## Proposal Under the Small Community Air Service Development Program

Date: June 11, 2012 Applicants: Wilkes-Barre/Scranton International Airport

Luzerne County, PA; Lackawanna County, PA

DUNS Number: 042623728

+4 Number: 7531 Employee Identification Number: 23-1736989 Congressional Districts: 10, 11

Contact: Barry J. Centini Wilkes-Barre/Scranton International Airport 100 Terminal Drive, Suite 1 Avoca, PA 18641 Phone: (570) 602-2000

E-mail: airport@flyavp.com

Docket #: DOT-OST-2012-0069Page 2 of 30

I. EXECUTIVE SUMMARY

The Wilkes-Barre/Scranton International Airport and the Counties of Luzerne and Lackawanna are submitting this application for g rant funds available under the Small Community Air Service Development Program to address the deficiencies in the Airport’s air service, includin g high fares and an insufficient

level of service. These deficiencies are the result of the unique characteristics of the air transportation system in the Greater Nor theastern Pennsylvania region.

Air travelers using the Wilkes-Barre/Scranton Inter national Airport (AVP) pay among the highest fares of any similar sized airpor t around the globe. AVP has aggressively recruited both legacy and low cost airl ines to enter its market for many years, but few carriers are willing to enter ev en AVP’s top O&D markets. This is in part because there are multiple airports served by low cost carriers, as well as legacy carriers with more flights, which surr ound the WilkesBarre/Scranton International Airport. As a result, AVP’s fares are not only high, but they are not competitive with the other airports . The lower fares and increased number of flights at the surrounding airp orts are sufficient to lure passengers from Wilkes-Barre/Scranton International Airport to airports more than 100 miles away, but these airports are not clos e enough to genuinely offer

convenient service.

The Northeastern Pennsylvania Region is a diverse ec onomic region worthy of attention. Within the Wilkes-Barre/Scranton MSA, AV P serves a population of over 1.7 million people. The Wilkes-Barre/Scranton M SA’s population is near 500,000 on its own. Further fueling the region’s eco nomic growth into the next 20 years is the massive Marcellus Shale Industry.

The Marcellus Shale is a black shale formation exten ding deep underground from Ohio and West Virginia northeast into Pennsylv ania and southern New York. Although the Marcellus Shale is exposed at th e ground surface in some locations in the northern Finger Lakes area, it is as deep as 7,000 feet or more below the ground surface along the Pennsylvania bord er in the Delaware River valley. In Pennsylvania, the development of these historic resources, while still in their infant stages, is credited with supporting nearly 156,000 jobs in 2011. In addition, the economic activity topped an estima ted $12.8 billion in 2011. This growth is expected to increase rapidly over the next several years, which will provide the Commonwealth of Pennsylvania with a s teady supply of affordable, clean-burning energy.Page 3 of 30

The Wilkes-Barre/Scranton International Airport (AVP ) is the gateway airport to the heart of the Marcellus Shale Industry in northe astern Pennsylvania and the Commonwealth of Pennsylvania as a whole.

Successful attraction of a low cost air carrier to A VP’s key markets has a track record of improving the cost differential in some A VP markets. Successfully retaining those low cost carriers long-term has prov en difficult. Recently, Allegiant Air has announced they will provide twice we ekly nonstop service from AVP to Orlando-Sanford beginning June 21, 2012.

Maintaining legacy air carrier service to other AVP key markets has improved cost differentials in those markets. However, the n umber of seats on the legacy carriers has been steadily decreasing, which is forcing air travelers to travel to another airport for their air service nee ds. Our described program is designed to address these concerns.

With this in mind, the Airport continues to provide exceptional service to the region, while having no control or responsibility ov er the main variable in air travel – the customer. Currently, AVP has three le gacy carriers, and beginning June 21, 2012, one low-cost carrier. While airline s have in the past been more prone to provide their own employees for ground hand ling and customer support positions, the last few years have put that in jeopardy as airlines consolidate their employees at smaller airports.

For several years, the U.S. airline industry has be en struggling to control costs. Controllable costs have been dropping over the last half-decade, with carriers using methods, such as reducing airline employee wag es and the actual outsourcing of on-airport jobs. Many carriers are opting not to start additional markets without the Airport and community picking up the charges for those start-up costs. Also, many carriers that have serv ice at airports are decreasing their flights dramatically to control costs.

The current trend is a continued increase in the AVP passenger market leaking to alternative airports and a serious imbalance in Pennsylvania’s airport system. With no air carriers operating in some of AVP’s top O&D markets, there is a significant gap between the demand for service and the level of service being provided. Past experience in these markets has pro ven they can be operated successfully and profitably, however, current carrie rs at AVP have chosen not to seek operating to those markets from AVP.

