# Application U nder the Small Community
Air Service Development Program

Docket DOT

- OST

- 201 2

- 0 069



# Walla Walla Regional Airport Walla Walla, WA

Legal sponsor: Port of Walla Walla DUNS: 04

- 018

- 7924

Tax ID: 910817738 Congressional District Code: WA

- 05

Contact: Jennifer Skoglund Airport Manager Walla Walla Regional Airport 310 A Street Walla Walla, WA 99362

- 2269 Phone: 509/525

- 3100 Email: js@portwallawalla.com

# T ABLE OF 

# C ONTENTS

A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM W ALLA W ALLA R EGIONAL A IRPORT Prepared by 

### Application Highlights

........................... 1

Air Service Issue

................................ .................... 1 Strategic Plan

................................ ....................... 1 Community Cost Contribution

.............................. 1 Public

- Private Partnership

................................ ...... 1 Material Benefits

................................ .................. 1 Use of Funds in a Timely Fashion

.......................... 1



### Air Service Environment

........................ 2 Remote Airport Catchment Area

.......................... 2 Business Community

................................ ............ 3 Educational Institutions

................................ ........ 3 Tourism

................................ ................................ 4



### Air Service

– Existing/Historical

............. 5 Existing Air Service

................................ ............... 5 Historical Air Service

................................ ............. 5 Destinations, Service Providers and Traffic Levels

................................ ................. 5 Extenuating Factors that have Affected
Air Service

................................ ..................... 6 Past Air Service Development Efforts

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

### Air Service Needs and Deficiencies

....... 7 Declining Air Service

................................ ............. 7 Market Profitability a Concern

.............................. 8 Survey Results: Passenger Potential

....................... 8 

### Strategic Plan

................................ ........ 10 Project Goals

................................ ...................... 10 Public

- Private Partnership

................................ .... 10 Proposed Plan

................................ .................... 10 Marketing Objectives

................................ ... 11 Marketing Message

................................ ..... 11 Target Audience

................................ .......... 12 Marketing Plan

................................ ............ 12 Marketing Budget

................................ ....... 13 Strategic Plan Funding

................................ ........ 13 Project Continuation and Sustaina bility

............... 14 Previous Grant Recipient

- New Project and Goals

................................ ................................ . 14


### Schedul e and Monitoring

.................... 15
Critical Milestones

................................ .............. 15 Monitoring Program

................................ ........... 15 

### Appendix A Letters of Support

.......... 16A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 1 W ALLA W ALLA R EGIONAL A IRPORT 

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# 1

A PPLICATION 

# H IGHLIGHTS

T his Small Community Air Service Development Program (SCASDP) grant application for Walla Walla Regional Airport (ALW) meets the criteria of Docket
DOT

- OST

- 2012

- 0069

. The Port of Walla Walla is requesting $ 250 ,000 in federal assistance to implement a $ 309 ,000 air service initiative.



### A IR 

### S ERVICE 

### I SSUE

Because of its relatively isolated location in the far southeast corner of the state of Washington, air service is extremely important to the Walla Walla Valley

. Alaska Airlines is the sole service provider with nonstop service to Seattle . Since the peak in 2006, departures have declined by 49 percent. While available seats in the market did not decrease due to Alaska’s replacement of the 37

- seat turboprop with the 76

- seat turboprop aircraft, Alaska’s decisio n to remove two departures per week during the summer has led to a decrease in seats in 2012 in a market that is already at minimum levels of
air service.

In April 2012, members of the public

- private partnership met with Alaska Airlines representatives to discuss ALW ’s market performance. Alaska Airlines indicated that poor load factor performance and increasing costs have led to the Walla Walla market being unprofitable.



### S TRATEGIC 

### P LAN

Immediate action is needed to increase load factors and bring Alaska Airlines back to profitability in the Walla
Walla market

. Without immediate action the Walla Walla Valley is in danger of losing its only access to the national air transportation system.

The Strategic Plan to increase Alaska Airlines’ load factors is to implement a comprehensive, two

- year marketing campaign to increase awareness of the convenience and availability of service at ALW

. Alaska Airlines supports the Strategic Plan outlined herein and has provided a letter of support for the Port of Walla Walla’s application ( Appendix A ).



### C OMMUNITY 

### C OST 

### C ONTRIBUTION

To support this air service initiative, non

- airport revenue

sources will fund 17 percent of the proposed $ 309 ,000 Strategic Plan. This is a strong commitment by the Walla Walla Valley to support Alaska Airlines

.



### P UBLIC


### - P RIVATE 

### P ARTNERSHIP

The Port of Walla Wa ll a has partnered with the Walla Walla Valley Wine Alliance, Walla Walla Valley Chamber of Commerce and Tourism Walla Walla for purposes of
air service retention and development

. This is not a new partnership. This public

- private partnership has worked together successfully f or many years.



### M ATERIAL 

### B ENEFITS

Air service in the Walla Walla Valley benefit s a remote population of over 73,000 . The Walla Walla Valley includes a vibrant business element, h igher educational institutions

, and a thriving agricultural community as well as a rapidly growing tourism market

.



### U SE OF 

### F UNDS IN A 

### T IMELY 

### F ASHION

The public

- private partnership and the local business community fully support this plan and have the ability to implement this project as proposed. The public

private partnership has a solid schedule and strategic plan to ensure timely use of the funds. The partnership is ready to kick

- off the Strategic Plan as soon as grant funds are awarde d.

This section addresses:



### • Project goals



### • Description of the Strategic Plan



### • Highlights of the grant applicationA PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 2 W ALLA W ALLA R EGIONAL A IRPORT 

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A IR 

# S ERVICE 

# E NVIRONMENT

The Walla Walla Valley is a remote region with few air service options. Air service is critical to this community. This section shows the broad segment of the traveling public, including businesses, educational institutions and other enterprises that benefit from l ocal air service

.



