McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

APPLICATION UNDER 

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2013-0120

SUMMARY INFORMATION

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 convenience, this Summary Information schedule is located at 

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/SCASDP

A. PROVIDE 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: City of McAllen, Texas (McAllen-Miller International Airport)

DUNS Number: 002741119

EIN/Tax ID: 74-6001650

B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING:

1. CITY OF MCALLEN, TEXAS 

2.

3.

4.

C. PROVIDE THE FULL AIRPORT NAME AND 3-LETTER IATA AIRPORT CODE FOR THE APPLICANT(S) AIRPORT(S) (ONLY 

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

1. MCALLEN-MILLER INTERNATIONAL AIRPORT (MFE) 2.

3. 4.
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

2

D. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING ORGANIZATION, AND IF A 

CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.

1. TX-15 2. TX-28

3. 4.

E. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)

 Not a Consortium Interstate Consortium Intrastate Consortium

Community now receives subsidized Essential Air Service

Community (or Consortium member) previously received a Small Community Air Service Development 

Program Grant

If previous recipient: Year of grant(s): 

F. PUBLIC/PRIVATE PARTNERSHIPS: (LIST ORGANIZATION NAMES)

PUBLIC PRIVATE

1. City of McAllen 1. McAllen Economic Development Corporation

2. 2. McAllen Chamber of Commerce

3. 3.

4. 4.

5. 5.

G. PROJECT PROPOSAL: (CHECK ALL THAT APPLY)

Marketing Upgrade Aircraft New Route

Travel Bank Service Restoration Subsidy

Surface Transportation Regional Service Revenue Guarantee

Launch New Carrier Start-up Cost Offset First Service

Study Secure Additional Service Other (explain below)

H. EXISTING LANDING AIDS AT LOCAL AIRPORT:

Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other (specify)
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

3

I. PROJECT COST: DO NOT ENTER TEXT IN SHADED AREA

LINE DESCRIPTION SUB TOTAL TOTAL AMOUNT

1 Federal amount requested $750,000

2 State cash financial contribution

Local cash financial contribution

3a Airport cash funds $100,000

3b Non-airport cash funds $100,000

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

4 TOTAL CASH FUNDING (1+2+3) $950,000

In-Kind contribution

5a Airport In-Kind contribution** $327,477

5b Other In-Kind contribution** $419,750

5 TOTAL IN-KIND CONTRIBUTION 

(5a + 5b)

$747,227

6 TOTAL PROJECT COST (4+5) $1,697,227

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.

McAllen-Miller International Airport will waive landing fees, the RON fee, the jet bridge fee, the boarding 

lounge fee and exclusive use space fees for two years for the proposed Denver service. The total two 

year value of these in-kind incentives is $327,477. Hotels in the community have offered to provide hotel 

rooms at no cost for up to five crew members for two years. Based on a cost of $115 per room night, the 

two year value of this "other" in-kind contribution is worth $419,750.

K. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER 12372 PROCESS?

a. This application was made available to the state under the Executive Order 12372 Process for review 

on (date) _____________.

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

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

L. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBT? (IF “YES”, PROVIDE EXPLANATION)

 No Yes (explain) 

____________________________________________________________________________________________________

____________________________________________________________________________________________________
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

4

TABLE OF CONTENTS

INTRODUCTORY LETTER .................................................................................................................... 5

AIRLINE LETTER OF SUPPORT........................................................................................................... 6

EXECUTIVE SUMMARY ........................................................................................................................ 7

AIR SERVICE OVERVIEW..................................................................................................................... 8

Catchment Area and Alternate Airports ................................................................................................................. 8

Existing Air Service ................................................................................................................................................ 9

Air Service Development Efforts ..........................................................................................................................10

AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES............................................................. 11

Capacity Trends ...................................................................................................................................................11

Traffic Trends .......................................................................................................................................................12

Domestic Fare Trends..........................................................................................................................................14

Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States .................................15

McAllen Domestic Fares Relative to Other South Texas Airports .......................................................................16

