1 

# Proposal Under the Small Community Air Service Development Program

DOCKET DOT-OST-2014-0133



# Submitted By: City of Shreveport Shreveport Airport Authority

DUNS #966608952 Fourth Congressional District July 20142 

# Prepared By: Shreveport Airport Authority 5103 Hollywood Avenue, Suite 300 Shreveport, LA 71109

Contact: Bryant L. Francis, C.M., Director of Airports

Email: bryant.francis@shreveportla.gov

Mark Crawford, Marketing and Public Relations Manager

Email: mark.crawford@shreveportla.gov

NOTE: This document is prepared for the us e of the United States of America Department of Transportation and th e Shreveport Airport Authority for the Small Community Air Service Development Program. The data contained herein was obtained fr om sources deemed reliable as of July 30, 2014.3 

## Table of Contents Page 1. Appendix B 4

2. Executive Summary 9 -Proposal Objective 9

-Current Air Service Deficiencies 9

-A Viable Solution 10

- Proven Success with New Approach & Purpose 11 -Shreveport: Economic Growth Requires Improved Access 12 -Growing Population Base 12 -Port of Shreveport-Bossier 13

-Elio Motors 13 -Computer Science Corporation 14

-Barksdale Air Force Base 14 -Local Medical Industry 14

4. Economic Outlook 15 5. Service Decline at Shreveport Regional 16 -Passenger Activity 16 -Passenger Leakage 17 -Shreveport’s Largest True Markets 18 -Airlines and Nonstop Markets 20 -Route Maps 21

-Current Needs 22 -Strategic Plan to Meet Needs of SCASDP 23 -Program Assurances 24

6. Conclusion 244 APPLICATION UNDER

SMALL COMMUNITY AIR SERVI CE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2014-0133

SUMMARY INFORMATION 1

All applicants must submit this Summary Information schedule, as the application coversheet, a completed standard form SF424 and the full application proposal on www.grants.gov

.

For your preparation convenie nce, this Summary Informatio n schedule is located at http://www.dot.gov/policy/aviation-policy/sm all-community-rural-air-service/SCASDP

A. P ROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D&B) DATA UNIVERSAL NUMBERING SYSTEM

(DUNS) NUMBER , INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN) OR TAX ID

. Legal Sponsor Name: Shreveport Airport Authority

Name of Signatory Party for Legal Sponsor: Shreveport Airport Authority

DUNS Number: 9666089520000

EIN/Tax ID: 72-6001326

B. L IST THE N AME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING :

1. S HREVEPORT A IRPORT A UTHORITY

2.____________________________________________________

3.____________________________________________________

4.____________________________________________________

C. P ROVIDE THE FULL AIRPORT NAME AND 3-L ETTER IATA A IRPORT C ODE FOR THE APPLICANT ( S ) AIRPORT ( S )

(O NLY PROVIDE CODES FOR THE AIRPORT ( S ) THAT ARE ACTUALLY SEEKING SERVICE ).

1. Shreveport Regional Airport-SHV 2.

3. 4.

D OES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE ISSUED BY

THE F EDERAL A VIATION A DMINISTRATION UNDER 14 CFR P ART 139? (I F “N O ”, P LEASE

EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR WHETHER AN

APPLICATION UNDER P ART 139 IS PENDING .)

Yes No (explain)

_____________________________________________________________________________________________

_______________________________________________________________

1 Note that the Summary Information does not count against the 20-page limit of the SCASDP application.5 D. L IST THE 2- DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING ORGANIZATION , AND IF

A CONSORTIUM , TO EACH PARTICIPATING COMMUNITY

.

1. LA-04 2.

3. 4.

E. A PPLICANT I NFORMATION : (C HECK A LL T HAT A PPLY )

Not a Consortium Interstate Consortium Intrastate Consortium

Community currently receives subs idized Essential Air Service

Community (or Consortium member) prev iously received a Small Community Air Service Development Program Grant

If previous recipient: Provide year of grant(s): 2003, 2009 ; and, the text of the grant agreement section(s) setting forth the scope of the grant project :

2003--Attract Northwest Airlink to provide new nonstop regional jet service between Shreveport

and Detroit or other airlines for routes to destinations not now available from Shreveport.

2009—Provide money for marketing and promotion of upgraded service (on aircraft capable of seating more than 100 passengers per flight) on selected (peak) American Eagle flights to Dallas/Fort Worth (DFW).

F. P UBLIC /P RIVATE P ARTNERSHIPS : (L IST O RGANIZATION NAMES )

PUBLIC PRIVATE

1. Shreveport Regional Airport 1. Ark-La-Tex Regional Air Service Alliance

2. 2. TownSquare Media

3. 3. The Forum News

4. 4. Lamar Outdoor

5. 5.

