August 2, 2011

BISMARCK AIRPORT

Bismarck, North Dakota

Proposal Under the Small Community Air Service Development Program

Docket DOT-OST-2011-0119

Risk Abatement and Marketing Funding to Support New Air Service at Bismarck

Sponsor: Bismarck Airport

Bismarck, North Dakota

Greg Haug, Airport Manager

Congressional Code: ND-001

Dun & Bradstreet Number: 080245640

Tax Identification Number (EIN): 45-6002036
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 2

Section Page Number

Introductory Letters of Support 3

Summary Information – Appendix C 4

Introduction 6

The Bismarck Airport Air Service Market 8

Location, Catchment Population and Air Service Airports 8

Current and Historical Service 9

Bismarck Top Domestic Markets: 2010 12

Bismarck Top Domestic Markets Average Fares: 2010 13

Bismarck Carrier Market Share: 2010 13 

Air Service Development Efforts 15

Air Service Needs and Deficiencies 19

 Bismarck’s Clear Air Service Needs and Deficiencies 19

 Stagnant Network Carrier Service 19

 Some of the Highest Average Fares in the Lower 48 21

 Alternative Airports 22

 Addressing Bismarck’s Clear Air Service Deficiency 22

Previous Grant Award 23

Strategic Plan for Expanded Bismarck Air Service 24

Specific New Route Data 25

Projected New Route Results 28

Goals and Objectives of the Strategic Plan 30

Local Support via Public Private Partnership 30

Grant Funding Plan 31

Grant Application Target Audience 32

The Impact of New Grant Supported Service 34

Grant Use Timeline 34

Measuring Progress toward Goals and Objectives 35

Grant Application Legal Sponsor 36

Community Profile 37

 The City of Bismarck 37

 Economic Overview 38

 The Oil and Gas Industry 40

 Higher Education in Bismarck 42

Summary 43
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 3

INTRODUCTORY LETTER OF SUPPORT
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 4

SUMMARY INFORMATION – APPENDIX C

Small Community Air Service Development Program

Docket DOT-OST-2011-0119

A. Applicant Information

 Not a Consortium Community now receives EAS subsidy

 Interstate Consortium Intrastate Consortium

 Community previously received a Small Community Grant

 If previous recipient, date of Grant: October, 2002

Expiration date of Grant: February 1, 2008

B. Public/Private Partnership

Public:

1. Bismarck Airport

2. City of Bismarck

3. City of Mandan

Private:

1. Bismarck-Mandan Chamber of Commerce

2. Bismarck-Mandan Development Association

3. Bismarck-Mandan Convention and Visitors Bureau

C. Project Proposal

 Marketing Upgrade Aircraft New Route

 Travel Bank Service Restoration Subsidy

 Surface Transportation Regional Service Revenue Guarantee

 Launch New Carrier Start-Up Cost Offset First Service

 Study Secure Additional Service Other (Specify)
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 5

D. Existing Landing Aids at Airport

 Full ILS Outer/Middle Marker Published Instrument Approach

 Localizer Other:

E. Project Cost

1. Federal amount requested: $ 500,000

2. State cash financial contribution: $ 0

Local cash financial contribution:

3a. Airport cash funds: $ 25,000

3b. Non-Airport cash funds: $ 50,000

3. Total local cash funds: $ 75,000

4. TOTAL CASH FUNDING: $ 575,000

In-Kind Contribution:

a. Airport In-Kind contribution: $ 398,104

b. Other In-Kind contribution: $ 0

5. TOTAL IN-KIND CONTRIBUTION: $ 398,104

6. TOTAL PROJECT COST: $ 973,104

F. In-Kind Contributions

For funds in lines 4a (airport in-kind contribution) and 4b (other in-kind contribution), 

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

One year of Airport fee waivers on landing fees, terminal use charges and jet bridge 

charges, based on a two-round-trip service pattern with an ERJ-140 aircraft. 

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?

 No
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 6

INTRODUCTION

The Bismarck Airport, supported by its community partners, herein makes application for a Small 

Community Air Service Development grant in response to the Department’s Order 2011-7-1 that 

requested such proposals. The Bismarck Grant application is focused on addressing clear local 

air service deficiencies, including high average fares (in the top eighteen among domestic 

lower 48 markets) and limited air carrier competition, by providing risk abatement and marketing 

funding to recruit new air service. The primary target carrier for this recruitment is American 

Airlines and the primary target route is Bismarck – Dallas/Fort Worth.

Bismarck is located in central North Dakota, at the junction of major east-west and north-south 

highways, and as such is truly the gateway to all of the State. Bismarck and North Dakota are the 

economic shining stars among U.S. cities and states. In May of 2011 the United States national 

unemployment rate stood at 9.1%. In North Dakota the rate was 3.2% and in Bismarck the rate 

was an amazing 2.9%.

The North Dakota economy, rooted in mining and agriculture, is the strongest in the nation. 

Bismarck is not only the State Capital of this powerhouse economy but also the transportation 

gateway to much of its mining and agricultural regions.

One of the few negatives in the North Dakota economy is the high cost of air service and a 

limited selection of airlines in most cities. The State is isolated from the rest of the country and, as 

such, air transportation becomes even more critical as a conduit for business and commerce 

related travel.

The business of North Dakota is mining and agriculture. The Bakken and Three Forks Formations,

centered in western North Dakota, are the 4th largest domestic oil and gas producing region. 

North Dakota is truly an agricultural breadbasket for the nation and a significant exporter of 

agricultural products world-wide.

Yet, because of high airfares and limited service in this isolated region, North Dakota and 

Bismarck area businesses struggle to efficiently conduct business, hamstrung by high airfares and 

limited air service choices. Given the clear national priority of increasing domestic energy 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 7

production and of increasing U.S. exports, addressing air service deficiencies that hinder the 

North Dakota economy is a priority 

Furthermore, three of eight North Dakota commercial service airports are in the Essential Air 

Service (EAS) program. Should the EAS program be curtailed and EAS service diminished in North 

Dakota, Bismarck is an easily accessible regional airport for these three smaller cities. The 

potential downgrade of EAS service in North Dakota suggests that addressing Bismarck air 

service deficiencies now is good long-term regional air service public policy.

In this Grant application the Bismarck Airport proposes a Department funding level of $500,000, 

matched by $50,000 in local non-airport cash funding and $25,000 in Airport marketing funding 

plus in-kind (Airport fee waivers) of $398,104.. This combined $575,000 in cash and $398,014 in inkind support would be used to support new American Eagle nonstop service from Bismarck to 

Dallas/Fort Worth. This service would bring much needed additional competition to the Bismarck 

market and provide critical improvement in transit times and transit options between western 

North Dakota’s booming energy sector and the vast oil and gas mining infrastructure based in 

Texas, Oklahoma and Louisiana.

American Eagle has expressed interest in the potential of such a route segment. However,

development of such a bold new nonstop air service route in the American heartland would be 

a significant financial commitment on the part of the carrier. This SCASD Grant would provide 

Bismarck with the necessary funding to provide an economic backstop to initial carrier 

operations and possible initial operating losses.

This Grant application outlines precisely the type of air service deficiency the SCASD program 

was intended to address: high fares and limited competition. The following pages will fully 

describe the clear need for Grant funding and outline how the Bismarck Airport and its 

supporters are fully prepared to make effective and timely use of Grant funding.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 8

THE BISMARCK AIRPORT AIR SERVICE MARKET

Location, Catchment Population and Air Service Airports

Bismarck, North Dakota, is located along the Missouri River in central North Dakota at the 

junction of Interstate I-94 and State Trunk Highway 83.

The Bismarck air service catchment area extends well beyond the 60 and 120 minute drive 

radiuses on the map. North Dakota is an isolated region, a place where a one hour drive from a 

farm or small town to visit Starbucks is a part of the rural routine.

The Bismarck Airport routinely enplanes passengers who started their journey driving in from 

eastern Montana. The Airport tracks Canadian license plates in the parking lot and averaged 31 

per day for the first six months of 2011. The excellent highway system of the region means 

Bismarck is the best air service portal choice for a vast area of central and western North 

Dakota. Even Aberdeen, South Dakota, to the southeast, is about as close to Bismarck, in terms 

of drive miles and time, as it is to Sioux Falls, SD or Fargo, ND.

