Item H1
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
MEETING DATE: 6/16/04
DIVISION: COUNTY ADMINISTRATOR
BULK ITEM: No - Time Approximate, P.M. please
DEPARTMENT: AIRPORTS
AGENDA ITEM WORDING: Presentation of the Florida Keys Marathon Airport Air Service Study, by Michael Boyd, of the
Boyd Group.
ITEM BACKGROUND: Our General Airport Engineer, URS, commissioned the Boyd Group to conduct the study. A Small
Communities Air Service Grant has been applied for, and that application is attached.
PREVIOUS RELEVANT BOCC ACTION: The Study and Grant Application were approved by the BOCC, March 17,2004.
CONTRACT/AGREEMENT CHANGES: N/A
STAFF RECOMMENDATION: N/A
TOTAL COST: N/A
COST TO AIRPORT: N/A
COST TO PFC: N/A
COST TO COUNTY: N/A
REVENUE PRODUCING: N/A
BUDGETED: N/A
SOURCE OF FUNDS: N/A
AMOUNT PER MONTH NEAR:
APPROVED BY: County Attorney N/A
OMB/Purchasing N/A
Risk Management NIA
DIRECTOR OF AIRPORTS APPROVAL
R3 ~ se~
Peter J. Horton
DOCUMENTATION: Included
To Follow X
Not Required
AGENDA ITEM #
HI
DISPOSITION:
/bev
APB
AGENDA ITEM WITH LATE DOCUMENTATION
DIVISION: County Administrator
DEPARTMENT: Airports
SUBJECT: Presentation of the Florida Keys Marathon Airport Air Service
Study, by Michael Boyd, of the Boyd Group
DATE ITEM WILL BE AVAILABLE: Week of 6/7/04 - 6/11/04
AGENDA ITEM NUMBER: Unknown
BEV /apb
Key West
I ntemational Airport
To:
From:
Date:
Subject: :
soce, County Administrator, Cou..!J!Y Clerk, County Atty.
Peter J. Horton, Airports Directo( ~~
06/11/04 .'
6/16/04 soec Meeting Agenda Item H-1 (Marathon Airport Air Service
Study).
Attached is additional information concerning the above item. It is a copy of the Small
Community Air Service Development Program grant application that we filed with the
U.S. Department of Transportation on May 14,2004.
APPENDIX B
10f5
,.
SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM
DOCKET OST -2004-17343
SUMMARY INFORMA nON
All applicants must submit this information along with their proposal. Previous applicants may
incorporate by reference all or any portion of their initial proposals in Docket OST-2004-17343, but
must also submit this summary information to be considered for a grant award from the FY 2004
funding for the Small Community Program in this docket. Additionally, the Office of Management and
Budget (OMB) issued a new policy with respect to applications for federal grants. Effective October 1,
2003, applicants for federal grants must include in their applications their DUNS number.
DUNS Number
147211044
A. APPLICANT INFORMATION: (CHECK ALL THAT APPLY) .
IiJ Not a Consortium 0 Interstate Consortium
o Community now receives EAS subsidy
o Intrastate Consortium
Point of Contact:
Community Name
Address 1
Address2
City, State Zipcode
Point of Contact:
Community Name
Address 1
Address2
City, State Zip code
Point of Contact:
Community Name
Address 1
Address2
City, State Zipcode
Point of Contact:
Phone: 305-292-3518
Fax: 305-292-3578
Email: horton-peter@monroecounty-fl.gov
Monroe County, Florida
Key West International Airport
3491 S. Roosevelt Boulevard
Key West, FL 33040
Peter J Horton, Monroe County Director of Airports
Phone:
Fax:
Email:
County:
Phone:
Fax:
Email:
County:
)-1 .. J
APPENDIX B
20f5
DESIGNATED LEGAL SPONSOR: MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
Point of Contact
Name Peter Horton Phone:305 2955195
Title Monroe County Director of Airports . Fax: 3052923578
Organization Monroe County Board of County Comm._Email:horton-peter@monroecounty-fl.gov
Address 1 3491 S Roosevelt Boulevard City: Marathon
Address2 Key West, FL 33040 State:Florida
Zip: 33050
PuBUCIPRIvATE PARTNERSIDPS: (LIST ORGANIZATION NAMES)
Pu blic
Private
I.Monroe Cty Board of Commissioners
2.Florida Keys Marathon Airport
3.City of Marathon, Florida
4.Monroe County Tourism Develop. Council
5.
I.Greater Marathon Chamber of Commerce
2.
3.
4.
5.
B. PROJECf INFORMATION
PROJECf PROPOSAL: (CHECK ALL TIIAT APPLY)
8 Marketing 0 Upgrade Aircraft IE New Route
0 Personnel 0 Increase Frequency 0 Low Fare Service
0 Travel Bank 18 Service Restoration 0 Surface Transportation
!8. Subsidy 0 Regional Service 0 Other (specify)
S Revenue Guarantee 0 Launch New Carrier
0 Start Up Cost Offset [] First Competitive Service
0 Study 0 Secure Additional Carrier
PROJECf GoAL: PROJECf IS INTENDED TO ADDRESS PROBLEMS INVOLVING (CHECK ALL TIIAT APPLY)
o High Fares
~ Insufficient Air Service
aI Unique Airport Circumstance
EYW at capacity.
Dl Access to National Transportation System Needed
o Other (specify)
APPENDIX B
30f5
I'
PLEASE PROVIDE A BRIEF SYNOPSIS (IN' ONE PARAGRAPH) OF TIlE HIGlll.IGIITS OF YOUR PROPOSAL.
THE ECONOMY OF TIlE FLORIDA KEyS DEPENDS ON TOURISM. THE KEYS ARE LACKING IN' AIR
SERVICE AT TInS TIME wrrn ONt Y SERVICE AT KEY WEST. THE KEY WEST AIRPORT IS AT CAPACITY.
THE MAMmON AIRPORT IS AIR CARRIER READY AND PROPOSES TO RECRUIT AND SUPPORT
NONSTOP REGIONAL JET SERVICE TO ORLANDO VIA DELTA CoNNECTION. THIS PROPOSAL WILL
SIGNIFICANTLY IMPROVE TOURISM ACCESS TO TIlE ENTIRE LENGTH OF THE FLORIDA KEYS.
hOJEer COST:
Federal amount requested:
T otallocal cash financial contribution:
Airport funds:
Non-Airport funds:
State cash financial contribution:
Existing funds:
New funds:
Airport In-kind contribution:
(amount & description)
Other In-Kind contribution:
(ARFF, Security, Waiver of fees)
Total cost of project:
$750,000
$100,000
$100.000
$200,000
$1,050,000
C. Am SERVICE DEVELOPMENT ZONE: (CHECK BOX IF INTERESTED IN DESIGNATION) 0
D. LOCAL AIRPORT INFORMATION: (WHERE SERVICE WOULD BE PROVIDED)
"
Airport Name: Florida Keys Marathon Aix:port
Airport City: City of Marathon.
Airport State: Florida
Airport Code: MTH
LOCAL AIRPORT CLASSIFICATION: (BASED ON MOST RECENf FAA ENPLANEMENT DATA)
o Non Hub
o Small Hub
o Medium Hub
18 Other
APPENDIX B
40f5
,.
ExISTING LANDING AIDs AT LOCAL AIRPORT:
o Full ILS
o OuterlMiddle Marker IS Published Instrument Approach
o Localizer
S Other (specify) P API
ExIsTING SERVICE: (CHECK ALL TIIAT APPLY)
o Jet service 0 Low Fare Service 0 Turboprop 0 No Existing Service
AIR CARRIER(S) SERVING AIRPORT:
Air Carriers
Air Carrien
t.None
2.