G. P ROJECT P ROPOSAL :

1. G RANT G OALS : ( CHECK ALL THAT APPLY )

Launch New Carrier Secure Additional Service Upgrade Aircraft

First Service New Route Service Restoration

Regional Service Surface Transportation Professional Services 2

Other (explain below)

2 “Professional Services” involve a comm unity contracting with a firm to produce a product such as a marketing plan, study, air carrier proposal, etc.6 2. F INANCIAL T OOLS T O B E U SED : ( CHECK ALL THAT APPLY )

Marketing (including Advertising): promotion of the air service to the public

Start-up Cost Offset: offsetting expenses to assist an ai r service provider in setting up a

new station and starting new service (for example, ticke t counter reconfiguration)

Revenue Guarantee: an agreement with an air servic e provider setting forth a minimum

guaranteed profit margin, a portion of whic h is eligible for reimbursement by the

community

Recruitment of Air Carrier: air service development activitie s to recruit new air service,

including expenses for airport marketers to m eet with air service providers to make the

case for new air service

Fee Waivers: waiver of airport fees, such as land ing fees, to encourage new air service;

counted as in-kind contributions only

Ground Handling Fee: reimbursement of expenses for pa ssenger, cabin, and ramp (below

wing) services provided by third party ground handlers

Travel Bank: travel pledges, or deposited monetary funds, from participating parties for

the purchase of air travel on an air carrier, w ith defined procedures for the subsequent use

of the pledges or the deposited funds; counted as in-kind contributions only

Other (explain below)

______________________________________________________________________________

______________________________________________________________________________

H. E XISTING L ANDING A IDS AT L OCAL A IRPORT :

Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other -- GPS Approach7 I. P ROJECT C OST : D O NOT ENTER TEXT IN SHADED AREA

L INE D ESCRIPTION S UB T OTAL T OTAL A MOUNT

1 Federal amount requested 500,000

2 State cash financial contribution

Local cash financial contribution

3a Airport cash funds 200,000

3b Non-airport cash funds

3 Total local cash funds ( 3a + 3b ) 200,000

4 TOTAL CASH FUNDING ( 1+2+3 ) 700,000

In-Kind contribution

5a Airport In-Kind contribution**

5b Other In-Kind contribution** 50,000

5 TOTAL IN-KIND CONTRIBUTION

( 5a + 5b ) 50,000

6 TOTAL PROJECT COST ( 4+5 ) 750,000

J. IN-KIND CONTRIBUTIONS**

For funds in lines 5a (Airport In-Kind contribution) and 5b (Other In-Kind contribution), please describe the

source(s) of fund(s) and the value ($) of each.

TownSquare Media - $25,000 in radio advertising

The Forum News - $15,000 in print advertising

Lamar Outdoor - $10,000 in billboard advertising

K. I S T HIS A PPLICATION S UBJECT T O R EVIEW B Y AN A FFECTED S TATE U NDER E XECUTIVE

O RDER 12372 P ROCESS ?

a. This application was made available to the State under the Executive Order 12372

Process for review on (date) _____________.

b. Program is subject to E.O. 12372, but has not been selected by the State for review.

c. Program is not covered by E.O. 12372.

L. I S T HE L EAD A PPLICANT OR A NY C O -A PPLICANTS D ELINQUENT O N A NY F EDERAL D EBT ?

(I F “Y ES ”, P ROVIDE E XPLANATION )

No Yes (explain)8 _____________________________________________________________________________________________

_______________________________________________________________ APPLICATION CHECKLIST

I NCLUDED ? I TEM

For Immediate Action

Y Determine Eligibility

Y New Grants.gov users must register with www.grants.gov

. Existing Grants.gov users must verify existing www.grants.gov account has not expired and the Authorized Organization Representative (AOR) is current.

For Submission by 5:00 PM EDT on July 31, 2014

N Communities with active SCASDP grants: notify DOT/X50 of intent to terminate existing grant in order to be eligible for selection in FY2014

Y Complete Application for Federal Domestic Assistance (SF424) via www.grants.gov

Y Summary Information schedule complete and used as cover sheet (see Appendix B )

Y Application of up to 20 one-sided pages (excluding any letters from the community or an air carrier show ing support for the application ) , to include:

Y  A description of the community’s air service needs or deficiencies.

Y  A strategic plan for meeting those n eeds under the Small Community Program.

Y  A detailed description of the funding necessary for implementation of the community's project.

Y  An explanation of how the proposed project differs from any previous projects for which the community received SCASDP funds (if applicable).

Y  Designation of a legal sponsor respons ible for administering the program.

Y  A motion for confidential treatment (if applicable) – see Appendix D below.9 

## Executive Summary

Proposal Objective

The Shreveport Airport Authority (SAA), opera tor of Shreveport Re gional Airport (SHV), respectfully submits its appl ication for a grant under the Small Community Air Service Development Program (SCASD) in the amount of $ 500,000 . This grant funding would be matched by $250,000 in local and airport funding, waiv ed airport fees, and advertising via local media outlets, making for a total grant of $750,000.

