Legal sponso

DUNS: 9615CongressionContact: Cu2403 AviatioSioux City, IA (712) 279-61cmiller@siouAugust 25, 2Docket #: D

SIOUX GATEWAY AIRPORT

COLONEL BUD DAY FIELD

PROPO

THE S

COMM

AIR SE

DEVELPROGR


PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

TABLE OF 

CONTENTS

Summary Information ........................................ 1Proposal Highlights ............................................ 2

High Priced Market with Limited Service Options .................2Solid Market Analysis ..........................................................3Significant Community Involvement and Support ................3Far Reaching Benefits to the Community .............................3

Air Service Environment .................................... 4

Large Catchment Area ........................................................4Long Drives to Competing Airports .....................................5Locally Headquartered Businesses ........................................5Significant Business Development ........................................5Substantial Educational and Medical Facilities ......................6

Air Service – Existing and Historical .................. 7

Existing Air Service ..............................................................7Historical Air Service ............................................................8Past Air Service Development Efforts ................................. 10

Air Service Needs and Deficiencies ................. 11

Limited Local Service Options ............................................ 11Demonstrated Market Demand ......................................... 12High Priced, Uncompetitive Marketplace ........................... 12

Strategic Plan – Air Service ...

Project Goals ......................................Proposed Air Service ...........................Airline Participation .............................Detailed Market Analysis .....................Alternate Plan .....................................Previous Grant Recipient - New Project 

Strategic Plan – Implementat

and Funding ......................Public-Private Partnership ....................Incentive and Support Plan ..................Strategic Plan Funding ........................Project Continuation and Sustainability 

Schedule and Monitoring ......

Milestones for Timely Completion of PrMonitoring Program ...........................

Appendix A. Airline and 

Community Support .........

Appendix B. Detailed Market 

Analysis .............................
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

SUMMARY 

INFORMATION

A. Applicant Information: 

(Check all that apply) 

X Not a Consortium Interstate Consortium Intrastate Consortium

Community now receives EAS subsidy 

X 

Community (or Consortium member) previously received a Small Community Grant If previous recipient, date of grant: September 2004 Expiration date of grant: September 2006 

B. Public/Private Partnerships: (List organization names) 

Public Private1. City of Sioux City 1. The Siouxland Initiative 2. Sioux Gateway Airport/Col. Bud 

Day Field 

2. Siouxland Chamber of Commerce 

C. Project Proposal: 

(Check all that apply) 

X Marketing Regional Service 

Personnel Launch New Carrier Travel Bank First Service Surface Transportation 

X Secure Additional Carrier 

X Revenue Guarantee 

X New Route 

X Start Up Cost Offset Low Fare Service 

Study Subsidy Upgrade Aircraft Increase Frequency Other (specify): __________ Service Restoration 

D. Existing Landing Aids at Local Airport: 

X Full ILS X Published Instrument Approach 

Localizer Outer/Middle Marker Other (specify): 

E. Project Cost: 

1. Federal amount requested: 2. State cash financial contribution: 3. Local cash financial contribution...

3a. Airport cash funds: 3b. Non-airport cash funds: 3c. Total local cash funds (3a.+3b.) 

4. TOTAL CASH FUNDING (1.+2.+3c.) 5. Local funds contributed from already-existing pr

projects included in line 3c. amount: 

6. Local funds contributed from new commitments 

resources included in line 3c. amount: 

7. Airport In-Kind contribution: (Fee Waivers) 8. Other In-Kind contribution: (Media) 9. TOTAL IN-KIND CONTRIBUTION (7.+8.): 10. TOTAL PROJECT COST (4.+9.): 

F. Enplanements: 

2000 85,828 2003 42,075 2001 90,016 2004 41,179 2002 56,199 2005 41,438 

G. Is this application subject to review by State 12372 process? 

a. This application was made available to the StaOrder 12372. Process for review on (date) ____b. Program is subject to E.O. 12372, but has not c. Program is not covered by E.O. 12372. 

H. Is the Applicant delinquent on any Federal dexplanation) 

No Yes (explain)

X

X
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

PROPOSAL 

HIGHLIGHTS

his Small Community Air Service Development Program

grant application for the Sioux Gateway Airport/Col. Bud Day Field meets the criteria of Docket DOT-OST-2010- 0124. The City of Sioux City, the airport sponsor, is requesting 

$500,000 in federal assistance to implement a $1,803,600 air service initiative. The project goal is to provide competitive eastbound air service to adequately serve the Siouxland area thereby reducing airfares and mitigating the need to drive long 

distances to access sufficient air service. Improved service eastbound, particularly to Chicago O’Hare International Airport, is a top priority. The Strategic Plan, American Airlines or United Airlines service to Chicago O’Hare, will achieve the project goals. 

High Priced Market with Limited Service Options The Sioux Gateway Airport catchment area is both underserved and overpriceWith air service in only one nonstop market, Minneapolis-St. Paul Internationa

single airline, Delta Air Lines, no competitive forces are operative in the marke

options at the local airport. To further exacerbate the problem, Delta continuthe Airport with departures declining 41 percent and seats declining 46 perceJanuary 2010. Because of the limited service offering and high airfares, 87 percent of Siou

necessary to

drive to an alternate airp

ort, Omaha or Sioux Falls, to access 

Historically, when competitive service entered the market, the percentage of 

airport more than doubled. With the lack of competition, airfares are exorbit

higher at Sioux Gateway Airport than the Iowa state average and 42 percent average. 

