PHASE
TWO
An analysis of the impacts of commercial airline service on the community is identified in this phase as well as what will be needed to introduce commercial airline service at Cut Bank International Airport. In order to develop commercial airline service at Cut Bank International Airport, there are several things the community must have in place before pursuing the service. They include, but are not limited to: 1.
Meeting FAA regulatory requirements TASK FIVE: IMPACT ANALYSIS There are a myriad of benefits that can be anticipated if Cut Bank International Airport is successful is attracting a commercial airline. There are also several costs to the community that are associated with the introduction of service. These benefits and costs are discussed and quantified here, as possible. Benefits of Commercial Airline Service Economic Impact of Commercial Airline Service Airports benefit communities other than just serving as a mode of transportation. Airports are an increasingly important transportation link to the global economy. Airports are key economic contributors to the growth and economic prosperity for the communities they serve. The economic contribution and impact of airports is even more substantial if the airport provides commercial air service. Many people beyond the immediate environs of an airport derive economic benefit from the airport and its day-to-day operation. These groups include employees who use the airport, area retail establishments, and hotels, restaurants, and tourist-related attractions whose patrons arrive via the airports. Almost every employment category in an airport’s market area, even those that never directly use the airport or its services, receives some economic benefit from the airport. An economic impact analysis is focused on identifying jobs, annual payroll, and total annual economic benefits that are attributable to an airport. There is economic benefit associated with every airport, whether it has commercial airline service or not. Some of the benefits are associated with aviation-related employers who actually do business on the airport. Other benefits are derived from spending by visitors who arrive in the area via general aviation or commercial service aircraft. As money from airport-related employment, payroll and visitor activity is initially released into the area’s economy, successive waves of employment, payroll, and economic activity occur. This re-circulating of initial economic benefits is known as the “multiplier” effect. Total benefits derived from the direct provision of aviation services, visitor spending, and the multiplier effect equal the airport’s total annual economic benefit. Airport Tenants A commercial service airport can support many aviation-related businesses. The airlines that serve the airport have employees who handle ticketing, baggage, maintenance, and other administrative functions. In addition, a commercial service airport can be home to air cargo operators, freight forwarders, travel agents, government, security personnel, rental car agencies, aircraft fuel handlers and maintenance providers, ground transportation service providers, auto parking concessionaires, security and maintenance personnel, food and beverage providers, airport administration, and others. These businesses are responsible for the provision of many aviation-related services that create jobs, payroll, and annual economic activity. Airport Visitors Each year many visitors arrive to an area. These visitors come for vacation and business related trips, and they arrive at the airport via both scheduled commercial airlines and in privately-owned general aviation aircraft. Once in the area, these visitors spend money for lodging, food, entertainment, transportation, shopping, and other items. As visitor related spending is released into the area economy, it supports many jobs in the service sector of the economy and creates additional payroll and economic activity benefits.
Commercial airline service at Cut Bank International Airport would not only be an important part of the area’s transportation infrastructure, but also vital to the local economy and could play an important role in supporting the area’s quality of life. Many non-aviation businesses depend on the commercial service at an airport because they have employees who travel, they have customers or suppliers who reach them via the airport, or they use air cargo or express shipping services on a regular basis. Potential Economic Benefits Potential economic benefits that could be anticipated from commercial airline service at Cut Bank International Airport can be estimated based on the results of previous Economic Impact Studies conducted by Wilbur Smith Associates (WSA) at comparable commercial service airports. Many factors impact/determine the economic benefit of an airport, and no two airports are identical. However, by comparing airports of a similar role, with similar facilities, and comparable activity levels, it is possible to estimate the types and scale of benefits that could be anticipated from new commercial airline service at the airport. From WSA’s database of economic impact data for over 500 airports, gathered through studies completed within the last three years, airports were selected that have fewer than 20,000 commercial service enplanements. The airports meeting this criterion are presented in Table 22. This presents airport-specific facility data including total based aircraft and length of the primary runway as well as summary results of each airport’s economic impact study. The economic impacts of those airports included in this analysis vary significantly even though they all have similar enplanement levels. Table
22 Based on the data presented in Table 22, airports with fewer than 20,000 enplanements for which WSA has conducted economic impact studies are responsible for creating the following average commercial service economic benefits in their market areas: 1.
