airport. As a result, AVP’s fares are not only high, but they are not competitive with the other airports . The lower fares and increased number of flights at the surrounding airp orts are sufficient to lure passengers from Wilkes-Barre/Scranton International Airport to airports more than 100 miles away, but these airports are not clos e enough to genuinely offer

convenient service.

The Northeastern Pennsylvania Region is a diverse ec onomic region worthy of attention. Within the Wilkes-Barre/Scranton MSA, AV P serves a population of over 1.7 million people. The Wilkes-Barre/Scranton M SA’s population is near 500,000 on its own. Further fueling the region’s eco nomic growth into the next 20 years is the massive Marcellus Shale Industry.

The Marcellus Shale is a black shale formation exten ding deep underground from Ohio and West Virginia northeast into Pennsylv ania and southern New York. Although the Marcellus Shale is exposed at th e ground surface in some locations in the northern Finger Lakes area, it is as deep as 7,000 feet or more below the ground surface along the Pennsylvania bord er in the Delaware River valley. In Pennsylvania, the development of these historic resources, while still in their infant stages, is credited with supporting nearly 140,000 jobs in 2010. In addition, the economic activity topped $11.2 bil lion in 2010. This growth is expected to increase rapidly over the next several years, which will provide the Commonwealth of Pennsylvania with a steady supply of affordable, cleanburning energy.Page 3 of 29

The Wilkes-Barre/Scranton International Airport (AVP ) is the gateway airport to the heart of the Marcellus Shale Industry in northe astern Pennsylvania and the Commonwealth of Pennsylvania as a whole.

Successful attraction of a low cost air carrier to A VP’s key markets has a track record of improving the cost differential in some A VP markets. However, successfully retaining those low cost carriers long- term has proven difficult. Maintaining legacy air carrier service to other AVP key markets has improved cost differentials in those markets. However, the n umber of seats on the legacy carriers has been steadily decreasing, which is forcing air travelers to travel to another airport for their air service nee ds. Our described program is designed to address these concerns.

With this in mind, the Airport continues to provide exceptional service to the region, while having no control or responsibility ov er the main variable in air travel – the customer. Currently, AVP has five leg acy carriers, and three of those are handled by one airline. While airlines h ave in the past been more prone to provide their own employees for ground hand ling and customer support positions, the last few years have put that in jeopardy as airlines consolidate their employees at smaller airports.

For several years, the U.S. airline industry has be en struggling to control costs. Controllable costs have been dropping over the last half-decade, with carriers using methods, such as reducing airline employee wag es and the actual outsourcing of on-airport jobs. Many carriers are opting not to start additional markets without the Airport and community picking up the charges for those start-up costs. Also, many carriers that have serv ice at airports are decreasing their flights dramatically to control costs.

The current trend is a continued increase in the AVP passenger market leaking to alternative airports and a serious imbalance in Pennsylvania’s airport system. With no air carriers operating in some of AVP’s top O&D markets, there is a significant gap between the demand for service and the level of service being provided. Past experience in these markets has pro ven they can be operated successfully and profitably, however, current carrie rs at AVP have chosen not to seek operating to those markets from AVP.

The results of past efforts utilizing Air Service De velopment funds have been positive. Delta Connection’s (formerly Northwest Ai rlink’s) nonstop Detroit service, which began in April 2005, continues to pro vide a good destination to business travelers, with acceptable fares.Page 4 of 29

Wilkes-Barre/Scranton International Airport and its supporting communities have continually been engaged in marketing the airp ort and look forward to improving the air service at AVP with the additional support of the DOT Small Community Air Service Development Program.

II. SERVICE DESCRIPTIONS

A. Wilkes-Barre/Scranton International Airport’s Service Area

Wilkes-Barre/Scranton International Airport (AVP) i s a non-hub airport located in Northeastern Pennsylvania serving a surr ounding population of approximately one million residents. AVP is within a two-hour drive of several major east coast cities including Philadelp hia and New York, is approximately eight (8) miles from Wilkes-Barre, PA and Scranton, PA, and is centrally located among four (4) major inter state highways.

(Source – Google Maps)

The Wilkes-Barre/Scranton/Hazleton metro-area has a population of over 600,000. There are over one million potential air p assengers within a one-hour drive time and just fewer than three millio n located within a 90-
minute drive time.Page 5 of 29

Within a One-Hour Drive Time is a Market of Over 1 Million Potential Air Passengers

(Source – SH&E Analysis, US Census, Maptitude)

Wilkes-Barre/Scranton’s airport service is bound by Philadelphia International Airport and Lehigh Valley Internation al Airport to the south, each offering substantially greater numbers of sche duled flights and often significantly lower fares. These two airports are app roximately a 100- and 60-mile drive, respectively, from the Wilkes-Ba rre/Scranton International Airport. One factor of great concern to the Partnership submitting this application is that Southwest Airlin es offers competing service at Philadelphia International Airport and i s offering significantly lower fares to many of AVP’s top markets. An additi onal factor is that both AirTran/Southwest and Allegiant Air provide low f are options to leisure destinations at Lehigh Valley International Airport.

