# June 11, 2012 Sponsor: Glacier Park International Airport – Kalispell, Montana Cindi Martin – Airport Director Congressional Code: MT - 01
Dun & Bradstreet Number: 119522167 Tax Identification Number (EIN): 81-0425701 

### Application for Federal Support to recruit New Air Service via: Ground Handling Cost Offset Advertising/Marketing Program 

### To Support New Non-Stop Service to Los Angeles 

# GLACIER PARK INTERNATIONAL AIRPORT, KALISPELL, MT Application Under the Small Community Air Service Development Program, Docket DOT-OST-2012-0069

Docket DOT-OS T-2012-0069Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 2 TABLE OF CONTENTS

Section Page Introductory Letter of Support 3 Summary Information – Appendix C 4
Introduction 7 Glacier Park: Location, Population and Economy 8
Current and Historical Glacier Park Air Service 10
Current Air Service 10 Capacity and Traffic History 11 Seasonality 12 Top Domestic Markets 13 Traffic and Capacity by Region 14 Domestic Traffic Point of Origin 15 Alternative Airports 15 Glacier Park Air Service Deficiencies and Needs 16 Capacity Declines 16 High Average Fares 17 Service by Region vs. Traffic Demand by Region 18 Seasonal Capacity Imbalance 18 Specific City Pair Deficiencies 19

Air Service Needs 19 A Strategic Plan to Gain Los An geles Air Service 20 Proposed New Service 20 Glacier Park’s Ground Handling and Marketing Program 22 Grant Funding Plan 23 Implementation Timeline and Alternative Plans 23 Air Service Development and Previous Grant Award 25 Public/Private Partnership and Legal Sponsor 26 Summary 27 Allegiant Air Letter of Support 28 This document is 28 pages. The cover is one pa ge, the letter of support is one page and the Summary of Information is three pages, leavin g an application document length of 22 pages plus the Allegiant Ai r letter of support.Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 3 INTRODUCTORY LETTER OF SUPPORTGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 4 SUMMARY INFORMATION – APPENDIX C

Small Community Air Service Development Program
Docket DOT-OST-2012-0069



### A. Applicant Information

Not a Consortium Community now receives EAS subsidy
Interstate Consortium Intrastate Consortium Community previously re ceived a Small Community Grant If previous recipient, Date of Grant: August, 2006 Expiration date of Grant: August 2009 Federal Funds Requested: $450,000 Carrier(s) Service Obtained: United Express Denver DEN Destination(s) Served: Target was Denver, DEN Grant was closed on June 1, 2009



### B. Public/Private Partnership
Public:
1. Glacier Park International Airport
2. Cities of Columbia Falls, Kalispell and Whitefish and Flathead County Private:
1. Kalispell & Whitefish Chambers of Commer ce and Convention and Visitors Bureaus
2. Alamo/National, Budget and Do llar Rental Car companies
3. Flathead Business and Industry Association, Glacier Park Tourism and Glacier Park Inc.
4. Montana West Economic Development
5. Whitefish Mountain Resort, Flathead Lake Lodge, Lakeside Club,
6. North Valley Hospital and Northwest Healthcare / KRMC
7. First Interstate, Mounta in West, First Montana, Glacier, Rocky Mountain, Three Rivers and Valley Banks
8. Big Mountain Commercial Association
9. Applied Material, Inc
10. Nation Flood, Inc
11. National Parks Realty
12. Nomad Global, Inc
13. Rocky Mountain Transport, IncGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 5 C. Project Proposal

Marketing Upgrade Aircraft New Route
Travel Bank Service Restoration Subsidy Surface Transportation Regional Service Revenue Guarantee
Launch New Carrier Start-Up Cost Offset First Service Study Secure Additional Service Other (Specify)



### D. Existing Landing Aids at Airport

Full ILS Outer/Middle Marker Published Inst rument Approach
Localizer Other:



### E. Project Cost

1. Federal amount requested: $ 200,000
2. State cash financial contribution: $ 0
Local cash financial contribution: 3a. Airport cash funds: $ 0 3b. Non-Airport cash funds: $ 60,750
3. Total local cash funds: $ 60,750
4. TOTAL CASH FUNDING: $ 260,750
In-Kind Contribution:

a. Airport In-Kind contribution: $ 41,416

b. Other In-Kind contribution: $ 0

5. TOTAL IN-KIND CONTRIBUTION: $ 41,416
6. TOTAL PROJECT COST: $ 302,166Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 6 F. In-Kind Contributions

For funds in lines 4a (airport in-kind contri bution) and 4b (other in-kind contribution), please describe the source(s) of fund(s) for each. 4a Estimated value of a waiver of Airpor t terminal use and landing fee charges



### G. Is Application Subject to Review by State Under Executive Order 12372 Process?

This application was made available to the State on ______. Program is subject to review, but has not been selected by the State. Program is not covered.



### H. Is Applicant Delinquent on any Federal Debt?

NoGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 7 INTRODUCTION I N TRODUCTION

The Glacier Park International Airport serves a large area of northw estern Montana. While sparsely populated, the Airport’s catchment area contains Glacier National Park and a large resort infrastructure. Annual tourism visits to the region total over 2,000,000. The catchment area is also very isolated. Only a few airports in th e lower 48 lie further north than Glacier Park and none of them is a major vacation destination. The region has no freeways, the closest being a
two hour drive south toward Missoula.

Air service in the region is inadequate to the needs of the local population and the local tourism industry. Despite being located in one of the most amazing places on earth, the tourism venues of the Glacier Park area must compete for tourism visits and tourism dollars with other, closer and
more accessible vacation options, most of which have more air service and lower airfares.

Thus, effective and affordable air service is essential to the economic well being of the Glacier Park region. Yet local air serv ice capacity is down 33% since 2003 and down 16% since 2008. Glacier Park’s 2011 average domestic fare was $222, higher than at any other Montana airport (excluding EAS airports and the state capital at Helena).

