Legal Sponsor: Williamsport Regional Airport

DUNS #75998641

Pennsylvania Congressional District 10 

# PROPOSAL UNDER THE SMALL

COMMUNITY AIR SERVICE

DEVELOPMENT PROGRAM Docket OST

- 2010

- 124



## PROPOS AL OF WILLIAMSPORT, PA

Submitted by: Williamsport Regional Airport

August 2010pg. 2



# TABLE OF CONTENTS

SUMMARY OF PROPOSAL 3

A IRPORT AND C OMMUNITY : 3

O FFICIAL P ROJECT S PONSOR : 3

C OMMUNITY P ARTNERS : 3

P ROJECT D ESCRIPTION : 3

WILLIAMSPORT MARKET OVERVIEW 5

P OPULATION B ASE : 5

E CONOMIC B ASE : 6

CURRENT AIR SERVICE AND MARKET DEFICIENC Y 9

C URRENT W ILLIAMSPORT A IR S ERVICE : 9

W ILLAMSPORT E NPLANEMENT T RENDS : 9

S ERVICE P ATTERN : 10

C URRENT AND P OTENTIAL C ONNECTIVITY AT W ILLIAMSPORT : 10

P REVIOUS A IR S ERVICE D EVELOPMENT E FFORTS : 12

PROPOSED SOLUTION FO R AIR SERVICE DEFICI ENCY 13

O VERVIEW : 13

O PTION #1: C ONTINENTAL A IRLINES SERVICE TO H OUSTON : 13

O PTION #2: U NITED A IRLINES SERVICE TO W ASHINGTON D ULLES : 14

N EED FOR R ISK M ITIGATION : 15

M ARKETING S UPPORT : 15

GRANT ADMINISTRATION PLAN 16

G RANT R EQUEST S UMMARY : 16

T ERMS FOR R ISK M ITIGATION F UNDS : 16

T ERM OF P ROJECT : 16

R OLE OF C OMMUNITY AND B USINESS P ARTNERS : 17

P ROJECT M ONITORING : 17pg. 3



# SUMMARY OF PROPOSAL

Airport and Community:

Community: Williamsport, Pennsylvania

Airport: Williamsport Regional Airport (IPT)

Contact: Tom Hart, Executive Director

Address: 700 Airport Rd, Montoursville, Pennsylvania 17754

Phone: 570.368.2444

Fax: 570.368.1603



## Official Project Sponsor:

Williamsport Regional Airport (IPT)



## Community Partners:

This proposal is supported by the City of Williamsport, Lycoming County, Williamsport

Regional Airport, and the Williamsport/Lycoming Chamber of Commerce.

The preceding community partners will sup port the proposed project by participating in one

or more of the following:

 Providing matching funds for SCASD grant award

 Working with Williamsport Regional Airport to negotiate agreements with targeted

air carriers

 Liaise with DOT regarding project benchmarks and carrier performance throughout

grant period

 Administration of complete project funding

 Preparation of quarterly reports for DOT, as necessary

 Obtain continuous community buy

- in and awareness of project

In addition to the aforementioned community partners, the numerous oil and gas companies

that have been rapidly expanding their operations in the Williamsport area are strongly

supportive of the goals laid out in this proposal.



## Project Description:

This proposal requests $500,000 in SCASD grant funds. These grant d ollars will be matched

with $2 00

, 000 in local community funds as well as “in

- kind” contri butions of approximately

$100,000 provided by Williamsport Regional Airport in the form of fee waivers and terminal

area improvements . Total project funding leve l will be approximately $ 8 00,000

.pg. 4 The purpose of the project outlined in this proposal is to provide risk mitigation funding for

new service to an additional airline hu b. The Williamsport Regional Airport and its

c ommunity partners believe the Williamsport market can generate and sustain sufficient

traffic and revenue to support this new service.

In recent months, the Marcellus Shale natural gas deposit has fundamentally changed the air

service demand in the Willia msport primary service area. Numerous oil and gas companies

and associated partner companies have begun to relocate to the region and set up

operations to extract the natural gas in the area. Existing air service at Williamsport

Regional Airport is not su fficient to address this sizeable, and steadily increasing, demand

for air travel to the Williamsport area.

