Legal sponsor: City of Sioux CityDUNS: 961522351Congressional District Code: IA-5Contact: Curtis R. Miller - Airport Director2403 Aviation BoulevardSioux City, IA 51111(712) 279-6165cmiller@sioux-city.orgAugust 25, 2010Docket #: DOT-OST-2010-0124SIOUXGATEWAYAIRPORTCOLONELBUDDAYFIELDPROPOSAL UNDERTHESMALLCOMMUNITYAIRSERVICEDEVELOPMENTPROGRAMPrepared by

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# T ABLE OF 

# C ONTENTSSummary Information ........................................ 1Proposal Highlights ............................................ 2High Priced Market with Limited Service Options .................2Solid Market Analysis ..........................................................3Significant Community Involvement and Support ................3Far Reaching Benefits to the Community .............................3Air Service Environment .................................... 4Large Catchment Area ........................................................4Long Drives to Competing Airports .....................................5Locally Headquartered Businesses ........................................5Significant Business Development ........................................5Substantial Educational and Medical Facilities ......................6Air Service – Existing and Historical .................. 7Existing Air Service ..............................................................7Historical Air Service ............................................................8Past Air Service Development Efforts ................................. 10Air Service Needs and Deficiencies ................. 11Limited Local Service Options ............................................ 11Demonstrated Market Demand ......................................... 12High Priced, Uncompetitive Marketplace ........................... 12Strategic Plan – Air Service .............................. 14Project Goals .................................................................... 14Proposed Air Service ......................................................... 14Airline Participation ........................................................... 15Detailed Market Analysis ................................................... 15Alternate Plan ................................................................... 16Previous Grant Recipient - New Project and Goals ............. 16Strategic Plan – Implementationand Funding ................................................. 17Public-Private Partnership .................................................. 17Incentive and Support Plan ................................................ 18Strategic Plan Funding ...................................................... 21Project Continuation and Sustainability ............................. 22Schedule and Monitoring ................................. 23Milestones for Timely Completion of Project ...................... 23Monitoring Program ......................................................... 25Appendix A. Airline andCommunity Support .................................... 26Appendix B. Detailed MarketAnalysis ........................................................ 56PAGE1

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# S UMMARY 

# I NFORMATIONA. Applicant Information:(Check all that apply)XNot a ConsortiumInterstate ConsortiumIntrastate ConsortiumCommunity now receives EAS subsidyXCommunity (or Consortium member) previously received a SmallCommunity GrantIf previous recipient, date of grant: September 2004Expiration date of grant: September 2006B. Public/Private Partnerships:(List organization names)PublicPrivate1. City of Sioux City1. The Siouxland Initiative2. Sioux Gateway Airport/Col. BudDay Field2. Siouxland Chamber of CommerceC. Project Proposal:(Check all that apply)XMarketingRegional ServicePersonnelLaunch New CarrierTravel BankFirst ServiceSurface TransportationXSecure Additional CarrierXRevenue GuaranteeXNew RouteXStart Up Cost OffsetLow Fare ServiceStudySubsidyUpgrade AircraftOther (specify): __________Increase FrequencyService RestorationD. Existing Landing Aids at Local Airport:XFull ILSXPublished Instrument ApproachLocalizerOuter/Middle MarkerOther (specify):E. Project Cost:1. Federal amount requested:$500,0002. Statecashfinancial contribution:$03. Localcashfinancial contribution...3a. Airportcashfunds:$30,0003b. Non-airportcashfunds:$1,050,0003c. Total localcashfunds (3a.+3b.)$1,080,0004. TOTAL CASH FUNDING (1.+2.+3c.)$1,580,0005. Local funds contributed fromalready-existingprograms orprojects included in line 3c. amount:$06. Local funds contributed fromnewcommitments ornewresources included in line 3c. amount:$1,080,0007. AirportIn-Kindcontribution: (Fee Waivers)$173,6008. Other In-Kind contribution:(Media)$50,0009. TOTAL IN-KIND CONTRIBUTION (7.+8.):$223,60010. TOTAL PROJECT COST (4.+9.):$1,803,600F. Enplanements:200085,828200342,075200632,506200190,016200441,179200743,076200256,199200541,438200850,945200932,791G. Is this application subject to review by State under Executive Order12372 process?a. This application was made available to the Stateunder the ExecutiveOrder 12372. Process for review on (date) _____________.b. Program is subject to E.O. 12372, but has not been selected for review.c. Program is not covered by E.O. 12372.H. Is the Applicant delinquent on any Federal debt?(if “yes”, provideexplanation)NoYes (explain)XXPAGE2

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# P ROPOSAL 

# H IGHLIGHTShis Small Community Air Service Development Programgrant application for the Sioux Gateway Airport/Col. BudDay 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 airservice initiative. The project goal is to providecompetitiveeastbound air service to adequately serve the Siouxland areathereby reducing airfares and mitigating the need to drive longdistances to access sufficient air service. Improved serviceeastbound, particularly to Chicago O’Hare InternationalAirport, is a top priority. The Strategic Plan, American Airlinesor United Airlines service to Chicago O’Hare, willachieve theproject goals.High Priced Market with Limited Service OptionsThe Sioux Gateway Airport catchment area is both underserved and overpriced to eastbound markets.With air service in only one nonstop market, Minneapolis-St. Paul International Airport, provided by asingle airline, Delta Air Lines, no competitive forces are operative in the market, and air travelershave nooptions at the local airport. To further exacerbate the problem, Delta continues to reduce departuresatthe Airport with departures declining 41 percent and seats declining 46 percent from January 2009 toJanuary 2010.Because of the limited service offering and high airfares,87percentofSiouxlandtravelersfinditnecessarytodrivetoanalternateairport, Omaha or Sioux Falls, to access adequate air service.Historically, when competitive service entered themarket, the percentage of air travelers using the localairport more than doubled. With the lack of competition, airfares are exorbitant with fares 18 percenthigher at Sioux Gateway Airport than the Iowa stateaverage and 42 percent higher than the U.S.average.TPAGE3