To the east, John F. Kennedy International Airport, Newark Liberty International Airport, LaGuardia Airport and Stewart International Airport also compete with AVP, offering travelers numerous l ow fare options. As large hubs, John F. Kennedy International, Newark Li berty International and LaGuardia offer substantially more scheduled fl ights and direct service options both domestically and international ly.

In addition, to the northwest, Allegiant Air provide s low fare options to leisure destinations at Elmira Corning Regional Air port.Page 6 of 29

B. Description of Economic Growth in Northeastern Pennsylvania

As stated earlier, the region’s economic growth is b eing fueled into the next several decades by the massive Marcellus Shale Industry. The Marcellus Shale geological formation is the largest unconventional natural gas reserve in the world.

Here are some recent key findings from a July 20, 2 011 study from Penn State University:

• During 2010, the Pennsylvania Marcellus Shale natur al gas industry triggered $11.2 billion in economic activity, gener ated $1.1 billion in state and local taxes, and supported nearly 140,000 jobs.

• The Pennsylvania Marcellus industry is projected to generate more than $12.8 billion in economic activity in 2011, le ading to more than $1.2 billion in state and local taxes and supportin g more than 156,000 jobs.

• As a result of Pennsylvania Marcellus production, r esidential electricity and natural gas bills across the Commonwealth are $2 45.1 million lower [$217.4 million from lower natural gas bills an d another $27.7 million from lower electricity bills].

• In 2010 alone, natural gas companies paid over $1.6 billion in lease and bonus payments to Pennsylvania landowners.

• By 2015, Pennsylvania’s Marcellus Shale could produ ce more than 12 billion cubic feet per day, second only to Texas in natural gas production.

• Marcellus Shale natural gas production could reach 17 billion cubic feet per day in 2020, potentially allowing the Marce llus to become the single largest producing gas field in the United St ates, if real natural gas prices do not fall significantly.

The Wilkes-Barre/Scranton International Airport (AVP ) is the gateway airport to the heart of the Marcellus Shale Industr y in northeastern Pennsylvania and the Commonwealth of Pennsylvania as a whole.Page 7 of 29 Two of the sweet spots for tapping that natural gas ar e in Northeastern Pennsylvania and the Pittsburgh area. To reach the gas, drillers use a process called hydraulic fracturing – or fracking, for short – in which they shoot millions of gallons of water, laced with chemic als and sand, into the ground. Much of that water comes back to the surface along with the gas

it releases.

Companies eager to tap into the gas already have tr ansformed large swaths of rural Pennsylvania, and future gas product ion has the potential to change residents’ lives for a generation or more . Marcellus shale gas has shifted global energy supplies, created instant wealth for some landholders, stimulated the state’s economy by cre ating jobs and raised environmental concerns about toxins going into the air and water.

A problem that we are finding with the travel needs o f these workers is the need to get across the Commonwealth of Pennsylva nia. Northeastern Pennsylvania and the Pittsburgh area are the concen trated areas for drilling in the Commonwealth. To do business on both sides of the state, workers have to drive, rather than fly, losing valua ble time in that fivehour trip, when they could fly in approximately one hour.

As seen below, nearly 2/3 of the work being done withi n the Marcellus Shale in the Commonwealth of Pennsylvania is being p erformed in Northeastern Pennsylvania.Page 8 of 29 Source: Pennsylvania Department of Enviro nmental Protection

C. Description of Community’s Existing Air Service

There are currently five (5) major airline networks s erving the WilkesBarre/Scranton International Airport. These carrier s are US Airways, Continental, Delta, United and American. Combined, these carriers serve a total of five (5) major hubs including Charlotte, Chicago, Detroit, Newark and Philadelphia.

The table below indicates the type of aircraft flown by each carrier, equipment type, seats and frequency at AVP. It is important to note that
all service to and from AVP is flown with either a re gional jet or turboprop, yet O&D research and previous experience indicate that many AVP markets can support significantly larger aircra ft such as Boeing 737 or the Embraer 170/190 series.

Carrier Market Code A/C Stops Daily Daily Monthly Monthly Seats/
Type Depts Seats Depts Seats Flight

AA Chicago ORD ERD 0 1.7 77 54 2,376 44
CO Newark CLE DH2 0 2.6 143 120 4,440 37

DL Detroit DTW CRJ 0 2.9 144 89 4,450 50 UA Chicago ORD ER4 0 3.9 132 82 4,100 50
US Charlotte CLT CR7 0 1.0 70 31 2,170 70
US Charlotte CLT CRJ 0 0.9 47 29 1,450 50 US Philadelphia PHL CRJ 0 4.2 211 131 6,550 50 US Philadelphia PHL DH3 0 0.2 10 6 300 50 US Philadelphia PHL DH8 0 1.6 61 51 1,887 37

TOTALS 19.1 894 593 27,723 47

Source: OAG Schedule Tapes, August 2011, via Sabre Airline SolutionsPage 9 of 29

The chart below shows the cities serviced by AVP’s cur rent airlines from

AVP.