Oil company management and the transient workforce that they employ in Williamsport are

currently meeting their travel needs through a combination of charter aircraft, corporate

aircraft, and commercial air travel to Pittsburgh and Philadelphia. Drive time from PHL to

the Williamsport area is approximately 3.5 hours and PIT requires 4.5 hours of drive time.

As such, these companies and their employee s need better air access to the Williamsport

area.

In addition to oil and gas companies, Williamsport is home to the Little League World Series.

This organization generates signi ficant world

- wide travel eac h year and capacity cuts at IPT

have forced them to trav el from other area airports. A SCASD grant to mitigate risk on new

service at IPT would give the Little League World Series, and other local companies, the air

service access they need.

Williamsport Regional Airport has participated in numerous discussions with targeted

carriers to rectify this air service deficiency. Through these discussions, IPT has found that

, given the risk profile associated with new market start

- up, these carriers will require risk

mitigation funding before starting service in the IPT market. As a result, Williamsport

Regional Airport and its partners are seeking assistance through the SCASD program to

obtain a portion of these risk mitigation funds.

While risk mitigation funding may be necessary to recruit new service to the IPT market,

thes e funds will only be dispersed in the event that the recruited carrier falls short of

profitability on the route. It is possible that only a portion of the dollars requested in this

proposal will be dispersed, and should this prove to be the case, Williams port is prepared to

return any unused funds to the Department of Transportation for future use in the SCASD

program.pg. 5



# WILLIAMSPORT MARKET OVERVIEW

Population Base:

Approximately 376,000 people live within a one hour drive, and 2.7 million within a two

ho ur drive of Williamsport Regional Airport (a service area map has been included below).



### Williamsport Service Area

60 &120 min Drive Time Radius

Source: Microsoft MapPoint

Williamsport Regional Airport is a short drive from numerous colleges and universities

including:

 Penn State University

 Lycoming College

 Pennsylvania College of Technology

 Lock Haven University

 Bucknell University

 Mansfield University

In all, these institutions maintain enrollment of more than 57,000 undergraduate and

graduate students.pg. 6 The Williamsport area contains the largest, most accessible portion of the Marcellus natural

gas shale. The growth of natural gas industry in the Williamsport area will continue to

increase the population base needing access to the nati onal air transportation system. In

addition to more permanent population increases tied to this industry growth, a large

number of transient workers will be commuting to the Williamsport area on a weekly basis

for rotating assignments in the natural gas fi elds.

In addition to the Marcellus Shale and institutions of higher learning , the Williamsport

service area contains a large number of seasonal travelers (snowbirds) who spend the winter

months in warmer climates and return to Williamsport in the spring. Many of these

snowbirds own second homes in the South/Southeast and make multiple trips throughout

the year to check on their properties in addition to their regular seasonal travel.

All of these population segments and their need for air travel are in a ddition to the basic

community air service needs that currently exist. With the assistance of the SCASD program

and the successful recruitment of new air service at IPT, it is estimated that the air service

needs of the aforementioned constituents will be met.



## Economic Base:

Williamsport, Pennsylvania is home to a wide variety of industries comprising a strong

economic base. These industries include: Oil and Natural Gas, Manufacturing,

Pharmaceutical, High Tech, Healthcare, and many others. Due to the di verse and successful

business segments in the area, individuals in the Williamsport service area enjoy relatively

high disposable income levels ($37,000+ annually). These disposable incomes are expected

to increase significantly as oil and gas companies c ontinue to grow in the area.

The primary industry in Williamsport at present, and for the foreseeable future, is oil and

natural gas. This is due to the Marcellus Shale, which is the largest natural gas shale in the

United States, and the third largest in the world. The Marcellus Shale is expected to yield

natural gas for 40+ years making the industry growth in Williamsport long

- term in nature.

The shale spans millions of acres and represents billions of dollars in commerce (map of

Marcellus Shale include d below).



### Marcellus Shale Mappg. 7 75 % of the land in Lycoming County, the largest county in Pennsylvania and home to

Williamsport Regional Airport, is already leased for natural gas exploration. The county map

below shows the leased land for natural gas development, the transcontinental pipeline and

the relative location of Williamsport Regional Airport.



