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SAVANNAH AIRPORT COMMISSION Savannah/Hilton Head International Airport
400 Airways Avenue Savannah, GA 31408 Telephone (9 12) 964-05 14 Fax (9 12) 964-0877
e-mail: [email protected] www.savannahairport.com
April 20,2005
C W R W Docket Operations Media Management Division Norton Melaver
W C E - C W R W
Sylvester Formey
COMMISSIONERS
Stephen S. Green Yvette Johnson-Hagins
Jay R. Turner
LEGAL COUNSEL
James B. Blackburn
mcU77VE DIREClVR
M-30 Room PL-40 1 Department of Transportation 400 Seventh Street, SW Washington, D.C. 20590
Re: for Savannah, GA. Docket OST-2005-20127 - (0 1
Proposal under the Small Community Air Service Development Program
On behalf of the Savannah / Hilton Head International Airport it is my pleasure to present to you the following Grant Request to supplement the ongoing efforts of our “First Services” initiative. The main goal behind “First Services” is to secure new airlines and retain existing carriers specifically by appealing to their bottom-line and offering expanded service by means of taking over station operations.
It is widely known that airline costs are at an all-time high, making it increasingly difficult for Airports to attract new carriers in a time of rampant cutbacks. Rising fuel prices, labor costs and more create an environment where even daily operations are severely challenged which further dilutes the chances of airlines expanding into new markets / airports. The current system by which airlines establish separate and redundant station operations at the airport further exacerbates airlines’ financial difficulties creating entry barriers for new airlines as well as exceedingly-high operating costs for the airport’s current airlines.
This Grant Request seeks $723,160.00 in federal funding to be used by the Savannah / Hilton Head International Airport to take over and fund station costs thereby increasing the Airport’s overall appeal to potential, new airlines.
Patrick S. Graham, A.A.E. The Savannah Airport Commission is the sponsoring organization. As its Executive Director, I will be responsible for administering the grant. Please contact me if you have any questions at 912-964-0514 or [email protected].
Daniel J. Coe, Jr., A.A.E.
Proposal Under the Small Community Air Service Development Program
Savannah, Georgia
Background
In July 2003, the Savannamilton Head International Airport was fortunate to be
awarded the Small Community Air Service Grant in the amount of $1,046,990. The
money was utilized for an extensive 2-year marketing campaign in order to take
advantage of the Airport’s new identity with Hilton Head Island, SC. The name change
was adopted in order to take advantage of the following: 1. The geographical proximity
of Savannah to Hilton Head Island, 2. The airport’s customer base (55% of passengers
utilizing the airport travel to or from South Carolina), 3. Internet marketing opportunities,
and 4. Making Savannah/Hilton Head International Airport a destination of choice on the
various Internet travel sites.
Since acquiring the funds, the Airport has been able to achieve the following: 1. Attract a
new carrier (Independence Air), 2. Convince a former carrier to return (American Eagle),
3. Add new non-top destinations, and 4. Enjoy record growth. The outcome of our
success is that we must continue to “grow”
the airport. Soon, the Airport will expand its
terminal by five gates, with construction set
to begin in the fourth quarter of 2005. The
Airport plans on managing and staffing the
new gates and will also continue to offer incentives to air carriers including reduced
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landing fees, marketing incentives, and reduced start-up costs. In addition, the airport’s
“First Services” initiative will allow the Airport to offer new and existing carriers a
unique opportunity to reduce their station costs while continuing to “raise the bar” with
regard to passenger customer service.
Public-Private Partnership Program
To assist in facilitating continued growth, the Savannah/Hilton Head International
Airport would enter into a partnership with The Savannah Economic Development
Authority (SEDA). As an economic engine of Chatham County, SEDA has a vested
interest in the area’s development and prosperity, making this partnership a mutually-
beneficial one.
Educational Opportunities
The Airport will partner with Savannah State University, Armstrong Atlantic State
University, Savannah Technical College, and Project Quick Start to offer college credit
relating to aviation. This opportunity would allow students to learn first-hand, different
aspects of the aviation industry and be trained to enter the work place upon successful
completion of the required courses.