Leakage to Other Airports in South Texas...........................................................................................................17

STRATEGIC PLAN .............................................................................................................................. 18

Revenue Guarantee for Nonstop Service to Denver ...........................................................................................18

Goals ....................................................................................................................................................................20

Grant Amendments/Alternate Strategies .............................................................................................................20

PROJECT IMPLEMENTATION, MONITORING AND FUNDING.......................................................... 20

Public / Private Partnerships ................................................................................................................................20

Project Funding ....................................................................................................................................................21

Proposed Implementation Timeline .....................................................................................................................22

PROJECT MONITORING AND FINANCIAL CONTROL...................................................................... 23

Success Metrics ...................................................................................................................................................23

Legal Sponsor......................................................................................................................................................24

Financial Controls ................................................................................................................................................24

LETTERS OF SUPPORT ..................................................................................................................... 25
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

5

INTRODUCTORY LETTER
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

6

AIRLINE LETTER OF SUPPORT
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

7

EXECUTIVE SUMMARY

McAllen-Miller International Airport is proposing a Small Community Air Service Development Grant in the amount 

of $750,000 to supplement a community-based cash contribution of $100,000 airport cash funding of $100,000, 

airport in-kind incentives valued at $327,477 and community-funded in-kind incentives valued at $419,750 to 

provide a minimum revenue guarantee for service from McAllen to Denver on either Frontier Airlines or United 

Airlines. Not only would Denver service provide a nonstop service for travelers in the local market, but it would 

generate logical connections to at least 75 destinations United serves from Denver and at least 27 airports 

Frontier serves from Denver.

Currently, only two network carriers serve McAllen. American operates service to its hub in Dallas/Ft. Worth, and 

United Airlines operates service to its hub in Houston. Allegiant also serves McAllen, but Allegiant's service is 

limited to Las Vegas and Orlando/Sanford, and Allegiant does not provide connecting service beyond Las Vegas 

or Orlando/Sanford. Aeromar, a Mexico City-based airline operates less-than-daily service to Mexico City using 

50-seat regional jets.

In 2012, McAllen's ex-Allegiant capacity was down 37.2% since it peaked in 2007, and total domestic and 

international ex-Allegiant traffic was down 20.8% since it also peaked in 2007. McAllen's average domestic exAllegiant fare stood at $244 in 2012, an increase of 30.0% from $188 in 2007 when capacity and traffic peaked. 

Even when the Allegiant data is included, McAllen's capacity is down 19.9%, domestic traffic is down 21.8% and 

the average domestic fare is up 19.2% to $216 from $181. 

McAllen retains just 58.7% of the traffic generated in its catchment area (the catchment area is defined as the 

McAllen-Mission Metropolitan Statistical Area); 36.4% of the traffic generated in McAllen's catchment area is lost 

to the airport in Harlingen, and 5.8% of the traffic is lost to the airport in Brownsville.

Travelers in the McAllen and the rest of the Rio Grande Valley would benefit from the proposed service because 

McAllen's network carrier service is currently limited to just Dallas/Ft. Worth and Houston, and the proposed 

Denver service would it would provide service to a third hub. If Frontier were to operate the service, travelers 

would also benefit because Frontier is a low-cost carrier, and Frontier would likely offer fares to Denver and the 

cities Frontier connects beyond Denver below the fares currently offered by American and United from McAllen to 

these cities. 
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

8

AIR SERVICE OVERVIEW

Catchment Area and Alternate Airports

The McAllen-Edinburg-Mission Metropolitan Statistical Area is considered as the primary catchment area for 

McAllen-Miller International Airport, where most of the airport's traffic either originates or is destined, but the 

airport also draws some traffic from other areas of Texas and Northeastern Mexico. The July 1, 2012, Census 

Bureau population estimate of the McAllen-Edinburg-Mission Metropolitan Statistical Area was 806,552 residents; 

the population of the metropolitan statistical area grew 41.7% since 2000 from 569,100 residents. The population 

within a 60 minute drive of McAllen-Miller International Airport is estimated to be 995,000, on the U.S. side of the 

border, and nearly 1.3 million within a two hour drive of the airport.