The results of past efforts utilizing Air Service De velopment funds have been positive. Delta Connection’s (formerly Northwest Ai rlink’s) nonstop DetroitPage 4 of 30

service, which began in April 2005, continues to pro vide a good destination to business travelers, with acceptable fares.

Wilkes-Barre/Scranton International Airport and its supporting communities have continually been engaged in marketing the airp ort and look forward to improving the air service at AVP with the additional support of the DOT Small Community Air Service Development Program.

II. SERVICE DESCRIPTIONS

A. Wilkes-Barre/Scranton International Airport’s Service Area

Wilkes-Barre/Scranton International Airport (AVP) i s a non-hub airport located in Northeastern Pennsylvania serving a surr ounding population of approximately one million residents. AVP is within a two-hour drive of several major east coast cities including Philadelp hia and New York, is approximately eight (8) miles from Wilkes-Barre, PA and Scranton, PA, and is centrally located among four (4) major inter state highways.

(Source – Google Maps)

The Wilkes-Barre/Scranton/Hazleton metro-area has a population of over 600,000. There are over one million potential air p assengers within a one-hour drive time and just fewer than three millio n located within a 90-

minute drive time.

Wilkes-Barre/Scranton’s airport service is bound by Philadelphia International Airport and Lehigh Valley Internation al Airport to the south, each offering substantially greater numbers of sche duled flights and often significantly lower fares. These two airports are app roximately a 100-Page 5 of 30 and 60-mile drive, respectively, from the Wilkes-Ba rre/Scranton International Airport. One factor of great concern to the Partnership submitting this application is that several low-cos t airlines offer competing service at Philadelphia International Air port and are offering significantly lower fares to many of AVP’s top marke ts. An additional factor is that AirTran/Southwest, Allegiant Air and F rontier Airlines provide low fare options to leisure destinations at Lehigh Valley International Airport.

To the east, John F. Kennedy International Airport, Newark Liberty International Airport, LaGuardia Airport and Stewart International Airport also compete with AVP, offering travelers numerous l ow fare options. As large hubs, John F. Kennedy International, Newark Li berty International and LaGuardia offer substantially more scheduled fl ights and direct service options both domestically and international ly.

In addition, to the northwest, Allegiant Air provide s low fare options to leisure destinations at Elmira Corning Regional Air port.

B. Description of Economic Growth in Northeastern Pennsylvania

The Wilkes-Barre/Scranton International Airport (AVP ) is the gateway airport to the heart of the Marcellus Shale Industr y in northeastern Pennsylvania and the Commonwealth of Pennsylvania as a whole. As shown on the map below, much of the activity in the C ommonwealth over the past few years has been near AVP.Page 6 of 30 Two of the sweet spots for tapping that natural gas ar e in Northeastern Pennsylvania and the Pittsburgh area. To reach the gas, drillers use a process called hydraulic fracturing – or fracking, for short – in which they shoot millions of gallons of water, laced with chemic als and sand, into the ground. Much of that water comes back to the surface along with the gas

it releases.

Companies eager to tap into the gas already have tr ansformed large swaths of rural Pennsylvania, and future gas product ion has the potential to change residents’ lives for a generation or more . Marcellus shale gas has shifted global energy supplies, created instant wealth for some landholders, stimulated the state’s economy by cre ating jobs and raised environmental concerns about toxins going into the air and water.

A problem that we are finding with the travel needs o f these workers is the need to get across the Commonwealth of Pennsylva nia. Northeastern Pennsylvania and the Pittsburgh area are the concen trated areas for drilling in the Commonwealth. To do business on both sides of the state, workers have to drive, rather than fly, losing valua ble time in that fivehour trip, when they could fly in approximately one hour.

As seen below, nearly 2/3 of the work being done withi n the Marcellus Shale in the Commonwealth of Pennsylvania is being p erformed in Northeastern Pennsylvania.

Source: Pennsylvania Department of Enviro nmental ProtectionPage 7 of 30

C. Description of Community’s Existing Air Service

There are currently three (3) major airline networks, and one low-cost airline, serving the Wilkes-Barre/Scranton Internat ional Airport. These carriers are Allegiant Air, Delta, United and US Ai rways. Combined, these carriers serve a total of seven (7) major hubs incl uding Atlanta, Charlotte, Chicago, Detroit, Newark, Orlando-Sanford and Philad elphia.

The table below indicates the type of aircraft flown b y each carrier, equipment type, seats and frequency at AVP. It is important to note that

all service to and from AVP is flown with either a r egional jet or turboprop (with the exception of Allegiant Air), yet O&D resea rch and previous experience indicate that many AVP markets can suppo rt significantly larger aircraft such as Boeing 737 or the Embraer 1 70/190 series.