In addition, the air service that Glacier Park has is oriented more east and south, in terms of hub options and capacity allocations, while Glacier Park visitors by air come more significantly from the west, with a great preponderance of California visitors.

Glacier Park was fortunate to receive a SCASD grant in 2006 and put that Grant to great use, recruiting United Airlines to begin Denver servic e. Since entering the market in 2007 United has doubled Denver capacity and added summer seas on Chicago service. Wi thout United service enabled by our first Grant, Glacier Park would today face greater air service challenges since the merger of Northwest and Delta combined two of our long-time incumbent carriers.

In this application Glacier Park requests Grant funding totaling $200,000, matched by local funding of $62,500 (gathered from a broad spectrum of mostly private interests). This Grant’s new service target is first ever nonstop service to th e Los Angeles Basin. The LA Basin is our largest market without nonstop service. With only connect ing service options, 6% of total Glacier Park domestic O&D involves LA Basin airports. Grant funding would support the startup phase of new service and we anticipate the same success we had with our first Grant and Denver service.Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 8 GLACIER PARK: LOCATION, POPULATION & ECONOMY I NT

Location and Population – Three cities are near the Glacier Park International Airport: Kalispell, Whitefish and Columbia Falls. The three cities form a commercial and retail trading center that serves an area more than a 100 miles west or north, including into Canada, and 40 miles to the south. State Highways 2, 83 and 93 cross near th e Airport and I-90 is a two hour drive south.

The one hour drive radius for the Glacier Park International Airport has a population of 99,253 while the two hour radius has a population of 145,490.

While local resident population is modest, MSA population growth has been significant. Kalispell MSA population is up 20% in ten years and still growing. Resident population is forecast to exceed 100,000 by 2015. During the peak summer months an influx of second home owners increases local population by over 20% to about 110,000. 

### 2001 75,987 2002 77,269 1.7% 2003 79,152 2.4% 2004 80,626 1.9% 2005 82,530 2.4% 2006 84,549 2.4% 2007 86,766 2.6% 2008 88,473 2.0% 2009 89,624 1.3% 2010 90,100 0.5% 2011 90,928 0.9% 19.7% Period KALISPELL MSA POPULATIONGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 9 Glacier Park’s Economy – The region’s economy is tourism based. The three cities of the Flathead Valley, Kalispell, Whitefish and Columbia Falls, each has a distinct economic personality.

Kalispell is the region’s retail and financial center and has the largest area health care facilities. The city has a thriving art colony for artists of all genres.

Whitefish is the “recreational capital of Montana”. Its biggest draw is the Whitefish Mountain Resort, which is complemented by many smaller resorts. Whitefish Mountain is only 11 miles from the Airport.

Columbia Falls is the gateway to Glacier National Park and is popular with river rafters.

The region as a whole is a popular “work from home” location. For professionals who can accomplish their professi on from a home office using modern technology, the Flathead Valley is a popular place to live.

All three cities are blessed to be at the western
entrance to Glacier National Park. Glacier is the “Crown of the Continent”, one of North America’s and the World’s most stunning mountain parks. Glacier Park is a World Heritage Site and draws two million visitors per year.

Glacier National Park is primarily a summer destinat ion. The Whitefish Mountain Resort ski area is primarily a winter destination. Together, these ve nues, plus a host of ot her recreational options the magnificent landscape offers, constitute the core of the Glacier Park economy.

This economy operates in isolation, further nort h than any other major tourism area in the lower
48 and a two hour drive to an in terstate highway. Its key econom ic engine, tourism, depends on accessibility. Effective and affordable local air service is a key componen t of that accessibility. Kalispell Regional Medical Center 2,500 Plum Creek Timber Company 1,140 Semitool 700 Flathead Valley Community College 689 TeleTech 500 Flathead County 456 Winter Sports, Inc. (Whitefish Mountain Resort) 450 Workplace, Inc. 440 Glacier National Park 400 Columbia Falls School District 352 National Flood Service 350 Wal

‐ Mart 350 Burlington Northern 300 LC Staffing 300 Immanuel Lutheran Home 270 North Valley Hospital 235 Flathead National Forest 207 Whitefish School District 200 Glacier Bancorp 185 CenturyLink 160 Target 150 Grouse Mountain Lodge 145 Brendan House 140 Flathead Electric Co

‐ Op 140 Rocky Mountain Contractors 140 Source: Kalispell Chamber of Commerce The Flathead Valley’s Largest EmployersGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 10 CURRENT AND HISTORICAL GLACIER PARK AIR SERVICE NT

Current Air Service: Glacier Park current ly supports air service from four airlines: Alle giant, Alaska Air, Delta and United. There is nonstop service to eight cities, however year-round service to only six. Delta Saturday-only Atlanta service and Un ited Chicago service are summer season only. Allegiant Air service to Las Vegas and Oakland is twice per week.

Year round hub service is only to Denver, Minneapolis, Salt Lake City and Seattle.

Market capacity varies greatly by season. In 2012, December weekly market capacity will be down 53% from July of 2012. Four of Glacier Park’s routes are eastward, two are southward and two are to the west. Segments Seats per Seats per Segments Seats per Seats per Seats per Week Carrier Destination Per Week Flight Week Per Week Flight Week Dec vs Jul Change

AS SEA 42 76 3,192 28 76 2,128

‐ 33% LAS 4 166 664 4 166 664 0% OAK 4 166 664 4 166 664 0% 8 166 1,328 8 166 1,328 0% ATL 2 160 320 0 0 0

‐ 100% MSP 28 131 3,668 14 76 1,064

‐ 71% SLC 56 54 3,024 40 50 2,000

‐ 34% 86 82 7,012 54 57 3,064

‐ 56% DEN 56 54 3,024 14 50 700

‐ 77% ORD 14 66 924 0 0 0

‐ 100% 70 56 3,948 14 50 700

‐ 82% 206 75 15,480 100 72 7,220

‐ 53%

Schedules per carrier websites for typical week in each month shown UA Total July, 2012 December, 2012

TOTAL

GLACIER PARK AIR SERVICE: SUMMER AND WINTER COMPARISON

G4

DL

UA DL TOTAL Allegiant TotalGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 11 Capacity and Traffic History – Glacier Park capacity has declin ed significantly in the past eight years. Compared to 2003 market capacity is do wn 33%, compared to 2008 it is down 16%. Average fare is up 35% since 2003 and 13% since 2009. 2011 market load factor was 77%

International traffic averages about 12% of annual total.


