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THIS IS A CENTERED DATELINE 1
COLUMBUS – CHARLOTTEAIR SERVICE RECRUITMENT PLAN
2
AGENDA
WHY AN INCENTIVE IS NECESSARY
AIRLINE MERGERS
PILOT SHORTAGE
AIRPORTS USED BY COLUMBUS PASSENGERS
FAA RESTRICTIONS ON AIRPORT INCENTIVES
THE COLUMBUS – CHARLOTTE MARKET
HOW SERVICE BENEFITS COLUMBUS
OUR HEAD START
GOAL AND TIMELINE
REVENUE GUARANTEE DETAIL
SUCCESS STORIES
NEXT STEPS
WHY AN INCENTIVE IS NECESSARYFIRST SECTION
3
4
18 MAJORS HAVE BECOME FOUR
Page 4
2000
Today
1978 1990
5
51 LCCs HAVE BECOME SEVENToday2006 2010200219981978 1984 1990 1994
6
AIRLINES FACE A PILOT SHORTAGE
CUMULATIVE NUMBER OF US MAINLINE AIRLINE PILOTS REACHING RETIREMENT AGEPROJECTED FOR CALENDAR YEAR 2016 – CALENDAR YEAR 2022
SOURCE: REGIONAL AIRLINE ASSOCIATION (RAA)
1,4493,064
4,797
6,808
9,014
11,575
14,171
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2016 2017 2018 2019 2020 2021 2022
REGIONALS CURRENTLY EMPLOY 17,000 PILOTS
FEWER THAN 1,000 PILOTS ARE CERTIFIED PER YEAR
7
AIRLINES RETIRED 11% OF FLEET
US AIRLINE TOTAL FLEET SIZECALENDAR YEAR 2000 – CALENDAR YEAR 2015
SOURCE: AIRLINES 4 AMERICA
5,900
6,000
6,100
6,200
6,300
6,400
6,500
6,600
6,700
6,800
6,900
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
6,050
6,762 6,763
8
AIRPORTS HAVE LOST CAPACITY
CHANGE IN SCHEDULED DEPARTING AIRLINE SEATSCALENDAR YEAR 2005 – CALENDAR YEAR 2015
SOURCE: OAG DATA
CSG IS A NON-HUB
-2.3%
-24.7%
-2.8%
-14.3%
-6.9%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
Large Hub Medium Hub Small Hub Non-Hub EAS
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ONLY 9% OF LOCALS USE CSG
CSG: 9%
ATL: 90%
MGM: 0.3%
BHM: 0.5%
COLUMBUS GENERATES 3,300 PASSENGERS PER DAY
JUST 300 USE CSG
ALMOST 3,000 PER DAY DRIVE TO ATLANTA
SOURCE: COLUMBUS AIRPORT TRUE MARKET STUDY
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CSG FORECASTS POORLY
DUE TO ATL “LEAKAGE,” CSG-CLT FORECASTS POORLY
MUST OVERCOME POOR FORECAST BY MITIGATING RISK
NEW ROUTES ARE A MAJOR INVESTMENT
CHARLOTTE SERVICE COSTS $7,000 ROUNDTRIP
TWICE-DAILY SERVICE IS A $5 MILLION ANNUAL INVESTMENT
LARGE MARKETS WITH MORE TRAFFIC SEEM LESS RISKY
CONSUMER BEHAVIOR IS DIFFICULT TO CHANGE
FREQUENT FLIER LOYALTY
CORPORATE CONTRACTS
AIRPORT PREFERENCE
LOCAL FINANCIAL SUPPORT IS PARAMOUNT IN RECRUITMENT
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AIRPORT INCENTIVES ARE LIMITED
SOURCE: FAA AIR CARRIER INCENTIVE HANDBOOK
“[THE] FAA ALLOWS PROMOTIONAL
INCENTIVES TO AIR CARRIERS FOR NEW
SERVICE TO INCREASE TRAVEL USING
THE AIRPORT AND/OR PROMOTE
COMPETITION…”
THE COLUMBUS – CHARLOTTE MARKETSECOND SECTION
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AA/CLT CONNECTS TO 107 CITIES
14
AA/CLT CONNECTS TO 107 CITIES
ONE HOUR FLIGHT
ACCESSES 2,220 DAILY CSG-AREA PASSENGERS
WOULD PROVIDE COMPETITION IN ALL MARKETS
WOULD HELP TO LOWER CSG FARES
15
WE HAVE A HEAD START
COLUMBUS AIRPORT WON A FEDERAL AIR SERVICE GRANT
$750,000 FOR NEW CHARLOTTE SERVICE
ROUGHLY HALF OF THE TARGETED TOTAL
GOAL AND TIMELINETHIRD SECTION