Other commercial service airports in the region are located in Harlingen and Brownsville.

Exhibit 1: One and Two Hour Drive Times from McAllen-Miller International Airport and the Location of the Airports in 

Harlingen and Brownsville

6 0-Minute Drive Time

120-Minute Drive Time
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

9

Existing Air Service

McAllen is served by American to its hub in Dallas/Ft. Worth, United to its hub in Houston, Allegiant to Las Vegas 

and Sanford and by Aeromar to Mexico City. These routes, and the carriers operating the routes, are illustrated in 

Exhibit 2.

Exhibit 2: Routes Operated by Carrier from McAllen-Miller International Airport

The number of flights per day, average seats per flight and seats per day by market and by carrier scheduled in 

August 2013 versus August 2012 are displayed in Exhibit 3. The data illustrates American has scheduled an 

average of 677 seats per day each way in the Dallas/Ft. Worth market, and American's capacity will increase 

28.2% versus August 2012. United has scheduled a total of 370 seats per day each way on the average day in 

August 2013 to Houston, but United's total capacity will be decline 3.6% versus the 384 seats per day each way it 

scheduled August 2012. Overall, airline capacity at McAllen will increase from 1,110 seats per day in August 

2012 to 1,272 seats per day each way in August 2013, but only because American is adding capacity and 

because Aeromar began service to McAllen since August 2012; United and Allegiant have each scheduled less 

capacity versus last year. 
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

10

Exhibit 3: Flights per Day*, Seats per Flight and Seats per Day Each Way by Market and Carrier at McAllen – August 2013 

Versus August 2012 (OAG Data as of July 10, 2013)

* The number of flights per day is displayed in increments of sevenths (because there are seven days in a week). "4 6/7" is read as four

flights seven days a week with a sixth flight operated six of the seven days in a week. 

Air Service Development Efforts

McAllen-Miller International Airport actively seeks additional air service and meets with airlines on a regular basis 

to discuss the McAllen market. Since June 2012, McAllen has met with 10 airlines in 16 meetings. A meeting in 

September 2012, with Aeromar in Mexico City, resulted in Aeromar beginning service from McAllen to Mexico City 

in March 2013. Exhibit 4 contains a list of McAllen's airline meetings since June 2012.

Exhibit 4: Dates, Forum and Location of McAllen-Miller International Airport Meetings with Airlines since June 2012

Airline Destination

Flights per Day 

Each Way

Seats per 

Flight

Seats per Day 

Each Way

Flights per Day 

Each Way

Seats per 

Flight

Seats per Day 

Each Way

Capacity 

Change

American DFW 3 5/7 140 528 4 6/7 140 677 28.2%

Total 3 5/7 140 528 4 6/7 140 677 28.2%

United IAH 6 5/7 57 384 7 2/7 50 370 -3.6%

Total 6 5/7 57 384 7 2/7 50 370 -3.6%

Network Carrier Total 10 4/7 87 912 12 1/7 86 1,047 14.8%

Aeromar MEX 5/7 48 37

Total 5/7 48 37

Allegiant LAS 6/7 166 150 6/7 166 145 -3.6%

SFB 2/7 166 48 2/7 166 43 -11.1%

Total 1 1/7 166 198 1 1/7 166 187 -5.4%

Grand Total 11 5/7 95 1,110 14 1/7 90 1,272 14.6%

August 2012 August 2013 Date Forum Location Airlines

June 2012 JumpStart 2012 Sacramento AeroMexico

Interjet

Sun Country

United

August 2012 AeroMexico Headquarters Mexico City AeroMexico

September 2012 Aeromar Headquarters Mexico City Aeromar

October 2012 Sixel Consulting Small Airports Conference Portland, ME American

Frontier

March 2013 Network USA 2013 San Antonio AeroMexico

Spirit

United

US Airways

Volaris

April 2013 Sixel Consulting Small Airports Conference Tucson American

Frontier

US Airways
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

11

AIR SERVCE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacity Trends

McAllen's total ex-Allegiant capacity is down 37.2% since it peaked in 2007 at 1,370 seats per day each way to 