This application is based on an analysis of curren t air service, utilization of that service, and opportunities for growing air service at S HV. The City of Sh reveport and surrounding communities suffer from deficiencies in Shreveport Regional Airport’s current service pattern. There is a need to expand air service to the Upper Midwest and East Coast and with grant funding as proposed here, efforts to enhance nonstop air service opti ons may be realized.

The modest grant funding request is entirely consistent with th e purpose of the Grant Program and, when combined with local funds, will enable Shreveport Regional Ai rport to serve as the true regional airport that it once was and can become again. Any success garnered from the grant funding made possible through this prog ram will have a signif icant and positive local economic impact and improve access to the national air transportation system.

Current Air Service Deficiencies

Airline scheduling and fleet changes due to the challenges faced by airlines struggling with high

oil costs has reduced air service levels at SHV. The combination of a struggling national economy and higher airline fuel costs have result ed in insufficient capacity and price competition for travelers to and from the area the airport serves. Specifically, SHV and the community have suffered from the following changes in airline service:

 American Airlines reduced capacity at SHV beginning in January 2012 by switching

from ATR aircraft with 66 seat s to all regional jet service. American primarily flies E135 and E140 aircraft with 37 and 44 seats, resp ectively, with only a fe w daily flights on the 50-seat E145 regional jets.

 Delta Air Lines discontinued nonstop service to its Memphis hub at the end of August 2013, which reduced nonstop markets from seve n to six. Now, there are no hub options for travelers destined for or originating from the Upper Midwest and East Coast.

 Due to airline mergers & acquisitions, SHV has lost its connection to hubs such as Detroit, Cincinnati, and now Memphis.

The net result of these service reductions is that the Shreveport community, which is highly dependent on air service access in support of bot h its burgeoning leisur e and business economic bases, is now at risk of seeing growth s uppressed due to lack of air service access.10 A Viable Solution

If awarded the grant, the Shreveport Airport Authority’s goal is to work with existing and potential new entrant carriers to attract and re cruit new Upper Midwest or East Coast nonstop service. The Airport and community have identifi ed several route options for this potential new

service:

 Chicago – Connect SHV directly to Chicago, wh ich would greatly increase the number of cities which can be reached with one stop from SHV. This service would most likely be operated by American or United, both of which have long-established major hubs at Chicago O’Hare, and have extensive interna tional service through one of the country’s primary air gateways. However, ultra low-co st operators Spirit and Frontier also serve the Chicago market and may be candidates.

 Washington D.C. – Recruit new air service to Wa shington Dulles or Washington National. Dulles is a large East Coast hub airport for United and new nonstop service from Shreveport would open up enormous new connectivity for the community, especially given the number of military pers onnel traveling from Barksdale Air Force Base to Washington D.C. American now o ffers more capacity at Washington National than any other airline, and there is the pot ential to both serve local O&D passengers as well as those accessing connect mark ets served from National.

 Charlotte – Recruit new hub air service to Charlott e. Charlotte is now a major American hub, following its recent merger with US Ai rways. Nonstop service from Shreveport would dramatically improve air service optio ns to/from the East Coast, as Delta’s existing Atlanta (ATL) service already operates at very high load factors coupled with strong yields, which demonstrates the potenti al success for added capacity to another East Coast hub without jeopardizi ng the success of ATL service.

 Minneapolis

– Recruit new hub service to Minneapolis/St. Paul (MSP). Delta, which operates a major hub at MSP, would be the most likely candidate to op erate this service, as it would offer a multitude of connect opport unities for the Shreveport traveler and complement Delta’s existing service to Atlant a, serving an entirel y different region and many markets which are not offered from Atlanta.

 Detroit -- Recruit new hub service to Detroit (DTW), which was pr eviously operated by Northwest Airlines. Following its merger with Northwest, Delta has continued to operate a major hub in Detroit, and offers service to a number of unique markets which are not served directly by its Atlanta hub. Cu rrently, Delta is the No. 1 carrier at SHV as determined by total annual passengers. Howe ver, all of its serv ice operates via ATL.

 While Shreveport Regional Airport does have leakage to surrounding airports, which was most recently evaluated in December 2013 by Sixel Consulting Group, it is poised to grow significantly. This is due to future regionalization and th e superior geographic location of the airport itself, in addition to a strengthening local and diversifying economy. With airlines accelerating the phase-out of smaller regional jet aircraft of 50- seats or less, small markets will increasingly have to support larger aircraft to maintain service. Those which cannot are likely to lo se some or all of the service currently operating. Several communities in the Pacifi c Northwest are prime examples of this potential, as they lost some or all service with Horizon Ai r as the airline transitioned from 37-seat turboprop to 70+ s eat turboprop aircraft severa l years ago. Being in the geographic center of a region with five (5) other non-hub airports (Texarkana,11 Longview, Tyler, Monroe, Alexandria) with sc heduled service within a 120-mile radius of SHV, Shreveport is by far the busiest and will be able to support larger planes and additional flights. The infrastructure is al ready in place and the te rminal facility can accommodate significantly more passengers, fl ights, and ground transportation activity. With superior interstate systems connecting SHV to the region, and with enhanced service and increased seat capacity, the potenti al exists to far surpass existing passenger levels utilizing our terminal landside & airside facilities.