Total Employment - Approximately 100 persons In addition, these comparable airports experience an average of approximately 6,400 enplanements. Although the ultimate economic impact of commercial airline service at Cut Bank international Airport will be dependent on a number factors including those examined in this analysis, as well as other factors such as the number and types of potential tenants and on-airport business locating on the airport, the economic impact data and average impacts identified for comparable airports provides a general understanding of the economic benefits that could be anticipated from the new commercial airline service. Business Reliance on Aviation Many businesses throughout the Cut Bank market area depend on both scheduled commercial service and general aviation aircraft and airports to support their daily business activities. These businesses are benefactors of “value added” benefits that result from the increased efficiency they gain through the use of air travel. Commercial air travel makes possible the quick movement of millions of people and billions of dollars worth of goods to markets around the world. Many employers in the Cut Bank market area benefit from the airports that serve northwestern Montana. Without the availability of the airports, employment levels for many businesses could be adversely impacted. As discussed in Phase One, 185 businesses in the market area were surveyed to assess there dependence on aviation and to determine their air travel characteristics. The survey sought information on topics such as reliance on scheduled commercial air service, usage of commercial service airports, importance of various factors on travel decisions, and driving versus flying decisions. Key information gathered from the business survey related to the importance of the availability of scheduled commercial service can be summarized as follows: 1.
76 percent of the respondents indicated they use scheduled commercial
airlines service as part of their business. These survey results underscore the vital relationship between business, economic development, and air service. This quantification of the importance of airline service provides support to Cut Bank’s pursuance of airline service. Funding Benefits of Commercial Service Additional economic benefits exist for those airports that serve scheduled commercial passengers. These additional benefits are quantified in terms of added revenue sources that are available to commercial service airports. If an airport can obtain additional revenue from external sources, this reduces the local level of contribution required for airport projects. Activity levels generated by commercial service airports generally cover the costs of operating and maintaining the airport. Revenue from airline landing fees can be anticipated to help offset expenses. Airports that do not have commercial service often have difficulty generating revenues to meet expenses, let alone generating revenues which are sufficient to fund the local share of needed capital improvement projects. Entitlement funds and passenger facility charges are examples of additional revenue sources available to airports with commercial passenger service. Entitlement funds are distributed through the FAA’s Airport Improvement Program (AIP). While Cut Bank International Airport currently receives General Aviation Entitlement Funds ($150,000 per year), there is additional money annually allocated to Primary commercial service airports. To be considered a “Primary” airport, an airport must enplane (board) at least 10,000 passengers annually. The funding source for the entitlement program is the Aviation Trust Fund. This trust fund derives revenues from the tax levied on all domestic airline tickets. Under the AIP program, each Primary airport is appropriated at least $1 million per year. The actual amount of entitlement funding for an eligible airport is currently determined according to the following formula: 1.
$15.60 for each of the first 50,0000 enplanements As shown, the existing entitlement funding ratios return funds at a higher rate to airports that have less than 100,000 enplanements annually. The reason for this is that as the level of airline service increases and passenger enplanements grow, airports theoretically become more financially self sufficient. Another important funding source available to commercial service airports is the Passenger Facility Charge (PFC). With FAA approval, airports may charge enplaning passengers a $1, $2, $3, or $4.50 PFC to use on eligible projects as noted in their PFC application. When a commercial airport chooses to implement a PFC, this charge is applied to all passengers that use the airport. The PFC applies to both originating and connecting passengers. The greater the number of passengers the higher the PFC revenue and airport can generate. PFCs may be collected for up to three years before being used, and this collection period can be extended an additional two years if the FAA approves a waiver. PFC revenues may be applied to paying debt service on bonds used to fund PFC eligible projects. PFC funds can also be used to reimburse the airport for earlier expenditures on PFC eligible projects that were not funded by the federal government. Improvement projects such as airfield, public use roadways, public terminal building planning, design, finance, and construction costs are eligible for PFC funding. One important exception to PFC collection rules is that PFCs cannot be collected for an enplanement on any route subsidized by the U.S. DOT’s Essential Air Service (EAS) program. If
Cut Bank International Airport is able to obtain scheduled commercial
airlines service, it would be in the community’s best interest for
as many passengers associated with its market area to use the local airport
as possible. If passenger leakage can be kept to a minimum, entitlement
and PFC revenue as well as economic benefit can be maximized. Table 23
illustrates the difference in the level of benefits and revenues based
on the number of the enplanements the airport can capture. The PFC funds
cannot be collected if the service is subsidized through the EAS program.
