BEFORE THE OFFICE OF THE SECRETARY 

DEPARTMENT OF TRANSPORTATION 

 

 

Community Proposal 

Lynchburg Regional Airport 

Lynchburg, Virginia 

DUNS # 010038073 

SMALL COMMUNITY AIR SERVICE DOCKET DOT-OST-2011-0119 

DEVELOPMENT PROGRAM 

 

Under 49 U.S.C. § 41743 et seg 

 

 

LYH LOW-FARE AIRLINE SERVICE: AN EXPANDED MARKET MODEL

The Lynchburg Regional Airport and the City of Lynchburg, in partnership with the Lynchburg 

Regional Chamber of Commerce through its Air Service Development Partnership and the Lynchburg 

Economic Development Authority hereby applies for a grant in the amount of $800,000 under the 

Small Community Air Service Development Program. 

While Delta Air Lines recently departed the Lynchburg market, it is clear that the current 

phase of airline consolidation resulting in a new wave of anti-competitive market developments, 

combined with Delta’s lack of attention to maintaining competitive, effective yield management in 

the LYH market, has clearly created new opportunities for a replacement air carrier. 

The intent of the grant is to develop new airline service between the Lynchburg Regional 

Airport (LYH) and Atlanta based on that airport’s presence as an established Southeast hub airport 

which is geographically ideal for serving major markets from the mid-Atlantic region, particularly 

central and southwest Virginia population centers. To further enhance market potential, possible 

integrated hub service to near-by Baltimore-Washington International Airport (BWI) is a secondary 

target in order to further maximize traffic flow potential. 

 The Airport believes that this proposal is consistent with Congressional intent to resolve air 

service deficiencies in rural areas. The data and research accomplished by the Lynchburg Regional 

Airport clearly show that this proposed air service will fill a real and unique service opportunity, and 

the grant funds will represent an investment that will establish air service that is sustainable in the 

long-term. 

 The Lynchburg Regional Airport expresses its appreciation to the Department in its 

consideration of this grant application. 

 

 All correspondence regarding this document should be directed to: 

 Mr. Mark F. Courtney 

 Airport Director 

 350 Terminal Drive 

 Suite 100 

 Lynchburg, Virginia 24502-3532 

 Tel. (434) 455-6089 

 Mark.courtney@lynchburgva.gov 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

2

Table of Contents 

BACKGROUND AND HISTORY................................................................................................................... 3 

Air Service Since 2000 

A Critical Fare Breakthrough 

Passenger Traffic Growth........................................................................................................... 4 

Current Air Service Profile 

Air Service Development Recent History .................................................................................. 5 

Market Demographics................................................................................................................ 6 

Primary Service Area Profile....................................................................................................... 7 

Strategic Plan 

THE PROPOSAL ..................................................................................................................................... 7 

Objective ..................................................................................................................................... 8 

Existing LYH Demand Establishes Strong Base ....................................................................... 9 

An Expanded Market Area ......................................................................................................... 11 

Passenger Potential ................................................................................................................... 12 

Revenue Potential ...................................................................................................................... 13 

An Important Distinction ............................................................................................................ 15 

PROJECT STRUCTURE............................................................................................................................. 15

Grant Objective ........................................................................................................................... 16 

Additional Community Members 

Project Sponsor 

COMPREHENSIVE MARKETING PROGRAM................................................................................................. 16 

ADMINISTRATION OF THE GRANT ............................................................................................................. 17 

Revenue Guarantee Program Agreement................................................................................. 18 

Application: Negotiations & Related 

Term of Program 

 

 

 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

3

0

100

200

300

400

500

600

700

1/1/20064/1/20067/1/2006

10/1/2006

1/1/20074/1/20077/1/2007

10/1/2007

1/1/20084/1/20087/1/2008

10/1/2008

1/1/20094/1/20097/1/2009

10/1/2009

1/1/20104/1/20107/1/2010

10/1/2010

1/1/20114/1/2011

LYH Avg Fares

Background and History 

 Lynchburg Regional Airport is classified as a primary service, non-hub air carrier airport 

serving the central portion of the western half of Virginia. Officially opened in 1931 to serve the 

needs of a growing aviation industry, scheduled airline service was introduced in 1936 by American 

Airlines, followed by Piedmont Airlines in the early 1940s. Except for a brief period just prior to and 

during the early part of World War II, LYH has offered scheduled airline service continuously ever 

since. 

 During the period of government regulation of airline routes and fares which lasted until 

1978 with the passage of the Airline Deregulation Act, LYH enjoyed a relatively stable level of airline 

service. Following deregulation, LYH continued to offer adequate service levels as the traditional 

major air carriers created the “hub and spoke” system in response to the introduction of new-entrant 

airlines. This created opportunities for LYH since its market size and location were attractive to 

serve as a “spoke” to near-by Charlotte airport and its hub carrier, Piedmont Airlines. Incorporating 

a linear route system with a hub-feed business model enabled Piedmont to provide LYH with Boeing 

737 service throughout the 1980s. 

