# 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

- 6002036Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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Section Page Number

Introductory Letters of Support 3 Summary Informatio n

– 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 1 2
Bismarck Top Domestic Market s Average Fares : 2010 1 3
Bismarck Carrier Market Share : 2010 1 3 Air Service Development Efforts 1 5
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 2 1 Alternative Airports 2 2 Addressing Bismarck’s Clear Air Service Deficiency 2 2
Previous Grant Award 2 3 Strategic Plan for Expanded Bismarck Air Service 2 4

Specific New Route Data 2 5 Projected New Route Results 2 8 Goals and Objectives of the Strategic Plan 3 0 Local Support via Public Private Partnership 3 0 Grant Funding Plan 3 1 Grant Application Target Audience 3 2 The Impact of New Grant Supported Service 3 4
Grant Use Timeline 3 4 Measuring Progress toward Goals and Objectives 3 5 Grant Application Legal Sponsor 3 6 Community Profile 3 7

The City of Bismarck 3 7
Economic Overview 3 8 The Oil and Gas Industry 4 0 Higher Education in Bismarck 4 2 Summary 4 3Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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I NTRODUCTORY LETTER OF SUPPORTBismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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SUMMA RY 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
Intersta te Consortium Intrastate Consortium Community previously received a Small Community Grant If previous recipient, date of Grant: October, 2002 Expiration date of G rant: February 1, 2008 

### B. Public/Private Partnership

Public:
1. Bismarck Airport 2. City of Bismarck 3. City o f 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 Servic e Other (Specify)Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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D. Existing Landing Aids at Airport

Full ILS Outer/Middle Marker Published Instrument Approach
Localizer O ther:



### E. Project Cost

1. Federal amount requested: $ 50 0 ,000
2. State cash financial contribution: $ 0
Local cash financial contribution:
3a. Airport cash funds: $ 25,000
3b. Non

- Airport cash funds: $ 5 0,000
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 4 a (a irport in

- kind contribution) and 4 b (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 wit h 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 b een selected by the State. Program is not covered.



### H. Is Applicant Delinquent on any Federal Debt?

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

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INTRODUCTION

The Bismarck Airport , supported by its community partners

, herein make s application for a S mall 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 to p 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 star s amon g 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% a nd in Bismarck the rate was an amazing 2.9%.

The North Dakota economy, rooted in mining and agriculture, is the stronge st 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 a nd 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 4 th largest domestic oil and gas producing region. North Dakota is truly an agricultural breadbasket for the nation and a significant exporter of agricultura l products world

- w ide

.

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. Give n the cle ar national priority of increasing domestic energyBismarck 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, t hree 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 Da kota suggests that addressing Bismarck air
service deficiencies now is good long

- term regional air service public policy.

In this Gran t application the Bismarck Airport proposes a Department funding level of $500,000, matched by $50,000 in local non

- airpo rt cash funding and $25,000 in Airport marketing funding plus i n

- kind (Airport fee waivers) of $398,104. . This combined $5 7 5,000 in cash and $ 398,014 in in

kind support would be used to support new American Eagle nonstop service from Bismarck to Dallas/For t 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 minin g 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 fin ancial 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 competi ti on. The following pages will fully describe the clear need for Grant funding and outline how the Bismarck Airport and its supporters are fully pr epared to make effective and timely use of Grant funding.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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THE BISMARCK AIR PORT A IR SERVICE MARKET

Location
, Catchment Population and Air Service Airports

Bismarck , North Dakota
, is located along the Missouri River in central North Dakota at the j unction 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 t own to visit Starbucks is a part of the rural routine.

The Bismarck A irport 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 n orth, 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 ar ea is the heart of a vast oil and gas miningBismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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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 Historic a l Air Service

Bismarck’s current air se rvice consists of network carriers Delta and United and less

- than

- dai l y 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.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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

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Overall
, Bismarck domestic traffic has grown 31% since 2003 while o verall Bismarck capacity is up 24% and t he market average domestic fare is up 23% in the same period

. 

### Bismarck D omestic Traffic PDEW , Capacity SDEW and Average Fare

Allegiant started Bismarck service in 200 4 . Typically

, Allegi ant 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 , with out Allegiant. 

### Bismarck Traffic PDEW , Capacity SDEW and Average Fare , Without AllegiantBismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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With Allegiant removed from the domestic traffic, average fare and capacity measurements Bismarck’s true network air service picture becomes clear.

Excluding Allegia nt 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 capit o l 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.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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Bismarck Top Market Average Fares: Year 2010

T he 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 ave rage fare is $27 4 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 ove r $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 sh are or interline routings, such as for Continental (associated with United) or American (interline.)Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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Delta (Northwest) has historically been the dominate carrier in the Bismarck market. Both Delta and United market shares have declined, as a percentag e 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

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

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BISMARCK AIRPOR T 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 respond ed to Frontier Airlines RFP for Q400 routes

. During first quarter numerous written and verbal conversations with United Airlines regarding
i nformation needed for a potential Bismarck

– C hicago 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 attend ed meeting with United Airlines to discuss potential Chic ago O’Hare service and present analysis of specific route

. In June unveil ed 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
De velopment 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

. D ialogue with Allegiant on possible Phoenix/Mesa servic e 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 advert ises 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 co ntact with Un ited Airlines regarding Chicago service.
Also in February attend ed 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 S alt Lake City s ervice 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 a ffect 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 newsp apers, and billboards across western and
central North Dakota

-- marketing and advertising Budget: $25,000; professional services budget: $90,000.