### GLACIER PARK TRAFFIC BY CARRIER TYPE: 2003 ‐ 2011

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 318,020 330,780 371,160 332,870 350,850 352,990
281,040 297,670 305,850 25,290 28,370 29,850 8,490 11,080 12,290

12,340 14,640 15,640 13,380 14,600 14,510 Annual Domestic O&D (Ex-Allegiant) A nnual Domestic O&D (Allegiant) A nnual International O&D 892 876 922

792 775 712
605 619 598

439 463 499 462 483 474 414 447 460 $165 $165 $174 $216 $222 $219

$196 $207 $222

$100 $120 $140 $160 $180 $200 $220 $240

0 200 400 600 800 1,000 1,200

2003 2004 2005 2006 2007 2008 2009 2010 2011 A verage Fare

Seats and Passengers per Day Each Wa y Seats per Day Each Wa y Domestic PDE W One

- Way Domestic Fare 

### GLACIER PARK CAPACITY (SDEW), DOMESTIC TRAFFIC (PDEW) AND AVERAGE FARE: 2003 ‐ 2011Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 12 Seasonality – Glacier Park is a seasonal market with a summer peak. With winter capacity down 53% from summer capacity, a fair question might be: Does winter demand drive winter capacity or does winter capacity drive winter demand?

It is noteworthy that, despite year after year of overall capacity reductions, Glacier Park’s fall, winter and spring traffic climbs each year with combined fourth quarter and first quarter traffic up in each period for the past three years.

591 694 951

568 542 557 713

479 490 581 868

480 428 508 822

497

383 428 717

334 294 366 544

299 294 357 657

320 309 367 673

368 $209 $215 $235

$212

$198 $201 $214 $218
$206 $219 $230

$212 $218 $237 $247

$210

$100 $120 $140 $160 $180 $200 $220 $240 $260

0 200 400 600 800 1,000 1,200Average FareSeats and Passengers per Day Each Way Seats per Day Each Way Domestic PDEW (Ex-Allegiant) One-Way Domestic Fare (Ex-Allegiant) 21,507 21,047

21,972 20,152 21,374 33,967 54,062

32,232 28,854 22,124

19,381 22,753 20,982

20,510 22,885

19,783 22,423 34,137 52,771 52,241

32,662

24,622
21,359 23,537

21,999 21,515 24,962

20,409 22,486 35,138 54,525
53,018

30,675

24,328

20,951 25,931

0 10,000 20,000 30,000 40,000 50,000 60,000

T100 Traffic by Month T100 Onboard 

## GLACIER PARK T100 TRAFFIC BY MONTH: 2008 TO 2011Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 13 Glacier Park’s Top Domestic Markets – Eight of the top markets (gold bars) have some form of nonstop service, although Las Vegas and Oakland service is less-than-daily, Chicago is summer only and Atlanta is summer only and Saturday only.

Top Market Average Fares – Top market fares do not fit the profile of an inbound leisure market.

$0 $50 $100 $150 $200 $250 $300 LAS SE A SFO/SJC/OAK LA BASIN LGA/JFK/EWR DEN MSP DCA/IAD/BWI ORD/MDW SLC ATL DF W SAN PDX PHX BOS SMF MCO ANC

IAH $99 $139 $196 $210 $274 $251 $232 $274 $263 $235 $233 $288 $204 $165 $211 $258 $203 $229

$244 $302 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 LAS SE A SFO/SJC/OAK LA BASIN LGA/JFK/EWR DEN MSP DCA/IAD/BWI ORD/MDW SLC ATL DFW SAN PDX PHX BOS SMF MCO ANC

IAH 36,580 27,640 19,310 18,980 12,150 12,030 11,740 10,810 9,970 8,700 8,600 7,620 7,620 7,020 6,270 5,930 5,220 5,200 5,040 4,870 50.1 37.9 26.5 26.0 16.6 16.5 16.1 14.8 13.7 11.9 11.8 10.4 10.4 9.6 8.6 8.1 7.2 7.1 6.9 6.7 A nnual O&D PDE W 

## GLACIER PARK TOP TWENTY MARKETS: YEAR 2011

GLACIER PARK TOP MARKET AVERAGE FARES: YEAR 2011Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 14 With the exception of Las Vegas (Allegiant) and Seattle/Portland (Alaska Air short haul) Glacier Park top market fares are at or above $200. Excl uding those three market’s traffic and revenue, Glacier Park’s average domestic fare in 2011 was $249.

Glacier Park Traffic and Capacity by Region – Glacier Park’s traffic demand is heavily
westbound or southwest bound. In 2011 45% of ma rket traffic was to or from markets west or
southwest of Glacier Park.



### Region O&D Percent Region Revenue Percent Region Average Fare Northeast 47,460 14% Northeast $12,992,650 17% Northeast $274 Southeast 39,410 12% Southeast $10,182,800 14% Southeast $258 South Central 23,510 7% South Central $7,026,540 9% South Central $299

Midwest 46,780 14% Midwest $11,856,550 16% Midwest $253 Mountain 25,870 8% Mountain $6,539,110 9% Mountain $253 Far West 152,670 45% Far West $25,878,520 35% Far West $170

Total 335,700 Total $74,476,170 Total $222 TRAFFIC BY REGION AVERAGE FARE BY REGION REVENUE BY REGIONGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 15 Glacier Park air service capacity is primarily focused on four hubs, Minneapolis, Denver, Salt Lake City and Seattle. Westbound service to Seattle and Oakland generates only 39% of market capacity in winter and only 25% in summer.

