GTF Great Falls International Airport

GTF Great Falls International Airport Great Falls, Montana

Small Community Air Service Development Program Proposal

Docket DOT-OST-2020-0231

Dun & Bradstreet DUNS Number: 15-61301148 Tax Identification Number: 81-0347136 Two-Digit Congressional Code: At-large

PROPOSAL OF GREAT FALLS INTERNATIONAL AIRPORT DOCKET DOT-OST-2020-0231 PAGE 1

Table of Contents LETTER OF INTRODUCTION............................................................................................................... 2 AMERICAN AIRLINES LETTER OF SUPPORT ................................................................................... 4 GREAT FALLS AREA CHAMBER OF COMMERCE LETTER OF SUPPORT .................................... 5 GREAT FALLS CONVENTION AND VISITORS BUREAU LETTER OF SUPPORT ........................... 6 EXECUTIVE SUMMARY ....................................................................................................................... 7 AIR SERVICE OVERVIEW .................................................................................................................... 9

Catchment Area and Access to Alternate Airports ............................................................................ 9 Existing Air Service .......................................................................................................................... 11 Air Service Development Efforts ...................................................................................................... 12 Marketing and Promotion of Air Service .......................................................................................... 13

AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES ......................................................... 14 Capacity Trend ................................................................................................................................. 14 Seats per Capita at Great Falls Versus Other Montana Airports ..................................................... 15 Traffic and Fare Trends .................................................................................................................... 16 Domestic Fare and Yield Trends Relative to Other U.S. Airports .................................................... 17 Leakage to Other Airports in the Region .......................................................................................... 19

STRATEGIC PLAN .............................................................................................................................. 20 Proposed New Route ....................................................................................................................... 20 Self-Sufficiency of the Proposed New Route ................................................................................... 20 Goals and Objectives ....................................................................................................................... 20 Target Airline Support ...................................................................................................................... 21 Great Falls-Dallas/Ft. Worth Traffic and Fare Trends ...................................................................... 21 Connecting Traffic Opportunities on American at Dallas/Ft. Worth ................................................. 22 Grant Amendments/Alternate Strategies ......................................................................................... 23

PROJECT IMPLEMENTATION, MONITORING AND FUNDING ....................................................... 23 Public/Private Partnerships .............................................................................................................. 23 Project Funding ................................................................................................................................ 23 Implementation Timeline .................................................................................................................. 24

PROJECT MONITORING AND FINANCIAL CONTROL .................................................................... 25 Success Metrics ............................................................................................................................... 25 Previous SCASDP Funding ............................................................................................................. 25 Legal Sponsor .................................................................................................................................. 25 Financial Controls ............................................................................................................................. 26

APPENDIX A: REQUIRED SUMMARY INFORMATION ................................................................... 27 APPENDIX B: LETTERS OF SUPPORT ............................................................................................ 32


LETTER OF INTRODUCTION

January 26, 2020

Brooke Chapman Associate Director Small Community Air Service Development Program U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590

Dear Ms. Chapman,

Great Falls International Airport serves the residents and visitors to Great Falls and the region surrounding our community. The Airport is submitting the attached proposal for a Small Community Air Service Development Grant in the amount of $800,000 a minimum revenue guarantee (MRG) on American Airlines for nonstop service to Dallas/Ft. Worth.

Even prior to the impact of the COVID-19 pandemic on airline capacity at Great Falls, capacity at Great Falls was trending down and declined 27.1% in the nine year period from 2011 through 2019. The pandemic resulted in capacity declining an additional 26.0% from 2019 to 2020 to just 437 seats per day each way in 2020.

The Great Falls Area Chamber of Commerce, the Great Falls Convention and Visitors Bureau and the Great Falls Tourism Business Improvement District headlined a partnership with Great Falls International Airport that included 32 local businesses and individuals with donations totaling $300,000 in cash for minimum revenue guarantee funding to supplement the proposed federal funding, and $32,000 to support marketing and promotion of the proposed service.

The Airport meets frequently with targeted airlines to discuss additional air service. We most recently met with American at the TakeOff Conference in Denver in October 2020, and American has offered its support for this application with the attached letter of support.

Great Falls has a successful record in the SCASD program; the Airport and the community were awarded SCASD funding in the amount of $385,000 in 2015 for a MRG on United Airlines service from Great Falls to Chicago. United began seasonal Chicago service under an MRG in 2016 and continued to operate the service on a seasonal basis through the summer of 2019 (The service did not return in the summer of 2020 given the downturn in demand attributed to the COVID-19 pandemic.)

We appreciate your consideration of our proposal.

Sincerely,


John Faulkner Executive Director Great Falls International Airport


AMERICAN AIRLINES LETTER OF SUPPORT


GREAT FALLS AREA CHAMBER OF COMMERCE LETTER OF SUPPORT


GREAT FALLS CONVENTION AND VISITORS BUREAU LETTER OF SUPPORT


EXECUTIVE SUMMARY

Great Falls International Airport is seeking a federal grant in the amount of $800,000 under the Small

Community Air Service Development Program to fund a minimum revenue guarantee and provide

marketing support for service from Great Falls to Dallas/Ft. Worth International Airport on American

Airlines. In addition to the amount requested from the Department, the Great Falls Chamber of

Commerce, the Great Falls Convention and Visitors Bureau and the Great Falls Tourism Improvement District headline 32 local businesses and individuals that have pledged $300,000 in cash that can be

applied to the minimum revenue guarantee. The three community-based organizations will also

provide $32,000 in cash for marketing and promotion of the proposed service over the first three years

of service.

The community will provide a portion of the project cost from community-based organizations. The

Great Falls Area Chamber of Commerce, the Great Falls Convention and Visitors Bureau and the

Great Falls Tourism Business Improvement District headline 32 local businesses and individuals that have pledged cash funding for the revenue guarantee totaling $300,000, an amount equal to 37.5%

of the $800,000 in federal funding requested.