### Lycoming County Map

Oil Exploration and Relative Airport Location

The economic impact of this natural gas industry was summarized in the Marcellus Shale

report completed by experts at Penn State University. Their study showed the following

economic impacts in 2010 and 2020:

 2010

$14 billion impact

98,000 jobs

$800 million in state/local tax revenue

 2020

$265 billion impact

176,000 jobs

$15 billion in state/local tax revenue

Numerous oil and gas industry companies have already made large scale commitments in the

area and continue to grow their operations at a brisk pace. The continued, long

- term 

## + 78,000

jobs over

the next

10 yearspg. 8 investme nts these companies are making in the Williamsport area bode well for the local

economy and will lend continuous support to any new service obtained at IPT.

Oil and gas industry companies who have already made significant investments in the

Williamsport ar ea include, but are not limited to:

 Halliburton

 Weatherford

 Annadarko

 Chesapeake Energy

 XTO Energy

 Express Energy Services

 Chief Oil & Gas

Each of the aforementioned companies has outlined requirements for air travel, the

magnitude of which makes current service at Williamsport Regional Airport inadequate for

their purposes. For this reason, these companies are strongly in support of the pro ject

outlined in this proposal.pg. 9



# CURRENT AIR SERVICE AND MARKET DEFICIENCY

Current Williamsport Air Service:

Williamsport Regional Airport currently has access to the national air transportation system

via a single airline network

– US Airways via Philad elphia. Existing service results in 20

weekly departures and 740 weekly seats in the IPT market. It is important to note that the

existing service to PHL is flown on 37 seat Dash 8 turboprop aircraft.



### Current IPT Service Map

August 2010

Source: Innovata , LLC via Aviation DataMiner

Current capacity in the IPT market reflects a small decrease in departures and seats, but is

essentially flat. Year

- over

- year, IPT has seen a 2.2% decrease in departures and a 1.8%

decrease in seats, but no substantial change in service.



## Willamsport Enplanement Trends:

Enplanements at Williamsport Regional Airport have been steadily declining since 2005 as

fares have increased and capacity has decreased. Capacity in terms of both seats and

departures is down nearly 50% sinc e 2005. Over the same time period, as capacity has been

pulled out, fares have continued to increase. Also, with less frequency in the market,

connectivity at PHL has been reduced to a minimum.

As a result of the large capacity cuts over the last five y ears, a corresponding decline in

enplanements was seen in the same time period. As can be seen on the following graph,

2009 represents the lowest level of enplanements in the last five years. Some of this decline

can be attributed to overall economic weak ness and the volatility of oil prices, but the

driving force behind the low enplanement levels is a direct result of decreased capacity in

the market and reduced access to the national air transportation system.pg. 10 

### Williamsport Enplanement Trend

2005

- 2009

Source: T

- 100 data via Aviation DataMiner



## S ervice Pattern :

The number of airline brands and nonstop destinations has been constant at IPT for the last

five years. US Airways service to Philadelphia has been the only option in this time period.

While these metrics stayed constant, the number of daily departures an d daily seats has

been effectively cut in half over the last five years. This decrease in capacity, and the

resulting loss in connectivity at PHL, has been the main cause of lower enplanements at IPT.



### Service Pattern Trend

August 2006

– August 2010

Source: Innovata, LLC via Aviation DataMiner

As air service access has declined, Williamsport area passengers have increased their

leakage rates to other area airports. This includes the numerous oil and gas companies who

are the largest contributors to current demand in the Williamsport service area. Without

additional capacity and better air service access, these companies will be forced to

continue their use of Philadelphia and Pittsburgh to address their needs.



## Current and Potential Connectivity at Williamsport:

Current market demand in IPT is primarily focused in the South/Southwest United States.

This Southern/Southwestern demand will increase exponentially over the coming months

and years as oil and gas companies ramp up their exploration and ex traction efforts in the

Williamsport area. While current service at IPT provides access to some of the majorpg. 11 metropolitan areas in the South/Southwest, the scope of US Airways service from PHL is not

extensive enough to address all of the air service needs at IPT. As a result, passengers

flying from IPT are forced to take many circuitous routings to arrive at their final

destination and often times, they are forced to make double connections to reach smaller

Southern destinations not served from the US Air ways hub at PHL.