3.
4.
5.
6.
7.
8.
9.
to.
CURRENT FLIGur INFoRMATION: (PLEASE PROVIDE ATI'ACHMENI' IF YOU NEED MORE ROOM)
Number of non-stop roundtrip flights per destination:
Number of one-stop, single-plane roundtrip flights
per destination per week (identify services that are
seasonal and dates of service):
Aircraft Type (include number of seats):
None
ENP1.ANEMENTS (LAST FIVE CALENDAR YEARS TO THE EXTENT APPLICABLE)
"
1999 22,722
2000 _9,553
2001
2002
2003
E. AIRFARES: (PROVIDE CURRENT AvAILABLE AIRFARES FOR TOP 3 O&D MARKETS-IF
APPLICABLE)
n/a
Airfare:
0&0 Market:
n/a
Airfare:
0&0 Market:
n/a
Airfare:
0&0 Market:
.I
,
F. PROXIMITY OF OTHER. AIRPORTS: (BASED ON MOST RECENT FAA ENPLANEMENT DATA)
What is your closest:
Non-hub (w/jet service)
Small Hub
Medium Hub
Large Hub
Low-fare service
Name
Name
Name
Name
Name
~
EYW
-
PBI
FLL
MIA
-
MIA
BEFORE THE OFFICE OF THE SECRETARY
DEPARTMENT OF TRANSPORTATION
Community Proposal
Florida Keys Marathon Airport
Marathon, Florida
Duns # 147211044
SMALL COMMUNITY AIR SERVICE
DEVELOPMENT PROGRAM
DOCKET OST-2004-17343
Under 49 U.S.C. 41743 et seg
The Florida Keys Marathon Airport, serving the Florida Keys in Monroe
County, Florida, herein submits its application for a Small Community Air
Service Development Grant.
Tourism is the life blood of the Florida Keys economy. Many of the 80,000
residents of the Keys depend on the over 3 million annual tourist visits for a
living. Effective air service options that allow tourists to conveniently access
the Keys are an essential element in the continued growth and success of
the Keys tourism industry.
Statement of Problem
Currently, the only scheduled air service access to the Keys is via Key West
International Airport, which is now at full capacity, and cannot be expanded.
The nearest alternative commercial airport to the Keys is Miami
International, which is almost four hours drive time from Key West. This
drive is via scenic but often congested Route 1, a two lane highway.
In short, the Keys are a spectacular destination whose economy is heavily
dependent on air access. With Key West International at full capacity, the
alternative is to allow the region to lose economic growth or begin to utilize
Marathon as a second air gateway.
This is a clear cut case where the limited airport capacity is threatening to
cost the Florida Keys economy tourist dollars and local jobs, and eventually
tax dollars from the commerce those tourists would produce.
The challenge facing Monroe County and the Florida Keys is not lack of air
passenger demand. Instead, it is lack of airport capacity. The under-utilized
/
2
Marathon Airport is the solution. To accomplish this, however, incentives will
be needed to convince an airline to shift resources into serving the market.
Intent of Grant
In this proposal the Florida Keys Marathon Airport is requesting a grant of
$750,000 for the specific purpose of recruiting and supporting new air
service at the Marathon airport. A consortium of civic groups, including the
Monroe County Tourism Development Council, will match the grant dollars
with $100,000 in local contributions. Monroe County and the City of
Marathon will provide $200,000 of in-kind contribution by providing Airport
Rescue Firefighting (ARFF) services, security services and waivers of fees
and charges to the airline.
The targeted service is Delta Connection regional jets from the Delta focus
city of Orlando. The Airport believes this is the best, but not only, airline
target. Delta Air Lines has a strong presence at MCO, and can cost-
effectively feed passengers to MTH.
The service this grant will make possible will deliver a range of benefits, all
of which are consistent with the goals of the Small Community Air Service
Development Program.
. It will provide much needed additional air service capacity in the Keys,
taking pressure off of the beleaguered Key West Airport and the limited
capacity it can accommodate.
. It will provide new, time-efficient alternatives for Keys visitors currently
forced into flying into Miami and renting a car for a long and challenging
drive on the often congested Highway 1 to Key West.
. The new capacity will exert some downward pressure on air fares,
primarily by making available more lower fare seats.
. The ideal location of the Marathon Airport will enable this new service to
generate new tourism visits and dollars for resorts along the entire Keys,
from Key Largo in the north to the city of Key West in the south.
The Florida Keys Marathon Airport and the consortium supporting this
application appreciate the Department's consideration.
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
3
All correspondence regarding this document should be directed to
Mr. Peter Horton
Monroe County Director of Airports
Key West International Airport.
3491 S. Roosevelt Boulevard
Key West, Florida 33040
Tel. (305) 292-3578
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
4
Table of Contents
I. OUTLINE OF PROPOSAL
5
II. PROJECT OBJECTIVES
6
III. THE FLORIDA KEYS AIR SERVICE MARKET
7
LOCATION AND POPULATION
TOURISM DRIVES THE LOCAL ECONOMY
TOURIST DESTINATIONS FAVOR MARATHON AIR SERVICE
AIRUNE STRATEGIES a. PAST MARATHON SERVICE
THE POTENTIAL TRAFFIC DEMAND AT MARATHON
7
7
8
9
10
IV. THE GRANT PROPOSAL AND ITS IMPACT
12
THE GRANT PROPOSAL
THE IMPACT OF THIS GRANT
12
12
V. GRANT ADMINISTRATION
14
RISK ABATEMENT
NEW SERVICE MARKETING SUPPORT
FUNDING SPLIT
14
15
15
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
5
I. Outline of Proposal
a). Airport and Community Name:
Florida Keys Marathon Airport (MTH)
9400 Overseas Highway, Suite 200
Marathon, Florida 33050
Contact: Reggie Paros,
Airport Manager
Community And Region Served: The Florida Keys have a resident population
of about 80,000 and hosts an estimated 3.1 million tourists every year.
b). Additional Community Members
Three public and one private entity are supporters of this application, see
appendix B for a complete list.
c). Project Sponsor
Monroe County Board of County Commissioners
d). Project Description:
The proposal requests $750,000 in grant funds from the Program to recruit
and support new regional jet service provided by Delta Connection to
Orlando.
The Grant funds would be matched by $100,000 in locally-generated funds.
This new air service would provide much needed new air service options and
capacity for tourists visiting any point along the length of the Florida Keys.
These new air service options will increase tourism visits and reduce drive
miles along the congested Highway 1 that is the only land link between the
Keys and the mainland. The new capacity will put downward pressure on air
fares for visiting tourists by introducing much needed additional capacity
during peak travel periods.
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
6
II. Project Objectives
The Florida Keys are an enormously popular tourist destination, but are a
challenge to get to. When access to such a destination becomes difficult, its
economy is threatened.
Tourist visits and tourist dollars are the lifeblood of the Florida Keys. These
depend upon the ability to access the region. Unfortunately, demand to visit
the area has now outstripped the capacity of its main air gateway, Key West.
Going forward, the region must find new airport capacity.
Specifically, this Grant is aimed at recruiting scheduled air service at
Marathon Airport, which has excellent facilities and is also ideally located
near the middle of the Florida Keys island chain. The airline targeted is
Delta, via its Delta Connection partner, Comair.
The Grant would be applied primarily to provide risk abatement for the new
service by Delta Connection. Another use of the funds would be for
marketing the new service, in conjunction with the resorts and tourism
agencies that promote Keys tourism in the course of daily business.
