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ACRP AIRPORT COOPERATIVE RESEARCH PROGRAM REPORT 18 Sponsored by the Federal Aviation Administration Passenger Air Service Development Techniques

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ACRP OVERSIGHT COMMITTEE* TRANSPORTATION RESEARCH BOARD 2009 EXECUTIVE COMMITTEE* CHAIR OFFICERS James Wilding CHAIR: Adib K. Kanafani, Cahill Professor of Civil Engineering, University of California, Berkeley Independent Consultant VICE CHAIR: Michael R. Morris, Director of Transportation, North Central Texas Council of Governments, Arlington VICE CHAIR EXECUTIVE DIRECTOR: Robert E. Skinner, Jr., Transportation Research Board Jeff Hamiel Minneapolis­St. Paul MEMBERS Metropolitan Airports Commission J. Barry Barker, Executive Director, Transit Authority of River City, Louisville, KY MEMBERS Allen D. Biehler, Secretary, Pennsylvania DOT, Harrisburg James Crites Larry L. Brown, Sr., Executive Director, Mississippi DOT, Jackson Dallas­Fort Worth International Airport Deborah H. Butler, Executive Vice President, Planning, and CIO, Norfolk Southern Corporation, Richard de Neufville Norfolk, VA Massachusetts Institute of Technology William A.V. Clark, Professor, Department of Geography, University of California, Los Angeles Kevin C. Dolliole Unison Consulting David S. Ekern, Commissioner, Virginia DOT, Richmond John K. Duval Nicholas J. Garber, Henry L. Kinnier Professor, Department of Civil Engineering, University of Beverly Municipal Airport Virginia, Charlottesville Kitty Freidheim Jeffrey W. Hamiel, Executive Director, Metropolitan Airports Commission, Minneapolis, MN Freidheim Consulting Edward A. (Ned) Helme, President, Center for Clean Air Policy, Washington, DC Steve Grossman Oakland International Airport Will Kempton, Director, California DOT, Sacramento Tom Jensen Susan Martinovich, Director, Nevada DOT, Carson City National Safe Skies Alliance Debra L. Miller, Secretary, Kansas DOT, Topeka Catherine M. Lang Neil J. Pedersen, Administrator, Maryland State Highway Administration, Baltimore Federal Aviation Administration Pete K. Rahn, Director, Missouri DOT, Jefferson City Gina Marie Lindsey Los Angeles World Airports Sandra Rosenbloom, Professor of Planning, University of Arizona, Tucson Carolyn Motz Tracy L. Rosser, Vice President, Regional General Manager, Wal-Mart Stores, Inc., Mandeville, LA Hagerstown Regional Airport Rosa Clausell Rountree, CEO­General Manager, Transroute International Canada Services, Inc., Richard Tucker Pitt Meadows, BC Huntsville International Airport Steven T. Scalzo, Chief Operating Officer, Marine Resources Group, Seattle, WA Henry G. (Gerry) Schwartz, Jr., Chairman (retired), Jacobs/Sverdrup Civil, Inc., St. Louis, MO EX OFFICIO MEMBERS C. Michael Walton, Ernest H. Cockrell Centennial Chair in Engineering, University of Texas, Austin Sabrina Johnson Linda S. Watson, CEO, LYNX­Central Florida Regional Transportation Authority, Orlando U.S. Environmental Protection Agency Steve Williams, Chairman and CEO, Maverick Transportation, Inc., Little Rock, AR Richard Marchi Airports Council International--North America Laura McKee EX OFFICIO MEMBERS Air Transport Association of America Thad Allen (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard, Washington, DC Henry Ogrodzinski National Association of State Aviation Officials Peter H. Appel, Administrator, Research and Innovative Technology Administration, U.S.DOT Melissa Sabatine J. Randolph Babbitt, Administrator, Federal Aviation Administration, U.S.DOT American Association of Airport Executives Rebecca M. Brewster, President and COO, American Transportation Research Institute, Smyrna, GA Robert E. Skinner, Jr. George Bugliarello, President Emeritus and University Professor, Polytechnic Institute of New York Transportation Research Board University, Brooklyn; Foreign Secretary, National Academy of Engineering, Washington, DC James E. Caponiti, Acting Deputy Administrator, Maritime Administration, U.S.DOT SECRETARY Cynthia Douglass, Acting Deputy Administrator, Pipeline and Hazardous Materials Safety Christopher W. Jenks Administration, U.S.DOT Transportation Research Board LeRoy Gishi, Chief, Division of Transportation, Bureau of Indian Affairs, U.S. Department of the Interior, Washington, DC Edward R. Hamberger, President and CEO, Association of American Railroads, Washington, DC John C. Horsley, Executive Director, American Association of State Highway and Transportation Officials, Washington, DC Rose A. McMurry, Acting Deputy Administrator, Federal Motor Carrier Safety Administration, U.S.DOT Ronald Medford, Acting Deputy Administrator, National Highway Traffic Safety Administration, U.S.DOT William W. Millar, President, American Public Transportation Association, Washington, DC Jeffrey F. Paniati, Acting Deputy Administrator and Executive Director, Federal Highway Administration, U.S.DOT Peter Rogoff, Administrator, Federal Transit Administration, U.S.DOT Joseph C. Szabo, Administrator, Federal Railroad Administration, U.S.DOT Robert L. Van Antwerp (Lt. Gen., U.S. Army), Chief of Engineers and Commanding General, U.S. Army Corps of Engineers, Washington, DC *Membership as of June 2009. *Membership as of June 2009.