Proven Success with New Approach & Purpose

The approach the SAA will employ will be sim ilar to past successful SCASD grant proposals. We propose to combine Grant funds through th e Small Community Air Service Development Grant Program with airport and locally-provided funds to implement an incentive package that can be presented to existing carriers in the mark et, as well as those not yet serving the market.

The Shreveport Airport Authority used a $500,000 Grant previously awarded under the Program to support the inauguration of Northwest Airlin k CRJ-200 service to Detroit in May 2004. This service was highly successful. Northwest was so pleased with its overall performance in Shreveport that it increased cap acity on its Memphis service fr om CRJ-200 aircraft to ARJ-85 aircraft in May 2005 until January 2006 when the aircraft were take n out of service due to high operational costs. The service ended in 2008 amid the deepening nationwide recession, which included airlines eliminating many routes which overflew other hubs. In this case, Detroit was discontinued while Memphi s service was retained.

Additionally, the Shreveport Airport Author ity was awarded a $100,000 grant in 2009 for marketing of larger jet service on American Airlines to Dallas. Unfortunately, after three years of working with American to use the grant, the airl ine was unable to schedule the required type of aircraft in our market. Therefore, implementa tion of the grant award funds was not successful and the grant expired at the end of 2012.

The Shreveport Airport Authority was able to su ccessfully use an airport incentive package to recruit nonstop service to Denve r with United Airlines in 2012, the culmination of a 5-year effort. Today, this service is performing incred ibly well, with high load factors and strong yields. It is an excellent exam ple of how the SHV market responds to enhanced service to a new hub which offers many unique connect opportunities. If successful in our efforts to secure a 2014 SCASD Grant, a similar approach would be used to recruit service to one of the five cities mentioned in the previous section.

In order to initiate Denver service, SHV part nered with the Ark-La-T ex Regional Air Service Alliance (RASA), a 501(c)4 organization. RASA is a non-profit comprised of political and business leaders serving governments and organiza tions in Northwest Louisiana. RASA’s Board of Directors represents the or ganizations that provide funding to it. The organization and its funding sources are completely separate from the Shreveport Airport Author ity and it receives no funding from the airport. RASA provided approximately $225,000 in funding, through local
donations, to United Airlines for risk abatem ent related to the launch of Denver service.12 Shreveport: Economic Growth Requires Improved Access

Shreveport and Bossier City are located in the No rthwest corner of Louisiana, and comprise the major commercial center for a tri-state area that encompasses portions of Louisiana, Texas, and Arkansas. This area is commonly re ferred to as the Ark-La-Tex Region.

Growing Population Base

The Shreveport/Bossier City community’s metr opolitan statistical ar ea (MSA) accounts for a population base of approximately 470,000 residents (60-minute drive time), an increase of over 30,000 in the last decade. Shreveport Regional Air port is the air gateway to a total population of more than 800,000 within 90-minutes and 1.9 million are accessible by a 120-minute drive or

less.

The region the airport serves continues to enjoy a thriving economy due to the stability of several key employers which are increasingly conductin g business on a national and global basis, and the ongoing impact of the oil & energy industry.13 Port of Shreveport-Bossier

An example of the need for additional Upper Midw est or East Coast connectivity is the Port of Shreveport-Bossier, which is also expanding.

In fall 2012, Germany-based Benteler Steel/Tube Co. announced a $900-million, two-phase facility that will include both a seamless steel tube mill and a steel mill. The project occupies 330 acres at The Port of Caddo-Bossier, where Bentel er is creating 675 new di rect jobs paying an average annual salary of $50,000, plus benefits . The project will ha ve a huge impact on

Northwest Louisiana.

It is estimated that the large-scale two-phase pr oject will lead to the creation of approximately 1,540 new indirect jobs, resulting in a total of mo re than 2,200 new, permanent jobs in the area. During the term of Benteler's contract with th e state, which runs thr ough 2035, estimates indicate that the project will result in total new ear nings of $2.7 billion (approximately $150 million per year at full employment) in Northwest Louisian a and a total, cumulative economic impact of $16.2 billion in the region. With corporate offices in Germany, company executives and facility management and support staff will be travelin g between Shreveport and Germany on a routine

basis. New East Coast or U pper Midwest service would offe r additional single-connection options when making the regular trip be tween SHV and Benteler’s home office.

