### APPLICATIO N UNDE R SMAL L COMMUNIT Y AI R SERVIC E DEVELOPMEN T PROGRA M

DOCKE T DOT-OST-2014-013 3

SUMMAR Y INFORMATION !

Al l applicant s mus t submi t thi s Summar y Informatio n schedule , a s th e applicatio n coversheet , a complete d standar d for m SF42 4 an d th e ful l applicatio n proposa l o n www.grants.gov . Fo r you r preparatio n convenience , thi s Summar y Informatio n schedul e i s locate d a t http://www.dot.gov/policv/aviation-policv/small-conTmunitv-rural-air-service/SCASD P

A
. PROVID E TH E LEGA L SPONSO R AN D IT S DU N AN D BRADSTREE T (D&B ) DAT A UNIVERSA L
NUMBERIN G SYSTE M 

### (DUNS ) NUMBER , INCLUDIN G 

### +4 , EMPLOYE E IDENTIFICATIO N NUMBE R (EIN ) O R TA X ID
. Ente r Y o r N 

### Lega l Sponso r Name : 

### Montros e Regiona l Airpor t
Nam e o f Signator y Part y fo r Lega l Sponsor : chairman , Count y Boar d o f

Count y Commissioner s DUN S Number : 

### 076471077000 0 ~~ ~ EIN/Ta x ID : 

### 84600078 7

B
. LIS T TH E NAM E O F TH E COMMUNIT Y O R CONSORTIU M O F COMMUNITIE S APPLYING : 

### ! Montros e Count y Colorad o

2 

### . Colorad o Flight s Allianc e
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. PROVID E TH E FUL L AIRPOR T NAM E AN D 3-LETTE R IAT A AIRPOR T COD E FO R TH E APPLICANT(S ) AIRPORT(S ) (ONL Y PROVID E CODE S FO R TH E AIRPORT(S ) THA T AR E ACTUALL Y
SEEKIN G SERVICE)
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### l
. Montros e Regiona l Airport , MT J 2
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- -

Not e tha t th e Summar y Informatio n doe

s no t coun t agains t th e 20-pag e limi t ofth e SCASD

P application

.DOE S TH E AIRPOR T SEEKIN G SERVIC E HOL D A N AIRPOR T OPERATIN G CERTIFICAT E ISSUE D B Y

T H E FEDERA L AVIATIO N ADMINISTRATIO N UNDE R 1 4 CF R PAR T 139 ? (I F "NO" , PLEAS E
EXPLAI N WHETHE R TH E AIRPOR T INTEND S T O APPL Y FO R A CERTIFICAT E O R WHETHE R A N
APPLICATIO N UNDE R PAR T 13 9 I S PENDING. )
/ J Ye s D N o (explain )

D
. LIS T TH E 2-DIGI T CONGRESSIONA L DISTRIC T COD E APPLICABL E T O TH E SPONSORIN G
ORGANIZATION , AN D I F A CONSORTIUM , T O EAC H PARTICIPATIN G COMMUNITY
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. APPLICAN T INFORMATION : (CHEC K AL L THA T APPLY ) [/ ] No t a Consortiu m Q Interstat e Consortiu m Intrastat e Consortiu m | [ Communit y currentl y receive s subsidize d Essentia l Ai r Servic e [ / I Communit y (o r Consortiu m member ) previousl y receive d a Smal l Communit y Ai r Servic e Developmen t Progra m Gran t
I f previou s recipient : Provid e yea r o f grant(s) : 

### 8 -24 -0 6 thr u 8-31-0 9

. aru j 9 th e tex t ofth e gran t agreemen t section(s ) settin g fort h th e scop e o f th e gran t project :

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. PUBLIC/PRIVAT E PARTNERSHIPS : (LIS T ORGANIZATIO N NAMES )
PUBLI C PRIVAT E 

### Montros e Count y 1
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. PROJEC T PROPOSAL :
1
. GRAN T GOALS : (CHEC K AL L THA T APPLY )

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2
. FINANCIA L TOOL S T O B E USED : (CHEC K AL L THA T APPLY )

| | Marketin g (includin g Advertising) : promotio n o f th e ai r servic e t o th e publi c J~/ j Start-u p Cos t Offset : offsettin g expense s t o assis t a n ai r servic e provide r

i n settin g u p a

ne w statio n an d startin g ne w servic e (fo r example , ticke t

counte r reconfiguration )