T
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Solid Market Analysis Extensive, detailed market analyses have been completed for Sioux City-Chicago Oforecasts for two roundtrips per day with 50-seat regional jet aircraft were done fo

Both route forecasts were positive on a segment and system basis, netting the car

system-wide. The route forecasts are included as Appendix B. The carriers have s

serving the market. SkyWest Airlines (United Express) has provided a letter of supapplication (Appendix A). To reduce the carrier’s risk in this high-cost airline envir

airline-approved air service support plan is proposed. The comprehensive plan wilUnited’s success in the market and includes: a $1.5 million revenue guarantee ovemarketing campaign, ticket counter renovation, use of ground support equipment defray start-up costs. 

Significant Community Involvement and Support The City of Sioux City, Sioux Gateway Airport/Col. Bud Day Field, the Siouxland Ch

The Siouxland Initiative formed a public-private partnership in support of this appl

these organizations have a history of successful initiatives with broad support from support this air service initiative, the Airport and community will fund 72 percent o

Strategic Plan. 

N

on-airp

ort revenue sources will fund 66 percent ($1,050,00

requirement. This is a strong commitment by the local community in support of 

The public-private partnership and local businesses have the ability to implement t

demonstrated in 2007 by the successful effort by the community to entice Frontie

market. This cooperative effort was the sole reason behind Frontier entering the m

Far Reaching Benefits to the Community Sioux Gateway Airport serves a region that includes a population exceeding 300,0South Dakota. As the region’s center for business, education and medical serviceshub airport will meet the diverse needs of these sectors as well as those of its citiz

Sioux

Gateway

Airport

has

completed

the

background

analysis

and

airline

meetings

making

the

success

of the

Strategic

Plan

highly

probable.
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT /COL.BUD DAY FIELD

AIR SERVICE ENVIRONMENT

he Siouxland community is large and dynamic. This section demonstrates the community’s need for additional air service including: a catchment area with a 

population over 300,000; inadequate alternative service; 

vibrant business community; and a region with substantial 

educational and medical facilities. Competitive air service with more local options will have a significant positive impact on the Siouxland economy. 

Large Catchment Area Located on the Iowa, Nebraska and South Dakota border, Sioux Gateway Airport/Col. Bud Day Field serves portions of all three states with a catchment area population exceeding 300,000. Sioux City, Iowa is the largest city and the commercial hub of the six-city, tri-state metropolitan region known as Siouxland. The region consists of Woodbury County, Iowa; Dakota County and Dixon County, Nebraska; and Union County, South Dakota. Exhibit 3.1

provides a depiction of the 10,050 square mile area served by the Airport. 

T

EXHIBIT 3.1 AIRPORT CATCHMENT ARCOMPETING AIRPORTS 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Long Drives to Competing Airports Only 13 percent of catchment area passengers use Sioux Gateway Airport; 76 percent use Omaha’s Epple

use Sioux Falls’ Joe Foss Field. The Siouxland region is located approximately 89 miles from Sioux Falls and from Omaha (Exhibit 3.1, previous page). The distance and drive time required to each of these airports 

businesses. 

Locally Headquartered Businesses The strength of the Siouxland air travel market lies in its business community. By any standard, the local business market is vigorous and vibrant. Much of this success can be traced back to cooperative efforts between the various government entities, businesses and citizens. These efforts have led to business growth, in-migration of new businesses and a well-diversified economy. Many different industries ranging from agriculture to high tech have a stake in the Siouxland area. Wells’ Dairy Inc. is a multi-billion dollar corporation headquartered in Siouxland. Beef Products Incorporated (BPI), Sue Honey Association, American Pop Corn, Great West Casualty and Wilson Trailer are multi-million dollar organizations that are also headquartered in the Siouxland region. Tyson Fresh Meats and Gelita North America operate large manufacturing facilities in the area. All of these organizations rely on air service to move staff, vendors and clients to and from Siouxland. Significant Business Development Siouxland continues to attract new business and investment with recent developments like: 

• American Popcorn (makers of Jolly Time Popcorn) will construct a new microwave 

popcorn plant in Sioux City - $6 million investment

• New multi-million dollar Events Center 

• Renovated Orpheum Theatre 

• Lewis and Clark Interpretive Center 

• Riverfront development including a new marina 

• Development of Historic Fourth Street 

• New downtown theater complex 

• Additions to St. Luke’s Regional Medical Center/Mercy Medical Center 

• Northeast Nebraska Community College and Wayne State College are building a joint facility in 

• New 55,000 square foot public museum to open downtown Sioux City December 2010 - $13.5 

National Recognition • Sioux City Metro 

ranked #14 for Best Small Places for Businesses and Careers – Forbes.com (2010) 

• For the third year in a 

row, Iowa has cracked the top 10 as one of the Top States for Doing Business – CNBC (2010) 

• Sioux City Metro 

ranked as one of the top 3 metros in the nation for economic development for the last four years – Site 

Selection Magazine (2006-2009)

• Sioux City Metro 

ranked third best metro in the U.S. for Metro Economic Growth Potential – Business Facilities Magazine (2009) 

• Iowa ranked second in 

the 15 Most Financially Happy States – 

MainStreet.com (2009) 

• Sioux City ranked as 

one of the Improved 55 Places – Milken Institute’s Best Performing Cities Index (2008) 

• Iowa ranked sixth in 

Quality of Life – Business Facilities 

Magazine (July 2008)
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

In addition, over the last few years, several new companies have begun operations in Siouxland including 

and GovConnection. These four companies alone added over 2,000 new jobs to the community. There hone million square feet of retail development in the Siouxland area. A $400 million upgrade to BPI’s man

construction in South Sioux City; this is the largest single investment project in Nebraska history. I

Hyperion Energy has optioned 11,000 acres in southern Union County in South Dakota to build a refinerySouth Dakota Board of Minerals & Environment unanimously approved the Air Quality Permit for Hyperiotowards this project becoming a reality. The project will create: 

• $10 billion capital investment 

• 400,000 barrels of oil refining per day 

• 1,800 permanent jobs at $20 to $30 per hour and three “spin-off” jobs per permanent job; tota

5,000 

Improved air service will help maintain this level of development and accelerate it. As evidenced in the examples above, the business community is committed to improving the Siouxland region. 