 With the acquisition of Piedmont in 1991 by then USAir, a recession combined with an initial 

wave of airline consolidation ushered in the next phase of airline deregulation typified by the 

widespread use of smaller, turbo-prop airliners designed to serve the smaller markets. This also 

occurred in conjunction with a rapid increase in major airline hubs throughout the country and, in 

particular, throughout the east coast. As a result, LYH began to experience many more flights (albeit 

with fewer seats) and more choices of airlines. As a result, throughout the 1990s LYH enjoyed 

unprecedented levels of airline service while attaining its best passenger year on record in 1994. 

Air Service Since 2000 

 Throughout the first decade of 2000, what began as a relatively stable period with three 

airlines serving the market changed drastically following the tragic events of September 11, 2001. 

In late fall of that year, United Express announced that it would discontinue all LYH service in January 

2002. With passenger demand significantly diminished as a result, and when combined with a 

subsequent recession, LYH passenger traffic suffered considerably and by 2003 reached a low point 

of just 95,932 total passengers for the year. This represented a 47 percent decrease in passengers 

compared to just five years earlier. 

A Critical Fare Breakthrough 

A major turning point in LYH’s competitive position took place in July 2008 in the wake of 

ever-increasing LYH airfares that culminated with LYH reaching the unenviable distinction of having 

the fourth highest average 

airfares in the country 

(among those with 50,000 

pax or more). In response 

to a disturbing drop in 

passenger load factors at 

LYH following a series of 

fare increases as a result of 

dramatic spikes in fuel 

prices in 2008, US Airways 

introduced an 

unprecedented (for an 

airport our size) low-fare 

style pricing structure that 

reduced LYH fares by an 

average of 57 percent. This advantageous fare environment continues to this day. 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

4

 

Passenger Traffic Growth 

 The ensuing stimulation in air travel demand as a result of the new fare structure being very 

competitive with other area airports served by low-fare carriers caused tremendous growth in LYH 

passenger traffic, with passenger levels rising by some 71 percent over a two-year period. In fact, in 

2010 LYH recorded its second best passenger year on record, with a total of 185,835 passengers 

served. 

Current Air Service Profile 

 

 Due to a number of factors unrelated to central Virginia’s market strength and potential, 

including continued industry consolidation, fuel price increases and ineffective yield management, 

Delta discontinued its regional jet service to LYH early in 2011. Since US Airways was clearly the 

market pricing leader and created a Lynchburg pricing strategy ideal for encompassing an expanded 

regional catchment area, US Airways has maintained its low-fare carrier pricing model. 

Consequently, following the departure of Delta, US Airways increased its daily departure frequency in 

addition to upgrading some of its turbo-prop service to regional jets. The result has been a return of 

a portion of the service lost when Delta departed the market, with the airport now offering a total of 

six daily departures to Charlotte with a combination of 37- and 50-seat DeHavilland Dash 8 aircraft 

and 50-seat Canadair Regional Jets (CRJs). 

 

Nonetheless, despite the 

presence of a competitive fare 

environment, the artificially low 

number of available airline seats 

offered daily at LYH relative to 

market area population has resulted 

in our service area being even more 

underserved. As the chart here 

indicates, at current airline service 

levels some 49 percent of our 

primary service area passengers 

drive to other airports for their air 

travel needs. 

18 2 ,8 3 9 18 4 ,574

19 6 ,3 6 1

18 3 ,3 78 176 ,4 3 8

16 1,2 77

12 7,59 0

10 0 ,2 74

12 8 ,2 8 4

110 ,3 74

170 ,10 0

95,932

175,8 18

18 5,8 3 5

10 8 ,4 4 1

12 0 ,174

18 5,79 3

18 2 ,9 8 8

178 ,50 5

18 2 ,4 4 8

118 ,53 5

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

250,000

199019911992199319941995199619971998199920002001200220032004200520062007200820092010

IAD

5.2%

GSO

3.4%

RIC

6.5%

CHO

4 .1%

Other

1.3 %

ROA

25.0%

RDU

3.5%

LYH

5 1.0 %
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

5

 

It is clear, however, that the vast majority of this leakage is the result of insufficient seat 

capacity at LYH to meet local air travel demand, combined with the presence of more nonstop air 

service offerings at other near-by airports, particularly to ATL and Orlando (LYH’s top two markets). 

In fact, in terms of air travel demand to just Atlanta or Orlando: 

• 11.9 percent of all domestic air travel generated at LYH last year was to Atlanta or 

Orlando. 

 And when just five other major Florida destinations are added to the above total: 

 • Some 23.4 percent (39,120) of LYH’s total passenger traffic was to/from Atlanta and six 

major Florida destinations. 

Air Service Development Recent History 

 Over the last five years, Lynchburg Regional Airport has pursued an air service development 

program centered on a SCASDP grant for $250,000 which was awarded in 2006. The program was 

designed to provide a total of $350,000 as a “Start-Up Cost Offset” and augmented by marketing 

and in-kind services for a total value of $405,000. The primary objective was to attract a United 

Express carrier to serve Washington Dulles as a replacement northern connecting hub, with a 

secondary hub identified as Philadelphia. 