In 2012, Ronpak, a leading manufacturer of custom printed paper bags, packages and food wraps based in New Jersey, opened its new 155,000-square-f oot manufacturing facility at the Port of Caddo-Bossier. The company announced in July of 2011 its intent to build a $16.8 million manufacturing facility, which now serves as the company's new corporate headquarters. By 2018, Ronpak will employ 275 people in Shreveport with an average annual sala ry of more than $40,500, plus benefits. Once the facility is fully ope n, those direct jobs also will result in 783 new indirect jobs, leading to a total of more than 1,000 new j obs for North Louisiana. Ronpak will maintain a manufacturing facility in New Jersey and company executives will be traveling between Shreveport and New Jersey. Again, servi ce to a new Upper Midwest or East Coast hub would create additional connectivity at SHV for this growing U.S. business.

Elio Motors

Elio Motors will occupy one-third of the former General Motors plant’s three million square foot site and will produce three-wheeled vehicles capable of attaining over 80 highway miles per gallon and over 60 MPG in the city. The company says it expects to begincommercial vehicle production in mid2015, with significant hiring at the Shreveport facility to begin by the second quarter of 2015 and full employment to be reached in late 2016. Elio is expected to employ 1,500 people when it reaches full production. The two-seat vehicle14 averages 65 miles per gallon of gas and will sell for $6,800. Suppliers and other manufacturing or distribution companies may occupy all or a po rtion of the remaining two million square feet and represent the potential of hundreds of additiona l jobs fueling the employment base once Elio Motors is in vehicle production mode.

Computer Science Corporation

Computer Science Corporation (CSC) announced in February 2014 it will establish a 116,000 square-foot, "next generation t echnology center" that will bring 800 new direct jobs by 2017 with an average salary of $50,000 plus benefits, and another 805 indirect jobs for a total of more than 1,600 new jobs in northwest Louisiana.

According to Louisiana Economic Development (LED ), CSC will become an anchor tenant of a 3,000-acre research park being de veloped by the Cyber Innovation Center, a non-profit research corporation, located in Bossier City, LA. The site was select ed among a field of 133 potential locations nationwide. CSC, based in the Washington D.C. area, will have a need for improved

air access to its home office as we ll as overall enhanced connectivity for its workforce, as its business is global with divisions and projects located worldwide.

Barksdale Air Force Base

Further growth is occurring at Barksdale Air Fo rce Base in Bossier City. The base employs approximately 10,000 area residents directly and is home to most of the nation’s B-52 strategic bomber fleet. Military personne l from Barksdale are deployed throughout the world and often utilize scheduled commercial air service provi ded at SHV. With many of them traveling internationally, additional hub connections to and from Shreveport are vital. Further, Global Strike Command is based in Bossier City and ma ny staff members travel weekly or monthly to Washington D.C. Adding an Upper Midwest or East Coast hub would allow for better connectivity to the Nation’s Capital.

Local Medical Industry

Greater Shreveport has fast become a regional hub for health care and a nationally recognized medical community and a growing biomedical indus try with the Biomedical Research Institute. More than 13,000 people are empl oyed in the medical industry in Northwest Louisiana. A consortium of providers and re searchers from the renowned Univ ersity Health Level 1 Trauma Center, the LSU Medical School , Overton Brooks VA Medical Ce nter, Willis-Knighton Health System, the CHRISTUS Schumpert Health System , and the Shriner’s Hospital are working to meet the medical needs of tomorrow and to keep the community at the forefront of health care advances. The health care industry in Shreve port will continue to expand as outlying areas relinquish more services which cannot be justified due to increasing costs.15 

## Economic Outlook

The economic outlook for Shreveport is one of growth from many directions. The planned I-49 extension from Shreveport to Te xarkana, Arkansas, is nearing completion and will create major traffic flow through Northwest Louisiana, with new sections already open. I-69 is expected to cross th rough Northwest Louisi ana on its way from Memphis to Houston, also openi ng up the region to more tr affic flow and improved road accessibility.

National retailers continue to negotiate for development space in Shreveport, as a result of shopping patterns that bring regional cons umers from as much as two hours’ drive time. National grocer Whole Foods recently announced its intention to open a store in Shreveport in 2015.

The Shreveport-Bossier City economy is beco ming even more regional as interstate systems expand, retail trade options expand, and healthcare services expand, not to mention tourism opportunities such as gaming available at the area ’s seven casinos, and horse racing at Louisiana Downs, along w ith the expansive Shreveport Convention Center and adjoining Hilton Hotel.