Based on Department of Transportation data, the Great Falls-Dallas/Ft. Worth market size was 8.0

passengers per day each way (PDEW) in 2019, and the average fare was $238. Based on a leakage

study using 2019 data, 45% of the Dallas/Ft. Worth traffic generated in Great Falls’ catchment area

leaks to other airports in the region. The Great Falls-Dallas/Ft. Worth true market size was 14.5 PDEW at an average fare of $231 in the study period. In addition to serving the local Great Falls-Dallas/Ft.

Worth market, the proposed service would also enable connections on American and other carriers

beyond Dallas/Ft. Worth. American could logically connect at least 107 markets via Dallas/Ft. Worth,

primarily to destinations in the Southeast United States and Latin America. The proposed air service

will enable Great Falls to recapture some of the traffic leaked to other airports, put downward pressure

on air fares and increase tourism to the region.

Great Falls meets the Department’s primary and secondary selection criteria for SCASDP funding:

• Air fares are higher than the national average air fares for all communities. Great Falls’

average domestic air fare was $196 in 2019 and $177 in the first three quarters in 2020; the average domestic air fare for all communities in the U.S. was $172 in 2019 and $144 in the first three quarters in 2020. Additional air service on a network carrier in Great Falls will likely put downward pressure on Great Falls’ fares.


• The community will provide a portion of the project cost from community-based organizations. The Great Falls Area Chamber of Commerce, the Great Falls Convention and Visitors Bureau, the Great Falls Tourism Business Improvement District and 29 other organizations and individuals have pledged cash funding for the revenue guarantee totaling $300,000, an amount equal to 37.5% of the $800,000 in federal funding requested.

• The community has established a public-private partnership. Great Falls International Airport has partnered with the Great Falls Area Chamber of Commerce, the Great Falls Convention and Visitors Bureau and the Great Falls Tourism Business Improvement District for this project.

• The assistance will provide material benefits to a broad segment of the traveling public. The proposed service to Dallas/Ft. Worth would benefit business, government and leisure travelers not only in the local Great Falls-Dallas/Ft. Worth market, but also benefit business and leisure travelers with connecting opportunities beyond Dallas/Ft. Worth.

• The assistance would be used in a timely manner. Great Falls International Airport has been actively engaged in a dialogue with American regarding Dallas/Ft. Worth service for several years, and American has provided a letter of support for this proposal. The likely scenario for starting the new service is in June 2022, assuming the Department announces awards by June 2021. June 2022 is the mostly likely scenario for service to begin because demand for travel to and from all Montana markets peaks in the summer, and the industry’s summer season schedule change in the first half of June coincides with the seasonal uptick in Montana demand. Under a best case scenario, American could start service in June 2021, but this would require a relatively fast award decision by the Department, a relatively fast execution of an agreement with the Department, widespread herd immunity to the COVID-19 virus and a relatively fast upturn demand for air travel.

• Innovation. While Great Falls’ proposal for a minimum revenue guarantee isn’t necessarily innovative, minimum revenue guarantees have proven to be the most effective tool for establishing and maintaining new air service in other communities.

• Community Participation. In addition to Great Falls International Airport, the Great Falls Area Chamber of Commerce, the Great Falls Convention and Visitors Bureau, the Great Falls Tourism Business Improvement District and 29 other businesses and individuals are participating in this project.

• Location. Great Falls International Airport is isolated. The closest large hub airport is Salt Lake City International Airport, located 571 road miles south of Great Falls. There are airports closer to Great Falls than Salt Lake City with more airline service than Great Falls, but the distances to these airport is substantial. These airports, and the distances from Great Falls, include Missoula (173 miles), Bozeman (174 miles) and Kalispell (217 miles).


AIR SERVICE OVERVIEW

Catchment Area and Access to Alternate Airports

As illustrated on the drive time map in Exhibit 1, Great Falls International Airport is the closest airport

to all residents within a 60-minute drive of the airport. 92,271 residents live within a one hour drive of

Great Falls International Airport, and 206,160 residents live within 120-minute drive of the airport.

Great Falls International Airport is isolated. Located 571 miles from Great Falls, the closest large hub airport is Salt Lake City International Airport; given the distance, only 1.4% of the traffic generated in

the Great Falls catchment area leaked to Salt Lake City in 2019. Bozeman Yellowstone International

Airport is the closest small hub airport to Great Falls and has relatively good air service during the

peak summer travel season, but it is located 174 miles from Great Falls. In 2019, the last full year

prior to the COVID-19 pandemic, Bozeman’s average domestic fare of $220 was 12.4% higher than

Great Falls’ average domestic one-way fare of $196. 4.6% of the traffic generated in Great Falls’

catchment area leaked to Bozeman in 2019.

Exhibit 1 illustrates one, two and three hour drive times and drive times from Great Falls and the

locations of other airports in the region. At 86 miles, Helena Regional Airport is the closest alternate

airport, but air service at Helena is even more limited than air service at Great Falls, and Helena had

a higher average domestic fare than Great Falls in 2019. Helena captured 2.6% of the traffic generated

in the Great Falls catchment area in 2019. Bert Mooney Airport in Butte is located 152 miles from

Great Falls. Like Helena, Butte had a higher average domestic fare and captured almost none of the

traffic generated in the catchment area. Bozeman Yellowstone International Airport is located 173 miles from Great Falls and has more air service than Great Falls. Bozeman’s average domestic fare

of $213 was higher than the average domestic fare at Great Falls in 2019; Bozeman captured 9.3%

of the traffic generated in the catchment area. Missoula International Airport is located 205 miles from

Great Falls, captured 3.6% of the traffic and had a higher average domestic fare of $214 in 2019.


Distances to Other Airports HLN = 86 Miles

BTM = 152 Miles BZN = 173 Miles MSO = 205 Miles FCA = 220 Miles BIL = 220 Miles

Exhibit 1. One, two and three hour drive times and drive times from Great Falls International Airport and locations of other airports in the region.