Domestic Traffic Point of Origin – Glacier Park traffic is approxim ately 60% inbound origin and 40% outbound origin. The inbound to outbound ratio has only varied slightly in the past nine years.

Alternative Airports: The Glacier Park region is very isolated. Therefore there are few alternative airports and most have the same airlines, if perhaps more or less service from them. Missoula is the closest alternative airport at 125 miles and a 2: 21 drive, most of which is a two lane highway.

Great Falls is nearly four hours distant. Spokan e offers a much greater variety of airlines and much lower average fares but it is 253 road mile s and a 4.4 drive hour, again with much of that driving on two lane highways. Weekly Seats Percent Weekly Seats Percent 

### ATL 0 0.0% ATL 320 2.1% ORD 0 0.0% ORD 924 6.0% MSP 1,064 14.7% MSP 3,668 23.7% DEN 700 9.7% DEN 3,024 19.5% 1,764 24.4% 7,936 51.3% SLC 2,000 27.7% SLC 3,024 19.5% LAS 664 9.2% LAS 664 4.3% 2,664 36.9% 3,688 23.8% OAK 664 9.2% OAK 664 4.3% SEA 2,128 29.5% SEA 3,192 20.6% 2,792 38.7% 3,856 24.9% 7,220 100.0% 15,480 100.0% Market Total Winter Summer

Region Total

Region Total

Region Total Market Total WEST SOUTH

East East

SOUTH

WEST Region Total

Region Total

Region Total Year 2012 by Season 

## GLACIER PARK CAPACITY BY HUB & DIRECTION

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 Outbound Origin 37% 37% 37% 39% 39% 40% 41% 42% 43%

Inbound Origin 67% 67% 67% 61% 61% 60% 59% 58% 57% 

## GLACIER PARK DOMESTIC TRAFFIC POINT OF ORIGIN: 2003 ‐ 2011

Airport Distance Drive Time Air Service Missoula 125 2:21 AS, DL, UA, G4 Great Falls 234 3:41 AS, DL, UA, F9, G4

Spokane 253 4:26 AS, DL, UA, F9, US, WN 

## GLACIER PARK ALTERNATIVE AIRPORTSGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 16 GLACIER PARK’S AIR SERVICE DEFICIENCIES AND NEEDS

Glacier Park’s Air Service Deficiencies – The residents of the Glacier Pa rk region live in one of the most magnificent settings on earth. The region is very isolated; the nearest interstate highway is a two hour drive. The local economy is heavily dependent on inbound tourism. Given the high isolation, effective and reasonably priced air serv ice is critical to the economic health of the region.

Yet Glacier Park air service capacity is down 33% since 2003 and down 16% since 2008. Glacier Park average fares are the highest in Montana the past two years (excluding EAS cities and the business travel oriented state capital at Helena). The bulk of the air service Glacier Park does
have is oriented east and southeast while Glacier Park traffic demand is more oriented west and
southwest.

Capacity Declines – Almost all small- and medium-sized cities nationally have suffered some capacity declines during the past decade due to airline industry restructuring. However, Glacier Park’s capacity decline is the steepest among non EAS airports in its region.

Comparing 2011 to 2003, Glacier Park capacity is down 33% while Bozeman is up and the total decline for the six cities as a group is 13%. Comparing 2007 to 2011, Glacier Park is down 23% while the group is down 15%. No non-EAS city in the region has lost more air service capacity in the past decade.

Another measure of capacity is airline seats per capita. We have already noted that the Kalispell MSA population has grown 20% in the pa st ten years. Certainly this explosive growth, 

### Airport 2003 2011 Change 2007 2011 Change Bozeman 888,304 931,640 4.9% 982,002 931,640

‐ 5.1% Glacier Park 651,640 436,495

‐ 33.0% 565,930 436,495

‐ 22.9%

Spokane 4,211,374 3,833,661

‐ 9.0% 4,683,416 3,833,661

‐ 18.1% Great Falls 711,712 514,222

‐ 27.7% 573,214 514,222

‐ 10.3%

Helena 441,448 327,979

‐ 25.7% 314,877 327,979 4.2% Missoula 854,215 692,541

‐ 18.9% 808,298 692,541

‐ 14.3%

Total 7,758,693 6,736,538

‐ 13.2% 7,927,737 6,736,538

‐ 15.0% 

## GLACIER PARK REGION AIRPORT CAPACITY CHANGES

2003 ‐ 2011 2007 ‐ 2011

T100 seats for each yearGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 17 which is compounded by each summer’s influx of second home owners, is incongruent with the significant declines in air service.

Glacier Park seats per capita in 2011 were
116% less than that of Bozeman and 53% less than the group average. It was measurably less than all cities in the group except Helena.

Glacier Park is, like Bozeman, significantly an inbound leisure market, highly dependent on affordable air service to support its tourism industry. Bozeman and Glacier Park have simila r MSA populations, however Bozeman has much more than double the airline capacity as Glacier Park, in terms of both actual seats and seats as a ratio to MSA population.

High Average Fares – With the exception of the State Capi tal in Helena, Glacier Park has had, for the past two years, the highest domestic average fare of any airport in the region and especially in comparison to Spokane, its primary leakage point.

With the annual exception of Helena and three years of, essentially, parity with Great Falls, Glacier Park has the highest average fares of all airports in the region. The differential is consistently 25% or more agai nst the group, between 40% and 60% with Spokane and, for the past two years, more than 10% against Mi ssoula, the closest alternative airport. 