 Unfortunately, considering industry and economic trends during the period, the program 

proved insufficient as an economic incentive to overcome other challenges being faced by identified 

airline prospects. Despite LYH being granted a one-year extension at the end of the grant’s threeyear term, the airport and partnership were unsuccessful in attracting a recipient airline and the 

grant expired in 2010. One major obstacle that LYH faced with the previous grant to provide an 

incentive program to airlines was the simple fact that, considering the economic times, the financial 

value of the total package was clearly inadequate to garner much attention. 

 Since losing all Delta Connection service in early 2011, the airport and partnership have 

primarily concentrated on new service potential based on United Express service to IAD, along with 

possible PHL service provided by US Airways. Despite very encouraging meetings, the continued 

uncertainty of aircraft availability and mainline partner negotiations on the part of United Express 

(Pinnacle/Colgan), have yet to yield successful results. In terms of PHL service, US Airways has also 

expressed little interest in serving LYH from there, preferring to concentrate on CLT. Recent attendance at the ACI Jump Start airline planners meeting yielded similar results, although the overall 

mood was strikingly more upbeat than previous meetings. 

 Marketing and promotional efforts. Over the last five years, LYH has developed and 

implemented a multi-media marketing and promotional program targeted specifically to the airport’s 

scheduled airline services. Built around an outdoor advertising (billboard) saturation strategy, the 

program has focused on promoting the airport’s strengths as a provider of competitive low fares, 

close-by location and convenient access. Primary campaigns center on spring and fall peak-travel 

periods which are supplemented with targeted radio advertising, fare specific newspaper ads and 

other print media to reinforce the airport’s brand image. 

 The primary goal of the airport’s marketing strategy is to build and maintain the airport’s 

brand through its slogan, “Check Lynchburg First.” Through numerous repetitive campaigns 

centered on this theme over the past five years, the program has been quite successful in achieving 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

6

its goals and the airport’s name recognition remains high. Below is a sampling of some of the 

billboards and print ads that have been used during this time. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Demographics 

 In December of 2010, LYH undertook a passenger survey in order to identify a number of 

travel and demographic characteristics of our passengers. The method of data collection was based 

on a capture-style approach in the passenger boarding areas in order to ensure a representative 

sample (8 percent). The following highlights the most salient findings: 

 Reason for Travel: Business 47.5% 

 Leisure 52.5% 

 Originating (Virginia) Pax: 63.5% 

 Destination (Visiting) Pax: 36.5% 

 Overall, the results pointed to a strong balance of business travel demand with leisure. 

Results varied somewhat from historical trends based on the stimulative effect of LYH’s low-fare 

offerings which attracted more leisure travelers. The results also reinforced the impact of a 

competitive fare environment which, when combined with more flights and seat capacity, allows the 

local air service area to be better served. 

 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

7

Primary Service Area Profile 

 

 Lynchburg Regional Airport is strategically located in Virginia’s Region 2000. This 2,000 

square mile area in central 

Virginia serves as Lynchburg 

Regional Airport’s Primary 

Service Area. It is comprised of 

Amherst County, Appomattox 

County, City of Bedford, Bedford 

County, Campbell County, and 

the City of Lynchburg. 

 Over 247,000 people 

live and work in Central 

Virginia’s historic and 

picturesque region. Virginia’s 

Region 2000 is a remarkable 

example of public-private 

cooperation: business and civic 

leaders, educators and 

government officials working 

together to create a supportive 

environment for business. This 

is one of the many reasons why 

four counties and two cities 

have combined their strengths 

and unique attributes to market 

the region’s outstanding workforce, education and training, transportation, and quality of life. 

Strategic Plan 

 Lynchburg Regional Airport is in the final stages of developing an air service strategic plan 

with the primary goal to help the airport and community focus their coordinated efforts and 

resources on targeted scheduled airlines which, based on their business models, route strategies 

and geographic concentration, make the most sense to pursue on a prioritized basis. Emphasis is 

being placed on major airlines, or their regional affiliates, which could offer the greatest number of 

domestic and international destinations most desired by business and corporate interests. One of 

those airlines identified in the strategic plan is AirTran Airways by virtue of its strategic connecting 

hub location at ATL and its complementary pricing structure to that which has been effective at LYH. 

Moreover, AirTran was targeted due to its considerable promise in an Expanded Market Area model. 

 A timeline for implementation of this plan is expected to cover a one-to-three year planning 

horizon. 

The Proposal 

 

 This proposal represents an unusual opportunity for a small non-hub airport to take 

advantage of a unique set of circumstances that will enable LYH to attract air service provided by an 

established low-fare carrier, AirTran Airways, which operates aircraft in the more efficient 117-

passenger configuration. The viability of supporting such service is based upon four primary factors: 

1. The proven success of a competitive and wide-ranging, low-fare airline pricing structure 

established in 2008 that has been profitable. 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

8

2. A geographic location which is situated in close proximity to two larger air service 

market areas, one of which due to its more traditional legacy carrier pricing structure, 

clearly expands LYH’s normal catchment area beyond its normal borders based on the 

fact that the primary determinant in a consumer’s purchase decision for air travel is 

based upon price. 