This growth in infrastructure now must be matched by expansion in air service access. Unfortunately, due to current and foreseen airline strategies, the majority of this growth will not come without offering incentives, as there are other expansion points where growth is long-established and highly visible to airline planners. The Shreveport Airport Authority has repeatedly found that airlines generally require incen tives and new service marketing support to minimize th e financial risks a ssociated with the initial launch of a new route. Airline interest exists in expa nding service at SHV, but it will likely require risk sharing in some form.16 

## Service Declines at Shreve port Regional Airport

Shreveport Regional Airport is classified as a Non-Hub airport by the FAA for calendar year 2014. Due to airline industry related shifts , enplanements have varied greatly in any given year since 1990. These levels have ranged from 250,524 to nearly 400,000. The airport is currently served by f our airlines operating primarily regional jet aircraft. In July 2014, the airport had 21 peak da ily departures to four h ub airports and two leisure destinations. This compares to 41 daily de partures just prior to the September 11, 2001 terrorist attacks. July 2014 total seat cap acity is down nearly 5% year-over-year.

Year Total Passengers Variance
2004 576,450 5.5%
2005 623,430 8.1%
2006 597,600 -4.1%
2007 584,710 -2.2%
2008 529,840 -9.4%
2009 467,040 -11.9%
2010 460,160 -1.5%
2011 507,040 10.2%
2012 531,980 4.9%
2013 553,431 4%

Source: Sixel Consulting Group

This indicates a better utilization of redu ced capacity, which is necessary in today’s economic environment, and with fares which have risen sharply. With more capacity coupled with airfare more competitive to those offered at surrounding airports, SHV’s passenger traffic could grow significantly.

Passenger Activity

In recent years, as indicated by the table showing historical pa ssenger activity, revenue passenger traffic has been on the increase. Through June, 2014, total passenger traffic has increased by 8.6%, or roughly 24,000 more passengers than during the same period in 2013. This strong surge in traffic comes as seat capacity continues a steady decline. Monthly load factors have surpassed 90% more than once this year. This leads to the distinct possibility that SHV’s leakage rate is , in fact, increasing due to such high load factors through a combination of rising passenger levels and declining seat availability. The following table depicts the projected to tal seats by carrier in 2013 vs 2014, and an overall expected decline of 4.5% year-over-year.

Calendar Year Actual 2013 vs. Calendar Year 2014 Projected Outbound Seats by Carrier

2013 Carrier Total 2014 Carrier Total 2013 vs 2014 Carrier % Change
AA 134,884 AA 123,360 AA -8.5
DL 133,700 DL 126,815 DL -5.1 G4 29,880 G4 26,228 G4 -12.2

UA 88,940 UA 93,413 UA 5

2013
Total 387,404 2014
Total 369,816 Total -4.517 If current trends continue, SHV will serve more than 600,000 total passengers in 2014, with more than 300,000 enplanements, a level wh ich has not been real ized since 2006. In 2006, however, the nonstop markets served and seat s available were much greater than in 2014. Without additional seat capacity, th e market will become stagnant, forcing passengers who would have selected SHV to choose another surrounding airport simply

because seats were not available and/or the limited remaining capacity was priced at an

unattractive fare level. The ne xt section analyzes this trend in greater detail, and offers a compelling look at Shreveport’s tr ue air travel market size.

Passenger Leakage

Given the relatively long drive time, Dallas airports capture a surprisingly large share of traffic generated in Shreveport’s catchment area.

In the 12-month period ending in June 2013, there were approximately 1,560 passengers per day each way (PDEW) for the Shreveport ma rket. Of those, 841.4 PDEW leaked to other airports, including 801.7 domestic PDEW and 39.8 international PDEW. This means only 718.6 PDEW actually flew from Shreveport Regional Airport, which

includes 661.4 domestic and 57.3 international passengers. Nearly 55% of the true Shreveport air travel market is leaked to othe r airports as far away as the Dallas/Ft. Worth Metroplex, Houston, and New Orleans. Just 46% of the true air travel market is retained, based on this in-depth analysis completed by Sixel Consulting Group in December, 2013. More than 1/3 of the leakage is to Dalla s/Ft.Worth & Dallas L ove Field, due to the plethora of nonstop flights offered and heavy competition at those airports which serve a metropolitan area of more than seven million. This is mentioned merely to state that, in

efforts to increase the retenti on rate at SHV, it is highly unlikely that any level of success will jeopardize the air service at these airports where the lion’s share of local leaked traffic is currently trav eling into and out of.18 Shreveport's Largest True Markets

All five cities specified in this applica tion for consideration of nonstop service are included in the following table of the Top 30 La rgest True Markets. Of particular note is Denver, a market which had no nonstop se rvice until August 28, 2012, which has become the #2 largest true market at Shreveport. Ce rtainly, the retention le vels have increased due to nonstop service being implemented, though the leakage rate in this market remains high, indicating an opportunity for additional se ats. The Washington D.C. region is #7 and with approximately 45% leakage, Ch icago is #8 and with approximately 59% leakage, Detroit is #16 and with approximately 62% leakage, Minneapolis/St. Paul is #20 and with approximately 63% leakage, and Ch arlotte is #26 and w ith approximately 62% leakage.19 9 4 8 7 4 11