### Airport 2005 2006 2007 2008 2009 2010 2011 Glacier Park $174 $216 $222 $219 $196 $207 $222

Bozeman $170 $210 $218 $215 $183 $193 $203 Missoula $169 $203 $206 $203 $184 $185 $201 Spokane $120 $134 $135 $139 $135 $141 $158 Great Falls $168 $214 $224 $226 $196 $199 $207

Helena $179 $226 $243 $251 $222 $220 $230 Group Average $140 $165 $168 $170 $158 $165 $181

Bozeman 2.4% 2.9% 1.8% 1.9% 7.1% 7.3% 9.4% Missoula 3.0% 6.4% 7.8% 7.9% 6.5% 11.9% 10.4% Spokane 45.0% 61.2% 64.4% 57.6% 45.2% 46.8% 40.5% Great Falls 3.6% 0.9%

‐ 0.9%

‐ 3.1% 0.0% 4.0% 7.2%

Helena

‐ 5.0%

‐ 7.1%

‐ 10.3%

‐ 14.3%

‐ 17.6%

‐ 12.3%

‐ 11.7% Group Average 24.3% 30.9% 32.1% 28.8% 24.1% 25.5% 22.7% 

## GLACIER PARK REGION AVERAGE FARES: 2005 ‐ 2011

Percent That Glacier Park is Higher Than Other Airports City MSA Pop T100 Seats Ratio Bozeman 89,658 931,640 10.39 Spokane 472,147 3,833,661 8.12 Missoula 109,299 692,541 6.34 Great Falls 81,327 514,222 6.32 Glacier Park 90,928 436,495 4.80 Helena 74,366 327,979 4.41 Group 917,725 6,736,538 7.34 

### SEAT CAPACITY PER CAPITA COMPARISON

2011 population estimates vs 2011 T100 seatsGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 18 Glacier Park’s high average fares show clearly in comparison to its peer group, lower 48 airports with between 300,000 and 400,000
annual domestic O&D.

For the year 2011 in that group Glacier Park
had the 7 th highest average fare among nineteen airports. Of the six airports in the group with higher average fares, Killeen is a major military base, Bismarck and Montgomery are state capitals, and Bismarck and Lafayette are major oil and gas centers. Aspen is a capacity constrained airport where only certain types of
airline aircraft can land.

Directional Allocation of Service by Region vs. Traffic Demand by Region – The Glacier Park market has significant communities of interest with the states to the west, especially California.
Some 45% of Glacier Park’s 2011 domestic tra ffic involved markets in Arizona, California, Nevada, Oregon, Washington, Alaska and Hawaii. 16% of Glacier Park’s total 2011 domestic traffic was exchanged with California cities, despite no nonstop service to any city in California
in that timeframe.

Glacier Park’s air service capacity is not oriented westward. Until the recent startup of twiceweekly Oakland service, there was no nonstop service to California. Alaska Air service to Seattle is performed with 76-seat Q400 turboprops and only at a frequency of twice daily (with a third frequency added during summer months only). Las Vegas service is, like Oakland, twice-weekly. On an annual basis routes to the west or southwest only generate about 33% of total market capacity. Yet 45% of annual domestic traffic is exchanged with markets in Arizona, Nevada, the coastal states, Alaska and Hawaii.

Seasonal Capacity Imbalance – With current allocations of service at Glacier Park, typical fall, winter and spring seat capacity is 53% lower than during the peak summer months (chart on page 10). Glacier Park appreciates the significan t increases in capacity its incumbent airlines place in the market during the June to August period. We believe our market can support more Airport 2011 O&D Avg fare Killeen 398,620 $257 Bismarck 396,300 $252

Aspen 395,390 $245 Lafayette, LA 393,390 $232 Montgomery 388,900 $231

Eagle, CO 383,500 $229 Glacier Park International 376,320 $222 Jacksonville, NC 366,320 $221 Monterey 364,320 $209 Great Falls 341,520 $207 Charlottesville 335,700 $203 Bangor 332,840 $202 Grand Junction 332,060 $201

Gainesville 326,420 $199

Durango 324,340 $195 Tri Cities 319,270 $192 Bend/Redmond 318,730 $160 Melbourne 314,130 $160 Nantucket 311,910 $70 LOWER 48 AIRPORTS 300,000 - 400,000 O&DGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 19 service during the peak summer. But more importantly, we believe our market receives too little service during the fall, winter and spring months.

Specific City Pair Deficiencies – The LA Basin (LAX, SNA, ONT, BUR & LGB) is the largest Glacier Park market without nonstop service. In the Glacier Park region both Missoula and Bozeman have nonstop service to the Basin.

Glacier Park had the highest average
fare for Basin traffic in 2011. With the exception of Helena in 2006 – 2010 and Great Falls in 2010, Glacier Park has had the highest fare each year in the period. In the past two years Glacier Park’s fare has been about 70% higher than at Missoula and 40% higher than at Spokane. For the period, Glacier
Park’s fare has been between 28% and 39% higher than that of the group.

Glacier Park’s Air Service Need – Glacier Park is very isolated; two plus hours to the nearest interstate highway and just beyond that to the nearest alternative airport. The nearest concentrated availability of measurably lower airfares is in Spokane, a 4.4 hour drive.

Glacier Park is highly dependent on affordable air service. Affordable air service makes it possible for more tourists to visit and thus suppo rt its tourism infrastructure. California alone generated 16% of all Glacier Park domestic O&D in 2011, despite no nonstop service from any airport in that state. The Los Angeles Basin alone generates 6% of total Glacier Park travel, despite no nonstop service and average fares higher than at every airport in the region.

Improved access to California, specifically the Lo s Angeles Basin, is a clear air service need for Glacier Park. New nonstop service to Los Angeles wo uld result in lower fares and link Glacier Park with its largest O&D market currently without nonstop service. 