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AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP REPORT 18 Passenger Air Service Development Techniques Steven C. Martin INTERVISTAS-GA2 CONSULTING, INC. Washington, DC IN ASSOCIATION WITH VESTA RAE & ASSOCIATES, LLC Houston, TX ROBIN LEE MONROE & ASSOCIATES, LLC Washington, DC WORDSWORTH COMMUNICATIONS Wellsboro, PA Subject Areas Aviation Research sponsored by the Federal Aviation Administration TRANSPORTATION RESEARCH BOARD WASHINGTON, D.C. 2009 www.TRB.org

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AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP REPORT 18 Airports are vital national resources. They serve a key role in trans- Project 03-08 portation of people and goods and in regional, national, and inter- ISSN 1935-9802 national commerce. They are where the nation's aviation system ISBN 978-0-309-11802-6 connects with other modes of transportation and where federal respon- Library of Congress Control Number 2009936855 sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most © 2009 Transportation Research Board airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera- COPYRIGHT PERMISSION tive Research Program (ACRP) serves as one of the principal means by Authors herein are responsible for the authenticity of their materials and for obtaining which the airport industry can develop innovative near-term solutions written permissions from publishers or persons who own the copyright to any previously to meet demands placed on it. published or copyrighted material used herein. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the sored by the Federal Aviation Administration (FAA). The ACRP carries understanding that none of the material will be used to imply TRB or FAA endorsement out applied research on problems that are shared by airport operating of a particular product, method, or practice. It is expected that those reproducing the agencies and are not being adequately addressed by existing federal material in this document for educational and not-for-profit uses will give appropriate research programs. It is modeled after the successful National Coopera- acknowledgment of the source of any reprinted or reproduced material. For other uses of tive Highway Research Program and Transit Cooperative Research Pro- the material, request permission from CRP. gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte- nance, operations, safety, security, policy, planning, human resources, NOTICE and administration. The ACRP provides a forum where airport opera- tors can cooperatively address common operational problems. The project that is the subject of this report was a part of the Airport Cooperative Research Program conducted by the Transportation Research Board with the approval of the The ACRP was authorized in December 2003 as part of the Vision Governing Board of the National Research Council. Such approval reflects the Governing 100-Century of Aviation Reauthorization Act. The primary partici- Board's judgment that the project concerned is appropriate with respect to both the pants in the ACRP are (1) an independent governing board, the ACRP purposes and resources of the National Research Council. Oversight Committee (AOC), appointed by the Secretary of the U.S. The members of the technical advisory panel selected to monitor this project and to review Department of Transportation with representation from airport oper- this report were chosen for recognized scholarly competence and with due consideration ating agencies, other stakeholders, and relevant industry organizations for the balance of disciplines appropriate to the project. The opinions and conclusions such as the Airports Council International-North America (ACI-NA), expressed or implied are those of the research agency that performed the research, and the American Association of Airport Executives (AAAE), the National while they have been accepted as appropriate by the technical panel, they are not Association of State Aviation Officials (NASAO), and the Air Transport necessarily those of the Transportation Research Board, the National Research Council, or the Federal Aviation Administration of the U.S. Department of Transportation. Association (ATA) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and Each report is reviewed and accepted for publication by the technical panel according to (3) the FAA as program sponsor. In October 2005, the FAA executed a procedures established and monitored by the Transportation Research Board Executive Committee and the Governing Board of the National Research Council. contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of airport The Transportation Research Board of the National Academies, the National Research professionals, air carriers, shippers, state and local government officials, Council, and the Federal Aviation Administration (sponsor of the Airport Cooperative Research Program) do not endorse products or manufacturers. Trade or manufacturers' equipment and service suppliers, other airport users, and research orga- names appear herein solely because they are considered essential to the clarity and nizations. Each of these participants has different interests and respon- completeness of the project reporting. sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden- tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro- fessionals, the intended users of the research products. The panels pre- pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and Published reports of the selecting research agencies has been used by TRB in managing cooper- AIRPORT COOPERATIVE RESEARCH PROGRAM ative research programs since 1962. As in other TRB activities, ACRP are available from: project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the Transportation Research Board Business Office intended end-users of the research: airport operating agencies, service 500 Fifth Street, NW providers, and suppliers. The ACRP produces a series of research Washington, DC 20001 reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work- and can be ordered through the Internet at shops, training aids, field visits, and other activities to ensure that http://www.national-academies.org/trb/bookstore results are implemented by airport-industry practitioners. Printed in the United States of America