In terms of catchment population, the yellow area on the map has a population of 110,000; the 

dark shaded area has a population of 223,000. When including the vast areas to the north, west 

and south from which Bismarck routinely captures airport passengers, the catchment population 

exceeds 300,000. In terms of air service demand, the area is deceiving. While the areas west and 

north of Bismarck are very sparsely populated, that area is the heart of a vast oil and gas mining 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 9

region which extends into Montana and Canada. Travel demand in the region, both business 

and worker rotation related, is significant as there are thousands of field workers and technical 

staff supporting mining efforts that do not have permanent or full-time local residency. 

North Dakota has eight commercial air service airports. Three are in the EAS program and 

another is a single carrier. Three other airports in Montana and South Dakota fall within 

Bismarck’s extended catchment area; all three are EAS.

EAS airports are noted in gray. Aberdeen just entered the EAS program in July of 2011, based on 

a filing to terminate service by Delta.

Bismarck’s Current and Historical Air Service

Bismarck’s current air service consists of network carriers Delta and United and less-than-daily 

carrier Allegiant.

Delta operates a mix of mainline and regional jet equipment to Minneapolis while United offers 

50-seat regional jet service to Denver and Chicago.

Allegiant offers approximately twice-weekly MD-80 flights to Las Vegas and Phoenix Mesa.

Airport Domestic Traffic Avg Fare Status Service

Bismarck, ND 355,030 $224.71 Delta, United, Allegiant

Aberdeen, SD 39,520 $259.20 EAS Delta

Dickinson, ND 25,990 $219.33 EAS Great Lakes

Devils Lake, ND 10,120 $335.04 EAS Delta

Fargo, ND 649,610 $191.89 Delta, United, American, Allegiant

Glendive, MT 1,280 $184.01 EAS Big Sky

Grand Forks, ND 219,610 $200.37 Delta, Allegiant

Jamestown, ND 8,110 $220.98 EAS Delta

Minot, ND 195,540 $288.43 Delta, United, Allegiant

Sidney, MT 6,870 $214.04 EAS Big Sky

Williston, ND 36,710 $237.53 Great Lakes

Traffic 12 Months 2011 Q1

BISMARCK REGION AIRPORTS
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 10

The service and capacity summary chart above shows both the extent of current Bismarck air 

service and the disappointing drop in overall capacity, driven by specific reductions by Delta Air 

Lines. Bismarck is suffering from Delta’s continuing merger driven consolidations of capacity and 

service in traditional upper Midwest Northwest Airlines markets.

CURRENT BISMARCK AIR SERVICE: SUMMER 2011

Seats

Carrier Route Segments Seats Segments Seats Change

Delta MSP 82 6,860 82 6,004 -12.5%

SLC 14 700 0 0 -100.0%

Total 96 7,560 82 6,004 -20.6%

United DEN 52 2,600 52 2,600 0.0%

ORD 14 700 14 700 0.0%

Total 66 3,300 66 3,300 0.0%

Allegiant LAS 4 600 4 600 0.0%

AZA 4 600 4 600 0.0%

Total 8 1,200 8 1,200 0.0%

170 12,060 156 10,504 -12.9%

BISMARCK AIR SERVICE CAPACITY: JUNE 2011 VS JUNE 2010 

Weekly

June, 2011

Weekly

Market Total

June, 2010
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 11

Overall, Bismarck domestic traffic has grown 31% since 2003 while overall Bismarck capacity is up 

24% and the market average domestic fare is up 23% in the same period.

Bismarck Domestic Traffic PDEW, Capacity SDEW and Average Fare

Allegiant started Bismarck service in 2004. Typically, Allegiant service to one or two destinations, 

while welcomed in any community, can disguise negative changes in network carrier service. 

This is clearly illustrated in Bismarck when the same PDEW, SDEW and average fare comparisons 

are made for 2003 to 2010, without Allegiant.

Bismarck Traffic PDEW, Capacity SDEW and Average Fare, Without Allegiant

645

762

722

746 740

734

769

799

377

422

457 468 479

455 464

494 $175

$179

$178

$200

$208

$233

$205

$216

$100

$120

$140

$160

$180

$200

$220

$240

0

100

200

300

400

500

600

700

800

900

2003 2004 2005 2006 2007 2008 2009 2010

Average Fare

Seats and Passengers per Day Each Way

Seats per Day Each Way Traffic PDEW Domestic Avg Fare 

645

727

671 679

659

658

690

719

377

397 414

412 414

378

352 370

$175

$184 $186

$213

$224

$258

$240

$255

$100

$120

$140

$160

$180

$200

$220

$240

$260

$280

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010

Average Fare

Seats and Passengers per Day Each Way

Seats per Day Each Way Traffic PDEW Domestic Avg Fare 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 12

With Allegiant removed from the domestic traffic, average fare and capacity measurements 

Bismarck’s true network air service picture becomes clear.

Excluding Allegiant data Bismarck’s capacity is up 11% since 2003 while the average domestic 

fare is up 46%. Amazingly, given the strongest economy in the nation and an old-fashioned 

mining “boom” going on west of the city, domestic network traffic is down 2%.

The why on this decline is simple, a 46% increase in the average fare paid, a small increase in 

capacity and, with the exception of a single Chicago nonstop, no new air service routes.

Bismarck Top O&D Domestic Markets

The list of Bismarck’s top 30 domestic markets (excluding Allegiant service to Las Vegas and 

Phoenix) shows Denver and Minneapolis as the top two destinations, followed by Orlando, 

Chicago ORD (with the single nonstop) and Washington D.C. (Bismarck is the state capitol of 

North Dakota). 

Bismarck Top Markets O&D and PDEW: Year 2010

Notable in the top ten are Dallas and Houston, indicative of the oil and gas mining related travel 

associated with the oil and gas production west and northwest of Bismarck.

0 5,000 10,000 15,000 20,000 25,000 30,000

DEN

MSP

MCO

ORD

DCA

DFW

SEA

IAH

PHX

SLC

PDX

ATL

MCI

LAX

SAN

STL

BOS

SAT

SFO

SMF

LGA

BOI

TPA

ANC

BWI

DTW

HNL

MIA

IND

ABQ

28,140

20,940

9,490

8,170

7,520

7,130

6,210

6,120

5,400

4,910

4,860

4,750

3,960

3,870

3,810

3,580

3,190

3,080

3,000

3,000

2,970

2,730

2,710

2,700

2,690

2,630

2,510

2,510

2,500

2,420

38.5

28.7

13.0

11.2

10.3

9.8

8.5

8.4

7.4

6.7

6.7

6.5

5.4

5.3

5.2

4.9

4.4

4.2

4.1

4.1

4.1

3.7

3.7

3.7

3.7

3.6

3.4

3.4

3.4

3.3

Annual O&D PDEW
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 13

Bismarck Top Market Average Fares: Year 2010

The average domestic one way net fare paid in 2010 in all domestic markets (excluding 

Allegiant traffic to Las Vegas and Phoenix) was $255.

The Bismarck top 30 average fare list is noteworthy for the extremely high fares in some key 

markets. The Dallas average fare is $274 and for Houston it is $314. 

Average Fares in Bismarck’s 30 Largest O&D Markets: Year 2010

Regardless of distance to destination, only one market has an average fare below $200 and 

sixteen of the top 30 markets have an average fare over $250. 

Bismarck Carrier Market Share: Year 2010

There are only three airlines in the Bismarck market; Delta and United offer network service and 

Allegiant offers less-than-daily service to two leisure destinations. The “other” 2% share reflects 

code share or interline routings, such as for Continental (associated with United) or American 

(interline.)

$0 $50 $100 $150 $200 $250 $300 $350

DEN

MSP

MCO

ORD

DCA

DFW

SEA

IAH

PHX

SLC

PDX

ATL

MCI

LAX

SAN

STL

BOS

SAT

SFO

SMF

LGA

BOI

TPA

ANC

BWI

DTW

HNL

MIA

IND

ABQ

$191

$270

$215

$234

$296

$274

$234

$314

$218

$220

$240

$264

$291

$234

$245

$259

$261

$276

$241

$239

$238

$248

$270

$276

$294

$270

$323

$217

$275

$340
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 14

Delta (Northwest) has historically been the dominate carrier in the Bismarck market. Both Delta 

and United market shares have declined, as a percentage of total, with the entry of Allegiant. 