Strategic Plan
The goal of this program, which is consistent with the legislation, is to stimulate new
demand at the SavannaWHilton Head International Airport (SAV) by appealing to leisure
and business travelers through effective advertising and marketing in the major markets
that traditionally support both Savannah and Hilton Head Island. By stimulating new
demand for both Savannah and Hilton Head Island, it is our intention that the airlines that
serve Savannah would increase capacity, add destinations and utilize larger equipment.
Funding Assurances
Destination Atlanta
Chicago O’Hare Newark
NY La Guardia
The Savannah Airport Commission has been identified as the coordination entity between
the cities, businesses and carriers. A separate project has been established by the
Savannah Airport Commission to account for the related costs that are subject to both
Internal and External Auditor’s review and the Federal Single Audit requirements.
Avg R/T Airfare Daily Departures Type of Equipment $179.42 12 Large Jet $259.08 3 Regional Jet $214.60 3 Regional Jet $246.14 3 Regional Jet
Program Monitoring
NY JFK Wash Dulles
The Savannah Airport Commission will monitor the success of the program and provide
periodic reports, which will allow the Airport Commission to modify or discontinue the
$197.34 2 Regional Jet $225.54 8 Regional Jet
program.
Non-Diversion Assurances
Savannamilton Head International Airport is a unique market in that service at the
airport has not impacted service at other airports. It is expected that this positive impact
on surrounding airports will continue under the grant.
Synopsis of SAV Air Service Existing Service:
The Savannah/Hilton Head International Airport currently offers 38 daily departures with
nonstop service to the following 10 destinations:
Houston Inter Cincinnati Charlotte
Daily Orlando service began in December 2004. Dallas service will resume in June 2005
and Northwest will begin daily Minneapolis service in June as well. All destinations
served, with the exception of NY LaGuardia, are considered “hubs” for the participating
carrier and offer passengers connections to the originating carriers domestic &
international routes. Additionally, Saturday service is available to Philadelphia, Boston,
$298.48 2 Regional Jet $247.86 5 Regional Jet $34 1.98 5 Large & Regional Jet
Pittsburgh, LaGuardia, and Washington Reagan National.
Historical Service
The Savannah/Hilton Head International Airport is fortunate that AirTran and
Independence Air offer air service to/from the Savannah & Hilton Head Island market.
They are instrumental in dramatically lowering the entire airfare structure at SAV while
keeping the competition honest. AirTran’s participation in the ATL market and
Independence Air’s participation in the Washington market demonstrates their impact on
fares and expansion of the areas.
September 1 1,200 1, rising fuel costs, and labor issues have had an adverse affect on the
way airlines traditionally operate. Unfortunately, Savannah/Hilton Head International
Airport is continuously being asked for concessions from the current carriers in order to
reduce the carriers’ cost of operating into Savannah. With “First Services” in place, the
Airport would be able to offer a unique incentive and the Airport would anticipate
enthusiastic participation from new and existing carriers.
Funding Requirements
The goal of the Savannah/Hilton Head International Airport is to add new markets,
increase airport operations and ridership while still maintaining the level of service our
customers have grown to expect.
The funding assistance from the small community air service program will allow the
Savannah/Hilton Head International Airport to launch a comprehensive passenger and
ground services program with the following objectives:
Passenger and Ground Handling Service
New airlines, in order to compete with established carriers, are sometimes forced to begin
station operations with a minimum of three daily flights. Thus they require a larger
market share than normally would be expected in order to cover their start-up costs.
Typically, costs associated with start-up are as follows: Ground equipment, passenger
check-in computers at both the ticket counter and gate area, labor, airport rent and fees,
and market development.
“First Services” would assist new and existing carriers by alleviating the day-to-day
costs of doing business such as: station personnel, costly equipment, associated real estate
costs, lease obligations.
“First Services” would offer a more efficient way of operating as follows: 1. Cost
savings, 2. Ability to add flights without increasing cost, 3. Customer service, and
4. Highly- trained staff.
The Airport would provide all necessary passenger handling and ground handling
equipment including but not limited to: Cute system (or similar system), computers,
communication lines, towing tractor, tow bar, belt loader, baggage carts, lavatory carts,
water truck, and fuel truck.
The Airport would be reimbursed on a per turn (inboundoutbound) basis. This fee would
be determined based on the size of aircraft, number of flights, and service requested. This
fee could also be discounted for start-up airlines. “First Services” would be able to lower
the fees as more airlines participated. The Airport would strive to have as many tenants as
possible participate and would initially hire from the existing labor pool.