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDSolid Market AnalysisExtensive, detailed market analyses have been completed for Sioux City-Chicago O’Hare service. Routeforecasts for two roundtrips per day with 50-seat regional jet aircraft were done for American and United.Both route forecasts were positive on a segment andsystem basis, netting the carriers over $4.4 millionsystem-wide. The route forecasts are included asAppendix B. The carriers have shown strong interest inserving the market. SkyWest Airlines (United Express) has provided a letter of support for this grantapplication (Appendix A). To reduce the carrier’s risk in this high-costairline environment, a thorough andairline-approved air service support plan is proposed. The comprehensive plan will ensure American’sorUnited’s success in the market and includes: a $1.5million revenue guarantee over two years, aggressivemarketing campaign, ticket counter renovation, useof ground support equipment and airport fee waiverstodefray start-up costs.Significant Community Involvement and SupportThe City of Sioux City, Sioux Gateway Airport/Col.Bud Day Field, the Siouxland Chamber of Commerce, andThe Siouxland Initiative formed a public-private partnership in support of this application. Cooperatively,these organizations have a history of successful initiatives with broad support from the community. Tosupport this air service initiative, the Airport and community will fund 72 percent of the proposed $1,803,600Strategic Plan.Non-airportrevenuesourceswillfund66percent($1,050,000)ofthe$1,580,000cashrequirement.This is a strong commitment by the local community in support of improved air service.The public-private partnership and local businesseshave the ability to implement the project. This wasdemonstrated in 2007 by the successful effort by the community to entice Frontier Airlines to serve themarket. This cooperative effort was the sole reason behind Frontier entering the market.Far Reaching Benefits to the CommunitySioux Gateway Airport serves a region that includesa population exceeding 300,000 in Iowa, Nebraska andSouth Dakota. As the region’s center for business,education and medical services, eastbound serviceto ahub airport will meet the diverse needs of these sectors as well as those of its citizens.



# S i o u x G a t e w a y A i r p o r t h a s c o m p l e t e d

t h e b a c k g r o u n d a n a l y s i s a n d a i r l i n e

m e e t i n g s m a k i n g t h e s u c c e s s o f t h e

S t r a t e g i c P l a n h i g h l y p r o b a b l e .PAGE4

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# A IR 

# S ERVICE 

# E NVIRONMENThe Siouxland community is large and dynamic. Thissection demonstrates the community’s need foradditional air service including: a catchment areawith apopulation over 300,000; inadequate alternative service;vibrant business community; and a region with substantialeducational and medical facilities. Competitive airservice withmore local options will have a significant positiveimpact onthe Siouxland economy.Large Catchment AreaLocated on the Iowa, Nebraska andSouth Dakota border, Sioux GatewayAirport/Col. Bud Day Field servesportions of all three states with acatchment area population exceeding300,000. Sioux City, Iowa is thelargest city and the commercial hubof the six-city, tri-state metropolitanregion known as Siouxland. Theregion consists of Woodbury County,Iowa; Dakota County and DixonCounty, Nebraska; and UnionCounty, South Dakota.Exhibit 3.1provides a depiction of the 10,050square mile area served by theAirport.TEXHIBIT 3.1 AIRPORT CATCHMENT AREA AND PROXIMITY TOCOMPETING AIRPORTSPAGE5

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDLong Drives to Competing AirportsOnly 13 percent of catchment area passengers use Sioux Gateway Airport; 76 percent use Omaha’s EppleyAirfield and 11 percentuse Sioux Falls’ Joe Foss Field. The Siouxland region is located approximately 89 miles from Sioux Falls and approximately 95 milesfrom Omaha (Exhibit 3.1, previous page). The distance and drive time required to each of these airports is costly for localbusinesses.Locally Headquartered BusinessesThe 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 tocooperative efforts between the various governmententities, businesses and citizens. Theseefforts have led to business growth, in-migration of new businesses and a well-diversifiedeconomy. Many different industries ranging from agriculture to high tech have a stake in theSiouxland area. Wells’ Dairy Inc. is a multi-billion dollar corporation headquartered in Siouxland.Beef Products Incorporated (BPI), Sue Honey Association, American Pop Corn, Great WestCasualty and Wilson Trailer are multi-million dollar organizations that are also headquartered inthe Siouxland region. Tyson Fresh Meats and GelitaNorth America operate large manufacturingfacilities in the area. All of these organizationsrely on air service to move staff, vendors andclients to and from Siouxland.Significant Business DevelopmentSiouxland continues to attract new business and investment with recent developments like:•American Popcorn (makers of Jolly Time Popcorn) will construct a new microwavepopcorn 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 South Sioux City•New 55,000 square foot public museum to open downtown Sioux City December 2010 - $13.5 million investmentNationalRecognition•Sioux City Metroranked #14 for BestSmall Places forBusinesses and Careers–Forbes.com (2010)•For the third year in arow, Iowa has crackedthe top 10 as one ofthe Top States forDoing Business –CNBC (2010)•Sioux City Metroranked as one of thetop 3 metros in thenation for economicdevelopment for thelast four years –SiteSelection Magazine (2006-2009)•Sioux City Metroranked third best metroin the U.S. for MetroEconomic GrowthPotential –BusinessFacilities Magazine(2009)•Iowa ranked second inthe 15 Most FinanciallyHappy States –MainStreet.com (2009)•Sioux City ranked asone of the Improved55 Places –MilkenInstitute’s Best PerformingCities Index (2008)•Iowa ranked sixth inQuality of Life –Business FacilitiesMagazine (July 2008)PAGE6

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDIn addition, over the last few years, several new companies have begun operations in Siouxland including Stream, Alorica Inc., Vizioand GovConnection. These four companies alone added over 2,000 new jobs to the community. There hasalso been an additionalone million square feet of retail development in the Siouxland area. A $400 million upgrade to BPI’smanufacturing complex is underconstruction in South Sioux City;thisisthelargestsingleinvestmentprojectinNebraskahistory. In addition to the above,Hyperion Energy has optioned 11,000 acres in southern Union County in South Dakota to build a refinery. In August 2009, theSouth Dakota Board of Minerals & Environment unanimously approved the Air Quality Permit for Hyperion.This is another big steptowards 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; total supportjobs will exceed5,000Improved air service will help maintain this levelof development and accelerate it.As evidenced in the examples above, the business community is committed toimproving the Siouxland region.Substantial Educational and Medical FacilitiesSiouxland is fortunate to be home to many educationand medical institutions(Table 3.1) that serve both a regional and national customerbase and generateair service demand.In short, the partnerships between the business community and government inSiouxland are strong. These partnerships can be leveraged to improve air serviceat Sioux Gateway Airport to attain similar successof other communitydevelopment projects in Siouxland.TABLE 3.1 INSTITUTIONSUNIVERSITIES AND COLLEGESBriar Cliff UniversityMorningside CollegeTri-State Graduate CenterWestern Iowa Tech Community CollegeNortheast Nebraska Community CollegeDesign West – Iowa State UniversityWayne State CollegeMEDICAL INSTITUTIONSMercy Medical CenterSt. Luke’s Regional Medical CenterThe Center for Neurosciences, Orthopedics, & SpineSiouxland Surgery CenterJune E. Nylen Cancer CenterPAGE7