However, the approximate split of network only traffic between the two carriers has only shifted 

slightly, with Delta (Northwest) declining and United increasing, in recent years. 

46.0%

27.0%

25.0%

2.0%

Bismarck Domestic Domestic Market Share: 2010

DL/NW

UA/CO

G4

Other
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 15

BISMARCK AIRPORT AIR SERVICE DEVELOPMENT

Local Air Service Development Efforts

Within the past five years, the Bismarck Airport has worked extensively to recruit new air service 

and retain existing service.

2007

Hired SH&E in January to assist with attracting Bismarck–Chicago service by United Airlines.

During first quarter Airport responded to Frontier Airlines RFP for Q400 routes.

During first quarter numerous written and verbal conversations with United Airlines regarding 

information needed for a potential Bismarck–Chicago O’Hare service.

In second quarter a Consultant was hired to profile Bismarck passenger market, assess 

potential new markets, and develop marketing strategy for identified routes.

In May attended meeting with United Airlines to discuss potential Chicago O’Hare service 

and present analysis of specific route.

In June unveiled new Airport website designed to provide information on area to potential 

airlines and traveling public.

In August the Bismarck-Mandan Chamber of Commerce and the Bismarck-Mandan 

Development Association prepare Business Community Air Travel Survey looking at how 

Northwest Airlines’ reduction in seat capacity affects the community as well as the local 

community’s travel patterns.

Dialogue with Allegiant on possible Phoenix/Mesa service continues throughout the year via 

emails and phone calls.

Air Service Committee of Bismarck-Mandan Chamber of Commerce meets monthly to 

discuss air service discrepancies as well as any news which might affect service in or out of 

Bismarck.

Airport advertises in various print media, including business magazines, local newspapers, 

and billboards across western and central North Dakota -- marketing and advertising 

Budget: $25,000; professional services budget: $75,000.

2008

In February, phone contact with United Airlines regarding Chicago service.

Also in February attended annual Allegiant conference to network and discuss viability of 

new service routes from Bismarck, one-on-one meeting with Allegiant representatives.

In October, new service to Phoenix/Mesa begins on Allegiant.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 16

In December Delta Air Lines hosts a meeting for North Dakota Congressional Delegation, 

Business Community, and Airport Managers to discuss the future of air service after the 

Northwest/Delta merger. At this meeting new Salt Lake City service is announced, beginning 

in June.

Air Service Committee of Bismarck Mandan Chamber begins tracking airfares from 

surrounding airports to judge any inequalities that might be occurring, discuss air service 

discrepancies as well as any news which may affect service in or out of community.

Airport partners with Bismarck-Mandan Convention and Visitors Bureau on cooperative 

advertisements in Regina/Saskatchewan, Canada; Airport is advertised in various print 

media, including business magazines, local newspapers, and billboards across western and 

central North Dakota -- marketing and advertising Budget: $25,000; professional services 

budget: $90,000.

2009

In February attended annual Allegiant conference to network and discuss viability of new 

service routes from Bismarck, met one-on-one with Allegiant representatives.

In March written correspondence occurs with United regarding frequency of a potential 

Bismarck–Chicago O’Hare flight.

In June new service to Chicago O’Hare begins on United Airlines and new service to Salt 

Lake City begins on Delta Air Lines.

In June Sixel Consulting Group is hired to prepare market analysis for presentation to Frontier 

Airlines about possible Denver–Bismarck service. Presentation is made to Frontier in Denver 

later that month.

In September, new advertising campaign focusing on Airport brand is unveiled. Also in

September a meeting was held with North Dakota Congressional Delegate’s aide to discuss 

air service issues affecting Bismarck, including available seats and fall schedules for both 

Delta and United Airlines, goal is to keep existing service throughout the year.

In October attended Sabre Roundtable Conference in Denver to establish link with Frontier 

Airlines over possible service to Denver.

In early November enlisted Sixel Consulting to survey travelers, mainly business community, to 

establish the demand for cities not currently served by airlines in Bismarck. That same month 

the Airport hosted business community luncheon in which Sixel Consulting presented survey 

results and narrowed focus to determine which airlines to actively recruit. Later that month

Sixel Consulting presented survey results to Bismarck-Mandan Chamber of Commerce to 

gain support for recruiting additional airline service. Also in November, entered into year-long 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 17

TV contract with North Dakota NBC affiliate to air Bismarck Airport commercials in three 

markets across the state.

In December, began production on first TV commercial advertising the Airport, completed 

for a January 2010 airing.

Also in December entered into yearlong agreement to air TV commercials quarterly on CBS 

station in Bismarck.

Throughout the year the Air Service Committee of Bismarck Mandan Chamber continues 

tracking airfares from surrounding airports to judge any inequalities that might be occurring, 

discuss air service discrepancies as well as any news which may affect service in or out of 

community.

During 2009 the Airport also partners with Bismarck-Mandan Convention and Visitors Bureau 

on cooperative print advertisements in Regina/Saskatchewan, Canada; Airport advertises in 

various print media, including business magazines, local newspapers, and billboards across 

western and central North Dakota -- marketing and advertising Budget: $25,000; professional 

services budget: $100,000.

2010

During February attended annual Allegiant Conference to network and discuss potential 

new service to Orlando, FL, Los Angeles, CA, and Oakland, CA Met one on one with 

Allegiant representatives. On February 17 received invitation to exclusive Allegiant luncheon 

for top-performing airports in Allegiant’s network.

During March exchanged numerous emails with Allegiant over route profiles from Bismarck

and exchanged numerous emails with Delta to develop advertisements promoting ridership 

on new Salt Lake City flight to save the route.

In April radio ads are developed based on first TV advertisement, scheduled to run in June, 

July and August.

During May surveyed oil companies via North Dakota Petroleum Council’s contacts 

regarding top destinations traveled to and from Bismarck in an effort to showcase viability of 

service routes to American Airlines.

During June exchanged emails and phone calls with Allegiant over route profiles and 

possible Orlando, FL, service. Also during June production begins on second TV commercial 

advertising Airport, completed for a July airing. Finally during June attended 2010 Jumpstart 

Conference in San Diego, CA, to meet with representatives from Delta Air Lines, 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 18

UnitedAirlines, Southwest Airlines, Frontier Airlines, Republic Airlines, and American Airlines 

over possible expansion of service or new service route.

During July concluded promotional contest to advertise the Chicago O’Hare nonstop flight 

on United Airlines with winner provided two free roundtrip tickets to Chicago on United 

Airlines, two-night hotel stay, and a major league baseball game.

During August developed a second contest featuring Salt Lake City as a nonstop destination 

on Delta Air Lines with the winner provided with two free nonstop tickets on Delta Air Lines, 

two-night hotel stay at a nationally recognized ski resort, and ski lift tickets. Also during August

submitted a SCASDG application.

In December the Airport entered into extended agreements with four TV stations, two for 

airing Airport commercials in Dickinson, Minot and Williston and two for Bismarck area ads. 

During the year the Air Service Committee of Bismarck Mandan Chamber continues tracking 

airfares from surrounding airports to judge any inequalities that might be occurring as well as

discuss air service discrepancies as well as any news which may affect air service in or out of

community. Also during the year the Airport partnered with the Bismarck-Mandan 

Convention and Visitors Bureau on cooperative print advertisements in 

Regina/Saskatchewan, Canada; Airport advertises in various print media, including business 

magazines, local newspapers, and billboards across western and central North Dakota --

marketing and advertising Budget: $150,000; professional services budget: $40,000.

2011

In January developed a third TV commercial to promote the Airport and its partners.

In June entered into six month agreements with out-of-state radio stations to air Airport ads.

In May attended the annual Allegiant Conference to network and discuss potential new 

service to Orlando, FL, and Los Angeles, CA, and meet one-on-one with Allegiant

representatives. Also in May received a consultant’s report on Bismarck air service, including 

an in-depth analysis of domestic pricing.