Carrier Market Code A/C Stops Daily Daily Monthly Monthly Seats/
Type Depts Seats Depts Seats Flight

DL Atlanta ATL CR7 0 1.0 65 31 2,015 65
DL Detroit DTW CRJ 0 3.4 168 104 5,200 50

DL Detroit DTW ERJ 0 0.4 18 11 550 50

G4 OrlandoSanford SFB M80 0 0.3 44 9 1,350 150 UA Chicago ORD ERJ 0 2.0 98 61 3,050 50
UA Newark CLE DH3 0 3.0 111 93 3,441 50
UA Newark CLE DH2 0 0.8 42 26 1,300 37
US Charlotte CLT CR9 0 1.0 79 31 2,449 79
US Charlotte CLT CRJ 0 1.6 79 49 2,450 50 US Philadelphia PHL CRJ 0 0.3 15 9 450 50
US Philadelphia PHL DH3 0 0.5 23 14 700 50 US Philadelphia PHL DH8 0 5.3 195 163 6,031 37

TOTALS 19.6 937 601 28,986 48

Source: OAG Schedule Tapes, July 2012, via Sabre Ai rline Solutions

The chart below shows the cities serviced by AVP’s cur rent airlines from

AVP.

Source: OAG Schedule Tapes June 2012Page 8 of 30

AVP Primary Catchment Area Usage, Retention & Total Booked

Rank Market PDEWs AVP
Retention AVP Primary

Leakage (PDEWs) Total

Booked (PDEWs)

1 ORD 33.2 67% 16.4 49.6

2 DFW 23.8 35% 44.4 68.2

3 MCO 22.2 19% 97.6 119.8

4 ATL 21.1 47% 23.8 44.9

5 LAS 20.9 28% 53.7 74.6

6 TPA 17.8 37% 30.9 48.7

7 CLT 17.0 75% 5.7 22.7

8 LAX 16.3 52% 15.1 31.4

9 PHX 13.8 46% 16.2 30.0

10 DTW 13.5 67% 6.7 20.2

11 DEN 13.2 42% 18.4 31.6

12 FLL 11.7 19% 61.0 72.7

13 RSW 11.0 27% 29.6 40.6

14 SFO 10.7 64% 6.0 16.7

15 MSP 10.4 53% 9.2 19.6

16 IAH 10.0 28% 26.3 36.3

17 BNA 9.8 42% 13.5 23.3

18 SAN 9.7 45% 11.8 21.5

19 SEA 9.4 37% 16.1 25.5

20 PBI 8.6 25% 25.6 34.2

21 MSY 8.1 41% 11.7 19.8

22 MCI 7.9 62% 4.8 12.7

23 CVG 7.4 69% 3.3 10.7

24 JAX 7.2 46% 8.4 15.6

25 PHL 6.8 79% 1.8 8.6

26 SAT 6.8 37% 11.6 18.4

27 EWR 6.7 96% 0.3 7.0

28 IND 6.3 47% 7.1 13.4

29 MIA 6.2 22% 22.0 28.2

30 PBI 8.6 25% 25.6 34.2

Subtotal 376.8 38% 602.3 979.1
Other 223.9 43% 302.4 526.3
Total 600.7 40% 904.7 1,505.4

Source: Adjusted SABRE MIDT and D.O.T. 10 % Coupon Sample

For 2011, Wilkes-Barre/Scranton International Airpo rt reported 464,560 combined enplaned & deplaned passengers. However, t he true Primary

Catchment Area size is estimated to be well over dou ble that number (see table above), which indicates that AVP is leaking pa ssengers to surrounding airports, with the primary reasons, base d on market research, being competition from low-fare markets, frequency and

available seats.

US Airways has traditionally dominated the AVP marke t. Delta Connection has eliminated flights over the past cou ple years, whichPage 9 of 30 increases opportunities for other airlines. In 200 9, Delta Connection eliminated Cincinnati service (January 2009), which was AVP’s #9 O&D Market for CY 2008, and eliminated Atlanta (August 2009), which was AVP’s #5 O&D Market for CY 2008. In addition, Unit ed Express decreased its service to Chicago O’Hare in August 2 011 (from three daily flights to two), and American Eagle decreased its se rvice to Chicago O’Hare in August 2011 (from two daily flights to one daily flight plus one flight four times a week, eventually leaving the AV P Market in November 2011).

New service in the past several years include: Unite d Express to Washington Dulles in October 2004; Continental Conn ection to Boston in March 2005; Hooters Air to Orlando, Fort Lauderdale , St. Petersburg in October 2005; Myrtle Beach Direct Air to Myrtle Bea ch in June 2008; Continental Connection to Newark in October 2008; Am erican Eagle to Chicago O’Hare in June 2010; Delta Connection to At lanta in September 2011; and Allegiant Air in June 2012.