### R EMOTE 

### A IRPORT 

### C ATCHMENT 

### A REA

Air service improvements in the Walla Walla Valley will have far reaching benefits to a population that is secluded from major population centers. The air service improvements at ALW would benefit a populati on in the airport catchment area exceeding 73,000

. ALW ’s catchment area (identified in blue in Exhibit 2 .1 ) includes Walla Walla County, western Columbia County, and a portion of Oregon’s Umatilla County. In addition to the primary catchment area, air serv ice improvements at ALW would benefit air travelers in the surrounding communities. Within a 50

- mile radius the population increases to over 280,000. While the Walla Walla Valley is located near several airports including Pasco and Pullman in Washington

, Lewiston in Idaho, and Pendleton in Oregon, all of the airports are non

- hub or smaller offering limited air service options. An estimated 30 percent of air travelers in the Walla Walla Valley are driving to Pasco ’s Tri

- Cities Airport to access air service. Although approximately 50 miles to the northwest of Walla Walla, the 60

- minute drive is an impediment to economic development in the Walla Walla Valley

.

This section addresses: Description of the Walla Walla Valley in relation to
air service to demonstrate the benefit of the Strategic Plan to a broad segment of the traveling public.

EXHIBIT 2.1 AIRPORT CATCHMENT AREA

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# E NVIRONMENT

A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 3 W ALLA W ALLA R EGIONAL A IRPORT The closest small

- hub airport is Spokane , a 180

- mile or almost three

- hour drive north. Portland is the closest medium hub airport at almost 250 miles west, and Seattle is the closest large hub airport at almost 300 miles northwest. Drive time to Seattle/Tacoma International Airport can exceed fi ve hours. This option is unacceptable to Walla Walla Valley business travelers and negativel y influences the local economy

. The significant drive distances make air service at the local airport highly valued.



### B USINESS 

### C OMMUNITY

The region served by ALW has a multifaceted economy with several key industries driving the need for air service. The Walla Walla Valley is the hub for medical, professional, and business services for southeastern Washington and northeastern Oregon.

Numerous companies utilize W alla Walla Valley's resources to compete on a global scale. Industry leaders include Nelson Irrigation, a manufacturer of agricultural and turf irrigation equipment, and Martin Archery, a maker of leading archery equipment. Key Technology, producer of auto mated food

- processing equipment, is a publically traded business with a large international

presence . Divisions of IBP, a meat

- packing company, and Boise Paper Solutions also utilize the area for manufacturing operations.

Agriculture is big business for t he Walla Walla Valley. Today, Walla Walla County has about 750 farms of which over 200 exceed 1,000 acres in size. Grape vineyards and wineries comprise an important and growing industry in the Valley. There are more than 100 wineries and multiple vineyard s in the area. According to a recent study in April 2012 conducted by the Stonebridge Research Group for the Washington State Wine Commission, the total economic impact of the wine industry in Walla Walla County is estimated to be over $500 million annuall y

. Local wineries and vineyards formed t he Walla Walla Valley Wine Alliance , one of the private partners in the public

- private partnership. The Alliance builds brand equity as the leading resource for consumers, media, and trade for knowledge of, and

acces s to the vineyards and wineries of the Walla Walla Valley.

The Walla Walla Valley is also home to 10 financial institutions, including Washington State’s first commercial bank and its oldest savings and loan association.



### E DUCATIONAL 

### I NSTITUTIONS

Three hi gh er education institutions are located in the Walla Wall a Valley: Walla Walla Community College, Whitman Colleg e and Walla Walla University

. Walla Walla Community College has rapidly grown to more than 13,000 students annually . This public, fully

accredit ed two

- year college provides a comprehensive educational program for students of all ages

.

Whitman College is an independent, co

- educational,

non

- sectarian residential liberal arts and sciences undergraduate college. Whitman has been cited as one of the n ation’s top liberal arts and sciences colleges by numerous national publications. Whitman College’s student body , approximately 1,475 students, represent
45 states and 3 0 countries.

In nearby College Place, Walla Walla University is a fully accredited private university affiliated with the Seventh

Day Adventist Church offering over 100 areas of study in liberal arts, professional, and technical programs

. More than 1,800 students of divers e backgrounds attend the school

.

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# E NVIRONMENT

A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 4 W ALLA W ALLA R EGIONAL A IRPORT 

### T OURISM

Inbound ALW flights hav e been bolstered in recent years by significant increases in tourist visits. A clear indication of this positive tourism trend is the 12 percent increase in hotel occupancy in 2011 over the preceding year. While multiple factors have contributed to this tr end, widespread media coverage of the many virtues of the Walla Walla wine industry and the various activities offered in the Walla Walla Valley have been key drivers.

Recent noteworthy coverage of Walla Walla has included being selected as the “Friendliest Small Town in America” by Rand McNally and USA Today in the summer of 2011 and being chosen as the “Best Small Town for Food” by Dailymeal.com in the first quarter of 2012. In March 2012, Walla Walla was featured in the Seattle Times NW Traveler section (March 4, 2012), and a just released article titled “T he next Big Wine Country” in Sunset Magazine (May 2012) labeled Walla Walla as the “cultural vortex of Eastern Washington.” These articles were picked up in regional publications across the US from Montana to New Mexico to Illinois resulting in increased i nterest by travelers from distant destinations. These articles were picked up in regional publications across the US from Montana to New Mexico to Illinois resulting in increased interest by travelers f rom distant destinations.