In June attended Jumpstart Conference, met with seven airlines: Alaska, American, Bearskin, 

Delta, Frontier, Southwest, and United. Multiple follow-ups with these carriers.

In July had a consultant presentation of the May Air Service Report to interested citizens.

In August submitted a SCASD Grant application for 2011.

Continued partnership with the Bismarck-Mandan Chamber to track airfare inequities.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 19

AIR SERVICE NEEDS AND DEFICIENCIES

Bismarck’s Clear Air Service Needs and Deficiencies

The Bismarck area economy is booming. Local oil and gas mining is setting new production 

records every year and agricultural production is benefiting from high demand for cash crops. 

The local unemployment rate is 2.9%, less than a third of the national average.

Yet the residents and businesses of Bismarck and its large catchment area have limited air 

service options and pay some of the highest average fares in the lower 48.

Quality air service is an essential ingredient for economic prosperity and continued economic 

growth. Conversely, a lack of adequate air service options or affordable airfares is a direct 

hindrance to economic growth.

Stagnant Network Carrier Service

With the exception of one single daily new regional jet flight to Chicago, Bismarck network 

carrier air service is today as it was in 2003. Delta (Northwest) operates to Minneapolis and 

United operates to Denver.

Route Metric 2003 2010 Change

Flights 1,567 2,545 62%

Seats 73,656 131,362 78%

Flights 4,476 4,281 -4%

Seats 382,407 283,781 -26%

Flights 626 1,315 110%

Seats 14,675 65,824 349%

Flights 6,669 8,141 22%

Seats 470,738 480,967 2%

Excludes Allegiant Air in 2010

Includes Delta SLC service in 2010 which has since ended

COMPARISON OF NETWORK AIR SERVICE

Year 2003 vs Year 2010

DEN

MSP

Other

Total
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 20

Delta has reduced Minneapolis capacity as part of the merger integration of Delta and 

Northwest. At the same time United has increased Denver capacity. Northwest’s historic use of 

mainline equipment at Bismarck has been dramatically curtailed by Delta, with only a single 

mainline flight to MSP remaining in 2010 and today.

Even this comparison is distorted because the 2010 network totals include a since-terminated 

Delta service to Salt Lake City. Excluding 2010 Salt Lake City totals from the comparison would 

leave Bismarck with a seat count of 447,591, a net loss of 23,147 annual seats or 5% fewer 

network seats than were available in 2003.

In this same approximate timeframe that Bismarck lost 5% of its network seats the following 

happened to the Bismarck economy;

The Bismarck MSA population grew 12% from 2003 to 2010.

The state population grew 6% in the same period.

According to the U.S. Bureau of Economic Analysis, since 2000:

- North Dakota has created 47,900 new jobs, a 15% increase while the nation as a 

whole saw job creation decline 1.5% in the same period.

- North Dakota’s average wage increased 54% while nationally it increased 30%

- The value of North Dakota exports rose 303% to $2.5 billion

- North Dakota per capita personal income increased 58% while nationally it was 34% 

North Dakota’s state GDP grew 7.1% in 2010 while the national growth was 2%.

According to the U.S. Chamber of Commerce North Dakota has been the top state for 

job creation since 2007. In addition to expected strength in construction and mining, its 

professional and technical services sectors saw a 42% job growth and the management 

sector a 36% increase.

According to Forbes, in Bismarck the number of high paying energy industry jobs has 

grown 23% since 2003 while jobs in professional and business services have grown 40%.

According to the North Dakota state Mineral Resources Department 2,000 new oil or gas 

wells will be drilled in 2011.

As to why network carrier capacity would decline in a booming business market like that 

described above, the Bismarck Airport believes it is a victim of industry circumstances. In the 

case of Delta and the Northwest merger, the Department is well aware from the Essential Air 

Service sector changes Delta is making that, in terms of equipment and service allocation, the 

carrier simply does not see the traditional upper Midwest route system of Northwest through the 

same eyes that Northwest did. Even in the case of United, while the carrier has modestly grown 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 21

its capacity at Bismarck, the general carrier philosophy for the past years, even before the 

Continental merger but certainly since, has been a very restrained approach to domestic 

capacity increases. These two unrelated carrier circumstances certainly play a role in the glaring 

paradox of a booming Bismarck area economy and a net reduction in network carrier service.

Some of the Highest Average Fares in the Lower 48

Unless you are booking a vacation on Allegiant to Las Vegas or Phoenix, it is very expensive to fly 

out of Bismarck, North Dakota. 

Among all domestic airports Bismarck ranks 78th highest out of 713 airports that reported traffic in 

2010. After sorting that massive list and only measuring lower 48 airports with continuing service 

Bismarck ranks 68th.

After adjusting all remaining airports by factoring out any less-than-daily (Allegiant type) air 

service Bismarck ranks 18th.

Note that half of the top 18 airports are single carrier EAS markets. Only two, Minot and 

Shreveport, can be considered peers with Bismarck in terms of market size and service.

Rank Airport Avg Fare Name Total Carriers

1 IYK $393.66 Inyokern, CA: Inyokern-Kern County 1

2 DHN $341.35 Dothan, AL: Dothan Airport 1

3 DVL $335.14 Devils Lake, ND: Devils Lake Mini 1

4 CSG $308.94 Columbus, GA: Columbus Metropolitan 2

5 TBN $300.26 Fort Leonard Wood, MO: Forney Army Air Field 1

6 MEI $299.02 Meridian, MS: Key Field 1

7 TXK $293.09 Texarkana, AR: Texarkana Muni/Webb Field 2

8 ART $290.87 Watertown, NY: Watertown New York International 1

9 MOT $288.11 Minot, ND: Minot International 3

10 CIU $277.35 Sault Ste Marie, MI: Chippewa County International 1

11 PQI $276.96 Presque Isle/Houlton, ME: Presque Isle Municipal 1

12 PIB $275.35 Laurel/Hattiesburg, MS: Pine Belt Regional 1

13 SHV $271.00 Shreveport, LA: Shreveport Regional 5

14 BPT $270.59 Beaumont/Port Arthur, TX: Jefferson County 1

15 LSE $264.23 La Crosse, WI: La Crosse Municipal 1

16 ABR $263.43 Aberdeen, SD: Aberdeen Regional 1

17 VCT $257.14 Victoria, TX: Victoria County Foster 1

18 BIS $255.00 Bismarck/Mandan, ND: Bismarck Municipal 3

HIGHEST AVERAGE FARES AMONG LOWER 48 AIRPORTS

EAS Airports

Peer Airports
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 22

Alternative Airports

In the case of most domestic airports with high airfares travelers can at least drive a reasonable 

distance to access lower priced air service. Such is not the case in Bismarck.

The nearest larger airport is Fargo and it is a three hour drive. At Fargo airfares are not 

significantly different than at Bismarck in most city pairs (confirmed by an extensive evaluation 

done in May of 2011). Average fare data for Fargo has, until recently, reflected Frontier’s market 

participation and some measurably lower average fares on many routes; however Frontier 

exited the market in April of 2010.

Rapid City, SD and Billings, MT offer only occasional and only modestly lower airline pricing in 

most city pairs and both alternative airports are nearly a six hour drive.

Bismarck’s only true alternative airport with measurably lower fares is Minneapolis, a 6.5 hour 

drive over 442 miles. By comparison to most other parts of the country and most other airports 

with high airfares, Bismarck really does not have an “alternative airport”. Local travelers pay the 

Bismarck fare or stay home.

Addressing Bismarck’s Clear Air Service Deficiency

There is no magic solution to Bismarck’s stagnant and high priced network air service situation. 

Delta and United have a duopoly on network service at Bismarck and in the entire central and 

western North Dakota region and while they certainly compete with each other; a comfortable 

status quo appears to have settled in.

Bismarck believes that introducing a new network carrier, from a hub with a global reach and 

with the best transit routings and times for the oil and gas mining related travel to Texas, offers a 

solid first step toward addressing the competitive imbalance and bringing airfares down to more 

tolerable levels.

