San Luis Obispo Denver Non-Stop Service Opportunities for Business - PowerPoint PPT Presentation

San Luis Obispo – Denver Non-Stop Service Opportunities for Business Savings and Support

Agenda Inefficiencies of Current Air Travel Cost of Drive Diversion to Other Airports Lost Employee Time Potential Service: Denver/United Service Network/Connections Potential Schedule New Service Support Current Incentives Business Commitment to Service United Airlines PassPlus Program Potential Fare Savings

Inefficiencies of Current Air Travel

SLO Retains Just 43% of its Passengers OAK, 4.6% SFO, 11.4% SJC, 5.1% Originating Airport For San Luis Obispo Area Passengers True Market with LCC Adjustment Tw elve Months Ended June 2010 SBP, 42.8% Rank Airport Passengers PDEW Share 1 San Luis Obispo, CA 239,440 328.0 42.8% 2 Los Angeles, CA 142,551 195.3 25.5% SMX, 5.4% 3 San Francisco, CA 63,711 87.3 11.4% 4 Santa Maria, CA 30,056 41.2 5.4% 5 San Jose, CA 28,298 38.8 5.1% SBA, 1.4% 6 Oakland, CA 25,760 35.3 4.6% 7 Burbank, CA 19,897 27.3 3.6% 8 Santa Barbara, CA 8,101 11.1 1.4% 9 Monterey, CA 1,665 2.3 0.3% Total San Luis Obispo Area Passengers 559,479 766.4 100.0% BUR, 3.6% LAX, 25.5% Page 4 Source: Sixel Consulting Group San Luis Obispo True Market Study

The Average LAX Drive Cost is $211 Roundtrip San Francisco (SFO) 225 Miles 3:25 Drive Time San Jose (SJC) 193 Miles 2:57 Drive Time Direct Drive Costs: San Luis Obispo Alternate Airports As of September 2013 SBP Airport Mileage (O/W) IRS Rate One Way Cost Roundtrip Cost Los Angeles (LAX) 187 $0.565 $105.66 $211.31 San Francisco (SFO) 225 $0.565 $127.13 $254.25 Santa Barbara (SBA) San Jose (SJC) 193 $0.565 $109.05 $218.09 193 Miles Santa Barbara (SBA) 94 $0.565 $53.11 $106.22 1:30 Drive Time Sources: Sixel Consulting Group, Google Maps, Internal Revenue Service Los Angeles (LAX) 187 Miles 3:10 Drive Time Page 5 Sources: Sixel Consulting Group and Google Maps Average Drive Time

A Company with 100 Trips Spends $21K Direct Drive Cost: San Luis Obispo - Los Angeles (LAX) As of September 2013 Annual Roundtrips Cost per Roundtrip Annual Cost 10 $211.31 $2,113.10 50 $211.31 $10,565.50 75 $211.31 $15,848.25 100 $211.31 $21,131.00 150 $211.31 $31,696.50 200 $211.31 $42,262.00 250 $211.31 $52,827.50 300 $211.31 $63,393.00 350 $211.31 $73,958.50 SBP 400 $211.31 $84,524.00 450 $211.31 $95,089.50 500 $211.31 $105,655.00 1,000 $211.31 $211,310.00 1,500 $211.31 $316,965.00 2,000 $211.31 $422,620.00 2,500 $211.31 $528,275.00 Los Angeles (LAX) 5,000 $211.31 $1,056,550.00 187 Miles 3:10 Drive Time Sources: Sixel Consulting Group, Google Maps, Internal Revenue Service Page 6 Sources: Sixel Consulting Group and Google Maps Average Drive Time