Walla Walla wines have also continued to receive phenomenal acclaim as the shining star of the Washington wine industry. While Walla Walla wineries represent less than 17 percent of Washington’s total operating wineries, they garnered 51 of the top 100 wines in Washington State in a recent article by wine critic Sean Sullivan.

Walla Walla tourism is expected to continue to grow at a rapid pace, with a new links golf course, Wine Valley Golf Club, which has been recognized as the number two course in Washington State ; a new widely

re cognized performing arts theatre (Power House Theatre); and, the emergence of several new first class restaurants. 

### W ALLA 

### W ALLA 

### V ALLEY


### A CCOLADES 

### :

• 2011 Friendliest Small Town in
America

, Rand McNally and
USA Today

• 2012 Best Small Town for Food

, Dailymeal.com

• 2012 (March 4) F eatured in the NW Traveler section, Seattle Times

• 2012 (May) article tit led “The next Big Wine Country” labeled Walla Walla as the “cultur al vortex of Eastern Washington ”

, Sunset Magazine

• 2012 51 Walla Walla Valley wines listed as the to p 100 wines in Washington State, Sean SullivanA PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 5 W ALLA W ALLA R EGIONAL A IRPORT 

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# –
E XISTING 

# /H ISTORICAL

T his section provides an overview of existing air service. Carriers providing service, service frequency, nonstop destinations offered , and equipment types are inclu ded in the discussion

. A summary of historical air service is also included with destinations, traffic levels, service providers, and an overview of extenuating factors that have affected air service. A description of air service development efforts conclu des the section.



### E XISTING 

### A IR 

### S ERVICE

ALW is served by Alaska Airlines (operated by Horizon
Air ) with nonstop service to Seattle

- Tacoma International Airport

. Alaska uses the 76

- seat Bombardier Q400 aircraft to provide service. ALW had 11 weekly departures and 836 available seats in June 2012 ( Table 3.1 ).

TABLE 3 .1 EXISTING AIR SERVICE

NONSTOP DESTINATION MARKETING CARRIER AIRCRAFT WEEKLY DEPART

URES WEEKLY SEATS Seattle, WA (SEA) Alaska Airlines Bombardier Q400 11 836

Total 11 836
Source: Diio Mi

, June 2012

From January through May 2012, the Airport had an average of 13 to 14 weekly departures; however, Alaska alerted the Airport that due to poor profitability, two flights per week would be

In September , Alaska dropped during the summer

. plans on reinstating the two flights per week and returning to a total of 13 weekly departures.



### H I STORICAL 

### A IR 

### S ERVICE

Over the past 10 years, Alaska/ Horizon and Big Sky Airlines have served ALW . By far, the most important service for the community has been the service to Seattle/Tacoma International Airport. This subsection summarizes ALW ’s air service history including: destinations, traffic levels, and service providers. Extenuating factors th at have affected air service over time are also reviewed.



### Destinations, Service Provider s and
Traffic L evels

Exhibit 3 .1 provides a summary of annual departures, seats and onboard passengers from 2003 throu gh 2011.

EXHIBIT 3.1 DEPARTURES , SEATS AND PASS ENGERS

Source: Diio Mi 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

0 200 400 600 800 1,000 1,200 1,400 1,600200320042005200620072008200920102011Onboard passengers/eatsDepartures

Calendar year Departures Onboards Seats This section addresses:



### • Description of existing air service



### • Synopsis of historical air service



### • Description of air service development efforts

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# S ERVICE 

# – E XISTING 

# /H ISTORICAL

A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 6 W ALLA W ALLA R EGIONAL A IRPORT Since 2003, onboard passengers have been on the rise with the exception of the peak in 2009 when available seats spiked. Overall onboard passengers have increased 23 percent since 2003.

As shown in Table 3.2 , d epartures peaked in 20 06 and have since declined by 47 percent. The decline in departures was in large part due to the replacement of the 37

- seat Bombardier Q200 with the 76

- seat Bombardier Q400 in October 2008. Shortly after Alaska began service with the larger aircraft, departures were decreased from three to two daily departures to Seattle with tag service with the other trip over Pasco. In 2010 the tag was removed and ALW was left with just two daily roundtrips with the Bombardier Q400

. The reduction in departures was c ompounded when Big Sky Airlines left the market in 2007.

Total available seats remain higher than the 2004 to 2008 period reflecting the use of the larger turboprop aircraft; however, seats have declined from 2011 to
2012 by eight percent with the reducti on in service scheduled for June through August 2012.



### Extenuating Factors that have A ffected

A ir S ervice

ALW serves a catchment area population exceeding 73,000 in the far southeast corner of the state of Washington. As mentioned previously , the airport s at Seattle, Portland, and Spokane offer a wide array of service, but they do not attract local air travelers due to the long drive distances. The presence of Pasco’s Tri

Cities Airport approximately 53 miles distant is a key factor affecting air service at ALW

, but it is still an hour or more drive for most of the catchment area . The second factor impacting local air service is the limited population base of the catchment area. Though the catchment area generates substantial numbers of air travelers, its size limits service in multiple directions.

While catchment area traffic volumes are modest

, the primary problem is the lack of an airline serving the Pacific Northwest with appropriate size aircraft to serve the market. Alaska Airlines does not have 50

- seat regional jets in their fleet making 76

- seat turboprop the ir primary operational aircraft . With this reality the Walla Walla Valley must market aggressively and make the larger aircraft economically viable.



### P AST 

### A IR 

### S ERVICE 

### D EVELOPMENT 

### E FFORTS

In the last three years, the public

- private partnership (identified on page 1 0 ) has been actively involved in air service development and preserving current air service. The public

- private partnership has maintained an open working relationshi p with Alaska Airlines meeting regularly to discuss service performance. A meeting with Alaska in April 2012 was the catalyst behind the Port of Walla Walla submitting this grant application. Other efforts include d a travel survey conducted in April 2012 ( described in detail on page s 8 and 9 ) , business outreach meetings, a “myth buster” marketing campaign and the “ship wine free” program by the Walla Walla Valley Wine Alliance.