8 8 6 10 7 11

9 9 17 1 9 9 10 9 7 12 3 17 9 13 9 14 9 15 5 27 13 20

16 19 15 20 6 30 4 32 17 24 23 20 29 24

33 26

37 22 8 57 28 39 21 66 69 23

0 10 20 30 40 50 60 70 80 90 100 LAS - 1

DEN - 2 LAX/SNA/ONT/BUR/LGB - 3
SAT - 4 MCO/SFB - 5

ATL - 6 DCA/IAD/BWI - 7
LGA/JFK/EWR - 8 ORD/MDW - 9

MAF - 10 MCI - 11
IAH/HOU - 12
SFO/OAK/SJC - 13

MIA/FLL/PBI - 14
STL - 15
DTW - 16
SEA - 17
PHX/AZA - 18
OKC - 19 MSP - 20
BOS - 21

PIT - 22
DFW/DAL - 23
PHL - 24
SLC - 25 CLT - 26
TPA/PIE - 27 ABQ - 28
SAN - 29
BNA - 30 Retained at SHV

Leaked from SHV Passengers per Day Each Way (PDEW) in the 30 Largest True Markets at Shreveport

Year-End Second Quarter 2013

Market Share by Carrier of Shreveport Area Traffic
Year-End Second Quarter 2013

American 36.1%

Delta 22.0% United 16.2% h west/AirTran

12.4% Allegiant 4.9% US Airways 2.5% Spirit 2.2% Frontier 1.4% Virgin America 0.6% JetBlue 0.2% Others 1.4%

Airline PDEW

American 563.9

Delta 342.6

United 252.9

Southwest/AirTran 194.1 Allegiant 77.0 US Airways 38.6 Spirit 35.0

Frontier 22.0 Virgin America 9.3

JetBlue 2.6

Others 22.0
Total 1,56020 Airlines and Nonstop Markets

The airport is currently served by four ai rlines offering the fo llowing nonstop routes:



### Airline Destination Daily FrequencyAllegiant Las Vegas 2 round trips/week yearround / 4 round trips seasonally Allegiant Orlando 2 round trips/week seasonally American Airlines Dallas/Ft. Worth 7 round trips

Delta Air Lines Atlanta 7 round trips United Airlines Houston 5 round trips United Airlines Denver 1 round trip Daily TOTAL 21 roundtrips/day in peak summer season

As indicated by this outline of service, ther e is a dearth of acce ss to the Upper Midwest and East Coast. On August 28, 2012, United Airlines inaugurated nonstop service to Denver. This is proving to be a success st ory for the SHV market, as the service has consistently improved and the once-daily flight is near capacity on most days. Service to Denver had never been attempted from SHV. The decision by United to open up unparalleled access to the Mountain West, West Coast, and Western Canada via Denver can be used as an example for what new serv ice to an Upper Midwes t or East Coast hub would do in growing the local market a nd providing improved ac cess to the national transportation system.

The following two route maps demonstrate the shift in, and d ecline of, nonstop hub service from SHV. In 2007, there was nonst op service to Cincinnati, Chicago, and Detroit, none of which exist today. Upper Midwest and East Coast access was excellent in 2007, thanks to the service offered to thes e hubs, but is virtua lly nonexistent today.21 SHV Route Map 2007

SHV Route Map as of July 201422 Current Needs

Analysis of the Shreveport market provides the following conclusions:

 Service Providers : Shreveport now has a limited number of airlines providing

service.

 Lack of Hub Connectivity to the Upper Midwest and East Coast : The

discontinuation of Delta Air Lines servic e to its Memphis hub delivered further

strain to our market with limited airlin e service to the Uppe r Midwest and East Coast and no hub connections to the east beyond Atlanta, which Delta already operates at a high frequency with a co rrespondingly high load factor and strong yield.

 Need for Additional Seats : Shreveport Regional Airport has limited capacity with service primarily aboard 50-seat regi onal jets. Larger jets being flown into new or existing markets would open up mo re capacity for the Shreveport region’s

residents and visitors.

 Strong travel demand : the 8.6% year-to-date grow th in passenger traffic far outpaces the national average. As local passenger demand continues to increase, with a corresponding decrease in seat capac ity, the potential to limit the natural growth of the market becomes much mo re likely to occur, beginning in 2015.

The Shreveport Airport Authority is reques ting $500,000 as part of this proposal to participate in the 2014 Small Community Air Service Development Program. If awarded, this grant will be complemented by a $250,000 community match program to help secure, initiate and market improved Uppe r Midwest or East Coast air service.

Given Shreveport’s previous success with ai r service development fund-raising with the Ark-La-Tex Regional Air Service Alliance (R ASA) for the successful Denver service, SHV believes the 50 percent community match to the SCASD grant amount requested is easily achievable.