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# A IR 

# S ERVICE 

# – E XISTING AND



# H ISTORICALhis section provides an overview of existing airservice. Carriers providing service, servicefrequency, direct and connecting destinationsoffered, available airfares and equipment types areincluded in the discussion. A summary of historicalair service is also included with destinations, trafficlevels, service providers and an overview ofextenuating factors that have affected air service.Adescription of air service development effortsconcludes the section.Existing Air ServiceSioux Gateway Airport has nonstop service to Minneapolis-St. Paul International Airport. In July 2009,Delta Air Lines operated an average of five daily roundtrips per day with 34-seat Saab 340 turbopropaircraft three times per day and 50-seat Canadair Regional Jets two times per day providing 1,364weekly available seats on 34 departures. Beginningin mid-August, Delta reduced service to four dailyroundtrips. This service offers single-connect service to 141 destinations (Table 4.1). Nonstop ChicagoO’Hare service would add competition, provide regional nonstop jet service in the largest local marketand give access to up to 135 single-connect marketsover Chicago O’Hare.TABLE 4.1 EXISTING AIR SERVICENONSTOPDESTINATIONMARKETINGCARRIERAIRCRAFTWEEKLYDEPARTURESWEEKLYSEATSSINGLECONNECTDESTINATIONSMinneapolis,MNDelta AirLinesCRJ-200(jet)20 1,000 135Source: apgDat, August 2010TPAGE8

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDOver the last five years, Sioux Gateway Airport’s average fares have farexceeded the state, region and national average. ReferenceTable 4.2,Sioux City’s fares have exceeded the State of Iowaeach year. The faredifferential was reduced in 2007 and 2008 due to Frontier Airlines’ Denverservice; however, since Frontier left the Sioux City market fares haveincreased. This demonstrates the impact competitive service can have onairfares in the market in a very short timeframe.Compared to the CentralRegion, 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 $85one way over the last five years.Historical Air ServiceAir service at Sioux Gateway Airport over the last10 years hasmarkedly declined. This subsection summarizes Sioux GatewayAirport’s air service history including: destinations, traffic levelsand service providers. Extenuating factors that have affected airservice over time are also reviewed.Destinations, Service Providers and Traffic LevelsOver the last 10 years Sioux Gateway Airport’s airservicedeclined significantly, a trend which was partiallyoffset in2007/2008 by Frontier’s Denver service but was stymied by theservice cancellation in May 2008.Exhibit 4.1provides asummary of annual departures and enplanements from2001through 2010 (estimated).Table 4.3, next page, shows theaverage scheduled weekly departures by destinationand airline.In the past 10 years, Sioux Gateway Airport’s departures decreased 76 percent. Average weekly departures have declined fromapproximately 83 weekly departures to only 20 departures in 2010. Average weekly available seats declined from 3,455 to 930, a73 percent decline. The reduction in departures, available seats and high local fares resulted in enplanements also declining. From2000 to 2006, enplanements declined 62 percent. Enplanements rebounded somewhat in 2007 and 2008 withthe addition ofFrontier’s Denver service and Northwest’s additionof one roundtrip per day to Minneapolis that beganin August 2007. However, inTABLE 4.2 AVERAGE ONE-WAY FARE PAIDAVERAGE FARESUX %HIGHER20052006200720082009Sioux City$199$234$188$207$204Sioux Falls $180$200$199$216$1936%Omaha $135$147$148$156$14046%Iowa $168$179$179$199$17318%Central Region$140$148$147$156$14047%U.S. $137$149$149$160$14442%Source: Data Base Products, Inc.EXHIBIT 4.1 DEPARTURES AND ENPLANEMENTS05001,0001,5002,0002,5003,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 EstCalendar year

Departures017,00034,00051,00068,00085,000102,000 EnplanementsSource: apgDat; airport recordsNote: 2010 departures estimated; 2010 enplanementsnot availablePAGE9

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD2009 enplanements plunged to 32,791, a 36 percent decrease over 2008. Enplanements are likely to further decline in 2010 withthe reduction in departures and available seats.TABLE 4.3 HISTORICAL DESTINATIONS AND SERVICE PROVIDERSDESTINATIONAIRLINEITEMAVERAGE SCHEDULED WEEKLY DEPARTURES/SEATS2001200220032004200520062007200820092010Denver, CO FrontierDept 16 17Seats 1,227 1,258Minneapolis, MN Delta/NorthwestDept 57 45 46 47 43 34 32 33 30 20Seats 2,628 2,077 1,834 1,807 1,740 1,339 1,241 1,314 1,247 930St. Louis, MOAmericanDept 19 15Seats 950 628TWADept 26Seats 815Average weekly departures83494647433436413020Average weekly seats3,4552,2341,8341,8071,7401,3521,5481,8381,247930Source: apgDatExtenuating Factors that have Affected Air ServiceSioux 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 atChicago O’Hare which has made it difficult for smaller or medium-sized cities such as SiouxCity to access the hub. This has permitted Minneapolis to maintain an eastboundmonopoly. Service to the southeast and south central U.S. was lost with the AmericanAirlines/Trans World Airlines’ merger and the subsequent decision to significantly downsizethe St. Louis hub. Due to its geographic location,alternate hubs to Chicago O’Hare andSt. Louis require longer flights.ExtenuatingFactorsGate constraints and airtraffic congestion atChicago O’Hare havemade it difficult forsmaller or medium-sizedcities such as Sioux Cityto access the hub.PAGE10