3. While the current low-fare pricing structure has been successful, the business model of 

the traditional legacy carriers has relied upon smaller, regional airline aircraft which 

have not provided sufficient capacity to adequately meet local demand considering 

recent airline and hub consolidations (e.g. less frequency), let alone provide additional 

capacity to meet the expanded regional footprint made possible by a low-fare pricing 

environment. 

4. While AirTran/Southwest have long served the eastern (Tidewater) portion of the 

Virginia, and currently serves all three airports in that region (ORF, PHF, RIC), AirTran 

has no presence whatsoever in the southwest and west-central portion of the state. 

 

While the concept of a smaller airport competing with near-by larger airports has long been 

demonstrated by airports such as Akron-Canton (CAK) and Newport News (PHF), those models were 

primarily based upon gaining market share from a much larger combined market area with other 

larger airports which also offered comparable, low-fare pricing structures. Conversely, the basis for 

this proposal is for LYH to establish a unique market niche based upon the assumption that other 

non-LYH carriers located within a portion of its expanded service area will not respond with 

competitive price matching. 

This proposal, however, is not intended to diminish the role or value of LYH’s existing, fullservice air service provider, US Airways. Rather, through market stimulation and an expanded 

service area made possible through LYH’s current low-fare pricing structure, this proposal is 

intended to provide additional growth opportunities for the incumbent carrier. Indeed, since the 

targeted carrier will attract considerable origin and destination traffic to a major business market not 

served nonstop by the incumbent (ATL), combined with the targeted carrier’s lack of service to the 

highly lucrative international markets served by the incumbent, the new service will prove to be 

mostly complementary. 

Objective 

 The Lynchburg Regional Airport continues to represent considerable untapped air service 

potential, with a number of unique strengths which would add to the potential success of this 

approach. The Department's approval of this grant application will allow the community to pursue a 

unique regional approach based upon LYH’s attractive central location within a 756,400 population 

service area. Consequently, the project’s primary objective will be to leverage this central location 

with the market strength of portions of two surrounding, easily accessible metropolitan service areas 

to attract replacement ATL air service based on LYH’s proven ability to generate a profitable mix of 

passenger traffic in a low-fare pricing environment. 

 

 

 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

9

 

 

 

 

MSA Population: 

Lynchburg – 252,600 

Roanoke – 302,200 

Charlottesville – 201,600 

TOTAL POPULATION: 756,400 

 

 

 

 

 

 

 

 

 

 

Existing LYH Demand Establishes Strong Base 

 

As noted earlier, at current LYH service levels some 49 percent of Region 2000 airline 

passengers drive to other airports for their air travel needs. It is clear, however, that the vast 

majority of this leakage is the result of insufficient seat capacity at LYH to meet local air travel 

demand, combined with the presence of more nonstop air service offerings at other near-by airports, 

particularly to ATL and Orlando (LYH’s top two markets). In fact, in terms of air travel demand to just 

Atlanta or Orlando: 

• 11.9 percent (19,870) of all domestic air travel generated at LYH last year was to Atlanta 

or Orlando. 

 And when just five other major Florida destinations are added to the above total: 

 • Some 23.4 percent (39,120) of LYH’s total passenger traffic was to Altanta and six major 

Florida destinations. 

 

 Clearly, the lack of adequate air service to Atlanta and the subsequent traffic flow to Florida 

markets alone makes a strong case for the viability of replacement service to ATL via AirTran. At 

current fare levels, therefore, the presence of a low-fare airline offering higher capacity, mid-size 

Boeing 717 aircraft as compared to 50-seat regional jets would attract air travelers from throughout 

this expanded service area. 

 

 

 