This new air service would have the following clear benefits:
1) The added capacity of the new flights would bring more tourists to the
Florida Keys. Currently, the constricted airport capacity is restraining
growth and deterring visits. Each additional tourist visit this program will
generate will have a multiplying effect, strengthening local resorts and
hotels/motels, bringing more business to restaurants, shops and activity
vendors, increasing local employment, and ultimately improving the local
tax base.
2) It will reduce peak period congestion at both the Key West International
Airport and on narrow, two-lane Highway 1, the only land link between
the Keys and the mainland.
3) The additional air service capacity will exert downward pressure on air
fares for Florida Keys visitors.
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
7
III. The Florida Keys Air Service Market
Location and Population
The Florida Keys are made up of 822 islands, extending for over 120 miles in
a southwesterly direction from the Florida mainland south of Miami.
~
i.
~
The population of the Keys chain is approximately 80,000, spread out along
the island chain with concentrations at Key West, Marathon, and Key Largo.
Tourism Drives the Local Economy
The heart and soul of the Keys economy is tourism. The labor force on the
Keys is about 44,000, with almost all jobs linked, directly or indirectly, to
tourism. These 44,000 jobs support about 3.1 million annual tourist visits.
These annual tourist visits account for most of the nearly 3 billion dollar
economy of Florida Keys.
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
8
Tourist Destinations Favor Marathon Air Service
Tourism visits are somewhat evenly distributed among the Keys island chain,
with concentrations in the three population centers. Currently only about
100/0 of tourist visits actually. fly directly into the Keys at Key West. An
estimated 400/0, or over 1.2 million, of these tourists fly into the Miami area
and drive the significant distance to the Keys. These represent the target
passengers that service at MTH would capture.
Over A Million Tourists Per Year Fly To Florida But Drive To The Keys
Otller IDea.. .,
tn..,.rt (.bl,.
drl.'a,. etc.)
50%-1.550.000
EaplaaelDeab At
EYW
10%- 295.080
Fly &. Drln FrolD
Mla..1 Area
40%- 1,240.010
Economic Damage Due To Insufficient Air Service
It is noted that even if the destination is a point on the Keys, there is
economic loss when the consumer uses Miami International. Corollary
spending, such as rental cars, is done in Miami, depriving the Keys of
business.
While individual tourist activities and daily expenditures vary widely, each
tourist visit has a minimum economic impact of $300 per visit day in the
Florida Keys.
A one percent increase in tourist visits facilitated by better Keys air service
access would mean 31,000 new tourist visits. Most recent studies show that
~
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
9
the average stay for a visitor to the Keys is 3.9 daysl. This means that even
a 10/0 increase in visitors would mean $36,270,000 in economic impact in the
Florida Keys.
Airline Strategies 8r.. Past Marathon Service
Historically, the Keys have had air service at both Key West International
and at Marathon.
Marathon Airport Enplanements 1996-2000
40,000
5,000
35,000
30,000
25,000
20,000
15,000
10,000
IJ Enplanements
1996
36,993
1997
37,385
1998
23,386
1999
22,722
2000
9,553
Marathon lost its last air service in May of 2000 when American Eagle pulled
out of the market.
During the 1990s Marathon had nonstop service from three airlines to four
destinations, Miami, Fort Lauderdale, Orlando, and Tampa. The enplanement
history clearly shows that these services were well patronized, with airport
traffic peaking in 1997 at over 37,000 enplanements or 74,000 0&0
passenger trips. The loss of this service was due to strategic and economic
shifts in the airline industry, not due to any decline in demand.
1 Per National Oceanic and Atmospheric .A.tlminiaration study
"
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
The Potential Traffic Demand At Marathon
10
Today, Key West enplanes nearly 300,000 annual passengers and is served
by five carriers.
Top Markets From The Florida K~ys
...- - . -::. . .~--.'~"'~:~~;~~~"(~-~":-~.:"?": ~:<;--~~~~~,~~:~~ll~~';Y~~.t-,~ "'''''ri.. _
EYW Traffic P..cent EYW
Rank Destination Generation Inbound Ori inatin AVI. Fare
1 Newark 28,590 ._0_ 89.~_______ _0. $1n
2 Boston . --------24~420-------__ 90.4~_ ____ $171
3 .NeWyork-LaGuardfi---------23,S20-------- 8?3~______mm__ $148
4 Philadeijiija----------------22,820------ - 93.1~_ _______._ $166
5 _Washi~n-N~_~.I1~L=-~.-~=j~09~~~---. - --- ... - 88.SO" $179
6 Atlanta 18,260 86.3~___._... $163
7 Chi~~:t[~r.e ___~_=_= 1_~!5~~=-~~_-..-=-_ _ 9<?~~___ ___ $179
8 Hartf~rdI~~~~d _._________.1?.,.~Q__.______ __ 88.9% $152
9 ~~Yo!:!_:'~~l1n~____.__J~,92()____.. 90.5% $141
10 BaltimoreIWashington 10,370 87.8% $1n
11 Miarri----.-. -. -----.--.--.1-0,-110 --- 68.8%__. . $114
12 RaleighlDurham---------.. -..--9;420-- ---- 91.2%_... ___ _ $146
13 Clevelsl1(f-------.------ ----.8~860-..--..-- 93.1% $173
14 betrOit---------.------ - ... ---S,79i:f - -- 87.3% $192
15 -Chartotte--.-------...--.- --7,280- n_ --. 88.9% $160
16 baUaSIFiwoith-- 7,040 86.8% $166
17 P~rQh -~:~.:~:._.::_~~-__~=._..~~~-_=____..._ 85.go" $159
18 Louisville 6,520 93'~~______._._h_ _ $150
19 ColUmbus .---.- ----00- eJoi:f---- 94.3% ____ __ .$162-----
20HoUSton:fntercontfne-rit8r-----6,OOO--.-_...- 89.5% $178
op ets
MIA
Av . Fare
$148
$148
$160
$161
$206
$126
$173
$168
$146
$138
N1A
$146
$164
$161
$162
$202
$153
$155
$156
$158
The Key West air service market does provide an excellent guide as to the
traffic demand and profile that Marathon air service would experience. This
list of Key West's top twenty markets is illustrative of the type of air traffic
that service at Marathon would experience. Key points include:
. Approximately 900/0 of traffic is inbound Origin, reflecting the
overwhelming use of direct air service to the Keys by tourists.
. In eleven of nineteen markets (excluding EYW-MIA) the Key West air fare
is higher than that at Miami. In the balance of instances, Key West air
fares are higher, in terms of price point, than those at Miami, and the
higher Miami average fare results from a different mix of traffic. For
example, while Key West - Dallas is strictly tourist traffic, Miami-Dallas
has significant business traffic which raises average fares.
/
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
11
. Eleven of the nineteen top markets (excluding Miami) have nonstop Delta
service from Orlando, making Orlando and Delta an excellent gateway
and carrier pairing to provide new air service at Marathon.
. Only 2 of the top markets are west of the Mississippi, acknowledgement
of the significant leisure community of interest between the northeastern
tier of the United States and the Florida Keys.
. The modest 0&0 totals of the top twenty markets, when compared with
the tourist visit numbers in the millions, illustrate the lack of direct air
service to accommodate travel demand to the Keys, resulting in millions
of drive trips for tourists that fly into the Miami area and transfer by
ground to the Keys.
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
-'
12
IV. The Grant Proposal and Its Impact
The Grant Proposal
The Florida Keys Marathon Airport proposes to use Grant Funds and its
matching contribution to recruit and support new air service at the Marathon
airport.
Specifically, the Airport will recruit Delta Connection to provide three round
trips per day between Marathon and Orlando, which is a Delta focus city with
significant online connectivity to major Florida Keys tourist traffic
generators. The bulk of Grant and local matching funds would be used for
risk abatement in the initial phase of this new service.