Given the nature of the demand at IPT and the expanding oil and gas industry in the area,

the best options for new hub access are Continental Airlines service to IAH and/or U nited

Airlines service to IAD. The maps below show current dome stic connectivity versus

connectivity at potential new airline hubs.



### Current Domestic Connectivity

Source: Innovata, LLC via Aviation DataMiner



### Potential Domestic Connectivity (Continental IAH Service)

Source: Innovata, LLC via Aviation DataMiner

As can be seen on the current domestic connectivity map above, current access to the

South/Southwest is limited to major metropolitan markets such as DFW, IAH, and PHX. Withpg. 12 the addition of Continental service to IAH, access to numerous Southern/Southwest ern

markets becomes available. It is important to note that this additional access includes the

oil industry centric markets of Oklahoma City and Tulsa, as well as refining and transport

markets for the oil industry, such as New Orleans and Gulfport.

Unit ed Airlines service to Washington Dulles would also be a viable option. While this

service would not provide the extensive Southern network that Houston service would offer,

nonstop access would still be available to the oil centric markets, as well as mo re extensive

access than the existing US Airways service. It should also be noted that the strong

partnership, and eventual merging, of United and Continental would provide extensive

double connection options over Houston.



## Previous Air Service Development Efforts:

Williamsport Regional Airport has been committed in the past, and will remain committed in

the future, to air service development activities. Airport representatives have attended the

annual Allegiant Air conference where they met with Allegiant planners to discuss the

possibility of future service. Additionally, airport representatives have taken several

meetings with potential new carriers such as, but not limited to: United Airlines, Northwest

Airlines, and Continental Airlines. The airport ha s al so invested in marketing the airport to

the local community. Williamsport Regional Airport plans to continue their commitment to

air service development independent of this proposal.pg. 13



# PROPOSED SOLUTION FOR AIR SERVICE DEFICIENCY

Overview:

To address the existing air service deficiency at Williamsport Regional Airport, it is

important that access to a new airline hub be recruited. For this reason, the Williamsport

Regional Airport and its community and business partners are seeking a Small Community Ai r Service Development grant in the amount of $500,000. The purpose of this grant will be to

provide risk mitigation funding to support nonstop service to a new airline hub. Grant funds

will be matched with local community funding of $ 2 00

, 000 In addition t o the

aforementioned cash contribution, Williamsport Regio nal Airport will provide approximately

$100,000 in contributions in the form of “in

- kind” fee waivers and terminal area

improvements

.

The Williamsport community has identified two carrier/hub combi nations that will address

existing air service deficiencies at IPT: Continental Airlines service to Houston and United

Airlines service to Washington Dulles.

Projections of route performance for both suggested carriers/hubs were completed by the

airport a nd are included below. Both routes are forecast to be profitable, but with the

existing economic uncertainty in the airline industry, it is important that small communities

such as Williamsport offer risk mitigation options to successfully recruit new air line service.

The SCASD grant fund requested in the proposal, combined with community and in

- kind

contributions , will aid Williamsport in their air service recruitment efforts.



## Option #1: Continental Airlines service to Houston:

Service to the Continent al hub at IAH is an excellent solution to existing deficiencies in air

service at IPT. Continental has existing corporate travel agreements with most of the oil

and gas companies present in the Williamsport area. Furthermore, their extensive network

in th e South/Southwest provides the best connectivity to destinations desired by these

companies. As the primary driver of demand for, and beneficiary of, any new service at

Williamsport, it is important that this service address their needs.

In addition to c orporate traffic, access to Houston would provide other Williamsport

passengers with more extensive connecting options both domestically and internationally.

Additionally, the competition resulting from an additional airline brand in the market is

likely to bring down overall fare levels at IPT.

The following forecast summary shows two daily round trips to Houston on 50

- seat regional

jet equipment to be profitable for Continental Airlines.