Source: OAG Schedule Tapes June 2012; Wilkes-Barre/ Scranton International Airport, YE April 2012

AVP New Service During the Past Eight Years

New Service Airline Began Ended Reason for Ending (1) Washington-Dulles, DC United Express October 2004 A ugust 2005 Shuttle America became US Airways
carrier – United did not have other
aircraft to maintain route Detroit, MI Northwest Airlink April 2005 N/A Orlando, FL Hooters Air October 2005 March 2006 Ris ing Fuel Costs Fort Lauderdale, FL Hooters Air October 2005 March 2006 Rising Fuel Costs St. Petersburg, FL Hooters Air October 2005 March 2 006 Rising Fuel Costs Myrtle Beach, SC Hooters Air March 2006 March 2006 Rising Fuel Costs Boston, MA Continental Connection March 2005 March 2007 Reduction of Continental Connection flights into BOS system wide Pittsburgh, PA US Airways Pre-1980 June 2007 Reduct ion of US Hub Myrtle Beach, SC Myrtle Beach Direct Air June 2008 August 2008 Seasonal service Cleveland, OH Continental Connection October 2008 Moving AVP’s service from #3 CO
Hub to #1 CO Hub Newark, NJ Continental Connection October 2008 N/A Cincinnati, OH Delta Connection March 1995 January 2009 Reduction of DL Hub Atlanta, GA Delta Connection May 2002 August 2009 P oor load factors; AVP-ATL route over 700 NM (too far for CRJ) Chicago, IL (O’Hare) American Eagle June 2010 Novem ber 2011 Poor load factors; not making $ Atlanta, GA Delta Connection September 2011 N/A Orlando-Sanford, FL Allegiant Air June 2012 N/A (1) “Reasons for Ending” comments were given by Airline Representatives to AVPPage 10 of 30 AVP Outbound Seats History

Annual Percent

Outbound Change vs.

Year Seats Prior Year

2001 366,429

2002 390,586 6.6%

2003 293,017 -25.0%

2004 338,714 15.6%

2005 396,224 17.0%

2006 331,991 -16.2%

2007 291,678 -12.1%

2008 278,908 -4.4%

2009 265,041 -5.0%

2010 268,488 1.3%

2011 297,348 10.7%

Seats

Month ('12 vs. '11) Diff (+/-) % Change

January 1,052 4.6%

February 3,016 15.2%

March 1,968 7.8%

April -106 -0.4%

Total for Period 5,930 6.3%

Source: Wilkes-Barre/Scranton International Airport

Losses in the past several years include: United Ex press to Washington Dulles in August 2005; Hooters Air to Orlando, Fort Lauderdale, St. Petersburg and Myrtle Beach in March 2006; Continen tal Connection to Boston in March 2007; US Airways to Pittsburgh in Ju ne 2007; Myrtle Beach Direct Air to Myrtle Beach in August 2008; Co ntinental Connection to Cleveland in October 2008; Delta Connection to C incinnati in January 2009; Delta Connection to Atlanta in August 2009; a nd American Eagle to Chicago in November 2011.

With these losses, plus the increase in passenger e nplanements (shown below), an increase in load factors, and the economi c growth in Northeastern Pennsylvania, the problem arising is t he limited amount of seats remaining in the market, which will, in turn, f orce air travelers to, once again, use other nearby airports for their air travel needs.Page 11 of 30 AVP Enplanement History

Percent

Annual Change vs.

Year Enplanements Prior Year

2001 189,036

2002 202,178 7.0%

2003 181,715 -10.1%

2004 201,765 11.0%

2005 221,348 9.7%

2006 212,865 -3.8%

2007 220,893 3.4%

2008 223,130 1.3%

2009 207,168 -7.2%

2010 217,706 5.1%

2011 233,990 7.5%

Enplanements

Month ('12 vs. '11) Diff (+/-) % Change

January -22 -0.1%

February 2,155 14.5%

March 167 0.9%

April -708 -3.6%

Total for Period 1,592 2.3%

Source: Wilkes-Barre/Scranton International Airport

As seen below, since the loss of nonstop Orlando ser vice in 2006, AVP has been on a steady decline of passengers to its #1 O& D Market – Orlando. In 2005, AVP had over 45 PDEWs to Orlando, retainin g nearly 50% of the Primary Catchment Market. Now, AVP captures almost 26 PDEWs, retaining only 22% of the Primary Catchment Market. With low cost service to Orlando surrounding the AVP market, this has become a major

detriment to AVP.