Substantial Educational and Medical Facilities Siouxland is fortunate to be home to many education and medical institutions (Table 3.1) that serve both a regional and national customer base and generate 

air service demand. In short, the partnerships between the business community and government in Siouxland are strong. These partnerships can be leveraged to improve air service at Sioux Gateway Airport to attain similar success of other community development projects in Siouxland. 

TABLE 3.1 INSTITUT

UNIVERSIT

Briar 

Morn

Tri-State 

Western Iowa T

Northeast Nebr

Design West 

Wayn

MEDICA

Mercy 

St. Luke’s Re

The Center for Neuro

Siouxlan

June E. N
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

AIR 

SERVICE 

–

EXISTING AND 

HISTORICAL

his section provides an overview of existing air service. Carriers providing service, service frequency, direct and connecting destinations 

offered, available airfares and equipment types areincluded in the discussion. A summary of historical air service is also included with destinations, traffic levels, service providers and an overview of extenuating factors that have affected air service. A description of air service development efforts concludes the section. 

Existing Air Service Sioux Gateway Airport has nonstop service to Minneapolis-St. Paul Internatio

Delta Air Lines operated an average of five daily roundtrips per day with 34-seaircraft three times per day and 50-seat Canadair Regional Jets two times per weekly available seats on 34 departures. Beginning in mid-August, Delta redroundtrips. This service offers single-connect service to 141 destinations (Tab

O’Hare service would add competition, provide regional nonstop jet service in 

and give access to up to 135 single-connect markets over Chicago O’Hare. 

TABLE 4.1 EXISTING AIR SERVICE 

NONSTOP 

DESTINATION 

MARKETING 

CARRIER AIRCRAFT 

WEEKLY 

DEPARTURES 

WEEKLY 

SEATS 

D

Minneapolis, 

MN 

Delta Air 

Lines 

CRJ-200 

(jet) 20 1,000 

Source: apgDat, August 2010 

T
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Over the last five years, Sioux Gateway Airport’s average fares have far exceeded the state, region and national average. Reference Table 4.2, 

Sioux City’s fares have exceeded the State of Iowa each year. The fare differential was reduced in 2007 and 2008 due to Frontier Airlines’ Denver service; however, since Frontier left the Sioux City market fares have increased. This demonstrates the impact competitive service can have on airfares in the market in a very short timeframe. Compared to the Central Region, Sioux City’s fares have been between $41 and $86 higher one way; Sioux City’s fares have exceeded the U.S. average by $39 to as much as $85 one way over the last five years. 

Historical Air Service Air service at Sioux Gateway Airport over the last 10 years has markedly declined. This subsection summarizes Sioux Gateway Airport’s air service history including: destinations, traffic levels and service providers. Extenuating factors that have affected air service over time are also reviewed. Destinations, Service Providers and Traffic Levels Over the last 10 years Sioux Gateway Airport’s air service declined significantly, a trend which was partially offset in 2007/2008 by Frontier’s Denver service but was stymied by the service cancellation in May 2008. Exhibit 4.1 provides a 

summary of annual departures and enplanements from 2001 through 2010 (estimated). Table 4.3, next page, shows the 

average scheduled weekly departures by destination and airline. 

In the past 10 years, Sioux Gateway Airport’s departures decreased 76 percent. Average weekly departur

approximately 83 weekly departures to only 20 departures in 2010. Average weekly available seats declin73 percent decline. The reduction in departures, available seats and high local fares resulted in enplanem2000 to 2006, enplanements declined 62 percent. Enplanements rebounded somewhat in 2007 and 200

Frontier’s Denver service and Northwest’s addition of one roundtrip per day to Minneapolis that began in 

TABLE 4.2 AVERAGE ONE-W

AVE

2005 2006 

Sioux City $199 $234 

Sioux Falls $180 $200 

Omaha $135 $147 

Iowa $168 $179 

Central Region $140 $148 

U.S. $137 $149 

Source: Data Base Products, Inc. 

EXHIBIT 4.1 DEPARTURES AND ENPLA

0

500

1,0001,5002,0002,5003,000

2001

2002

2003

2004

2005

2006

Calendar 

Departures

Source: apgDat; airport records Note: 2010 departures estimated; 2010 en
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

2009 enplanements plunged to 32,791, a 36 percent decrease over 2008. Enplanements are likely to furthe reduction in departures and available seats. 

TABLE 4.3 HISTORICAL DESTINATIONS AND SERVICE PROVIDERS 

DESTINATION AIRLINE ITEM 

AVERAGE SCHEDULED WEEKLY DEPARTURE

2001 2002 2003 2004 2005 2006 2007 

Denver, CO Frontier Dept 16 

Seats 1,227 

Minneapolis, MN Delta/Northwest Dept 57 45 46 47 43 34 32 

Seats 2,628 2,077 1,834 1,807 1,740 1,339 1,241 

St. Louis, MO 

American Dept 19 15 

Seats 950 628 

TWA Dept 26 

Seats 815 

Average weekly departures 83 49 46 47 43 34 36 

Average weekly seats 3,455 2,234 1,834 1,807 1,740 1,352 1,548 

Source: apgDat 

Extenuating Factors that have Affected Air Service Sioux Gateway Airport’s air service has suffered due to a combination of factors. Eastbound air service has been victimized by gate constraints and air traffic congestion at Chicago O’Hare which has made it difficult for smaller or medium-sized cities such as Sioux City to access the hub. This has permitted Minneapolis to maintain an eastbound monopoly. Service to the southeast and south central U.S. was lost with the American Airlines/Trans World Airlines’ merger and the subsequent decision to significantly downsize the St. Louis hub. Due to its geographic location, alternate hubs to Chicago O’Hare and St. Louis require longer flights. 

