HomeMy WebLinkAboutORDINANCE 1969-2002T ~~
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Suggested by: Administration
City of Kenai
ORDINANCE N0. 1969-2002
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA INCREASING
ESTIMATED REVENUES AND APPROPRIATIONS BY X20,000 IN THE AIRPORT
SPECIAL REVENUE FUND FOR AN AIR TRAVEL MARKETING STUDY.
WHEREAS, the City is concerned with the high cost of air travel and decreasing
enplanements at the Kenai Municipal Airport; and, '
WHEREAS, the City would like to conduct an airfare analysis and air service study;
and,
WHEREAS, professional services are needed to obtain the information and conduct the
study; and,
WHEREAS, money is available in the fund balance.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA that estimated revenues and appropriations be increased as follows:
Airport Special Revenue Fund
Increase Estimated Revenues:
Appropriation of Fund Balance 20 000
Increase Appropriations:
Airport Administration-Professional Services 20 000
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4~ day of September
2002.
JOHN J. WILLIAMS, MAYOR
ATTEST:
Carol L. Freas, City Clerk
Introduced: August 21, 2002
Adopted: September 4, 2002
Effective: September 4, 2002
Approved by Finance:
(08/ 15/2002) hl
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Municipal A~rpart
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"ServLn~-t3~e.Grea~texKev-ai~ ~evungula%
305 N. WILLOW ST. SUITE Z00 KENAF, ALA~iM~A 99611
T61.EpHONE 907.27951
FAx 907.283~3?37
To: Linda Snow -City Manager
from: Rebecca Cronkhite -Airport Manager
Date: August 15, 2x42
Subject: Proposal for Air dare Study
Attached is a proposal for Sixel Consulting Group, Inc. to conduct in-depth research into local
airfares, travel preferences and possible marketing strategies for attracting additional air service
to the Kenai market.
This proposal is in response to my inquiries based on concern expressed by Council and the
Airport Commission regarding lack of .competition in the Kenai market. To date our efforts to
attract another carrier have been ineffective, while local airfares have increased 30% in the past 6
months and enplanements have decreased 20%. The Airport Commission and I feel strongly that
we need totake apro-active position before the situation becomes critical for our concessionaires
and traveling public.
As you can see from the attached proposal, there are three phases to the project. The first phase
gathers basic information; the second expands to determine historical and current travel data;
and the third explores possible marketing strategies. The second and third phases will include
meetings with Council, the Airport Commission and the public. The third phase will also include
contacting local businesses that purchase large numbers of tickets to explore ticket guarantee
options for new carriers. The final and perhaps most exciting result of this project is the
passibility of grant money to help improve air service. There are grant funds available to assist
communities that have no service or extremely high airfares. There is a lot of competition in this
particular grant program; however, Sixel was successful in obtaining two large Grants last near for
There was no money budgeted for this study; therefore, it will require an appropriation from
Council from airport fund balance.
Let me know if you have questions or need further information.
www.ci.kenai.ak.us.
Sixel Consulting Group, lnc.
Air Transports#ion & Airport Consulting Services
TICKET LIFT SURVEY /TRUE MARKET -AIR SERVICE DEVELOPMENT MASTER PLAN
PROPOSAL
August 7, 2002
Rebecca Cronkhite
Airport Manager
Kenai Municipal Airport
305 North Willow, Suite 200
Kenai, Alaska 99611
Dear Rebecca:
Per our conversation last week, please examine the following proposal. I have broken it into three
elements, so that you can only pursue the work that you feel is most relevant to your situation. Also,
please note that we have contacted all seven of Kenai-Soldotna's travel agents. Of those seven
agencies, four had automated back-office accounting systems, while three were manual. Six of the
agents contacted expressed an interest in participating in further research, while one of the automated
. .
agencies ~s reluctant and may not participate.