A secondary use of Grant and local matching funds w~uld be for a wide
ranging joint promotion of the new service in conjunction with the ongoing
promotional activities of Florida Keys resorts and tourism promotion
agencies.
A preliminary forecast for this new service suggests:
+ 2,100 new annual regional jet flights between Marathon and Orlando.
+ New airline capacity of 77,700 annual seats, operating in and out of the
Marathon Airport, in the heart of the Keys.
+ A 650/0 load factor for the new service will generate just over 50,000 0&0
passenger trips.
The Impact of This Grant
Based upon an annualized 650/0 load factor, the new service would create
about 25,000 annual enplanements at the Florida Keys Marathon airport in
the first year. While below enplanement levels achieved in the late 1990s, it
is anticipated that second and third year enplanement totals would increase
as the service reaches self sufficiency.
The economic impact of this new service is significant:
1) Consistent with traffic patterns at Key West, about 900/0 of the first year's
50,000 annual 0&0 .would be inbound tourist traffic. This means that
about 22,500 tourists would arrive in the Keys via this new service. With
the daily economic value of a tourist visit at over $300 and average
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
13
tourist stay at 3.9 days, each new tourist brought to the Keys by this
service is worth at least $1,170 in local economic impact.
2) This new air service will put downward pressure on the high air fares that
also restrict Keys tourism growth. The downward pressure is anticipated
to be primarily in the form of new capacity, some of which will be
available in the lowest fare brackets.
3) The new service will reduce peak travel period congestion at the Key
West International Airport, which has a small and overcrowded terminal
facility, a short (4800') runway with inadequate runway safety areas, and
extremely limited area for parking and servicing its ever increasing fleet
of commercial airliners.
4) Every tourist brought directly by air into the heart of the Keys is one less
tourist on the crowded and slow Highway 1 from Miami to Key West.
The Florida Keys Marathon Airport estimates that the first year of this new
air service, supported by this Grant proposal, will have a minimum overall
economic impact on the Florida Keys economy of $20,000,000. This
economic impact is in the form of new tourists gained directly from the new
service and new tourists gained from an overall reduction in average air
fares paid.
/
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
14
v. Grant Administration
The Grant and community matching funds of $100,000 will be administered
by the Florida Keys Marathon Airport.
There are two separate applications for the funds:
1) A program of risk abatement for the operator of the new air
service.
2) A new service marketing program focused on inbound origin
leisure traffic generators.
Risk Abatement
The program of risk abatement for the operator of the new air service will be
developed in negotiations with the carrier. These negotiations will involve:
. Mutual agreement on reasonable costs for the operation of the service.
This will involve recognition of reasonable carrier costs and the variability
of costs, to include fuel and changing industry regulation. Industry and
carrier cost data and trends will help the Airport in these discussions.
. Mutual agreement on allocation of all revenues generated by the service,
to include some factoring for the beyond Orlando revenues of the traffic.
It is anticipated that most onboard traffic on the route will be connecting
traffic from the Delta system. Again, industry and carrier formulas for
allocation of revenue over a system can guide the Airport.
. The Airport will specify acceptable levels of operating performance on the
route, to include on-time performance, flight completion, and effective
timing of flights offered.
. The risk abatement agreement will include a ceiling that specifies a per
flight revenue support number that will not be exceeded. It will also have
a revenue performance floor, wherein if route performance exceeds
specific load factor or revenue measures, risk abatement funds will
remain dormant.
. The Airport will seek a one year agreement with the carrier for service on
the route.
. All agreements between the Airport and the carrier will be subject to
review and approval of the Department.
Florida Keys Ma rathon Airport
Proposal under the Small Community Air Service Development Program
#
15
New Service Marketing Support
While the pent-up demand will likely result in a quick ramp-up time for the
service, some marketing will be needed to assure that "Marathon" becomes
associated as a co-terminal to the Keys.
A fund of $75,000 will be allocated for this purpose. This program will be
supervised by the Tourism Development Council.
These efforts will involve:
. Promoting the new air service via existing out of state marketing venues
for Keys resorts and hotel/motel accommodations.
. Aligning new air service marketing with on going Keys promotional efforts
of the various government and private Florida Keys tourist marketing
entities.
The Airport is confident that effective coop marketing and promotion of the
new service can be accomplished via existing out of state tourism promotion
venues. The mutual benefits and common self interest of both parties in
such an arrangement is clear.
Funding Split
The revenue guarantee and marketing funds will be allocated as follows:
Funding Grid
Revenue .
G Marketing Total
uarantee
Grant Funds
$683,824
$66,176
$750,000
Local Match
$91,176
$8,824
$100,000
Total $775,000 $75,000 $850,000
These funds are in addition to the $200,000 in-kind contributions from
Monroe County and the City of Marathon.
./
Florida Keys Marathon Airport
Proposal under the Small Community Air Service Development Program
Project Report
Air Service Potential
At
Marathon, Florida
TheBoydGroup
Aviation Consulting &. Forecasting
1-1/
Note:
This document is prepared for the exclusive use of URS and
Monroe County, Florida. The data and information herein are
from sources deemed accurate, but are not guaranteed.
Prepared by
The Boyd Group/ASRC, Inc.
78 Beaver Brook Canyon Road
Evergreen, Colorado 80439
(303) 674-2000 Fax: (303) 674-9995
Info@AviationPlanning.com www.AviationPlanning.com
June, 2004
3
Table of Contents
I. INTRODUCTION 5
II. EXECUTIVE SUMMARY 6
III. SUMMARY OF THE MARKET 8
The Current Role of Airline Service 8
The Kevs Air Access Situation 8
Air Service Growth Options 6
IV. AIR SERVICE OPTIONS & THE FLORIDA KEYS 10
The Airline Industrv 10
The Issue of Connectivity 10
Current Kevs Air Service 11
V. AIR SERVICE OPTIONS 13
Current Destination Mix 13
Sizin2 The Potential Market 15
Strate2V: Ooe Destination - The Kevs 16
Strate2V: Build & Add To Existio2 EYW Service 17
Delta & American The Primary Marketing. Targets 17
Continental. Local Commuters Secondary Targets 17
Strate2V: Officiallv Re-Classifv Florida Kevs As Sin21e Destination 18
Phasio2 The Pro2ram 18
Total Traffic Potential 19
Phase One: Three Delta ERJ-135 Fli2hts To MCO 20
Phase Two: Three American Ea21e ATR-72s To MIA 21
Phase Three: Two Delta Connection CRJ-700s To A TL 22
Potential Traffic At MTH 23
Assumptions 23
Timeframes 23
TheBoydGroup,lue
4
Enplanement Estimates
24
Economic Impact Of New MTH Service
24
VI. FACILITY. COST. & STRATEGIC ISSUES
26
Facilitv Issues
Terminal & Airside
Security Facilities
Emergency Response
26
26
26
26
Airline Marketinl! Issues
26
TheBoydGroup,Inc
The objective is
to determine
whether MTH can
again support
viable scheduled
air service.
5
I. Introduction
The Boyd Group has accomplished an evaluation of the potential
for re-establishing scheduled air service at Marathon, Florida.
Air service access to the Keys is critical to the tourist and leisure
industries on which the region's economy depends. Today, the
majority of visitors who initiate their journey by air use Miami
International or Fort Lauderdale, and then drive the remaining
way to the keys. The main reason for this is the fact that Key
West International Airport is essentially at full capacity, and has
limited, if any, ability to absorb more traffic.