Alternative Airport Drive Time Drive Distance

Fargo 2:55 199

Rapid City 5:50 366

Billings 5:55 419

Minneapolis 6:36 442

Drive distances and times per MapQuest
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 23

PREVIOUS GRANT AWARD

In 2002, the first year of the Small Community Air Service Development Grant Program, the 

Bismarck Airport was awarded a Grant for $1,557,500 in funding, matched by a local share of 

$512,500. The purpose of the 2002 Grant was to assess the feasibility of inaugurating new 

regional air service, recruit a regional airline to provide the regional air service, and market the 

regional air service.

The proposal was groundbreaking in that it envisioned an on-call point-to-point airways system 

using single engine aircraft providing service in rural areas where drive distances are great. The 

concept was tried and did not gain the traction necessary to continue as a going concern. 

Much was learned about the marketing, pricing, promotional and operational tactics needed 

to make such a concept work at some future time and place.

The 2002 Grant gets an “A” for creativity and for acquired learning for the Department and 

North Dakota on strategies and tactics to consider in addressing rural air service needs. The 

Grant’s scope and purpose have almost nothing in common with the current 2011 Grant 

application.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 24

A STRATEGIC PLAN FOR EXPANDED BISMARCK AIR SERVICE

STRATEGIC PLAN FOR NEW AIR SERVICE

The Bismarck Airport and its partners propose to use Grant funding in combination with the local 

match funding to support new network air service at Bismarck.

The targeted carrier is American Eagle and the targeted route is Bismarck – Dallas. American 

Eagle is expanding the reach of its already powerful DFW hub, having added over a dozen new 

routes in the past two years. Service from Bismarck to the DFW hub would address several 

pressing Bismarck air service needs;

Dallas is Bismarck’s sixth largest domestic market (excluding Allegiant markets Las Vegas and 

Phoenix).

Dallas service would create online connections to 74 domestic and 24 international cities.

American Eagle Bismarck – Dallas Service With Connection City Pairs
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 25

American Eagle service to Dallas would interject a third carrier’s pricing activity into the 74 

domestic and international markets shown. Imposition of a third carrier consistently leads to 

lower airfares, either via actual lowering of price points or by relaxation of advance purchase 

and minimum stay requirements that network carriers use so artfully to wall off lower end fares 

from use on most typical business trips.

The service would also introduce the first single connect service between Bismarck and 45 city 

pairs (29 domestic and 16 international), including many smaller south central and southeastern 

US cities. These are cities that, while they may have Delta or United service, do not have that 

service from Denver or Minneapolis, thereby requiring double connect travel currently.

Specific New Route Data

Bismarck – Dallas/Fort Worth is a 978 miles segment, almost identical to current American routes 

Dallas – Charleston, SC, (971 miles) and Dallas – Salt Lake City (1,003 miles). American Eagle 

deploys EMB-140 (44-seat) aircraft on the Charleston route. The new service is proposed as two 

round trips per day with EMB-140 equipment.

Based on recent American Eagle Form 41 data the estimated annual segment cost of operation 

would be $9.7 million dollars. Variances in fuel cost can, of course, cause a variance either way, 

especially on a segment of this distance.

Potential traffic flows for the new service are significant. For purposes of this calculation traffic 

from Minot, Dickinson, Williston, Jamestown and Devils Lake is considered for local Dallas traffic 

and revenue totals, given the tremendous attractiveness Bismarck – Dallas nonstop service 

would have in the region vs. routings via Denver or Minneapolis.

Distance 978

Annual Segments (factored) 1,409

Block Time 2.65

Annual Block Hours 3,733.9

Annual Seats 61,996

Annual ASM 60,632,088

Estimated CASM 0.16

Estimated Annual Segment Cost $9,701,134

Estimated Cost/Hour $2,598.16

BISMARCK - DALLAS OPERATIONAL METRICS
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 26

The Bismarck Region – Dallas Local Market PDEW and Average Fare: 2003 - 2010

The local market between the Bismarck region and Dallas has grown dramatically in recent 

years, up 29% from 2009 to 2010 and up 47% since 2003. Traffic is now (2010) in the 22 PDEW or 

16,060 annual O&D range and the average fare is in the $300 range.

For domestic and international connect flow traffic only Bismarck, Dickinson and Jamestown

O&D traffic is considered in the projection of new service traffic potential. Both Jamestown and 

Dickinson are in the EAS program and Jamestown faces the almost certain loss of branded 

network service in 2012 with the competitive viability of unbranded replacement service a 

serious question.

Bismarck area domestic flow traffic that could competitively move via DFW on American Eagle 

totaled some 159 PDEW or 116,070 annual O&D at an average fare of $269 in 2010. Bismarck 

area traffic in some 29 of the city pairs tallied currently moves via double connections (where 

Delta does not offers service from MSP or United from Denver) or even via interline connections 

in cases where American is the only carrier (some smaller cities in Texas). 

15.0

17.0

16.0

18.0

17.0 17.0 17.0

22.0

$195 $204 $198

$221

$260

$300

$268 $295

$0

$50

$100

$150

$200

$250

$300

$350

0

5

10

15

20

25

2003 2004 2005 2006 2007 2008 2009 2010

Average Fare PDEW

PDEW Average Fare
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 27

Bismarck Domestic Flow Traffic via DFW: Market PDEW and Average Fare: 2003 - 2010

The Bismarck international traffic market that could flow via DFW is modest but growing. Traffic 

has grown 180% from 2003 to 2010 and equates to 10,220 annual O&D in the most recent year.

Bismarck International Flow Traffic via DFW: Market PDEW and Average Fare: 2003 - 2010

145.0

157.0

156.0

164.0

160.0

152.0

145.0

159.0 $183

$195 $198 $219

$238

$266

$253

$269

$0

$50

$100

$150

$200

$250

$300

135

140

145

150

155

160

165

170

2003 2004 2005 2006 2007 2008 2009 2010

Average Fare PDEW

PDEW Average Fare

5.0

5.0

6.0

9.0

10.0 12.0

13.0

14.0

$292

$327

$317

$313

$315

$341

$338

$338

$260

$270

$280

$290

$300

$310

$320

$330

$340

$350

0

2

4

6

8

10

12

14

16

2003 2004 2005 2006 2007 2008 2009 2010

Average Fare PDEW

PDEW Average Fare
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 28

Projected New Route Results

Bismarck offers a simple, basic and conservative estimation of first and second year traffic and 

revenue results for American Eagle Bismarck – Dallas service, with an assumed year one start in 

2012.

The first year of operation is projected to show a segment operating loss of $398,691. Nearly

$11.9 million in system ticket revenue is generated, of which a projected $8.87 million would 

allocate as Bismarck – Dallas segment revenue.

The Bismarck – Dallas local market grows to 25,000 annual O&D and American Eagle captures 

62% of that total or some 15,533 annual passengers. The new service would also capture over 

26,557 annual domestic connect passengers via DFW as well as just under 1,200 international 

connect passengers.

Segment load factor would be 69.8% during the first year of operation. Average fares in all traffic 

sectors would be 2% less than 2010 levels, a significant fare reduction from where 2012 levels 

would be absent the new service.

Projection of American Eagle BIS Area BIS Area Total AA

BIS - DFW Results BIS Area Domestic International System & Segment

Year One: 2012 DFW Locals Flow via DFW Flow via DFW Traffic & Revenue

2010 O&D PDEW 22 159 14 195

2010 O&D Annual 16,060 116,070 10,220 142,350

2010 Avg Fare $295 $269 $338

Organic Growth to 2012 4% 4% 4% 4%

Baseline 2012 O&D 16,702 120,713 10,629 148,044

Stimulation AA Mkt Entry 50% 10% 10%

2012 O&D with AA Service 25,054 132,784 11,692 169,529

AA Capture 62% 20% 10% 26%

AA O&D Annualized 15,533 26,557 1,169 43,259

2012 Avg Fare (2010 minus 2%) $289 $264 $331

AA Revenue $4,489,104 $7,010,999 $386,995 $11,887,098

Segment Revenue Prorate 60% 45%

BIS DFW Segment Revenue $4,489,104 $4,206,600 $174,148 $8,869,851

Segment Ancillary @ $10 per O&D $155,332 $265,568 $11,692 $432,592

Total Segment Revenue $4,644,436 $4,472,168 $185,839 $9,302,443

Segment Costs (page 23) $9,701,134

Operating Profit/Loss ($398,691)
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 29

The second year of a Bismarck – Dallas service (2013) is projected to produce a modest 5% 

operating margin with an operating profit of $492,074. System revenue would total nearly $13.4

million.