The table in Exhibit 2 summarizes the distance to each of the other airports in the region, the number

of airlines, the number of destinations, the average seats per flight prior to the pandemic in 2019. With

the exception of Helena and Butte, all other airports in the region had more air service than Great

Falls.

Exhibit 2. Full-Year 2019 number of airlines, number of destinations and average seats/flight at Great Falls and other airports in the region. (Airline Data Inc. data: January 10, 2021).

Road Miles Airport Location from GTF Airlines Destinations Seats/Flight

Great Falls N/A 4 7 68.1

Helena 86 3 4 61.1 Butte 152 1 1 50.0

Missoula 173 6 13 50.0 Bozeman 174 7 17 112.5 Kalispell 217 5 13 90.6 Billings 221 7 15 56.3


As shown in Exhibit 3, Great Falls generated 474.8 domestic PDEW and 14.3 international PDEW for

a total of 489.1 PDEW at an average domestic one-way fare of $196, an average international one-

way fare of $472 and an average blended domestic and international one-way fare of $204 in 2019.

The airports in Helena and Butte generated less traffic at higher average fares than Great Falls, while the airports in Missoula, Bozeman, Kalispell and Billings generated more traffic. Three of these four

airports had a higher average domestic fare than Great Falls. Missoula’s average domestic fare was

equal to the average domestic fare of $196 at Great Falls in 2019.

Exhibit 3. 2019 domestic and international passengers per day each way (PDEW) and average one-way fare at Great Falls and other airports in the region (DOT DB1B data)

Road Miles Domestic International Domestic+International Airport Location from GTF PDEW Fare PDEW Fare PDEW Fare

Great Falls N/A 474.8 $196 14.3 $472 489.1 $204

Helena 86 322.0 $223 12.8 $516 334.8 $235 Butte 152 67.8 $237 2.5 $517 70.4 $247

Missoula 173 1,175.4 $196 51.2 $482 1,226.6 $208 Bozeman 174 2,025.3 $220 83.8 $531 2,109.1 $233 Kalispell 217 930.6 $221 28.8 $507 959.4 $229 Billings

Existing Air Service

221 1,193.8 $203 51.2 $489 1,245.0 $215

In third quarter 2020, airlines operated an average of 477 seats per day each way at Great Falls, a

decline of 28.1% versus third quarter 2019. In third quarter 2020, Great Falls had Alaska service to

Seattle, Delta service to Salt Lake City and Minneapolis/St. Paul, United to Denver and Allegiant

service to Las Vegas and Mesa/Phoenix (all Allegiant service was operated twice a week). Alaska

operated 23.7% of the scheduled capacity, Delta operated 40.4% of the scheduled capacity, United

operated 19.9% of the scheduled capacity, and Allegiant operated 16.0% of the scheduled capacity in

third quarter 2020. Exhibit 4 illustrates the number of flights per day each way, seats per flight, seats

per day each way and seat share by carrier and market based on published capacity for third quarter

2020.


Exhibit 4. Great Falls third quarter 2020 departures per day, seats per departure, seats per day and percent of total capacity and year-over-year change by airline and market.

Third Quarter 2020 Flights per Day Seats per Seats per Day 3Q 2020 YOY Seat % YOY Seat

Airline Destination Each Way Flight Each Way Seat Share Change Change

Alaska SEA 1 3/7 76.0 113 23.7% -23 -17.0% Total 1 3/7 76.0 113 23.7% -23 -17.0%

Delta MSP 4/7 76.0 44 9.2% -69 -61.3% SLC 3 50.0 149 31.2% 6 4.2% Total 3 4/7 54.2 193 40.4% -63 -24.7%

United DEN 1 6/7 50.0 95 19.9% -54 -36.1%

ORD 0.0% -52 -100.0% Total 1 6/7 50.0 95 19.9% -106 -52.7%

Network Carriers 7 57.7 401 84.0% -192 -32.4%

Allegiant AZA 2/7 178.1 39 8.1% 14 54.8% LAS 2/7 157.4 38 7.9% -8 -17.8%

Total 3/7 167.2 76 16.0% 6 7.8%

All Carriers 7 3/7 64.5 477 100.0% -187 -28.1%

Air Service Development Efforts

The Airport has an active air service development program, and the airport director met in-person with 12 airlines on 19 occasions in the two year period from January 2019 through December 2020. In

addition to the in-person meetings, the airport director had four conference calls with two airlines over

the same period of time. These meetings included two in-person meetings with American. The

number of meetings with each airline is summarized in Exhibit 5. In September 2021, the Airport will

host most large U.S. airlines and meet with them on-site at the annual Montana Airline Rendezvous.


Exhibit 5. Summary of Great Falls International Airport airline meetings in 2019 and 2020.

Discussion/Meeting Forum and Number of Contacts

Airline

Headquarters

Meeting 2019

Conference

Call 2019

Conference

Call 2020

Montana Airline

Rendezvous 2019

TakeOff

Conference 2020

Total Alaska 1 1 2

Allegiant 1 1 1 1 4 American 1 1 2 Breeze 1 1 Delta 1 1

Frontier 2 1 1 4 JetBlue 1 1

SkyWest 1 1 Southwest 1 1 2

Spirit 1 1 Sun Country 1 1

United 1 1 1 3 Totals 1 1 3 10 8 23

Over the last ten years, Great Falls has been successful in attracting United to operate seasonal Great

Falls-Chicago service beginning in June 2016. United operated the service on a seasonal basis during

the peak travel summer season from 2016 through 2019, but United did not operate the service in the

summer of 2020 due to the impact on demand from the COVID-19 pandemic.

Marketing and Promotion of Air Service

Great Falls International Airport’s marketing and promotion programs are aimed at increasing travel and promoting completion among the airlines serving Great Falls. The proposed Great Falls-Dallas/Ft.

Worth service will qualify for $132,000 in marketing and advertising incentives. These incentives

include newspaper, television, radio and billboard advertising. This amount can be spent at the

airline’s discretion at a rate of $66,000 per year over the first two years of the new route using any

combination of the available incentives. Exhibit 6 illustrates the expected spending per year.