2004 2005 2006 2007 2008 2009 2010 2011 2012 Dept 180 78 Seats 3,420 1,482 Dept 361 5 Seats 26,958 380 Dept 57 Seats 2,109 Dept 1,221 1,037 1,032 1,036 1,070 676 677 690 637 Seats 45,177 38,369 38,184 38,332 46,028 50,472 51,452 52,440 48,412 1,278 1,037 1,212 1,114 1,070 1,037 682 690 637 47,286 38,369 41,604 39,814 46,028 77,430 51,832 52,440 48,412 Annual seats Seattle, WA (SEA) Alaska

Source: Diio Mi Big Sky

Alaska

Annual departures Boise, ID (BOI)

Pendleton, OR (PDT) Pasco, WA (PSC) Alaska TABLE 3.2 HISTORICAL HUB DESTINATIONS AND SERVICE PROVIDERS
SCHEDULED ANNUAL DEPARTURES/SEATS HUB AIRLINE ITEMA PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 7 W ALLA W ALLA R EGIONAL A IRPORT 

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# S ERVICE 

# N EEDS AND


# D EFICIENCIES

T he Air Service Needs and Deficiencies section identifies the impetus behind this SCASDP grant application. This section demonstrates the critical need for the Walla Walla Valley to take action to preserve the highly valued air service in the community

.



### D ECLINING 

### A IR 

### S ERVICE

For many years the Walla Walla Valley has had Alaska Airlines/Horizon Air nonstop service to Seattle

- Tacoma International Airport. When Horizon changed their fleet from the 37

- seat Bombardier Q200 turboprop aircraft to the 76

- seat Bomb ardier Q400 aircraft small communities across the Northwest were impacted. While the larger aircraft provided more capacity per trip, market sizes necessitated the reduction in frequency. Where ALW once had as many as five daily roundtrips per day, ALW now has only one or two roundtrips per day ( Table 4.1 )

.

The reduced departures have deteriorated the quality of air service provided at ALW . When Alaska/Horizon reduced frequency to two roundtrips per day in 2009 the community absorbed the loss of frequency although it impacted local businesses significantly. The further reduction from two roundtrips to one on certain days of the week exacerbates the problem and will cause more air travelers from the Walla Walla Valley to make the
minimum 180

- mile drive to ac cess a small hub airport
or 50

- plus mile drive to Pasco where air service options are also limited.

With the use of the larger turboprop aircraft, available seats in the market were less impacted. However, with the recent reduction from two roundtrips t o one roundtrip per day, available seats are scheduled to decline by five percent. While the seat loss is of limited impact, the 15 percent weekly frequency loss seriously impairs the convenience of local air service. In a market with such limited
air serv ice, any reductions seriously impede the
communi ty’s access to the national air transportation system. This secti on addresses: Description of the Walla Walla Valley’s air service needs and deficiencies

.

MON TUE WED THU FRI SAT SUN
2000 5 5 5 5 5 4 5 34 1,258 37
2001 4 4 4 4 4 4 4 28 1,036 37
2002 4 4 4 4 4 4 4 28 1,036 37
2003 4 4 4 4 4 4 4 28 1,036 37
2004 4 4 4 4 4 4 4 28 1,036 37
2005 3 3 3 3 3 2 3 20 740 37
2006 3 3 3 3 3 2 3 20 740 37
2007 3 3 3 3 3 2 3 20 740 37
2008 3 3 3 3 3 2 3 20 740 37
2009 2 2 2 2 2 1 2 13 962 74
2010 2 2 2 2 2 1 2 13 988 76
2011 2 2 2 2 2 1 2 13 988 76
2012 2 1 1 2 2 1 2 11 836 76 TABLE 4.1 NONSTOP DAILY FLIGHTS ALW-SEA

Source: Diio Mi AVG FLIGHTS PER DAY - JULY CALENDAR

YEAR FLIGHTS/ WEEK SEATS/ WEEK SEATS/ DEPT

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# D EFICIENCIES

A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 8 W ALLA W ALLA R EGIONAL A IRPORT 

### M ARKET 

### P ROFITABILITY A 

### C ONCERN

The recent reduction from two daily roundtrips to one on two days of the week during the summer was a result of Alaska’s assessment of the ALW market performance in 2011

. While ALW ’s passengers and associated load factors had significant increases in 2011 over 2010 (inbound load factor of 65 percent versus 55 percent and outbound 65 percent versus 61 percent), total s fell slightly short of their all

- time highs in 2009. Load factor year

- to

- date percentages for the first three months of 2012 continue to increase over the same period in the preceding two years but are still lower than Alaska’s target for the Walla Walla market.

Alaska has indicated that t he performance of the ALW

Seattle market has been weak. Table 4.2 provide s the average load factor for calendar year 2011 for Alaska Airlines’ non

- hub markets with nonstop service to Seattle. ALW had one of the lowest load factors and was significantly below the 75 percent average.

Alaska has indicated that at these load factors the market is no longer profitable, the result of worsening traffic and cost pressures over the past couple of years. Review of specific day

- of

- week performance metrics indicated that load factors failed to break 60 percent and profit margins were over five points lower than the market average on Tuesdays and Wednesdays in summer 2011 leading to the reduction from two

rou ndtrips to one in 2012.