998 seats per day each way in 2012. In fact, McAllen's ex-Allegiant capacity was at a ten year low in 2012. The 

primary reason McAllen's capacity is down so drastically is because the capacity of United/Continental 

(Continental served McAllen prior to the United/Continental merger; United did not) is down 287 seats per day 

each way or 39.1% since 2007, and United's capacity was at a ten year low in 2012. Delta's capacity was down 

77 seats per day each way in 2012, and Delta exited the McAllen market entirely in May 2012 when it 

discontinued two nonstops per day to Atlanta operated with 66-seat regional jets. American's capacity has been 

relatively flat since 2005, and American's capacity exceeded the capacity operated by United for the first time in 

2012. The trend in the number of seats per day each way by carrier for the last ten years is illustrated in Exhibit 

5.

Exhibit 5: Seats per Day Each Way by Carrier at McAllen-Miller International Airport Year-End Fourth Quarter 2003-2012

(DOT T-100 Data / Excludes Allegiant Data) 

This Section Continued on Next Page

1,064

1,149

1,216

1,359 1,370

1,233 1,244

1,176 1,187

998

399 411

528 525 523 529 536 520 496

515

6 7 8 4 114

7 9

134 123

3 7

665 671 688

750 733 703

630

522

568

446

0

250

500

750

1,000

1,250

1,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Seats per Day Each Way

All Carriers (Ex-Allegiant) American Delta United/Continental
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

12

Traffic Trends

McAllen's total traffic, to include Allegiant, is down 21.8% since it peaked in 2007 to 673,270 origin and 

destination (O&D) passengers in 2012. When Allegiant is excluded, McAllen's domestic plus international traffic 

is down 30.6% to 510,830 O&D passengers in 2012 and domestic traffic alone is down 32.8%. Domestic, 

international and total O&D passengers in each of the last ten years are illustrated in Exhibit 6.

Exhibit 6: Annual Domestic and International Origin and Destination (O&D) Passengers at McAllen-Miller International Airport

Year-End Fourth Quarter 2003-2012 (DB1B data)

This Section Continued on Next Page

488,660

532,810

599,130

639,150 670,760

595,800 560,440

522,010 492,880

453,080

25,370 

58,480 

68,630 

78,620 

101,530 

94,640 

102,910 

126,440 37,910 

55,170 

61,390 

70,660 

65,000 

51,940 52,160 

58,160 

58,810 57,750 

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Annual Origin and Destination (O&D) Passengers

MFE Domestic Annual O&D (Ex-Allegiant) MFE Domestic Annual O&D (Allegiant) MFE International Annual O&D

637,270 654,600

674,810

714,130 726,360

804,390

768,290

685,890

587,980

526,570
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

13

When McAllen's annual O&D data is translated to passengers per day each way (PDEW), ex-Allegiant domestic 

traffic is down 300 PDEW from 919 PDEW in 2007 to 619 PDEW in 2012; international traffic is down ten PDEW 

from 89 PDEW in 2007 to 79 PDEW in 2012. Allegiant's traffic grew to 173 PDEW in 2012, but total traffic is 

down 231 PDEW from 1,102 PDEW in 2007 to 871 PDEW in 2012. It should also be noted that Allegiant traffic 

accounted for 19.8% of McAllen's traffic in 2012, but all Allegiant traffic was to just two destinations – Las Vegas 

and Orlando/Sanford – and Allegiant does not connect traffic beyond these destinations. The PDEW data is 

illustrated in Exhibit 7.