Source: OAG Schedule Tapes August 2011 AVP Primary Catchment Area Usage, Retention & Total Booked

Rank Market PDEW AVP
Retention AVP Primary

Leakage Total

Booked

1 ORD 28.5 59% 20.2 48.7
2 DFW 27.7 50% 27.8 55.5
3 LAS 25.8 40% 39.3 65.1
4 MCO 25.8 22% 89.4 115.2
5 TPA 19.6 35% 36.0 55.6
6 PHX 17.2 36% 30.9 48.1
7 LAX 16.9 39% 25.9 42.8
8 ATL 16.6 43% 21.6 38.2
9 DEN 14.3 44% 18.0 32.3
10 CLT 13.0 62% 8.0 21.0
11 FLL 11.4 17% 53.9 65.3
12 SAN 10.7 41% 15.5 26.2
13 SEA 10.5 40% 15.9 26.4
14 SFO 10.2 36% 18.2 28.4
15 RSW 10.0 31% 21.8 31.8
16 DTW 9.9 61% 6.3 16.2
17 IAH 9.8 33% 19.6 29.4
18 STL 9.7 72% 3.8 13.5
19 MSP 9.2 44% 11.8 21.0
20 BNA 9.0 45% 11.2 20.2
21 MCI 8.7 57% 6.5 15.2
22 PBI 8.6 31% 19.0 27.6
23 MSY 7.7 51% 7.4 15.1
24 IND 7.5 64% 4.2 11.7
25 JAX 7.5 39% 11.7 19.2
26 CVG 7.2 32% 15.5 22.7
27 SAT 7.0 44% 9.0 16.0
28 MIA 7.0 22% 24.5 31.5
29 SNA 6.8 54% 5.9 12.7
30 AUS 6.1 31% 13.6 19.7
Subtotal 380.0 35% 712.5 1,092.5
Other 220.3 31% 498.9 720.0
Total 600.3 33% 1,211.4 1,812.5

Source: Adjusted SABRE MIDT and D.O.T. 10 % Coupon SamplePage 10 of 29

For 2010, Wilkes-Barre/Scranton International Airpo rt reported 433,972 combined enplaned & deplaned passengers. However, t he true Primary Catchment Area size is estimated to be triple that number (see table above), which indicates that AVP is leaking passenge rs to surrounding airports, with the primary reasons, based on market research, being competition from low-fare markets, frequency and av ailable seats.

US Airways has traditionally dominated the AVP marke t. Delta Connection recently eliminated flights over the pas t couple years, which increases opportunities for other airlines. In 200 9, Delta Connection eliminated Cincinnati service (January 2009), which was AVP’s #9 O&D Market for CY 2008, and eliminated Atlanta (August 2009), which was AVP’s #5 O&D Market for CY 2008. In addition, Unit ed Express is decreasing it’s service to Chicago O’Hare in August 2011 (from three daily flights to two), and American Eagle is decreasing it ’s service to Chicago O’Hare in August 2011 (from two daily flights to one daily flight plus one flight four times a week).

New service in the past several years include: Unite d Express to Washington Dulles in October 2004; Continental Conn ection to Boston in March 2005; Hooters Air to Orlando, Fort Lauderdale , St. Petersburg in October 2005; Myrtle Beach Direct Air to Myrtle Bea ch in June 2008; Continental Connection to Newark in October 2008; Am erican Eagle to Chicago O’Hare in June 2010; and Delta Connection t o Atlanta in September 2011.

Source: OAG Schedule Tapes August 2011; Wilkes-Barr e/Scranton International Airport, YE May 2011Page 11 of 29 AVP New Service During the Past Several Years

New Service Airline Began Ended Reas on for Ending (1) Washington-Dulles, DC United Express October 2004 A ugust 2005 Shuttle America became US Airways
carrier – United did not have other
aircraft to maintain route Detroit, MI Northwest Airlink April 2005 N/A Orlando, FL Hooters Air October 2005 March 2006 Ris ing Fuel Costs Fort Lauderdale, FL Hooters Air October 2005 March 2006 Rising Fuel Costs St. Petersburg, FL Hooters Air October 2005 March 2 006 Rising Fuel Costs Myrtle Beach, SC Hooters Air March 2006 March 2006 Rising Fuel Costs Boston, MA Continental Connection March 2005 March 2007 Reduction of Continental Connection flights into BOS system wide Pittsburgh, PA US Airways Pre-1980 June 2007 Reduct ion of US Hub Myrtle Beach, SC Myrtle Beach Direct Air June 2008 August 2008 Seasonal service Cleveland, OH Continental Connection October 2008 Moving AVP’s service from #3 CO Hub
to #1 CO Hub Newark, NJ Continental Connection October 2008 N/A Cincinnati, OH Delta Connection March 1995 January 2009 Reduction of DL Hub Atlanta, GA Delta Connection May 2002 August 2009 P oor load factors; AVP-ATL route over 700 NM (too far for CRJ) Chicago, IL (O’Hare) American Eagle June 2010 N/A Atlanta, GA Delta Connection September 2011 N/A (1) “Reasons for Ending” comments were given by Airline Representatives to AVP

AVP Outbound Seats History

Annual Percent

Outbound Change vs.