2009

In February attend ed 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 serv ice 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.
I n September, new advertising campaign focusing on Airport brand is unveiled . Also in September a meet ing 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 attend ed Sabre Roundtable Conference in Denver to establish link with Frontier Airlines over possible service to Denver

. In early November enlist ed 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 host ed business community luncheon in which Sixel Consulting present ed survey results an d narrow ed focus to determine which airlines to actively recruit . Later that month Sixel Consulting present ed survey results to Bismarck

- Mandan Chamber of Commerce to gain support for recruiting additional airline service . Also in November, enter ed into ye ar

- longBismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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TV contract with North Dakota NBC affiliate to air Bismarck Airport commercials in three
markets across the state

. In December, beg a n production on first TV commercial advertising the Airport, completed for a January 2010 airing

. Also in December e nter ed 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 b e 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/Sask atchewan, 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

D uring February a ttend ed annual Allegiant Conference to network and discuss potential new service to Orlando, FL, Los Angeles, CA, and Oakland, CA M et one on one with Allegiant representatives . On February 17 receive d invit ation to exclusive Allegiant lunch eon for top

- performing a irports in Allegiant’s network

. During March exchange d numerous emails with Allegiant over route profiles from Bismarck
and exchange d numerous emails with Delta to develop ad vertisements promoting ridership

on new Salt Lake City fli ght to save the route

.
In April radio ads are developed based on first TV ad vertisement, scheduled to run in June, July and August

. During May survey ed oil companies via North Dakota Petroleum Council’s contacts regardi ng top destinations traveled to and f rom Bismarck in an effort to showcase viability of
service routes to American Airlines

. During June exchange d emails and phone calls with Allegiant over route profiles and possible Orlando, FL

, service. Also during June production begins on second TV comme rcial
adverti sing Airport, completed for a July airing . Finally during June attend ed 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

United Airlines, Southwest Airlines, Frontier Airlines, Republic Airlines, an d American Airlines over possible expansion of service or new service route

. During July conclude d promotional contest to advertise the Chicago O’Hare nonstop flight
on United Airlines with winner provided two free roundtrip tickets to Chicago on United
Ai rlines, 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 wi th the w inner provided with two free nonstop tickets on Delta Air Lines,
two

- nig ht hotel stay at a nationally recognized ski resort

, and ski lift tickets . Also during August submitted a SCASDG a pplication

. In December the Airport entered into extended agreements with four TV stations, two for airing Airport commercials in Dickinson, M inot 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 we ll as any news which may affect air service in or out of community . Also during the year the Airport partner ed with the Bismarck

- Mandan Convention and Visitors Bureau on cooperative print advertisements in Regina/Saskatchewan, Canada ; Ai rport advertises in various print media

, including business magazines, local new spapers, and billboards across western and c entral 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 attend ed the annual Allegiant Conference to network and discuss potential new
service to Or lando, FL
, and Los Angeles, CA
, and m e e t 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 attend ed Jumpstart Conference, met with seve n 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 applicati on 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 

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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 se tting 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 c atchment 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 opt ions 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 (Nort hwest) operates to Minneapolis and United operates to Denver.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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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 equ ipment 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 :

- N orth Dakota has cr eated 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

- Nort h 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 jo bs 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 decli ne 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 Del ta 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 th e carrier has modestly gr ownBismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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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 o n Allegiant to Las Vegas or Phoenix, it is very ex pensive to fly out of Bismarck, North Dakota.

Among all domestic airports Bismarck ranks 78 th 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 68 th

. After adjusting all remaining airports by factoring out any less

- than

- daily (Allegiant type) air
service Bismarck ranks 18 th

.

Note that half of the top 18 airports are single carrier EAS markets. Only two, Minot and Shreveport, can be conside red peers with Bismarck in terms of market size and service.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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Alternative Airports

In the case of m ost 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 Bisma rck.

The nearest larger airport is Fargo and it is a three hour drive. A t 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 ma n y 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 i n 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 oth er 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 pri ced 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 i n.

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 , offer s a solid first step toward a d dressing the competitive imbal ance and bringing airfares down to more
tolerable levels.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

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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 sh are 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 t hat 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 strategi es 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 

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A STRATEGIC PLAN FOR EXPANDED BISM AR CK AIR SERVICE
S TRATEGIC PLAN FOR NEW AIR S ERVICE

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. Amer ican 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 large st 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 PairsBismarck 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 p urchase and minimum stay requirements that network carriers use so artfully to wall of f 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 domes tic 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 cur rently.