While day

- of

- week adjustments are common across Alaska’s network and are used to a lign capacity with demand

, the Walla Walla Valley is at risk of losing Alaska’s service unless the market returns

to profitability. The public

- private partnership ardently believes that positive tourism trends and assorte d outbound travel opportunities, when combined with a strong local marketing effort as outlined in the Strategic Plan

, will provide the growth in passenger s that Alaska needs to be profitable

. For this to occur, the consistent convenience of at least 13 weekly roundtrips is needed.



### S URVEY 

### R ESULTS 

### : P ASSENGER 

### P OTENTIAL

In April 2012 a survey was conducted of Walla Walla Valley based business travelers to ascertain their tr avel behaviors, needs and preferences. The survey was delivered by email to members of the Walla Walla Valley Chamber of Commerce and the Walla Walla Valley Wine Alliance, two participants in the public

- private partnership. Since the survey was not deliver ed to a random sample of businesspeople and the respondents were self

- selected, the results are not statistically valid with any reliable degree of confidence (plus or minus five percent). However, the survey provides an indication of the travel habits of Walla Walla Valley business travelers. TABLE 4.2 AVERAGE LOAD FACTOR IN ALASKA AIRLINES' NON

- HUB MARKETS TO SEATTLE ALASKA NONSTOP SEA MARKET LOAD FACTOR Mammoth Lakes, CA 59 Arcata, CA 63 Walla Walla, WA 63 Helena, MT 64 Wenatchee, WA 65

Sun Valley, ID 65 Lewiston, ID 66 Yakima, WA 67 Great Falls, MT 68 Pullman, WA 68 Redmond, OR 69

Pasco, WA 71 Redding, CA 78 Missoula, MT 80 Medford, OR 83 Santa Rosa, CA 85 Average Non

- Hub Markets 75 Source: Diio Mi, CY 2011

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# N EEDS AND 

# D EFICIENCIES

A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 9 W ALLA W ALLA R EGIONAL A IRPORT The intent of the survey was to identify opportunities which may exist for increasing overall use of ALW

. In total, 296 people responded to the survey, including 40 winery respondents. The following provides a summa ry of some of the survey findings:

• On average, respondents fly 7.4 times per year. Winery representatives flew more frequently, 9.3 times, versus non

- winery respondents, 7.1 times per year.

• Seattle was the overwhelming majority top final trip destination s elected (65 percent).

• Respondents used ALW for 65 percent of their trips indicating that 35 percent of travelers are using alternate airports.

• Assuming flight schedules were identical, the preferred airline of choice for Walla Walla Valley businesspeople w as Alaska Airlines (84 percent). The percentage was higher for winery respondents at 95 percent.

• ALW was the preferred airport for 90 percent of total respondents. Winery respondents prefer ALW 97 percent.

Based on the results of the Walla Walla Valley business traveler survey, it is clear that although ALW is overwhelmingly the preferred airport for Walla Walla Valley businesspeople, nearly one

- third still fly out of Pasco primarily because of flight schedules and options.

While it is not surprising that Seattle rank ed the highest among the final trip destinations for Walla Walla Valley business flyers overall, it was surprising to find that Seattle also ranks high for Walla Walla Valley based flyers using Pasco’s Tri

- Cities Airport. For those flyers who said they flew at least 90 percent of their flights out of ALW , more than three

- quarters (75 percent ) listed Seattle among their top three destinations. In comparison, more than two out of five (4 3 percent ) of those who said they flew at least 90 perce nt of their flights out of Pasco also reported Seattle among their top final destinations.

Clearly, this statistic indicates that there are still a number of Walla Walla Valley business travelers choosing to fly out of Pasco even though they can reach th eir final destination (i.e. Seattle) by flying out of
ALW

. This finding suggests that there is potential to increase the number of passengers flying out of

ALW by advertising the benefits of flying local

and/or providing incentives to do so.

The Strategic Plan proposed herein will create more awareness of Alaska’s service in the Walla Walla Valley thereby increasing ridership and returning Alaska to profitability on the ALW

- Seattle route.A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 10 W ALLA W ALLA R EGIONAL A IRPORT 

# S E CTI ON 

# 5

S TRATEGIC 

# P LAN

T he Strategic Plan proposed by the Port of Walla Walla will achieve the community’s goals and help to alleviate the air service needs and deficiencies of this community. This section provides a detailed description of the goals of the project and a plan for attaining those goals. This section also identifies the legal sponsor responsible for administering the program and the public

- private partnership that has been formed to actively participate in implementing the proposed project. A detailed description of the funding necessary for implementation of the Strategic Plan, including federal and non

- federal contributions, is included.



### P ROJECT 

### G OALS

The project goa l is to increase enplanements at ALW to return Alaska Airlines’ Seattle service to profitability and ensure the Walla Walla Valley’s continued access to the national air transportation system.



### P UBLIC


### - P RIVATE 

### P ARTNERSHIP

The Port of Walla Walla is the owner/sponsor of ALW

. For the purpose of this appli cation, the Port of Walla Walla, Walla Walla Valley Wine Alliance, Tourism Walla Walla and the Walla Walla Valley Chamber of
Commerce have formed a public

- private partnership (refer to community support letter s in Appendix A ). Collectively, this partnership is committed to comp leting the Action Plan outlined herein.

All partners in the public

- private partnership will be fully involved in the execution of the Strategic Plan ( Table
5 .1 ). The Port of Walla Walla will execute all federal grant offers and process all associated reimbursement requests. The Walla Walla Valley Wine Alliance will coordinate the development and administration of the advertising and promotion program. T ourism Walla Walla and the Walla Walla Valley Chamber of Commerce will assist the Alliance with the marketing campaign. In addition, the Walla Walla Valley Chamber of Commerce and Port of Walla Walla will generate support from Walla Walla Valley’s business community.