Exhibit 7: Annual Domestic and International Passengers per Day Each Way (PDEW) at McAllen-Miller International Airport

Year-End Fourth Quarter 2003-2012 (DB1B data)

Page 13

669

728

821

876 919

814 768

715 675

619

35 

80 

94 

107 

139 

130 

141 

173 52 

75 

84 

97 

89 

71 71 

80 

81 

79 

0

200

400

600

800

1,000

1,200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Passengers per Day Each Way (PDEW)

MFE Domestic PDEW (Ex-Allegiant) MFE Domestic PDEW (Allegiant) MFE International PDEW

871

897

924

978 992

1,102

1,052

940

803

721
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

14

Domestic Fare Trends

McAllen's average domestic ex-Allegiant fare is up $69 each way or 39.7% over the last ten years to $244 each 

way. Since 2007 when both ex-Allegiant capacity and traffic peaked, the average domestic fare is up $56 each 

way or 30.0%. Declining capacity is forcing fares higher and suppressing demand. The relationship of exAllegiant capacity, domestic traffic and the average domestic fare over the last ten years is illustrated in Exhibit 8.

Exhibit 8: Ex-Allegiant Passengers per Day Each Way (PDEW), Seats per Day Each Way and Average Domestic One-Way 

Fare at McAllen-Miller International Airport – Year-End Fourth Quarter 2003-2012 (DOT T-100 and DB1B Data)

This Section Continued on Next Page

1,064

1,149

1,216

1,359 1,370

1,233 1,244

1,176 1,187

998

669

728

821

876

919

814

768

715

675

619

$175 $173 $174

$182

$188

$200

$178

$208 $227

$244

$100

$150

$200

$250

$300

500

750

1,000

1,250

1,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average One-Way Fare

Seats and Passengers per Day Each Way

MFE Seats per Day Each Way (Ex-Allegiant) MFE Domestic PDEW (Ex-Allegiant)

MFE Domestic Fare (Ex-Allegiant)
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

15

Domestic Fares Versus Domestic Fares at Other Airports in the Lower 48 United States

McAllen's average domestic ex-Allegiant fare of $244 each way was $67 or 37.8% higher than the average 

domestic fare of $177 at the average Lower 48 airport. Not only is McAllen's average domestic ex-Allegiant fare 

higher, but the McAllen fare is up more on both an absolute basis and on a percentage basis. Over the last ten 

years, McAllen's average ex-Allegiant domestic fare is up 39.7% while the average fare at the average Lower 48 

airport is up 28.5%. The average domestic fare for McAllen and the average Lower 48 airport and the cumulative 

percent change in the average fare is illustrated in Exhibit 9.

Exhibit 9: Average One-Way Ex-Allegiant Domestic Fare at McAllen-Miller International Airport and Cumulative Change since 

2003 Versus the Average Lower 48 Airport

This Section Continued on Next Page

$175 $173 $174

$182 $188

$200

$178

$208

$227

$244

$138 $134 $136

$149 $149

$159

$143

$157

$171 $177

-1.0% -0.3%

4.2%

7.5%

14.7%

1.7%

18.9%

29.9%

39.7%

-3.1% -1.1%

8.1% 7.9%

15.2%

3.6% 14.1%

24.1%

28.5%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0

$50

$100

$150

$200

$250

$300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cumulative Fare Change

Average One-Way Domestic Fare

McAllen Ex-Allegiant Domestic Fare Average Lower 48 Airport Domestic Fare

McAllen Ex-Allegiant Cumulative Change Average Lower 48 Airport Cumulative Change
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

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McAllen Domestic Fares Relative to Other South Texas Airports

Not only did McAllen have a high domestic ex-Allegiant fare relative to the average Lower 48 airport in 2012, 

McAllen's average domestic ex-Allegiant fare was also higher than the average domestic fare of $162 at 

Harlingen and only slightly lower than Brownsville's average domestic fare.

Although Brownville's average domestic fare, at $250, was $6 higher than McAllen's fare of $244, Brownsville has 

much less capacity than McAllen. Airlines operated 309 seats per day each way at Brownsville versus the 998 

seats per day operated at McAllen and 1,266 operated at Harlingen. The average domestic ex-Allegiant fares for 

McAllen, Harlingen and Brownsville are illustrated in Exhibit 10 (among the three airports, Allegiant serves only 

McAllen.

