Docket: DOT-OST-2010-0124

Before the Office of the Secretary of Transportation

U.S. Department of Transportation

Glacier Park International Airport / Kalispell, Montana

Proposal under the Small Community Air Service Development Program

An Integrated Program of New Service Development via;

Start-up Cost Offsets, Advertising/Marketing, and Revenue Guarantees 

In Support of New Service to/from San Francisco on United Express

Sponsor: Glacier Park International Airport

Kalispell, Montana

Cindi Martin – Airport Director

Congressional Code: MT-001

Dun & Bradstreet Number: 119522167

August 27, 2010
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 2

Table of Contents

Description Page number

Table of Contents 2

Airport Letter 3

Summary Information (Appendix B) 4

Introduction and Proposal Objectives 7

Kalispell Location and Population 9

Air Service & Traffic 11

Average Fares 14

Traffic by Region 16

Alternative Airports 17

Traffic Leakage 18

Air Service Needs and Deficiencies 20

Glacier Park Previous Grant Award 23

Local Air Service Development Efforts 24

Detailed Explanation of Proposal 25

Extenuating Factors Affecting Glacier Park Air Service 30

A Strategic Plan for Success 31

Public/Private Partnership & Air Service Advisory Group 32

Grand Funding 34

Target Audience & Marketing Plan 35

Grant Timeline, Milestones and Monitoring 37

Performance Measurements 38

Financial Controls and Return on Investment 38

Use of Department Funds and Route Self Sufficiency 39

Alternative Plan and Legal Sponsor 40

Airport Profile 41

Community Information 42

Summary 48
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 3

Introductory Letter
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 4

Summary Information

Small Community Air Service Development Program

Docket DOT-OST-2010-0124

A. Applicant Information

 Not a Consortium Community now receives EAS subsidy

 Interstate Consortium Intrastate Consortium

 Community previously received a Small Community Grant

 If previous recipient, Date of Grant: August 18, 2006

Expiration date of Grant: June 1, 2009

B. Public/Private Partnership

Public:

1. Glacier Park International Airport

2. Montana Department of Commerce Regional Development Office

Private:

 

1. Montana West Economic Development

2. The Flathead Port Authority

3. Whitefish Partners
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 5

C. Project Proposal

 Marketing Upgrade Aircraft New Route

 Personnel Increased Frequency Low Fare Service

 Travel Bank Service Restoration Subsidy

 Surface Transportation Regional Service Other (Specify)

 Revenue Guarantee Launch New Carrier

 Start Up Cost Offset First Competitive Service

 Study Secure Additional Carrier

D. Existing Landing Aids at Airport

 Full ILS Outer/Middle Marker Published Instrument Approach

 Localizer Other:

E. Project Cost

1. Federal amount requested: $ 500,000

2. State cash financial contribution: $ 0

3. Local cash financial contribution: $ 50,000

3a. Airport cash funds: $ 0

3b. Non-Airport cash funds: $ 50,000

3c. Total local cash funds: $ 50,000

4. TOTAL CASH FUNDING: $ 550,000

5. Local funds contributed from already existing

Programs of projects included in line 3c: $ 0

6. Local funds contributed from new commitments

Or new resources included in line 3c: $ 50,000 $39,000 MT West Econ Dev

 $10,000 Big Mtn Merchants

 $ 1,000 Glacier Country

7. Airport In-Kind contribution: $ 0

8. Other In-Kind contribution: $ 0

9. TOTAL IN-KIND CONTRIBUTION: $ 0

10. TOTAL PROJECT COST: $ 550,000
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 6

F. Enplanements at Airport

2000: 157,850

2001: 154,575

2002: 149,660

2003: 154,650

2004: 168,057

2005: 178,072

2006: 191,293

2007: 176,319

2008: 172,845

2009: 159,758

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?

 No
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 7

Introduction and Proposal Objectives

Kalispell’s Glacier Park International Airport and the air service it offers is a key driver of the 

economic health of Montana’s Flathead Valley. The valley is one of the most isolated areas of 

the country, some 121 miles from the Interstate highway system and very long distances, by road 

or by air, from major cities like Seattle (580 miles by road and 379 by air), Denver (1,140 miles by 

road and 753 by air) or Minneapolis (1,303 miles by road and 1,025 by air).

Yet the Flathead Valley economy is highly dependent on access to the rest of the nation and to 

the world beyond. This is true not only for the estimated 186,000 residents of the Glacier Park 

catchment area but also critical to region’s economy, particularly for the tourism industry.

The tourism industry of the Kalispell area must compete for tourist and their dollars with other, less 

isolated venues. Northwest Montana’s summer and winter vacation sites and activities are 

among the best in the world. However, reasonably priced air service and adequate airline 

capacity are critical to the efforts of the local tourism industry to attract a fair share of American 

and international tourists and their leisure spending.

The Glacier Park International Airport has some of the highest air fares in the entire Northwest 

region. The Delta/Northwest merger has altered the competitive balance in the market and left 

Delta with a majority market share. This market share concentration does not bode well for

airfare moderation; instead it implies even higher fares are in Kalispell’s future.

Furthermore, Kalispell’s air service is not oriented toward the region’s largest travel communities 

of interest. A full 45% of Kalispell’s current traffic demand is westbound, yet only 28% of its current 

capacity is westbound.

Kalispell was very fortunate to receive a 2006 SCASD Grant that was used to recruit successful 

United Airlines service to Denver. That Grant and the successful entry of United into the market is 

even more important in light of the Delta/Northwest merger and the resulting market share 

concentration. Without United’s market presence Delta would have an estimated 65% Kalispell 

market share.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 8

It remains critical to address Kalispell’s air service challenges; high fares, market share 

concentration and westbound capacity deficiencies. Kalispell has demonstrated it supports new 

air service and used its first grant wisely and to enormous benefit.

The Airport proposes a new SCASD Grant that will address these significant challenges. 

Specifically this Grant will be for the risk abatement and marketing of improved westbound 

service. The primary new route/carrier target for this Grant is United Airlines service to San 

Francisco. This service would bring more capacity and competition to the market and thus lower 

fares, strengthen United’s overall footprint at Kalispell, help balance out the market 

concentration, and provide a nonstop link between Kalispell and its number one market 

(California) via United’s large SFO hub. Availability of modest risk mitigation is essential for 

network carriers to consider new service. This is particularly so with United in 2011 as it will most 

likely be consummating a merger with Continental in that timeframe.

Kalispell, the Department and United teamed up before to bring the successful United Denver 

service to the market. This Grant proposal will build on that success.

Objectives for Program:

• Bring additional capacity to Glacier Park International

• Lower average airfares through increased capacity and competition

• Add nonstop westbound service for the 45% of Kalispell traffic that is westbound

• Reduce inefficient leakage to Missoula and Spokane

• Broaden United Airlines market stance to balance Delta market share concentration 

Means to Achieve Objectives:

• Use SCASD Grant and local match to provide a partial startup phase revenue 

guarantee for new westbound service

• Build on the knowledge and learning from the highly successful first SCASD Grant

• Leverage local community, business and resort interest in improved air service to 

maximize support for new service

Course of Action to Support Means:

• Provide startup cost offsets for the new carrier

• Provide revenue guarantees to ensure the success of the new service

• Provide an aggressive multi level marketing program to support the new flights
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 9

Kalispell & the Flathead Valley: Location & Population

Glacier Park International Airport is the gateway for the Flathead Valley, and the communities of 

Kalispell, Whitefish, and Columbia Falls, Montana, along with the world famous Glacier National 

Park. The Airport serves a large and fast growing area that includes parts of Montana, Idaho, 

Alberta, Canada, and British Columbia, Canada.

The Airport’s catchment area (green shaded area) extends well over 100 miles to the west, north 

and east, mostly across rural terrain on two lane highways. Glacier Park International is the 

closest U.S. airport for portion of Canada included in the catchment area. The furthest extents of 

this catchment area are somewhat attributable to Allegiant Air low fare service to Las Vegas. 

The Airport’s location near the junction of the two main highways of the region means it has 

enormous potential as a regional gateway; provided adequate capacity and reasonable fares 

are available.

Approximately 186,000 U.S. and Canadian residents live in the Glacier Park International Airport 

catchment area. Local population has grown by nearly 20% since 2000. This growth rate 

outpaced much of the rest of the mountain west for the same period. The vast majority of this 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 10

growth was in the immediate Kalispell – Whitefish – Columbia Falls Micropolitan area, with very 

little of the growth occurring on the Canadian side of the border.