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COOPERATIVE RESEARCH PROGRAMS CRP STAFF FOR ACRP REPORT 18 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Eileen P. Delaney, Director of Publications Natalie Barnes, Editor ACRP PROJECT 03-08 PANEL Field of Policy and Planning Michael Audino, University of South Florida, Tampa, FL (Chair) Robert Ashcroft, Allegiant Air, Las Vegas, NV Michael Covalt, Arizona Airports Association, Green Valley, AZ Robert W. O'Brien, Jr., Chicago/Rockford International Airport, Rockford, IL Barney Parrella, (formerly) Innova Aviation Consulting, LLC, Bethesda, MD Marc P. Pelham, (formerly) Mobile Airport Authority, Mobile, AL Luther H. Roberts, Jr., Huntsville­Madison County Airport Authority, Huntsville, AL Sharon Glasgow, FAA Liaison David Cross, National Association of State Aviation Officials Liaison Aloha Ley, U.S.DOT Liaison Christine Gerencher, TRB Liaison AUTHOR ACKNOWLEDGMENTS The research study conducted for this guidebook was performed through ACRP Project 03-08 by Inter- VISTAS-ga2 Consulting, Inc. with the assistance of Vesta Rae & Associates, LLC, Robin Lee Monroe & Associates, LLC, and Wordsworth Communications. Steven C. Martin of InterVISTAS-ga2 Consulting, Inc. (InterVISTAS) was the Principal Investigator for the project and primary author of the guidebook. Nicole Guitebruegge, Mark Haneke, Neil Hathi, Howard Mann, Mike Morstein, and Geneva Tretheway of InterVISTAS assisted with the research and data collection. Jon Ash of InterVISTAS provided review and advice. Mark Kiehl, now with Palm Springs Inter- national Airport, contributed to the early efforts of the research. Vesta Rae Gaubert of Vesta Rae & Asso- ciates and Robin Lee Monroe of Robin Lee Monroe & Associates contributed to the early research and data collection. Julia L. Johnson of Wordsworth Communications provided invaluable assistance with organizing, presenting, and editing the report and its many drafts. The study team would like to sincerely thank the many airports and airlines that participated in the research for sharing their data, insight, and time. Their experiences with efforts to improve their own air service and willingness to share those experiences enrich this guidebook.