Extenuating Factors Gate constraints and air traffic congestion at Chicago O’Hare have made it difficult for smaller or medium-sized cities such as Sioux City to access the hub. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Past Air Service Development Efforts Sioux Gateway Airport plays a critical role in the community’s economic health and quality of life. Since 1996 and particularly over the past five years, the City of Sioux City, Siouxland Chamber of Commerce and The Siouxland Initiative have worked together on air service development efforts. These efforts have included several market studies to determine retention of local passengers, pro forma analyses for many major hubs and presentations to airlines. Table 4.4

provides an overview of the air service development efforts since 2005. 

TABLE 4.4 PAST AIR SERVICE DEVELOPMENT EFFORTS YEAR INITIATIVE 

2005 

American Airlines' St. Louis pro forma analysis (po

Delta Air Lines' Salt Lake City pro forma analysis (Market Airfare Analysis (identified significant airfaMidwest Airlines' Milwaukee pro forma analysis (n

2006 

Delta Air Lines' proposal for Salt Lake City service 

Delta Air Lines' Salt Lake City pro forma analysis (Frontier Airlines' Denver pro forma analysis (positiTrue market estimate (updated retention/market d

2007 

Response to Frontier Airlines’ Request for Proposa

Frontier Airlines' proposal for Denver service Network conference (met with AA/DL/FL/G4/TZ/WSCASDP grant application 

2008 

Air service marketing brochure 

Allegiant Air conference Network conference (met with UA/YX/F9/AA/DL) United Airlines’ Chicago O’Hare pro forma analysUnited Airlines’ Denver pro forma analysis (positivUnited Airlines’ proposal in Washington, DC SCASDP grant application 

2009 

Allegiant Air conference 

Network conference (met with AA/DL/F9/UA/US/YPassenger Demand Analysis American Airlines' Chicago O'Hare pro forma anaUnited Airlines’ Chicago O’Hare pro forma analysUnited Airlines’ Denver pro forma analysis (positivDelta Air Lines' Salt Lake City pro forma analysis (American Airlines' proposal in Dallas/Ft. Worth Delta Air Lines' proposal in Atlanta United Airlines' proposal in Chicago SCASDP grant application 

2010 

Allegiant Air conference 

Air service marketing brochure - update Network conference (met with AA/F9/UA/MX/AMDelta Air Lines' proposal in Atlanta United Airlines' proposal in Chicago 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

AIR 

SERVICE 

NEEDS AND 

DEFICIENCIES 

he Air Service Needs and Deficiencies section identifies the issues at Sio

have stunted the growth of commercial air service to the community. T

detailed analysis to demonstrate that Siouxland is underserved and overpriced. 

Limited Local Service Options Siouxland has an estimated true market of over 650 air travelers per day each way, yet air service is limited to an average of 143 seats per day each way. This represents almost a 60 percent reduction from the 353 seats per day each way provided in 2007 when Frontier Airlines was in the market and a 71 percent reduction since 2001. Chicago (ORD/MDW) is clearly the largest Sioux City market. Among Sioux City’s top 50 true markets, 53 percent of passengers were destined to eastern markets that would be served over Chicago O’Hare. Chicago O’Hare servicewould also provide access to many western markets. Table 5.1 provides Siouxland’s true market and retention for top 25 eastbound markets and Siouxland in total. The net result of Siouxland’s lack of service is that only 13 percent of air travelers use the local airport. The situation is even worse in 10 of the top 25 eastbound markets served over Chicago O’Hare with fewer than seven percent of air travelers using the local airport. 

TABLE 5.1 CATCHMENDIVERSION OF PASSE

MARKET 

RANK 

TOP EA

MARKETS 

 OVER 

1 Chicago, 2 Dallas, TX 3 Houston, 5 Orland9 Chicago, 

11 Boston14 Detro15 Norfol16 NW Arka17 Milwauk18 Baltimo19 Fort Laude21 San Anto22 Washington23 Miam25 Columb26 Pittsbur27 Austin28 New Orle29 Raleigh/Du30 Madiso31 Atlant32 Washington33 Clevelan34 Hartfo

Other domestic m

Total all mark

T
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Demonstrated Market Demand While all market indicators suggested the existence of a strong demand for additional air service prior to Fmarket, it was validated by the seven months Frontier operated Sioux City-Denver air service. Frontier ent

daily roundtrips in early October 2007, increasing to three daily roundtrips two months after service initiatFrontier reported passengers showed that an average of 104 outbound passengers per day from October to/beyond Denver on the Frontier service. Due to Frontier’s bankruptcy and fleet re-structuring, Sioux Citcanceled in May 2008. However, onboard passengers during the seven-month service period amply dem

need for additional Sioux City service and would undoubtedly have been considerably higher had the serv

year. A review of the service performance proved that: the market is underserved; competitive service will lower fares; and use of Sioux Gateway Airport will improve with retention more than doubling. 