^ | Revenu e Guarantee : a n agreemen t wit h a n ai r

servic e provide r

settin g fort h a minimu m guarantee d profi t

margin , a portio n o f

whic h i s eligibl e fo r

reimbursemen t

b y th e communit y [/ j Recruitmen t o f

Ai r Carrier : ai r

servic e developmen t

activitie s t o recrui t

ne w ai r service , includin g expense s fo r airpor t marketer s t o mee t

wit h ai r servic e provider s t o mak e th e

cas e fo r ne w ai r servic e [ | Fe e Waivers : waive r o f airpor t fees , suc h a s landin g fees , t o encourag e ne w ai r service ;
counte d a

s in-kin d contribution s onl y | | Groun d Handlin g Fee : reimbursemen t o f expense s fo r

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ai r trave l o n a n ai r

carrier , wit h define d procedure s fo r th e subsequen t

us e ofth e pledge s o r

th e deposite d funds ; counte d a s in-kin d contribution s onl y

1 "Professiona

l Services " involv e a communit y contractin

g wit h a firm t o produc e a produc t suc h a s a marketin

g plan , study , ai

r carrie r proposal , etc

.L J Othe r (explai n below )

H
. EXISTIN G LANDIN G AID S A T LOCA L AIRPORT : [7 1 Ful l IL S [/ ] Outer/Middl e Marke r [7 ] Publishe d Instrumen t Approac h ~/ \ Localize r

Q Othe r

(specify )

I
. PROJEC T COST : D O NO T ENTE R TEX T I N SHADE D ARE A Ente r Y o r N
LIN E DESCRIPTIO N S U B TOTA L TOTA L AMOUN T 1 Federa l amoun t requeste d 500,00 0 2 Stat e cas h financia l contributio n 0 Local cash financial contribution 3 a Airpor t

cas h fund s 0 3 b Non-airpor t

cas h fund s 125,00 0 3 Tota l loca l cas h fund s (3a + 3b) 

### 125P0 0 4 TOTA L CAS H FUNDIN G (1+2+3) 625,00 0 In-Kind contribution 5 a Airpor t

In-Kin d contribution* * 0 5 b Othe r

In-Kin d contribution* * 0 5 TOTA L IN-KIN D CONTRIBUTIO N (5a + 5b) 0
6 TOTA L PROJEC T COS T (4+5) 625,00 0

J
. IN-KIN D CONTRIBUTIONS* * Fo r fund s i n line s 5 a (Airpor t In-Kin d contribution ) an d 5 b (Othe r In-Kin d contribution) , pleas e describ e th e source(s ) o f fiind(s ) an d th e valu e ($ ) o f each

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. I s THI S APPLICATIO N SUBJEC T T O REVIE W B Y A N AFFECTE D STAT E UNDE R EXECUTIV E

ORDE R 1237 2 PROCESS ? | | a
. Thi s applicatio n wa s mad e availabl e t o th e Stat e unde r th e Executiv e Orde r

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. Progra m i s no t covere d b y E.O

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. I s TH E LEA D APPLICAN T O R AN Y CO-APPLICANT S DELINQUEN T O N AN Y FEDERA L DEBT ? ( I F "YES" , PROVID E EXPLANATION ) / N o Ye s (explain )

APPLICATIO N CHECKLIS T

INCLUDED ? ITE M
Ente r Y o r N For Immediate Action

Y Determin e Eligibilit y

Y Ne w Grants.go v user s mus t registe r wit h www.grants.eov

. Existin g Grants.go v user s must verify existine www.srants.sov account has not expired and the Authorized

Organization Representative (AOR) is current. For Submission bv 5:00 PM EDT on July 31, 2014

N Communitie s wit h activ e SCASD P grants : notif y DOT/X5 0 o f

inten t t o terminat e existin g gran t

i n orde r t o b e eligibl e fo r

selectio n i n FY201 4

Y Complet e Applicatio n fo r Federa l Domesti c Assistanc e (SF424 ) vi a www.erants.go v

Y Summar

y Informatio n schedul e complet e an d use d a s cove r shee t (se e Appendi x B )

Y Applicatio n o f u p t o 2 0 one-side d page

s (excludin g an y letter s fro m th e communit y o r a n ai r carrie r showin g suppor t fo r th e application) , t o include :

Y • A descriptio n ofth e community' s ai r servic e need s o r

deficiencies

.
Y A strategi c pla n fo r meetin g thos e need s unde r th e Smal l Communit y Program

.