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FOREWORD By Michael R. Salamone Staff Officer Transportation Research Board This guidebook should be of interest to airport managers and local government repre- sentatives interested in retaining existing and/or attracting new commercial air service in small communities. It provides information on the air service development (ASD) tech- niques, tools, and programs that smaller communities have used, including minimum rev- enue guarantees, guaranteed ticket purchases (i.e., travel banks), cost subsidies, marketing and advertising, and non-financial (i.e., in-kind) contributions, among others. The guide- book is organized into two major sections. The first section discusses the context for ASD, particularly the financial condition of the U.S. aviation industry and the basic underlying competitive challenges that small communities face in retaining or enhancing their com- mercial air service. The second section discusses how communities can address those chal- lenges, and describes the basic components and tools of an ASD program. The guidebook is intended to help small communities develop and execute an ASD program. Development of air service is a priority for many communities. Yet, ASD teams have little practical guidance on what techniques exist and which are effective. Air service development includes the attraction, initiation, expansion, retention, or any improve- ment of air service and can include changes in pricing, frequency, capacity, hub connec- tivity, or the number of nonstop destinations served. ASD techniques can include incen- tives; subsidies; guarantees; changes to rates and charges; marketing; cost-reduction measures; airport­community­airline partnerships; reduction of third-party costs, such as ground handling or fueling services; or any other approach taken to encourage development of air service. Under ACRP Project 03-08, InterVISTAS-ga2 Consulting was asked to develop a guide- book that describes techniques that airports and communities can employ in their efforts to develop passenger air service. The guidebook was to include fundamental information to assist airports and the communities they serve in understanding the nature of ASD within the general context of the airport, community, and airline business perspectives. To accomplish the project objectives, the research team (1) conducted a thorough review of relevant domestic literature, existing research, regulatory requirements, pub- lished practical guidance, known techniques, and other appropriate material; (2) collab- orated with industry associations (i.e., Airports Council International­North America, American Association of Airport Executives, National Association of State Aviation Offi- cials, Regional Airline Association, and Air Transport Association); (3) interviewed key individuals from the ASD teams of a representative cross section of communities, includ- ing airports that have received but no longer receive subsidies from the Essential Air

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Service (EAS) program, airports that have received Small Community Air Service Devel- opment Program (SCASDP) grants, and airports that have active ASD programs indepen- dent of EAS and SCASDP; (4) established the current state of ASD experience in the air- port industry; (5) summarized experience to date in assessing existing or potential air service and compiled a comprehensive list of techniques for developing air service; and (6) prepared the guidebook.

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CONTENTS 1 Summary P A R T I Overview of Air Service Development 17 Chapter 1 Using this Guidebook 17 What is the purpose of this guidebook? 17 Who should use this guidebook? 18 How is this guidebook organized? 19 How was the research conducted? 21 Summary 22 Chapter 2 Understanding the Role of Air Service Development 22 What is air service development? 22 Why is air service development important? 24 How do air carriers decide which airports they will serve? 27 How can an airport or community influence air service decisions? 28 What other stakeholders can be involved? 29 What factors are not within an airport's control? 29 What is the ASD process? 30 Summary 31 Chapter 3 Understanding the Context for Air Service Development 31 How do smaller communities connect to the national aviation system? 34 What are the most significant recent trends in the airline industry? 44 What are the key relevant regulatory issues? 46 Summary 47 Chapter 4 Understanding the Key Challenges to Viable Air Service at Smaller Communities 47 How do local demographic and economic characteristics influence air service? 48 What are small airports' most common competitive challenges? 54 Summary P A R T I I Best Practices for Air Service Development 57 Chapter 5 Taking Stock of the Situation 57 What are the airport's current services and how are they performing? 64 Where do key community groups want to fly? 65 How are a facility and its costs assessed? 67 How does the airport compare to its peers? 71 Summary

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72 Chapter 6 Identifying Available Resources to Enhance Air Service 72 What sources of airport revenues may be available to fund ASD? 78 How much do other airports devote to ASD? 78 What types of human resources are needed for successful ASD efforts? 81 Summary 82 Chapter 7 Establishing and Validating ASD Goals 82 What is the overall process for identifying goals? 83 What are the categories of ASD goals? 97 What other goals support ASD? 99 What is the process for validating and refining ASD goals? 103 Summary 104 Chapter 8 Selecting Appropriate Techniques for Air Service Development 104 What revenue-related ASD techniques are available? 107 What cost-related ASD techniques are available? 114 What are the legal issues regarding airport incentive programs? 117 Which techniques should the airport use? 121 Summary 122 Chapter 9 Making a Compelling Case to Airlines 122 What should ASD teams and communities expect? 122 What information do other airports present to airlines? 122 What data and information do the airlines want to see? 132 How should the information for presentations to airlines be organized? 134 How should an airline be approached? 137 Summary 138 Chapter 10 Evaluating and Improving ASD Efforts 138 Why is evaluation so important? 138 How is effectiveness in ASD measured? 143 Who should conduct the evaluation? 144 When should an evaluation be conducted? 144 Why do stakeholders need to be informed? 145 Summary 146 References P A R T I I I Appendices 149 Appendix A Glossary 153 Appendix B Frequently Asked Questions 157 Appendix C Annotated Bibliography