The more detailed topography and city/highway map below illustrates Glacier Park’s central 

location in the Flathead Valley and near the junction of the two major highways of the region.

74,710 75,997 77,248 79,167 80,635 82,535 84,824 87,200 89,104 89,624

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

MSA Population

Kalispell Micropolitan Statistical Area Population

Nine Year Growth 20%
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 11

It also illustrates the significant distance from Kalispell to Interstate 90 as well as to nearby airports 

at Missoula, Spokane and Great Falls. The map topography only hints at the challenges that the 

mountainous terrain presents to travel by road.

Glacier International Airport Air Service and Traffic

The Glacier Park International Airport is served by four airlines. Delta Air Lines, now merged with

Northwest, had a (combined) 51% share of traffic and capacity in 2009 and provides year round 

service to Minneapolis and Salt Lake City and summer seasonal service to Atlanta.

United Airlines serves Denver with the aid of the 2006 SCASD Grant and offers summer seasonal 

service to Chicago. Alaska/Horizon Air provides service to Seattle and Allegiant Air operates

twice weekly to Las Vegas

Carrier Routes Onboard % Total Seats % Total Flights % Total Load Factor

Delta (Northwest) Atlanta 2,782 0.9% 3,520 0.9% 22 0.3% 79.0%

Minneapolis 44,768 14.5% 60,230 14.6% 612 9.7% 74.3%

Salt Lake City 111,224 36.0% 147,046 35.6% 2,861 45.5% 75.7%

Alaska/Horizon Seattle 77,687 25.1% 114,258 27.6% 1,506 24.0% 68.0%

United Denver 35,736 11.6% 45,254 10.9% 899 14.3% 79.0%

Chicago 9,631 3.1% 11,716 2.8% 178 2.8% 82.2%

Allegiant Las Vegas 27,339 8.8% 31,500 7.6% 210 3.3% 86.8%

Total 309,167 413,524 6,288 76.1%

T100 data for year 2009

GLACIER PARK MARKET TRAFFIC AND CAPACITY: 2009
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 12

Traffic Demand

Glacier Park traffic has only seen net growth of 1.2%, comparing year 2009 to year 2000.

Given that the Kalispell area saw population growth of 20% in the same 2000 to 2009 period this 

is compelling evidence of a shortfall of air service capacity and competitive pricing.

Because the Kalispell region is a recreational wonderland and tourism is a significant component 

of the local economy, Glacier Park air travel demand has a measurable seasonality. Summer 

season traffic demand (Q3) has historically been more than twice that of winter (Q1).

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

157,850 154,575 149,660 154,650

168,057 178,072

191,293 176,319 172,845

159,758

Glacier Park Enplanements: 2000 - 2009

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4

61,990

79,210

137,830

73,590 69,620

77,850

131,930

66,310

59,750

73,380

106,890

61,920

Glacier Park O&D Traffic by Quarter: 2007 - 2009
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 13

Glacier Market Capacity

Glacier Park capacity also peaks in the summer and recedes in the winter. Given the significant 

and growing winter vacation industry of the area, does limited winter capacity constrict traffic or

does it accurately reflect its true level?

Top Markets

The western orientation of Glacier Park traffic demand is illustrated by the makeup of the top 

twenty market list. The importance of San Francisco and the Bay Area is also clear.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4

121,980

146,780

183,782

113,388 107,644

126,360

174,974

110,720 105,372 109,158

138,936

88,412

Glacier Park Capacity by Quarter: 2007 - 2009

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Las Vegas

Seattle

Denver

Minneapolis

Salt Lake City

Dallas

Atlanta

Los Angeles

San Francisco

Chicago

Phoenix

Newark

San Diego

Portland

Orlando

San Jose

Houston

Sacramento

Orange County

Oakland

32,740

24,810

12,020

9,530

8,110

7,700

7,550

7,550

7,110

6,940

6,660

6,410

6,190

5,890

5,050

5,030

5,000

4,750

4,730

4,690

44.8

34.0

16.5

13.1

11.1

10.5

10.3

10.3

9.7

9.5

9.1

8.8

8.5

8.1

6.9

6.9

6.8

6.5

6.5

6.4

O&D Passengers

PDEW
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 14

Eleven of Glacier Park’s top twenty markets are west of Kalispell. Seven of the top twenty are in 

California. San Francisco by itself is the ninth largest O&D market for Glacier Park, when 

combined with Oakland and San Jose the overall market becomes the fourth largest for Glacier 

Park with some 16,830 annual O&D or 23 PDEW. The United hub at San Francisco would generate 

online connections to eight of Kalispell’s top twenty markets and fifteen of its top fifty.

Glacier International Airport Average Fares

Glacier Park has the highest average fares in the western Montana, northern Idaho and eastern 

Washington region.

In 2009 Glacier Park’s average one way net domestic fare was $196. This is 7% higher than at 

Missoula and 45% higher than at Spokane. For the seven year period of 2002 to 2009 Glacier 

Park’s average one way fare has increased 22%, from $161 to $196.

This is despite the addition of Allegiant Air Las Vegas service in 2007. Allegiant Air service tends to 

lower overall market average fares due to the large volume of traffic generated at very low net 

fares to only one or a few destinations. Excluding Allegiant Air, Glacier Park’s 2009 average one 

way fare was $210, a 30% increase since 2002 and 56% higher than Spokane’s 2009 fare. The 

gap between Glacier Park’s high average fares and those of Missoula and Spokane is also 

$108 $112 $115 $120

$134 $135 $139 $135

$161 $165

$165

$174

$216 $222 $219

$196

$161 $166

$162

$169

$203 $206 $203

$184

$0

$50

$100

$150

$200

$250

2002 2003 2004 2005 2006 2007 2008 2009

Average Fare

.

Spokane Glacier Park Missoula
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 15

significant when the difference in type of market is considered. Spokane is a major regional 

population and business/commerce center and only minimally a tourism and leisure activity 

magnet. Thus a significant component of Spokane traffic demand is business travel. Missoula has 

some leisure traffic demand but again is a regional business/commerce center (including a 

large state university). Thus a significant portion of Missoula traffic demand is business travel.

Glacier Park is primarily a tourism and leisure travel generator. Given that leisure average fares 

are typically lower than business travel fares due to longer advance purchase and weekend 

stays, this means that Glacier Park’s primarily leisure travelers are paying significantly higher 

average fares than Spokane or Missoula’s more business/commerce traveler profile. While it is 

impossible to put precise numbers on this it is clear that Glacier Park is primarily a leisure travel 

market and is paying higher fares then business/commerce markets Spokane and Missoula.

A further illustration of Glacier Park’s high average fares is a comparison to average fares in 

Northwest Region markets with similar or larger catchment areas. Glacier Park has the second 

highest fare in the group and is argumentatively the most leisure travel oriented market of the 

group, which further compounds the impact of being ranked second.

In summary, Glacier Park is one of the highest average fare markets in the northwestern U.S. On 

a smaller scale this is as if Orlando had the highest average fare in the southeast U.S. 

Average One-Way Fares at Northwest Region Airports With Catchment Areas of 150,000+

12 Months ended 3/31/2010

$0 $50 $100 $150 $200 $250 $300

Idaho Falls

Glacier Park

Great Falls

Pasco

Bozeman

Missoula

Billings

Eugene

Medford

Portland

Seattle

Boise

Spokane

$199

$197

$195

$185

$184

$183

$166

$160

$151

$150

$149

$136

$136
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 16

Glacier Park Domestic Traffic by Region

There is a strong western orientation to Glacier Park domestic traffic. Over 45% of the Airport’s 

domestic traffic is exchanged with airports in the western U.S., specifically Arizona, Nevada, 

California, Oregon, Washington, Alaska and Hawaii (blue shared area below).

Glacier Park exchanged some 43,100 O&D (59 PDEW) with California alone in the twelve months 

ended 3/31/2010. This is more traffic exchange than with any other region except the northeast 

and far and away more than with any other state.