Year Seats Prior Year

2001 366,429

2002 390,586 6.6%

2003 293,017 -25.0%

2004 338,714 15.6%

2005 396,224 17.0%

2006 331,991 -16.2%

2007 291,678 -12.1%

2008 278,908 -4.4%

2009 265,041 -5.0%

2010 268,488 1.3%

Seats

Month ('11 vs. '10) Diff (+/-) % Change

January 1,849 8.8%
February 2,772 16.3%

March 3,756 17.6%

April 4,549 21.5%
May 5,422 25.4%

June 3,011 13.0%

Total for Period 21,359 17.1%

Source: Wilkes-Barre/Scranton International AirportPage 12 of 29

Losses in the past several years include: United Ex press to Washington Dulles in August 2005; Hooters Air to Orlando, Fort Lauderdale, St. Petersburg and Myrtle Beach in March 2006; Continen tal Connection to Boston in March 2007; US Airways to Pittsburgh in Ju ne 2007; Myrtle Beach Direct Air to Myrtle Beach in August 2008; Co ntinental Connection to Cleveland in October 2008; Delta Connection to C incinnati in January 2009; and Delta Connection to Atlanta in August 200 9.

With these losses, plus the increase in passenger e nplanements (shown below), an increase in load factors, and the economi c growth in Northeastern Pennsylvania, the problem arising is t he limited amount of seats remaining in the market, which will, in turn, f orce air travelers to, once again, use other nearby airports for their air travel needs.

AVP Enplanement History

Percent

Annual Change vs.

Year Enplanements Prior Year

2001 189,036

2002 202,178 7.0%

2003 181,715 -10.1%

2004 201,765 11.0%

2005 221,348 9.7%

2006 212,865 -3.8%

2007 220,893 3.4%

2008 223,130 1.3%

2009 207,168 -7.2%

2010 217,706 5.1%

Enplanements

Month ('11 vs. '10) Diff (+/-) % Change

January 1,094 7.0%

February 1,393 10.4%

March 1,959 11.6%
April 2,291 13.2%

May 3,518 20.0%

June 2,024 10.4%

Total for Period 12,279 12.2%

Source: Wilkes-Barre/Scranton International Airport

As seen below, since the loss of nonstop Orlando ser vice in 2006, AVP has been on a steady decline of passengers to its #1 O& D Market – Orlando. In 2005, AVP had over 45 PDEWs to Orlando, retainin g nearly 50% of the Primary Catchment Market. Now, AVP captures almost 26 PDEWs, retaining only 22% of the Primary Catchment Market. With low costPage 13 of 29

service to Orlando surrounding the AVP market, this has become a major

detriment to AVP.

AVP – ORLANDO PROFILE

Source: U.S. DOT O&D Survey, via Data base Products, YE 1Q 2011

To the south of AVP, Lehigh Valley International Air port has been increasing seats, which we feel is a detriment to AV P. Within the past year at ABE:

• AirTran has increased service to Orlando from one le ss-than-daily flight to two daily flights using 117- and 137-seat aircraft

• AirTran has added new service to Fort Lauderdale with 117-seat
aircraft

• Allegiant Air has added seasonal service to Myrtle Beach, and
moved its Florida service from Orlando to Sanford wi th 150-seat
aircraft

• American Eagle added new service to Chicago O’Hare wi th three daily flights using 50-seat aircraft

• Delta has increased seat capacity to Atlanta from o ne daily 50-seat aircraft to three daily 50-seat aircraft

• Delta has increased service to Detroit from three t o four daily flights using 50-seat aircraft

• United has increased service to Chicago O’Hare from four to five daily flights using 50-seat aircraft

• United has increased service to Washington-Dulles f rom three to four daily flights using 34-seat aircraft

• US Airways has increased daily seat capacity to Phil adelphia with
50-seat aircraftPage 14 of 29

D. Analysis of Greater Northeastern Pennsylvania Needs and
Deficiencies

Over the past several years, AVP experienced a seve re reduction in jet service to Philadelphia and Pittsburgh, which inclu ded a reduction in the number of seats available. Additionally, the regio n does not currently have competitive year round low fare service to its number one O&D market: Orlando. Service to Orlando performed well when it was introduced in 2004, with the positive trend continui ng in 2005 and 2006,

until Hooters Air discontinued all air service due to multiple factors, including internal scheduling problems, rising fuel costs, airline scheduling problems and problems with their service model.

Atlanta, another AVP top O&D market, continued to p erform well since returning to AVP in 2002, but ended in August 2009. Delta’s primary reason for discontinuing the flight is that the sta ge length was too long for a regional jet.

As seen below, AVP is ranked as #6 by Delta’s Load F actors at ATL.

Delta Ranking by Load Factor at ATL

Source: U.S. D.O.T. Report T-100 YE Dec 2009.

Continental and US Airways remain at constant capac ity, with no future growth
on the horizon.

American is cutting back beginning in August 2011. American is going from two daily flights to one daily flight plus one fligh t four times a week.Page 15 of 29 Delta has had no growth to Detroit since they began with three daily flights in April 2005. In October 2005, the Detroit flights d ecreased to twice daily because of problems with Mesaba Airlines. The thir d daily flight was reinstated in February 2009 after Delta discontinued all servi ce from AVP to Cincinnati. However, Delta will be adding one daily flight to A tlanta in September 2011.

United has had no growth to Chicago since they bega n with three daily flights in October 1998. In May 2003, the Chicago flights decreased to twice daily, and United has been satisfied with the performance to date with no additional increase in service. In April 2011, the third dail y flight was added, however, in August 2011, the flights return to twice daily.