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TARGET: $1.7 MILLION IN FUNDING
NEW SERVICE, BY THE NUMBERS
UP TO $3,500 IN AIRLINE COST, EACH WAY
UP TO $7,000 AIRLINE COST, ROUNDTRIP
UP TO $5 MILLION ANNUAL AIRLINE INVESTMENT
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TARGET: $1.7 MILLION IN FUNDING
NEW SERVICE, BY THE NUMBERS
UP TO $3,500 IN AIRLINE COST, EACH WAY
UP TO $7,000 AIRLINE COST, ROUNDTRIP
UP TO $5 MILLION ANNUAL AIRLINE INVESTMENT
COLUMBUS AIRPORT INVESTMENT
$200,000 IN WAIVERS AND MARKETING CASH
$750,000 IN GRANT FUNDING
$950,000 CURRENT AIRLINE INCENTIVES
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TARGET: $1.7 MILLION IN FUNDING
NEW SERVICE, BY THE NUMBERS
UP TO $3,500 IN AIRLINE COST, EACH WAY
UP TO $7,000 AIRLINE COST, ROUNDTRIP
UP TO $5 MILLION ANNUAL AIRLINE INVESTMENT
COLUMBUS AIRPORT INVESTMENT
$200,000 IN WAIVERS AND MARKETING CASH
$750,000 IN GRANT FUNDING
$950,000 CURRENT AIRLINE INCENTIVES
WHAT IT WILL LIKELY TAKE
CURRENT INCENTIVE MITIGATES JUST 19% OF RISK
AIRLINES WANT RISK MITIGATION OF 35%+
TOTAL PACKAGE $1.7 MILLION+
20
MINIMUM REVENUE GUARANTEE
ACCOUNTING FOR PARTICIPANTS’ FUNDING
INDIVIDUAL LETTERS OF CREDIT, OR;
PARTITIONED LOCAL BANK ACCOUNT
QUARTERLY INVOICING
AIRLINE WILL REPORT REVENUE AGAINST TARGET
IF REVENUE IS BELOW TARGET
FUNDING DRAWN BY PERCENTAGE FROM EACH ACCOUNT
IF REVENUE IS ABOVE TARGET
NO PAYMENT IS OWED
GRANT FUNDING USED FIRST
NO LOCAL FUNDING TOUCHED UNTIL GRANT EXHAUSTED
END OF PROGRAM: TWO YEAR PERIOD
21
STRUCTURE OF EFFORT
$1.5 MILLIONOUR GOAL IN REVENUE GUARANTEES
Determine YourCompany’s Interest
MakePledge
PledgesAggregated
Airport NegotiatesWith Interested Airlines
Service AgreementReached
Revenue GuaranteeContract Signed
ServiceBegins
Airline CompletesQuarterly Revenue Reports
NoPayment
Guarantors Invoiced Only if Grant Funding is Exhausted
Grant Funding InvoicedTo a Total of $750,000
Project Complete
FlightsSelf-Sustaining
Today
Ultimate Goal
Pledges Converted to CashOn Account or Letters of Credit
Remaining FundsReturned to Guarantors
RevenueAbove Target
RevenueBelow Target
22
EXAMPLE: ROCHESTER, MN
ROCHESTER, MINNESOTA – ATLANTA
COMMUNITY COALITION
$950,000 IN VARIOUS FUNDING
DAILY SERVICE ON DELTA
USED LESS THAN $200,000
Rochester
Atlanta
23
EXAMPLE: NORTH BEND, OR
NORTH BEND, OREGON – DENVER
RESORT AND BUSINESS COALITION
$1.2 MILLION MRG
TWICE-WEEKLY SERVICE ON UNITED
GOING INTO THIRD SEASON
North Bend
Denver
24
EXAMPLE: TUCSON, AZ
TUCSON – NEW YORK KENNEDY
CHAMBER MEMBERSHIP
$2.9 MILLION ON ACCOUNT
DAILY SERVICE ON AMERICAN
BEGAN OCTOBER 7TH
Tucson
New York Kennedy
25
POTENTIAL TIMELINE
DEVELOP PLEDGES
FEBRUARY 2017 FINAL DEADLINE
TAKE PLEDGES TO CARRIERS
FEBRUARY – APRIL 2017
CONVERT PLEDGES TO CASH
ON AIRLINE’S REQUEST
SEPTEMBER 2017
SIGN CONTRACT WITH CARRIER/ANNOUNCE SERVICE
SEPTEMBER – DECEMBER 2017
SERVICE LAUNCH
LATE 2017 INTO 2018
THIS IS A CENTERED DATELINE 26
CONTACT INFORMATION
RICHARD HOWELL
AIRPORT DIRECTOR
COLUMBUS AIRPORT
3250 WEST BRITT DAVID ROAD
COLUMBUS, GEORGIA 31909
706.324.2449, EXT. 1410