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDPast Air Service Development EffortsSioux Gateway Airport plays a critical role in thecommunity’s economic health and quality of life.Since 1996 and particularly over the past fiveyears, the City of Sioux City, Siouxland Chamberof Commerce and The Siouxland Initiative haveworked together on air service developmentefforts. These efforts have included severalmarket studies to determine retention of localpassengers, pro forma analyses for many majorhubs and presentations to airlines.Table 4.4provides an overview of the air servicedevelopment efforts since 2005.TABLE 4.4 PAST AIR SERVICE DEVELOPMENT EFFORTSYEARINITIATIVERESULT2005American Airlines' St. Louis pro forma analysis (positive) CompletedDelta Air Lines' Salt Lake City pro forma analysis(positive) CompletedMarket Airfare Analysis (identified significant airfare disparities) CompletedMidwest Airlines' Milwaukee pro forma analysis (negative) Completed2006Delta Air Lines' proposal for Salt Lake City service UnsuccessfulDelta Air Lines' Salt Lake City pro forma analysis(positive) CompletedFrontier Airlines' Denver pro forma analysis (positive) CompletedTrue market estimate (updated retention/market demand) Completed2007Response to Frontier Airlines’ Request for Proposals SuccessfulFrontier Airlines' proposal for Denver service SuccessfulNetwork conference (met with AA/DL/FL/G4/TZ/WN) CompletedSCASDP grant applicationUnsuccessful2008Air service marketing brochure CompletedAllegiant Air conferenceCompletedNetwork conference (met with UA/YX/F9/AA/DL) CompletedUnited Airlines’ Chicago O’Hare pro forma analysis(positive) CompletedUnited Airlines’ Denver pro forma analysis (positive) CompletedUnited Airlines’ proposal in Washington, DC CompletedSCASDP grant applicationUnsuccessful2009Allegiant Air conferenceCompletedNetwork conference (met with AA/DL/F9/UA/US/YX) CompletedPassenger Demand AnalysisCompletedAmerican Airlines' Chicago O'Hare pro forma analysis (positive) CompletedUnited Airlines’ Chicago O’Hare pro forma analysis(positive) CompletedUnited Airlines’ Denver pro forma analysis (positive) CompletedDelta Air Lines' Salt Lake City pro forma analysis(positive) CompletedAmerican Airlines' proposal in Dallas/Ft. Worth PendingDelta Air Lines' proposal in Atlanta SuccessfulUnited Airlines' proposal in Chicago PendingSCASDP grant applicationUnsuccessful2010Allegiant Air conferenceCompletedAir service marketing brochure - update CompletedNetwork conference (met with AA/F9/UA/MX/AM) CompletedDelta Air Lines' proposal in Atlanta PendingUnited Airlines' proposal in Chicago PendingPAGE11

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# A IR 

# S ERVICE 

# N EEDS AND



# D EFICIENCIEShe Air Service Needs and Deficiencies section identifies the issues at Sioux Gateway Airport whichhave stunted the growth of commercial air service to the community. This section provides adetailed analysis to demonstrate thatSiouxland is underserved and overpriced.Limited Local Service OptionsSiouxland has an estimated true market of over 650air travelers per day each way, yet air service islimited to an average of 143 seats per day each way.This represents almost a 60 percent reduction fromthe 353 seats per day each way provided in 2007when Frontier Airlines was in the market and a 71percent reduction since 2001. Chicago (ORD/MDW)is clearly the largest Sioux City market. Among SiouxCity’s top 50 true markets, 53 percent of passengerswere destined to eastern markets that would beserved over Chicago O’Hare. Chicago O’Hare servicewould also provide access to many western markets.Table 5.1provides Siouxland’s true market andretention for top 25 eastbound markets andSiouxland in total. The net result of Siouxland’slackof service is that only 13 percent of air travelersusethe local airport. The situation is even worse in10 ofthe top 25 eastbound markets served over ChicagoO’Hare with fewer than seven percent of air travelersusing the local airport.TABLE 5.1 CATCHMENT AREA RETENTION ANDDIVERSION OF PASSENGERSMARKETRANKTOP EASTERNMARKETS SERVEDOVER ORDSUXRETENTIONTRUEMARKETPAX1Chicago, IL (ORD)4.028,3632Dallas, TX (DFW)4.021,2113Houston, TX (IAH)4.019,7315Orlando, FL6.715,7029Chicago, IL (MDW)4.311,11811Boston, MA16.89,93114Detroit, MI12.59,31315Norfolk, VA4.08,63216NW Arkansas, AR4.08,63217Milwaukee, WI14.68,57518Baltimore, MD10.06,31419Fort Lauderdale, FL6.36,15621San Antonio, TX11.45,35222Washington, DC (DCA)36.85,28223Miami, FL4.05,17925Columbus, OH14.64,86126Pittsburgh, PA17.94,42027Austin, TX14.64,18628New Orleans, LA6.54,12929Raleigh/Durham, NC14.64,05130Madison, WI14.63,91631Atlanta, GA28.93,85932Washington, DC (IAD)14.63,71433Cleveland, OH14.63,64634Hartford, CT14.63,579Other domestic markets13.4236,519Total all markets13.3478,789TPAGE12