### Airport 2006 2007 2008 2009 2010 2011 Glacier Park $205 $206 $205 $192 $189 $208

Bozeman $199 $205 $204 $184 $189 $205 Missoula $197 $205 $202 $126 $112 $118 Spokane $141 $136 $139 $133 $136 $144 Great Falls $192 $184 $200 $186 $200 $182

Helena $204 $213 $209 $202 $194 $181 Group Average $160 $155 $158 $143 $142 $150

Bozeman 3.0% 0.5% 0.5% 4.3% 0.0% 1.5% Missoula 4.1% 0.5% 1.5% 52.4% 68.8% 76.3% Spokane 45.4% 51.5% 47.5% 44.4% 39.0% 44.4% Great Falls 6.8% 12.0% 2.5% 3.2%

‐ 5.5% 14.3%

Helena

‐ 2.5%

‐ 3.8%

‐ 2.4%

‐ 8.9%

‐ 2.6% 13.3% Group Average 28.1% 32.9% 29.7% 34.3% 33.1% 38.7% 

## LA BASIN AVERAGE FARES: 2006 ‐ 2011

Percent That Glacier Park Fare is HigherGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 20 A STRATEGIC PLAN TO GAIN LOS ANGELES SERVICE

The Glacier Park International Airport has worked aggressively to recruit new air service for many years. Since 2011 domestic airlines have become, almost universally, risk averse. They want
communities to assist them with the often difficult startup phase of new air service, especially air service that is relatively long haul (due to always uncertain fuel costs being a greater percent of operating cost on lo ng haul flights).

Proposed New Service – The Glacier Park International Airp ort proposes to use Grant funding to support new nonstop service to Los Angeles. Our prim ary target carrier for this service is Allegiant Air, which has written a letter in support of this Gr ant application. We envisi on our support of this new service to consist of a complete airport grou nd handling cost offset and a large-scale new service marketing and advertising program du ring the initial phase of new service.

The Los Angeles Basin is the largest Glacier Park market without nonstop service and by itself generates 6% of total Airport domestic O&D. Year-round nonstop service would link the entire Basin area, and its population of more than 18 mill ion, with all the recreational opportunities the Glacier Park region affords.

Market pair traffic has declined 28% since 2006 while average fare has increased 2%. However, 32.0 32.0 33.0 36.0 36.0 33.0

25.0 26.0 26.0 $147 $154 $172 $205 $206 $205 $192 $189 $210

$0 $50 $100 $150 $200 $250

0 5 10 15 20 25 30 35 40

2003 2004 2005 2006 2007 2008 2009 2010 2011 A verage Fare PDEW PDE W A verage Fare 

## GLACIER PARK ‐ LA BASIN PDEW AND AVG FARE: 2003 ‐ 2011Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 21 when quarterly data is viewed, the bulk of the decl ine is in third quarter, when traffic shifts to a largely inbound flow of visiting summer tourists. The past three summer quarters have shown
traffic down between 20% and 34% while traffic du ring other quarterly periods has been stable.

That the market pair’s summer traffic demand is primarily inbound is clear from quarterly point of origin data. During first, second and fourth quar ter origin is about evenly split while during the third quarter is it about 75% Los Angeles origin. Year round nonstop service may increase Los Angeles point of origin demand by facilitating Lo s Angeles access to winter sport opportunities.

47% 41%

23% 46% 49% 44%

19% 40% 50%
42%

23% 48% 54%

37%

30% 49%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

2008
- Q1 2008- Q2 2008
- Q3 2008
- Q4 2009- Q1 2009- Q2 2009
- Q3 2009- Q4 2010- Q1 2010
- Q2 2010- Q3 2010
- Q4 2011
- Q1 2011- Q2 2011
- Q3 2011- Q4 Point of Origin by Quarter 26.0 29.0 56.0

32.0

25.0 29.0 54.0

24.0

19.0 24.0 36.0

20.0 20.0 22.0 42.0

20.0 20.0 22.0 40.0

25.0 $206 $195 $212 $204 $190 $209

$212 $199 $191

$168 $204 $200

$173 $189 $206

$170 $192 $208 $221
$202

$0 $50 $100 $150 $200 $250

0 10 20 30 40 50 60

A verage Fare PDEW PDE W A verage Fare 

## GLACIER PARK ‐ LA BASIN TRAFFIC AND FARE BY QUARTER: 2007 ‐ 2011

GLACIER PARK POINT OF ORIGIN BY QUARTER 2008 ‐ 2011: LA BASINGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 22 Glacier Park’s Ground Handling Offset and Marketing Program – While Allegiant Air has been able to operate successfully from Glacier Park to Las Vegas and recently Oakland, Los Angeles Basin service represents a significantly greater risk and economic challenge.

Las Vegas is 846 miles from Glacier Park and Oakl and is 834 miles, both about 7% shorter than Allegiant’s average system stage length of 901 miles for year 2011. However, Los Angeles is just over 1,000 miles from Glacier Park or about an 11% greater flight distance. In addition, Los Angeles area airports are, for a variety of reason s, expensive for less-than-daily carrier operations in comparison to Las Vegas or Oakland. So from a cost perspective, Glacier Park – LA Basin service represents to Allegiant, or any other carrier, a much greater economic challenge than shorter haul markets like Las Vegas and Oakland might.

Glacier Park will support new Alle giant Air nonstop service to the Los Angeles Basin by providing a complete and Grant-funded ground handling pr ogram at Glacier Park for the initial phase of service. In addition, grant funding will permit an aggressive and multi-dimensional marketing and promotional program to en sure strong ridership.

The complete ground handling cost offset at Glacier Park will help the carrier absorb the significantly higher block hour costs of the long er stage length to Los Angeles as well as the measurably higher airport costs encountered at Los Angeles area airports. Allegiant has estimated its average per turn ground handling cost at Glacier Park at $450 per turn. FBO provided fuel-in-to plane costs ar e an additional $80 per turn.

The marketing program that will accompany the new service will be comprehensive and multi layered. Marketing efforts will be closely coordinated with Allegiant Air and its own air service marketing infrastructure. The new service will also be marketed at both ends, in both the Glacier
Park catchment area as well as selectively in the hu ge Los Angeles Basin area.