Exhibit 10: 2012 Average Domestic Ex-Allegiant Fares at McAllen, Harlingen and Brownsville. (DB1B Data)

$250 $244

$162

$0

$50

$100

$150

$200

$250

$300

Brownsville McAllen Harlingen

Average Domestic Ex-Allegiant Fare

Average Domestic Ex-Allegiant Fare
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

17

Leakage to Other Airports in South Texas

The last leakage study completed in September 2009 using year-end first quarter 2009 traffic data, revealed 

McAllen International Airport captured only 57.8% of the traffic generated in the McAllen-Edinburg-Mission 

metropolitan statistical area. The airport in Harlingen, which is served only by Southwest and United, captured 

36.4% of the traffic, and the airport in Brownsville captured 5.8% of the traffic. The map in Exhibit 11 illustrates 

the location of the alternate airports and the amount of traffic captured at each airport.

Exhibit 11: Percent of McAllen Catchment Area Traffic Captured at the Airports in McAllen, Harlingen and Brownsville 

(September 2009 Leakage Study Data for Year-End First Quarter 2009 Traffic)
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

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STRATEGIC PLAN

Revenue Guarantee for Nonstop Service to Denver

McAllen's network carrier service is limited to American's service to its Dallas/Ft. Worth hub, and United's service 

to its Houston hub. Although Allegiant also serves McAllen, Allegiant does not offer connections beyond Las 

Vegas and Orlando/Sanford. Aeromar's service to Mexico City offers only limited connecting opportunties to a 

few cities in Mexico.

McAllen-Miller International Airport is proposing SCASDG funding for service to Denver on Frontier or United. Not 

only would a nonstop route from McAllen to Denver provide service in the local market, but service on United

could connect McAllen with at least 75 airports United serves from Denver and service on Frontier would connect 

McAllen with at least 27 airports Frontier serves from Denver. The logical connecting markets United could 

connect via Denver are illustrated on the map in Exhibit 12, and the logical connecting markets Fontier could 

connect via Denver are illustrated on the map in Exhibit 13.

Exhibit 12: Logical Connecting Markets United Could Serve with McAllen-Denver Service (circuity not greater than 66%)
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

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Exhibit 13: Logical Connecting Markets Frontier Could Serve with McAllen-Denver Service (circuity not greater than 66%)

Denver ranks as McAllen's ninth largest market with 17.4 passengers per day each way (PDEW) in 2012. The 

average McAllen-Denver fare was $181 each way in 2012. All markets United could logically flow via Denver 

generated 298 PDEW at an average fare of $210 in 2012; all markets Frontier could logically flow via Denver 

generated 269 PDEW at an average fare of $186 in 2012. Excluding Allegiant Las Vegas data, the markets 

United could logically flow via Denver generated 153 PDEW at an average fare of $297 in 2012, and the markets 

Frontier could logically flow via Denver generated 124 PDEW at an average fare of $267 in 2012. The data for all 

markets that could logically flow via Denver on United and Frontier, both with and without Allegiant's Las Vegas 

traffic, and including the local Denver traffic of 17.4 PDEW is illustrated in the table in Exhibit 14. 

Exhibit 14: 2012 Passengers per Day Each Way (PDEW) and Average One-Way Fare in the Markets United and Frontier 

Could Flow via Denver (DOT DB1A Data / Market Sizes for Airports in Metropolitan Areas with Multiple Airports Are Grouped 

Together, i.e., SFO/SJC/OAK)

PDEW Average Fare PDEW Average Fare

Including Allegiant LAS Data 298 $210 269 $186

Excluding Allegiant LAS Data 153 $297 124 $267

United via DEN Frontier via DEN
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

20

Goals

McAllen-Miller International Airport has three goals for the proposed project to recruit service from McAllen to 

Denver on United or Frontier:

 Reverse the downward trends in airline capacity and airline traffic at McAllen-Miller International Airport.