Although no airport is able to capture its entire unconstrained demand
level, the number of enplanements associated with the Cut Bank International
Airport market area would generate over $123 million in economic activity
and airport revenues. If the airport captures the estimated potential
level of enplanements, the community and airport would still be able to
gain $13.8 million in financial benefits. If Cut Bank captures the level
of enplanements associated with other EAS airports in the state, the airport
would gain $3.2 million in economic activity and would not be eligible
for any additional FAA revenues.
Source: Wilbur Smith Associates While the financial impact would increase in the local market area, because these passengers are currently using another airport, the economic impact and revenues would likely decrease at Great Falls International, Glacier Park International, and other regional airports. The financial and economic impact would be transferred from these airports currently capturing the travelers back to Cut Bank International Airport. Cost Savings to Community Larger airports naturally attract drivers from distant locations due to better service choices, larger aircraft equipment types, and potential non-stop service. The surveys of local residents and businesses revealed that airports at distances as far as four hours away attract Cut Bank International Airport market area passengers. Often, travelers do not consider the entire cost of driving to an alternative airport to begin the air portion of their trip. There are costs associated with a passenger’s time, gas, and parking at alternate airports. In order to reflect the true cost of driving to an airport to begin the air portion of a trip, several components can be analyzed. These components included the following: 1.
Mileage Cost - The average cost of driving an automobile
the one-way distance to a nearby airport. This cost was determined by
using the maximum tax deduction per mile allowed by the Internal Revenue
Service for 2004 ($0.41). Table
24
Source: Wilbur Smith Associates Additionally, according to survey results, local businesses noted that they would be willing to pay an additional $91 to begin their flights at Cut Bank International Airport instead of driving to an alternate airport. According to household survey responses, on average, they would be willing to spend an additional $63 to be able to fly out of Cut Bank than have to drive to an alternate airport to begin personal or leisure relate-d airline trips. Benefits to the Airport The introduction of commercial airline service at Cut Bank International Airport may provide additional revenues for the airport as well as the community. The airport may have an opportunity to sell fuel to the carrier as well as collect commercial service landing fees to support the financial needs of the airport in the future. These revenues will likely be needed to help offset the costs of complying to the FAA’s Part 139 requirements discussed below. Costs of Commercial Airline Service Airport Facility Upgrades There appears to be appropriate airside facilities in place to support commercial airline service at Cut Bank International Airport. Table 25 presents the runway length, available fuel data, and navigational aids available at the EAS airports in Montana as well as the other general aviation airports located in the Cut Bank International Airport market area. As shown, the runway length at Cut Bank exceeds several other airports that currently have commercial service including Glasgow, Havre, and Wolf Point. Cut Bank International offers 100LL and Jet A fuel, similar to the other Montana airports. In terms of navigational aids, Cut Bank International offers VOR and GPS non-precision approaches on Runway 31. Only West Yellowstone offers a precision ILS approach. Although
Cut Bank International appears to meet several of the facility requirements
for commercial airline service, the airport will need to meet several
requirements in terms of terminal waiting area, airline counter space,
electrical power, reconfiguration of the terminal to provide security
screening, and Part 139 facility requirements discussed in a subsequent
section. Federal Airport Security In November 2001, shortly after the terrorist attacks of September 11, 2001, President Bush and Congress signed a bill to overhaul the U.S. aviation security system to respond to what was previously the unthinkable. The Transportation Security Act makes airport security a direct federal responsibility, overseen by the Transportation Security Administration (TSA). As enacted, the law also requires explosive detection systems to be deployed at U.S. airports as soon as possible for use on all checked baggage. Other important features of the bill include deployment of federal air marshals; and improved airport perimeter access security. The creation of TSA was followed by creation of the Department of Homeland Security (DHS). The aviation security bill also gives airports some direct reimbursement for security authorizations and more flexibility to spend Airport Improvement Program (AIP) and PFCs on security