Glacier Park catchment area marketing will follow the path already made by the marketing efforts for existing Allegiant service to Las Vega s and Oakland. Marketing co sts in the region are relatively low, venues are fewer and there is less promotional “noise” to compete with. Period Service Plan Annual Turns Ground Handling Cost Fueling Total/Turn Annual Marketing Total Cost Offset Year One Twice weekly 104 $450 $80 $530 $55,120 $100,000 $155,120 Year Two Twice weekly 104 $450 $80 $530 $55,120 $50,000 $105,120 208 $450 $80 $530 $110,240 $150,000 $260,240 Total Program 

### GLACIER PARK ‐ LOS ANGELES GROUND HANDLING OFF SET AND MARKETING PROGRAM PLANGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 23 New service marketing efforts in the Los Angeles Basin must clearly be more selective and cost conscious. But promoting the new se rvice in the Basin is essential to its success. In 2011 Allegiant offered nonstop service between sixteen western and Midwestern cities and either Los Angeles International or Long Beach. A total of 479,690 O&D were generated. 293,760 of those O&D (61.2%) were inbound to Los Angeles. Focusing on only Montana routes, Billings and Missoula generated 59,430 O&D with 36,360 inbound. Coincidentally, the inbound origin percent here is also 61.2%. It is possible Glacier Park’s origin pe rcentage might skew toward Los Angeles, given it
is much more of an inbound destin ation than Missoula or Billings.

This means that 39% of Allegiant O&D on existing Los Angeles rout es is Los Angeles area origin. Allegiant has a large email contact list in the Los Angeles area; this data would suggest it is at least 186,000, given several years of carrier service at Los Angeles it is likely many times larger.

Of the 28 local organizations that contributed cash to this Grant’s matching funds, eight are Glacier Park area resorts or Tourism/CBV organi zations. These organizations, supported by the Airport, will work closely with Al legiant Air on marketing Glacier Park service in the Los Angeles area, focusing on their own previous visito r contact lists but also including expanded participation in Los Angeles ar ea Travel Shows and other tourism promotion venues. Nonstop service, especially at Allegiant’s low fares, makes all the difference in promoting the Glacier Park area to tourists and travel agencies that assist tourists in making vacation location choices.

Grant Funding Plan – This Grant application requests $200,000 in Department funding. A total of 28 Glacier Park area companies and organizations have contributed $60,750 in local cash matching funds, making total Grand cash funding $260,750. The Airport in-kind contribution of waived terminal use and landing fees has an estimated value of $41,416, making total Grant value of $302,166.

Implementation Timeline and Alternative Plans – Allegiant is a growing ai rline. On a system basis it has posted double-digit growth in traffic and op erations for at least the past eight years. In the Los Angeles Basin the carrier started service in 2009 and traffic grew 94% year over year in 2010 and 13% year over year in 2011. The carrier continues to work to find an optimum Basin gateway plan, having encountered considerable operat ional and cost challenges operating at Los Angeles International and Long Beach. The carrier is working to solve these issues, which are barriers to more aggressive expansion in Los Angeles service. Entity Funding Percent of Total DOT $200,000 76.7%

Total $260,750 100.0% 28 Glacier Park Area Contributors $60,750 23.3% 

### GRAND FUNDING PLANGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 24 The implementation timeline for this Grant assume s the carrier will have clarity on its Los Angeles airport gateway plan for 2013 oper ations. We fully expect that Grant funding will enable the carrier to begin Glacier Park service during that year. Not knowing exactly when, we have built our implementation plan as a month one, month two, month three plan rather than name specific months of the calendar.

If, for some reason, Allegiant Air is unable to be gin Glacier Park – Los Angeles Basin service in a prompt manner, we do have various backup plan s. Since development of any alternative plan may take additional time we do ask that any Grant award have a three-year lifespan.

We have discussed Glacier Park – Los Angeles LAX less-than-daily service with Alaska Air. AlaskaAir already serves Glacier Park with daily multiple frequency Q400 flights from its Seattle hub. Biweekly or even Saturday or Sunday only 737/800 flights from LAX would complement the Seattle hub service. These nonstop flights would also, owin g to Alaska Air’s code share relationships at LAX, carry the American Airline code, which has considerable brand preference in the Los Angeles Basin region. We have also discussed wi th both Allegiant and US Airways the potential
for Phoenix – Glacier Park service. Phoenix is an undeveloped Glacier Park market and currently
is the 15 th largest destination market and 7 th largest without nonstop service.

The impact of nonstop service to Los Angeles cannot be underestimated. In the Allegiant Air example, new service would consist of 166-seat MD80s operating twice weekly year round. This implies 34,528 annual new, low fare seats between Glacier Park and its top market without nonstop service. Allegiant Air targets all its se rvices to have a 90% load factor, implying 31,075 annual O&D on the route. Using cu rrent Allegiant Air point of origin data for Los Angeles, 39% of onboard would be inbound origin, meaning 12,119 inbound origin passenger trips or 6,060 new visitors to Glacier Park. Assuming four days pe r average visit and $150 spent per day per visitor that is 24,240 visit days and $3.6 million in new local spending. Timeframe Action Purpose Base Month Grant Award Continuous Carrier Recruitment Secure service Ongoing During Grant File Quarterly Status Reports to DOT Record keeping Month One Agreement with carrier for new service Milestone Month Two Announcment of New Service for Sale Publicity Month Two Community meetings and stakeholder meetings Engage community Month Two Begin new service marketing Sell seats Month Three Review initial advance bookings data Adjust marketing if needed Month Four New service kickoff and celebration Maximize local free press Month Five Monitor performance with carrier Adjust marketing if needed Month Six and beyond Shift marketing from new service mode to ongoing promotion mode Manage marketing funding 

### GRANT IMPLEMENTATION PLANGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 25 AIR SERVICE DEVELOPMENT AND PREVIOUS GRANT

Air Service Development – The Glacier Park International Ai rport, supported by its community partners, is very active in both new airline se rvice recruitment and in preserving and supporting
its incumbent carriers.