Y • A detaile d descriptio n o f th e fundin g necessar

y fo r implementatio n o f

th e community' s project

.

N A n explanatio n o f ho w th e propose d projec t differ s fro m an y previou s project s fo r whic h th e communit y receive d SCASD P fund s (i f applicable)

.
Y Designatio n o f a lega l sponso

r responsibl e fo r

administerin g th e program
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N A motio n fo r confidentia l treatmen t

(i f applicable ) - se

e Appendi x D below

.

# G rant Proposal Under The

Small Community Air Service Development Program

For 

# Montrose Regional Airport

Docket DOT

- OST

- 2014

- 0113 DUNS #076471077 Colorado Congressional District #3Proposal under the Small Community Air Service Development Program

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# Table of Contents 1. Technical Details of Proposa l

................................ .............................. 3 Contact Information

................................ ................................ ................................ ...... 3 Legal Sponsor of Proposal

................................ ................................ ........................... 3 Community Partner

................................ ................................ ................................ ...... 3 Statement of Air Service Deficiency

................................ ................................ ............. 3 Proposal Meets Priority Selection Criteria for Grant Award

................................ .......... 5 Overview of Grant Request

................................ ................................ .......................... 6



## 2. MTJ Service Area and Air Service Deficiency

................................ ..... 8 G eographic Location & Market Population

................................ ................................ ... 8 Top 15 MTJ O&D Markets Fare Comparison

................................ ............................... 9 MTJ and Bay Area Traffic: A Proven Market

................................ .............................. 10 Loss of MTJ

- OAK Nonstop Creates Economic Impact Void for Community

.............. 11



## 3. Grant Implementation Plan

................................ ................................ 1 3 Funding and Distributio n Sources

................................ ................................ .............. 1 3 Risk Abatement Terms

................................ ................................ ............................... 1 3 Marketing the New Service

................................ ................................ ........................ 1 4 Plan for Self Sufficiency

................................ ................................ ............................. 1 5Proposal under the Small Community Air Service Development Program

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# 1. Technical Details of Proposal

Contact Information
All correspondence regarding this proposal should be referred to: Lloyd D. Arnold, C.M. Director of Aviation Montrose Regional Airport 2100 Airport Road Montrose, Colorado 81401 970

- 249

- 3433 larnold@montrosecounty.net


## Legal Sponsor of Proposal
The Montrose Regional Airport (MTJ) is the legal sponso r of this grant pro posal.


## Community Partner
Colorado Flights Alliance joins the Montrose Regional Airport in its support for this grant proposal and is the community partner responsible for the matching portion of the grant funding. The mission of Color ado Flights Alliance is to lead economic development on Colorado’s western slope through air service.


## Statement of Air Service Deficiency
The Montrose Regional Airport serves as the primary airport for a large portion of the western slope of Colorado. B eing a geographically isolated region, the airport serves as a critical economic engine that the community relies on not only for outbound air service, but also for inbound tourists which come to the area to ski and enjoy other outdoor recreational opportu nities. Tourism is a top industry in the region, and reliable scheduled air service is crucial to the economic health of the overall region.Proposal under the Small Community Air Service Development Program

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### Montrose is approximately a five hour drive to/from Denver International Airport and a six hour drive to/ from Al b uquerque International Sunport. The sheer isolation of the community underscores the necessity of scheduled air service, and this grant request epitomizes the spirit and intent of the Small Community Air Service Development Program.
Unfortunately , schedul ed air service at Montrose Regional Airport has suffered over the last several years due to airline consolidation and the changing dynamics of the US aviation industry. Scheduled departures between CY 2009 and CY 2014 have decreased by 28%, leaving fewer o ptions for travelers to get to/from the greater Montrose region, thus having a significant negative economic impact on the community.