Currently the seven EAS communities in Montana (Havre, Lewistown, Glasgow, Wolf Point, Glendive, Sidney and Miles City) do not have security screening located at their airports. Big Sky Airlines flies non-secure from these communities. Once the aircraft arrives from one of these communities to Billings International Airport, a bus meets the aircraft and passengers (and their luggage) are transported to the front of the terminal building. If passengers have connecting flights, they must then check-in at the counter in Billings and proceed through passenger screening. TSA is currently looking into the costs of providing screening at each of the EAS communities in Montana. According to the Montana Federal Security Director (FSD), Tom Russell, all EAS airports will eventually have local screening capabilities. However, the timing of outbound screening requirements at these airports is unknown. Cut Bank should work closely with TSA to ensure the appropriate passenger and baggage screening measures, including screeners and equipment, are in place before commercial service is initiated at the airport. The terminal at Cut Bank International Airport may also need to be reconfigured to support TSA. TSA is responsible for paying for the security equipment and personnel at the airport. These personnel would be included in the economic benefit of additional employment at the airport if/when TSA decides to do screening. There may be minimal local costs that are associated with providing security screening at Cut Bank International Airport, including some maintenance and passenger education. Federal
Operational Requirements The Cut Bank International Airport manager may need assistance, or at least one or two more full-time employees, to keep up with the certification requirements. Training must be done regularly, as well as daily maintenance and self-inspections. Additionally, a large amount of documentation is required. The certification and accompanying documentation will help the airport in the area of liability. There are many fire protection requirements involved in the airport's certification that may be costly for the community to meet. The Cut Bank Volunteer Fire Department would have to meet the FAA's requirement for response time, which is three minutes from firehouse to the midpoint of the runway. In addition, fire and rescue services must be provided 15 minutes before and 15 minutes after each commercial aircraft operation. If the department cannot meet this response time, it may be necessary to construct a firehouse on airport property to meet the requirement. The FAA will help pay for an additional fire truck, equipment, and buildings. A specially-equipped truck will also be needed by the department which needs a three-quarter ton to one-ton truck built to carry 500 pounds of dry chemicals, 100 gallons of water and foam for fighting aviation fires. The FAA will pay 95 percent of the cost of the truck, which is estimated at $80,000. In addition, the department will need protective proximity suits for firefighters and annual specialized training, including a live-fire drill. In developing the rule change, the FAA was required to estimate the costs of meeting the new requirements for Class III airports. They created three categories for estimating costs for both one-time capital expenditures and on annual recurring basis. These categories include the costs associated with 1) preparing the Airport Certification Manual revisions (Part 139, Sections B-C); 2) airport operational changes (Non-ARFF) (Part 139, Sections D); and 3) changes for Aircraft Rescue and Fire Fighting (ARFF) and the Airport Emergency Plan. Table 26 presents the categories and dollar estimates based on the FAA’s notations for the Class III airports in Montana. Table
26
Source: FAA Report to Congress, December 2003 Similar to other Montana EAS communities, it is estimated that there are at least $69,200 in one-time costs that Cut Bank must pay to meet FAA Part 139 requirements. In addition, it is estimated that the community will need to pay $114,200 annually in recurring costs. At the seven EAS communities in Montana, the per passenger costs of implementing Part 139 standards is estimated to range fro $32 per passenger in Sidney to $105 per passenger in Lewistown. These costs can possibly be passed on to the airlines in terms of landing fees or rates and changes, which in turn may pass on the costs to the passengers through higher airfares. Local Marketing Costs It is difficult to estimate a minimum level of funding needed to market new airline service in Cut Bank. The amount of funds spent at other similarly-sized communities range from $0 to over $100,000 annually. If marketing funds from the local communities (Cut Bank, Shelby, Browning, etc.) are not available or insufficient, Cut Bank International Airport should work closely with the state and as well as local businesses (including Glacier Park resorts and tour operators) to fund a marketing and advertising program. This will be key to educating visitors and residents on the new service available and the success of its initiation and continued operation.