The Airport spends about $40,000 per year on marketing and advertising its air service. This
includes conventional local venu es such as newspaper, billboards and radio. The Airport has embraced the new promotional mediums and levera ges its website as well as social mediums.

The Airport retains an air service consultant and conducts annual “state of the market” conference calls with incumbent carriers Alaska, Delta and United. The Airport attends the annual Allegiant Air airport conf erence each year in Las Vegas. The Airport has attended three Sixel Consulting Small Airport Air Service Conferences in the past two years. At those conferences one-to-one meetings have occurred with Alaska Air, Frontier, SeaPort, and Silver Airways regarding potential new services. The Airport has ac tively recruited Frontier Airlines service and has had headquarters meetings with that carrier in 2009 and 2010.

Previous Grant Award – Glacier Park was awarded a Smal l Community Air Service Development Grant in August of 2006. The Grant targeted first time United Airlines service to Denver. The carrier began Grant supported service to Denver in June of 2007. Because the Grant enabled daily Denver service, the carrier also cautiously added weekend only Chicago service for the summer of 2007. Since that time United service has gr own significantly and operates today without any community financial support. Denver service this summer is four daily trips, one being a CRJ700. Chicago service remains summer only but is now daily and flown with a large regional jet.

The 2006 Grant award was for $450,000. Grand funds were expended in an orderly manner per the risk abatement agreement with United. The Grant was closed on June 1, 2009.

The Grant application specifically outlined a target of United Airlines and risk abatement of new service to Denver and that was the ultimate use of the funding. This Grant application targets new service to Los Angeles with a primary target carrier of Allegiant Air. The Grant funding would be used for a ground handling cost offset an d an aggressive “both ends” marketing program.Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 26 PUBLIC PRIVATE PARTNERSHIP AND LEGAL SPONSOR

Glacier Park’s Public Private Part nership for Air Service Recruitment – The Glacier Park communities have truly come together to support this Grant application. Twenty eight different companies and organizations have contributed cash to the Grant matching fund. An Air Service Support group has been formed that is briefed on air service developmen t matters on a regular basis. Air service consultant facilitated community meetings were held in September of 2010 and February of 2012. Each time three separate meetings took place and combined attendance in both September and February was well over 1 00, bringing together business and community leaders from all over the Flathead Valley to discuss a common need, air service.

The Air Service Support Group has 34 individual members, with multiple members from some participating organizations. The group includes th ree rental car firms, se ven local banks, nine local resorts or tourism organizations and th e local economic develo pment organization.

Legal Sponsor – The legal sponsor of this Grant application and the administrator of a Grant award will be the Flathead Municipal Airport Authority / Glacier Park International Airport. Cindi Martin is the Airport Director and administrated the Airport’s previous Grant award. 

## GLACIER PARK AIR SERVICE SUPPORTERS: OUR PUBLIC PRIVATE PARTNERSHIP

Cities of Columbia Falls, Kalispell & Whitefish Flathead County Glacier Park International Airport Alamo/National, Budget & Dollar Car Rental Big Mountain Commercial Associates Applied Materials, Inc First Interstate, First Montana, Glacier, Mountain West, Rocky Mountain, Three Rivers and Valley Banks Flathead Business and Industry Association Flathead Lake Lodge, Glacier Country Tourism, Glacier Park, Inc, Lakeside Club and Whitefish Mountain Resort Kalispell and Whitefish Chambers of Commerce Kalispell and Whitefish CVBs Mountain West Economic Development National Flood, Inc National Parks Realty Nomad Global, Inc Northwest Healthcare / KRMC and North Valley Hospital Rocky Mountain Transport



### Cindi Martin, C.M. Airport Director Flathead Municipal Airport Authority 4170 Highway 2 East, Kalispell, MT 59901 406 257 5994 cindi@glacierairport.comGlacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 27 SUMMARY
The Glacier Park region is one of the most isolated in the lower 48, two hour’s drive from a freeway, more than that from any alternative air service and well over four hours drive to measurable low fare air service. The region’s economy is highly dependent on tourism, on drawing visitors from all over the nation and th e world. This means it is highly dependent on having adequate and reasonably priced air service.

Yet Glacier Park air service ca pacity has declined 33% since 2003 and 16% since 2008. Its average domestic fare is the highest in Montana, excluding EAS markets and the business travel oriented state capital at Helena. Current air services are also out of balance, with the bulk of capacity heading south and east while a signific ant portion of demand is west or southwest. Furthermore, fall, winter and spring capacity is typically about 50% less than peak summer capacity, to the detriment of passenger demand during those seasons. California generates
16% of total domestic market O&D and the Los An geles Basin generates 6% of the total market.

Our Grant application calls for modest Grant funding of $200,000. Our community, mobilized and focused on improving air service, has raised $60,750 in cash matching funds, with 28 individual companies or organizations making co ntributions. Our Air Service Support Committee has 33 member companies or groups. In short we are focused on ensuring this Grant is as successful as our first Grant, which enabled Unit ed Airlines to enter an d grow in our market.

The Los Angeles Basin, considered as one market, is the largest Glacier Park market without nonstop service. Due to our diligent work recruiti ng new air service, Allegiant Air has indicated its interest in Los Angeles service. However, the stag e length and high cost of airport access in the Basin causes Allegiant to hesitate on implementa tion. Grand funding will provide, during initial operations, a zero-cost ground handling program at Glacier Park for the carrier and support an aggressive “both ends” marketing program to ensure high ridershi p. Allegiant has written a letter of support for this Grant application.

Effective and reasonably priced air service is no t a “nice to have” amenity at Glacier Park. Our isolation means it is a necessity. Our magnific ent surroundings make possible a strong tourism economy, but our isolation can make it difficult fo r tourists to visit. This Grant will make possible year-round low fare nonstop service from Los An geles. We urge the Department to award this Grant. The benefits are clear and signific ant, the grant funding cost very modest.Glacier Park International Airport • Small Community Air Service Development Grant Proposal • June 2012 

## 28