# MTJ Scheduled Departure Comparison

CY 2014 vs. CY 2009

In addition to the decreasing level of scheduled departures a t MTJ, an additional deficiency exists in terms of fare levels compared to similar sized regional airports on the western slope of Colorado. Montrose Regional Airport’s one way average grossProposal under the Small Community Air Service Development Program

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### fares during CY 2013 were approximately 29% higher than Durango

- L a Plata County Airport (DRO) and 17% higher than Grand Junction Regional Airport (GJT). In addition to these major fare discrepancies with regional airports, Montrose Regional Airport’s fares were approximately 42% higher than the National Average gross on e way fare.


# MT J Fare Comparison with Western Slope Airports

and the National Average

CY 2013

Proposal Meets Priority Selection Criteria for Grant Award
The Montrose community believes it suffers from air service deficiencies in the areas of limited a ir service access and demonstrable higher fares than other regional airports. This grant application meets and exceeds the selection criteria put forth by the Department of Transportation in Docket DOT

- OST

- 2014

- 0113.

 As previously stated, a irfares at MTJ are higher than other regional airports in addition to being higher than the national average fo r all communities

 The community partner, Colorado Flights Alliance, will match the DOT grant request by 25% of the total with a cash contribution. No portion of the cost of the proposed project will come from airport revenues.

 A public

- private partnership has been established between the airport and Colorado Flights Alliance, whereby the facilitation of the air carrier service to the public will be accomplishe d by Colorado Flights AllianceProposal under the Small Community Air Service Development Program

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###  The new air service will provide material benefits to a broad segment of the traveling public, including outbound passengers and inbound tourism driven passengers. Both business and leisure travelers alike will greatly benefi t from the proposed project.

 The assistance will be used in a timely manner. It is fully expected that should a grant be awarded to the Montrose community that it will be utilized expeditiously.

 This grant application benefits several communities and the larger economic region, including Montrose City and County, Ouray City and County, and the resort town of Telluride where commercial air service will be lost at the local airport (TEX) as of September 16, 2014, due to operational challenges.



## Overview of Grant Request
One specific area that the airport and the community have identified as an air service deficiency is a lack of western US access to the national transportation system. As the map of CY 2014 scheduled service below indicates, the western US is lacking in access to/from Montrose Regional Airport.Proposal under the Small Community Air Service Development Program

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### The community’s grant request is for $500,000 in funding for revenue guarantee purposes to attract western US air service access, with a specific emphasis on the San Francisco Bay Area. The grant r equest will be matched by Colorado Flights Alliance with $125,000 in cash, for a total of $625,000. In addition to the revenue guarantee, a specifically targeted marketing and advertising campaign will be launched to promote this service. It is envisioned that this proposed service will be seasonal, as winter season is the peak of traffic at Montrose Regional Airport.Proposal under the Small Community Air Service Development Program

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# 2. MTJ Service Area and Air Service Deficiency Geographic Location & Market Population
Montrose Regional Airport is th e main gateway to th e Colorado western s lope, and serves a resident population of over 70,000. In addition to agriculture, the region is a major recreational destination, and a large resort industry is dependent on Montrose Regional Airport for access to and from the rest of the nation and the globe.

The local population base is located along the north/south US 50/550 corridor, bordered by Delta, Colorado in the north, and Ouray/Red Mountain Pass to the south. In addition to agriculture and recreational tourism, the reg ion has been attracting interest of light manufacturing industries. The additional air service, which this grant request canProposal under the Small Community Air Service Development Program

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### deliver, will be an enormous boost to the competitiveness of Colorado’s western s lope within the global economy

. 

## Top 15 MTJ O&D Ma rkets Fare Comparison
As has already been outlined, Montrose Regional Airport endures significantly higher fares than other regional airports on a total market level. However, a look at the top 15 MTJ markets during CY 2013 and comparing them to DRO and GJT reveals an even deeper, more pronounced chasm in fare levels for the most popular markets. 