### 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) airc raft 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 co nsidered 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.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 26 The Bismarck Region

– Dallas Local Market PDEW and Average Fare: 20 03

- 2010

The local market between the Bismarck region and Dallas has grown dramatically in recent years, up 2 9 % from 2009 to 2010 and up 4 7 % since 2003. Traffic is now (2010) in the 22 PDEW or 16,060 annual O&D range and t he 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 alm ost 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 11 6,070 annual O&D at an average fare of $2 69 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
i n cases where American is the only carrier (some smaller cities in Texas).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. Tra ffic 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

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

## 28

Projected New Route Results

Bismarck offers a simple, basic and conse rvative 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 $1 1.9 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
6 2 % of that total or som e 15, 533 annual passengers. The new service would also capture over
2 6,557 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. Aver age 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.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 ma rgin with an operating profit of $4 92,074

. 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 B ismarck 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.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 o n 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.



### L ocal Support v ia 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 w ith 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 Cha mber of Commerce

The Airport’s quest for new commercial air service is supported foremost by the Bismarc k

Mandan Chamber of Commerce. The Chamber’s Foundation and its Air Services Committee are in full support of th is application. The Foundation has pledge d $ 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 commun ities of Bismarck and Mandan. The Air Services Committee works year

round on special projects to help raise awar eness of the A irport and the importance of improving ai r 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 uti lity 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 promo tion 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 th e entire region that it serves. City leaders continually work with the Airport to develop and support new service initiatives. The Airport is a depar tment of the City of Bismarck. The City of B ismarck controls the p rimary 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 der ives 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

- Mand an 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, agricultur e, 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
interconnecti vity 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 $ 50 0,000 in Department funding. Local non

airport partners of the airport will contribute $ 50
, 000 (a 1 0% match) while the Airport will contribute $25,000 in dedicated marketing fund s for a total cash non

- airport Grant funding level of $ 5 75 ,000

.

The Airport will also contribute , for the first year of service, in

- kind fee waivers with a n estimated

v alue 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 pub lic

- 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 a nd 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, es pecially oil and gas industry firms headquartered in Texas , Oklahoma or Louisiana.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 pa rts 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 busi nesses – 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

se rvice 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
Counci l 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 Bismarc k 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

ens uring 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
envision ed in this proposal.

The new service will :

Reverse the surprising decline in network capacity at Bismarck

.

M itigate , by injection of a third network competitor, the continuing rise in the already very high Bismarck airfares

.

Dramatically improve air se rvice 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 de cisions 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
p reserved 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 mid

course adjustments needed in the marketing and promotional programs that support the new service are made promptly and executed professionally.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 36

In terms of the new route being self

- sustaining, t he Airpor t 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 conf ident 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 th e 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 B ismarck 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: 080245640Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 37

COMMUNITY PROFIL E

City of Bismarck

Bismarck is the C apit o l 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 cit y’s commercial, education and medical infrastructure constitutes a regional center serving the rural population for hundreds of miles in any direction.

Alt hough located in a rather remote location where the weather can be harsh, Bismarck is a thriving ci ty . 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 eve n 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, t he Bismarck

- Ma ndan 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 e ducational in stitutions 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

BismarckBismarck 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, home s 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.



## “Bismarck enjoys an astonishingly low unemployment rate of less than
t hree 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 300,0 00 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 ga ined 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 2 009

. 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 Da kota’s 417 billion cubic feet (bcf) of proven natural gas reserves is enough to meet the need s of 417,000 homes for 15 years, and its proven oil reserves are enough to f u el 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 eco nomy

. 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

- gall on 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 g as, as well as alternative fuels such as ethanol and biodiesel , are driv ing North
Dakota’s booming economy. The state’s natural gas and oil industry accounts for at le ast 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 200 9

. Bismarck is a hub for oil and gas mining support and logistics s ervices provided b y 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 Commer ce, 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 A irport is the major airport serving western North Dakota, the expansion of the natural gas industry is als o 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.Bismarck Airport • Small Community Air Service Development Grant Proposal • August 2, 2011 

## 42

Highe r Educatio n 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 t wo

- year public college and a member of the North Dakota University System. United Tribes Technical College is a two

- year tribal college

, a nd Rasmussen College, a two

- to four

- year privat e college, has a campus in Bismarck.

University of Mary

The Univers it y of Mary is the only private Catholic university in North Dak ota. It has been accredited by t he Learning Commission of the North Central Association of Colleges and Schools since 1969. Since its incorp oration in 1959, the university’ s enrollment has gro wn 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 Ce nter in Billings, MT.

Taking lea dership 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 q uality 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, t he new school

– the university’s first

– is a new model for pre paring students for business careers that is uniquely designed to bridge the gap
between the academic and business world s. The new 29,000

- square

- foot flagship facility that houses the Tharalds on 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 t hat fosters
servant

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

## 43

SUMMARY

The contrast is surprising and disappointin g.

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 Midwe st 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 Ai rlines 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 th at 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 fi nd 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 pa rtners 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

Thi s 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 t h e fourth largest dome stic oil and gas production state , to a Texas hub city with convenient conne ctions throughout the Texas/ O k l a h o m a / 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 th e $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 distanc e 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 servi ce 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 pa rtners 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 Bismar c k in addressing a clear and significant need for local air service improvements. 

## AIRPORTS