High Priced, Uncompetitive Marketplace The low catchment area use of Sioux Gateway Airport is a function of the market being underserved and overpriced. These characteristics frequently go hand-in-hand and are interrelated. With a single airline serving the market, there is no direct competitive pressure on fare levels, and the airline is free to establish fares that best serve their objectives. The non-competitiveness of Sioux City fares is exacerbated by the low-fare carrier presence at Omaha which entices passengers to divert to that airport where low-fare airlines provide more direct service. To illustrate the magnitude of Sioux City’s fare disparity, Table 5.2

compares Sioux City’s fares with Omaha, the states of Nebraska and Iowa and the U.S. national average for the top 25 eastern markets served over Chicago O’Hare and in total. While it is not expected that Sioux City’s fares be equal to Omaha fares due to market size differences and the low-fare carrier presence at Omaha, the comparison is included to demonstrate the magnitude of the differences. 

TABLE 5.2 HISTORICAL AIRFARE 

TOP EASTBOUND 

MARKETS 

OVER ORD 

SIOUX

CITY O

Chicago, IL (ORD) $225 

Dallas, TX (DFW) $262 

Houston, TX (IAH) $221 

Orlando, FL $143 

Chicago, IL (MDW) $166 

Boston, MA $178 

Detroit, MI $257 

Norfolk, VA $254 

NW Arkansas, AR $287 

Milwaukee, WI $177 

Baltimore, MD $321 

Fort Lauderdale, FL $262 

San Antonio, TX $323 

Washington, DC (DCA) $189 

Miami, FL $173 

Columbus, OH $221 

Pittsburgh, PA $288 

Austin, TX $242 

New Orleans, LA $255 

Raleigh/Durham, NC $195 

Madison, WI $183 

Atlanta, GA $298 

Washington, DC (IAD) $190 

Cleveland, OH $153 

Hartford, CT $289 All markets $204 

Source: Data Base Products, Inc.; CY 200

Overpriced Siouxland Market Compared to state and national averages, Siouxland suffers from significantly higher fares at 42 percent higher than the U.S. average in 2009. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Sioux City’s average fare exceeds Omaha, the state of Nebraska, the state of Iowa an

the top 25 eastern markets. In total, the fare differential ranges from $31 higher th

higher than Omaha and $61 higher than the U.S. average. Table 5.2 provided historical airfares for calendar year 2009. Another demonstratio

Siouxland market is a comparison of published airfares (Table 5.3). Published airfare

airfare” and are not influenced by seat availability. It is also a more recent fare comp

data. It is clear from the comparison of published airfares that Siouxland’s fares are 

over $50 one-way higher than Omaha in 13 of the top 25 eastbound markets. 

TABLE 5.3 PUBLISHED AIRFARE COMPARISON 

TOP EASTBOUND 

MARKETS OVER ORD 

LOWEST PUBLISHED FARE 

SIOUX 

CITY OMAHA DIFF. 

Chicago, IL (ORD) $166 $79 $87 

Dallas, TX (DFW) $189 $154 $35 

Houston, TX (IAH) $189 $135 $54 

Orlando, FL $169 $119 $50 

Chicago, IL (MDW) $166 $79 $87

Boston, MA $189 $139 $50 

Detroit, MI $200 $164 $37 

Norfolk, VA $184 $139 $45 

NW Arkansas, AR $176 $165 $11 

Milwaukee, WI $129 $92 $37 

Baltimore, MD $177 $127 $50 

Fort Lauderdale, FL $184 $114 $70 

San Antonio, TX $162 $112 $50 

Washington, DC (DCA) $181 $153 $28 

Miami, FL $196 $164 $33 

Columbus, OH $151 $101 $50 

Pittsburgh, PA $176 $127 $49 

Austin, TX $184 $134 $50 

New Orleans, LA $187 $185 $2 

Raleigh/Durham, NC $195 $122 $73 

Madison, WI $137 $102 $35 

Atlanta, GA $202 $100 $102 

Washington, DC (IAD) $181 $153 $28 

Cleveland, OH $159 $101 $58 

Hartford, CT $186 $149 $37 

Source: Computer Reservation System, as of July 19, 2010 

Siouxland’s

fares

are

excessively

high,

averaging

over

$50

one-way

higher

than

Omaha

in

13

of the

top

25

eastbound

markets.
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT /COL.BUD DAY FIELD

STRATEGIC PLAN – AIR SERVICE

he Strategic Plan will achieve the community’s goals and help to alleviate the air service needs and deficiencies of Siouxland. This Strategic 

Plan section provides a detailed description of thegoals of the project and a primary and alternate plan for attaining those goals. As a previous grant recipient, this application is a new project with different goals than the previous project. 

Project Goals The project goal is to provide competitive eastbound air service to adequately 

thereby reducing airfares and mitigating the need to drive long distances to a

Proposed Air Service With existing service limited to Minneapolis, Siouxland’s primary air service nesignificant connecting opportunities, specifically Chicago O’Hare Internationa

High average fares and extreme diversion of catchment area travelers support service initiative. American Airlines’ or United Airlines’ Chicago O’Hare servic

with optimal air service access. This plan will achieve the project goals by: 

• Offering more service options, nonstop service to Siouxland’s top dest

opportunities to the community 

• Providing competition to the sole carrier in the Sioux City market, Delt

reducing airfares 

• Reducing the need for air travelers to drive to Omaha or Sioux Falls for 

T

EXHIBIT 6.1 ROUTE MAP

MSP

ORD

SUX
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Airline Participation Over the past year, members of the public-private partnership (Table 7.1, page 17

American and United regarding nonstop eastbound service. Discussions with the 

SkyWest Airlines (United Express) has provided a support letter for this grant appli

the difficulty in securing face-to-face airline meetings, the fact that both airlines m

representatives bodes very well. However, based on preliminary discussions with t

support package proposed in the Strategic Plan is critical in the airline’s decision to American or United to Chicago O’Hare would meet the goals of this Small CommDevelopment Program grant application. 