The Florida Keys Marathon Airport, located in the middle part of
the Keys, is well located to be utilized to address the capacity
constraints at EYW. The open questions in this regard are:
· Is the Marathon Airport capable of efficiently handling
scheduled air service?
· Can adequate traffic be attracted to using the facility as a
new gateway to the region?
· What airline systems would be logical marketing targets
for Marathon service?
· What would be the costs to the County in recruiting air
service to Marathon?
It is clear that the Marathon Airport is an under-utilized facility.
However, that alone is not sufficient to attract and maintain
scheduled air service. Airlines today are almost entirely risk-
averse, and to gain air service at MTH will require that the
market represents a higher and better use of airline assets than
where they are currently being applied.
The goal of this analysis was to identify the traffic levels that
the airport could attract, and then determine whether such
traffic was sufficient to support scheduled air service.
TheBoydGroup,Inc
6
II. Executive Summary
Air Service Growth Options
Key West International, which is the air gateway to the Keys, is
at full capacity at this time. Regardless of the excess demand,
which is enormous, the physical fact is that there is very little
additional service that can be added. Therefore, the options for
Monroe County are:
1. To accept the current situation. Unfortunately, this leaves
the Keys mainly as a road-accessed destination. The
capacity of US 1, however, is also limited.
2. To increase air capacity by recruiting air service to
Marathon. At the least, this will make the Keys more
competitive with other destinations vying for consumer
vacation dollars.
The second option, obviously, is the most desirable. However,
this would entail recruitment of carriers interested in serving the
market. The analyses accomplished in this project indicate that
Marathon does have the potential of gaining the additional air
service that the Keys needs.
Conclusions
Based on the data developed in this project, the following
conclusions are made:
The Market Identity. The destination of visitors is more
correctly "the Keys" and not necessarily specifically Key West or
Marathon. For that reason, the Keys should be increasingly
considered one destination with two airport gateways, MTH and
EYW.
TheBoydGroup, IDe
7
Marathon
represents a
revenue
opportunity for
airlines, not a
risk.
Air Passenger Demand. The current air travel demand to the
Keys represents approximately five times the traffic that Key
West International can handle.
MTH is not a
separated
destination, but
instead a 00-
terminal to the
Keys.
Key West International is currently the only scheduled air
service gateway to the Keys. Because it cannot be materially
expanded, there is a negative economic impact to the region
due to visitors being forced to use Miami and Ft. Lauderdale to
access the Keys.
Demand Distribution. Almost 90% of the visitors who use
Miami or Ft. Lauderdale to access the Keys ("fly-drive" segment)
are generated from the East Coast. This represents a ready
opportunity for carriers with hubs serving that region.
Airline Opportunities. With the capacity constraints at EYW,
and over 1.2 million passengers using MIA/FLL to access the
Keys, there is enormous opportunity for profitable additional air
service if MTH is re-positioned and re-framed not as another
destination, but as an expansion of the Keys' airport capacity.
Strategy. The Boyd Group concludes that incumbent carrier
systems Delta and American are prime targets for expansion of
their Keys air service, using the co-terminal of MTH.
TheBoydGroup, IDe
Fewer than one in
four visitors who
use air travel to
get to the Keys
are flying into
Key West
International.
8
III. Summary of The Market
The Current Role of Airline Service
Of the estimated 3.1 million visitors to the Keys annually,
slightly over 50% do not use any form of air service, with the
majority of these using auto for their journey. 1
Travel/Access Modes
Other Means or
Transport
(Car, Ship, etc.~
(1,550.000~
50%
Fly To MIAlFLL
and Drive
40%
(1,240.000~
Access Via EYW
10%
(295,OOO~
The remainder represents approximately 1.535 million visitors
who use air to access the Keys. Of these, however, less than
one in four uses Key West International.
Based on the fact that EYW is at full capacity, we can conclude
that a substantial portion of the "fly-drive" market now using
Miami and Ft. Lauderdale would use EYW or Marathon were the
seats and service available.
The Keys Air Access Situation
One of the fundamental challenges to increasing air service to
the Florida Keys is the limited airport infrastructure available.
Key West International has a 4,801-foot runway, which while
entirely safe, represents limits to the size and type of airliners
that can be operated at the airport. Furthermore, the terminal
facility is at capacity in terms of the number of passengers it
can handle.
I Source NOAA.
TheBoydGroup,Inc
Clearly, there is
immediate
demand for more
air service to the
Keys.
The solution is
expansion of
service at MTH,
but branding it as
the Keys, not a
stand-alone
destination.
9
The "fly-drive" segment of visitors - those that fly into Miami or
Fort Lauderdale and drive the rest of the way, face the natural
constriction of a mostly two-lane highway that accommodates
almost 3 million visitors each year.
Clearly, to maintain and expand the tourist industry on which
the Keys depends, additional access must be developed. This
points to the Florida Keys Marathon Airport as a natural option.
But just having a need for additional air access does not create
air service, particularly into a nearly un-served airport.2 Airlines
will not take risks today, and will enter such markets only if
there is a near-certainty that they will be profitable almost from
the start of service.
Fortunately, the air service demand to the Keys far outstrips the
current or potential airport capacity of the Keys, even when
MTH is considered. This is the reason that over 1.5 million
visitors are forced to use Miami/Ft. Lauderdale as an access
point. It also means that any capacity added to the Keys via the
MTH co-terminal would likely be filled very quickly.
The Economic Benefit of MTH Air Service
This high percentage of "fly-drive" visitors has several negative
economic impacts for the Keys and for Monroe County:
· By using Miami or Ft. Lauderdale, dollars are spent
outside of Monroe County for services such as rental
cars, food, and some intermediate hotel and overnight
services.
· The drive portion of the "fly-drive" may be scenic, but it
also takes up substantial amounts of consumers vacation
time. In fact, with the need to be at major airports such
as Miami at least two hours before flight time, the
essential part of an entire day would be spent by
vacationers who have to drive in from Key West.
· The cost of a vacation in the Keys may be less
competitive with other destinations that have easier and
wider air service access.
2 Florida Coastal Airlines publishes a schedule with a single daily 8-seat flight to
Miami, tagged onto Key West.
TheBoydGroup,Inc
10
IV. Air Service Options &. The Florida Keys
The Airline Industry
There are four modes of air transportation to access the Florida
Keys.
Business and General Aviation. This represents non-commercial,
private aircraft.
Charter Service. This involves specific, pre-sold service aimed at
moving groups of customers. Because of the facility and runway
constraints at Key West, this mode of air access is limited.
Indeoendent Commuter Airlines. Florida is one of the few
markets left in the nation that can support small, independent
commuter airlines. Key West is served by two of these, Florida
Coastal, and Cape Air. Both operate 8-seat, piston-engined
Cessna 402 aircraft. Because of the size of these airliners, and
the low levels of connectivity to the rest of the air transportation
system, these independent commuters are not a major factor in
air service to the Keys. Furthermore, for a variety of reasons,
these carriers do not represent future growth potential for the
Keys. 3
Major Airline Systems. These are airlines such as American,
Continental, and Delta. Today, these carriers are comprised of
"mainline" aircraft - operated by their own employees, and
"regional airline partners" - which are basically contractors to
the major. At markets such as Key West (and, hopefully,
Marathon) major carriers usually use regional airline partners to
provide service.
The Issue of Connectivity
At small markets such as Key West, viable air service is
dependent on the hub-and-spoke system. This is where an
airline flies passengers into a central airport, for example Delta
into its hub at Atlanta, and connects them onward to several (or
3 The economics of operating 8-seat piston aircraft are getting more and more
difficult. Furthermore, there is increasing consumer resistance to flying on smaller
aircraft. Therefore, independent commuters are essentially ''niche'' carriers serving
small, but well defined, local markets. They do not provide material connectivity to
the rest of the air transportation system.