US Airways has had recent growth to Charlotte. The service began with one daily flight in April 2005, and went to twice daily in January 2011, and has been performing well.

As seen below, AVP is ranked as #3 to Charlotte, #10 to Detroit, # 19 to Chicago O’Hare (UA), #29 to Chicago O’Hare (AA), an d #43 to Philadelphia.

US Airways Ranking by Load Factor at CLT

Source: U.S. D.O.T. Report T-100 YE Dec 2010Page 16 of 29 Delta Ranking by Load Factor at DTW

Source: U.S. D.O.T. Report T-100 YE Dec 2010

United Ranking by Load Factor at ORD

Source: U.S. D.O.T. Report T-100 YE Dec 2010Page 17 of 29 American Ranking by Load Factor at ORD

Source: U.S. D.O.T. Report T-100 YE Dec 2010

US Airways Ranking by Load Factor at PHL

Source: U.S. D.O.T. Report T-100 YE Dec 2010

Although there has been little or no growth at AVP t o these destinations listed above, airports near AVP, i.e. Lehigh Valley International or Elmira Regional, have been gaining seats, even though ther e load factors are

lower than AVP’s.Page 18 of 29 From the charts listed above:

• ATL, AVP was ranked #6 YE2009; ABE was ranked #72 YE20 09

o Note: ABE is currently ranked #47 with Delta and #49 of 56

with AirTran

• CLT, AVP is ranked #3; ABE is ranked #18

• DTW, AVP is ranked #10; ELM is ranked #20; ABE is ra nked #55

• ORD (UA), AVP is ranked #19; ABE is ranked #25

• ORD (AA), AVP is ranked #29; ABE is ranked #48

• PHL, AVP is ranked #43; ELM is ranked 58; ABE is ra nked #70

As seen below, here are the latest load factors from AVP to specific destinations, most destinations have load factors a t 80% or higher or a 12 month period.

Sources: U.S. D.O.T. T-100 Reports and Wilkes-Barre /Scranton International Airport Another challenge for AVP is the fact that competin g airports are marketing their low-fare service to travelers in th e AVP market area, through television, newspaper, radio and billboard ( as seen below). The billboard below was actually placed less than 1⁄2 mile from the entrance

to AVP.

In light of these circumstances, AVP continues to a ctively pursue competitive low-fare service, as well as maintaining or even increasing legacy air service, to its top markets.

AVP’s air fares remain extraordinarily high for the level of service offered and the economic demographic of the area as evidenc ed in the tablePage 19 of 29 below. As shown on the charts below, AVP’s fares rema in above average and significantly higher than select markets with si milar sized O&D

passengers.

AVP vs. Selected World Cities

- O&D Passengers & Avg

. Fare

Total Daily Avg. O&D Daily O&D

Rank Market Code Enp. Psgrs Enp. Psgrs Fare Psgrs Psgrs 1 Juba, Sudan JUB 217,410 596 $380 450,351 1,234 2 Shreveport, LA SHV 216,270 593 $321 427,359 1,171 3 Grand Junction, CO GJT 216,058 592 $219 433,321 1,187

4 Wilkes-Barre/Scranton, PA AVP 219,107 600 $213 435,935 1,194 5 Palmerston North, New Zealand PMR 216,512 593 $197 434,947 1,192 6 Daytona Beach, FL DAB 226,581 621 $192 451,485 1,237
7 La Paz, Mexico LAP 226,640 621 $189 452,629 1,240 8 Redmond, OR RDM 219,492 601 $187 439,104 1,203 9 Ixtapa/Zihuatanejo, Mexico ZIH 217,210 595 $182 432,151 1,184 10 Bloemfontein, South Africa BFN 222,290 609 $178 447,113 1,225
11 Huatulco, Mexico HUX 216,226 592 $183 367,852 1,008 12 Rimini, Italy RMI 217,383 596 $164 434,759 1,191
13 Freeport, Bahamas FPO 216,930 594 $157 434,190 1,190
14 Belo Horizonte, Brazil PLU 216,723 594 $143 433,477 1,188 15 Tsushima, Japan TSJ 219,146 600 $131 438,338 1,201 16 Oujda, Morocco OUD 223,914 613 $125 438,698 1,202 17 Londonderry, United Kingdom LDY 223,567 613 $98 447,363 1,226 18 Iquitos, Peru IQT 218,555 599 $98 438,713 1,202 19 Karup, Denmark KRP 221,096 606 $92 443,165 1,214 20 Pohang, South Korea KPO 222,343 609 $87 444,634 1,218 21 Monteria, Colombia MTR 221,913 608 $73 439,764 1,205

Average 219,779 602 $172 436,445 1,196
(Source: O&D Survey YE May 2011, via Sabre Airline Solutions, OAG Schedule Tapes

AVP vs. Selected North American Cities

- O&D Passengers & Avg

. Fare

Total D aily Avg. O&D Daily O&D

Rank Market Code Enp. Psgrs Enp. Psgrs Fare Psgrs Psgrs 1 Shreveport, LA SHV 216,270 593 $321 437,359 1,171 2 Appleton, WI ATW 267,235 732 $236 531,214 1,455 3 Rapid City, SD RAP 272,956 748 $224 548,313 1,502
4 Peoria, IL PIA 236,089 647 $219 475,225 1,302 5 Grand Junction, CO GJT 216,058 592 $219 433,321 1,187