― Additional capacity will likely put downward pressure on the average fare paid by travelers.

 Recapture traffic generated in McAllen's catchment area, but leaked to the airports in Harlingen and 

Brownsville.

 Reduce the number of connections to markets not served with a single connection on American's existing 

service to its Dallas/Ft. Worth hub and United's existing service to its hub in Houston.

Grant Amendments/Alternate Strategies

McAllen-Miller International Airport's primary air service development goal is for new service from McAllen to 

Denver on United or United Express. If the Department awards McAllen-Miller International Airport a grant for the 

proposed service, but the community is not successful in recruiting service to Denver on either carrier, the airport 

and the community may request the Department consider redirecting award funding to assist in recruiting other 

service. 

In addition to the proposed Denver service, the airport and the community have also identified Chicago, Phoenix 

and Atlanta as hubs that could provide travelers in the area with service not only in the local Chicago, Phoenix or 

Atlanta markets, but also connections to many destinations served beyond these hubs. If the airport is not 

successful in attracting service to Denver, the airport would meet with the appropriate airlines to discuss service 

to Chicago (United and American), Phoenix (US Airways/American) and Atlanta (Delta).

PROJECT IMPLEMENTATION, MONITORING AND FUNDING

Public / Private Partnerships

The airport, local governments and business organizations in the region understand the importance of affordable 

air fares, and the relationship between air fare affordability and economic growth. Based on this recognition and 

awareness, the airport manager regularly conducts community outreach meetings with business and government 

organizations to discuss the importance of air service to the economy of McAllen and using the local airport when 

traveling both for business and leisure. The McAllen Economic Development Corporation and the McAllen 

Chamber of Commerce have partnered with the City of McAllen and McAllen Miller International Airport for this 

project and have pledged cash funding of $100,000 to support the proposed minimum revenue guarantee.
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

21

Project Funding

In addition to the Small Community Air Service Development Grant of $750,000 requested from the Department, 

organizations in the community are willing to provide cash of $100,000 to be applied toward a minimum revenue 

guarantee. The airport will provide cash of $100,000 for marketing and estimates the value of its in-kind 

contributions from waived fees at $327,477 (for two years), based on one roundtrip operated with a 138-seat 

Airbus A319. The total value of cash and in-kind contributions from the community and the airport is valued at 

$947,227 or 55.8% of the total project cost of $1,697,227. A summary of funding sources is shown in Exhibit 15.

Exhibit 15: Summary of Sources and Types of Project Funding

Funding Source Grant Cash In-Kind Total

Department of Transportation $750,000 $750,000

Community $100,000 $419,750 $519,750

Airport $100,000 $327,477 $427,477

Total $750,000 $200,000 $747,227 $1,697,227
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

22

Proposed Implementation Timeline

The proposed implementation timeline for the project assumes the Department will award Small Community Grant 

Funding in September 2013. Once the award is announced, McAllen-Miller International Airport will advise both 

United and Frontier of the grant award. Based on the airline planning lead times and the need for advance 

bookings, we assume it could not begin service until the latter half of 2014 at the earliest, and a preliminary 

discussion with one airline indicated service could not begin until Winter 2014, but the airline would need to know 

if SCASD funding were available from the 2013 SCASD Program to make a decision. The first two milestones on 

the Airport's timeline are to execute the grant agreement with the Department and to negotiate the minimum 

revenue guarantee agreement with the airline. Once service is announced and schedules are published, the 

airline, the Airport and the community would begin marketing the new route and working with the airline to monitor 

advance bookings. The Airport will continue its marketing program and continue to work with the airline to 

monitor the route once service begins. The Airport will submit grant status reports on a quarterly basis to the 

Department throughout the proposed three-year term of the minimum revenue guarantee. The proposed project

timeline is shown in Exhibit 16.