TheBoydGroup,Inc
The pattern of air
service access at
EYW is excellent.
The traffic,
however, is
limited by
capacity at EYW.
11
in some cases, dozens) of onward destinations. In this manner,
sufficient traffic can be collected onto a single airliner to make
flights to places like Key West economically viable.
Optimally, the idea is to allow markets such as EYW to have
access to most major destinations via a single connection.
Current Keys Air Service
Key West is served today by four major airline systems, each
using regional airline partners. In addition, it has service from
two independent commuter airlines, operating 8-seat Cessna
402 aircraft.
AllanIa
Della
C t Tam QMndo
U rre n Gu earn/Con\; ntal Dt\Ila & GLifstream/Continental
US Ai ays
Air Service
To The Keys
Fort l.audardala
Gullslraam/Continantal
& Cape Air
Miami
American
The major carrier system service includes:
. Delta Air Lines, which provides all-jet service, with two
daily flights to Atlanta, and three daily fights to Orlando.
Both of these destinations offer enormous connectivity to
both large and mid-size cities across the rest of the
nation, plus enormous access to European destinations.
. Continental's regional partners offer 19-seat and 8-seat
flights to Ft. Lauderdale, Fort Myers, Miami, Tampa, and
Orlando. Because this airline does not operate a hub at
any of these points, these flights are either aimed at local
traffic, or timed to "kiss" certain Continental flights
arriving and departing at Ft. Lauderdale, Orlando, and
Tampa. This represents some limited connectivity, mostly
to Houston, Cleveland, and Newark. Additional
connectivity is offered beyond these Continental hubs,
TheBoydGroup,lnc
12
but it requires making two connections, which is less
attractive to consumers.
. American Eagle operates 64-seat turboprops to the
American Airlines hub at Miami. These offer very strong
connectivity to mostly very large destinations.
. US Airways Express operates 19-seat airliners to Tampa.
This service offers very limited connectivity to US Airways
flights to the Northeast. At some point, due to a new
code-share arrangement with United, there could be
some connectivity to that carrier's Chicago and Denver
hubs.
TheBoydGroup,Inc
13
v. The Market Opportunity
The objective of this portion of the study was to determine not
only if there is sufficient demand to recruit air service at
Marathon, but to also define from which parts of the nation this
demand is generated. In doing so, we can identify which
carriers have the strongest potential of making MTH service a
success.
It is estimated that 1.24 million visitors are using airports other
than EYW to access the Keys. The issue at hand is to determine
the followi ng:
. Re-Capture Rate. How many of these visitors could be
re-captured with an increase in air service to the region.
. Traffic Generation. The points of origin from which
these visitors are coming from.
. Airline Systems. The airline systems that would benefit
from adding service to the Keys via Marathon.
Current Destination Mix
In reviewing the 2003 top O&D market data for Key West, a
number of factors become very clear:
Low Local Trip Origination. This is primarily a destination
market, i.e., 85% to 90% of passengers initiate their trip from
points outside of the Keys.
This is very typical of resort destinations, but it also affects the
choice of airline system to target with marketing efforts.
With high origination rates outside of the Keys, an airline cannot
rely upon local advertising to build business. Instead it must
work on generating new traffic from a highly-Balkanized base in
many other cities. This means that carriers with a strong and
centralized hub system would be the most likely candidates for
marketing efforts on the part of the Keys.
TheBoydGroup, lue
14
The OltD
distribution
indicates strong
service expansion
opportunities for EWR 30,710 4.05% $178.68 10.94%
incumbent EYW BaS 25,240 3.33% $170.01 9.63%
carriers. LGA 25,030 3.30% $144.23 11.91 %
PHL 23,060 3.04% $166.96 6.72%
DCA 19,720 2.60% $179.41 12.12%
All 18,350 2.42% $165.05 13.84%
ORD 14,730 1.94% $177.32 10.45%
JFK 12,930 1.70% $139.42 8.12%
BDL 12,010 1.58% $155.65 11.07%
BWl 10,770 1.42% $181.30 11.61%
MIA 10,030 1.32% $115.58 31.90%
DlW 8,620 1.14% $194.00 11.60%
RDU 8,400 1.11% $151.01 8.10%
CLE 8,290 1.09% $182.68 8.56%
CLT 7,580 1.00% $156.55 12.53%
DFW 6,970 0.92% $176.58 13.77%
PIT 6,810 0.90% $165.80 13.51%
ORF 6,380 0.84% $209.38 18.97%
SDF 6,020 0.79% $152.74 7.14%
IAH 5,980 0.79% $177.61 10.20%
MSP 5,920 0.78% $207.97 10.47%
lAD 5,880 0.77% $192.44 8.50%
CMH 5,860 0.77% $163.87 5.80%
STL 5,760 0.76% $179.80 15.10%
CVG 5,550 0.73% $157.52 14.05%
PVD 5,450 0.72% $182.33 14.68%
High Concentration Of East Coast Demand. While the
distribution of O&D will be affected by the levels and quality of
the air service at a given airport, it is very clear that the East
Coast is the main community of travel interest for the Keys.
HighlY Balkanized O&D Mix. The traffic base of the Keys is not
dependent on anyone destination. Only one, Newark,
comprises more than 4% of the total. Over 60% of the total
traffic is comprised of passengers from destinations each of
which by themselves represent less than one percent of the
airport's total traffic. This pOints to the opportunity for more
service from highly concentrated hub carriers.
TheBoydGroup,Inc
15
These factors indicate the following in regard to air service
recruitment efforts:
1. Incumbent carriers are the best target for increasing
service to the Keys via MTH. They already have market
presence, and service to MTH would be additive, not
competitive, with their current service at EYW.
2. Service via carriers with strong connecting hub
operations would more effectively meet the need than
adding more point-to-point service, or service to non
connecting-hub airports.
Sizing The Potential Market
It is logically assumed that the current O&D demand distribution
at EYW is representative of most of the traffic accessing the
Keys by air, including the fly-drive passengers.
Key West Interna al
Leakage By Region
The fly-drive traffic was divided into destinations with the same
distribution as EYW passengers. The results provide a picture of
not only the traffic being lost to EYW, but also where air service
recruitment efforts need to focus.
TheBoydGroup,Inc
MTH is not just
another airport.
It is expansion
capacity for EYW.
16
Estimated "Fly-Drive" By Region
Region "Fly-Drive" Percent Of Total
Mid-Atlantic 590,366 33.0%
Southeast 363,509 20.3%
Midwest 362,458 20.3%
New England 262,922 14.7%
iTexoma 70,743 4.0%
West Coast 65,363 3.7%
Rocky Mountains 37,032 2.1%
Florida 24,338 1.4%
Northwest 11,980 0.7%
Total 1,788,710
Note that almost nine out of ten fly-drive passengers are
generated from the East Coast - from the Southeast moving
north to New England. This indicates that the best opportunities
for adding air service to the Keys will be with carriers that have
strong hub systems in these regions.
Strategy: One Destination - The Keys
It is clear that demand for air service to the Keys exceeds the
capacity of Key West International to handle it.
But that capacity can be expanded - by making use of Florida
Keys Airport at Marathon. Conceptually, these two facilities
should not be viewed as two separate airports. In fact, EYW and
MTH are simply two arrival and departure terminals to the same
destination - the Keys. The use of the terminal and runway
capacity at MTH is essentially the same as expanding EYW.
Therefore, recruiting air service in this case is not precisely the
same as trying to entice carriers to serve a new destination.
Instead, it is the process of showing carriers that they can use
MTH to increase their access to the Keys. In short, the mindset
needs to be that EYW now has additional capacity in the form of
the facilities at Marathon.