TABLE 5.1 PUBLIC

- PRIVATE PARTNER ROLES PUBLIC

- PRIVATE PARTNER ROLE

Port of Walla Walla/ Walla Walla Regional Airport Grant administration ; Generate support from Walla Walla’s business community Walla Walla Valley

Wine Alliance Develop and administer the marketing campaign
Tourism Walla Walla Assist with the marketing campaign

Walla Walla Valley Chamber of Commerce Generate support from Walla Walla's business community; Assist with the marketing campaign



### P ROPOSED 

### P LAN

The Port of Walla Walla and other Walla Walla Valley representatives meet regularly with Alaska to discuss
ALW ’s market performance. In April 2012, community representatives met with Alaska

, and Alaska indicated that efforts must be made to return the mark et to profitability. T he community has taken several immediate actions in response. First, the Port of Walla Walla is waiving a portion of the terminal building rent, landing fees , and the ARFF reimbursement from July

This section addresses:



### • A Strategic Plan for meeting Walla Walla

Valley’s air service needs and deficiencies



### • Previous grant recipient with new project

and goals



### • Description of the public

- private partnership



### • Designation of a legal sponsor



### • Funding necessary for implementation of the

Strategic Plan

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A PPLICATION U NDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM Page 11 W ALLA W ALLA R EGIONAL A IRPORT through December 2012 to reduce Alaska ’s operating costs in the Walla Walla market. The fee waivers will save Alaska an estimated $ 60,630 through the remainder of 2012. The Port is also considering partial fee waivers totaling $121,260 in 2013.

While the reduction in operating costs will assist in returning Alaska to profitability, it is not a long

- term solution. The public

- private partnership believes that a comprehensive, two

- year marketing campaign will increase ridership to the level that wil l meet Alaska’s load factor and profitability targets. The purpose of the "fly Walla Walla" marketing campaign is to ensure continued passenger growth o n inbound and outbound
ALW flights.

Alaska Airlines fully supports the proposed plan.

Alaska’s letter of support is included in Appendix A.



### Marketing Objective s

For Alaska Airlines to meet their profitability targets, they have indicated that an 80 percent average load factor is desired. An 80 percent load factor with 76

- seat aircraft and 13 weekly depart ures (post

- August 2012 frequency) requires approximately 82,200 annual origin and destination passengers annually or 113 passengers daily each way. With 64,129 ALW passengers in calendar year 2011, an increase of 18,073 passengers or about 13 passengers per flight is required.

To accomplish this passenger increase, the marketing campaign has two objectives:
1. I ncrease the number of passengers originating out of ALW
2. I ncrease the number of passengers flying in to
ALW who originate elsewhere



### Marketing Message

The survey results (described on pages 8 to 9 ) showed that the top perceived advantages of flying out of ALW

are all convenience related ( e.g. r educed travel to the airport, l e ss waiting at the airport, and f ree parking). However, r ecent formal and informal research has shown that the lack of air travel flight options to and from ALW are a major deterrent to the use of ALW and frequency of travel

.

A survey conducted in 2008 by Tourism Walla Walla revealed that only nine percent of travelers coming to Walla Walla travelled by air. Likewise, preliminary results from a survey currently being conducted by the Walla Walla Valley Wine Alliance is showing that nearly one

quarter of vi sitors to Walla Walla reported poor flight connections as an obstac le to visiting the Walla Walla Valley more frequently.

The public

- private partnership believes that one of the reasons that travelers are using alternate airports is due to traveler perception of poor flight options at ALW

. Often when travelers perceive that they cannot get a flight out of ALW that meets their schedule needs, they habitually look to Pasco for air travel versus investigating options at the local airport

. Service failure and continued drive diversion often re sult from a lack of

awareness and the advantages of available air service at the local airport.

The primary marketing message of t he broad

- based advertising and promotion program will be to emphasize the benefits and convenience of using Alaska Airlines at ALW

.

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### Target Audience

The marketing campaign will target both inbound and outbound air travelers to the Walla Walla Valley. The primary audience is air travelers that are:
1. Convenience driven
2. Time sensitive
3. Less price sensitive
4. Frequent air travelers
5. Ves ted in supporting the local economy

Overall, Alaska’s service at ALW holds the most benefit for this group.



### Marketing Plan

The marketing plan has b een organized according to outbound (originating in Walla Walla) and inbound (originating outside of Walla Walla) travelers and marketing strategies are identified for each group

.

OUTBOUND TRAVELERS

Strategy 1

– Create incentives targeted at Walla Walla Valley wine industry flyers and area businesses

. Each of these incentives will be considered as part of the overall campaign.

• Provide Alaska Airlines VIP Lounge passes to one individua l from each Walla Walla win ery

.

• Provide double frequent flyer miles for winery representatives flying out of ALW

.

• Provide a 10 percent airline ticket discount for Wal la Walla winery representatives and other Walla Walla Valley businesses

.

Strategy 2

– Increase the exposure of the A laska Airlines brand in Walla Walla through community involvement and event marketing.

• Work with Alaska Airlines to become a major sponsor of one or several of the following tourism events in the Walla Walla V alley in 2013:

- Vintage Walla Walla in June 2 013 ( Walla Walla Valley Wine Alliance) - Walla Walla Balloon Stampede in May 2013 ( Walla Walla Valley Chamber of Commerce)

- February is for Foodies in February 2013 (Hotel/Lodging Association)

• Work with Alaska Airlines to b ecome a major
sponsor of the Wal la Walla Food Bank fundraiser during the fourth quarter 2012

.

• The public

- private partnership will complement this strategy with promotion/education efforts focused on area service clubs (Lions, Rotary, etc.) and business organizations.

Strategy 3

– Aggressively promote ALW as the airport of choice within the Walla Walla Valley.

• Members of the public

- private partnership will publicly encourage use of ALW and Alaska Airlines during all public speeches and media contacts.