100 Trips Represents $31K in Personnel Costs Personnel Time Cost: San Luis Obispo - Los Angeles International Airport (LAX) As of September 2013 Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost 10 6.33 $20.00 $1,266.00 500 6.33 $20.00 $63,300.00 6.33 $35.00 $2,215.50 6.33 $35.00 $110,775.00 6.33 $50.00 $3,165.00 6.33 $50.00 $158,250.00 50 6.33 $20.00 $6,330.00 1,000 6.33 $20.00 $126,600.00 6.33 $35.00 $11,077.50 6.33 $35.00 $221,550.00 6.33 $50.00 $15,825.00 6.33 $50.00 $316,500.00 100 6.33 $20.00 $12,660.00 1,500 6.33 $20.00 $189,900.00 6.33 $35.00 $22,155.00 6.33 $35.00 $332,325.00 6.33 $50.00 $31,650.00 6.33 $50.00 $474,750.00 200 6.33 $20.00 $25,320.00 2,000 6.33 $20.00 $253,200.00 6.33 $35.00 $44,310.00 6.33 $35.00 $443,100.00 6.33 $50.00 $63,300.00 6.33 $50.00 $633,000.00 300 6.33 $20.00 $37,980.00 2,500 6.33 $20.00 $316,500.00 6.33 $35.00 $66,465.00 6.33 $35.00 $553,875.00 6.33 $50.00 $94,950.00 6.33 $50.00 $791,250.00 400 6.33 $20.00 $50,640.00 5,000 6.33 $20.00 $633,000.00 6.33 $35.00 $88,620.00 6.33 $35.00 $1,107,750.00 6.33 $50.00 $126,600.00 6.33 $50.00 $1,582,500.00 Sources: Sixel Consulting Group, Google Maps Los Angeles (LAX) 187 Miles 3:10 Drive Time Page 7 Sources: Sixel Consulting Group and Google Maps Average Drive Time

A Company with 100 Trips Spends $25K Direct Drive Cost: San Luis Obispo - San Francisco (SFO) San Francisco (SFO) As of September 2013 225 Miles Annual Roundtrips Cost per Roundtrip Annual Cost 3:25 Drive Time 10 $254.25 $2,542.50 50 $254.25 $12,712.50 75 $254.25 $19,068.75 100 $254.25 $25,425.00 150 $254.25 $38,137.50 200 $254.25 $50,850.00 250 $254.25 $63,562.50 300 $254.25 $76,275.00 350 $254.25 $88,987.50 SBP 400 $254.25 $101,700.00 450 $254.25 $114,412.50 500 $254.25 $127,125.00 1,000 $254.25 $254,250.00 1,500 $254.25 $381,375.00 2,000 $254.25 $508,500.00 2,500 $254.25 $635,625.00 5,000 $254.25 $1,271,250.00 Sources: Sixel Consulting Group, Google Maps, Internal Revenue Service Page 8 Sources: Sixel Consulting Group and Google Maps Average Drive Time

100 Trips Represents $32K in Personnel Costs San Francisco (SFO) 225 Miles 3:25 Drive Time Personnel Time Cost: San Luis Obispo - San Francisco International (SFO) As of September 2013 Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost 10 6.43 $20.00 $1,286.00 500 6.43 $20.00 $64,300.00 6.43 $35.00 $2,250.50 6.43 $35.00 $112,525.00 6.43 $50.00 $3,215.00 6.43 $50.00 $160,750.00 50 6.43 $20.00 $6,430.00 1,000 6.43 $20.00 $128,600.00 6.43 $35.00 $11,252.50 6.43 $35.00 $225,050.00 6.43 $50.00 $16,075.00 6.43 $50.00 $321,500.00 100 6.43 $20.00 $12,860.00 1,500 6.43 $20.00 $192,900.00 6.43 $35.00 $22,505.00 6.43 $35.00 $337,575.00 6.43 $50.00 $32,150.00 6.43 $50.00 $482,250.00 200 6.43 $20.00 $25,720.00 2,000 6.43 $20.00 $257,200.00 6.43 $35.00 $45,010.00 6.43 $35.00 $450,100.00 6.43 $50.00 $64,300.00 6.43 $50.00 $643,000.00 300 6.43 $20.00 $38,580.00 2,500 6.43 $20.00 $321,500.00 6.43 $35.00 $67,515.00 6.43 $35.00 $562,625.00 6.43 $50.00 $96,450.00 6.43 $50.00 $803,750.00 400 6.43 $20.00 $51,440.00 5,000 6.43 $20.00 $643,000.00 6.43 $35.00 $90,020.00 6.43 $35.00 $1,125,250.00 6.43 $50.00 $128,600.00 6.43 $50.00 $1,607,500.00 Sources: Sixel Consulting Group, Google Maps Page 9 Sources: Sixel Consulting Group and Google Maps Average Drive Time