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDDemonstrated Market DemandWhile all market indicators suggested the existenceof a strong demand for additional air service prior to Frontier entering themarket, it was validated by the seven months Frontier operated Sioux City-Denver air service. Frontier entered the market with twodaily roundtrips in early October 2007, increasingto three daily roundtrips two months after serviceinitiation in December 2007.Frontier reported passengers showed that an averageof 104 outbound passengers per day from October through April traveledto/beyond Denver on the Frontier service. Due to Frontier’s bankruptcy and fleet re-structuring, Sioux City-Denver service wascanceled in May 2008. However, onboard passengersduring the seven-month service period amply demonstrate the demand andneed for additional Sioux City service and would undoubtedly have been considerably higher had the service been available for a fullyear. A review of the service performance proved that: the market isunderserved; competitive service will lower fares;and use of SiouxGateway Airport will improve with retention more than doubling.High Priced, Uncompetitive MarketplaceThe low catchment area use of Sioux Gateway Airportis a function ofthe market being underserved and overpriced. Thesecharacteristicsfrequently go hand-in-hand and are interrelated. With a single airlineserving the market, there is no direct competitivepressure on farelevels, and the airline is free to establish faresthat best serve theirobjectives. The non-competitiveness of Sioux Cityfares is exacerbatedby the low-fare carrier presence at Omaha which entices passengers todivert to that airport where low-fare airlines provide more directservice.To illustrate the magnitude of Sioux City’s fare disparity,Table 5.2compares Sioux City’s fares with Omaha, the statesof Nebraska andIowa and the U.S. national average for the top 25 eastern marketsserved over Chicago O’Hare and in total. While itis not expected thatSioux City’s fares be equal to Omaha fares due to market sizedifferences and the low-fare carrier presence at Omaha, thecomparison is included to demonstrate the magnitudeof thedifferences.TABLE 5.2 HISTORICAL AIRFARE COMPARISONTOP EASTBOUNDMARKETSOVER ORDAVERAGE FARESIOUXCITYOMAHASTATEOF NESTATEOF IAU.S.AVGChicago, IL (ORD)$225$106$112$193$147Dallas, TX (DFW)$262$159$162$191$165Houston, TX (IAH)$221$152$153$167$167Orlando, FL$143$123$126$167$117Chicago, IL (MDW)$166$86$86$198$113Boston, MA$178$174$176$161$154Detroit, MI$257$166$170$235$143Norfolk, VA$254$147$150$214$161NW Arkansas, AR$287$190$192$200$199Milwaukee, WI$177$172$174$155$122Baltimore, MD$321$132$135$168$121Fort Lauderdale, FL$262$143$144$150$120San Antonio, TX$323$139$142$181$143Washington, DC (DCA)$189$180$181$179$171Miami, FL$173$169$173$187$151Columbus, OH$221$127$132$161$130Pittsburgh, PA$288$141$147$148$131Austin, TX$242$143$147$192$140New Orleans, LA$255$176$180$207$138Raleigh/Durham, NC$195$125$127$157$127Madison, WI$183$159$171$160$155Atlanta, GA$298$214$213$221$141Washington, DC (IAD)$190$172$178$186$178Cleveland, OH$153$134$138$164$143Hartford, CT$289$150$156$205$156All markets$204$140$142$173$144Source: Data Base Products, Inc.; CY 2009OverpricedSiouxland MarketCompared to state andnational averages,Siouxland suffers fromsignificantly higher faresat 42 percent higher thanthe U.S. average in 2009.PAGE13

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDSioux City’s average fare exceeds Omaha, the stateof Nebraska, the state of Iowa and the U.S. averagein 21 ofthe top 25 eastern markets. In total, the fare differential ranges from $31 higher than state of Iowato $65higher than Omaha and $61 higher than the U.S. average.Table 5.2provided historical airfares for calendar year 2009. Another demonstration of the overpricedSiouxland market is a comparison of published airfares (Table 5.3). Published airfares represent the “structuralairfare” and are not influenced by seat availability. It is also a more recent fare comparison due toavailability ofdata. It is clear from the comparison of publishedairfares that Siouxland’s fares are excessively high, averagingover $50 one-way higher than Omaha in 13 of the top25 eastbound markets.TABLE 5.3 PUBLISHED AIRFARE COMPARISONTOP EASTBOUNDMARKETS OVER ORDLOWEST PUBLISHED FARESIOUXCITYOMAHADIFF.Chicago, IL (ORD)$166$79$87Dallas, TX (DFW)$189$154$35Houston, TX (IAH)$189$135$54Orlando, FL$169$119$50Chicago, IL (MDW)$166$79$87Boston, MA$189$139$50Detroit, MI$200$164$37Norfolk, VA$184$139$45NW Arkansas, AR$176$165$11Milwaukee, WI$129$92$37Baltimore, MD$177$127$50Fort Lauderdale, FL$184$114$70San Antonio, TX$162$112$50Washington, DC (DCA)$181$153$28Miami, FL$196$164$33Columbus, OH$151$101$50Pittsburgh, PA$176$127$49Austin, TX$184$134$50New Orleans, LA$187$185$2Raleigh/Durham, NC$195$122$73Madison, WI$137$102$35Atlanta, GA$202$100$102Washington, DC (IAD)$181$153$28Cleveland, OH$159$101$58Hartford, CT$186$149$37Source: Computer Reservation System, as of July 19,2010



# S i o u x l a n d ’ s f a r e s a r e e x c e s s i v e l y h i g h ,

a v e r a g i n g o v e r $ 5 0 o n e - w a y h i g h e r t h a n

O m a h a i n 1 3 o f t h e t o p 2 5 e a s t b o u n d

m a r k e t s .PAGE14

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# S TRATEGIC 

# P LAN 

# – A IR 

# S ERVICEhe Strategic Plan will achieve the community’sgoals and help to alleviate the air service needsand deficiencies of Siouxland. This StrategicPlan section provides a detailed description of thegoals of the project and a primary and alternate planfor attaining those goals. As a previous grantrecipient, this application is a new project withdifferent goals than the previous project.Project GoalsThe project goal is to provide competitive eastbound air service to adequately serve the Siouxland areathereby reducing airfares and mitigating the need to drive long distances to access sufficient air service.Proposed Air ServiceWith existing service limited to Minneapolis, Siouxland’s primary air service need is to a hub offeringsignificant connecting opportunities, specificallyChicago O’Hare International Airport (Exhibit 6.1).High average fares and extreme diversion of catchment area travelers support the need for this airservice initiative. American Airlines’ or United Airlines’ Chicago O’Hare service would provide Siouxlandwith optimal air service access. This plan will achieve the project goals by:•Offering more service options, nonstop service to Siouxland’s top destination and single-connectopportunities to the community•Providing competition to the sole carrier in the Sioux City market, Delta Air Lines, therebyreducing airfares•Reducing the need for air travelers to drive to Omaha or Sioux Falls for acceptable airfaresTEXHIBIT 6.1 ROUTE MAPMSPORDSUXPAGE15