Region O&D Traffic Percent Total

Northeast 45,370 15.0%

Southeast 35,600 11.8%

South Central 20,870 6.9%

Midwest 38,170 12.6%

Intermountain 24,990 8.3%

Far West 137,040 45.4%

12 months ended 3/31/2010

GLACIER PARK DOMESTIC TRAFFIC BY REGION 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 17

Alternative Airports

Air service airports in the Glacier Park region include; Missoula 125 miles and 2:15 drive time to 

the south, Great Falls 234 miles and 3:39 drive time to the east and Spokane 254 miles and 4:21 

drive time to the west. 

Alternate Airports Near Glacier Park International

Despite significant distances and mountainous roads Glacier Park International Airport does 

suffer leakage of traffic to other airports. As was illustrated in the average fare section above 

Spokane average fares are some 56% lower than at Glacier Park (excluding Allegiant Air service 

to Las Vegas) and thus would present a strong temptation in many cases to Glacier Park tourism 

visitors who intend to rent a car in any case. Glacier Park average fares are some 7% higher than 

at Missoula as well.

FCA

MSO

GTF GEG

Alternate Airports
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 18

Traffic Leakage

The Kalispell market is relatively isolated and not on the Interstate Highway system. Yet significant 

air traffic demand leaks from Kalispell to surrounding airports, specifically Missoula and Spokane. 

Although the Glacier Park International Airport catchment area represents a large proportion of 

the population of the larger region, the Airport does not retain the number of passengers equal 

to its share of the regional population. In other words, the Airport is leaking a large percentage 

of its passengers to other airports – even when those airports are not particularly close.

The Kalispell-Whitefish-Columbia Falls micropolitan statistical area had a population of over 

89,624 in 2009. The larger region comprised of the MSAs of Kalispell plus Great Falls, Missoula and 

Spokane has 2009 population of 749,109.

Kalispell’s share of the regional population is 12.0%, while Spokane has the largest share of the 

regional population, with 62.6%.

In theory an Airport draws a number of passengers proportional to its overall population in the 

region. If that were to be the case in the Kalispell market, one could reasonably expect the 

Airport to retain about 12% of the total passengers using all four airports in the larger region. 

However, in the case of Kalispell, Glacier Park International Airport retains only 7.8% of the 

region’s O&D traffic..

This implies leakage of 4.2% of traffic or in this case 163,223 annual O&D or a leakage rate of 

35.1% for Glacier Park. The largest beneficiary of Kalispell’s passenger leakage is Spokane, which 

we have already noted has average one way fares some 56% lower than at Glacier Park.

MSA Population O&D Traffic Traffic Gap Implied Leakage

Market 2009 % Total 2009 % Total Leakage O&D Leakage Percent

Glacier Park 89,624 12.0% 301,940 7.8% -4.2% 163,223 -35.1%

Great Falls 82,178 11.0% 273,210 7.0% -3.9% 153,190 -36.0%

Missoula 108,623 14.5% 521,770 13.5% -1.0% 40,302 -7.1%

Spokane 468,684 62.6% 2,779,440 71.7% 9.1% -352,839 12.7%

Total 749,109 3,876,360

GLACIER PARK LEAKAGE: POPULATION VS O&D TRAFFIC
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 19

Another way of determining passenger leakage from the Kalispell market to other airports in the 

region is by comparing the economy of Kalispell to the economies of the nearest three cities 

with commercially-served airports. The easiest way to gauge each catchment area’s 

contribution to the economy of the region is to compare the gross metropolitan products (GMP) 

of each. A GMP is much like a gross national product – an overall gauge of economic activity in 

an area in dollars earned.

The United States Council of Mayors reports the Kalispell-Whitefish-Columbia Falls metro area 

produced a GMP of $3.5 billion in 2009, which represented 12.3% of the total gross regional 

product (GRP) of the area including Spokane, Missoula, and Great Falls. Spokane generated 

the largest portion of the GRP, with $17.5 billion, or 61.6%, while Missoula produced a GMP of $4.6

billion – good for 16.2% of the GRP.

Using this method of measurement Glacier Park’s implied leakage is nearly 175,000 annual O&D 

or 36.7% of traffic demand suggested by Gross Metropolitan Product.

Regardless of method of measurement the evidence is clear and consistent that Glacier Park 

does not generate O&D traffic in proportion to either its population or economic generation.

GMP 2009 O&D Traffic Traffic Gap Implied Leakage

Market In Billions % Total 2009 % Total Leakage O&D Leakage Percent

Glacier Park 3.5 12.3% 301,940 7.8% -4.5% 174,924 -36.7%

Great Falls 2.8 9.9% 273,210 7.0% -2.8% 110,550 -28.8%

Missoula 4.6 16.2% 521,770 13.5% -2.7% 106,200 -16.9%

Spokane 17.5 61.6% 2,779,440 71.7% 10.1% -391,602 16.4%

Total 28.4 3,876,360

GLACIER PARK LEAKAGE: GROSS METROPOLITAN PRODUCT VS O&D TRAFFIC
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 20

Air Service Needs and Deficiencies

The Kalispell region is among the most isolated in the lower 48 of the United States, being a two 

hour drive from an Interstate Highway, a two hour drive from the nearest alternative airport and 

over a four hour drive from the nearest airport with low fare air service. Furthermore, the major 

population centers of the United States are hundreds or thousands of miles from the region. Thus 

air service becomes an even more critical factor for supporting economic health and growth.

Compounding this isolation is the fact that the Glacier Park market has the second highest 

domestic average fare paid of all airports of similar or larger catchment area in the northwest 

U.S. The Glacier Park market has this high average fare despite a significant tourism/leisure travel 

component. Passengers traveling on vacation generally buy tickets far in advance and stay 

over a weekend, thus qualifying for low price points. The northwest region airports that Glacier 

Park is compared to all have more business travel demand than does Glacier Park. Thus, in 

effect Glacier Park is a leisure market paying business market type average fares.

Glacier Park’s current air service is oriented toward the south and east while the largest portion 

of its traffic demand (45%) is to the west. The merger of Delta Air Lines and Northwest Airlines has

also reduced competition at Glacier Park. Effectively Glacier Park lost an airline, even though so 

far the merged carrier has retained service to all hubs flown prior to the merger. The loss of an 

airline, in terms of the dynamics of market price competition, is significant and is highly likely to 

lead to even higher fares in the future than are being paid now. 

These market air service deficiencies are compromising the economic health and growth 

prospects for Kalispell and the entire Flathead Valley region. This is particularly true for the tourism 

industry of the region, which accounts for more than a third of regional economic activity. While 

the region’s backpacking, fishing, boating, hunting and a host of other activities are known and 

renowned nationally and worldwide, a lack of good air service access and reasonable airfare 

pricing is hampering the region’s ability to compete with other, more easily accessible, 

wilderness venues in nearby states. This is especially true in these times of consumer austerity, 

when vacation dollars are both less available and consumers are seeking value for them.

Limited air service access, especially to the west, is also harming local efforts to recruit new 

business and industry from higher cost of living areas like California.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 21

The Need to Improve Westbound Access

The Glacier Park market is a paradox. Almost two thirds of airline seats that arrive and depart 

Glacier Park International Airport are east or south bound. Only about one third of market seats 

are to or from westbound destinations.

Yet 45% of Glacier Park O&D traffic is exchanged with markets to the west. A startling 15% of 

total Glacier Park O&D traffic is exchanged with California markets alone, yet Glacier Park has 

no nonstop service to any California city. Seven of the top twenty Glacier Park domestic 

destinations are in California.

San Francisco is the perfect California gateway for Glacier Park. San Francisco ranks as Glacier 

Park’s ninth largest O&D market and the Bay Area, when San Francisco, Oakland and San Jose 

are combined, is Glacier Park’s fifth largest O&D market. 

The United Airlines hub at San Francisco offers nonstop service to a total of 50 domestic and 

international markets, 20 in California, 15 other domestic destinations, four each in Mexico and 

Hawaii, two in Europe and five in Asia.

The O&D traffic demand between Glacier Park and California clearly illustrates that the Kalispell 

region has significant leisure and business communities of interest with California. San Francisco is 

the closest major city in California to Glacier Park and the United Airlines hub operation at San 

Francisco is the largest network carrier hub in the state.

The Need to Rebalance Glacier Park Market Competition

Prior to the Delta Air Lines / Northwest Airlines merger Glacier Park had five airlines offering 

service, including four network carriers.