 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

10

LYH  MAV ‐ AirTran Destinations

Jan ‐ Dec 2010

     Apt NStop

Inbound +

Outbound Corrected Corrected One‐Way YIELD

Rank NAME Code Miles Passengers Pax / Day Revenues Avg. Fare /CPM

1 Wm B Hartsfield ATL 389 11,370 31.0 $1,771,280 $155.79 39.7

2 Dallas/Ft Wor In DFW 1,054 7,750 21.0 $1,298,240 $167.52 14.9

3 Orlando Intl     MCO 625 7,320 20.0 $829,610 $113.34 16.3

4 Charlotte        CLT 175 6,310 17.0 $544,190 $86.24 49.3

5 New York City Area 367 5,900 16.0 $980,830 $166.24 23.4

6 Chicago Area 557 5,710 16.0 $890,370 $155.93 18.5

7 Denver Intl      DEN 1,385 5,030 14.0 $863,140 $171.60 11.0

8 McCarran Intl    LAS 1,986 4,920 13.0 $865,550 $175.92 8.3

9 Fort Laud Intl   FLL 777 4,870 13.0 $609,110 $125.07 14.6

10 Logan Intl       BOS 557 4,540 12.0 $691,470 $152.31 16.8

11 Houston Area 1,062 4,480 12.0 $810,730 $180.97 16.6

12 Tampa Intl       TPA 673 4,080 11.0 $574,960 $140.92 19.6

13 Los Angeles Intl LAX 2,203 3,900 11.0 $839,070 $215.15 9.2

14 Sky Harbor Intl PHX 1,862 3,840 11.0 $678,670 $176.74 8.8

15 Jacksonville Int JAX 493 3,500 10.0 $407,100 $116.31 20.6

16 St Paul Intl     MSP 896 3,310 9.0 $595,760 $179.99 15.2

17 Wayne County     DTW 403 3,150 9.0 $530,750 $168.49 23.2

18 San Francisco In SFO 2,352 3,060 8.0 $677,480 $221.40 8.8

19 Seattle/Tacoma I SEA 2,281 2,680 7.0 $628,090 $234.36 9.1

20 West Palm Beach PBI 735 2,570 7.0 $351,690 $136.85 16.7

21 Memphis Intl     MEM 622 2,490 7.0 $359,670 $144.45 20.6

22 SW Florida Reg   RSW 758 2,400 7.0 $286,190 $119.25 14.3

23 San Antonio Intl SAT 1,233 2,290 6.0 $372,550 $162.68 12.8

24 Moisant Intl     MSY 812 2,040 6.0 $309,080 $151.51 18.5

25 Indianapolis     IND 418 1,880 5.0 $276,080 $146.85 21.5

26 Kansas City Intl MCI 853 1,860 5.0 $296,720 $159.52 15.4

27 Lambert‐St Louis STL 616 1,840 5.0 $400,880 $217.87 27.8

28 Newark Intl      EWR 357 1,810 5.0 $374,270 $206.78 29.4

29 Milwaukee        MKE 602 1,690 5.0 $293,100 $173.43 18.0

30 Port Columbus In CMH 271 1,440 4.0 $233,850 $162.39 31.2

31 Buffalo          BUF 388 1,180 3.0 $140,890 $119.40 16.4

32 Rochester        ROC 408 1,180 3.0 $196,850 $166.82 19.6

33 Akron/Canton Reg CAK 275 1,080 3.0 $193,330 $179.01 31.5

34 Sarasota/Bradent SRQ 712 890 2.0 $118,240 $132.85 17.1

35 Pensacola Reg    PNS 658 790 2.0 $104,890 $132.77 20.1

36 Portland         PWM 639 760 2.0 $103,830 $136.62 13.7

37 Pittsburgh Intl PIT 226 650 2.0 $94,980 $146.12 26.8

38 Philadelphia Int PHL 277 640 2.0 $206,340 $322.41 52.0

39 Jm Cox Dayton In DAY 324 620 2.0 $91,730 $147.95 27.1

40 Westchester Coun HPN 392 360 1.0 $77,510 $215.31 28.3

41 Mid‐Continent    ICT 1,001 280 1.0 $66,160 $236.27 19.1

42 Luis Munoz Marin SJU 1,527 240 1.0 $70,850 $295.20 15.9

43 Baltimore/Wash I BWI 188 100 0.0 $25,150 $251.50 47.0

44 Bloomington‐Norm BMI 567 80 0.0 $15,520 $194.02 21.0

45 Flint            FNT 457 50 0.0 $7,620 $152.32 14.7

46 Branson          BKG 20 0.0 $3,290 $164.50 17.6

47 Dulles Intl      IAD 146 10 0.0 $2,400 $240.10 48.5

TOTAL FOR BASE LYH 126,960 347 $20,160,060 $158.79 15.8 

 Source: 4Q10 AIRS O&D Data (Current passenger traffic before stimulation) 

 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

11

Below: Sample of AirTran destinations served out of Atlanta 

 

Dallas 

Ft. Lauderdale 

Phoenix 

Tampa 

Lynchburg

Las Vegas

Houston 

Los Angeles

San Francisco Kansas CIty

St. Louis

New Orleans 

Minneapolis/St. Paul 

Portland

Indianapolis 

Boston

San Antonio 

Ft. Myers

West Palm Beach 

Pensacola

Milwaukee

Branson

Orlando

BWI

Jacksonville

Memphis

AirTran Will Provide Excellent Coverage to Major Markets

Atlanta

Boston

Buffalo Chicago

Denver

New York

Pittsburgh

Seattle

Detroit

 

An Expanded Market Area 

 

As recent market research has shown, even a limited amount of air service at competitive, 

low-fare style pricing has stretched LYH’s traditional geographic market area considerably. 

Complemented by convenient, uncongested vehicle drive times of approximately one hour, LYH 

passengers have been drawn from a considerably broader area of 60-100 miles. 

 

 The Expanded Market Area population is based upon the traditional LYH air service 

catchment area, combined with only a portion of the Roanoke and Charlottesville catchment areas 

that are closest geographically to LYH. As 

depicted here, recent market research 

revealed LYH’s potential to attract 

passengers from these areas area despite 

offering seat capacities considerably below 

even local market demand. 