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDAirline ParticipationOver the past year, members of the public-private partnership (Table 7.1, page 17) have met with bothAmerican and United regarding nonstop eastbound service. Discussions with the carriers have been positive.SkyWest Airlines (United Express) has provided a support letter for this grant application (Appendix A). Giventhe difficulty in securing face-to-face airline meetings, the fact that both airlines met with Siouxlandrepresentatives bodes very well. However, based onpreliminary discussions with the airlines, the communitysupport package proposed in the Strategic Plan is critical in the airline’s decision to serve Siouxland. EitherAmerican or United to Chicago O’Hare would meet thegoals of this Small Community Air ServiceDevelopment Program grant application.Detailed Market AnalysisA financial analysis and forecast has been developed for American and United service to Chicago O’HareInternational Airport. The detailed analyses are included asAppendix B, Detailed Market Analysis.Mature Market ResultsProjections were completed for a two roundtrip schedule on a 50-seat EmbraerRegional Jet 145 for American and a 50-seat Canadair Regional Jet for United.Table 6.1provides an example of one of the pro forma analyses completed.Passenger projections were based on a mature market(i.e., passengerprojections would be at 100 percent on the first day of service). It is estimatedthat two roundtrips per day will generate at least$12.6 million in systemrevenue for either carrier. Projected system profit is estimated at almost $5.0million. The estimated profit margins suggest thatafter the initial serviceramp-up that the service would be self-sustaining and profitable for eitherairline.Airline Risk During Ramp-UpAlthough it is estimated that American and United will earn a profit on both a segment and a system basis, they will not generatethis amount of revenue or margin at start-up. Airlines typically incur losses in new markets during the ramp-up period. To furtherexacerbate the airline’s risk in the market, Frontier pulling out of the market after only seven months of service could potentiallyTABLE 6.1 SIOUX CITY-CHICAGO O'HARE MARKETANALYSIS EXAMPLEITEMSTATISTICAL CATEGORY1Available seats per departure502Segments per day43Onboard passengers57,4994Load factor79%5Average fare all markets$2196Segment 1 revenue$6,268,7217Segment 1 cost$5,156,1368Segment 1 profit margin $$1,112,5859Segment 1 profit margin %18%10System revenue$12,617,79711System cost$7,632,27512System profit/loss$4,985,52113System margin40%



# S i o u x l a n d r e p r e s e n t a t i v e s h a v e m e t w i t h

A m e r i c a n E a g l e a n d U n i t e d E x p r e s s

w i t h i n t h e l a s t 1 2 m o n t h s w i t h b o t h

a i r l i n e s s h o w i n g s t r o n g i n t e r e s t i n t h e

m a r k e t .PAGE16

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDcause local travelers to be more wary of new marketentrants. This could lead to a longer than normalramp-up period. The lengthof the ramp-up period is highly dependent on marketing efforts and the community’s reaction to Frontier’s service cancellation.Based on preliminary discussions with the airlines,it is estimated that the airlines will require a revenue guarantee of over $1 millionto begin service. For success, the new service will also require a strong marketing program.Alternate PlanWhile the public-private partnership was encouragedby discussions with American and United, if SiouxGateway Airport fails toobtain Chicago O’Hare service, alternate carriers will be approached for eastbound service. Alternatehub service that would fulfillthe goals of this grant application include: Detroit, Milwaukee, Cleveland, Memphis or Atlanta. Consistent with the intent of the airservice initiative proposed, obtaining nonstop service to an alternate hub airport with numerous connecting opportunities andcompetitive airfares is the best option for Sioux Gateway Airport catchment area passengers.Previous Grant Recipient - New Project and GoalsIn 2004, the U.S. Department of Transportation awarded the City of Sioux City a Small Community Air Service Development Programgrant. The 2004 grant included the following project goals:•Introduce service by a second carrier to increase use of the airport and promote morecompetitive airfares.•Promote greater awareness of the services at SiouxGateway Airport.•Increase use of services at Sioux Gateway Airport.•Generate a marketing plan to promote lower businessfares, stabilize the existingpassenger base and develop a frequent user program.The U.S. Department of Transportation’s portion ofthe project budget, $609,800, includedpartial funding of a revenue guarantee, marketing support, promotional materials for a frequentuser program, website development and ground support equipment and facilities for a newcarrier. Where the previous application’s goals were general in nature, this application’s goalsare specific: obtain competitive eastbound servicewith concentration on Chicago O’HareInternational Airport. As demonstrated, this application qualifies as a new project and meetsthe requirements of the Small Community Air ServiceDevelopment Program.Alternate PlanAlternate hub service thatwould fulfill the goals ofthis grant applicationinclude: Detroit,Milwaukee, Cleveland,Memphis or Atlanta.PAGE17

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# S TRATEGIC 

# P LAN 

# –

I MPLEMENTATION AND 

# F UNDINGhis section,Strategic Plan - Implementation andFunding, provides the detailed incentive and supportplan required to implement the Strategic Plan. Inaddition, this section identifies the public-private partnership,self-sufficiency of the service and provides a description of thecommunity’s plan to continue with the project if itis not selfsustaining after the grant award expires. A detaileddescription of the funding necessary for implementation ofthe Strategic Plan, including federal and non-federalcontributions, is included.Public-Private PartnershipThe City of Sioux City, the owner/sponsor of SiouxGatewayAirport/Col. Bud Day Field, has been designated asthesponsor of this grant application. The City of Sioux City, theSiouxland Chamber of Commerce and The Siouxland Initiativehave formed a public-private partnership.All partners will be fully involved in the execution of theStrategic Plan (Table 7.1). The City of Sioux City will executefederal grant offers, process reimbursement requests andoversee grant administration. The Siouxland Initiative andSiouxland Chamber of Commerce will be responsible foradministering the marketing campaign. Together thesepartners are a formidable team with a track recordof successwho are committed to improving air service for theSiouxlandcommunity.TTABLE 7.1 PUBLIC-PRIVATE PARTNERROLESPUBLIC-PRIVATEPARTNERROLECity of Sioux CityGrant and revenueguaranteeadministrationSiouxland Chamberof CommerceAssist with localmarketing effortsThe SiouxlandInitiativeCoordination ofthe marketingprogramPAGE18

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDIncentive and Support PlanThe current airline financial landscape with airline bankruptciesand volatile fuel prices is rough. Accordingly, airlines are highlyrisk adverse requiring communities to partner withthem toreduce risk. In this environment, community support packageshave become increasingly important. To be effective, supportpackages must be structured to address the issues of new airlineentry in the community and ensure that the market respondsquickly. Unfortunately, Sioux Gateway Airport hasan additionalhurdle to the typical barriers-to-entry; local travelers may behesitant with a new airline entrant after FrontierAirlines left themarket in less than a year. These obstacles work against newservice and extend the time it takes for the airline to gainprofitability.The public-private partnership proposes a communitysupportpackage that has been tested and proved to be successful. Toreduce American Airlines’ or United Airlines’ breakeven periodand offset the risk during start-up, the public-private partnershipproposes the following incentives (Exhibit 7.1):•Marketing campaign: create name and serviceawareness for American/United•Revenue guarantee: reduce airline risk•Ticket counter renovation: reduce airline start-upcosts•Fee waivers: reduce airline start-up costsMarketing CampaignService failure and continued drive diversion oftenresult from a lack of awareness of available air service at the local airport. Thepublic-private partnership understands and agrees with the U.S. Department of Transportation that a thorough understanding of thetarget market is essential for the success of new air service. Similarly, new air service supported by a well-designed marketingcampaign increases the chances of the service becoming self-sustaining. This aggressive and comprehensive air service marketingRiskMitigationRevenueguaranteeMarketingcampaignTicketCounterRenovation/Fee waiversEXHIBIT 7.1 INCENTIVE PLANAmericanAirlines/UnitedAirlinesPAGE19