Exhibit 6. Proposed spending timeline for the marketing and promotion of proposed Dallas/Ft. Worth service.

Amount Function Timeline/Year $30,000 Advertising and Saturation Campaign Three Months Prior to Launch/Year One $36,000 Maintenance Placement Campaign Nine Months after Launch/Year One $66,000 Maintenance Placement Campaign Year Two

Angela Padalecki 2019-06-12 14:06:00 -------------------------------------------- Do we want to describe who the Air Service Alliance is, either here or in another section? Looks like it's briefly described in the next bullet - should we mention that City lodging taxes flow to the organization for air service development purposes?


AIR SERVICE DEVELOPMENT NEEDS AND DEFICIENCIES

Capacity Trend

Unlike most U.S. airports, airline capacity in Great Falls had been trending down in the nine years prior

to the pandemic. Exhibit 7 illustrates capacity on all carriers at Great Falls fell 21.7% from 754 seats per day each way in 2011 to 590 seats per day each way in 2019. Capacity in 2020 fell another 26.0%

from the 590 seats per day each way in 2019 to just 437 seats per day each way, and most of the

decline in 2020 can be attributed to network carrier capacity declining. Network carrier capacity fell

27.9% from 2019 to 2020; Allegiant capacity fell 16.9%.

Exhibit 7. Great Falls network carrier and Allegiant published seats per day each way 2011 – 2020. (Airline Data Inc. data as of January 10, 2021)

Network Carriers Allegiant All Carriers

800

700

600

500

400

300

200

100

0

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

754 756 738 752

682

587 574 589 590 549

470 489 487

466

351

141 157 142 152

85 103 100 107 117 133

437

600 596 599 613

Seat

s pe

r Day

Eac

h W

ay

Michael Lum 2019-06-12 14:06:00 -------------------------------------------- 120 minutes

Angela Padalecki 2019-06-12 14:06:00 -------------------------------------------- I thought this was within 180 minutes?

Michael Lum 2019-06-12 14:06:00 -------------------------------------------- Added higher domestic fare

Angela Padalecki 2020-12-28 14:24:00 -------------------------------------------- Were Montrose fares also higher than GTF's in 2018?


Seats per Capita at Great Falls Versus Other Montana Airports

On a per capita basis, Great Falls is underserved relative to most other airports in Montana. Among

the largest airports in Montana, Bozeman, Missoula, Kalispell and Billings have more seats per capita

than Great Falls; only Helena and Butte had fewer seats per capita prior to the pandemic in 2019 and

during the pandemic in 2020. Exhibit 8 illustrates Great Falls seats per capita was 2.65 in 2019 and

declined 26.0% to 1.96 in 2020 as the COVID-19 pandemic caused airlines to reduce capacity. The

decline of 26% at Great Falls was greater than the declines at all airports except Butte, and nine

percentage points greater than the statewide average decline of 17.0%.

Exhibit 8. 2019 and 2020 Montana airports seats per capita (U.S. Census Bureau 2019 population estimates; Airline Data Inc. data as of January 10, 2021; excludes EAS airports)

2019 Seats per Capita 2020 Seats per Capita

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0 Bozeman

Missoula

Kalispell

Average

Billings

Great Falls

Helena

Butte

8.26

7.09

4.63 4.16 3.94 4.04

3.45 3.35 3.15

2.60 2.65

1.96 1.82

1.32 0.97 0.91

Sche

dule

d Se

ats

per

Cap

ita


Traffic and Fare Trends

Exhibit 9 illustrates as capacity at Great Falls trended down 21.7% from 2011 through 2019, domestic

traffic increased 11.1% to 475 PDEW, and the average domestic fare declined 10.0% to $196.

Capacity declined 28.7% from 2019 through the first three quarters in 2020 as domestic traffic declined

56.6% and the average domestic fare declined 10.0% to $177. International traffic declined from 14.3 PDEW in 2019 to 6.0 PDEW in the first three quarters in 2020.

Exhibit 9. Great Falls published seats per day each way 2011 – YTD 3Q 2020 and Great Falls domestic and international PDEW – 2011 – YTD 3Q 2020. (Airline Data Inc. and DOT DB1B data).

1,200

Seats per Day Each Way (All Carriers) International PDEW (All Carriers)

Domestic PDEW (All Carriers) Average Domestic One-Way Fare (All Carriers)

$250

1,000 $200

800

$150

600

400

$100

$50

200

0 2011

2012

2013

2014

2015

2016

2017

2018

2019

$0 YTD 3Q

2020

$200 $200 $198 $203 $204 $196 $196

754 756 738 752

587 574

13 14 15 15 15 16 15 14 14 6

206

420 428 438 456 466 475 472 472 481 493

590 589

682

$177

$207 $206

Seat

s an

d Pa

ssen

gers

per

Day

Eac

h W

ay

Ave

rage

One

-Way

Far

e


Domestic Fare and Yield Trends Relative to Other U.S. Airports

Great Falls’ average domestic fare has exceeded the U.S. average domestic fare for all airports in the

United States from 2011 through 2019 and for the first three quarters in 2020. Exhibit 10 illustrates

the average Great Falls domestic fare of $196 in 2019 exceeded the average U.S. domestic fare of $172 by $24 or 14.3%; for the first three quarters in 2020, the average Great Falls domestic fare of

$177 exceeded the average U.S. domestic fare of $144 by $33 or 22.4%. Exhibit 10 further illustrates

while Great Falls’ average domestic fare fell 10.0% from 2019 through the first three quarters in 2020,

the average U.S. domestic fare fell at a greater rate of 15.9%.

Exhibit 10. Great Falls average domestic one-way fare and U.S. airport average domestic fare 2011 – YTD

3Q 2020 (U.S. DOT data).