Element 1 will determine the average airfares for local Kenai*Anchorage traffic. This will determine the
affect that changes in airfares on this route have had on enplanements. As we discussed, after you
ordered the Airport Tragic Sumrr-ary, there is a major problem in the DOT data that you received. As a
small-certificated air carrier, ERA Aviation does not report into the DOT's OD1A database and therefore,
fare information is non-existent. We did, however, apply an estimated fare based on a standard industry
yield formula for the mileage to Anchorage. However, it is not reflective of reality. The passenger
numbers should be close to correct, as ERA is required to report enplanements into the DOT's 298C
database. Therefore, the only way to accurately and economically complete the Airport Traffic Summary
is to survey area travel agents. These agents retain copies of the tickets they sell.
Element 2 expands on the travel agent ticket study, but is centered on retention/leakage rates to
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leakage I retention study, but with a twist. We take the travel agent information and combine it with U.S.
DOT information to come up with a clear estimate of the "true" size of the Kenai market. While fare and
Sixes Consulting Group, Inc. Post office Sox 5248 _ Eugene, ~R 974115 (541;} 341-1501
passenger information is not available on flights operated solely by ERA, anytime a passenger connects
.
through Anchorage to a larger airline (like Alaska Airlines, the full ticket information ~s required to be
reported in the 4D1A Survey by the larger airline. This allows us to accurately determine the true size of
the Kenai travel market and decide if there are opportunities for service beyond Anchorage (i.e. seasonal
non-stop jet service to Seattle/Tacoma for example).
A major advan#age to pursuing Element 2 in lieu of Element 1 is that Element 1 can be performed at the
same time for an additional $1,000 survey fee (to account for the additional tickets surveyed for 1999 and
2000.
dement 3 provides Kenai with an Air Service Development Master Plan. This plan will look extensively
at the Kenai market and all other markets in the region to determine what service deficiencies and
possibilities might exist. It also identifies goals and recommends strategy to accomplish these goals. It
will also detail what is not possible at Kenai at this time.
I have sent you a copy of our resume, which lists references as well as work completed to date.
dement #1- KenailAnchora a Fare, Ana~iysis:
In order to determine the actual airfare that travelers between Kenai and Anchorage have been charged
over the last three years, and the affects that changes in fares may have had on enplanements, Sixel
Consulting Group proposes to collect ticketing information from Kenai-Soldotna area travel agencies.
This information cannot be economically derived from any other source. To this end, consultant shall
perform the following:
Task ~. ~:
Consultant and/or staff member shall travel fo Kenai for eve days to compile ticket information
from area travel agents. While this information can, in some cases, be collected
electronically, Sixel Consulting Group has determined Through a phone survey of area agents
that half of the agencies who have agreed to participafe in this study have manual back ofllce
systems and are not automated. This means that a member of the SCG staff would gather
the data manually, directly from the travel agencies. SCG will sample a statistically
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Task 7.2:
Consultant shall add this information to the Airport Traffic Summary -n order to more
accurately determine the effect that fare changes may have had on enplanements.
Element #2~.Complete Tick,~t LL ft Surve
In order to calculate the underlying demand for air service from the residents of the Kenai Municipal
Airport Catchment Area, it is necessary to collect ticketing information from Kenai area travel agencies.
This information cannot be economically derived from any other source. To this end, consultant shall
perform the following:
Task 2.1:
Consultant shall determine the Airport Catchment Area (ACA) for Kenai Municipal Airport
using the nearest airport criteria.
Task 2.2:
Consultant shall contact ACA travel agencies by fax and telephone to explain the study (its
purpose and the intended use of the material), to pre-qualify them and to gain their
participation in the survey before traveling to the area.
Task 2.3:
Consultant shall survey a statistically valid sample of airline tickets (between 3, 000 and
4, 000) issued by travel agents in the Kenai Municipal Airport ACA.
Task 2.4:
Consultant shall collect the following data from each qualifying ticket issued.' origin,
connecting points, destination, originating airline, connecting airline(s), total fare, date of
issue, and dates of travel.