The merger effectively cost Glacier Park a competitor. While the newly merged Delta has not, as 

of yet, cut service to any hub previously flown by the two airlines, the Glacier Park market has 

lost for certain one price competitor. Instead of four network carriers pricing competitively in the 

market there are now are three. Furthermore both Alaska/Horizon and United face limitations to 

their ability to fully compete in the Glacier Park market. Alaska/ Horizon’s hub is Seattle, nearly 

400 miles directly west of Glacier Park. Because of this Alaska/Horizon is hard pressed to offer 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 22

competitive connections and pricing to many cities beyond the west coast. United service is 

year round to Denver and summer season to Chicago and thus this carrier is hard pressed, again 

by hub location and routing circuity, to offer effective competition to western destinations. The 

shifts in Glacier Park market share due to the Delta/Northwest merger are clear.

Delta now has clear market dominance and the hub location limitations of competitors mean 

that Delta often only has one real competitor on many routes.

Delta 35%

Northwest 

17%

Alaska 

24%

United 

15%

Allegiant

9%

Glacier Park Market Share 2009

Delta 51%

Alaska 

24%

United 

16%

Allegiant

9%

Glacier Park Market Share 2010
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 23

Strengthening the smallest carrier, by market share, is the best way to rebalance the 

competition at Glacier Park. United has been successful operating Denver and (seasonal) 

Chicago service. The addition of San Francisco would give the carrier a much greater footprint 

in the market, more internal flexibility in terms of capacity allocations and schedule timing and 

the ability to more effectively compete for western market traffic.

Nonstop service between Glacier Park and San Francisco would help address all of the market’s 

current deficiencies; lack of westbound access in proportion to traffic demand, the second 

highest average fares in the region despite being a primarily leisure market, and the market 

share consolidation issues and diminishing of competition that has resulted from the 

Delta/Northwest merger.

Glacier Park International Airport Previous Grant Award

In August of 2006 the Department awarded Glacier Park a $450,000 Small Community Air Service 

Development Grant. The goal of the 2006 grant was to bring new air service to Kalispell, 

specifically United Airlines service from Denver.

Glacier Park is proud of the success of the 2006 Grant. United began Glacier Park service in 2007 

and that service continues to operate profitably today. As a result of the market toehold the 

Denver flights have gained for United the carrier has successfully experimented with summer 

season Chicago service in recent years.

The 2006 Grant was closed on June 1, 2009 and 100% of the DOT and local match funding was 

used to support the successful startup of the United Denver service. Clearly Glacier Park 

International Airport, the Kalispell region and the entire Flathead Valley do support new air 

service and the airport and surrounding communities have demonstrated they know how to 

successfully use precious Air Service Development Grant dollars effectively.

It is specifically because of the success of the first Grant that Glacier Park now files this 

application for a new, second grant. The first Grant was specifically for Denver, a hub southeast 

of Glacier Park that improves east and south connections. This new Grant application is to 

improve westbound service via San Francisco. We firmly believe that United service to San 

Francisco will work as well or better than the Grant supported Denver service. 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 24

Local Air Service Development Efforts

Since at least 1998 Glacier Park International Airport has been involved in aggressive air service 

development efforts. During that year Glacier Park International Airport retained the services of 

Sixel Consulting Group to help recruit Northwest Airlines to serve the Flathead Valley year round 

(at that time they provided only seasonal service). 

In 2001, Glacier Park International Airport first approached United Airlines regarding service to 

Denver. The events of 9/11 and United’s subsequent bankruptcy led to putting that partnership 

on hold. 

In early 2003 Glacier Park International Airport visited America West Airlines in Phoenix to propose 

service to Phoenix. The Airport proposed seasonal Airbus service to America West. Beginning in 

June 2003 America West began year round regional jet service to the Flathead Valley with one 

flight per day. Following the summer of 2004 America West discontinued service. They returned 

in the summer of 2005 but left the market after the merger with US Airways.

In 2006, Glacier Park International Airport was able to recruit United Airlines service to Denver, 

aided greatly by a Department Grant. United’s successful Denver route has allowed the carrier 

to operate seasonal summer Chicago service. 

In 2008, the Airport recruited Allegiant Air to begin twice-weekly service to Las Vegas. That 

service has performed well in its first two years of service.

The Airport remains in close and regular contact with its incumbent airlines. The Airport has 

attended each of the Allegiant Air annual February conferences at that carrier’s headquarters 

city of Las Vegas. At least once per year but often twice or more the Airport has either a 

conference call with each of its incumbent network carriers or makes a visit to each carrier’s 

headquarters. The Airport also attends either the Network or Jumpstart Conference each year.

In November of 2009 Glacier Park presented a market briefing document to Frontier Airlines at its 

headquarters in Denver. The Airport has followed up this meeting with additional market 

information transmissions to Frontier. 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 25

Detailed Explanation of Proposal

The Glacier Park market is very isolated and air service dependent, has the second highest fares 

of any airport in its peer group in the Northwest Region, suffers from a competitive imbalance 

post Delta/Northwest merger and has the majority of its air service headed east and south while 

45% of its traffic is westbound.

The Airport proposes to offer Grant funding, marketing support and revenue guarantees to a 

United Express carrier for daily flights to the San Francisco hub.

This will, in some form, address all of the market service issues listed above.

 Additional capacity will discipline pricing, if not lead to lower fares in some markets.

 United has the smallest traffic share in the market, enabling that carrier to add capacity 

and link the market to its large west coast hub will strengthen the carrier service footprint 

and add a third carrier to the pricing equation in many west coast markets.

 This service will, at long last, give Glacier Park nonstop service to California and 

additional capacity to the west, where 45% of its traffic exchanged.

 Enabling United to add a route to its powerful San Francisco hub will redress the market 

share imbalance that has occurred post Delta/Northwest merger.

This new route can be started up very efficiently because United already has operating 

infrastructure at Glacier Park.

This new route can be operated very efficiently, in tune with seasonal traffic demand 

fluctuations, because United accesses the Glacier Park market year round from its Denver hub 

and less than daily off peak service can be complimented by connection service via Denver. At 

the same time, United will have the flexibility to add capacity during peak summer and winter 

travel periods, especially on weekends when leisure travel demand for Glacier Park is highest 

and some business routes at the San Francisco hub are operated at reduced frequency.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 26

Glacier Park to San Francisco is 844 miles and the Airport believes that Untied would typically 

operate the route with a 50 seat regional jet, although larger equipment could be substituted 

during peak periods.

The operational statistics summary assumes an average of one daily round trip, however, the 

carrier may operate two flights per day at peak periods like on weekends in peak summer or 

peak winter. At the same time service may be reduced to less than daily during should periods 

like November or May.

Distance 844

Block Time 2.5

Annual Segments 716

Annual Block Hours 1,790.0

Annual Seats 35,800

ASM 25,632,800

Estimated CASM 0.19

Estimated Annual Op Cost $4,870,232

Estimated Cost/Hour $2,721

 OPERATIONAL STATISTICS: FCA - SFO
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 27

San Francisco is Glacier Park’s ninth largest O&D destination and the combined Bay Area of San 

Francisco, Oakland and San Jose is Glacier Park’s fifth largest O&D destination. Nonstop service 

would stimulate those numbers significantly.

The United Airlines hub at San Francisco offers to Glacier Park online connection service to a 

total of 50 domestic and international markets; 20 in California, 15 other domestic destinations, 

four each in Mexico and Hawaii, two in Europe and five in Asia.

Connections Available Beyond the United Airlines San Francisco Hub

Glacier Park – San Francisco service would be a perfect complement to existing United service 

to Denver and during the summer season to Chicago. It would “bulk up” United’s market 

footprint in the market by giving it the ability to more effectively compete for traffic to the west. 

United also has a significant international service pattern at San Francisco, including nonstop 

flights to five Asian cities, four Mexican cities and two European capitals.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 28

First Year Traffic and Revenue Forecast

United Express regional jet service is estimated to generate 28,308 onboard O&D the first year of 

operation.

