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APPENDIX A Glossary Air service development (ASD)--a broad term that encompasses a variety of activities with the ultimate goal of retaining existing air service or improving air access and capacity in order to develop the economy of a community or region. ASD involves all activities directly related to enhancing commercial passenger service at an airport. Available seat mile (ASM)--a measure of air carrier capacity. ASMs are the mathematical prod- uct of the total number of seats available for sale on an aircraft times the number of miles flown. Backhaul--the extra miles involved in a circuitous routing that takes passengers out of their way to reach their final destination. This sometimes includes flying in the opposite direction from the final destination. As an example, for passengers flying from Walla Walla first to Seattle and then on to Denver, the Walla Walla to Seattle portion of the journey is a backhaul, because they are initially flying westbound before connecting to their eastbound flight. Catchment area--the area from which an airport draws its traffic. Catchment areas vary in size and shape, depending on physical barriers (e.g., mountains, oceans), nonstop service offerings, and competing airports. Catchment areas can be overlapping, depending on the intended destination of the passenger involved, his/her preferred routing, and the presence of nonstop service from another nearby airport. Circuity--the degree to which a routing varies from the shortest (i.e., nonstop) distance between two points. It is measured in terms of the ratio of the total number of miles flown divided by the total nonstop miles. For example, a flight that goes from New York first to Atlanta and then to Miami is more circuitous than flying from New York to Miami nonstop. Guaranteed ticket purchase--sometimes called a Travel Bank; a community provides funds that will be used to purchase tickets on a targeted airline worth a set amount of revenue during a given period of time. Businesses or individuals deposit funds in a bank account that can be used only for purchasing tickets on the target airline. Hub-and-spoke--the system through which legacy network carriers connect smaller cities in the United States to the national aviation system. These carriers transport passengers on nonstop flights from various "spoke" cities into their "hubs," and then redistribute them to connecting flights for their final destinations. Depending on the amount of passenger traffic in the market between the spoke city and the hub, legacy airlines may operate their own large jets or use regional affiliate carriers to provide service, usually with regional jet or turboprop aircraft. Incumbent--an air carrier serving an airport that has maintained service at that airport for one year or more. In-kind assistance--products, goods, or services that otherwise might have to be paid for, but which can be donated by third-party providers instead. 149

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150 Passenger Air Service Development Techniques JumpStart--an air service development conference sponsored by Airports Council International North America (ACI-NA). The conference occurs in June each year and is held in conjunction with the ACI-NA marketing conference. Leakage--the percentage of passenger traffic that could reasonably be considered to be within the catchment area of one airport that is lost to another airport. Legacy network carrier--the major network carriers in the United States: American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines, and US Airways. Their airline operations--in one corporate form or another--generally pre-date the deregulation of the airline industry in 1978. Load factor--the percentage of seats that are filled on a plane. For example, a 100-seat plane carrying 82 passengers would have an 82 percent load factor. Low-Cost Carrier (LCC)--sometimes referred to as "low-fare carriers," LCCs are airlines that tend to have unit costs that are significantly lower than the legacy network carriers. These carriers' interstate operations launched after the deregulation of the airline industry in 1978. They include Southwest Airlines, AirTran Airways, Frontier Airlines, JetBlue Airways, and Virgin America. Mainline operations--refer to operations conducted by an airline's main operating unit (e.g., American Airlines) rather than a regional affiliate, code-share, or partner airline (e.g., American Eagle or American Connection). Market--in the context of air service, usually defined in terms of service between a pair of cities (e.g., flights between Little Rock, AR, and Albuquerque, NM). In cases where a larger metropolitan area may be served by more than one airport, there may be separate markets for service to dif- ferent airports. Flights serving LaGuardia Airport (New York City) are usually considered to be in a different market from those serving John F. Kennedy International Airport (New York City) or Long Island Islip MacArthur Airport (Islip, New York), for example. Business travelers in par- ticular are willing to pay different amounts for service to one airport rather than the other. Market entry--when a new carrier begins to offer service at a particular airport. Entry at an airport can cause passengers to shift away from existing travel patterns (i.e., fly on the new airline as opposed to an incumbent carrier). Market entry can also stimulate new traffic (i.e., prompt individuals to fly who would not have otherwise flown). Minimum revenue guarantee--see revenue guarantee. Metropolitan statistical area (MSA)--generally, a geographical entity containing a large popu- lation nucleus and adjacent communities having a high degree of social and economic integration with that nucleus. Under the 1990 metropolitan area standards, qualification of an MSA required a city with a population of 50,000 or more, or an urbanized area with a population of 50,000 or more and a total area population of at least 100,000 (75,000 in New England). MSAs are composed of entire counties, except in New England where the components are cities and towns. Network--an air service development conference sponsored by the Flight International Group. The conference targets North American airports and the airlines that serve them. The conference occurs in March each year. New entrant--an air carrier either attempting to begin service at an airport for the first time or one that has been providing service at an airport for less than one year. This can also apply to service by a carrier already operating at an airport but not in a particular city pair market. Niche carrier--airlines that cater to a particular market segment, or "niche," that sometimes provide specialized services from small communities to major leisure destinations.