Detailed Market Analysis A financial analysis and forecast has been developed for American and United servInternational Airport. The detailed analyses are included as Appendix B, Detailed M

Mature Market Results Projections were completed for a two roundtrip schedule on a 50-seat Embraer Regional Jet 145 for American and a 50-seat Canadair Regional Jet for United. Table 6.1 provides an example of one of the pro forma analyses completed. 

Passenger projections were based on a mature market (i.e., passenger projections would be at 100 percent on the first day of service). It is estimated that two roundtrips per day will generate at least $12.6 million in system revenue for either carrier. Projected system profit is estimated at almost $5.0 million. The estimated profit margins suggest that after the initial service ramp-up that the service would be self-sustaining and profitable for either airline. 

Airline Risk During Ramp-Up Although it is estimated that American and United will earn a profit on both a segment and a system basthis amount of revenue or margin at start-up. Airlines typically incur losses in new markets during the ramexacerbate the airline’s risk in the market, Frontier pulling out of the market after only seven months of se

TABLE 6.1 SIOUX CITY-ANALYSIS EXAMPLE ITEM STAT

1 Available seats 2 Segments 3 Onboard p4 Load f5 Average fare 6 Segment 1 7 Segmen8 Segment 1 pr9 Segment 1 pro

10 System r11 System 12 System pr13 System 

Siouxland

representatives

have

met

with

American

Eagle

and

United

Express

within

the

last

12

months

with

both

airlines

showing

strong

interest

in

the

market.
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

cause local travelers to be more wary of new market entrants. This could lead to a longer than normal ra

of the ramp-up period is highly dependent on marketing efforts and the community’s reaction to Frontier

Based on preliminary discussions with the airlines, it is estimated that the airlines will require a revenue gu

to begin service. For success, the new service will also require a strong marketing program. 

Alternate Plan While the public-private partnership was encouraged by discussions with American and United, if Sioux G

obtain Chicago O’Hare service, alternate carriers will be approached for eastbound service. Alternate hub the goals of this grant application include: Detroit, Milwaukee, Cleveland, Memphis or Atlanta. Consisten

service initiative proposed, obtaining nonstop service to an alternate hub airport with numerous connectin

competitive airfares is the best option for Sioux Gateway Airport catchment area passengers. 

Previous Grant Recipient - New Project and Goals In 2004, the U.S. Department of Transportation awarded the City of Sioux City a Small Community Air Se

grant. The 2004 grant included the following project goals: 

• Introduce service by a second carrier to increase use of the airport and promote more 

competitive airfares. 

• Promote greater awareness of the services at Sioux Gateway Airport. 

• Increase use of services at Sioux Gateway Airport. 

• Generate a marketing plan to promote lower business fares, stabilize the existing 

passenger base and develop a frequent user program.

The U.S. Department of Transportation’s portion of the project budget, $609,800, included partial funding of a revenue guarantee, marketing support, promotional materials for a frequent user program, website development and ground support equipment and facilities for a new carrier. Where the previous application’s goals were general in nature, this application’s goals are specific: obtain competitive eastbound service with concentration on Chicago O’Hare International Airport. As demonstrated, this application qualifies as a new project and meets the requirements of the Small Community Air Service Development Program.

Alternate Plan 

Alternate hub service that would fulfill the goals of 

this grant application include: Detroit, Milwaukee, Cleveland, Memphis or Atlanta. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

STRATEGIC 

PLAN 

–

IMPLEMENTATION AND 

FUNDING

his section, Strategic Plan - Implementation and 

Funding, provides the detailed incentive and support plan required to implement the Strategic Plan. In 

addition, this section identifies the public-private partnership, 

self-sufficiency of the service and provides a description of the community’s plan to continue with the project if it is not selfsustaining after the grant award expires. A detailed description of the funding necessary for implementation of 

the Strategic Plan, including federal and non-federal contributions, is included. 

Public-Private Partnership The City of Sioux City, the owner/sponsor of Sioux Gateway Airport/Col. Bud Day Field, has been designated as the sponsor of this grant application. The City of Sioux City, the Siouxland Chamber of Commerce and The Siouxland Initiative have formed a public-private partnership. All partners will be fully involved in the execution of the Strategic Plan (Table 7.1). The City of Sioux City will execute federal grant offers, process reimbursement requests and oversee grant administration. The Siouxland Initiative and Siouxland Chamber of Commerce will be responsible for administering the marketing campaign. Together these partners are a formidable team with a track record of success who are committed to improving air service for the Siouxland community. T

TABLE 7.1 ROLES 

PUBLIC-PR

PARTN

City of Sio

Siouxland C

of Comm

The Siou

Initiat
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Incentive and Support Plan The current airline financial landscape with airline bankruptcies and volatile fuel prices is rough. Accordingly, airlines are highly risk adverse requiring communities to partner with them to reduce risk. In this environment, community support packages have become increasingly important. To be effective, support packages must be structured to address the issues of new airline entry in the community and ensure that the market responds quickly. Unfortunately, Sioux Gateway Airport has an additional hurdle to the typical barriers-to-entry; local travelers may be hesitant with a new airline entrant after Frontier Airlines left the market in less than a year. These obstacles work against new service and extend the time it takes for the airline to gain profitability. The public-private partnership proposes a community support package that has been tested and proved to be successful. To reduce American Airlines’ or United Airlines’ breakeven period and offset the risk during start-up, the public-private partnership proposes the following incentives (Exhibit 7.1): 

• Marketing campaign: create name and service 

awareness for American/United 

• Revenue guarantee: reduce airline risk 

• Ticket counter renovation: reduce airline start-up costs 

• Fee waivers: reduce airline start-up costs 

Marketing Campaign Service failure and continued drive diversion often result from a lack of awareness of available air service a

public-private partnership understands and agrees with the U.S. Department of Transportation that a thotarget market is essential for the success of new air service. Similarly, new air service supported by a well-

campaign increases the chances of the service becoming self-sustaining. This aggressive and comprehens