$250

All U.S. Airports Average Domestic One-Way Fare GTF Average Domestic One-Way Fare

$200

$150

$100

$50

$0 2011

2012

2013

2014

2015

2016

2017

2018

2019

YTD 3Q 2020

$196 $196

$144

$170 $172 $170 $172 $172 $178 $182 $182

$188 $177

$198 $200 $200 $204 $203 $207 $206

Ave

rage

Dom

estic

One

-Way

Far

e


$0.156

$0.151 $0.153 $0.152 $0.136 $0.146 $0.145 $0.145 $0.146 $0.147

$0.123

1,250 1,247 1,232 1,244 1,257 1,259 1,280 1,241 1,294 1,207

1,175 1,178 1,185 1,189 1,194 1,187 1,174 1,167 1,168 1,175

$0.158

$0.159 $0.160 $0.163 $0.162 $0.161 $0.162 $0.164 $0.165

Great Falls’ domestic yield has also exceeded the average U.S. domestic yield for Lower 48

communities by a wide margin in each of the last nine years and the first three quarters in 2020, as

illustrated in Exhibit 11. Although Great Falls’ domestic length of haul of 1,207 miles in 2019 was 3.3%

greater than the average U.S. length of haul of 1,168 miles, Great Falls’ domestic yield of $0.163 was 10.6% higher than the U.S. average domestic yield of $0.147 in 2019. Likewise, Great Falls’ domestic

length of haul of 1,294 miles in the first three quarters in 2020 was 10.1% greater than the average

U.S. length of haul of 1,175 miles, and Great Falls’ domestic yield of $0.136 was 11.1% higher than

the U.S. average domestic yield of $0.123 in the first three quarters in 2020.

Exhibit 11. Great Falls and average U.S. domestic yield and Great Falls and average U.S. airport length of haul: 2011 – YTD 3Q 2020 (U.S. DOT data).

$0.180

$0.160

$0.140

All U.S. Airports Average Domestic One-Way Yield GTF Average Domestic One-Way Yield All U.S. Airports Average Domestic Length of Haul GTF Average Domestic Length of Haul

3,000

2,500

$0.120 2,000

$0.100

$0.080

1,500

$0.060 1,000

$0.040

$0.020

500

$0.000

2011

2012

2013

2014

2015

2016

2017

2018

2019 0

YTD 3Q 2020

Ave

rage

Dom

estic

Yie

ld

Leng

th o

f Hau

l


Leakage to Other Airports in the Region

The primary catchment area of Great Falls International Airport is illustrated in the Exhibit 12 and

includes 56 zip codes extending from the Canadian border to the north, and about 50 miles to the

south of the airport.

Exhibit 12. Catchment area of Great Falls International Airport.

As shown in Exhibit 13 on the following page, 2019 leakage data indicates the true market size of the Great Falls catchment area was 639.5 PDEW, and Great Falls International Airport retains 76.5% of

the traffic generated in its catchment area. Bozeman Yellowstone International Airport captures 59.4

PDEW, or 9.3% of the traffic; Billings Logan International Airports captures 23.0 PDEW, or 3.6% of

the traffic; Missoula International Airport captures 22.8 PDEW, or 3.6% of the traffic; Kalispell Glacier

Park International Airport captures 22.5 PDEW or 3.5% of the traffic; Helena Regional Airport captures

16.7 PDEW, or 2.6% of the traffic, and Salt Lake City International Airport captured 5.9 PDEW or 2.6%

of the traffic.


Exhibit 13. Great Falls catchment area domestic and international passengers per day each way (PDEW), airport share and average one-way fare by airport. (2019 leakage data).

Airport Name

Airport Code

PDEW

Airport Share

One-Way Fare

Great Falls Int'l Airport GTF 489.1 76.5% $204 Bozeman Yellowstone Int'l Airport BZN 59.4 9.3% $213 Billings Logan Int'l Airport BIL 23.0 3.6% $212 Missoula International Airport MSO 22.8 3.6% $214 Glacier Park Int'l Airport FCA 22.5 3.5% $198 Helena Regional Airport HLN 16.7 2.6% $223 Salt Lake City Int'l Airport SLC 5.9 0.9% $194 All Airports 639.5 100.0% $206

STRATEGIC PLAN

Proposed New Route

Over the last ten years, both capacity and traffic at Great Falls has declined, and Great Falls’ average

domestic fare has exceeded the average U.S. domestic fare by a relatively wide margin. A primary component in the community’s plan to help address these deficiencies is to offer a minimum revenue

guarantee for service on American to Dallas/Ft. Worth. The proposed new service would benefit a

mix of business and leisure travelers by providing nonstop service to Dallas/Ft. Worth and connecting

service beyond Dallas/Ft. Worth.

Self-Sufficiency of the Proposed New Route

We believe the proposed Great Falls-Dallas/Ft. Worth route will become self-sufficient during the

revenue guarantee period and continue to operate beyond the revenue guarantee period.

Goals and Objectives

Great Falls has four goals and objectives for its Small Community Air Service Development Grant

proposal for service to Dallas/Ft. Worth.

• Nonstop service to American’s Dallas/Ft. Worth hub • Traffic growth in markets served via Dallas/Ft. Worth, particularly markets in the Southeast

and Latin America. • More competition and lower fares in the local Great Falls-Dallas/Ft. Worth market and the

connecting markets beyond Dallas/Ft. Worth. • Recapture catchment area traffic leaked to other airports in the region.

Michael Lum 2019-06-12 20:13:00 -------------------------------------------- We will probably want to spend more to promote the service in the first year than in the second year. See revised phrasing in the exhibit.

Angela Padalecki 2019-06-12 14:06:00 -------------------------------------------- This is inconsistent with what we discussed last week, which was up to $50K/yr for the first two years of service

Joseph R. Burtard 2019-06-12 22:44:00 -------------------------------------------- I will update the AIS to reflect this allocation timeline and make sure this is mentioned during the committee meeting.


