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Understanding the Role of Air Service Development 29
However, their willingness to support an ASD program will depend on whether they Stakeholders' will-
believe that it will generate a positive return on their investment and whether new service
meets business objectives (e.g., new nonstop service to a major business destination, direct
ingness to support
service from a key inbound tourist market). If proposed new service has been thoroughly ana- an ASD program
lyzed and meets the fundamental criteria, then major stakeholders should be able to under- will depend on
stand the business reasoning behind the need for an incentive package, and the need for their
involvement. whether they
believe it will
State and federal government agencies can also be stakeholders. Both can contribute to ASD
efforts. Consider: generate a positive
· State governments invest more than $800 million annually in planning, operations, infrastruc- return on invest-
ture development, maintenance, and navigational aids for the nation's 3,000 public-use air- ment or meets key
ports. For example, both Kansas and Wyoming supported programs to bring more affordable
business objectives.
air service to commercial airports in their states. The Kansas legislature in 2006 committed to
a five-year, $25 million program. Wyoming has provided $3 million per year since 2002 for air
service development.
· The federal government contributes direct financial assistance to support air service at small
communities.
First, under the Essential Air Service program, U.S.DOT subsidizes service to 102 commu-
nities in the continental United States and another 39 in Alaska. In 2009, Congress provided
$110 million to fund the program.
Second, the SCASDP provides grants to help small communities achieve sustainable air
service. As established, an additional goal of the program was to generate creative ASD pro-
posals that could be implemented in other small communities. Through fiscal year 2007,
U.S.DOT has issued over 200 SCASDP grants totaling approximately $100 million to small
hub and non-hub communities. SCASDP grants have ranged from $20,000 to $1.6 million
and have funded a wide range of air service initiatives. Congress has recently been providing
$10 million per year for the SCASDP.
What factors are not within an airport's control?
To begin with, the broad economic forces at work in the nation and a community--such as
changes in its population and economic activity--affect the local demand for air service. Locally,
if a company that generates a significant amount of travel either decides to expand or to relocate,
such decisions will directly influence carriers' willingness to serve a community.
Similarly, as evidenced by the soaring costs of jet fuel during 2007 and 2008, the loss of
demand following the Gulf War, and the industry's near collapse following the events of
September 11, 2001, any major external shock is completely outside of a community's control.
Some of those factors affect carriers' costs (e.g., oil prices) and others affect carriers' revenue (e.g.,
loss of demand during an economic downturn). Both have similar ultimate effects on a carrier's
financial bottom line, so both can influence airlines' decisions.
What is the ASD process?
Effective ASD follows a relatively straightforward and logical process. In general, the process
begins by identifying key service deficiencies, then flows into setting goals, marshaling resources,
selecting a strategy, implementing the plan, and evaluating outcomes. Figure 2.3 illustrates the
steps in the process, which is described in greater detail in subsequent chapters.