Segment load factor would grow to 77.0% and average fares would grow 2% from 2012 levels to 

be back at 2010 levels.

The Bismarck Airport understands that these conservative projections show an operating loss for 

the carrier in the first year. The traffic and revenue assumptions are conservative. The Airport 

believes that a conservative forecast such as this shows a clear understanding of the financial 

challenges this new service would face and why modest Grant supported risk abatement 

funding is needed to encourage the carrier to begin service. 

Bismarck does not attempt to discern the down-line traffic and revenue value the American 

network would gain from Bismarck traffic, even in the first year of segment losses. We are 

confident that a financial result like that projected above, coupled with modest Grant 

supported risk abatement funding, would give the carrier reason to begin and retain Bismarck 

service.

Projection of American Eagle BIS Area BIS Area Total AA

BIS - DFW Results BIS Area Domestic International System & Segment

Year Two: 2013 DFW Locals Flow via DFW Flow via DFW Traffic & Revenue

2012 O&D with AA Service 25,054 132,784 11,692 169,530

2012 Avg Fare $289 $264 $331

Organic Growth to 2013 2% 2% 2% 2%

Baseline 2013 O&D 25,555 135,440 11,926 172,921

AA Capture 65% 22% 11% 28%

AA O&D Annualized 16,611 29,797 1,312 47,719

2013 Avg Fare (2012 + 2%) $295 $269 $338

AA Revenue $4,896,532 $8,023,663 $442,904 $13,363,100

Segment Revenue Prorate 60% 45%

BIS DFW Segment Revenue $4,896,532 $4,814,198 $199,307 $9,910,037

Segment Ancillary @ $10 per O&D $166,108 $297,967 $13,118 $477,194

Total Segment Revenue $5,062,640 $5,112,165 $212,425 $10,387,231

Segment Costs 2012 +2% $9,895,157

Operating Profit/Loss $492,074
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 30

Goals and Objectives of the Strategic Plan

The Airport and its community supporters have three primary goals in air service development 

and those goals apply to this SCASD grant application:

 Recruit new air service to key destinations, with a priority on a Texas nonstop service.

 Support the new air service with aggressive local marketing and advertising.

 Work to ensure that total market traffic and revenue grows and that both the new 

entrant carrier and existing incumbents are profitable at Bismarck. 

Local Support via a Public Private Partnership

A number of local partners will be working with the Bismarck Airport to promote, support, and 

market the new air service. Contacts will be made with all members of the Bismarck-Mandan 

Chamber of Commerce and with other community minded groups and individuals with an 

interest in expanding the local economic base via the economic benefit new air service would 

bring to the region. Key members of the Bismarck area public private partnership are:

Bismarck-Mandan Chamber of Commerce

The Airport’s quest for new commercial air service is supported foremost by the BismarckMandan Chamber of Commerce. The Chamber’s Foundation and its Air Services Committee 

are in full support of this application. The Foundation has pledged $50,000 in private donations 

from its members, to be used as matching funds in support of the application to improve air 

service to the communities of Bismarck and Mandan. The Air Services Committee works yearround on special projects to help raise awareness of the Airport and the importance of 

improving air service to the communities.

Bismarck-Mandan Development Association

The Bismarck-Mandan Development Association has relationships with local service providers. 

Partnering with BMDA, many of these utility service providers will negotiate favorable terms, 

grants, and conditions for new or expanding companies. BMDA shares an interest in expanding

the economic base of the community through local business growth, attraction of new 

businesses, and the promotion of tourism and visitor traffic via the Bismarck Airport. 
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 31

City of Bismarck

The City of Bismarck is one of the biggest supporters of bringing additional air service to the local 

Bismarck Airport, realizing how vital the Airport is to the growth of the entire region that it serves.

City leaders continually work with the Airport to develop and support new service initiatives. The 

Airport is a department of the City of Bismarck. The City of Bismarck controls the primary 

oversight of the Airport, but the City of Mandan will also contribute to expand air service.

City of Mandan

The City of Mandan has implemented several programs to assist in the redevelopment efforts of 

the Central Business District (CBD). A growing community, much of the city’s success derives from 

a network of contributors. Although the City of Bismarck controls direct oversight of the Bismarck 

Airport, the City of Mandan also contributes to the expanded use of the Airport as well. The

fortunes of both cities are intertwined.

Bismarck-Mandan Convention and Visitors Bureau

The Convention and Visitors Bureau focuses on making Bismarck-Mandan a sport and leisure hub 

in this part of the country. The Bureau is expanding meeting and event business in the 

government, medical, fraternal, agriculture, religious, energy, education and military markets. 

The Bureau is dedicated to the economic health of the area and the prosperity of its members. 

Moreover, the Bureau believes enhanced air service at the Bismarck Airport is essential to the 

interconnectivity of businesses, and is a key part of any community’s plan for economic growth.

 

Grant Funding Plan

The Bismarck Airport and its partners are requesting $500,000 in Department funding. Local nonairport partners of the airport will contribute $50,000 (a 10% match) while the Airport will 

contribute $25,000 in dedicated marketing funds for a total cash non-airport Grant funding level 

of $575,000.

The Airport will also contribute, for the first year of service, in-kind fee waivers with an estimated 

value of $398,104 This includes waivers on landing fees, terminal use fees and jet bridge charges.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 32

The local non-airport cash funding will come from the Bismarck-Mandan Chamber of 

Commerce Foundation. The Chamber is an active member of the Airport’s public-private 

partnership and the Foundation is well funded. The Chamber has made improving air service a 

high priority because of overwhelming and consistent comments from its members on the 

limitations and high costs of current network carrier service.

A host of soft or community in-direct contributions will also aid the new airline and new service. 

This will include, for example, the Chamber and Development groups facilitating contacts and 

meetings between the new airline’s sales team and local business and industry, including the 

numerous small and medium sized oil and gas mining support companies that operate west of 

the city.

Grant Application Target Audience

Grant funding will be used to provide initial phase risk abatement funding and marketing and 

promotional funding for new air service, with a specific target of nonstop flights to Dallas on 

American Eagle.

The various target audiences for this service include:

Bismarck area businesses.

Out-state firms that are conducting business in the region, especially oil and gas industry 

firms headquartered in Texas, Oklahoma or Louisiana.

Line Description Sub Total Total Amount

1 Federal amount requested $500,000

2 State cash financial contribution $0

Local cash financial contribution

3a Airport cash funds (Marketing funding) $25,000

3b Non-airport cash funds $50,000

3 Total local cash funds (3a + 3b): $75,000

4 TOTAL CASH FUNDING (1 + 2 + 3): $575,000

In-Kind contribution

5a Airport in-kind contribution (First year fee waivers) $398,104

5b Other in-kind contribution** $0

5 TOTAL IN-KIND CONTRIBUTION (5a + 5b): $398,104

6 TOTAL PROJECT COST (4 + 5): $973,104

BISMARCK AIRPORT 

2011 SCASD Project Cost Detail
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 33

Rotation travel related to out-of-state workers, in all industries, who have come to North 

Dakota due to the high demand for labor but still have family or roots in other parts of 

the country.

Local resident leisure and visit friends and relatives (VFR) travel demand.

Summer tourism traffic from the south central U.S. 

 

Each of these audiences will require different marketing and promotional approaches.

Bismarck area businesses – The Delta (Northwest) and United affinity programs are well 

established in the Bismarck region. Yet local dissatisfaction with incumbent air service is 

significant. Media costs are low in the Bismarck region so informing local businesses of new 

service will not be a challenge. Efforts will focus on the new service convenience and the 

attractiveness of the new carrier’s frequent flyer program. 