Task 2.5:
In conjunction with the travel agent data collection, consultant shall analyze summarized
ticket information produced by the U. S. Department of Transportation via its OD~A 10%
Ticket Lift Survey in beyond markets where applicable. This survey is produced from all
Schedule T X00 carriers operating in the tJ.S. Pertinent information to be collected by the
OD1A survey to be used in this part of the study includes passengers at Kenai Municipal
Airport by destination market.
~onsurranr sna-~ summar-ze rrave- agency information and calculate the following for both
domestic and international passengers: passenger leakage rates from the Kenai Municipal
~i~cel Consulting Group, Inc. Post Office fox 5~4~ -Eugene, OR 97485 ~54'i} 34~-~~~~
~~ Airport ACA, alternate airports used, carriers used at alternate airports, range of airfares at
Kenai Municipal Airport and alternate airports and advanced purchase summazzes.
Task 2. l:
In order to quantify the total number of Kenai Municipal Airport ACA passengers using
alternate airports, consultant shall use summarized travel agency information and combine
this information with OD 1 A survey in order to estimate the total numbers of passengers using
alternate airports, and the amount of local ACA revenue being spent on airline tickets at
alternate airports.
Task 2.8:
Though not part of this survey, from this information a number of useful bits of information
can be calculated, such as: the cost to travelers to use alternate airports (in terms of time and
value), the loss to the Kenai Municipal Airport in revenue (concessions, landing fees,
passenger facility charges, etc.).
Deliverable:
Consultant shall provide the Kenai Municipal Airport five copies of the full color report of the
summarized findings.
Delivery Schedule:
1 Consultant shall present the completed analysis within 30 days of the contract signing.
J
Element #3 -Air Service-Devel,_opment Master Plan^
The purpose of an Air Service Development Master Plan is to provide a yardstick for comparing an air
service market with other markets in the region as well as other markets served by the same air carriers.
The Air Service Development Master Plan also provides perspective on the strength of the local air
service market and identifies service gaps and opportunities. The final result is a recommendation of
strategy and the next steps to be taken to enhance the air service available at the Kenai Municipal
Airport.
Task 3.1;
From Task 1.1 the Kenai Municipal Airport Catchment Area has been determined.
Consultant shall also identify Airport Catchment Areas for other airports in the region.
Task 3.2:
Using the DOT's OD1A information, consultant shall analyze additional information relevant
to Kenai Municipal Airport passenger numbers. Consultant shall also acquire this same
information far all other airports in the state, region and country. Items to be queried include:
passengers by destination and carrier, revenues by destination and carrier, average air fare,
Sixel Consulting Group, Inc. Past Gffice Say 52~~ - Eugene, t~P 9~40~ X541) 34'I-1~0~
average yield, average coupons used and average itinerary mileage, among other data
-tems.
Task 3.3:
Consultant shall acquire economic and demographic statistics from fhe U. S. Department of
Commerce's Bureau of the Census, Depending on the timing of fhe study, the relevant
review period will include actual Census 2000 information adjusted to Year 2002 or the
applicable Time period. Data elements to be queried include: population, employment,
personal income, earnings, retail sales, manufacturing employment, automobile sales and
households with income in excess of $50, OOO. This information will be summarized for each
ACA in the region for comparative purposes.
Task 3.4:
Consultant shall combine fhe economic and demographic data with the OD 1 A data and
compare the results at Kenai Municipal Airport to other regional and similar-sized airports in
order to determine items of relevance to air service in the region. Amor-g these comparative
measures will be: the service levels at Kenai Municipal Airport per person (i.e. number of
seats offered per capita) and passenger production of Kenai Municipal Airport per person.
Task 3.5:
Working with local economic development agencies, chambers of commerce and convention
~) and visitors bureaus, consultant shall identify any other factors in the community that may
drive additional air travel.
Task 3.6:
Consultant shall use the ticket lift survey information, the economic and demographic
information, the ~D 1 A information, as well as local community information in order fo
estimate potential airline traffic at Kenai. Consultant shall use Phis information to identify
airlines and/or hubs that can serve the needs of the Kenai community.