• Existing Combined Draw from 

Expanded Market Area - 9% 

• Projected Combined Draw with 

QSI/Capacity Stimulation - 18% 

 

 

 LYH Passengers from Select Markets

 

 

6.3%

2.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

ROA CHO
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

12

Passenger Potential 

 

 Total passenger traffic generated under the proposal scenario has been calculated below. 

Variables used to determine projected traffic generation by AirTran in the LYH Expanded Market Area 

were based on actual past performance with a similar, low-fare fare pricing structure that would 

typically be utilized by AirTran. 

 

Air Tran 

Type Aircraft Boeing 717 

Seating Configuration 117 (mixed class) 

Initial Frequency 2.57 flights/day (average) 

Total Daily Departure Seats 300 (average) 

Projected Average Load Factor (LF) 85% 

Projected Daily Passengers 510 (enplaned plus deplaned) 

Projected Annual Passengers 186,150 

Capacity Share 53% 

Market Share 59% 

US Airways 

Projected Annual Passengers 125,332 

Capacity Share 47% 

Market Share 41% 

Total LYH Market Potential 

 311,482 Passengers 

 Based upon the following assumptions: 

1. 20% core leakage to other airports due to nonstops, greater international 

connections, low-fare seats sold out, etc. 

2. 18% air travel stimulation from Expanded Market locations. 

3. US Airways service levels remain stable. 

4. Total LYH capacity: 

a. 300 AirTran daily departure seats at 85% LF. 

b. 262 US Airways daily departure seats at 75% LF. 

 The listing below depicts the combined passenger traffic generated by the three airports 

made up in the expanded regional service area as an indicator of current air travel demand. Due to 

airline pricing disparities between markets, it is anticipated that the majority of passengers attracted 

to LYH from the Expanded Market Area would represent net-new passengers and not shifted market 

share. The destinations are ranked by number of passengers served, and include the current 

nonstop destinations served by AirTran from its hub at ATL. 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