 Load factor, based on two daily round trips on ERJ

- 145, is estimated to be greater

than 79%

 Annualized projected operating profit in the market is just over $3.9 million

resulting in an operating margin of 25%

 For the purpose of this forecast, fuel was assumed to be $2.00 per gallon, including

into plane fees and taxespg. 14



## Option #2: United Airlines service to Washington Dulles:

In the event that efforts to recruit new service from Continental Airlines fall short,

Williamsport Regional Airport and its partners believe that United Airlines service to IAD is a

viable alternative. Given the short stage length to IAD, and the increased access that United

would provide via its partnership with Continental, United is projected to be profitable on

the route. Following the announced merger of United and Continental, the United brand

presence would help to drive demand on the new route and the merged network would

likely provide additional connectivity as the IAD hub continues to grow.

A forecast of IPT

- IAD route performance was completed by the airport and shows Unit ed to

be profitable in the market with 38 weekly round trips on Saab 340 turboprops.

 Load factor, based on two daily round trips on ERJ

- 145, is estimated to be greater

than 74%

 Annualized projected operating profit in the market is just over $6.9 million

resulting in an operating margin of 65%

 For the purpose of this forecast, fuel was assumed to be $2.00 per gallon, including

into plane fees and taxespg. 15



## Need for Risk Mitigation:

While each of the targeted markets outlined above are projected to be profitable, airlines

tend to be risk averse when examining new route possibilities. Uncertainty of demand in

the current economic environment and the vulnerability of new air service to fluctuations in

oil prices exacerbate the risk averse nature of the a irlines.

It is important to note that the route forecasts above we completed on a steady

- state basis,

and it is likely that revenues during the route development process will result in negative

operating margins for the carriers. The purpose of the SCASD grant dollars requested in this

proposal is to mitigate the risk for airlines initiating new service in the face of these

barriers to market entry.



## Marketing Support:

As was mentioned previously in this proposal, Williamsport Regional Airport and its

community partners have set aside a portion of matching funds ($XX,XXX) specifically for

the purpose of marketing any new service obtained with SCASD funds. In addition to funds

specifically allocated for the new service, Williamsport Regional Airport will continue to

engage in marketing and communication activities in the course of normal business.pg. 16



# GRANT ADMINISTRATION PLAN

Grant Request Summary:

Williamsport Regional Airport and its business and community partners are requesting a

Small Community Air Service Development grant in the amount of $500,000 to provide risk

mitigation funding to be used for the recruitment of service to a new airline hub as outlined

in this proposal. Grant dollars awarded to Williamsport from the SCASD program will be

matched with $ 2 00

, 000 in local community funds ($ 150

, 000 in matching funds and $ 50

, 000

in marketing funds) and approximately $ 100,000 of “in

- kind” support i n the form of fee

waivers from Williamsport Regional Airport. Total project fundin g will be approximately

$ 8 00,000

.



## Terms for Risk Mitigation Funds:

Williamsport Regional Airport proposes to use the following guidelines for a risk mitigation

program:

 Risk mitigation funds will only be available to an airline providing nonstop service to

a new hub airport

 Following the award of grant dollars, Williamsport Regional Airport will begin

negotiations with prospective air carriers

 The best air service optio n will be identified and a risk mitigation agreement will be

developed and negotiated

 Projected costs for selected service will be defined in negotiations with the targeted

carrier and outlined contractually

 Targets for overall revenue and the allocation of that revenue to the new route will

be agreed upon and a target revenue per flight will be determined

 Williamsport Regional Airport will review traffic and revenue reports for the new

service, as provided by the air carrier

 Revenue shortfalls will be offset with risk mitigation funds following a detailed

invoice from the air carrier. Williamsport Regional Airport will then invoice the DOT

for its share of mitigation funding as outlined in the agreement

 Risk mitigation agreements with any air c arrier will not exceed one year



## Term of Project:

Williamsport Regional Airport respectfully requests that it be given up to two years from the

date of grant issuance to enter any risk mitigation agreement. Airlines are scheduling well

in advance of current dat e, and to be successful, adequate time must be given to recruit

the new service and establish an extended booking window.pg. 17



## Role of Community and Business Partners:

The City of Williamsport, Lycoming County, Williamsport Regional Airport, and the

Williamsp ort/Lycoming Chamber of Commerce are partnering to give the project outlined in

this proposal the best possible chance for success. The primary role of all involved will be to

provide matching funds for awarded SCASD dollars, recruit prospective carriers, negotiate

carrier agreements, market the new service in the primary service area, and administer

total project funding.