2011 UA Share United United United United Segment

Destination YR 10Q1 Avg Fare Traffic Via SFO Traffic Avg Fare Ancillary Revenue Revenue

SFO 7,110 $177.41

SJC 5,030 $186.76

OAK 4,690 $178.38

Bay Total 16,830 $180.47 25,245 55% 13,885 $177 $14 $2,457,615 $2,457,615

EWR 6,410 $209.64 6,731 5% 337 $201 $7 $67,734 $27,094

BOS 4,520 $230.45 4,746 5% 237 $221 $7 $52,505 $21,002

PHL 3,620 $270.51 3,801 5% 190 $260 $7 $49,361 $19,744

IAD 2,820 $276.27 2,961 5% 148 $265 $7 $39,273 $15,709

BWI 2,450 $240.60 2,573 5% 129 $231 $7 $29,716 $11,887

JFK 2,040 $265.49 2,142 5% 107 $255 $7 $27,304 $10,921

MCO 5,050 $217.81 5,303 5% 265 $209 $7 $55,444 $22,178

DFW 7,700 $252.23 8,085 5% 404 $242 $7 $97,892 $39,157

IAH 5,000 $218.35 5,250 5% 263 $210 $7 $55,031 $22,012

AUS 2,070 $237.97 2,174 5% 109 $228 $7 $24,834 $9,934

SAT 1,550 $273.02 1,628 5% 81 $262 $7 $21,335 $8,534

DEN 12,020 $223.62 12,621 3% 379 $215 $7 $81,289 $32,516

ABQ 1,540 $257.36 1,617 5% 81 $247 $7 $19,982 $7,993

LAS 32,740 $82.31 34,377 5% 1,719 $79 $7 $135,826 $81,496

LAX 7,550 $186.86 7,928 15% 1,189 $179 $7 $213,319 $127,991

PHX 6,660 $197.23 6,993 15% 1,049 $189 $7 $198,616 $119,170

SAN 6,190 $196.21 6,500 15% 975 $188 $7 $183,645 $110,187

SMF 4,750 $184.84 4,988 15% 748 $177 $7 $132,759 $79,655

SNA 4,730 $174.53 4,967 15% 745 $168 $7 $124,827 $74,896

ONT 2,410 $228.02 2,531 15% 380 $219 $7 $83,096 $49,857

BUR 2,000 $177.04 2,100 15% 315 $170 $7 $53,544 $32,126

HNL 1,990 $270.80 2,090 15% 313 $260 $7 $81,487 $48,892

RNO 1,590 $165.41 1,670 15% 250 $159 $7 $39,773 $23,864

LGB 1,530 $195.52 1,607 5% 80 $188 $7 $15,084 $9,050

TUS 1,530 $220.08 1,607 15% 241 $211 $7 $50,919 $30,552

OGG 1,380 $280.12 1,449 15% 217 $269 $7 $58,456 $35,073

PSP 1,330 $172.53 1,397 15% 209 $166 $7 $34,702 $20,821

FAT 1,090 $212.72 1,145 15% 172 $204 $7 $35,065 $21,039

SBA 1,020 $205.44 1,071 15% 161 $197 $7 $31,691 $19,014

KOA 910 $260.32 956 15% 143 $250 $7 $35,825 $21,495

LIH 670 $256.67 704 15% 106 $246 $7 $26,009 $15,605

BFL 150 $303.67 158 50% 79 $292 $7 $22,964 $13,779

MRY 130 $147.08 137 33% 45 $141 $7 $6,367 $3,820

RDD 120 $146.25 126 50% 63 $140 $7 $8,852 $5,311

ACV 110 $162.91 116 50% 58 $156 $7 $9,039 $5,423

SBP 70 $323.86 74 50% 37 $311 $7 $11,433 $6,860

Total 154,270 161,984 25,908 $4,672,615 $3,662,274

Asia 900 $762 $21 $685,821 $274,328

Mexico 900 $298 $14 $268,214 $88,511

Europe 600 $775 $21 $465,021 $186,008

Total Traffic 28,308 $6,091,671 $4,211,122

Projected Traffic & Fare With United Service

FCA - SFO TRAFFIC & REVENUE

Current Traffic & Fare
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 29

The new service will generate an estimated $6.4 million in total revenue for United, an estimated 

$4.2 million of which would be credited to the local segment Glacier Park – San Francisco.

A modest $402,782 first full year operating loss is projected. This is a 9% negative margin and a 

reasonable first year outcome. The operating loss per new passenger generated is $14.22.

The forecast passengers on the new service would pay approximately 4% less than the average 

fare paid in each city pair for the 12 months ended 3/31/2010. This is actually an assumption of 

significant average fare paid savings because the baseline average fare is from a 12 month 

period in 2009 and early 2010 when industry average fares were very depressed and the new 

service traffic would travel in 2011 and 2012. Were it not for the new service average fares paid 

in that period would be significantly higher due to normal economic recovery and normal 

inflation.

Load factor on the new route would be 79.1% in the first year, assuming use of a 50 seat RJ on all 

flights. Second year load factors, due to normal market growth and increased market traction 

for the service, will climb into the mid 80% range. Combined with modest average fare growth 

the service should break even or make a profit in year two.

Traffic 28,308

Seats 35,800

Load Factor 79.1%

Estimated Annual Op Cost $4,613,904

Estimated First Year Segment Revenue $4,211,122

Estimated First Year Operating Loss $402,782

NEW SERVICE SUMMARY FCA - SFO
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 30

Extenuating Factors Affecting Glacier Park Air Service

The Kalispell region is one of the most isolated in the lower 48 of the United States. The nearest 

Interstate Highway is two hours drive distant. These facts separate the Glacier Park Grant request 

from most others wherein the application does have relatively close access to other air service.

Isolation magnifies the importance of good air service, both in terms of flights and routes and in 

terms of reasonable airfare pricing.

Since both Northwest and Delta were major air service providers at Glacier Pak, the merger of 

those two airlines has significantly impacted the competitive balance of the market. 

The imbalance between service and traffic demand at Glacier Park is unusual as well. Where as 

a majority of Glacier Park air service is to hubs to the east and south, the largest portion of 

Glacier Park traffic demand (45%) is to cities to the west. California, by itself, generates 15% of 

total Glacier Park domestic traffic demand, yet Glacier Park has no nonstop service to that 

state.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 31

A Strategic Plan for Success

Building on the Successful First Grant

Glacier Park International Airport was able to recruit United Airlines service to Denver, starting in 

2007, with the help of a Small Community Grant. A total of $500,000 in Grant funding and 

matching funds was expended in the initial startup phase of this new service. United has 

retained the Denver service after Grant funding ended. Because of the Grant supported Denver 

service United also has added and retained summer seasonal Chicago service. Over 107,000 

O&D passengers have flown on United Airlines in or out of Glacier Park in the period supported 

by the Grant. This equated to a Grant funding cost per passenger of $4.67. 

Now the Glacier Park International Airport and its local partners want to build on the success, the 

knowledge and the platform of the first Grant with this Grant Application.

The first Grant was a great success, precisely the type of success the Small Community Air 

Service Development Grant program was designed to create. In addition to the new air service 

and passengers the first Grant generated, consider for a moment where the Glacier Park market 

would be today without United Airlines. The Delta/Northwest merger would have reduced 

market network carrier air service to just Delta service south and east and Alaska/Horizon service 

west. Glacier Park’s already high airfares would no doubt be even higher.

As this document has shown, there is more work to be done to address Glacier Park’s air service 

deficiencies. Average fares remain higher than at peer airports in the region, the 

Delta/Northwest merger has reduced competition and current service is weighted east and 

south while traffic demand is weighted west. And all this in an isolated market much more reliant 

on air service for economic health than the average U.S. city where freeways and alternative air 

services are easy to reach.

Glacier Park knows how to successfully recruit, introduce and support new air service. In these 

difficult economic times airlines, especially network carriers, are hesitant to start new air service 

without some form of financial backup during the startup phase of service. Glacier Park believes 

that award of this second Grant will be the backstop that United needs to begin San Francisco 

service and that this service will significantly address current air service deficiencies.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 32

Public / Private Partnerships

A number of local partners will be working with Glacier Park International Airport to promote and 

market the new service. Contacts will be made to all regional members of chambers of 

commerce and similar organizations, and those with an interest in growing the economic base 

of the community through local business growth, attraction of new businesses and the 

promotion of tourism and visitor traffic via the airport. 

Montana West Economic Development and the Flathead Port Authority

Montana West Economic Development and the Flathead Economic Development Port 

Authority’s objective is to grow job opportunities in Northwest Montana. These organizations work 

hand in hand to help local businesses expand and to attract appropriate new businesses to the 

valley. They work to build the reputation of the area as a desirable place to do business through 

strategic marketing and communications. 

All services are provided at no cost and include information on demographics, workforce and 

labor trends, sites and facilities, financing options, logistics and local service providers. In addition 

they support a local Technology Roundtable and various special events aimed at promoting 

positive economic development activities.