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDcampaign will ensure long-term continuation of thisair service initiative and will aid in minimizingthe ramp-up period which mayreduce 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 mediaThe target audience is business travelers and mid-to-upper incomehouseholds.Table 7.2provides the marketing budget. The Airport hasestablished an extensive partnership agreement withall media outlets.This $100,000 campaign will be funded by non-airport sources ($50,000cash) and local media ($50,000 in-kind). The Siouxland Initiative and theSiouxland Chamber of Commerce will be responsible for oversight of themarketing campaign.In additional to traditional paid media advertising, the marketing campaignwill utilize websites and social media. The Siouxland Chamber ofCommerce’s website receives nearly 5,000 visits monthly. The SiouxlandChamber of Commerce blog on the website showcases members and theChamber. Unlike other forms of social media, blogsallow the reader tohave more information on a subject and allow another avenue for communication. On the blog, the new service will be highlightedand links to other forms of social media such as Facebook and Twitter will be available. The blog hasan average of 1,300 hitsmonthly.Social media is becoming a much more prominent anduseful tool in marketing. Facebook and Twitter will be utilized in thismarketing campaign. The goal of the Facebook pageis to promote the Siouxland Chamber of Commerce, its members and thecommunity as a whole. The Siouxland Chamber of Commerce uses Twitter as a means of publicizing and updating followers on localbusiness and what’s going on at the Chamber. Updates on the new service will be posted on Facebook and Twitter.TABLE 7.2 MARKETING BUDGETDESCRIPTIONCASHINKINDTOTALNewspaper:The Sioux City Journal$5,000$5,000$10,000Television:KCAU (ABC)$10,000$10,000$20,000KTIV (NBC)$15,000$15,000$30,000KMEG-KPTH (CBS/FOX)$6,000$6,000$12,000CableONE$4,000$4,000$8,000Radio:Powell Group$5,000$5,000$10,000Outdoor:Avery$5,000$5,000$10,000Total$50,000$50,000$100,000MarketingCampaignThis $100,000 campaignwill be funded by nonairport sources ($50,000cash) and local media($50,000 in-kind).PAGE20

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDRevenue GuaranteeTo reduce airline risk and provide incentive to American or United to provide nonstop service to ChicagoO’Hare, this Strategic Plan includes a revenue guarantee as part of the community support package. Althoughpro forma projections for Chicago O’Hare service are positive (Appendix B), service ramp-up and breakeven cantake up to 12 months or longer, particularly in a market with significant barriers-to-entry. It is anticipated thatAmerican or United would require a $1.5 million revenue guarantee to initiate service to Chicago. Exact termsof the revenue guarantee agreement are subject to negotiation and will be split over a two-year service period.Ticket Counter RenovationIn many cases, a new airline entrant must absorb the costs of space renovations and equipment purchases atan airport. These fixed start-up costs are necessary but cause a longer breakeven period for the airline. Tomitigate start-up costs as part of the community support package, the Airport will fund the renovationof anunused ticket counter. Costs of renovation are estimated at $30,000.Fee WaiversThe air service support program includes three feewaivers: ground support equipment; landing fees; andterminal fees. Each fee waiver is described in detail below:GROUND SUPPORT EQUIPMENTThe Airport owns an aircraft pushback tug, ground power unit, luggage carts, baggage tug, belt loader,deicing truck, lavatory service cart, tow bar and aticket counter setup. Typically, the Airport would charge anequipment use fee for an airline to use the groundsupport equipment. However, the Airport will waivethefees for the use of ground support equipment for the first year of service. With a 10-year amortization period,the fee waiver is valued at $12,600.LANDING FEESAs part of the Airport’s standard rates and charges, signatory airlines are charged a landing fee assessed at$0.91 per 1,000 pounds of gross landed weight. TheAirport will waive landing fees for the first 12 months of



# T h e A i r p o r t i s c o m m i t t e d t o t h i s

p r o g r a m o f f e r i n g c o m p r e h e n s i v e f e e

w a i v e r s f o r t h e f i r s t 1 2 m o n t h s o f s e r v i c e .PAGE21

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDnew service to an additional hub. The landing feewaiver will vary depending on aircraft type used and the number of roundtripsoffered. Landing fees for the first 12 months areestimated at $33,000 assuming the use of the Embraer Regional Jet or theCanadair Regional Jet with two roundtrips daily.TERMINAL FEESThe Airport will waive terminal fees for the first12 months of service including: carrier exclusive space (i.e. gate area, ticketing),baggage claim space and maintenance, baggage claimuse, gate holding space rental and passenger loading bridge maintenance.These fees are estimated at $128,000 for the first12 months.Strategic Plan FundingThe public-private partnership is requesting U.S. Department of Transportation assistance in funding 28 percent, or $500,000, of theStrategic Plan. Specifically, U.S. Department of Transportation funding will be used to fund a portion of the revenue guarantee. Allother elements including 67 percent of the revenueguarantee, the marketing campaign, ticket counter renovation and fee waiverswill be funded by the community.Table 7.3provides the Strategic Plan budget by element and sources of funding.TheAirportandcommunitywillfund72percentofthetotalproposedairserviceprogram.Non-airport funding sources will provide 66percent of the cash requirement and 61 percent of the funding for the total program including in-kindservices.TABLE 7.3 STRATEGIC PLAN BUDGETDESCRIPTIONFUNDING SOURCETOTALUS DOTAIRPORTNON-AIRPORTCASHCASHINKINDCASHIN-KINDAirline incentive program:Marketing campaign$50,000$50,000$100,000Revenue guaranteeFirst year$500,000$500,000$1,000,000Second year$500,000$500,000Ticket counterrenovation$30,000$30,000Fee waivers:Ground support equipment$12,600$12,600Landing fees$33,000$33,000Terminal fees$128,000$128,000Total$500,000$30,000$173,600$1,050,000$50,000$1,803,600Percent of total project28%2%10%58%3%100%Percent of cash contribution32%2%N/A66%N/A100%SignificantCommunityContributionNon-airport sources willfund $1,050,000, or 66percent, of the cashrequirement.PAGE22