TheBoydGroup,lnc
17
Strategy: Build. Add To Existing EYW Service
Because the Keys market is materially underserved, the logical
path is to look for ways to increase frequencies with incumbent
carriers, using Marathon.
For that reason, The Boyd Group would suggest that air service
efforts should focus on the following:
. Expanding incumbent carrier air service to the Keys by
adding frequencies at Marathon.
. Build on the carriers that have the highest potential of
recapturing the leakage that is now part of the fly-drive
component of visitors.
Delta & American The Primary Marketing Targets
The goal is to re-capture as much of the leakage to MIA/FLL as
possible. This can only be done with carriers that have the
strongest route systems into the East Coast and Northeast
regions of the country.
Of the current airline systems that serve the Keys, only Delta
and American actually access true connecting hub operations.
For Delta, they have hubs at ATL and MCO, and American has a
strong hub at MIA. Therefore, the strategy would be to
concentrate primary efforts to convince these carriers to
implement additional frequencies to the Keys, using Marathon.
Continental. Local Commuters Secondary Targets
There are also possibilities of adding Continental-branded
service at MTH. However, because this service does not offer
high degrees of connectivity, it would not be as effective in re-
capturing the fly-drive leakage now using Miami and Ft.
Lauderdale.
TheBoydGroup,Inc
Concept: List
both MTH and
EYW as 00-
terminals to one
destination, just
as LGA and lFK
are listed under
"New York."
18
Strategy: Officially Re-Classify Florida Keys As A Single
Destination
Along these lines, The Boyd Group would suggest exploring the
potential of having the Florida Keys officially re-c1assified as a
single destination with two airports, just as Chicago is listed as a
single destination served by O'Hare and by Midway airports.
Instead of having MTH and EYW separately listed in Official
Airline Guides and in computer reservations systems, it would
be listed as "Florida Keys" with service to both airports listed.
This would facilitate and immediately increase consumer
awareness of MTH as an access point to the Keys.
Phasing The Program
It is felt that the Keys service expansion program, using MTH as
the access point, would best be started with the Delta system.
The first phase would be to implement three daily 37-seat Delta
Connection jets to Orlando, in addition to the three now
operated from EYW. Including the current EYW-ATL service, this
would immediately give the Delta system eight daily flights to
the Keys, building synergies with the carrier's strong route
system into the Northeast and Midwest, where most of the
Key's unmet demand is generated.
Air Service Implementation
.
T -
Phase I Delta ConnectIon Orlando Embraer 135.fe18 59,975 59 975
Phase II Amertcan EaaIe Miami international ATR 72 105,031 165,006
Phase m Delta Connection Atlanta 2 Canadlllr RJs 53 992 218 998
The second phase would be to recruit additional American
Airlines service to its Miami hub. The relatively short flying time
to MIA would represent low risk for the carrier, plus would allow
it to benefit from the increased consumer awareness of MTH
that the Delta service would generate.
The third phase would be to increase the Delta Atlanta service
to an additional two CRJ-700 flights. This is a relatively long
TheBoydGroup,Inc
The fly-drive
market is far
greater than the
capacity that can
reasonably be
added to the
Keys.
19
haul and would consume substantial aircraft time. However, in
conjunction with the other Delta-branded service at both MTH
and EYW, it is believed that the service would further penetrate
the base of nearly one million consumers from the Northeast
and Midwest which are now accessing the Keys from MIA/FLL.
These "phases" are considered to be sequencing priorities. It is
noted that Delta has a large number of regional jets being
delivered in 2005, and has expressed interest in finding
opportunities to place them in profitable markets. The Boyd
Group believes that a compelling proposal can be made to Delta
regarding the strong, net-new system revenues this additional,
MTH-based service would bring to the carrier.
Total Traffic Potential
It must be recognized that the total size of the fly-drive leakage
to Miami and Ft. Lauderdale far surpasses the levels of
additional service that the Keys reasonably can expect to re-
capture. Some fly-drive traffic is intentional, comprised of
visitors who desire to have a road-based component to their
Florida visit. Furthermore, there is some portion of this fly-drive
segment that is the result of consumer preferences for larger
aircraft, or simply is coming from cities where the incumbents
now serving EYW do not operate.
The Boyd Group's analyses of the market indicate that the
service outlined above represents minimal risk for the carriers
involved and exceptional potential for net-new system revenues.
Based on the MTH service outlined, the increases in capacity
would represent a maximum of 13% re-capture of the fly-drive
market.4
On the following pages are forecast annualized projections for
each of the three service expansions noted above. Note that
very conservative estimates have been made of the potential
traffic capture expected.
4 Based on daily service and an 80% load factor.
TheBoydGroup,Inc
The concept is to
show incumbent
carriers the
amount of traffic
being left on the
table due to EYW
being at full
capacity.
Posturing MTH as
an expansion of
the Keys' airport
capacity will
address this
issue.
20
Phase One: Three Delta ERJ-135 Flights To MeO
Phase I: Marathon-Orlando Traffic Estimates
Current capture Resulting
Destination Leakage Rate Traffic
Orlando 23,413 50% 11,706
Newark 120,175 3% 3,605
Boston 102,647 5% 5,132
New York-LGA 98,864 5% 4,943
Washington-DCA 80,243 3% 2,407
Atlanta 76,754 5% 3,838
Hartford/Springfield 51,660 7% 3,616
New York-JFK 50,104 5% 2,505
Raleigh/Durham 39,596 7% 2,772
Dallas/Ft. Worth 29,592 7% 2,071
Louisville 27,406 7% 1,918
Columbus 25,641 7% 1,795
Cincinnati 25,220 7% 1,765
Los Angeles 18,999 5% 950
Nashville 18,747 7% 1,312
New Orleans 15,216 7% 1,065
Greensboro 15,132 7% 1,059
Richmond 13,787 7% 965
Birmingham 10,508 7% 736
Las Vegas 9,121 5% 456
Tallahassee 5,591 7% 391
Salt Lake City 5,296 10% 530
Greenville/Spartanburg 4,666 10% 467
Columbia 4,456 10% 446
Huntsville 3,909 10% 391
Pensacola 3,447 10% 345
San Juan 2,984 5% 149
Mobile 1,387 10% 139
Other (incl. DL/NW/CO Codeshare) 2,500
Total 59,975
TheBoydGroup,Inc
21
Phase Two: Three American Eagle ATR-72s To MIA
Phase II: Marathon - Miami Traffic Estimates
Current Capture Resulting
Destination Leakage Rate Traffic
Newark 120,175 7.5% 9,013
Boston 102,647 7.5% 7,699
New York-LGA 98,864 10% 9,886
Philadelphia 95,921 5% 4,796
Washington-National 80,243 7.5% 6,018
Atlanta 76,754 7.5% 5,757
Chicago-O'Hare 61,033 10% 6,103
Hartford/Springfield 51,660 7.5% 3,874
New York/Kennedy 50,104 10% 5,010
Baltimore/Washington 43,589 5% 2,179
Miami 42,748 10% 4,275
Raleigh/Durham 39,596 7.5% 2,970
Cleveland 37,242 5% 1,862
Detroit 36,948 7.5% 2,771
Charlotte 30,601 5% 1,530
Dallas/Ft. Worth 29,592 10% 2,959
Pittsburgh 27,658 7.5% 2,074
Louisville 27,406 7.5% 2,055
Columbus 25,641 7.5% 1,923
Houston 25,220 7.5% 1,892