Out-of-state Firms – The Airport and its partners, working closely with the North Dakota Petroleum 

Council and the state Industrial Commission (Oil and Gas Division) and working closely with the 

Airline and all its corporate relationships in Texas, will identify and contact out-of-state firms 

performing oil and gas mining work in North Dakota. This should be a relatively low cost 

electronic and mail effort.

Rotation Travel – Contacts with Bismarck area firms and with out-of-state firms should provide a 

very good baseline of firms in the region that are employing out-of-state workers. Simple 

agreements can be reached with these firms to advise their employees, via regular internal 

communication, of new air service in the region. Also, with low media costs, modest amounts of 

conventional mass media in the region will ensure the news of new air service at Bismarck is 

effectively communicated.

Local Resident Leisure and VFR Travel – North Dakotans work hard and play hard. Because of the 

isolation of the region taking a vacation or visiting family usually involves a long trip. 

Conventional media efforts will ensure this travel demand sector is aware of the new air service.

Summer tourism – The North Dakota Tourism Division oversees the promotion of State tourism 

nationwide and internationally. The Airport and its partners will work closely with this Division on 

ensuring that, where appropriate, North Dakota tourism marketing efforts will be coordinated 

with the new Airline.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 34

The Impact of New Grant Supported Air Service 

The Bismarck Airport sees significant regional economic impact from the new air service 

envisioned in this proposal.

The new service will:

Reverse the surprising decline in network capacity at Bismarck.

Mitigate, by injection of a third network competitor, the continuing rise in the already 

very high Bismarck airfares.

Dramatically improve air service options and transit times for critical business travel 

between the oil and gas mining region near Bismarck and the 

Texas/Louisiana/Oklahoma area.

Inject new network carrier service at Bismarck, at modest costs associated with this Grant 

proposal, at a time when two nearby EAS airports are about to lose their network carrier 

service. Replacement service in these markets will likely be unbranded, causing a further 

decline in the quality of overall North Dakota air service.

 

Grant Use Timeline

The Airport envisions Grant funding would be available beginning in fourth quarter of 2011. The 

Airport envisions that new Grant supported air service could then begin, at the earliest, in spring 

of 2012. Since the lead times for Airlines to make new route decisions can be lengthy, the Airport 

requests Grant funding be available for a three year period.

The Airport’s timeline for Grant usage is built on a four quarter cycle. This acknowledges that the 

Airport cannot exactly predict the date of agreement with the carrier for new service nor the 

sometimes significant lead times network carriers have to begin new service.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 35

Measuring Progress toward Goals and Objectives

The Airport anticipates the carrier will provide it with timely advance booking information and 

continuing guidance on actual financial performance. 

The Airport will also correlate the performance of the new carrier with that of incumbents. One 

of the goals the Airport has in adding new air service is to ensure incumbent carrier services are 

preserved and remain viable. Given the market power of Delta and United in North Dakota we 

believe their incumbent services at Bismarck will continue to be profitable after the entry of a 

third network carrier.

As the above timeline indicates, the Airport will work closely with the airline to ensure any midcourse adjustments needed in the marketing and promotional programs that support the new 

service are made promptly and executed professionally.

Time Frame Event

Grant Application

Submit Letters of Support for Grant Application

Receive Grant Award

Begin new air service recruiting efforts with Grant funding available

Submit quarterly DOT Grant status report

Reach agreement with carrier on new Bismarck service

Announce new air service in coordination with carrier

Submit quarterly DOT Grant status report

Begin mass media marketing and promotion of new service

Work with the carrier to develop traffic and revenue goals

Submit quarterly DOT Grant status report

Evaluate initial bookings and adjust media efforts as needed, working with carrier

New service begins with press conference, ribbon cutting and media events

Submit quarterly DOT Grant status report

Evaluate first quarter of actual results in comparison to goals

Adjust marketing program as booking data and seasonal considerations dictate

Quarter D

BISMARCK AIRPORT GRANT APPLICATION MILESTONES

Quarter A

Quarter B

Quarter C

Fourth Quarter 2011

August, 2011

The following milestones will occur by quarter starting when a carrier commitment is accomplished
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 36

In terms of the new route being self-sustaining, the Airport recognizes domestic air service is a 

very competitive business and subject to many outside factors which can dramatically impact 

air service economics.

We believe the booming North Dakota economy is ready for new network carrier air service. We 

are confident there is significant business travel demand that is not being met by existing service 

and that a measurable stimulation of local travel demand, along with organic growth driven by 

the strong local economy, will generate ample traffic and revenue for the new service.

However, should the new service not prove to be self-sustaining as projected, in the second year 

the Airport and its partners are prepared to take significant steps to retain the service until 

viability is attained. While it is difficult to define exactly what steps would be taken without 

knowing more precisely the reasons for the financial shortfalls (is it a traffic or revenue shortfall or 

a fuel cost driven cost overrun?), examples of steps which could be taken include:

Extension of the first year airport fee waivers, valued at approximately $400,000 annually 

for a second year.

Renewed and refined marketing and promotional efforts targeted toward whatever 

traffic sector is not meeting traffic and revenue targets.

Depending on the degree of additional financial need and the strength of traffic 

response, the Bismarck parties would consider a second round of locally generated risk 

abatement financial support.

Grant Application Legal Sponsor

 

The legal sponsor of this application is the Bismarck Airport. The Airport Manager is Greg Haug. 

The contact information for the Legal Sponsor is:

Bismarck Airport

Bismarck, North Dakota

Greg Haug, Airport Manager

Congressional Code: ND-001

Dun & Bradstreet Number: 080245640
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 37

COMMUNITY PROFILE

City of Bismarck

Bismarck is the Capitol of the strongest state economy in the United States.

The city is located in central North Dakota on the Missouri River at the junction of east-west 

Interstate I-94 and north south State Trunk Highway 83. The city’s commercial, education and 

medical infrastructure constitutes a regional center serving the rural population for hundreds of 

miles in any direction.

Although located in a rather remote location where the weather can be harsh, Bismarck is a 

thriving city. This report has already touched on the powerful local economy, with solid growth 

metrics in every measurable category and a 2.9% unemployment rate.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 38

The entire North Dakota region has a healthy economy. However, Bismarck and its catchment 

area shine even within that region.

May 2011 Unemployment Rates: Upper Midwest MSAs 

Economic Overview

The capital of North Dakota boasts strong employment rates thanks to bountiful job 

opportunities. In addition to agriculture and oil and gas mining, the Bismarck-Mandan area is 

home to two competing health care providers, MedCenter One Health Systems and St. Alexius 

Medical Center. Combined, those health care providers have more employees in Bismarck than 

the State of North Dakota. State government and educational institutions are also among the 

other significant area employers.

9.0%

7.5%

7.4%

6.6%

6.3%

6.2%

5.6%

5.2%

5.1%

5.0%

4.7%

4.3%

3.7%

2.9%

0% 2% 4% 6% 8% 10%

United States

Duluth

Missoula

St. Cloud

Minneapolis/St...

Great Falls

Rochester, MN

Billings

Mankato

Rapid City

Sioux Falls

Grand Forks

Fargo

Bismarck
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 39

Unlike many other areas of the country, where home values have dipped significantly, homes in 

Bismarck actually appreciated by a rate of about 2 percent over the past year. Bismarck 

residents also spend an 

average of $7,560 a year on 

vacations, respectful of the 

harsh winter climate they 

reside in.

Rank Employer Employees

1 State of North Dakota 4,321

2 MedCenter One Health Systems 3,047

3 St. Alexius Medical Center 2,010

4 Bismarck Public School District 1,640

5 North Dakota Federal Offices 1,198

6 City of Bismarck 850

7 MDU Resources Group 693

8 Aetna 653

9 University of Mary 572

10 Dan’s Supermarkets 569

11 Mandan Public School District 535

12 Missouri Slope Lutheran Care Center 493

13 Basin Electric Power Cooperative 481

14 Pride, Inc. 471

15 Burlington Northern Railroad 420

16 Housing Industry Training (HIT) 420

17 Coventry Health Care, Inc. 415

18 Laducer and Associates, Inc. 258

19 Cloverdale Foods 250

20 Tesoro Petroleum 239

“Bismarck enjoys 

an astonishingly 

low unemployment 

rate of less than 

three percent, less 

than a third of the 

national figure”
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 40

The Oil and Gas Industry

North Dakota is a leading energy producer. The 

state produces enough oil to fuel over 700,000 

cars and heat over 300,000 homes a day. North 

Dakota produces enough natural gas to meet 

the natural gas needs of almost 1 million homes 

a day. The 2007-2009 biennium was historical in 

many ways. The Bakken formation and the 

Three Forks formation directly underlying the 

Bakken gained attention as the biggest oil 

resource play in the continental United States. 