13

LYH + ROA + CHO Destinations served from ATL by Air Tran

Jan ‐ Dec, 2010

                   A/P Code Nstop

Inbound +

Outbound One‐Way Yield

Rank Name Code Miles Passengers Pax/Day Revenues Avg. Fare /CPM

1 Orlando Area 617 60,870 166.0 $5,691,060 $93.50 14.3

2 New York City Area 364 63,660 175.0 $9,283,350 $145.83 33.4

3 Wm B Hartsfield   ATL 393 49,120 135.0 $9,600,180 $195.44 48.7

4 Chicago Area 544 42,850 117.0 $7,991,260 $186.49 27.3

5 Dallas/Ft Wor In DFW 1,047 30,500 84.0 $5,888,400 $193.06 16.7

6 Denver Intl       DEN 1,373 28,880 79.0 $5,264,020 $182.27 11.6

7 Logan Intl        BOS 542 28,010 77.0 $4,410,830 $157.47 22.5

8 Los Angeles Intl LAX 2,195 27,520 75.0 $6,098,480 $221.60 9.3

9 Charlotte         CLT 200 25,600 70.0 $3,218,370 $125.72 61.7

10 Philadelphia Int PHL 266 25,430 70.0 $4,079,870 $160.44 55.8

11 San Francisco In SFO 2,345 24,970 68.0 $5,593,970 $224.03 8.8

12 McCarran Intl     LAS 1,971 24,720 68.0 $4,834,820 $195.58 9.1

13 Houston Area 1,063 23,040 63.0 $4,458,950 $193.53 17.1

14 Tampa Intl        TPA 691 21,660 59.0 $3,295,900 $152.17 20.0

15 Fort Laud Intl    FLL 794 20,280 56.0 $3,027,230 $149.27 16.9

16 Sky Harbor Intl   PHX 1,858 18,770 51.0 $3,670,770 $195.57 9.7

17 St Paul Intl      MSP 881 18,590 51.0 $4,008,080 $215.60 19.0

18 Seattle/Tacoma I SEA 2,266 17,850 49.0 $3,989,590 $223.51 9.0

19 Wayne County      DTW 386 15,480 42.0 $3,363,680 $217.29 39.6

20 Kansas City Intl MCI 842 13,630 37.0 $2,226,850 $163.38 15.6

21 Jacksonville Int JAX 511 12,910 35.0 $1,927,970 $149.34 25.8

22 Moisant Intl      MSY 830 12,330 34.0 $2,061,310 $167.18 18.8

23 Milwaukee         MKE 583 12,170 33.0 $1,709,340 $140.46 17.8

24 San Antonio Intl SAT 1,229 11,940 33.0 $2,139,150 $179.16 13.6

25 Lambert‐St Louis STL 610 11,840 32.0 $2,274,220 $192.08 23.8

26 Indianapolis      IND 406 11,310 31.0 $1,788,260 $158.11 23.6

27 West Palm Beach   PBI 755 10,850 30.0 $1,677,140 $154.58 18.3

28 Washington DC Area 179 10,050 27.0 $1,289,260 $128.28 69.1

29 SW Florida Reg    RSW 778 9,860 27.0 $1,477,280 $149.83 17.9

30 Memphis Intl      MEM 631 9,030 25.0 $1,622,200 $179.65 24.3

31 Buffalo           BUF 375 5,680 16.0 $840,210 $147.92 23.8

32 Sarasota/Bradent SRQ 738 5,240 14.0 $794,480 $151.62 19.3

33 Portland          PWM 622 5,030 14.0 $774,850 $154.04 21.0

34 Port Columbus In CMH 262 4,840 13.0 $799,830 $165.25 32.2

35 Rochester         ROC 398 4,380 12.0 $759,730 $173.45 27.4

36 Pensacola Reg     PNS 673 3,870 11.0 $634,860 $164.05 23.8

37 Jm Cox Dayton In DAY 320 3,170 9.0 $554,940 $175.06 30.7

38 Luis Munoz Marin SJU 1,549 2,530 7.0 $695,830 $275.03 15.2

39 Pittsburgh Intl   PIT 214 2,430 7.0 $444,160 $182.78 40.0

40 Mid‐Continent     ICT 990 1,940 5.0 $439,950 $226.78 18.8

41 Akron/Canton Reg CAK 267 1,860 5.0 $323,660 $174.01 30.8

42 Westchester Coun HPN 392 1,600 4.0 $302,090 $188.81 33.9

43 Bloomington‐Norm BMI 567 980 3.0 $201,650 $205.77 22.6

44 Flint             FNT 439 450 1.0 $73,950 $164.32 29.7

45 Baltimore/Wash I BWI 205 410 1.0 $158,900 $387.56 76.6

46 Raleigh/Durham    RDU 155 160 0.0 $45,100 $281.86 79.3

47 Tidewater Area 202 300 1.0 $115,710 $385.70 88.8

TOTALS 779,690 2135.0 $124,347,050 $159.48 17.5

 

 Source: 4Q10 AIRS O&D Data 

Revenue Potential 

 Revenue yield assumptions are based upon actual U.S. DOT Origin and Destination survey 

data from a one-year period ending the 2nd Quarter 2010 which represents a valid sample for a oneyear period during which a comparable low-fare pricing structure was in place at LYH. The higher US 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

14

Airways domestic yield figure and average fare amount were used in recognition of US Airways’ 

standing as the pricing leader in the LYH market, and in light of its much more effective yield 

management results than Delta (despite fare matching). 

12.97

17.17

0.0

5.0

10.0

15.0

20.0

Domestic

DL US

 Individual Airline Yield Comparison Source: 2Q10 AIRS O&D Data 

 

 As compared below, an historically underserved regional LYH air service market 

area combined with a strong balance of business travel demand has helped to maintain 

a profitable market environment despite LYH’s existing low-fare pricing structure. For 

instance, while relatively comparable with both ROA and CHO, LYH actually has 

generated a domestic passenger yield that is some 17.6 percent higher than Newport 

News while generating 23 percent higher average fares. 

 

12.97¢

17.17¢ 17.60¢ 17.30¢

14.60¢

0.0

5.0

10.0

15.0

20.0

Domestic ROA CHO PHF

DL US ROA CHO PHF

Yield Comparison Source: 2Q10 & 4Q10 AIRS O&D Data 

 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

15

$174 $180 $186

$141

$0

$50

$100

$150

$200

LYH ROA CHO PHF

LYH ROA CHO PHF

 Average Fare Comparison Source: 4Q10 AIRS O&D Data 

An Important Distinction 

 In addition, an important distinction in the project scenario is the fact that all three 

commercial service airports in the eastern half of Virginia are served by AirTran/Southwest, whereas 

the Southwest and West-Central portion of the state are not served by either carrier. Clearly, LYH 

AirTran service based on an Expanded Market Area model would fill a void in the combined carriers’ 

route systems. 

 

Project Structure 

 

This proposal requests $800,000 in grant funds from the Program to attract and establish 

service by a targeted low-fare airline, AirTran. The primary hub airport targeted for AirTran service 

will be Hartsfield-Jackson Atlanta International Airport (ATL), with secondary service targeted to 

Baltimore-Washington International (BWI). This will be matched by at least $180,000 in locallygenerated funds, $50,000 in combined marketing/advertising support, as well as approximately 

$120,000 in waived landing fees for the new carrier for a period of one-year (based on a one-year 

minimum commitment). Total value of the financial incentive will be approximately $1,120,000 

 The goal is to use $950,000 of the combined funds to provide a “Revenue Guarantee” to 

cover any losses which would normally exist during the initial market development period of up to 

one year. An additional $30,000 in community funds and $20,000 in airport funds are intended to 

be used for marketing the new service, including the costs of negotiating with the carrier and 

developing an aggressive advertising and community support program. 

Based upon the airport’s demonstrated market demand and passenger revenue generation 

to Atlanta as an origin/destination point, the predominant flow of air travel to Southeastern 

destinations and points west, and the combination of a proven expanded service area due to existing 

LYH fare advantages, this proposal is expected to result in establishing a sustainable level of new 

service without the need for further financial assistance. 