Win-Win Situation
Airlines: Eliminate start-up costs, achieve profitability quickly, and insert additional
service when needed.
Airport: Ability to offer a viable alternative to the airlines without financial guarantees
Employees: Career options, better benefits, employment stability
Associated Costs for “First Services”
EquiDment Cute System (Counter & Gates) Office computers & supplies Communication Lines Towing Tractor (2 @ 30,000) Belt Loader (2 @ 20,000) Baggage Cart (4@ 2000) Fuel Truck Total:
Personnel Full Time (5 @ 10.00 per hr) Benefits/Taxes/Retirement Part Time (5 @ 10.00 per hr) Benefits/Taxes Uniforms Total:
Cost $250,000.00
5,000.00 6,000.00
60,000.00 40,000.00 8,000.00
100,000.00 $469,000.00
$104,000.00 39,520.00 78,000.00 29,640.00
3,000.00 $254,160.00
Grand Total: $723,160.00 Less 50% Co-op Partnership Total Requested $361,550.00
Conclusion:
If awarded this grant, the Airport would be able to offer the airlines operating into the
SavannahMilton Head Island a unique incentive, no station costs. The Airport would be
able to deeply discount start up costs or waive the costs for an extended period. Although
only a few U.S. airports have implemented a similar program, most major European
airports offered these services to other airlines for years.
This proposal is based on staffing and equipment for one ticket counter (two positions)
and a minimum of two gates. The Airport feels strongly that if “First Services” is
implemented most if not all carriers operating into The Savannah/Hilton Head
International Airport would take advantage of the cost savings. The Airport currently has
two former airline station managers under its employ and would be able to administer the
program successfully.
Consideration for Air Service Development Zone:
Savannah is fortunate to be an intricate part of a business development zone that has the potential to become one of the leading technical sectors in the Southeastern United States. The major components of the zone are:
The Savannamilton Head International Airport’s Southwest Quadrant
Over 100 acres developable land Aviation-only related business Prime location for regional jet maintenance hangar Prime location for regional jet paint shop Prime location for airplane manufacturing plant
The Georgia Ports Authority: Major economic driver for Savannah Growth rate of 31% for last two years Constructing an 8‘h container birth Acquired land for continued growth Revenue in excess of 100 million dollars Foundation for long term sustained growth Savannah named the top logistics location in the United States
Gulfsteam Aerospace
Savannah’s largest employer Worldwide leader of corporate jet aircraft
Responsible for 15% of initiated business travel from SAV
J.C. Bamford
Planned expansion in 2005 World’s largest manufacturer of excavation equipment
Mega Site 0 One of the world’s largest ready to build sites
1560 acre site corner of I1 6 & I95
Crossroads Business Center 1800-acre business and technology park developed by the Savannah Economic Development Authority New home to Georgia Institute of Technology (Georgia Tech Regional Engineering Program)
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New Home to Savannah Technical College Infrastructure capable for latest technologies Master planned to support 1,000,000 square feet of private office space
The Research Park at Skidaway Island 0 Skidaway Institute of Oceanography
o Allows for collaborative efforts with institutions in the University System of Georgia
o Current grants underwritten by 9 National Science Foundation . Office of Naval Research 9 Department of Energy
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100-acres of leasable property
Marketing to companies involved in biotechnology, environmental technology, and related fields
MSA Potential Growth
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West Chatham County will increase 35% by 2010 Renowned area developer Harvey Gilbert predicted the following for the zone:
o Liberty, Beaufort and Jasper Counties will become connected to the Savannah MSA
o Inevitable growth and development corridor will emerge with this 50-mile radius from the intersection of Interstates 16 and 95
. Currently population of 600,000
. “In ten years Metro Savannah will be a continuous and well-connected economic and employment center from Beaufort, SC and Hilton Head Island through Savannah to Brunswick, GA.
The Savannah/Hilton Head International Airport is located in the middle of the zone. The airport’s southwestern quadrant has been recently improved in an effort to secure more aviation related business.
In order for Savannah to maintain this growth it is incumbent upon the airport to be able to provide and maintain first-class air service. The Savannah /Hilton Head International Airport is a perfect candidate for designation as an Air Service Development Zone. The incredible growth potential of the zone would allow Savannah to become “the poster child” for the DOT.