$221 $211

9.9 9.4

8.9 8.3 8.4

7.9 8.0

4.2

10.7 11.6

$225 $235 $238 $240

$248 $252 $261

$274

Target Airline Support

The Airport has been engaged in discussions with American Airlines regarding nonstop Dallas/Ft. Worth service over several years, and American supports this proposal with a letter of support.

Great Falls-Dallas/Ft. Worth Traffic and Fare Trends

There is demand for nonstop Dallas/Ft. Worth service. Based on DOT data as illustrated in Exhibit

14, the Great Falls-Dallas/Ft. Worth market generated 8.0 PDEW at an average fare of $238 each

way in prior to the COVID-19 pandemic in 2019. Based on year-end second quarter 2019 leakage

study data, the true market size is 14.5 PDEW at an average fare of $231 – 44.8% of the traffic leaks

to other airports. Nonstop service would naturally stimulate demand, retain some traffic currently

leaked to other airports, and likely put downward pressure on the local Great Falls-Dallas/Ft. Worth

fare. According to the Great Falls Visitors and Convention Bureau, the Dallas/Ft. Worth Metroplex is

a large source of tourists visiting the Great Falls area.

Malmstom Air Force Base, Great Falls’ largest employer, estimates it generated 160 trips to Barksdale Air Force Base in Shreveport in 2020. These trips often require a full-day of travel with two connections

at a high average fare of $417 each way often resulting in passengers driving from Dallas to

Shreveport. Nonstop Dallas/Ft. Worth service would significantly improve the travel time.

Exhibit 14. 2011 – YTD 3Q 2020 Great Falls-Dallas/Ft. Worth PDEW and average one-way fare (DOT DB1A data).

GTF-DFW/DAL PDEW

20

GTF-DFW/DAL One-Way Fare

$300

$250

15

$200

10 $150

$100

5

$50

0 2011

2012

2013

2014

2015

2016

2017

2018

2019

$0 YTD 3Q

2020

Pass

enge

rs p

er D

ay E

ach

Way

Ave

rage

One

-Way

Far

e


Connecting Traffic Opportunities on American at Dallas/Ft. Worth

American could carry traffic not only in the local Great Falls - Dallas/Ft. Worth market, but American

could also carry traffic connecting beyond its Dallas/Ft. Worth hub – the largest hub in American’s

network. As shown in Exhibit 15, American could carry traffic to least 107 non-circuitous airports

beyond Dallas/Ft. Worth. In addition to the local market size of 8.0 PDEW in full-year 2019, the markets American could logically carry beyond Dallas/Ft. Worth generated 69.4 PDEW in full-year

2019. Traffic in most Great Falls markets typically peaks in third quarter; the local Great Falls -

Dallas/Ft. Worth market size was 9.8 PDEW in third quarter 2019 and the markets beyond Dallas/Ft.

Worth generated 80.8 PDEW in third quarter 2019.

Exhibit 15. Connecting markets at American’s Dallas/Ft. Worth hub.


Grant Amendments/Alternate Strategies

If a grant is awarded for Great Falls-Dallas/Ft. Worth service, and the community is not successful in

its effort to recruit American to Dallas/Ft. Worth, Great Falls International Airport would ask the

Department to consider reallocation of the award funds for service to an alternate destination.

Potential routes would include service to Los Angeles, Phoenix or Chicago on American, Los Angeles

or San Francisco on United or Los Angeles, Portland, San Francisco, San Jose or Oakland on Alaska.

PROJECT IMPLEMENTATION, MONITORING AND FUNDING

Public/Private Partnerships

The Great Falls International Airport Authority has partnered with the Great Falls Area Chamber of

Commerce, the Great Falls Convention and Visitors Bureau and the Great Falls Tourism Business

Improvement District to promote and advance the community’s air service objectives and this project.

Project Funding

Great Falls International Airport is requesting Small Community Air Service funding of $800,000 for its

proposed minimum revenue guarantee and marketing support for service between Great Falls and

Dallas/Ft. Worth on American. Together, 32 local business and individuals lead by the Great Falls

Area Chamber of Commerce, the Great Falls Convention and Visitors Bureau, the Great Falls Tourism Business Improvement District have pledged funds totaling $300,000 in cash for minimum revenue

guarantee funding to supplement the proposed federal funding. The Great Falls Convention and

Visitors Bureau, the Great Falls Tourism Business Improvement District will also contribute a total of

$32,000 to be applied to marketing and promotion. In addition to the marketing and promotion

provided by the community-based organizations, and because American will be a new-entrant carrier at Great Falls, the Airport will provide marketing and promotion support of $100,000 over the first two

years of service. The airport will also wave landing fees and per-turn fees for a period of two years

after service begins. The landing fee in-kind contribution is estimated at $82,070, and the per-turn in-

kind contribution is estimated at $255,500 for a total in-kind contribution of $386,482. The sources and

uses of the project funding are illustrated in Exhibit 16.


Exhibit 16. Sources and uses of project funding.

Cash Cash In-Kind Waiver In-Kind Waiver Total Funding Source Revenue Guarantee Marketing Landing Fee Terminal Rent Project Value

Department of Transportation $800,000 $800,000 Community-Based Funding $300,000 $32,000 $332,000 Great Falls International Airport $100,000 $82,070 $255,500 $437,570

Total $1,100,000 $132,000 $82,070 $255,500 $1,569,570

Implementation Timeline

The proposed implementation timeline for the project is illustrated in Exhibit 17. Great Falls

International Airport will advise American immediately after learning the Department will award a

SCASDP grant for the proposed Great Falls-Dallas/Ft. Worth service. Assuming grant awards are not announced by June 2021, and even if the grant agreement with DOT is executed relatively quickly,

American will not likely be willing to launch the service until the summer of 2022. American will likely

want to begin the proposed service to capture peak demand beginning in June, but the timing of a

DOT award announcement in June 2021 would not give American an opportunity to publish its

schedule, take advance bookings and begin service in the summer of 2021. We anticipate meeting

with American in the second half of 2021 to discuss service and negotiating an MRG for service

beginning in the summer of 2022. An agreement would likely be finalized by the end of 2021, American

would announce the service and publish the schedule in the first quarter of 2022, and the Airport would

begin marketing and promoting the route in the spring of 2022.