As discussed in Phase One, demand for commercial airline travel is influenced by many factors that vary by market. The air service needs of communities are also influenced by outside market forces and the ability of the local airport to capture its associated demand. This study has quantified the level of demand associated with Cut Bank International Airport, referred to as unconstrained demand. All markets experience some level of passenger leakage wherein passengers associated with a local market drive to a more distant commercial service airport to initiate their commercial air travel. In the deregulated airline operating environment, it is a reality that airports compete with each other for the same passengers to support their air carrier service. The level of passengers that can be captured at Cut Bank International will be dependent on both favorable outside market forces and local influences that can be matched to provide service that is acceptable for the passengers. With reliable, scheduled commercial airline service, it was estimated that Cut Bank International can capture approximately 16,375 enplanements annually. This represents nearly 10 percent of the market’s unconstrained demand. This level of potential demand translates into approximately 45 passengers per day. Based on demand estimates, Cut Bank appears to have the ability to attract commercial airline service. However, due to the airline economics of operating aircraft to small communities, the current state of the airline industry, and the limited number of hub airports within proximity to Cut Bank, the viable options for the service are limited. After discussions with various carriers including Big Sky, Great Lakes, and SkyWest, it will be difficult for Cut Bank to obtain scheduled commercial airline service without some type of subsidy or revenue guarantee. This is not only the case for Cut Bank but for any airport that is currently seeking new airline service. In evaluating all the options presented in Phase One, it appears that the best fit for commercial airline service is nonstop service to Billings on Big Sky Airlines. Billings is the top destination for market area travelers and provides connecting capabilities to several other carriers, including Big Sky codeshare partners Alaska Airlines, Horizon Airlines, Northwest Airlines, and America West Airlines to destinations throughout the U.S. In addition, the equipment type that is currently flown by Big Sky, 19-seat Beechcraft 1900, is an appropriate fit to the size of Cut Bank market and could support the potential annual enplanement estimate of over 16,000 with three flights per day. At a minimum, the community should pursue three flights in the summer months to support the increased tourism demand. There appears to be enough demand for air service in the Cut Bank International market area to support nonstop service to Billings. Airline Costs to Serve Airport Table 27 presents the cost for Big Sky Airlines to operate the Beech 1900 aircraft between Cut Bank and Billings. According to Craig Denney, Executive Vice President at Big Sky Airlines, it costs Big Sky approximately $1,100 per block hour (flight costs) to fly the Beech 1900 aircraft. The flight between Cut Bank and Billings would be approximately 1.33 hours and it would cost Big Sky about $1,500 to operate this flight (one-way). Based on this estimate, it costs $79 per seat (19 seats per flight) on the aircraft on a one-way flight. If the Cut Bank market area is successful in reaching its annual potential demand level of 16,375, and flights could average 78% load factors (potential demand of 16.375/total number of seats offered of 20,800), the cost of operating the flight would be $100 per passenger (one-way). Even based on a 78% load factor, the carrier would still need to charge $200 for the round-trip flight between Cut Bank and Billings just to break even. If the flight is just two-thirds full (68% load factor or 13 seats), the cost per passenger rises to $115 one-way or $230 for a round trip flight. Big Sky’s system-wide load factor in 2004 was 36.7%. Based on this load factor (or seven passengers per flight), the cost per passenger rises $214 one-way and $428 round trip. Table
27
Source: Big Sky Airlines
At $214 cost per passenger for a one-way flight between Cut Bank and Billings based on the carrier’s current load factor, it is easy to see that it is a large risk for Big Sky to enter a new market without some sort of subsidy or revenue guarantee arrangement. The carrier will have to charge Cut Bank area travelers’ high air fares in order to cover their operational costs. The airport and market area communities should pursue new service with some sort of subsidy or revenue guarantee in place to minimize the risk of Big Sky losing money on the Cut Bank-Billings route. Essential Air Service As mentioned in Phase One, Cut Bank International had commercial airline service prior to the 1978 airline deregulation. Due to this service, Cut Bank was eligible for an EAS subsidy, a program that Congress established to ensure that smaller communities would retain their link to the national transportation system. Under the program, the U.S. DOT guarantees a minimum level of service at each eligible community, which is defined by specifying a hub through which the community is linked to the nationwide network, a minimum number of round trip flights and available seats that must be provided to that hub, aircraft to be used, and maximum permissible number of intermediate stops to a hub. After solicitations to air carriers and a review and selection of an air carrier, the DOT enters into an agreement with the carrier to pay a subsidy to ensure that the specified level of service is provided. An airport becomes ineligible for EAS service when its subsidy per passengers reaches more than $200. Big Sky Airlines currently receives $823,600 per year to serve each of the seven EAS eligible airports in Montana with Beechcraft 1900/Fairchild Metro III aircraft. The EAS subsidy was awarded by the