• The Port of Walla Walla will continue its local advertising campaign promoting use of ALW

.

• The public

- private partnership will create ongoing campaigns to promote Alaska Airlines and ALW to their membership via newsletter articles and mentions, e

- blasts, s ocial media, and W eb site display advertising.

Strategy 4

– Create a program to formalize the Walla Walla Valley resident’s commitment to maintaining commercial air service at ALW

.

• T he d evelop ment of an Airline Travel Bank ® in th e Walla Walla Valley for A laska Airlines will be considered.

INBOUND TRAVELERS

Strategy 1

– Conduct collaborative quarterly inbound travel promotions.

• W ork with Alaska Airlines to create a traveler incentive package . The traveler incentive package may include but is not limited to :

- Discounted airline ticket s

- Certificates for local Walla Walla restaurant s , lodging, and/or wineries

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– Create regional ( e.g. Yakima, Tri

- Cities and ALW ) inbound flight offerings to encourage travel to the Washington Wine Country.

• Create a partnership between Alaska A irlines, Tourism Walla Walla, the Tri

- Cities Convention and Visitors Bureau (CVB), the Yakima CVB, the Walla Walla Valley Wine Alliance, and Enterprise Car Rental to provide

t ourists the option of flying in to and out of one of three regional airports ( i.e. Yakima, Pasco, and ALW ) and using an Enterprise ren tal car to travel while in wine country.

Strategy 3

– Promote Alaska Airlines as the travel option of choice from Seattle (and other markets) to the Walla Walla Vall ey

.

• C reate a targeted marketing campaign including

r adio, print, and other advertising in the Seattle metropolitan area

.



### Marketing Budget

The total budget for the marketing campaign including development and implementation is $300,000 over a
two

- year period. Table 5 .2 provides the preliminary marketing budget. The budget allocates $150,000 to each year of the marketing campaign. Components include: advertising, public relations, and promotional incentives for both in

- market and out

- of

market promotions. 

### S TRATEGIC 

### P LAN 

### F UNDING

The public

- private partnership is requesting US Department of Transportation (DOT) assistance in funding 81 percent, or $ 25 0,000, of the Strategic Plan. The remaining cash funds for the marketing campaign will b e p rovided by non

- airport sources. Airport revenue will fund the annual meeting with Alaska Airlines as well as in

- kind program administration.

Table 5. 3 provides the Strategic Plan budget by element and sources of funding. The Ai rport and community will fund 19 percent of the total proposed air service program. Year 1 Year 2
Outdoor $7,500 $7,500

Print $9,000 $9,000 Radio (Seattle) $60,000 $60,000
Web Banners & Facebook Ads (Portland/Seattle) $13,500 $13,500

$90,000 $90,000 $1,000 $1,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $10,000 $10,000 $25,000 $25,000 $25,000 $25,000 $50,000 $50,000 $150,000 $150,000 Total Marketing Campaign Component

Out of Market (Western Region) Out of Market (Major Destinations)
Subtotal
Outbound Travel Incentives
Inbound Travel Incentives
Subtotal TABLE 5.2 MARKETING CAMPAIGN PRELIMINARY BUDGET Budget

Advertising

Public Relations Out of Market In-Market

Subtotal
In-Market

Promotional Incentives Out of Market (Portland/Seattle)

US DOT
CASH CASH IN-KIND CASH IN-KIND Marketing Campaign $250,000 $0 $0 $50,000 $0 $300,000 Program Administration $0 $1,000 $5,000 $0 $3,000 $9,000
Total $250,000 $1,000 $5,000 $50,000 $3,000 $309,000 Percent of total project 81% 0% 2% 16% 1% 100%
Percent of cash contribution 83% 0% N/A 17% N/A 100% TABLE 5.3 STRATEGIC PLAN BUDGET

DESCRIPTION FUNDING SOURCE

TOTAL AIRPORT NON-AIRPORT

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### P ROJECT 

### C ONTINUATION AND 

### S USTAINABILITY

The comprehensive, two

- year marketing campaign is anticipated to generate increased ridership at ALW

. During the two

- year campaign, the public

- private
p artnership plans to meet with Alaska Airlines annually to assess the effectiveness of the program. If Alaska indicates that the program has not achieved the desired average load factor and profitability targets , the public

private partnership will consider funding further marketing efforts . In addition, the Port of Walla Walla
will consider the waive r of additional airport fees. Other programs to increase ridership and awareness in the community will also be considered. The public

- private partnership is committed to makin g Alaska Airlines’
service self

- sustaining.



### P REVIOUS 

### G RANT 

### R ECIPIENT


### - N EW 

### P ROJECT

AND 

### G OALS

In 200 4 , the US DOT awarded the Port of Walla Walla a SCASDP grant. The 2004 grant ’s goal was to expand Horizon Air’s schedule coverage bet ween ALW and Seattle/Tacoma International Airport to capture ad ditional connections at Seattle . The plan was to change the schedule to depart ALW earlier in the morning and return from Seattle later in the evening.

The US DOT ’s portion of the project bud get, $ 250,000

, included partial funding of the advertising/promotion program to support the schedule change ($50,000) and full funding of the crew cost offset ($200,000). The primary need for US DOT funding was to compensate Horizon Air for all added crew costs for a 12

- month period.

The prior application’s goals were very specific with changing Horizon Air’s schedule. The goal of this application is to increase ridership on the existing service with no changes to the service required. While both applicat ions included an element for advertising/promotion, the goals and plan of each application were very different.

As demonstrated, this application qualifies as a new project and meets the requirements of the SCASDP

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# S ECTION 

# 6

S CHEDULE AND


# M ONITORING

T he public

- private partnership has developed a realistic timetable to achieve the goals of this pro posal. This section provides critical milestones to be achieved by the public

- private partnership. A monitoring program is also provided to track the progress of the project.