AVP – ORLANDO PROFILE

Source: U.S. DOT O&D Survey, via Data base Products, YE April 2012Page 12 of 30

To the south of AVP, Lehigh Valley International Air port has been increasing seats, which we feel is a detriment to AV P. Within the past year at ABE:

• AirTran has increased service to Orlando from one le ss-than-daily flight to two daily flights using 117- and 137-seat aircraft

• Delta has increased seat capacity to Atlanta from o ne daily 50-seat aircraft to three daily 50-seat aircraft

• Delta has increased service to Detroit from three t o four daily flights using 50-seat aircraft

• Frontier has begun service to Orlando twice weekly us ing 138-seat
aircraft

• US Airways has increased daily seat capacity to Phil adelphia with

50-seat aircraft

D. Analysis of Greater Northeastern Pennsylvania Needs and

Deficiencies

Over the past several years, AVP experienced a seve re reduction in jet service to Philadelphia and Pittsburgh, which inclu ded a reduction in the number of seats available. Additionally, the regio n does not currently have competitive year round low fare service to its number one O&D market: Orlando. Service to Orlando performed well when it was introduced in 2004, with the positive trend continui ng in 2005 and 2006,

until Hooters Air discontinued all air service due to multiple factors, including internal scheduling problems, rising fuel costs, airline scheduling problems and problems with their service model.

Atlanta, another AVP top O&D market, continued to p erform well since returning to AVP in 2002, but ended in August 2009. One daily flight to Atlanta did return in September 2011.

As seen below, AVP is ranked as #16 by Delta’s Load Factors at ATL with

a 90% load factor.Page 13 of 30 Delta Ranking by Load Factor at ATL

Source: U.S. D.O.T. Report T-100 YE Dec 2011.

American cut back beginning in August 2011. America n went from two daily flights to one daily flight plus one flight four ti mes a week, then discontinued all service in November 2011, citing p oor load factors and an inability to increase revenues.

Delta has had recent growth to Detroit, adding a fo urth flight in March 2012. This is the first growth of the route since they be gan with three daily flights in April 2005. In October 2005, the Detroit flights d ecreased to twice daily because of problems with Mesaba Airlines. The thir d daily flight was reinstated in February 2009 after Delta discontinued all servi ce from AVP to Cincinnati.

United has had no growth to Chicago since they bega n with three daily flights in October 1998. In May 2003, the Chicago flights decreased to twice daily, and United has been satisfied with the performance to date with no additional increase in service. In April 2011, the third dail y flight was added, however, in August 2011, the flights return to twice daily.

US Airways has had recent growth to Charlotte. The service began with one daily flight in April 2005, and went to twice daily in January 2011, and has been performing well. The airline will be adding a thir d daily flight to Charlotte in July 2012.Page 14 of 30 As seen below, AVP is ranked as #6 to Charlotte, #20 to Detroit, # 36 to Chicago O’Hare (UA), #23 to Chicago O’Hare (AA), an d #56 to Philadelphia.

US Airways Ranking by Load Factor at CLT

Source: U.S. D.O.T. Report T-100 YE Dec 2011

Delta Ranking by Load Factor at DTW

Source: U.S. D.O.T. Report T-100 YE Dec 2011Page 15 of 30 United Ranking by Load Factor at ORD

Source: U.S. D.O.T. Report T-100 YE Dec 2011

American Ranking by Load Factor at ORD

Source: U.S. D.O.T. Report T-100 YE Dec 2011Page 16 of 30 US Airways Ranking by Load Factor at PHL

Source: U.S. D.O.T. Report T-100 YE Dec 2011

Although there has been little or no growth at AVP t o these destinations listed above, airports near AVP, i.e. Lehigh Valley International or Elmira Regional, have been gaining seats, even though ther e load factors are

lower than AVP’s.

From the charts listed above for YE 2011:

• ATL: AVP was ranked #16; ABE was ranked #19

• CLT: AVP is ranked #6; ABE is ranked #24

• DTW: AVP is ranked #20; ABE is ranked #41; ELM is ra nked #64

• ORD (UA): AVP is ranked #36; ABE is ranked #48

• ORD (AA): AVP is ranked #23; ABE is ranked #80

• PHL: AVP is ranked #56; BGM is ranked #72; ABE is r anked #77

As seen below, here are the latest load factors from AVP to specific destinations, most destinations have load factors a t 80% or higher or a 12 month period.

Sources: U.S. D.O.T. T-100 Reports and Wilkes-Barre /Scranton International AirportPage 17 of 30

Another challenge for AVP is the fact that competin g airports are marketing their low-fare service to travelers in th e AVP market area, through television, newspaper, radio and billboard ( as seen below). The billboard below was actually placed less than 1⁄2 mile from the entrance

to AVP.

In light of these circumstances, AVP continues to a ctively pursue competitive low-fare service, as well as maintaining or even increasing legacy air service, to its top markets.

AVP’s air fares remain extraordinarily high for the level of service offered and the economic demographic of the area as evidenc ed in the table below. As shown on the charts below, AVP’s fares rema in above average and significantly higher than select markets with si milar sized O&D

passengers.

AVP vs. Selected World Cities

- O&D Passengers & Avg

. Fare (+/

- 10 Ranking of AVP’s Enp. Psgrs.)