Risk 

Mitigation

Revenue 

guarantee

Marketing 

campaign

EXHIBIT 7.1 INCENTIVE PLAN

American 

Airlines/ 

United 

Airlines
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

campaign will ensure long-term continuation of this air service initiative and will aid in minimizing the ram

reduce the level of the revenue guarantee payment. The marketing campaign will include: 

• Press conference 

• Articles and news releases to local media 

• Siouxland Chamber of Commerce “Business After Hours” special event 

• Ribbon cutting ceremony 

• Promotional giveaways 

• Direct mail promotional flyer to the Siouxland business community 

• Introductory and testimonial advertisements on billboards, radio, television, and newspapers 

• Websites and social media 

The target audience is business travelers and mid-to-upper income households. Table 7.2 provides the marketing budget. The Airport has established an extensive partnership agreement with all media outlets. This $100,000 campaign will be funded by non-airport sources ($50,000 cash) and local media ($50,000 in-kind). The Siouxland Initiative and the Siouxland Chamber of Commerce will be responsible for oversight of the marketing campaign. In additional to traditional paid media advertising, the marketing campaign will utilize websites and social media. The Siouxland Chamber of Commerce’s website receives nearly 5,000 visits monthly. The Siouxland Chamber of Commerce blog on the website showcases members and the Chamber. Unlike other forms of social media, blogs allow the reader to have more information on a subject and allow another avenue for communication. On the blog, the new 

and links to other forms of social media such as Facebook and Twitter will be available. The blog has an a

monthly. Social media is becoming a much more prominent and useful tool in marketing. Facebook and Twitter wmarketing campaign. The goal of the Facebook page is to promote the Siouxland Chamber of Commerce

community as a whole. The Siouxland Chamber of Commerce uses Twitter as a means of publicizing and 

business and what’s going on at the Chamber. Updates on the new service will be posted on Facebook a

TABLE 7.2 MARKETING BUD

DESCRIPTION C

News

The Sioux City Journal $

Telev

KCAU (ABC) $

KTIV (NBC) $

KMEG-KPTH (CBS/FOX) $

CableONE $

Ra

Powell Group $

Out

Avery $Total $

Marketing Campaign 

This $100,000 campaign will be funded by nonairport sources ($50,000 

cash) and local media ($50,000 in-kind). 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Revenue Guarantee To reduce airline risk and provide incentive to American or United to provide nonstoO’Hare, this Strategic Plan includes a revenue guarantee as part of the community s

pro forma projections for Chicago O’Hare service are positive (Appendix B), service r

take up to 12 months or longer, particularly in a market with significant barriers-to-

American or United would require a $1.5 million revenue guarantee to initiate servic

of the revenue guarantee agreement are subject to negotiation and will be split ove

Ticket Counter Renovation In many cases, a new airline entrant must absorb the costs of space renovations and 

an airport. These fixed start-up costs are necessary but cause a longer breakeven pemitigate start-up costs as part of the community support package, the Airport will funused ticket counter. Costs of renovation are estimated at $30,000. 

Fee Waivers The air service support program includes three fee waivers: ground support equipm

terminal fees. Each fee waiver is described in detail below: 

GROUND SUPPORT EQUIPMENT The Airport owns an aircraft pushback tug, ground power unit, luggage carts, baggdeicing truck, lavatory service cart, tow bar and a ticket counter setup. Typically, thequipment use fee for an airline to use the ground support equipment. However, t

fees for the use of ground support equipment for the first year of service. With a 1

the fee waiver is valued at $12,600. 

LANDING FEES As part of the Airport’s standard rates and charges, signatory airlines are charged a 

$0.91 per 1,000 pounds of gross landed weight. The Airport will waive landing fee

The

Airport

is

committed

to

this

program

offering

comprehensive

fee

waivers

for

the

first

12

months

of service.
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

new service to an additional hub. The landing fee waiver will vary depending on aircraft type used and thoffered. Landing fees for the first 12 months are estimated at $33,000 assuming the use of the Embraer Canadair Regional Jet with two roundtrips daily. TERMINAL FEES The Airport will waive terminal fees for the first 12 months of service including: carrier exclusive space (i.e

baggage claim space and maintenance, baggage claim use, gate holding space rental and passenger load

These fees are estimated at $128,000 for the first 12 months. 

Strategic Plan Funding The public-private partnership is requesting U.S. Department of Transportation assistance in funding 28 p

Strategic Plan. Specifically, U.S. Department of Transportation funding will be used to fund a portion of t

other elements including 67 percent of the revenue guarantee, the marketing campaign, ticket counter rewill be funded by the community. Table 7.3 provides the Strategic Plan budget by element and sources o

and co

m

munity

will fund 72 percent of the total pro

p

osed air service pro

gram. Non-airport fund

percent of the cash requirement and 61 percent of the funding for the total program including in-kind se

TABLE 7.3 STRATEGIC PLAN BUDGET 

DESCRIPTION 

FUNDING SOURCE 

TOTAL 

US DOT AIRPORT NON-AIRPORT 

CASH CASH 

INKIND CASH IN- KIND 

Airline incentive program:

Marketing campaign $50,000 $50,000 $100,000 

Revenue guarantee

First year $500,000 $500,000 $1,000,000 Second year $500,000 $500,000 

Ticket counter renovation $30,000 $30,000 Fee waivers:

Ground support equipment $12,600 $12,600 Landing fees $33,000 $33,000 Terminal fees $128,000 $128,000 