In addition to the Grant funding allocation, the Shreveport part ies will offer the following “soft” funding support for th e Grant, if applicable.

 Landing Fee/Marketing Program: The Airport Authorit y provides a marketing program based upon airline landing fees for a minimum period of six months. The landing fees are allocated to a marketi ng program to reimburse the airline for advertising expenses. The estimated am ount of this fund varies, depending upon frequency of flights and the aircraft used for the route.

 Rental Abatement : Contingent upon Airport Author ity approval, a new entrant airline beginning new service may be eligible for rental abatement for terminal space, holdroom gates and aircraft apron parking for a period of up to one year.23 Strategic Plan to Meet Needs of Small Community Air Service Development Program

If successful in the awarding of the Small Community Air Service Development Program Grant, the SAA will continue its ongoing negotiati ons with airlines to develop service to Chicago, Charlotte, Washington DC, Minneapo lis/St. Paul, or Detroit. These hubs specifically mentioned are the primary targets, as they offer the greatest potential for improved access to the national transportation sy stem, and all are among the list of Top 30 True Shreveport Markets.

With increased passenger activity, airlines are more likely to consider the market for an increase in capacity, whether th rough additional frequency and/or utilizing larg er aircraft. Marketing, advertising, and promotion have generally been on the decline within the airline industry. Therefore, it is imperative for a small market such as SHV to increase these efforts on its own. Airlines generally do not have sufficient f unding to advertise in the Shreveport market. With the assistance of this grant award in th e form of an airline revenue guarantee, the airport will utilize a portion of its own a dvertising & promotion funds to positively affect awareness of the new service, which will contribute to increased usage, attract additional capaci ty, and hopefully realize a con tinued reduction in average

air fare.

As it pertains to new or enhanced air service, the Airport Authority’s goal is to enter into an agreement with an airline that will provide long-term service which is profitable to the airline and self-sustaining with in several months after service start-up. The service will be beneficial to the community by providi ng new or enhanced connectivity through a hub airport not currently served nons top. If the new service is marketed properly beginning soon after announcement through the first seve ral months of operation, it has a better

chance of success.

The target audience for this new service will be similar to the existing customer now utilizing Shreveport Regional Airport. An es timated 70 percent of the airport’s customer base is business travelers, which will also be a key target for the new hub service. In cooperation with the airline, a particular emphasis will be placed on marketing and promoting the new or improved air service to companies and individuals using Shreveport air service which may ha ve a need to travel to that hub city or vi a that hub to reach other cities. This may be accomplished by utilizing our partnerships with the local Chambers of Commerce in both Shreveport an d Bossier City to communicate with its business member organizations.

The Airport Authority believes a reason able timetable for the creation and implementation of the grant is as follows:

 Awarding of SCASD grant: Fall 2014
 Continued negotiations with ai r carriers: Winter/Spring 2015
 Possible implementation of new se rvice: Spring/Summer/Fall 2015
 Grant close-out: Fall 201624 The Shreveport Airport Authority will act as the lead agent with the Department of Transportation staff in administration of th e grant. The Shreveport Airport Authority’s Director of Airports is Brya nt L. Francis, C.M.; with Deputy Director of Airports, Bill Cooksey, C.M.; and Marketing and Public Re lations Manager Mark Crawford as the DOT’s contacts for this grant. Mr. Franci s, Mr. Cooksey and Mr. Crawford can be reached at (318) 673-5370.

Program Assurances

As the sponsor, the Shreveport Airport Authority of the City of Shreveport and its governing board will be the res ponsible parties for all fiscal matters and the Department's reporting requirements. The Shreveport Airpor t Authority is establ ished as a public department of the City of Shreveport. As a public entity, the Depart ment can be assured that proper financial controls are in place to guarantee that the Department’s Grant will be used in accordance with any subsequent agreement. The Shreveport Airport Authority understands that the grant is a reimbursable gr ant, meaning the Authority is responsible for program expenditures and will submit invoi ces to the Department for reimbursement, based on a percentage of the total grant request.



## Conclusion

In summary, the Shreveport Airport Authority believes the provision of federal dollars to help obtain new service from Shreveport to the Upper Midwest and East Coast will

benefit a number of cities in the tri-state area which our airport serves, as well as those residing in other regions with a need to travel to the Shreveport area by air.

As Shreveport Regional Airport serves a wide catchment area, citizens and businesses in North Louisiana, East Texas, and Southwest Arkansas will all benefit from additional destinations of service as well as additional access to the national transportation system through new or enhanced air service. Busine sses which are continuing to invest heavily into this region’s economy will provide a steady stream of customers who need to travel by air, whether for business or leisure purposes.

The Shreveport Airport Authority will work with community organizations through the Ark-La-Tex Regional Air Servic e Alliance to ensure that any funding is wisely and appropriately spent and to ensure reporti ng procedures to the DOT are followed appropriately.