Total Daily Avg. O&D Daily O&D

Rank Market Code Enp. Psgrs

. Enp. Psgrs

. Fare Psgrs

. Psgrs

. 1 Atyrau, Kazakstan GUW 221,613 607 $578 444,740 1,218
2 Port Hedland, Australia PHE 216,893 594 $549 436,181 1,195 3 Ouagadougou, Burkina Faso OUA 222,257 609 $506 441,357 1,209 4 Appleton, WI ATW 218,151 598 $319 438,593 1,202
5 Rennes, France RNS 213,286 584 $308 423,175 1,159 6 Ushuaia, Argentina USH 214,853 589 $297 432,765 1,186

7 Wilkes-Barre/Scranton, PA AVP 219,874 602 $259 438,922 1,203 8 George, South Africa GRJ 223,343 612 $240 446,163 1,222 9 Jayapura, Indonesia DJJ 225,169 617 $239 457,378 1,253
10 Cozumel, Mexico CZM 214,432 587 $233 427,694 1,172
11 Rzeszow, Poland RZE 220,451 604 $229 440,279 1,206 12 Haiphong, Vietnam HPH 222,621 610 $218 454,793 1,246

13 Mexicali, Mexico MXL 217,424 596 $209 442,989 1,214 14 Ixtapa/Zihuatanejo, Mexico ZIH 218,256 598 $203 438,180 1,200 15 Van, Turkey VAN 221,655 607 $195 438,305 1,201
16 Aksu, China AKU 219,924 603 $191 458,235 1,255 17 Orenburg, Russian Federation REN 225,390 618 $170 454,653 1,246 18 Iquitos, Peru IQT 221,386 607 $126 456,438 1,251 19 Londonderry, United Kingdom LDY 216,477 593 $125 440,774 1,208
20 Monteria, Colombia MTR 218,550 599 $117 433,546 1,188 21 Bhopal, India BHO 217,094 595 $60 431,286 1,182

Average 219,481 601 $256 441,736 1,210
(Source: O&D Survey YE March 2012, via Sabre Airlin e Solutions, OAG Schedule TapesPage 18 of 30 AVP vs. Sel ected North American Cities

- O&D Passengers & Avg

. Fare

Total Daily Avg. O&D Daily O&D

Rank Market Code Enp. Psgrs Enp. Psgrs Fare Psgrs Psgrs 1 Appleton, WI ATW 218,151 598 $319 438,573 1,202 2 Rapid City, SD RAP 239,255 655 $304 482,618 1,322 3 Bangor, ME BGR 208,628 572 $284 411,555 1,128
4 Missoula, MT MSO 253,446 694 $281 505,753 1,386
5 Peoria, IL PIA 226,074 619 $269 448,722 1,229

6 Wilkes-Barre/Scranton, PA AVP 219,874 602 $259 438,922 1,203 7 Daytona Beach, FL DAB 238,345 653 $242 476,869 1,306
8 Cozumel, Mexico CZM 214,432 587 $233 427,694 1,172
9 Medford, OR MFR 260,152 713 $230 518,210 1,420
10 Allentown, PA ABE 414,750 1,136 $222 827,865 2,268
11 Redmond, OR RDM 202,406 555 $215 405,410 1,111 12 Newburgh, NY SWF 201,406 552 $211 405,077 1,110
13 Bloomington-Normal, IL BMI 269,277 738 $205 535,886 1,468 14 Ixtapa/Zihuatanejo, Mexico ZIH 218,256 598 $203 438,180 1,200
15 La Paz, Mexico LAP 205,457 563 $200 411,901 1,128 16 Acapulco, Mexico ACA 283,814 778 $193 566,269 1,551
17 Abbotsford, BC, Canada YXX 254,041 696 $174 508,132 1,392
18 Juneau, AK JNU 269,137 737 $173 541,745 1,484 19 Aguadilla, PR BQN 232,607 637 $172 458,342 1,256
20 Ketchikan, AK KTN 199,768 547 $161 399,841 1,095

Average 241,464 662 $227 482,378 1,322
(Source: O&D Survey YE March 2012, via Sabre Airlin e Solutions, OAG Schedule Tapes

III. STRATEGIC PLAN FOR USING GRANT FUNDING

A. Program Goals

The primary goals of this grant proposal are to incr ease enplanements at AVP by attracting new service and expanding current service, to address insufficient air service by attracting replacement service for such services recently lost, and to address unreasonably high far es to AVP’s prime markets by increasing competition between existing a ir carriers and new air carriers. Currently, the AVP markets are under served and it is apparent that travelers in and outside the region a re choosing to use alternative airports offering more scheduled servic e to a broader range of

destinations with lower fare service.

Historically, the Northeastern Pennsylvania market has supported new service as it enters the region and it is anticipat ed by all Partners in this program that this trend will continue with a high lev el of success.