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDProject Continuation and SustainabilityIt is anticipated that improved eastbound service will be self-sustaining after thestart-up period which can take up to 12 months or longer. However, if aminimum load factor of 65 percent is not achieved on average after the first 12months of service (this includes the ramp-up period), the public-privatepartnership will fund an additional $20,000 marketing campaign as service failureis often due to the lack of awareness in the community. It is anticipated that asecond-year revenue guarantee will be negotiated aspart of the initial incentivepackage. The public-private partnership and the Siouxland business communityunderstand the importance of this project and the difficulties associated withprofitably operating air service and will continueto work to ensure its success.PAGE23

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# S CHEDULE AND 

# M ONITORINGhe public-private partnership has developed a realistictimetable to achieve the goals of this proposal. This sectionprovides critical milestones to be achieved by thepublicprivate partnership. A monitoring program is alsoprovided to trackthe progress of the project.Milestones for Timely Completion of ProjectThe following milestones are proposed to track theprogress of thisair service initiative. The timeline is highly dependent on the date ofthe U.S. Department of Transportation’s grant awardand the servicestart date.Marketing Campaign Development and InitiationFebruary15,2011: Development of the marketing campaign will be completed in February 2011 inorder to begin the marketing campaign 60 days priorto new service initiation estimated to be May 1,2011. Development of the marketing campaign is dependent on air service announcement and start-up.It is anticipated that the marketing campaign willbegin by March 2011 and continue throughout thefirst year of new service.Service InitiationMay1,2011: The service start date is the critical date for the rest of the Strategic Plan. It is anticipatedthat American Airlines or United Airlines will initiate nonstop Chicago O’Hare service in May 2011. Airservice initiation is dependent on airline route planning and availability of right-sized aircraft fortheSioux City market.TPAGE24

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDRevenue Guarantee Contract CompletionApril30,2012: At the end of the first year of service, the revenue guarantee will be calculated based on the termsof theagreement. If the service start date changes due to airline circumstances and/or equipment availability, the revenue guaranteecontract term will change accordingly. Also, the revenue guarantee may be split over a two-year service period.May1,2012: If the load factor for the first 12 months of service does not reach an average of 65 percent, SiouxCity will invest$20,000 in additional marketing to help the servicereach the potential passenger levels required forcarrier success. A second yearrevenue guarantee is included in the original incentive package.Alternate PlanMay1,2011: If American or United has not committed to nonstop Chicago O’Hare service by May 1, 2011, the Cityof Sioux Citywill contact alternate carriers for eastbound service which would meet the goals of this grant application. There are many obstaclesto air service startup and efforts to secure Chicago O’Hare service will continue as discussions beginwith other carriers. Consideringthe changes that may develop in the next year withother carriers and other potential eastbound hubs,Sioux City will monitor the aircarrier 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 APRTABLE 8.1 STRATEGIC PLAN SCHEDULE20112012Marketing development/campaignRevenue guarantee contract periodService initiationAlternate planAlternate Plan inPlaceIf American or Unitedhas not committed toproviding nonstopChicago O’Hare serviceby May 1, 2011, the Cityof Sioux City will contactother carriers foreastbound hub servicewhich would meet thegoals of this grantapplication.PAGE25

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELDMonitoring ProgramThe monitoring program includes service performancetracking, assessing the effectiveness of the marketingcampaign, impact on airfares and determining the influence of improved eastbound service on retentionatthe Airport. The following will be completed to monitor the Strategic Plan:•Performance and revenue guarantee: Review aircraftdepartures, enplaned passengers, load factorsand revenue guarantee indicators on a monthly basis. Airport data, U.S. Department ofTransportation airline reported data and data obtained directly from the airline will be used.•Airfares: Compare U.S. Department of Transportationairline reported average airfares on aquarterly basis, when available, to prior quarters.Published airfares will be tracked monthly orquarterly via one of the Global Distribution/Computer Reservations Systems (GDS/CRS).•Marketing: To evaluate the effectiveness of the marketing campaign, Morningside College willconduct a survey of local travelers six months after service initiation.•Retention: A follow-up true market estimate will beconducted to determine changes in passengerdiversion after the first 12 months of service.PAGE26

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# A PPENDIX 

# A. A IRLINE AND



# C OMMUNITY 

# S UPPORTppendix Aincludes letters of support for the City of SiouxCity’s application to the U.S.Department of Transportation for improved eastboundservice. Support letters were submittedbySkyWestAirlines, participants in the public-private partnership, and members of theSiouxland community. The letters of support are included on the following pages of thisAppendix Aand are listed below.AirlineSkyWest Airlines (United Express)GovernmentUnited States Senate – Senator Charles GrassleyUnited States Senate – Senator Tom HarkinUnited States Senate – Senator Mike JohannsUnited States Senate – Senator E. BenjaminNelsonCongress of the United States – Congressman JeffFortenberryCongress of the United States – CongressmanSteve KingState of Iowa – Governor Chester CulverCity of North Sioux City – Mayor Don FuxaCity of Sergeant Bluff – Mayor Dale PetersenCity of Sioux City – Mayor Michael HobartCity of South Sioux City – Mayor Sandra EhrichPublic-private partnershipSioux Gateway Airport/Col. Bud Day Field (refer tocover letter)Siouxland Chamber of CommerceThe Siouxland InitiativeBusinesses and OrganizationsBriar Cliff UniversityC.W. Suter ServicesGreat West Casualty CompanyLiberty National BankMercy Medical CenterPhillips Kiln Services Ltd.Powell Broadcasting CompanySt. Luke’s Iowa Health SystemSecurity National BankSiouxland National BankSiouxland Surgery CenterTyson Fresh Meats, Inc.US BankWells’ Dairy, Inc.Western Iowa Tech Community CollegeAPAGE56

P ROPOSAL UNDER THE S MALL C OMMUNITY A IR S ERVICE D EVELOPMENT P ROGRAM S IOUX G ATEWAY A IRPORT / C OL . B UD D AY F IELD 

# A PPENDIX 

# B. D ETAILED 

# M ARKET



# A NALYSISonfidential submission of the City of Sioux City, IA.C