Kalispell Area Chamber of Commerce

The Kalispell Area Chamber of Commerce is a business and professional association consisting of 

700 members. These members employ over half of the private workforce in Flathead County. 

Founded in 1905, the mission of the Kalispell Area Chamber of Commerce is to enhance the 

community and business environment of the Flathead Valley. 

The Chamber provides numerous services to help meet those goals including: business start up 

and expansion assistance, public policy development and advocacy, business promotion and 

public relations, community leadership development, business networking and marketing, 

workforce training and development, and the creation and dissemination of business and 

economic data and research.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 33

Montana Department of Commerce Regional Development Office

The RDO's are a resource to businesses, local development corporations, and communities in the 

area. The program serves as an access point to relevant Commerce Department resources, and 

all other relevant business and community development resources. 

The mission of the Regional Development Officer is to insure that all areas of Montana have 

reasonably equal access to funding and resources; develop close and effective working 

relationships with businesses, city and county governments, and local economic development 

agencies (EDCs); work closely with the Governor’s Office of Economic Opportunity with its 

economic development activities; assist the Commerce programs with efforts to maximize 

leverage of other funds; help businesses create higher paying and sustainable jobs; and provide 

access to information and programs about other state and federal programs. The RDO is the key 

conduit between expanding Montana businesses seeking financing through business loan 

programs such as Community Development. Block Grant (CDBG), Montana Board of 

Investments (MTBOI) and others.

Air Service Advisory Groups

Glacier Park International Airport has established an Air Service Advisory Group to help recruit 

new service and support incumbent airlines. The Group consists of the Glacier Park International 

Airport, Montana West Economic Development and the Flathead Port Authority, the Kalispell 

Area Chamber of Commerce, Whitefish Partners, and the Montana Department of Commerce
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 34

Grant Funding 

Grant Funding Allocation

The Glacier Park International Airport is requesting $500,000 in Small Community Air Service 

Development Grant funding. Glacier Park would match this Grand funding with $50,000 of local, 

non-airport funding. The local match funding would be community generated funding, it would 

be new funding and strictly for the purpose of supporting the Grant objectives in concert with 

the Federal funding.

Marketing and Advertising

Glacier Park International Airport proposes to spend $50,000 in funds on marketing and 

advertising promotions in support of new service. The Airport would work closely with United 

Airlines on the exact spending pattern for this funding.

Some portion would be spent in the Glacier Park catchment area, where fortunately media 

costs are relatively low. The Airport would work closely with United to ensure that all marketing 

and promotional efforts are consistent with United Airlines marketing and promotional schemes 

and protocols.

Some portion may also be spent in concert with the various entities that promote Kalispell area

tourism in out of state venues. The Airport will work closely to ensure that new San Francisco 

service is featured in locally generated tourism promotions that run routinely in California and 

southwestern U.S. cities.

All marketing and promotional plans will be forwarded to the Department and the Glacier Park 

International Airport will include in its timely quarterly Grant Status reports to the Department 

complete details on marketing and promotional efforts.

Allocation Percent DOT Share Glacier Park Share

Service Risk Abatement $500,000 90.9% $454,500 $45,500

Marketing & Promotion $50,000 9.1% $45,500 $4,500

Total $550,000 $500,000 $50,000

GRANT FUNDING BREAKDOWN
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 35

Start-up Expenses

Whereas normally an Airport may offer to assist new air service by helping to defray startup costs 

this will not be necessary in the case of this Grant application since Untied Airlines service is 

already established at Glacier Park.

Revenue Guarantee

The Airport proposes to make available at least $500,000 in funds for a revenue guarantee to the 

new carrier, to cover start-up losses that may occur during the first twelve months of service. 

Subject to negotiation, payments will be made to the new carrier quarterly, when income 

derived from passengers and cargo is less than the agreed upon target revenue per flight. In 

quarters where revenue generated exceeds the target revenue the Airport will seek, in 

negotiations with the carrier, to have that surplus credited against any shortfalls in other quarters 

covered by the revenue guarantee agreement.

Any revenue guarantee agreement between Glacier Park and an airline for this new service will 

be sent to the Department for review and approval prior to being implemented. 

Additional Costs

As part of this program, the Airport understands that additional expenses might be incurred, 

such as possible expenses related to meeting with United Airlines or one of its affiliated regional 

partners to negotiate a commitment for the new service. The Airport does not anticipate these 

expenses to be significant.

Target Audience and Marketing Plan

The target audience for the new service this Grant would create consists of both local residents 

of the Flathead Valley region and visitors to that region.

For local residents both business and leisure air travel needs will be met by the new service. The 

need for more airfare competition at Glacier Park has been noted earlier in this document. The 

glaring need for more nonstop service to the west and specifically for the first nonstop service to 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 36

California is clear. Current air travel demand patterns clearly establish significant business and 

leisure communities of interest between the Kalispell region and California.

The marketing of the new service in the Flathead Valley region will be coordinated with United 

Airlines and its regional partner that begins the new service. While final decisions on the nature 

and focus of this marketing effort will be subject to agreement with the carrier, Glacier Park 

anticipates an aggressive multimedia effort aimed at establishing in the minds of area residents 

that there is now nonstop service to California.

This broad message will be conveyed via low cost bill boards and radio spots and radio 

promotions featuring, for example, a San Francisco ticket giveaway to radio listeners.

A more focused message on new service to California will be conveyed at low cost via the 

various Chamber and Economic Development entities that are party to this Grant Application, 

using email and postal mail, as well as visits to Chamber and Economic Development Group 

meetings.

The overall goal is to ensure that every Flathead Valley resident that has business or leisure travel 

interest related to western destinations and especially California will be exposed to the news of 

the new air service multiple times in the first six months the service operates.

Regarding inbound tourists and leisure activity visitors, the Airport and its partners in the Grant will 

work closely with the Airline and with local resorts and Resort associations to ensure that all 

routine marketing efforts aimed at visitors, especially from California, mention the new air 

service. Where appropriate and cost effective the Airport will allocate Grant marketing funding 

to assist leisure/vacation visitor marketing efforts undertaken by local resorts, Chamber Groups or 

regional or state entities.

Local resorts will include information about the new air service in their own marketing efforts to 

previous visitors from California.

The overall goal is to ensure that a broad swath of the vast potential vacation and visitor 

population in the west and southwest has some exposure to the news of new nonstop service 

from San Francisco directly to Glacier Park, that gateway to northwest Montana.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 37

Whitefish Partners, The Kalispell Chamber of Commerce, Flathead Convention and Visitors 

Bureau, Flathead County Economic Development Authority and Montana West Economic 

Authority all have agreed to feature the new United Express service to/from San Francisco in all 

of their promotional material, newsletters, contacts with members and at trade shows, 

conventions, etc. The value of this in-kind service is undeterminable.

Timeline, Milestones and Monitoring

The timeline for the implementation of new air service proposed in this Grant application is 

driven by one key variable. That is the date of award. Should Glacier Park be awarded this 

Grant the date of award may have a material effect on the ability of United Airlines or one of its 

regional partners to begin service by summer 2011. Network carrier route planning and capacity 

allocations are done far in advance. Glacier Park does not know if a Grant award date may still 

permit United or one of its regional partners to fit Glacier Park – San Francisco service into the 

summer of 2011 capacity, route and schedule plan. For purposes of this timeline we will assume 

that a Grant award would be in time for carrier response in the summer of 2011.

GLACIER PARK GRANT TIMELINE WITH MILESTONES

Date Event Status

Aug, 2010 Grant Application Done

Sept, 2010 Letters of support

Q4 2010 Receive Grant Award

Jan, 2011 Follow up meetings with United or its regional partner

Q1 2011 Air service agreement with United or partner

Q1 2011 Announce service

Q1 2011 Begin quarterly DOT Grant status reports

Q1 2011 Hold community meetings with key travel generators

Q2 2011 Begin advertising 60 to 90 days prior to first flight

Q2 2011 New service kickoff

Q2 2011 Evaluate first 30 days & booking curve

Q2 2011 Based on initial booking curve firm up Fall 2011 off peak service

Q3 2011 Refine marketing program based on route performance

Q3 2011 Renew marketing program, targeting winter bookings 

Q4 2011 Work with carrier to firm up Winter service pattern

Q1 2012 Evaluate first six months of service 

Q1 2012 Adjust marketing and service as needed

Indicates Milestone
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 38

Performance Measures

The success of the program will be based on three variables. The first measure of success will be 

the recruitment and retention of an airline to provide service to a new hub. When new service is 

initiated, the first measure of success will be met. The Airport will judge the second measure of 

success by the increased number of enplanements. Finally, the third measure of success will be 

based on how much average airfares in the community have gone down. The measurement of 

enplanements will include a monthly comparison, once the program begins, to past 

enplanements numbers. The measurement of airfares will be derived from US DOT OD1A reports.