U.S. DOT to Big Sky to provide nonstop or one-stop service between each of communities and Billings. The two-year subsidy for all seven communities was for awarded in February 2004 and expires in February 2006. Cut Bank should work with the U.S. DOT and its congressional representatives, Senator Burns, Senator Baucus, and Representative Rehburg to pursue the airport’s eligibility to join the EAS program under United States Code Service (USCS) 49 §41736 and authorized under USCS 49 §41742. Under this code a city or state may make a proposal to the Secretary of Transportation for compensated air transportation for a point that does not currently have an EAS designation. Several factors the U.S. DOT considers when approving the proposal including 1) if, at any time before October 23, 1978 the point was served by a carrier that held a certificate under § 41736; 2) the point is more that 50 miles away from the nearest small hub or EAS-eligible point; and 3) the point is more than 150 miles from the nearest medium or large hub airport. Cut Bank meets the technical criteria of §41736 when applying for the EAS designation. The community was served by Western Airlines until 1970, it is 106 miles from Great Falls International Airport, the nearest eligible point, and it is 675 miles to Salt Lake City, the nearest medium or large hub airport. As part of its approval, the U.S. DOT will consider the traffic generating potential and the cost of providing the subsidy to the U.S. government. The study provides a detailed analysis of the demand associated with the Cut Bank International Airport market area and highlights that there are over 150,000 annual enplanements associated with the market area and a potential to capture at least 10 percent of these passengers. The community, U.S. DOT, and potential carriers could work closely to ensure a reasonable subsidy is determined. Only a few communities have been granted EAS determinations in the last 12 years, including Dickinson, North Dakota, Show Low Arizona, and Kalaupapa, Hawaii. The last few years, President Bush has pushed to reduce the funding available to the EAS program. However, Congress has not been in favor of the proposed reductions, recognizing the need for and importance of the program to rural communities throughout the U.S. Community Revenue Guarantee If EAS eligibility is not regained, Cut Bank should pursue another form of guarantee or subsidy to support new air service. However, the community should weigh the benefits of these agreements. While these arrangements usually start off focusing on the positives of having air service for the community, most subsidy programs are generally only successful as long as the subsidy is provided. Once the subsidy is gone, it has typically been the experience that the air carrier leaves the market. There are various forms of subsidy including revenue or seat guarantees, “escrow” accounts, straight payment, and advance purchase ticket accounts. In general, these subsidy arrangements require Cut Bank to guarantee the airline will make a certain profit level regardless of the type or level of service that is provided. In principal, these agreements are structured such that the airline agrees to provide so many daily trips from the local airport to another airport in return for a set fee. In the case of seat guarantees and escrow accounts, the community uses the subsidy as an account. On a monthly basis, the number of passengers who utilized the service is compared to the number of guaranteed seats and if the actual number is less than the guaranteed level, money is taken out of the account to pay the carrier the difference. Some larger airlines require a set payment amount, regardless of how many passengers use the service. Revenue guarantees at other communities have ranged from $100,000 per year to $3 million per year. Big Sky provided service between Olympia and Spokane, Washington under a $100,000 ticket purchase commitment. However, the community had a difficult time convincing people to change their travel habits and begin using the local air service. Due to low ridership and losses of $1 million, Big Sky pulled out of the market 20 months later. Typically, local agencies and businesses are asked contribute to a revenue guarantee agreement to show their commitment to using the new service. This is a large commitment needed by the community. When these funds are being solicited, it is necessary to have a strong local catalyst that can meet with the businesses and educate them on the importance of their contributions. Several communities have also been able to secure U.S. DOT Small Community Air Service Development Program grants to assist with the revenue guarantee. This study is funded by a grant from this program to determine the ability of Cut Bank to support commercial airline service. A few airlines have also agreed to initiate new service to airports with commercial air service using the advance purchase ticket accounts or ticket commitments. In this subsidy format, local passengers, primarily large businesses, are requested to purchase tickets from the airline or at least buy so much in airline travel certificates to ensure use of the new service. This subsidy form is more of a start-up approach to ensure the feasibility of the service during the critical start-up phase. This approach has proven successful in several cities however it is difficult and can be more expensive to administer, which makes some airlines avoid this program. Big Sky offers its passengers a bulk ticket program, where it pre-sells books of 10 round-trip or 20 one-way tickets that must be used within one year. It may be possible for Cut Bank area businesses and individuals to commit to using the service through the purchase of these bulk tickets. It was noted by the Blackfeet Reservation and Indian Health Services that they would be extremely interested in supporting air service through the bulk ticket program. It is important that, as part of any subsidy program, the community consider the following: 1.