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Glossary 151 Non-aeronautical revenue--revenue that an airport derives from activities not associated with flight operations. Examples include car rental fees, concessionary/vending fees, parking fees, and airport business park rental fees. Non-hub airport--the FAA's definitions of hub airports are based on statutory definitions and are not the same as the more operational definition of hubs that are applied by airlines. Federal law defines a non-hub airport as one at which less than 0.05 percent of all enplanements in the United States occur. Non-hub airports are defined in 49 USC 41731. Origin and destination (O&D)--refers to passengers who originate from and/or are destined to a particular airport or market. Passenger demand--an economic measure of the extent to which travelers may be willing to purchase air service at a given price/fare. Demand is a theoretical construct; it is inversely related to price. More air service is demanded at lower fares. Travelers demand less air service at higher fares. Regional airlines--provide short- and medium-haul scheduled airline service connecting 635 U.S. communities with larger cities and hub airports operating 9- to 78-seat turboprops and 30- to 108-seat regional jets. Revenue guarantee--agreements that establish a target amount of revenue that a carrier will receive for operating a particular service to a particular destination over a given length of time. They may be expressed as a minimum amount that will be generated from passengers (ticket sales), provided that the carrier meets certain operating requirements (e.g., completing 92 percent of their operations, with an on-time departure or arrival record of x percent). Revenue seat miles--a measure of the amount of capacity in a market that an airline is able to sell. A related measure is the revenue per available seat mile (RASM), which is calculated by divid- ing the total passenger revenue generated on a flight by the total number of available seat miles. Reverse leakage--the number or percentage of traffic that is gained by a particular airport from another (nearby) airport's catchment area. Small community--generally, one served by an airport classified by the FAA as a small hub or a non-hub. There are 426 non-hub and small hub communities in the United States, including those in Alaska, Hawaii, and the U.S. territories. Small Community Air Service Development Program (SCASDP)--established by Congress under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, P.L. 106-181 (AIR-21), to help small communities enhance their air service. Administered by the U.S. Department of Transportation, the program provides grants to help small communities achieve sustainable air service. An additional goal of the program was to generate creative air service development proposals that could be implemented in other small communities. Small hub airport--the FAA's definitions of "hub" airports are based on statutory definitions and are not the same as the more operational definition of hubs that is applied by airlines. The categories are based on the number of passengers boarding an aircraft (enplaning) for all oper- ations of U.S. carriers in the United States. A small hub airport enplanes from 0.05 to 0.249 percent of all enplanements. Federal law defines a small hub airport at 49 USC 41731. Stakeholder--person or entity (e.g., a business) that has a vested interest in the level of air service provided at an airport. Key stakeholders may include resident companies, economic development agencies, tourism offices, etc., within an airport's catchment area. Subsidy--a broad category of financial incentives that generally offset some aspect of an air- line's costs of operation. These can include waivers of fees or discounted landing (or other) fees during a promotional period. Cash subsidies are paid without regard to the amount of revenue

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152 Passenger Air Service Development Techniques that a carrier may generate during the agreed-upon period. Subsidies are generally a fixed amount, often with no connection to the eventual profitability of the route. T-100--operational statistical data provided by the U.S. Department of Transportation. Information is tabulated for both domestic and international operations on a monthly basis and is required to be filed by all airlines (both scheduled and non-scheduled). Travel bank--see guaranteed ticket purchase. Very Light Jets (VLJs)--generally, jet aircraft with a maximum take-off weight of 10,000 pounds, certified for single-pilot operations, equipped with advanced avionic systems, and priced below other business jets. Two types of these models--the Cessna Citation Mustang and Eclipse 500-- have received FAA type and production certification and begun delivering aircraft.