Financial Controls

As the sponsor, Glacier Park International Airport will be the responsible party for all fiscal matters 

and DOT reporting requirements. The group is established as an Airport Authority, which is a 

public governing body. As a public entity the DOT can be assured that proper financial controls 

are in place to guarantee that the DOT’s grant will be used in accordance with any subsequent 

agreement. The Airport understands that the grant is a reimbursable grant, meaning the Airport 

is responsible for program expenditures and will submit invoices to the DOT for reimbursement, 

based on a percentage of the total grant request.

Return on Investment

The return on investment from the first Grant was huge, with over 107,000 United Airlines 

passengers using Glacier Park in the 2007 – 2009 period, for a cost per passenger generated of 

less than $5.

For this Grant the Airport will use the same cost effective and achievable strategy to add new 

service, increase enplanements, and lower airfares at the airport. The proposal uses proven 

methods of achieving air service improvements, allowing the DOT to be comfortable with 

choosing this proposal. The increased competition, and access to lower airfares with increased 

competition, by adding service on a new route, is in line with the major goals of the Small 

Community Air Service Development Program. 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 39

Use of Department Funds

Glacier Park International Airport has developed this proposal as a one-time grant. The 

advertising and marketing program will commence a few months before service starts and last 

for at least twelve months. The revenue guarantee program will also be in place for twelve 

months. It is projected that the service will be financially self-sustaining within the second twelve 

months of service. 

Route Self Sufficiency

The traffic, revenue and cost of operation forecast included in this Grant application suggests a 

modest first year loss for new Glacier Park – San Francisco service.

This forecast is consistent with most new service startups, it is highly unusual for new air service to 

be profitable from day one of operation. The modest level of the forecast first year loss and the 

“room to grow” in terms of load factor suggest second year results of breakeven or modest 

profitability. This analysis does not consider any economics of operating or market footprint scale 

that United would achieve in the Glacier Park market from the addition of this service.

Should the service remain unprofitable in the second year the Glacier Park Airport and its 

partners will immediately work with the carrier to correct the shortfall. Steps to bring the new 

service to second year profitability include;

 Analysis of existing traffic flows to determine where market share capture objects are 

falling short of forecast or of known potential.

 Additional local marketing funds targeted to identified market share capture shortfalls.

 Adjustments in second year and beyond capacity allocations to more accurately fit with 

traffic demand patterns established by the first year’s service.

 Additional “soft” incentives to the carrier from the Airport and its partners.

 Block seat purchases from local resorts at negotiated rates to reduce carrier risk. 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 40

Alternate Plan

If, for some unforeseen reason, service is not commenced in a timely manner by United Express 

on the San Francisco route, the Airport proposes to use federal grant money awarded under the 

Small Community Air Service Development Program to recruit service on another westbound 

route. While this is unlikely, the airline industry is subject to great volatility and in the time span 

from Grant award to carrier agreement to service startup a great deal can happen. Witness the 

huge swing in the airline industry from Fall 2007 to Fall 2008 and all that happened in between in 

terms of fuel cost, traffic demand and revenue metrics.

Alternate options for service under this Grant would include United service to the Chicago 

O’Hare hub and/or Los Angeles, or Horizon Air/Alaska Airlines service to Portland and/or Los 

Angeles. Any alternative use of the funding will be subject to Department approval.

Legal Sponsor

The Legal Sponsor of this Grant application is the Glacier Park International Airport. The 

designated Legal Sponsor contact is:

Cindi Martin

Glacier Park International Airport Director

4170 Highway 2 East

Kalispell, Montana 59901

Phone 406 257 5994

Fax 406 257 5960

Email cindi@glacierairport.com
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 41

Glacier Park International Airport Background

Glacier Park International Airport is a public airport serving Flathead County, Montana. It 

located six miles) northeast of the central business district of Kalispell and also serves the towns of 

Evergreen, Columbia Falls, and Whitefish as well as Glacier National Park. The airport was 

originally built in 1942 under the name Flathead County Airport. For many years, passenger traffic 

remained low. In 1970, the airport was designated for international traffic and changed to the 

current name. Throughout the 1970s and 1980s, traffic picked up substantially, as Hughes 

Airwest, Western Airlines and Horizon Air offered flights. The terminal was upgraded in 1981, and 

further major upgrades to the terminal, runways and other facilities occurred throughout the 

1990s. Glacier Park International Airport now covers an area of 1,505 acres which contains two 

asphalt paved runways: 2/20 measuring 9,006 x 150 ft and 12/30 measuring 3,504 x 75 ft.

Glacier Park International Airport Aerial Photo
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 42

Community Information

Flathead County is Montana’s third largest in terms of population, 

behind Yellowstone (Billings) and Missoula counties. The 

estimated 2009 MSA population of 89,624 does not count an 

additional 16,000 or so summer residents. The Flathead Valley 

and the Kalispell MSA are one of the fastest growing areas in the 

state of Montana and even rank high in terms of population 

growth in the nation. The MSA population has grown 20% between 2000 and 2009. The MSA 

growth pattern is not new, Gallatin County population grew 34.4% from 1990 to 2000 and

Flathead County had a population growth rate of 25.8% in the same period. 

Glacier Park International Airport serves the 132,030 residents located in four Montana counties; 

Flathead, Lincoln, Glacier and Lake (50%). In addition, Glacier Park International Airport is the 

primary air transportation node for the estimated 2 million annual visitors to Glacier National Park 

and Waterton Lakes National Park (Alberta). Flathead County is not only among one of the 

fastest growing counties in Montana, but in the nation as well.

What’s New in Kalispell

Kalispell is in the heart of the magnificent Rocky Mountains, poised in the northwest corner of 

Montana and about an hour south of the Canadian border. As Montana's seventh largest city 

and the seat of Flathead County, it is a progressive, thriving community; the very essence of Big 

Sky Country with the best backyard in the country.

o Bizjournals compared 140 micropolitan areas in 20 statistical categories, using data from 

the U.S. Census Bureau. A micro consists of a central community with 10,000 to 50,000 

residents, along with the surrounding countryside. It is, in effect, a small-scale version of a 

metropolitan area. Kalispell, as the gateway to Glacier National Park, is one of the most 

scenic places in America. Entrepreneurial spirit runs high in Kalispell, which ranks sixth 

among all micros in percentage of self-employed workers. Some quick stats on the area 

include: Average commuting time: 18.9 minutes, Median household income: $45,920, 

Homeownership rate: 76.1%, Median house value: $204,300, Adults with bachelor's 

degrees: 25.3%
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 43

o U.S. News & World Report named Kalispell one of its 

10 Best Outdoorsy Places to Retire if you like hiking, 

biking, or walking. Kalispell enjoys a four-season 

climate, with January being the coldest month. Kalispell lies among northwestern 

Montana's towering mountains, lush valleys, and pristine lakes. Glacier National Park is 

just north of Kalispell. Kalispell is the regional trade center for northwest Montana, serving 

over 150,000. Mountain Sports and Living magazine once named Kalispell the "best 

mountain town in America."

o The 100th anniversary of one our nation’s most valuable treasures is 

being celebrated in 2010. The story of Glacier National Park’s past, 

present, and future is one shared by many diverse cultures and 

people. The Centennial of Glacier National Park provides all Americans and the world a 

chance to increase our understanding of and dedication to the rich history and 

preservation of this pristine treasure. Centennial events and celebrations will be 

occurring throughout the year. Visitors worldwide will celebrate with the park and 

explore the possibilities it has to offer, with millions of acres of wild country to explore, the 

most intact ecosystem in the lower 48 states and the spectacular Going-to-the-Sun 

Road. 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 44

Kalispell Economic Overview

Kalispell is the trade center of Northwest 

Montana, a dynamic, prosperous economy, 

where people travel to shop, receive 

medical care and conduct business. The 

population of the trade area for Kalispell is 

estimated to be 150,000 people, excluding 

Canadian residents who might use the trade 

zone from time to time. Education, 

government, health services, forest products, 

manufacturing, engineering, tourism and 

retail thrive and balance the local economy. 