Potential Service: Denver/United

Proposed SBP – Denver Service Proposed Schedule: San Luis Obispo - Denver Operated by SkyWest dba United Express Origin Destination Departs Arrives Elapsed Time Aircraft SBP DEN 6:05am 9:35am 2:30 CR7 DEN SBP 9:50pm 11:20pm 2:30 CR7 One Daily Flight in Each Direction, on “Business Schedule” Operated by SkyWest, Doing Business As (DBA) United Express Canadair CRJ700 (CRJ) Aircraft, Seating 70 Six First Class 16 Economy Plus 48 Economy Page 11 Sources: Sixel Consulting Group Analysis of United Airlines Denver Hub

San Luis Obispo – Denver Connectivity 85 One-Stop Cities 25 Non-Duplicated Connections Page 12 Sources: Sixel Consulting Group Analysis of United Airlines Denver Hub

New Service Support

Mitigating Airline Risk Due to Drive Diversion, New Routes Forecast Poorly in Airline Models SBP-DEN Forecasts $722,000 Loss in Years One and Two Total Forecast Loss Near $1.5 Million in “Start - Up” Phase Must Overcome Poor Forecast Through Risk Mitigation Additional Funds Required to Reduce Risk and Secure Flights Business Commitment to Use New Service is Paramount Commitment Can Be Leveraged to Save Money Lock in Discounts with Corporate Contracts Opportunity to Reduce Drive Costs Employee Time Lost to Ground Transportation Page 14

Mitigating Losses in “Start - Up” Phase Targeted Risk Mitigation Amount: $1,500,000 Funding Already Secured: $500,000 Funding Still Needed: $1,000,000 Request for Business Pledges to Take to Carrier Pre-Purchased Tickets Funds in Escrow Account for Use on New Service Draw from Account for Discounted Fares Optimum Formula: Take Direct Cost Savings from Drive to Other Airports and Commit that Funding to the Project Page 15

Examples from Other Communities Kalispell $500,000 Guarantee Drew $500,000 Bismarck Duluth $250,000 Guarantee Idaho Falls $300,000 Guarantee None Used $500,000 Guarantee Drew $50,000 None Used Springfield Manhattan $500,000 Guarantee $2 Million Guarantee Drew $500,000 None Used Branson $3 Million Guarantee Myrtle Beach None Used $500,000 Guarantee Drew $500,000 Panama City $25 Million Guarantee None Used Page 16

Impact of New Service in Other Communities Kalispell Passengers Up 2% Bismarck Duluth Passengers Up 23% Idaho Falls Passengers Up 18% Passengers Up 9% Springfield Manhattan Passengers Up 12% Passengers Up 165% Branson Passengers Up 52% Myrtle Beach Passengers Up 19% Average Passenger Growth: 53% Panama City Passengers Up 179% Page 17

United Airlines PassPlus Program

United Airlines’ Corporate Accounts Pre-Paid United PassPlus Program Lock-In Discounts Based on Mileage Flown Designees Access Through Mileage Plus Account Can Be Used on Last Minute Fares Benefits Business Travelers the Most Discount Program Fare Type Domestic Discount Int’l Discount First, Business, Full Fare Y 20% 20% 14-Day Advance Coach 5% 20% Deep Discount Coach 2% No Discount Other Benefits Premier Level Memberships and Upgrades Priority Check-In Economy Plus Seating at No Charge Page 19