Task 3, l:
Consultant shall analyze all airlines operating in the region, as well as the service provided by
those airlines to airports in the region fo determine if any possibilities exist to supplement the
existing air service provided fo Kenai area residents.
Task 3.8:
Consultant shall make recommendations concerning the necessary steps and course of
action to be underfaken by the Kenai Municipal Airport in order to market to and, if the market
exists, fo ultimatel y acquire additional air service for the region.
Task 3.9:
Consultant shall travel to Kenai fo present the findings of Element 7, Element 2 and Element
3 at the conclusion of the study period and with the coordination of all interested parties.
Sixel Consulting Group, Inc. Lost Gffico Sox 524 - Eugene, G~ ~!~4C~a ~54~ } 341-1 ~~1
Deliverable:
Consultant shall provide the Kenai Municipal Airport five copies of the full co%r report of the
summarized findings.
Delivery Schedule:
Consultant shall present the completed analysis within 30 days of the completion of the
Travel Agency Trcke# Lift Survey.
Conclusions:
Every airservice market is different. Accordingly, we tailor ourworkto the specific market and airservice
development requirements of the region. I assure you that the information generated in these studies will
give the Kenai Municipal Airport the information and perspective needed to effectively address local air
service issues. We appreciate your interest and look forward to working with you.
Sincerely,
Mark Sixel -President
Sixel Consulting Group
Sixes Consulting Group, inc. Post {office Box 24~ -Eugene, ~P X7405 ~~41 ~ 34~ -1 X01
Element 1 Compensation**:
Compensation associated with the completion of the Kenai-Anchorage Fare Analysis:
Agency Survey (around 4,000 tickets) $3,000
Data Compilation 500
Completion of Airport Tra~rc Summary (Trial Issue) 250
Airfare 1,000
Lodging (4 nights} 320
Rental Car /Fuel (4 days) 200
Meals (Allowance of $30 per day) 150
Administrative Fee (10% of total expenses) 1 G77
Total Ticket Lift Survey ,~;~
Note: Airfare, lodging and rental car/feel are billed at actual cost.
Element 2 Compensation~*:
Compensa#ion associated with the completion of the Ticket Lift Survey:
Agency Survey (around 8,000 tickets) $4,000
Report (5 copies: 4 bound,l unbound) 4,500
Completion of Airport Traffic Summary (Trial issue} 250
Airfare 1,000
Lodging (4 nights} 320
Rental Car /Fuel (4 days) 200
Meals (Allowance of $30 per day) 150
Administrative Fee (10% of total expenses) 67
Total Ticket Lift Survey ~~~
Note: Airfare, lodging and rental car/fuel are biNed at actual cost
**P/ease Note: Completion of Element 2 would include the completion of all parts of Element ~, as well as the
tabulation of an estimated additional 4,000 tickets.
Sixel consulting group, Inc. Post ~Jffice Sox 5240 -Eugene, ~}R 0405 (541) 341-1501
Element 3 Compensation:
~'
Compensation associated with the completion of the Air Service Development Master flan:
Analysis and Report (5 copies) $7,500
Airfare 1,000
Lodging (2 nights) 160
Rental Carl Fuel 80
Meal (Allowance of $30 per day) 60
Administrative Fee (10% of total expenses) ~ 130
Total Air Service Profile ~~~
Note: Airfare, lodging and rental car/fuel are bled at actual cost.
Total Compensation to Complete All Proposed Elements:
Compensation associated with the completion of the entire Proposal;
Ticket Lift Survey I Airport Traffic Summary (Element 2} $8,750
~ Eleme t ~ n '
n Expe se Estimate 1,837
Air Service Development Master Plan (Element 3) 7,500
Element 3 Expense Estimate 1,430
Total Compensation and Estimated Expenses ~~,~
Note: Airfare, lodging and rental car/fuel are biAed at actual cast
Sixel Consulting Croup, Ina. Past ~f~ae Bax 5245 -Eugene, ~R 97405 (541) 341-1501