Flathead County is Montana's third most populous and second-fastest growing.

Growth estimates project that by 2015 the county's population will reach 100,000 (NPA Data 

Services Inc.) The county is a montage of three distinctive incorporated cities, Kalispell, Whitefish 

and Columbia Falls, as well as several small towns. Kalispell, the county seat, is the state's seventh 

largest city with a population of 22,000 and a growth rate of 22 percent since the U.S. 2000 

census - its population is estimated to hit 25,000 by 2015. Greater Kalispell is home to over 34,000. 

Commercial development has reached epic proportions in the past few years. On Kalispell's 

north side three-quarter million square feet of major retailers and restaurants have been built to 

keep pace with the area's booming real estate growth. In 2008 the city issued 7 permits for $4.26 

million in commercial construction. An additional 32 permits were issued for another $37.5 million 

in 2007.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 45

The Flathead Valley’s Largest Employers

Kalispell Regional Medical Center 1,700

Plum Creek Timber Company 1,140

Semitool 700

Flathead Community College 689

TeleTech 500

Flathead County 456

Winter Sports, Inc. (Big Mountain Resort) 450

Workplace, Inc. 440

Glacier National Park 400

Columbia Falls School District 352

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

National Flood Service 175

CenturyTel 160

Target 150

Grouse Mountain Lodge 145

Brendan House 140

Columbia Falls Aluminum 140

Flathead Valley Co-Op 140

Rocky Mountain Contractors 140

Source: Kalispell Chamber of Commerce

Kalispell Tourism

Kalispell and the Flathead Valley are a visitor and recreational paradise. The area plays host to 

eight golf courses within a 45 minute drive, two ski resorts, Glacier National Park, and Flathead 

Lake. The Flathead boasts over 2,000 artists and craftsman in residence, and among the highest 

concentration of bronze casting foundries in the nation. Outstanding arts and culture 

opportunities abound. In 209 the renowned Glacier Symphony and Chorale celebrated its 25th 

anniversary. Kalispell has been recognized as the "Best Mountain Town in America" by Mountain 

Sports and Living magazine. And, Glacier National Park has been rated the "Best Backcountry 

Park in America" by Backpacker magazine.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 46

Glacier National Park

From downtown Kalispell, you can 

see the majestic, snowcapped 

peaks of magnificent Glacier 

National Park, with its diverse 

wildlife, awe-inspiring glaciers, 

expansive valleys, cascading 

waterfalls and a million acres of 

pristine wilderness, studded with 

762 lakes, 563 streams or rivers and 

175 named mountains - six of 

which rise to over 10,000 feet. 

Glacier National Park is known as 

the “Crown of the Continent” with some of North America’s most stunning mountain vistas. The 

most-visited attraction in Glacier Park is the “Going to the Sun Road,” which traverses the 

mountain peaks above timberline, offering sweeping vistas of the northern Rockies. Glacier Park 

offers more than 700-miles of trails, which link roughly 700-mountain lakes, 37 glaciers, and 

access to more than 1,000-species of plants. The Park is home to full-time residents such as black 

bears, grizzly bears, mountain goats, bighorn sheep, moose, and deer. In 1995, Glacier Park was 

named a World Heritage Site, joining such landmarks as the Taj Majal, the Galapagos Islands, 

and the Serengeti Plains.

Flathead National Forest

The more than 2.3 million acres of the Flathead National Forest that dominate the Kalispell region 

make Northwest Montana a sportsman's paradise. The forest and adjacent undeveloped lands, 

including Glacier and Waterton National Parks, create a recreational Shangri-La of nearly 10,000 

square miles and provide habitat for 250 species of wildlife including elk, moose, bighorn sheep, 

mountain goats, mountain lions, wolves and grizzly bears. More than 200 species of birds have 

been recorded in the Flathead. The lakes, rivers and wetlands provide refuge to waterfowl. 

Lacing the valley floor are miles of streams, creeks and sloughs - perfect for slipping in your 

canoe or kayak. The Flathead River offers miles of great fishing for whitefish, cutthroat and 

rainbow trout. Recreationists enjoy rafting and boating on 219 miles of the Wild and Scenic 

portions of its North, Middle and South forks.
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 47

Whitefish

Whitefish is often referred to as Montana’s recreation and vacation capital – with year round 

options for just about every sports enthusiast. In the winter Whitefish Mountain Resort provides 

plenty of excitement and challenge for skiers 

and boarders alike. Whitefish is also the center of 

fun in the warm seasons including water sports 

aplenty on 7-mile long Whitefish Lake, mountain 

and road biking, hiking, river rafting, kayaking, 

amazing photo safari destinations, wildlife 

viewing and world class golf on two of the 

Valley’s 9 championship courses. Whitefish is 

famous for its great shopping and world class dining as well as comfortable and Montana

Friendly lodging. Whitefish is one of the Rockies’ most-visited tourist destinations.”Each year, 

more than 2 million visit this corner of the Flathead Valley. Whitefish’s biggest draw is the worldfamous Big Mountain Resort, which boasts being the closest mountain ski resort to a commercial 

airport (just 11 miles from GPI).
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 48

Summary

Glacier Park International Airport is an essential gateway to air service for a large area of the 

northern Rocky Mountains, home to 180,000 American and Canadian residents. The Airport is 

also a gateway to a large and nationally and globally known wilderness area and all the 

associated leisure activities.

The Glacier Park region is one of the most isolated in the nation, a two hour drive just to get to 

the Interstate Highway system and full day’s drive or even multi day’s drive to major population 

centers like Seattle, Denver and Minneapolis.

This isolation means air service is even more important than it is in the typical American city 

where the Interstate runs thru town and there is a selection of air service airports within a 90 

minute drive.

Glacier Park air service is characterized by;

 High fares, the second highest among peer airports in the Northwest region

 Especially high air fares considering that Glacier Park is significantly a leisure destination 

market, akin to a northwestern version of a Florida resort community. Its peer airports in 

the Northwest are much more business markets. This means Glacier Park leisure 

passengers are paying higher airfares than business travelers are some peer airports in 

the region.

 Market share concentration issues, the Delta/Northwest merger has cost Glacier Park an 

airline and left the merged Delta with over 50% market share.

 An imbalance between the existing service pattern and traffic demand with a majority 

of existing air service going east and south and some 45% of traffic demand being to the 

west. A full 15% of Glacier Park traffic is exchanged with California but the Airport has no 

nonstop service to that state. 

This Grant proposal is for improving westbound access. It is targeted for new United Airlines 

nonstop service to the United hub at San Francisco. This new service would help address all of 
 Glacier Park International Airport – Small Community Air Service Development Grant – August 2010 49

Glacier Park’s air service deficiencies noted above. It would bring average fares down, as any 

new route and capacity does. It would strengthen United’s service footprint in the Glacier Park 

market and help to balance out the loss of Northwest Airlines as a market competitor.

Finally it would rebalance Glacier Park’s air service pattern to be more in tune with its air travel 

demand by adding a western hub and a California hub.

The Airport won a previous Small Community Air Service Development Grant in 2006, for revenue 

guarantees in support of United service to Denver. That route is still flown today – a true success 

story from the SCASD Grant Program. The Airport wishes to build on the success of that Grant 

with this proposal for assistance in recruiting badly needed improved westbound access and 

service.

Glacier Park has demonstrated it supports new air service when it is installed. The challenges 

Network carriers face in these volatile economic times means that risk abatement of new service 

startup is essential to recruiting new air service.

Glacier Park believes that United Airlines can be recruited to take the risk of starting new San 

Francisco service. That risk, however, has limits and the community must also take risk to support 

the startup phase of new service. The SCASDG Program is Kalispell’s best option for putting 

together a package of incentives and risk abatements to bring about San Francisco service.

The Glacier Park International Airport and its Public and Private Partners in this Grant application 

are committed to replicating the success of the 2006 Grant.

Our air service needs and deficiencies are clear. The positive impact this Grant application 

would have on those deficiencies is also clear.

We thank the Department for its consideration of this application and look forward to repeating 

the success of the first Grant should the Department look favorably on this application.