Specifically, the three program goals are as foll ows:

1. Secure service to leisure destinations, i.e. but no t limited to, Tampa/St. Petersburg, Fort Lauderdale, West Palm Bea ch, Punta Gorda, Las Vegas, and/or Myrtle Beach.Page 19 of 30 2. Restore daily service to:

a. Pittsburgh International Airport

b. Washington-Dulles International Airport

c. Boston Logan International Airport

3. Assist with marketing efforts to new and/or existing air carriers at AVP to expand their service with additional flights/ markets.

From the successful implementation of these program goals, AVP anticipates a direct affect of reduced fares in key markets and a significantly increased level of service.

B. Target Audiences

The following is a list of target audiences for AVP, but not limited to:

• Low-fare carriers

1. Allegiant Air

2. jetBlue Airways

3. PEOPLExpress

4. Southwest Airlines

5. Spirit Airlines

6. Sun Country Airlines

7. Vision Airlines

• Legacy carriers

1. American Airlines

2. Delta Air Lines

3. United Air Lines

4. US Airways

• Regional carriers

1. Cape Air

2. Colgan Air

3. Public Charters, Inc.

4. Silver Airways

C. Plan Implementation and Timetable

Key milestones for the Program will be:

• Securing meetings with carriers to negotiate new ser vice (October 2012 – March 2013).

• Announcing new service with local community marketing campaign (January 2013 – June 2013).Page 20 of 30 • Starting up new service (January 2013 – October 2013 ).

• Monitoring and analyzing monthly traffic numbers of new service (January 2013 – June 2014).

• Monitoring and analyzing fares to the target market s (January 2013 – June 2014).

IV. AIRPORT AND BI-COUNTY PARTNERSHIP FUNDING AND

MONITORING ASSURANCES

The Wilkes-Barre/Scranton International Airport will act as the sponsor of the program. The sponsorship will be managed by Barry J. Centini, Airport Director, and the program will be managed by an airp ort administration and bicounty partnership representing the counties of Luz erne and Lackawanna. The partnership will meet on a regularly scheduled month ly basis to review the progress and schedule of the program and more often when the program requires it.

At each meeting, goals, objectives, and milestones will be evaluated to measure progress. Additionally designated members of the P artnership will be assigned to evaluate any changes in the current market envir onment and to identify any potential obstacles. The Partnership will prepare an d submit quarterly reports to provide assurances that both the DOT and communit y funding are being spent in the manner proposed. At the time that new service is secured and the funding is successfully allocated, the quarterly re ports will provide the DOT updates on the success of the service.

V. FUNDING DESCRIPTION

A. An airline or airlines to provide service to one or more nonstop leisure destinations, i.e. but not limited to, Tampa/St. Pet ersburg, Fort Lauderdale, West Palm Beach, Punta Gorda, Las Vegas and/or Myrtle Beach, minimum two (2) flights per week per destinati on. Risk abatement subsidy, as well as ground handling and st art-up costs for provided service.

FAA: $ 100,000 Luzerne County: $ 50,000 Lackawanna County: $ 50,000 Airport: $ 50,000 Total: $ 250,000Page 21 of 30

B. An airline to provide nonstop Pittsburgh, Washingt on (DC) and/or Boston service, minimum two (2) daily flights per weekday pe r destination. Risk abatement subsidy for weekday service up to six (6) months.

FAA: $ 125,000 Luzerne County: $ 25,000 Lackawanna County: $ 25,000 Total: $ 175,000

C. Local Market Advertising to provide needed baselin e support for new and/or restored airline service with a new or present airline, as well as support of additional flights with present airline s ervice.

FAA: $ 275,000 Luzerne County: $ 25,000 Lackawanna County: $ 25,000 Airport: $ 50,000 Total: $ 375,000

D. TOTALS:

FAA: $ 500,000 Luzerne County: $ 100,000 Lackawanna County: $ 100,000 Airport: $ 100,000

Total: $ 800,000

VI. COMMUNITY ACTIVITIES

The Airport and supporting community organizations have been aggressively and actively marketing the airport for several year s. This effort has included many initiatives all undertaken to ensure that the Northeastern Pennsylvania community is served in the best possible way.

Specific activities have included: * Direct subsidy to carriers * Targeted carrier meetings * New service cost reduction incentives including:

- Advertising and marketing assistance for, but not limited to, television, radio, and newspaper coverage - Waiving of landing fees and space rentals for a n egotiated period - Donate local billboard advertising space and coun ty bus system promotion - Develop and direct a new service information maili ng initiative to local travel agents and community businessesPage 22 of 30

* New service kick-off and promotional meetings with local travel agents * New service local community marketing support ini tiatives * Annual attendance and participation at ACI’s annu al Marketing “JumpStart” conference and Network USA conference

VII. RESULTS OF PAST AIR SERVICE DEVELOPMENT EFFORTS

The results of past efforts utilizing Air Service De velopment funds are positive. Service continues to Detroit, MI, via Delta Air Lin es’ express carrier Pinnacle Airlines with load factors averaging 80% in 2008, 88 % in 2009, 90% in 2010 and 87% in 2011. Detroit service began at AVP in A pril 2005. Service to Orlando, FL, did better than expected despite Hoote rs Air’s end of service in March 2006 due to its own internal financial issues, with load factors averaging in the 83% to 86% range by the end of their tenure at AVP.