## Project Monitoring:

In order to ensure that grand funds are being utilized in a manner that achieves the

objectives outlined in this proposal, Williamsport Regional Airport will submit quarterly

progress reports to the DOT outlining route performance. These reports will include, but

not be limited to: Load factor, average fares, O&D traffic, and segment revenue as

compared to revenue t argets.

### APPENDIX B

Page 1 of 3

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET OST

- 2010

- 0124

SUMMARY INFORMATION

All applicants mus t submit this information with their proposal , along with a completed form SF424 on

http:// www.grants.gov.

A. APPLICAN T INFORMATION: (CHECK ALL THAT APPLY)



### X Not a Consortium ⁭ Interstate Consortium ⁭ Intrastate Consortium

⁭ Community now receives EAS subsidy

X Community (or Consortium member) previously received a Small Community Grant

If previous recipient, expiration date of grant: ___ August 200 6**

_________________

** Note: previous funds were not used as they were specifically for Northwest Service and the DL/NW merger proved to be a pro blem



### B. P UBLIC 

### /P RIVATE 

### P ARTNERSHIPS 

### : (L IST ORGANIZATION NAMES 

### )

Public Private

1. Williamsport Municipal Airport Authority 

### 1. Williamsport

- Lycoming Chamber of Commerce



### 2. Lycoming County Board of Commissioners 

### 2.______________________________________

3.____________________________________ 3.______________________________________

4.________

____________________________ 4.______________________________________

5.____________________________________ 5.______________________________________

C. P ROJECT 

### P ROPOSAL 

### : (CHECK ALL THAT APPLY)



### X M arketing ⁭ Upgrade Aircraft X New Route

⁭ Per sonnel ⁭ Increase Frequency ⁭ Low Fare Service

⁭ Travel Bank ⁭ Service Restoration X Subsidy

### APPENDIX B

Page 2 of 3

⁭ Surface Transportation ⁭ Regional Service ⁭ Other (specify)

_________________ X Revenue Guarantee ⁭ Launch New Carrier

_________________

_________________ X Start Up Cost Offset ⁭ First Service

_________________

_________________ ⁭ Study ⁭ Secure Additional Carrier



### D. E XISTI NG 

### L ANDING 

### A IDS AT 

### L OCAL 

### A IRPORT:



### X Full ILS X Outer/Middle Marker X Published Instrument Approach

X Localizer ⁭ Other (specify )

E. PROJECT COSTS:

1. Federal Amount Requested: $500,000

2. State cash financial contribution : $ 0

3. Local cash financial contribution...

3a. Airport cash funds:

_____________________________

3b. Non

- Airport cash funds: $2 00,000

3c. Total local cash funds (3a. + 3b.) :

_____________________________

4. TOTAL CASH FUNDING (1. +2.+3.)

______ $7 00,000

________________

5. Local funds contributed from already

- existing

programs or projects included in line3c. amount: $ 0

6. Local funds contributed from new commitments

or new resources included in line 3c. amount : $ 0

7. Airport In

- K ind contribution:

_______ $100 ,000

________________

(amount & description) Reduced Landing fees, terminal rental and other miscellaneous services



### 8. Other In

- Kind contribution:

_____________________________

( amount & description)

9. T OTAL IN

- KIND CONTRIBUTION (7.+8.) :

_______ $100,000

_______________

10. TOTAL PROJECT COST (4.+9.)

_______ $800,000

_______________

### APPENDIX B

Page 3 of 3

F. ENPLANEMENTS:

2000 43742 2004 36134 2008 24808

2 001 40148 2005 31935 2009 20724

2002 33239 2006 28050

2003 29213 2007 26737

G. IS THIS APPLICATION SUBJECT TO REVIEW BY STATE UNDER EXECUTIVE ORDER 12372

PROCESS?

⁭ a

. This application was made available to the St ate 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.

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



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

X No ⁭ Yes (explain) _______________________________________________________________