Exhibit 17. Proposed project timeline.

Activity/Project Milestone Potential Dates SCASD Grant Award Announcement June 2021 Execute Grant Agreement with DOT June 2021

Negotiate Minimum Revenue Guarantee with Airline Winter 2021/2022 Announce Service First Quarter 2022 Publish Schedule First Quarter 2022

Market Route (Pre-Launch) April-Mid-June 2022 Monitor Advance Bookings April-Mid-June 2022

Adjust Marketing Plan Based on Advance Bookings April-Mid-June 2022 Begin Service Mid-June 2022

Market Route (Post-Launch) Mid-June 2022 and Beyond Operate Service with MRG Mid-June 2022 - August 2024 Monitor Route Performance Mid-June 2022 - August 2024 and Beyond

Submit Grant Status Reports to DOT Quarterly 3Q 2021 - 3Q 2024


PROJECT MONITORING AND FINANCIAL CONTROL

Success Metrics

Four goals have been established to measure the success of the proposed project and are illustrated

in Exhibit 16. The goals of the project are aimed at increased traffic and lower fares. These goals are

objective and can be measured by comparing year-over-year market size changes and changes in

fares on a quarterly basis as DOT traffic and revenue data is published. Another measure of success will be the load factor performance on the flights operated in the proposed market. High load factors

(defined as load factors in the upper 70s or greater) will constitute traffic metric success. The amount

of subsidy required by American will also provide an indication of the route’s financial success.

Exhibit 16. Project goals and success metrics.

Project Goals Success Metric

• Nonstop service to American’s Dallas/Ft. Worth hub.

• Inauguration of nonstop service to Dallas/Ft. Worth.

• Traffic growth in markets served via Dallas/Ft. Worth, particularly markets in the Southeast and Latin America.

• Great Falls-Dallas/Ft. Worth markets size growth and market size growth in markets that could connect beyond Dallas/Ft. Worth.

• More competition and lower fares in the local Great Falls-Dallas/Ft. Worth market and the connecting markets beyond Dallas/Ft. Worth.

• Quarterly year-over-year declines in fares for the local Great Falls-Dallas/Ft. Worth market and the largest markets beyond Dallas/Ft. Worth.

• Recapture catchment area traffic leaked to other airports in the region.

• Increased retention (and less leakage) of the traffic generated in Great Falls’ catchment area.

Previous SCASDP Funding

The Great Falls International Airport received SCASD funding in the amount of $385,000 (DOT-OST- 2015-0126). The funding was used for a minimum revenue guarantee for summer seasonal service

on United Airlines beginning in June 2016, and United operated the service each summer from 2016

through 2019. United had planned to reinstate seasonal service without a minimum revenue

guarantee in Summer 2020, but the impact on demand resulting from the COVID-19 pandemic

prevented United from operating the service in 2020. We expect United will reinstate the service once

demand recovers.

Legal Sponsor

The Great Falls International Airport Authority is the legal sponsor responsible for administering the

program, and the Great Falls International Airport Authority Board of Directors is the governing body.


Great Falls International Airport Authority 2800 Terminal Drive Great Falls, MT 59404 John Faulkner Executive Director 406-788-2155 / [email protected]

Financial Controls

As the sponsor, the Great Falls International Airport Authority will be the responsible party for all fiscal

matters and the Department’s reporting requirements. The Great Falls International Airport Authority

is established as a public governing body. As a public entity, the Department can be assured that

proper financial controls are in place to guarantee the Department’s Grant will be used in accordance with any agreement. The Great Falls International Airport Authority understands that the Grant is a

reimbursable grant, meaning the Commission is responsible for program expenditures and will submit

invoices to the Department for reimbursement, based on a percentage of the total grant request.

mailto:[email protected]


APPENDIX A: REQUIRED SUMMARY INFORMATION

APPLICATION UNDER

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

DOCKET DOT-OST-2020-0231

SUMMARY INFORMATION

A. PROVIDE THE LEGAL SPONSOR AND ITS DUN AND BRADSTREET (D&B) DATA

UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER, INCLUDING +4, EMPLOYEE IDENTIFICATION NUMBER (EIN) OR TAX ID.

Legal Sponsor Name: Great Falls International Airport Authority

Name of Signatory Party for Legal Sponsor: John Faulkner; Executive Director

DUNS Number: 15-6130148

EIN/Tax ID:

B. LIST THE NAME OF THE COMMUNITY OR CONSORTIUM OF COMMUNITIES APPLYING:

Great Falls, Montana

C. PROVIDE THE FULL AIRPORT NAME AND 3-LETTER IATA AIRPORT CODE FOR THE

APPLICANT(S) AIRPORT(S) (ONLY PROVIDE CODES FOR THE AIRPORT(S) THAT ARE

ACTUALLY SEEKING SERVICE).

Great Falls International Airport: GTF

THE AIRPORT SEEKING SERVICE IS NOT LARGER THAN A SMALL HUB AIRPORT:

UNDER FAA HUB CLASSIFICATIONS EFFECTIVE ON THE DATE OF SERVICE OF THE

ATTACHED ORDER

AS OF CALENDAR YEAR 1997


DOES THE AIRPORT SEEKING SERVICE HOLD AN AIRPORT OPERATING CERTIFICATE

ISSUED BY THE FEDERAL AVIATION ADMINISTRATION UNDER 14 CFR PART 139? (IF “NO”,

PLEASE EXPLAIN WHETHER THE AIRPORT INTENDS TO APPLY FOR A CERTIFICATE OR

WHETHER AN APPLICATION UNDER PART 139 IS PENDING.)