### C RITICAL 

### M ILESTONES

Immediate action is needed to increase load factors and bring Alaska Airlines back to profitability in the Walla Walla market. Because of this, the public

- private partnership has set an aggressive timeline for completi on of the Strategic Plan. The following milestones are proposed

. The timeline is highly dependent on the date of the U S DOT ’s grant award.

: It is anticipated that the US DOT will September 20 1 2
award SCASDP grants in September 2012. If the date of grant award changes, earlier or later, the remaining milestone dates will also change.

: Development of the October to December 2012 marketing campaign will be completed from October through December 20 1 2. The marketing plan will be completed no later than December 31, 2012 so as to facilitate implementation of the advertising and promotion program on January 1, 2013.

: The marketing January 201 3 to December 2014 campaign to increase enplanements at ALW will begin in January 2013 and continue for a two

- year period. 

### M ONITORING 

### P ROGRAM

The public

- private partnership will monitor enplanement activity and load factors at ALW monthly to track the effectiveness of the market campaign. The public

- private part nership will also meet at a minimum annually, likely more frequently, with Alaska Airlines to discuss service performance and the progress of the marketing campaign. It is anticipated that the partnership will work closely with Alaska in marketing efforts and promotion of the service.

This section addresses:



### • How the community will monitor the progress

of the project



### • The plan/schedule for timely completion of

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# A PPENDIX 

# A

L ETTERS OF 

# S UPPORT

ppendix A includes letters of support for the Port of Walla Walla ’s application to the US DOT for a comprehensive, two

- year marketing campaign to improve Alaska Airlines’ load factors and profitability in the Walla Walla market

. Support letters were submitted by Alaska Airlines, participants in the public

- private partnership and other members of the Walla Walla Valley community

. The letters of support are included on the following pages of this Appendix A and are listed below.



### Airline

Alaska Airlines



### Government
United States Senate

– Senator Patty Murray Congress of the United States

– Member of Congress

Cathy McMorris Rodgers Washington State Legislature

– Senator Mike Hewitt,

Representative Maureen Walsh, and Representative Terry Nealey



### Public

- private partnership
Port of Walla Walla (refer to cover letter) Tourism Walla Walla Walla Walla Valley Chamber of Commerce Walla Walla Valley Wine Alliance



### Businesses and Organizations Coffey Communications, Inc. Whitman College 

# A This section addresses: Letters of support from members of the public

private partnership

, the local business community, and state government.

### May 30, 2012

Ms. Aloha Ley Associate Director, Small Community Program Office of Aviation Analysis US Department of Transportation 1200 New Jersey Ave, SE W86-310 Washington, DC 20590

RE: Order 2012-05-08; Docket DOT- OST-2012-0069

Dear Ms. Ley,

Preserving commercial air service in the greater Wa lla Walla valley is critical to our economic vitali ty. For some 27 years Horizon/Alaska Airlines has been providing commerci al air service to Walla Walla.

In 2009 Alaska Airlines changed its airplane fleet from a 37 passenger aircraft to a 76 passenger airc raft. Since this change, Walla Walla has struggled to meet Alaska Airlines p assenger enplanement goals. In April the airline i nformed a group of community leaders that they are losing money in the Walla Walla market. It is critical to increase pa ssenger enplanements.

With this background, we enthusiastically endorse t he Small Community Air Service Development Grant ap plication being submitted by the Walla Walla Regional Airport. Dev elopment of the comprehensive marketing plan to enc ourage additional passenger enplanements is exactly the approach we n eed to take to preserve air service.

We are pleased with the community partnerships bein g aligned for this project. This includes the Port of Walla Walla, Tourism Walla Walla, Walla Walla Valley Chamber of Commerce, the Walla Walla Wine Alliance, and the lo cal Air Travel Coalition.

Please give this application careful consideration as our community works together to preserve air ser vice in the Walla Walla valley.

Respectfully,



## __________________ __________________ ___________ _______ Sen. Mike Hewitt Rep. Maureen Walsh Rep. Terry Nealey 16 th 

### Legislative District 16 th 

### Legislative District 16 th 

### Legislative District

### June 4, 2012

Ms. Aloha Ley Associate Director, Small Community Program Office of Aviation Analysis US Department of Transportation 1200 NW Jersey Ave, SE W86

- 310 Washington, DC 20590

RE: Order 2012

- 05

- 08; Docket DOT OST

- 2012

- 0069

Dear Associate Direc tor Ley,

Whitman College endorses the Small Community Air Service Development Program Grant being submitted by the Walla Walla Regional Airport. The grant would provide funding to execute a robust marketing campaign to build both inbound and outbound pass enger traffic.

Whitman is a liberal arts and sciences undergraduate college with 1,475 students, the majority of whose families live in states other than Washington. Our students represent 45 states and 30 nations and rely heavily on Alaska Airline’s comm ercial air service when travelling to and from Walla Walla and their family homes. Maintaining commercial air service in the Walla Walla Valley is critical to our student population and their families. In addition, Whitman faculty and staff, visiting facul ty, and lecturers rely heavily on Alaska’s service to Walla Walla for routine business travel.

Our educational institution would be far less attractive to future students and faculty if Walla Walla lost this valuable commercial air service. We at Whitman appreciate the fact that Alaska Airlines seeks to make the Walla Walla market successful. However, Alaska is losing money supporting the Walla Walla route given current levels of passenger traffic. Increasing travelers’ use of Alaska Airlines to and from Walla Walla is critical to retaining our air service.
Thank you in advance for your thoughtful consideration of this grant application.
Sincerely,

George S. Bridges President