6 Wilkes-Barre/Scranton, PA AVP 219,107 600 $213 435,935 1,194 7 Key West, FL EYW 274,314 752 $207 541,589 1,484
8 Medford, OR MFR 278,768 764 $197 557,301 1,527 9 Daytona Beach, FL DAB 226,581 621 $192 451,485 1,237 10 Cozumel, Mexico CZM 241,248 661 $189 443,133 1,214
11 La Paz, Mexico LAP 226,640 621 $189 452,629 1,240 12 Redmond, OR RDM 219,492 601 $187 439,104 1,203

13 Comox, BC, Canada YQQ 184,255 505 $186 368,476 1,010
14 Juneau, AK JNU 268,292 735 $185 537,268 1,472
15 Huatulco, Mexico HUX 216,226 592 $183 367,852 1,008
16 Allentown, PA ABE 420,313 1,152 $182 841,583 2,306 17 Newburgh, NY SWF 196,077 537 $178 391,469 1,073 18 Bloomington-Normal, IL BMI 273,280 749 $168 550,351 1,508 19 Abbotsford, BC, Canada YXX 245,917 674 $159 493,275 1,351 20 Aguadilla, PR BQN 229,140 628 $146 453,576 1,243 21 Nantucket, MA ACK 142,494 390 $95 288,229 790

Average 257,297 662 $194 478,033 1,308
(Source: O&D Survey YE May 2011, via Sabre Airline Solutions, OAG Schedule TapesPage 20 of 29

III. STRATEGIC PLAN FOR USING GRANT FUNDING

A. Program Goals

The primary goals of this grant proposal are to incr ease enplanements at AVP by attracting new service and expanding current service, to address insufficient air service by attracting replacement service for such services recently lost, and to address unreasonably high far es to AVP’s prime markets by increasing competition between existing a ir carriers and new air carriers. Currently, the AVP markets are under served and it is apparent that travelers in and outside the region a re choosing to use alternative airports offering more scheduled servic e to a broader range of
destinations with lower fare service.

Historically, the Northeastern Pennsylvania market has supported new service as it enters the region and it is anticipat ed by all Partners in this program that this trend will continue with a high lev el of success.

Specifically, the four program goals are as follo ws:

1. Secure service to leisure destinations, i.e. but no t limited to, Central Florida Region (Orlando/Tampa/St. Petersburg ), Fort Lauderdale, West Palm Beach, Punta Gorda, Las Vegas , and/or Myrtle Beach).

2. Restore daily service to:

a. Pittsburgh International Airport

b. Washington-Dulles International Airport

c. Boston Logan International Airport

3. Entice existing air carriers at AVP to expand their service with additional flights/markets.

From the successful implementation of these program goals, AVP anticipates a direct affect of reduced fares in key markets and a significantly increased level of service.Page 21 of 29

B. Target Audiences

The following is a list of target audiences for AVP:

• Low-fare carriers

1. Allegiant Air

2. Direct Air

3. jetBlue Airways

4. Southwest Airlines

5. Spirit Airlines

6. Sun Country Airlines

7. Vision Airlines

• Legacy carriers

1. American Airlines

2. Delta Air Lines

3. United Air Lines / Continental Airlines

4. US Airways

• Regional carriers

1. Cape Air

2. Colgan Air

3. Gulfstream International Airlines

4. Public Charters, Inc.

5. Streamline Air

C. Plan Implementation and Timetable

Key milestones for the Program will be:

• Securing meetings with carriers to negotiate new ser vice (October 2011 – March 2012).

• Announcing new service with local community marketing campaign (January 2012 – June 2012).

• Starting up new service (January 2012 – October 2012 ).

• Monitoring and analyzing monthly traffic numbers of new service (January 2012 – June 2013).

• Monitoring and analyzing fares to the target market s (January 2012 – June 2013).Page 22 of 29

IV. AIRPORT AND BI-COUNTY PARTNERSHIP FUNDING AND

MONITORING ASSURANCES

The Wilkes-Barre/Scranton International Airport will act as the sponsor of the program. The sponsorship will be managed by Barry J. Centini, Airport Director, and the program will be managed by an airp ort administration and bicounty partnership representing the counties of Luz erne and Lackawanna. The partnership will meet on a regularly scheduled month ly basis to review the progress and schedule of the program and more often when the program requires it.

At each meeting, goals, objectives, and milestones will be evaluated to measure progress. Additionally designated members of the P artnership will be assigned to evaluate any changes in the current market envir onment and to identify any potential obstacles. The Partnership will prepare an d submit quarterly reports to provide assurances that both the DOT and communit y funding are being spent in the manner proposed. At the time that new service is secured and the funding is successfully allocated, the quarterly re ports will provide the DOT updates on the success of the service.

V. FUNDING DESCRIPTION

A. An airline or airlines to provide service to one or more nonstop leisure destinations, i.e. but not limited to, Central Flor ida region, Fort Lauderdale, West Palm Beach, Punta Gorda, Las Vegas and/or Myrtle Beach, minimum two (2) flights per week per destinati on. Risk abatement subsidy, as well as ground handling and st art-up costs for provided service.