Yes No (explain)

D. SHOW THE DRIVING DISTANCE FROM THE APPLICANT COMMUNITY TO THE NEAREST:

1. Large hub airport: Salt Lake City International Airport (SLC); 569 miles

2. Medium hub airport: Sacramento International Airport (SMF); 1,111 miles

3. Small hub airport: Bozeman Yellowstone Airport (BZN); 173 miles

4. Airport with jet service: Great Falls International Airport has jet service; Helena Regional Airport

(HLN) is the closest alternate airport with jet service (86 miles)

E. LIST THE 2-DIGIT CONGRESSIONAL DISTRICT CODE APPLICABLE TO THE SPONSORING

ORGANIZATION, AND IF A CONSORTIUM, TO EACH PARTICIPATING COMMUNITY.

1. At-Large (Montana has only one congressional district)

F. APPLICANT INFORMATION: (CHECK ALL THAT APPLY)

Not a Consortium Interstate Consortium Intrastate Consortium Community currently receives subsidized Essential Air Service, receives assistance under the Alternate Essential Air Service Pilot Program, or is a participant in, and has received a grant under, the Community Flexibility Pilot Program Community (or Consortium member) previously received a Small Community Air Service Development Program Grant

If previous recipient: Provide year of grant(s): 2015 ; and, the text of the grant agreement section(s)

setting forth the scope of the grant project:


G. PUBLIC/PRIVATE PARTNERSHIPS: (LIST ORGANIZATION NAMES) PUBLIC PRIVATE Great Falls International Airport Great Falls Chamber of Commerce

H. PROJECT PROPOSAL:

1a. GRANT GOALS: (CHECK ALL THAT APPLY)

Launch New Carrier Secure Additional Service Upgrade Aircraft

First Service New Route Service Restoration

Regional Service Surface Transportation Professional Services

Other (explain)

1b. GRANT GOALS: (SYNOPSIS)

Concisely describe the scope of the proposed grant project.

Great Falls International Airport and the Great Falls Chamber of Commerce are seeking nonstop service to Dallas/Ft. Worth International Airport on American Airlines. Dallas/Ft. Worth service would

provide service not only in the local market, but would also serve as a connecting hub to other

destinations on the West Coast, Hawaii, Asia and Australia.

2. FINANCIAL TOOLS TO BE USED: (CHECK ALL THAT APPLY)

Marketing (including Advertising): promotion of the air service to the public Start-up Cost Offset: offsetting expenses to assist an air service provider in setting up a new station and starting new service (for example, ticket counter reconfiguration) Revenue Guarantee: an agreement with an air service provider setting forth a minimum guaranteed profit margin, a portion of which is eligible for reimbursement by the community Recruitment of U.S. Air Carrier: air service development activities to recruit new air service, including expenses for airport marketers to meet with air service providers to make the case for new air service

Fee Waivers: waiver of airport fees, such as landing fees, to encourage new air service; counted as in-kind contributions only

Ground Handling Fee: reimbursement of expenses for passenger, cabin, and ramp (below wing) services provided by third party ground handlers


Travel Bank: travel pledges, or deposited monetary funds, from participating parties for the purchase of air travel on a U.S. air carrier, with defined procedures for the subsequent use of the pledges or the deposited funds; counted as in-kind contributions only

Other (explain below)

I. EXISTING LANDING AIDS AT LOCAL AIRPORT:

Full ILS Outer/Middle Marker Published Instrument Approach

Localizer Other (specify)

J. PROJECT COST: DO NOT ENTER TEXT IN SHADED AREA

REMINDER: LOCAL CASH CONTRIBUTIONS MAY NOT BE PROVIDED BY AN AIR CARRIER (SEE “TYPES OF CONTRIBUTIONS FOR REFERENCE).

Line Description Sub Total Total Amount

1 Federal amount requested $800,000

2 State cash financial contribution $0

Local cash financial contribution

3a Airport cash funds $100,000

3b Non-airport cash funds $332,000

3 Total local cash funds (3a + 3b) $432,000

4 TOTAL CASH FUNDING (1+2+3) $1,232,000

In-Kind contribution

5a Airport In-Kind contribution** $437,570

5b Other In-Kind contribution** $0

5 TOTAL IN-KIND CONTRIBUTION (5a + 5b)

$437,570

6 TOTAL PROJECT COST (4+5) $1,569,570

Angela Padalecki 2019-06-12 14:06:00 -------------------------------------------- Where are we mentioning and including the letter of support from Skywest?

Angela Padalecki 2019-06-13 16:47:00 -------------------------------------------- Should we mention Skywest if we get a letter of support from them?

Angela Padalecki 2021-01-07 14:52:00 -------------------------------------------- Mention that Dallas/Ft. Worth is the top market for tourists traveling to the Great Falls Area according to the Great Falls vistor and convention bureau?


K. IN-KIND CONTRIBUTIONS

For funds in lines 5a (Airport In-Kind contribution) and 5b (Other In-Kind contribution), please

describe the source(s) of fund(s) and the value ($) of each.

Great Falls International Airport will waive landing fees and the cost per turn fees for a period of

two years for the proposed service. The total landing fee incentive is estimated to be $82,070

based on Great Falls’ non-signatory landing fee of $1.50, the maximum landing weight of 74,950

pounds for the EMB-175 operated by American and an assumption of one landing per day for two

years. In addition, the total cost per turn incentive is estimated to be $255,500 based on the non-

signatory cost per turn of $350 for one turn per day for two years.

L. IS THIS APPLICATION SUBJECT TO REVIEW BY AN AFFECTED STATE UNDER EXECUTIVE

ORDER 12372 PROCESS? a. This application was made available to the State under the Executive Order 12372 Process for review on (date) .

b. Program is subject to E.O. 12372, but has not been selected by the State for review.

c. Program is not covered by E.O. 12372.

M. IS THE LEAD APPLICANT OR ANY CO-APPLICANTS DELINQUENT ON ANY FEDERAL

DEBT? (IF “YES”, PROVIDE EXPLANATION)

No Yes (explain)


APPENDIX B: LETTERS OF SUPPORT



Documents

GTF Great Falls International Airport