Washington-Dulles 24,842 5% 1,242
St. Louis 24,632 10% 2,463
Minneapolis/St. Paul 23,413 7.5% 1,756
Los Angeles 18,999 7.5% 1,425
Nashville 18,747 7.5% 1,406
Indianapolis 18,621 7.5% 1,397
Denver 17,318 7.5% 1,299
New Orleans 15,216 7.5% 1,141
San Francisco 14,796 7.5% 1,110
Richmond 13,787 7.5% 1,034
Jacksonville 12,568 7.5% 943
Orlando 11,181 7.5% 839
Las Vegas 9,121 5% 456
San Juan 2,984 7.5% 224
Tampa 2,732 3% 82
St. Thomas 1,345 5% 67
Other 3,500
Total :105,03:1
TheBoydGroup, IDe
22
Phase Three: Two Delta Connection CRJ-700s To ATL
Phase III: Marathon - Atlanta Traffic Estimates
Traffic Capture Resulting
Destination Generation Rate Traffic
Newark 120,175 2% 2,403
Boston 102,647 2% 2,053
New York-laGuardia 98,864 2% 1,977
Philadelphia 95,921 2% 1,918
Washington-National 80,243 2% 1,605
Atlanta 76,754 20% 15,351
Chicago O'Hare 61,033 2% 1,221
Hartford/Spri ngfield 51,660 3% 1,550
New York-Kennedy 50,104 2% 1,002
Baltimore/Washington 43,589 3% 1,308
Raleigh/Durham 39,596 3% 1,188
Cleveland 37,242 2% 745
Detroit 36,948 2% 739
Charlotte 30,601 2% 612
Dallas/Ft. Worth 29,592 3% 888
Pittsburgh 27,658 2% 553
Louisville 27,406 3% 822
Columbus 25,641 3% 769
Houston 25,220 2% 504
Cincinnati 25,220 3% 757
Washington-Dulles 24,842 3% 745
Norfolk 24,800 3% 744
St. Louis 24,632 2% 493
Minneapolis/St. Paul 23,413 2% 468
Providence 22,572 3% 677
Los Angeles 18,999 2% 380
Nashville 18,747 3% 562
IndianapOlis 18,621 3% 559
Denver 17,318 2% 346
Dayton 16,645 3% 499
New Orleans 15,216 3% 456
Greensboro 15,132 3% 454
San Francisco 14,796 2% 296
Richmond 13,787 3% 414
Syracuse 12,904 3% 387
Kansas City 12,610 3% 378
Manchester 12,358 3% 371
Grand Rapids 12,148 3% 364
Albany 12,022 3% 361
Milwaukee 11,854 3% 356
Portland, ME 10,929 3% 328
Buffalo 10,761 3% 323
Birmingham 10,508 3% 315
Other 5,750
Total 53,992
TheBoydGroup,lnc
23
Potential Traffic At MTH
Assumptions
In these projections, the following assumptions have been
made:
· Annual growth in visitors to the Keys would average
1.60/0.5 This is reflected in the traffic projections for MTH.
· EYW is projected to be nearly flat in traffic growth, with
only 10/0 expected annually.
· The new service would only re-capture existing leakage,
and there would be no market stimulation due to the
additional capacity.
· Additional service could be expected from Gulfstream,
Cape Air, and other carriers. To remain conservative,
these are not reflected in the projections.
Timeframes
For the purposes of this study, the assumption was made that
additional Delta Connection service to MCO, operating from
MTH, could be established in the second half of 2005.
The additional Miami service with American Eagle is projected to
enter MTH at the beginning of 2006, and Delta Connection
service to ATL from the MTH facility would start in the middle of
that year.6
Based on these projections, it is estimated that the Marathon
facility could be experiencing approximately 112,000 annual
enplanements by 2007.
5 Source: NOAA
6 Given the enormous size of the revenue opportunity, these are not felt to be overly
aggressive estimates.
TheBoydGroup,Inc
24
Enplanement Estimates
It is noted that the service projected in this document is based
upon the Delta and American systems accessing traffic that
represents the "low hanging fruit" - Le., the enormous
passenger leakage that is generated mainly from the East
Coast.
Keys/MTH Potential Traffic
140,000 !
120,000
..
<II 100,000
~
.tl
c 80,000
...
e
...
c 60,000
<II
"S.
c
W 40,000
20,000
2005 2008 2007 2008 2009 2010 2011 2012 2013
. Keys/Mlli - An. 13,_ 27,428 27,fII67 28,313 28,788 29,226 29,693 30,169
llKeys/Mlli - MIA 52,515 53,356 54,209 55,077 55,958 56,853 57,7&3 58,687
[J KeyslMlli - MCO 14,_ 30,488 30,955 31,450 31,954 32,485 32,984 33,512 34,048
This does not reflect the traffic that can be expected by the
addition of carriers that today serve other Florida markets from
EYW.
Economic Impact Of New MTH Service
It is important to note that even with this service expansion at
MTH, there will still be enormous leakage to MIA/FLL with the
fly-drive portion. Based on annualized estimates of 220,000
O&D passengers being re-captured at MTH, there will still be
approximately one million visitors that will remain in the f1y-
drive segment.
To be sure, the addition of MTH service, under any reasonable
scenario, will not capture all, nor even a majority of the fly-drive
segment. However, the economic impact of the additional traffic
at MTH will be substantial.
TheBoydGroup,Inc
25
While an economic impact analysis is not a part of this project,
it is obvious that the recapture of over 200,000 annual O&D
passengers to the Keys would produce benefits far beyond the
incremental costs to the county of re-establishing air service at
MTH.
Projected Visitor Mix - 2007
Keys/MTH
Enpl8nements
3.4%
I
Kers/EYW
r Enplenements
9.4%
,
Ground/SUrface
SO.3%
Remaining Fly-Drive
36.9%
It is assumed that all of the passengers captured by this new
service will be ones diverted from the fly-drive consumer
component, and there will be minimal, if any, net-new visitors
to the Keys as a result of the new service.
However, by using the local airport instead of MIA/FLL, there
are certainly a number of positive economic impacts, such as
expenditures on rental cars, meals, and other incidentals.
Another benefit would be these consumers' ability to stay longer
in the Keys by eliminating the long drive to MIA/FLL and the
need to allow two hours or more for potential security screening
at that airport.
As a raw estimate, if each of these re-captured passengers
spent an additional $50 within the Keys as a result of this
increased service, it would pump an additional $5.4 million into
the local economy.
TheBoydGroup, IDe
26
VI. Facility, Cost, & Strategic Issues
Facility Issues
Terminal & Airside
The Marathon terminal building is already in place and would
require minimal, if any modification for airline ticketing and
passenger processing. It is also noted that since the facility is
debt-free, it would offer very attractive space rental to the
carriers operating there.
Security Facilities
The required equipment and modifications to meet the needs of
the Transportation Security Administration would represent
possibly as much as $300,000 to complete. It is expected that
these funds would be available from either FDOT or federal
sources. An on-site inspection of the terminal indicated that
minimal physical re-configuration of the security check point
would be needed.?
Emergencv Response
It is expected that once scheduled service commences, MTH
would be considered an Index A facility, which would require
minimal additional investment by the County.
Airline Marketing Issues
With the enormous levels of traffic leakage to Miami and Ft.
Lauderdale, combined with the capacity limitations at EYW, the
concept of using MTH as a Keys air service expansion point
would be an attractive concept to the target airlines.
Critical to this strategy, however is to posture MTH as additional
airport capacity for the region, and not as a new destination.
The traffic that can be re-captured from the current fly-drive
segment represents at least 200,000 additional passengers to
the incumbent airlines serving the Keys.
7 This is an observation only, and actual costs would be determined by the TSA's
final requirements.
TheBoydGroup,lnc