The Detroit service continues to provide a good dest ination to business travelers, with acceptable fares. The Orlando servic e provided a great level of service for business and leisure travelers, with a v ery competitive fare structure.

With our past history and experience of being able to utilize funds for positive gains, we are confident that an award to Wilkes-Barre /Scranton International Airport will bring positive results.

VIII. PROGRAM SPONSORS

Program Legal Sponsor: Program Partners:

Barry J. Centini, Airport Director Luzerne County, PA Wilkes-Barre/Scranton Lackawanna County, PA International Airport Greater Pittston Chamber o f Commerce

100 Terminal Drive Greater Pocono Chamber of Comme rce Avoca, PA 18641 Greater Scranton Chamber of Comm erce 570/602-2000 – Phone Greater Wilkes-Barre Chmbr. of Commerce 570/602-2010 – Fax Lackawanna Co. Conv. & Visitors Bureau bcentini@flyavp.com Luzerne Co. Convention & Visitors Bureau Wilkes-Barre/Scranton Penguins AAA Hockey
Attachments: 1) Attachment 1 – Allegiant Air Letter of Support 2) Attachment 2 – Delta Air Lines Letter of Support 3) Attachment 3 – PEOPLExpress Letter of Support 4) Attachment 4 – Silver Airways Letter of Support 5) Attachment 5 – US Airways Letter of Support 6) Attachment 6 – Program Partners “In-Kind” Contribut ionsPage 23 of 30 ATTACHMENT 1

Page 1 of 2

Docket DOT-OST-2012-0069Page 24 of 30 ATTACHMENT 1

Page 2 of 2

Docket DOT-OST-2012-0069Page 25 of 30 ATTACHMENT 2

Page 1 of 1

Docket DOT-OST-2012-0069Page 26 of 30 ATTACHMENT 3

Page 1 of 1

Docket DOT-OST-2012-0069Page 27 of 30 ATTACHMENT 4

Page 1 of 1

Docket DOT-OST-2012-0069Page 28 of 30 ATTACHMENT 5

Page 1 of 1

Docket DOT-OST-2012-0069Page 29 of 30 ATTACHMENT 6

Page 1 of 2

Docket DOT-OST-2011-0119

In-Kind Contributions
Wilkes-Barre/Scranton International Airport

Small Community Air Service Grant

Luzerne County Convention and Visitors Bureau

In-Kind Item Amount

Staff Fulfillment $2,080.00
Mailing and Distribution of Visitor Guide $820.00

Attendance at Trade Shows $2,500.00

Ad Placement - Annual Visitors Guide $2,500.00
Ad Placement - Pennsylvania Pursuits Magazine $1,00 0.00
Total In-Kind: $8,900.00

Lackawanna County Convention and Visitors Bureau

In-Kind Item Amount

Staff Fulfillment $3,500.00
Mailing and Distribution of Visitor Guide $1,200.00

Attendance at Trade Shows $2,000.00
Half Page Ad Placement - This Week in The Poconos $ 1,300.00
Total In-Kind: $8,000.00

Greater Pittston Chamber of Commerce

In-Kind Item Amount
Insert in Monthly Newsletter for 12 months $3,500.0 0
Total In-Kind: $3,500.00

Greater Pocono Chamber of Commerce

In-Kind Item Amount
Ad Placement - Annual Bizzy Awards $2,500.00
Ad Placement – Annual Dinner Program $1,000.00

Total In-Kind: $3,500.00

Wilkes-Barre/Scranton Penguins AAA Hockey Team

In-Kind Item Amount
Distribution of Airport Fliers at Two Home Games $2 ,500.00
Total In-Kind: $2,500.00Page 30 of 30 ATTACHMENT 6

Page 2 of 2

Docket DOT-OST-2011-0119

Greater Scranton Chamber of Commerce

In-Kind Item Amount
Ad Placement in News Briefs Newsletter $2,000.00

Web Site Exposure
Total In-Kind: $2,000.00

Greater Wilkes-Barre Chamber of Commerce

In-Kind Item Amount
Full Page Ad Placement - Annual Dinner Program $500 .00
Full Page Ad Placement - Awards Luncheon Program $5 00.00
Staff Fulfillment & Web Site Exposure $1,000.00

Total In-Kind: $2,000.00