As a result, North Dakota moved up in ranking 

to become the fourth largest oil producing 

state. North Dakota’s 4,810 oil wells produced 

79.7 million barrels of crude oil in 2009. New 

pipelines and railroad shipping facilities for unit 

trains of oil have been completed near Stanley 

and New Town. North Dakota’s only oil refinery is located in Mandan.

North Dakota also produced 87,188 MMCF of natural gas in 2008 (EIA, Natural Gas Annual 2009). 

Future potential oil and natural gas resources are substantial. North Dakota’s 417 billion cubic 

feet (bcf) of proven natural gas reserves is enough to meet the needs of 417,000 homes for 15 

years, and its proven oil reserves are enough to fuel 790,000 cars for 15 years and at the same 

time heat 322,000 homes for 15 years.

Expansion of the oil, ethanol, and biodiesel industries is good news for North Dakota as it 

represents new jobs, provides additional tax revenue, and supports a growing economy. For 

several years there were only two ethanol plants in North Dakota. Recently, two additional 

ethanol plants started production, and there are plans to add more ethanol and biodiesel 

plants in the near future. It is estimated that a 100-million-gallon ethanol plant could generate as 

many as 71,000 truckloads per year.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 41

Oil and natural gas, as well as alternative fuels such as ethanol and biodiesel, are driving North 

Dakota’s booming economy. The state’s natural gas and oil industry accounts for at least 3,500 

jobs (direct and indirect wage earners). Job Service 

North Dakota estimates the average annual wage 

in the oil and gas extraction industry at over $80,000

in 2009. Bismarck is a hub for oil and gas mining 

support and logistics services provided by out-state 

companies. The area also has a number of locally 

based companies that support the oil industry 

through various services, further stimulating the 

economy.

In August 2010, Jim Hirsch, director of Workforce 

Development for the Department of Commerce, 

said he expects employers to express a much 

stronger appetite for workers than when they were 

asked the same question four years ago. “There’s a good chance [the need for new oil workers] 

could triple,” according to Hirsch, which means about 3,600 new, properly skilled workers will 

have to find their way to western North Dakota’s oil patch every year for the next five years.

Because the Bismarck Airport is the major airport serving western North Dakota, the expansion of 

the natural gas industry is also big news. Tulsa-based Oneok Partners LP has under construction a 

$350-415 million gas plant near 

Watford City in western North Dakota 

that, by 2012, will process about 100 

million cubic feet of natural gas daily, 

doubling the company’s capacity.

Companies Active in Williston Basin Mining

MDU Resources (Williston Basin Interstate Pipeline CO)

Kodiak Oil & Gas

Zargon Energy Trust

Voyager Oil and Gas

Abraxas Petroleum Corp

Credo Petroleum

US Energy Corp.

Brigham Exploration Corp

Samson Oil and Gas

RPT Uranium Corp

Teton Energy Corp

Oil and Gas Drilling Support Firms Headquarters

BJ Services Houston, TX

Stallion Oil Field Services Houston, TX

Marathon Oil Houston, TX

Citation Oil and Gas Houston, TX

Upton Resources Incorporated Dickinson, ND

General Steel and Supply Dickinson, ND
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 42

Higher Education in Bismarck

There are three colleges and one university in Bismarck. The University of Mary, a four-year 

university operated by the Sisters of Saint Benedict, is the largest degree-granting institution in the 

city. Bismarck State College is a two-year public college and a member of the North Dakota 

University System. United Tribes Technical College is a two-year tribal college, and Rasmussen 

College, a two- to four-year private college, has a campus in Bismarck.

University of Mary

The University of Mary is the only private Catholic university in North Dakota. It has been 

accredited by the Learning Commission of the North Central 

Association of Colleges and Schools since 1969. Since its 

incorporation in 1959, the university’s enrollment has grown from 

69 to close to 2,900.

Today, the University of Mary School of Accelerated and Distance Education has a total of 18 

sites in the Upper Midwest and beyond, including the Butler Center in downtown Bismarck, the 

Fargo Center in Fargo, and the Billings Center in Billings, MT. 

Taking leadership to a new level, in 2006 the University of Mary became a member of the 

National Collegiate Athletic Association (NCAA) Division II and the Northern Sun Intercollegiate 

Athletic Conference, setting a new standard of quality in programs campus-wide.

In 2006, U-Mary also launched the Gary Tharaldson School of 

Business. Named for North Dakota hospitality entrepreneur and 

industry innovator Gary Tharaldson, the new school – the 

university’s first – is a new model for preparing students for 

business careers that is uniquely designed to bridge the gap 

between the academic and business worlds. The new 29,000-

square-foot flagship facility that houses the Tharaldson School 

opened its doors on September 11, 2008.

Today, with a faculty and staff of more than 500, the University of Mary remains committed to 

continuing the mission of its founders and serving the people of the region in a spirit that fosters 

servant-leadership.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 43

SUMMARY

The contrast is surprising and disappointing.

Bismarck and its catchment area are, by any measure, the strongest regional economy in the 

nation. Yet Bismarck has lost 5% of its network air service in recent years and local business and 

industry operate with the burden of paying some of the highest average airfares in the nation.

Bismarck has only two network air carriers. Both are, for different reasons, taking a very 

constrained approach to domestic small city service and capacity growth. Delta Air Lines has 

acquired Northwest and its upper Midwest route system and, seeing the financial performance 

of that region through different eyes, is dramatically reducing small and medium sized city 

capacity. Bismarck, despite its economic strength, is a victim of that strategic decision by Delta.

United Airlines is in the midst of a merger with Continental, with all the associated challenges. The 

carrier has publicly stated it will shrink domestic capacity. Despite what appear to be profitable 

operations at Bismarck, current service is barely on par with that of the previous year.

Yet air service is even more critical to economic growth in Bismarck than it is in most of the 

nation, simply because of the city’s great isolation from the rest of the country. Residents of 

Illinois or California can generally find an alternative airport less than two freeway drive hours 

away. Bismarck’s first real alternative airport, in terms of different service providers and 

measurably lower fares, is at Minneapolis, a 6.5 hour drive.

The Bismarck Airport and its community partners have proposed in this Grant application, to 

address a clear deficiency in local network carrier service by recruiting, with Grant support, a 

new network carrier service with a primary target being American Eagle and nonstop service to 

Dallas.
Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 44

This service, as proposed herein, would introduce a third network carrier to the market. It would 

introduce the first nonstop service from Bismarck, the gateway to the fourth largest domestic oil 

and gas production state, to a Texas hub city with convenient connections throughout the 

Texas/Oklahoma/Louisiana region where much of our nation’s energy mining industry is based.

The Airport’s public and private partners are committed to this proposal, with $50,000 in local 

non-airport funding assigned as a match to the $500,000 Grant application funding request. The 

Airport will complement this cash funding with $25,000 of dedicated marketing funding and 

nearly $400,000 of in-kind contributions in the form of fee waivers for the first year of service.

Nonstop regional jet service across our nation’s heartland from a key oil and gas producing 

region with a booming economy to Dallas would be a bold step for American Eagle. The route 

clearly has significant traffic and revenue potential. However, the route segment distance is 

significant and the financial risk for the carrier thus greater than most new regional jet routes.

This is exactly the type of bold new air service proposal the Small Community Air Service 

Development program is designed to aid. The current air service environment at Bismarck is 

exactly the type of environment SCASD grants are designed to address. The Bismarck Airport 

proposal is modest in financial need, clear in its objective and reasonable in its approach.

The Bismarck Airport and its community partners thank the Department for its consideration of 

this Grant application. We urge the Department to award this Grant and assist the Airport and

the City of Bismarck in addressing a clear and significant need for local air service

improvements. AIRPORTS