FAA: $ 200,000 Luzerne County: $ 50,000 Lackawanna County: $ 50,000 Airport: $ 50,000 Total: $ 350,000

B. An airline to provide nonstop Pittsburgh, Washingt on (DC) and/or Boston service, minimum two (2) daily flights per weekday pe r destination. Risk abatement subsidy for weekday service up to six (6) months.

FAA: $ 125,000 Luzerne County: $ 25,000 Lackawanna County: $ 25,000 Total: $ 175,000Page 23 of 29

C. Local Market Advertising to provide needed baselin e support for new and/or restored airline service with a new or present airline, as well as support of additional flights with present airline s ervice.

FAA: $ 175,000 Luzerne County: $ 25,000 Lackawanna County: $ 25,000 Airport: $ 50,000 Total: $ 275,000

D. TOTALS:

FAA: $ 500,000 Luzerne County: $ 100,000 Lackawanna County: $ 100,000 Airport: $ 100,000

Total: $ 800,000

VI. COMMUNITY ACTIVITIES

The Airport and supporting community organizations have been aggressively and actively marketing the airport for several year s. This effort has included many initiatives all undertaken to ensure that the Northeastern Pennsylvania community is served in the best possible way.

Specific activities have included: * Direct subsidy to carriers * Targeted carrier meetings * New service cost reduction incentives including:

- Advertising and marketing assistance for, but not limited to, television, radio, and newspaper coverage - Waiving of landing fees and space rentals for a n egotiated period - Donate local billboard advertising space and coun ty bus system promotion - Develop and direct a new service information maili ng initiative to local travel agents and community businesses * New service kick-off and promotional meetings with local travel agents * New service local community marketing support ini tiatives * Annual attendance and participation at ACI’s annu al Marketing “JumpStart” conference and Network USA conferencePage 24 of 29

VII. RESULTS OF PAST AIR SERVICE DEVELOPMENT EFFORTS

The results of past efforts utilizing Air Service De velopment funds are positive. Service continues to Detroit, MI, via Delta Airline s’ express carrier Pinnacle Airlines with load factors averaging 80% during 2008 , and averaging 88% during 2009, and averaging approximately 89.2% for the first seven months of 2009. Detroit service began at AVP in April 2005. Service to Orlando, FL, did better than expected despite Hooters Air’s end of s ervice in March 2006 due to its own internal financial issues, with load factors averaging in the 83% to 86% range by the end of their tenure at AVP.

The Detroit service continues to provide a good dest ination to business travelers, with acceptable fares. The Orlando servic e provided a great level of service for business and leisure travelers, with a v ery competitive fare structure.

With our past history and experience of being able to utilize funds for positive gains, we are confident that an award to Wilkes-Barre /Scranton International Airport will bring positive results.

VIII. PROGRAM SPONSORS

Program Legal Sponsor: Program Partners:

Barry J. Centini, Airport Director Luzerne County, PA Wilkes-Barre/Scranton Lackawanna County, PA International Airport Greater Pittston Chamber o f Commerce
100 Terminal Drive Greater Pocono Chamber of Comme rce Avoca, PA 18641 Greater Scranton Chamber of Comm erce 570/602-2000 – Phone Greater Wilkes-Barre Chamber of Commerce 570/602-2010 – Fax Lackawanna Co. Convention & Vis itors Bureau bcentini@flyavp.com Luzerne Co. Convention & Visitors Bureau Wilkes-Barre/Scranton Penguins AAA Hockey

Attachments: 1) Attachment 1 – Allegiant Air Letter of Support 2) Attachment 2 – Gulfstream International Airlines Letter of Support 3) Attachment 3 – Delta Air Lines Letter of Support 4) Attachment 4 – Program Partners “In-Kind” Contribut ionsPage 25 of 29 ATTACHMENT 1

Page 1

Order: 2011-7-1

Docket DOT-OST-2011-0119

July 28, 2011 Ms. Aloha Ley

Associate Director Office of Aviation Analysis U.S. Department of Transportation

8 th Floor, Room W86-310 1200 New Jersey Avenue SE, Washington D.C. 20590

RE: SUPPORT OF WILKES-BARRE/SCRANTON INTERNATIONAL AIRPORT’S

SMALL COMMUNITY GRANT APPLICATION

Dear Ms. Ley,

The purpose of this correspondence is to express Al legiant Air’s support of the Wilkes-Barre/Scranton International Airport’s (AVP) grant application under the Small C ommunity Air Service Development Program.

By way of background information, Allegiant Air is a low-cost, commercial air carrier, offering non-st op jet service to more than seventy (70) airports throughout the coun try. We are currently seeking to expand our networ k to airports that share

our commitment to low costs and that fit within our business model.

To that end, we have identified AVP as a potential Allegiant airport. As you know, initiating new air service can be quite risky. The availability of a small community grant to offset initial marketing costs, as well a s lower airport operating expenses, can be immensely helpful in mitigating so me of that risk.

Of course, initiating service at AVP will depend on numerous other factors, including, among other thi ngs, the economic market, aircraft availability, and the cos t of fuel.

In light of the aforementioned uncertainties, it is particularly helpful to have a small community gra nt that can provide stability and some certainty to a new market. As s uch, Allegiant strongly endorses LGU’s application under the small community program.