Ensure the type of aircraft being operated by the carrier is acceptable
to the target ridership. As a general rule, the smaller the aircraft,
the lesser the degree of ridership. Ensure the agreement identifies specific
aircraft types to be operated. Air Fares Big Sky air fares to between Billings and other Montana communities were analyzed to determine a range of fares that Big Sky may charge Cut Bank area passengers to fly to Billings. As shown in Table 28, the average fare per passenger mile flown differs by Montana airport depending on whether or not they receive EAS-subsidized service. The fare per mile at EAS communities was $0.37, while at non-EAS communities, including Great Falls, Helena, and Missoula, the fare per mile averaged $0.58 for a one-way flight. Big Sky charges a slightly lower per mile air fare to EAS communities due to the subsidy assistance. If Cut Bank were able to obtain EAS-subsidized service, it is estimated that the air fare would range from $90 to $100 for a one-way flight or $180 to $200 for a roundtrip flight to Billings. If the community was not able to become eligible for EAS, the fares charged by Big Sky are estimated to range from $150 to $160 for a one-way flight or $300 to $320 for a roundtrip flight. Table
28
Source: Big Sky Airlines; Wilbur Smith Associates Action Plan There are many items that need to be addressed before commercial airline service can be initiated at Cut Bank International Airport. This section discusses the action items that will be needed at the local level to successfully implement air service at the airport. The community needs to be aware that initiatives to improve air service are generally not overnight successes. A typical response time for a carrier to actually begin new or improved service to a community, once the opportunity has been identified, can take years. This analysis is only the first of many steps that the community needs to take to bring in new air service. It will take a well-orchestrated, organized effort on behalf of the entire Cut Bank International market area to realize successful commercial air service. Local Catalyst for Improvements - Task Force Local involvement is crucial to any successful air service program. While some state and federal funds may be available to help provide the physical facilities needed by the carriers and even possibly to assist with some support of service, local patronage and support is the number one factor that makes commercial air service viable. Before a community decides how to proceed with an action plan for air service, it must decide what priority it places on commercial air service and what type of air service is considered acceptable to the local users. This prioritization process is one that needs to be considered not just at the airport level, but by the community as a whole. The GAO noted that nearly every successful air service development effort in recent years had a local catalyst working for the improvements. Cut Bank may wish to consider establishing some type of a task force, committee, or panel that would represent airport, business, political, economic development, and other interests to help identify how the community can best initiate and sustain commercial air service. The commitment expressed by the members of this group is important to the potential for success in air service development in this community. If the members of the task force are not committed, it will be difficult to gain commitment from the rest of the community that is not as aware of the issues involved with air service development. Since the value of commercial air service extends into a community well beyond the airport and its physical boundaries, the community will need broaden the personnel and financial resources available to pursue air service opportunities by reaching out to other established groups in Cut Bank and beyond to other communities and groups, including the Blackfeet Indian Reservation and the tourism related businesses near Glacier National Park, that could benefit from improved commercial air service. This broader base of support may be represented on the task force, committee, or panel established to provide input on air service needs and priorities. This broad base of support and the commitment of the air service group is highly valued by airlines and is one of the factors they look for in examining their service opportunities.
An important factor in determining the level of demand being generated is to know the people in Cut Bank’s market area who regularly rely on air service, especially to meet business needs. Business travelers are typically the backbone of successful local air service. These travelers have a more frequent need to use commercial air service and are generally willing to pay a fare that allows the carriers to operate at a profit. In addition to local businesses that rely on commercial air travel, there are also businesses who have customers or suppliers who reach them by air. Many communities have found it advantageous to compile a database of businesses that either use or rely on the local airport today or that use air service to reach the local community to do business. Development of a strong rapport with local businesses who use air service including the Blackfeet Indians and supporting agencies as well as the tourism-dependent businesses, such as Glacier Park Lodge and Resort at Glacier will be critical. Several ways other communities are building local consensus and keeping businesses engaged in air service development efforts include: 1.