If the project is not self-sustaining after the grant awards expires, the airport and the local 

parties will consider additional local financial incentives based on an evaluation of deficiencies in 

service levels, scheduling, destinations served or other factors. 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

16

 

 

 

Grant Objective 

Therefore, the grant will be used as follows: 

 To implement a “Revenue Guarantee Program” to support the service during the first year of 

operations. The intent is to establish a clear and straightforward revenue guarantee 

methodology with the targeted airline of up to $950,000 ($800,000 from the grant) for a 

minimum of three daily departures on peak days (averaging 2.57 flights/day) to Atlanta (ATL) 

or, as combined, with Baltimore/Washington International (mix TBD). This approach will also 

encompass an in-kind contribution in the form of a waiver of landing fees during the same 

one-year period. (Specifics regarding this program are provided in a subsequent section.) 

 A focused Marketing and Advertising Campaign to support the service. The campaign will be 

designed to support the new service as well as encourage additional passenger traffic on the 

existing air service provider at Lynchburg Regional Airport. This campaign will be patterned 

after the very successful program that was implemented as part of the introduction of a lowfare pricing structure by US Airways in July 2008. 

 

Additional Community Members 

 The Lynchburg Regional Economic Development Authority and the Lynchburg area Air Service 

Development Partnership (a collection of businesses and civic groups in the region) will represent 

the Community participation in this application and 

supports this proposal. This group directly supports air 

service at LYH: 

• The Air Service Development Partnership is a 

committee of the Lynchburg Regional Chamber of 

Commerce 

• It is comprised of companies that collectively 

spend nearly $15 million in air travel per year. 

 

 

 

 

 

Project Sponsor 

 The City of Lynchburg, Virginia is the official sponsor in submitting this application. 

 

Comprehensive Marketing Program 

 The Airport and the City of Lynchburg are focused upon making the new service as successful 

as possible in as short a period of time as possible. To accomplish this, a comprehensive marketing 

and advertising program will be implemented to support the new multi-directional connecting 

northern hub service. 

The plan is to allocate a minimum of $50,000 toward the following: 

MEMBER TICKET SALES

AREVA $7,882,159

Genworth $1,800,000

BWX Technologies $1,605,977

M/A-COM Wireless $1,059,427

Liberty University $400,000

J Crew $200,000

Flowserve $200,000

Barr Labs $184,000

Centra Health $140,000

RR Donnelly $100,000

TOTAL $13,571,563
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

17

 A multi-media advertising plan in the Lynchburg Regional Airport service announcing the new 

service and promoting it throughout the one-year period. 

 Targeted mailings to key generators of business travel. Working with major employers in the LYH 

area, the marketing plan will endeavor to identify additional traffic sources. 

 Targeted business receptions to promote the new service. 

 Civic presentations will be made to showcase the new service. 

The programs will be developed locally, and will also concentrate on increasing public awareness of 

the range of air service offered at LYH by both US Airways and the new carrier. 

 

 

Administration of the Grant 

 The total financial value of the project will be $1,120,000, with $800,000 from the Grant 

program, $180,000 from the Community, $20,000 from airport marketing funds, and the remaining 

$120,000 from in-kind contributions from the Airport in the form of waived landing fees. Division of 

cost and distribution of the combined funds will be as follows: 
Lynchburg Regional Airport 

Proposal under the Small Community Air Service Development Program 

18

Source & Use of Project Funds 

 Rev. Guarantee 

and In-Kind Serv. 

Marketing & 

Advertising 

Totals 

Lynchburg Community $150,000 $30,000 $180,000 

Landing Fee Waiver Est. $120,000 $120,000 

Grant Program $800,000 $800,000 

Airport Advertising $20,000 $20,000 

Totals $1,070,000 $50,000 $1,120,000 

 

 

Revenue Guarantee Program Agreement 

 To provide risk sharing during the first year of route development, this proposal intends to 

make available to the airline a fund of $950,000 to provide guaranteed revenue to the chosen 

airline to be paid in mutually agreeable installments. This will be supplemented with approximately 

$120,000 of in-kind contributions from the Airport in the form of a waiver of landing fees for the 

service during its first year of operation. 

1. The airline and the community will negotiate and determine an acceptable revenue 

reporting requirement so that the airport may track relative performance during the oneyear period. 

2. The Department will be provided a progress report on a quarterly basis, or on an 

alternative schedule that it determines.

Application: Negotiations & Related 

 Based on a demonstrated lack of adequate nonstop air service to Atlanta and market 

demand to other Southeastern destinations, Lynchburg Regional Airport plans to target AirTran 

Airways solely through this program. This is partly based upon the recent market opportunity that 

was created to ATL by the departure of Delta Connection service at LYH earlier this year. 

Term of Program 

 The Grant is requested for a period of one-year from the time service commences, and is 

based upon a minimum one-year service commitment by the carrier. 

X:Backup to G/SCASD Proposal 2011/SCASD Proposal.Aug 2011