Once you have had an opportunity to review the fore going, please feel free to contact me with any ques tions, comments, or concerns. In that regard, I look forward to spe aking with you.

Best Regards,

E. Keith Hansen Manager, Airport Planning Allegiant AirPage 26 of 29 ATTACHMENT 2

Page 1

Order: 2011-7-1

Docket DOT-OST-2011-0119

Ms. Aloha Ley Date: August 1, 2011

Associate Director Office of Aviation Analysis U.S. Department of Transportation

8 th Floor, Room W86-310 1200 New Jersey Avenue SE, Washington D.C. 20590

Dear Ms. Ley,

I am writing today in support of Wilkes-Barre/Scran ton International Airport and their application for a Small Community Air Service Development Grant.

As you may be aware, the dissolution of the former US Airways hub in Pittsburgh has left a huge hole i n terms of regional air service in western Pennsylvania. More than thirty cities within 350 miles of Pittsburgh that formerly enjoyed non-stop service remain without that link. Besides being the second largest city in Pennsylvania, Pittsburgh is a true regional business center and while the Greater Pittsburgh International Airport has done a tremendous job of restructuring itself a s a true Origin/Destination traffic generator, it is noteworthy that the only o ther Pennsylvania city being served by air from Pit tsburgh is Philadelphia. Despite being the anchor of western Pennsylvania bu siness, cities such as Latrobe, Erie, Wilkes-Barre/ Scranton, Williamsport, and even the State Capital in Harrisburg remain wit hout a direct air link. Pennsylvania is the sixth l argest state in the union in terms of population and this lack of regional acces s is problematic and economically restrictive.

Gulfstream International Airlines continues to work diligently to restore service from the Greater Pit tsburgh International Airport to airports throughout the region and would welcome the possibility of adding Wilkes-Barre/Scranton as a destination. Conceived in cooperation with the Greater Pittsburg h International Airport, the “Pittsburgh Connector” has the intent of restoring service in several regional markets, focusing on Pi ttsburgh International Airport as its “hub”. We re main very interested in serving the Wilkes-Barre/Scranton – Pittsburgh mark et and restoring that community’s link to the busin ess center of western Pennsylvania.

As with any new venture, the start-up costs constit ute a good deal of our forecast outlay. We fully e ndorse Wilkes-Barre/

Scranton’s effort to secure a SCASD Grant to aid in launching and marketing this venture. We are conf ident that the restoration

of this vital air link will benefit economic develo pment in Pennsylvania. These funds will assure a means to grow and promote this new travel option and allow Gulfstream Interna tional to focus on providing seamless connectivity and operational reliability to assure this new service succeeds and the people of Pennsylvania benefit.

Very truly yours,

Mickey Bowman

Vice President of Essential Air Service

Gulfstream International Airlines 1100 Lee Wagener Blvd., Suite 201 Ft. Lauderdale, FL 33315Page 27 of 29 ATTACHMENT 3

Page 1

Order: 2011-7-1

Docket DOT-OST-2011-0119Page 28 of 29 ATTACHMENT 4

Page 1

Order: 2011-7-1

Docket DOT-OST-2011-0119

In-Kind Contributions
Wilkes-Barre/Scranton International Airport

Small Community Air Service Grant

Luzerne County Convention and Visitors Bureau

In-Kind Item Amount

Staff Fulfillment $2,080.00
Mailing and Distribution of Visitor Guide $820.00

Attendance at Trade Shows $2,500.00

Ad Placement - Annual Visitors Guide $2,500.00
Ad Placement - Pennsylvania Pursuits Magazine $1,00 0.00
Total In-Kind: $8,900.00

Lackawanna County Convention and Visitors Bureau

In-Kind Item Amount

Staff Fulfillment $3,500.00
Mailing and Distribution of Visitor Guide $1,200.00

Attendance at Trade Shows $2,000.00
Half Page Ad Placement - This Week in The Poconos $ 1,300.00
Total In-Kind: $8,000.00

Greater Pittston Chamber of Commerce

In-Kind Item Amount Insert in Monthly Newsletter for 12 months $3,500.0 0
Total In-Kind: $3,500.00

Greater Pocono Chamber of Commerce

In-Kind Item Amount Ad Placement - Annual Bizzy Awards $2,500.00
Ad Placement – Annual Dinner Program $1,000.00

Total In-Kind: $3,500.00

Greater Wilkes-Barre Chamber of Commerce

In-Kind Item Amount Full Page Ad Placement - Annual Dinner Program $500 .00 Full Page Ad Placement - Legislative Breakfast $500 .00 Full Page Ad Placement - Awards Luncheon Program $5 00.00

Staff Fulfillment $2,000.00

Total In-Kind: $3,500.00Page 29 of 29 ATTACHMENT 4

Page 2

Order: 2011-7-1

Docket DOT-OST-2011-0119

Wilkes-Barre/Scranton Penguins AAA Hockey Team

In-Kind Item Amount Distribution of Airport Fliers at Two Home Games $2 ,500.00
Total In-Kind: $2,500.00

Greater Scranton Chamber of Commerce

In-Kind Item Amount
Ad Placement in News Briefs Newsletter $2,000.00

Web Site Exposure
Total In-Kind: $2,000.00