Total $500,000 $30,000 $173,600 $1,050,000 $50,000 $1,803,600

Percent of total project 28% 2% 10% 58% 3% 100%Percent of cash contribution 32% 2% N/A 66% N/A 100%

Significant Community Contribution Non-airport sources will fund $1,050,000, or 66 percent, of the cash requirement. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Project Continuation and Sustainability It is anticipated that improved eastbound service will be self-sustaining after the start-up period which can take up to 12 months or longer. However, if a minimum load factor of 65 percent is not achieved on average after the first 12 months of service (this includes the ramp-up period), the public-private partnership will fund an additional $20,000 marketing campaign as service failure is often due to the lack of awareness in the community. It is anticipated that a second-year revenue guarantee will be negotiated as part of the initial incentive package. The public-private partnership and the Siouxland business community understand the importance of this project and the difficulties associated with profitably operating air service and will continue to work to ensure its success. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT /COL.BUD DAY FIELD

SCHEDULE AND MONITORING

he public-private partnership has developed a realistic timetable to achieve the goals of this proposal. This section provides critical milestones to be achieved by the publicprivate partnership. A monitoring program is also provided to track 

the progress of the project. 

Milestones for Timely Completion of Project The following milestones are proposed to track the progress of this air service initiative. The timeline is highly dependent on the date of the U.S. Department of Transportation’s grant award and the service start date. Marketing Campaign Development and Initiation 

February 15, 2011: Development of the marketing campaign will be comple

order to begin the marketing campaign 60 days prior to new service initiation 2011. Development of the marketing campaign is dependent on air service aIt is anticipated that the marketing campaign will begin by March 2011 and cfirst year of new service. 

Service Initiation 

May 1, 2011: The service start date is the critical date for the rest of the Strat

that American Airlines or United Airlines will initiate nonstop Chicago O’Hare 

service initiation is dependent on airline route planning and availability of righ

Sioux City market. 

T
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Revenue Guarantee Contract Completion 

A

pril 30, 2012: At the end of the first year of service, the revenue guarantee will be calculated based on 

agreement. If the service start date changes due to airline circumstances and/or equipment availability, th

contract term will change accordingly. Also, the revenue guarantee may be split over a two-year service p

May 1, 2012: If the load factor for the first 12 months of service does not reach an average of 65 percen

$20,000 in additional marketing to help the service reach the potential passenger levels required for carrierevenue guarantee is included in the original incentive package. 

Alternate Plan 

May 1, 2011: If American or United has not committed to nonstop Chicago O’Hare service by May 1, 20

will contact alternate carriers for eastbound service which would meet the goals of this grant application. to air service startup and efforts to secure Chicago O’Hare service will continue as discussions begin with 

the changes that may develop in the next year with other carriers and other potential eastbound hubs, Sio

carrier environment and pursue any new opportunities that may satisfy this service deficiency. 

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

TABLE 8.1 STRATEGIC PLAN SCHEDULE

2011 2012

Marketing development/campaign

Revenue guarantee contract period

Service initiation

Alternate plan

Alternate Plan in 

Place 

If American or United has not committed to providing nonstop Chicago O’Hare service by May 1, 2011, the City of Sioux City will contact other carriers for eastbound hub service 

which would meet the 

goals of this grant application. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT / COL. BUD DAY FIELD

Monitoring Program The monitoring program includes service performance tracking, assessing the effecampaign, impact on airfares and determining the influence of improved eastboun

the Airport. The following will be completed to monitor the Strategic Plan: 

• Performance and revenue guarantee: Review aircraft departures, enplane

and revenue guarantee indicators on a monthly basis. Airport data, U.S. Transportation airline reported data and data obtained directly from the 

• Airfares: Compare U.S. Department of Transportation airline reported av

quarterly basis, when available, to prior quarters. Published airfares will quarterly via one of the Global Distribution/Computer Reservations Syste

• Marketing: To evaluate the effectiveness of the marketing campaign, Mo

conduct a survey of local travelers six months after service initiation. 

• Retention: A follow-up true market estimate will be conducted to determ

diversion after the first 12 months of service. 
PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT /COL.BUD DAY FIELD

APPENDIX A. AIRLINE AND COMMUNITY SUPPORT

ppendix A includes letters of support for the City of Sioux City’s appl

Department of Transportation for improved eastbound service. Suppby SkyWest Airlines, participants in the public-private partnership, a

Siouxland community. The letters of support are included on the following p

and are listed below. 

Airline SkyWest Airlines (United Express) Government United States Senate – Senator Charles Grassley United States Senate – Senator Tom Harkin United States Senate – Senator Mike Johanns United States Senate – Senator E. Benjamin Nelson Congress of the United States – Congressman Jeff Fortenberry Congress of the United States – Congressman Steve King State of Iowa – Governor Chester Culver City of North Sioux City – Mayor Don Fuxa City of Sergeant Bluff – Mayor Dale Petersen City of Sioux City – Mayor Michael Hobart City of South Sioux City – Mayor Sandra Ehrich 

Public-private paSioux Gateway Airportcover letter) Siouxland Chamber of The Siouxland Initiative Businesses and OBriar Cliff University C.W. Suter Services Great West Casualty CLiberty National Bank Mercy Medical Center Phillips Kiln Services LtPowell Broadcasting CSt. Luke’s Iowa Health Security National Bank Siouxland National BanSiouxland Surgery CenTyson Fresh Meats, IncUS Bank Wells’ Dairy, Inc. Western Iowa Tech Co

A





























PROPOSAL UNDER THE SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

SIOUX GATEWAY AIRPORT /COL.BUD DAY FIELD

APPENDIX B. DETAILED MARKET ANALYSIS

onfidential submission of the City of Sioux City, IA. C