# MTJ Top 15 O&D Markets Fare Comparison

with DRO and GJT CY 2013

A view of the top 15 markets indicates that MTJ is at a significant disadvantage when compar ed to the other regional airports. San Francisco, which this grant proposal aims to gain access to, is the #11 O&D market at MTJ during CY 2013, indicating that there is significant demand for Bay Area traffic even in the absence of nonstop flights between MTJ and SFO during CY 2013. Clearly, the fare differential is great enough forProposal under the Small Community Air Service Development Program

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### both inbound and outbound passengers to consider alternative airports in the region for their travels. A Small Community Air Service Development Program grant award will help r ecapture a portion of the passengers. Furthermore, a grant award would bring a new nonstop destination and potentially fare discipline into the MTJ market

. 

## MTJ and Bay Area Traffic: A Proven Market
During the first quarter of CY 2013, Allegiant Air flew nonstops between OAK and MTJ in order to connect the Colorado resort destination with a highly populated area with a community of interest with the greater Montrose region. When combining both Bay Area airports during CY 2013 (OAK and SFO), the combined re gion was the #4 O&D market at MTJ. 

# Top 5 MTJ O&D Markets CY 2013

The strong community of interest between the Bay Area and greater Montrose region is evident, however, Allegiant discontinued its MTJ

- OAK nonstops in CY 2014, leaving Bay Area travelers to either connect circuitously, choose an alternative airport for their travels, or not fly at all. A Small Community Air Service Development Program grant award would help regain the Bay Area service, which has already demonstrated that it is a viable ma rket.Proposal under the Small Community Air Service Development Program

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## Loss of MTJ

- OAK Nonstop Creates Economic Impact Void for Community

The loss of the nonstop flight between Montrose Regional Airport and Oakland International Airport has had a negative economic impact for the greater Montrose community. This was clearly illustrated during the winter season (Dec 2013

– March 2014) at MTJ, where the lack of nonstop OAK service had an estimated lost economic impact of over $8.5 million. This is based on inbound visitors and their spending on lodging, food and beverag e, ski lift tickets, retail, and other recreational activities. 1



### For a community which relies heavily on the tourism industry for economic vibrancy, the loss of $8.5 million in economic impact has significant implications on the residents and busine sses in the western slope of Colorado. With the aid of a Small Community Air

1 An economic multiplier of 3x is used to measure the total economic impact of each dollar as it circulates through the local economyProposal under the Small Community Air Service Development Program

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### Service Development Program grant award, this economic impact can be reignited through the installation of Bay Area nonstops for the upcoming winter season.
Additionally, Montro se County has an unemployment rate that is higher than the national average, and by extension any loss of air service or economic drivers has a more acute impact on the community than it does on most communities in the United States. As of April 2014, Mont rose County’s unemployment rate was 7.9% vs. the United States unemployment rate of 6.3%. A grant award to attract additional air service will aid a community that has seen a slower recovery from the Great Recession than the rest of the country

.Proposal under the Small Community Air Service Development Program

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# 3. Gra nt Implementation Plan Funding and Distribution Sources
As previously mentioned, Montrose Regional Airport is joined by Colorado Flights Alliance as its community partner in this grant application. It is proposed that the funding for new service is split between revenue guarantee and marketing/advertising, with the majority of the funding going towards the revenue guarantee portion

.



## Risk Abatement Terms
Montrose Regional Airport proposes to implement a risk abatement program with the following term s:

 Funding would be available to an airline providing nonstop service to a hub in the San Francisco Bay Area, including SFO and OAK.

 Upon award of grant funds, Montrose Regional Airport and its community partner will negotiate with prospective airlines. The best service proposal will be identified and a risk mitigation agreement between Montrose Regional Airport and the carrier will be negotiated.

 Montrose Regional Airport will negotiate a detailed service agreement with the carrier that is consistent w ith DOT guidelines for grant fund use.Proposal under the Small Community Air Service Development Program

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###  The costs of operating the new service will be defined in discussions with the selected carrier and outlined in a contractual manner. Industry cost data for appropriate aircraft type and stage length will help guide the airport in these discussions.

 A target for overall revenue associated with the new service and the component of that revenue that will be credited to th e new route will be agreed upon, and a targe te d revenue figure per flight will be established.

 Mon trose Regional Airport will monitor traffic and revenue reports for the new service, which will be provided by the selected carrier.

 Any revenue shortfall will be offset with risk mitigation funds upon detailed invoice fr om the selected carrier. Montrose Regional Airport, in turn, will invoice the DOT for its share of funding in the agreed upon manner.