Individual meetings and presentations to local businesses Participation by top business travelers in airline meetings is crucial. Airlines like to know that these air travelers and their annual budget for airline travel are there to support the service being considered. The airlines will be looking to secure these travelers to ensure their success in the market. Representatives from the following groups should be actively involved in airline meetings and other initiatives to bring air service to Cut Bank: 1.
Blackfeet Tribal Business Council
Although very few small communities in the U.S. have funds to spend on marketing airline service, marketing will be a key component of getting market area passengers to change their travel patterns and begin using the local airport. It will be extremely difficult to get Cut Bank market area travelers to change their habits of driving to Great Falls or Kalispell to begin airline trips. Education of travel agencies, passengers, politicians, businesses, and community organizations is one of the keys to successful air service development. While the carriers sometimes have a budget to advertise air service, most of the carriers are not using their own resources to market air service at the small community level. In most cases, the carriers in the small communities rely on the local airport to advertise if any advertisement is done at all. Advertising efforts can present an opportunity for a cooperative and joint effort between the airport and the airline. This cooperative effort is considered by airlines to be critical, especially when new service is initiated. Marketing and advertising can be effective tools in which to educate the community on the benefits of the local airport. Passengers are much more fare-sensitive following the recent economic downturn and unless the local airports offer reasonable airfares and service choices compared to competing airports, it will continue to be difficult to increase passenger usage strictly through marketing. Successful “fly local” marketing campaigns include billboards, radio and TV promotions, print ads, travel agent promotions, and fax promotions. While most marketing is typically focused on local travelers, some concern should also be given to travelers coming into the market from other areas. This is especially true for the marketing of the Cut Bank International Airport to travelers visiting Glacier National Park. It will be important to inform travel agents throughout the U.S. of the new service at the airport and promote the easy access to the east side of the park. Trade and convention shows, promotion of local tourist activities, and regular news articles provide a means for keeping the public informed and aware of the air service that is available locally. The more positive information that is disseminated about the airport, and air service in particular, the more likely the chances for capturing demand for air service. Airline
Promotions Ground Transportation Availability The availability of rental cars and other types of ground transportation, including shuttles or taxis, will be a key to getting visitors to Glacier National Park and other tourists to fly into the Cut Bank International Airport for their vacations. Cut Bank should work closely with a rental car agency to base at the airport, especially during summer months. Visitors booking their travel online would be able to reserve their cars quickly if a rental car company were located at the airport or nearby. Thrifty and Dollar are two agencies that are highly visible in Montana and Canada and may be willing to work closely with Cut Bank International Airport to provide cars to its local air passengers. Also, Sun Tours in East Glacier Park, Montana offers shuttle and taxi service to Glacier National Park. The airport should form a solid partnership and advertising effort with Sun Tours to promote this ground transportation option as well. Tourism Packaging With commercial airline service, Cut Bank International Airport could be considered to be a gateway to northwestern Montana recreational activities, including the east entrances of Glacier National Park. There appears to be an opportunity for the community to work with various groups to develop tour packages that can be marketed throughout the world. Air service at Cut Bank could be promoted as part of package deals. It is important to note that the tour-packaging effort must be coordinated locally; the airlines infrequently have the resources available to coordinate packaging. The community should work with the following groups to gauge the interest in promoting the community and local air service through vacation packages: 1.
Airlines serving Cut Bank, as well as other scheduled and charter carriers Summary Commercial air service is dynamic and continually changing. Changes in the air service environment for Cut Bank International including airline decisions regarding equipment, fares, additional connecting banks, and routes to be served are continually occurring, impacting findings from this analysis. It is important that the community has a sincere interest in obtaining and supporting commercial airline service and that the information presented in this study is used as the basis for developing a community action plan. The effort to develop airline service at Cut Bank International will need to be well-organized and have the support of the entire market area. The items presented in this list summarize the air service development items that should be undertaken by the community to develop viable commercial airline service: 1.
Establish a local catalyst for bringing air service to the community.
This could be a local business or community leader or a task
force committed to bringing air service to Cut Bank. |
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