Exhibit 16: Proposed Project Timeline

Activity/Project Milestone Estimated Dates

SCASD Grant Award Announcement September 2013

Execute Grant Agreement with DOT September/October 2013

Airline Meetings November 2013 - May 2014

Announce Service June or July 2014

Publish Schedule June or July 2014

Market Route (Pre-Launch) September-November 2014

Monitor Advance Bookings September-November 2014

Adjust Marketing Plan Based on Advance Bookings September-November 2014

Begin Service December 2014

Market Route (Post-Launch) December 2014 and Beyond

Operate Service with MRG December 2014 - November 2017

Monitor Route Performance December 2014 - November 2017 and Beyond

Submit Grant Status Reports to DOT Quarterly 3Q 2013 - 4Q 2017
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

23

PROJECT MONITORING AND FINANCIAL CONTROL

Success Metrics

The ultimate success of the program will be based on either United or Frontier operating service to Denver, or if 

neither airline begins Denver service, an airline operating service to one of the alternate hubs mentioned –

Chicago, Phoenix or Atlanta. Regardless of whether the community obtains service to Denver or one of the 

specified alternate hubs, the community expects the new service to put downward pressure on fares in the 

markets served by the airline, increase traffic at the airport and reduce the amount of leakage to the airports in 

Harlingen and Brownsville. The Airport will work with the airline to continuously monitor the performance of the 

new service. Even before service begins, we will communicate with the airline on a regular basis to monitor 

advance bookings and week-over-week advance bookings. Marketing and promotional activities can be adjusted 

if advance bookings are weak or are not booking at a rate satisfactory to the airline. A summary of the project 

goals and success metrics is shown in Exhibit 17.

Exhibit 17: Project Goals and Success Metrics

Project Goals Success Metric

 Reverse the downward trends in airline 

capacity and airline traffic at McAllen-Miller 

International Airport.

 Quarterly year-over-year increases in airline 

capacity and traffic.

 Downward pressure on the average fare paid 

by travelers.

 Quarterly year-over-year declines in the average 

fares paid in McAllen.

 Recapture traffic generated in McAllen's 

catchment area, but leaked to the airports in 

Harlingen and Brownsville.

 Increased quarterly year-over-year origin and 

destination traffic.

 Reduce the number of connections to 

markets not served with a single connection 

on American's existing service to its hub in 

Dallas/Ft. Worth and United's existing service 

to its hub in Houston.

 Increases in traffic in markets not previously 

served with a single connection via Dallas/Ft. 

Worth or Houston.

Once service begins, the Airport will rely on traffic and revenue data provided directly by the airline and the 

amount of minimum revenue guarantee reimbursements requested by the airline as indications of project 

success. T-100 data and DB1B data will also be analyzed to compare year-over-year market size growth on a 

quarterly basis. In addition, the airport will analyze leakage once the service has operated for a full year to 

determine the trend in leakage to other airports. The Airport will report its success metrics in the quarterly grant 

reports to the Department. 
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

24

Legal Sponsor

McAllen-Miller International Airport is owned and operated by the City of McAllen, Texas, and the City of McAllen

is the legal sponsor responsible for administering the program; the City of McAllen is a government entity.

Philip K. Brown

Director of Aviation

City of McAllen, Texas

McAllen-Miller International Airport

2500 South Bicentennial Blvd., Suite 100

McAllen, TX 78503-3140

956-681-1500 (office)

956-681-1510 (fax)

Financial Controls

As the sponsor, McAllen-Miller International Airport and its governing body, The City of McAllen, will be the 

responsible parties for all fiscal matters and the Department's reporting requirements. The City of McAllen is 

established as a public governing body. As a public entity, the Department 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 City of McAllen understands that the Grant is a reimbursable grant, meaning the City is 

responsible for program expenditures and will submit invoices to the Department for reimbursement, based on a 

percentage of the total grant request.
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

25

LETTERS OF SUPPORT
 

 

McAllen-Miller International Airport; McAllen, Texas

Proposal Under the Small Community Air Service Development Program; Docket DOT-OST-2013-0120

26