## Marketing the New Service
Marketing and advertising will be critical to the success of the new service, and MTJ and its community partner are prepared t o work tirelessly to increase awareness in specifically targeted markets. Components of the program will include the following:

 Local print media advertising illuminating the new service.

 Electronic and social media initiatives.

 A series of presentatio ns at key civic organization s.

 Public relations events and outreach

 Consumer eventsProposal under the Small Community Air Service Development Program

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## Plan for Self Sufficiency
MTJ understands that there can be factors that will adversely affect ridership on a new route. Therefore, it will be in close liaison with the airline to quickly identify any reduction in traffic and/or revenue growth on the new service.
1) MTJ and Colorado Flights Alliance have an extensive background in recruiting seasonal service and taking quick action when indicated to assure success.
2) This pr ogram is, at its foundation, a partnership with the airline. The Airport and Community will work to identify any areas or dynamics which can enhance ridership, and will be in on

- going contact with the carrier.
3) In this regard, MTJ and Colorado Flights Alli ance have access to local, regional and airline industry data and business intelligence. This includes sophisticated programs that track passengers by market, zip code and travel segment.
These will be used to support the carrier and provide input regardi ng matters such as scheduling shifts. Importantly, this new service will be operated with airliners capable of moving travel groups and their sports equipment. Colorado Flights Alliance will assure that this portion of the travelling public is attracted to the new service.

### July 25, 2014

Brooke Chapman Associate Director Small Community Air Service Department Office of Aviation Analysis U.S. Department of Trans portation 1200 New Jersey Ave., SE Washington, DC 20590 Room W86

- 307

Dear M s
. Chapman,
On behalf of the town of Telluride , I am writing in support of the Small Community Air Service Grant application that has been submitted by the Montrose Regional Airport (MTJ ). The purpose of the airport’s application is to address air service deficiencies and increase access to the national tra nsportation system for the region. As a community that is heavily reliant on the tourism industry, air service is critical to the overall health of the region. Specifically, the San Francisco Bay Area would be an outstanding addition to the air service off ered at MTJ . T here is a strong community of interest between the two regions , and the service would generate a significant economic impact

. W e urge the Department of Transportation to give the Montrose Regional Airport’s application favorable consideratio n. Please feel free to contact me with any questions.

Sincerely,

Stuart Fraser Mayor Town of Telluride

### July 30,2014

Ms. Brooke Chapman, 

### Associate 

### Director Small 

### Community 

### Air Service Development Program U.S. Department 

### of Transportation 8th 

### Floor, Room 

### W86-307 1200 

### New Jersey 

### Avenue SE, 

### Washington 

### D.C. 20590

Dear 

### Ms. Chapman:

On 

### behalf 

### of the Montrose 

### County Commissioners 

### I want 

### to express 

### our 

### County's unwavering support 

### for the 2014 

### Small Community 

### Air Service Development Grant proposal. 

### Our organization realizes the 

### benefit and 

### importance 

### of decreasing the 

### higher than average 

### airfares 

### into our region and 

### increasing access 

### to the east coast.


### Increasing and 

### expanding service 

### will have a 

### significant impact on 

### stimulating our regional economy. 

### This grant 

### opportunity 

### will provide additional resources 

### to support 

### our continuing efforts to 

### provide a 

### national and 

### international conduit to the 

### Western Region 

### of Colorado.



### We are 

### committed to the economic 

### diversification of our 

### region and 

### expanding 

### air service provides the economic impact that 

### allows us 

### to execute 

### our 

### diversification efforts. Our 

### airport receives 

### overwhelming community and 

### regional support to mature our 

### air service 

### program and 

### your support 

## will strengthen 

### our 

### ability to that end.



### Thank you very much 

### for your consideration 

### of our grant submission, we 

### truly appreciate 

### it.



### DWlda 

## Cc: Ron Henderson, 

### BOCC Vice Chairman Gary J. 

### Ellis, Commissioner Ken 

### Norris, Interim County Manager 161 South Townsend Avenue, Montrose, CO 81401 

### David S. 

### White BOCC Chairman

r Telephone: 97 0-249-77 55 F ax: 970-249-77 

### 6l tsr.18a3