Proposed New Jet Service Will Stimulate Competition and Increase Consumer Options From Central Kentucky However, Public Input is Needed to Secure the New Service

Would you like more nonstop destinations, lower air fares or more choice when purchasing your next airline ticket? At Blue Grass Airport we need your help to stimulate competition, lower fares, increase flights and to give you a voice in determining what type of air service will be offered from your hometown airport. To do this we are simply asking the public to submit letters of support or emails to the U.S. Department of Transportation in support of Central Kentucky's effort to land new nonstop jet service from Lexington to Minneapolis, MN.

This is your opportunity to have your voice heard. You can make a difference!

Background

On May 13, 2004 Blue Grass Airport submitted an application to the U.S. Department of Transportation on behalf of Central Kentucky requesting federal assistance from the Small Community Air Service Development Pilot Program for the introduction of daily nonstop jet service by Northwest Airlines between Lexington , KY and Minneapolis , MN . This application was a collaborative effort of Blue Grass Airport, the Lexington Convention and Visitors Bureau and Commerce Lexington with each organization pledging local financial support to promote the new service through advertising and targeted promotions.

The Small Community Air Service Pilot Program is a federal grant initiative that distributes up to $20 million dollars each year to small communities that propose creative ways to increase competition, lower fares or increase access to the national transportation system. This federal grant program is very competitive and hundreds of communities across the nation submit proposals each year.

In hopes of luring nonstop jet service to Minneapolis, Blue Grass Airport coordinated $75,000 in local pledges to support the new service. To supplement this support the airport has requested an additional $150,000 from the federal government to offset airline costs associated with launching the new service. In addition to a local financial component, it is imperative that Central Kentucky demonstrate significant public support for the new service and the heightened competition it will stimulate. To that end, the airport is requesting that the public submit letters of support for this proposed service directly to the federal government.

Recently, a letter writing campaign played a pivotal role in making new jet service to Washington D.C. from Lexington a reality.

The Need for the New Service

* The Need for a Balanced Air Service Market

* Competition has Stimulated Air Service in Central Kentucky

* Northwest Has Steadily Increased its Commitment to Lexington

* Demand for Minneapolis has Grown Significantly Over the Years

* Minneapolis Provides Central Kentucky Travelers with More Choice

* New Service to Minneapolis Enhances Tourism and Economic Development for Central Kentucky

We Need Your Help

Whether you travel by air or not Central Kentucky has much to gain from the introduction of new nonstop jet service from Blue Grass Airport . Increased competition, expanded choice and better access allow for new tourism opportunities, improved economic development and the competition that results from the addition of new service keeps fares reasonable for all travelers. In fact, a recent study by the University of Kentucky revealed that for every new business traveler that visits Lexington spends over $400 a day in the local economy.

It is possible for Lexington to win this new service and you can make it happen! We are asking for letters and comments be submitted directly to the U.S. Department of Transportation. To assist you with this we have designed a special link on our website www.bluegrassairport.com that will allow you to gain more information on the proposed service and submit comments in support of more competition. From this page, you can also let us know what other destinations or services you would like to see from the airport.

Submit Comments to:

A. To submit comments electronically simple follow the link below: You must enter in the docket number "OST-2004-17343" in the field named "Docket ID". From there proceed directly to the name and address fields. Once contact information is complete continue to the next page. Follow directions to complete and submit comments. http://dmses.dot.gov/submit/dspSubmission.cfm

B. To submit comments by mail please send letters to the following address. Please include the docket number "OST-2004-17343" on your letter.

Docket Management System, U.S. Department of Transportation, Room Plaza 401, 400 Seventh Street, SW, Washington , DC 20590-0001

OR

The Honorable Norman Y. Mineta, Secretary of Transportation, U.S. Department of Transportation, 400 Seventh Street, S.W., Washington, D.C. 20590

Let Us Know What You Think

We want to hear how we are doing, what service you would like to see and how we can assist your business with its air travel needs. Please submit comments to: ttyra@bluegrassairport.com or call (859) 425-3105.

Reasons We Need New Service to Minneapolis, MN

A. The Need for a Balanced Market

With the loss of ATA Connection Lexington will realize a reduction in capacity of 136 daily outbound seats or approximately 6% of total lift in the market. More importantly, of those 136 daily seats roughly 107 seats carried connecting passengers to western destinations such as Minneapolis, San Francisco, Seattle, Las Vegas, Denver and Los Angeles. The seats contributed by ATA added to those provided by newly introduced service by Northwest through Memphis, Delta through Dallas and Continental through Houston has allowed Lexington to pursue new opportunities and promote a high level of competition to the west. The balance created among the carriers has been vital to efforts to maintain affordable pricing and guarantee reliable service. With the loss of ATA lift to the west Lexington travelers will realize a 23% reduction in competition to the west.

To maintain the vital balance among carriers and provide a downward pressure on fares it is crucial that Lexington introduce new seats to the west by opening a new hub service with an existing carrier. Northwest Airlines, which currently controls 16% of the local market share, is Central Kentucky ’s second largest airline brand. Nonstop regional jet service to Minneapolis by Northwest Airlines will provide an adequate balance in the market, offer hundreds of new connection options, allow for more convenient access to a growing destination and places a downward pressure on fares to the Midwest and Western U.S. We feel Lexington-Minneapolis service is a perfect match for our air service needs.

B. Competition has Stimulated Air Service in Central Kentucky

Since the introduction of new service options to the west the air service market to the western U.S. has grown significantly. In fact, passenger volume in every westbound destination from Lexington has at least doubled with many markets showing more growth. In 2000, westbound passenger activity represented 15% of all trips to and from Blue Grass Airport. In 2003, thanks to new competition that total has grown to over 25% of airport activity. Likewise, average fares in those western markets have dropped significantly due to the new competition. With the loss of capacity by competitors in the Lexington market and a further consolidation by air carriers we fear that these impressive gains will be quickly reversed resulting in higher fares, fewer flight options and an overall reduction in our region’s ability to reach out to new economic development opportunities in the West and Midwestern U.S.

Since 2000, Blue Grass Airport has focused its marketing efforts toward stimulating competition by growing demand to underutilized destinations. The greatest amount to time and effort has been placed on growing service by existing carriers by introducing new nonstop service to major hubs. This strategy has been successful in increasing passenger volume, lowering air fares, promoting competition among major carriers and expanding consumer choice. In fact, since 2000 Lexington has introduced six new destinations by four different airlines. However, with the loss of a key westbound connection point we find Lexington is in need of a quality connection to a major Midwestern hub airport.

In five of the six new markets introduced at Blue Grass Airport air fares were reduced and in all six markets passenger activity increased. In the one market that air fares increased we found the rise to be minimal and the additional connecting opportunities afforded by the new service provided far greater stimulus to competition.

In fact, in each of the six new markets introduced since 2000 passenger volume increased by at least 28% and average fares decreased by at least 19%. It is clear that the introduction of new nonstop service to major a hub benefits the traveling public by providing additional air service access, stimulating competition and lowering fares.

C. Northwest Has Steadily Increased its Commitment to Lexington

Since 2000, Northwest Airlines has been very active in the Lexington community and has consistently grown market share through dedicated service to the business customer. In just four years Northwest expanded its market share from 8% to 16%, introduced new nonstop service to Memphis , upgraded its four turbo-prop a day service to Detroit to six jets daily and increased passenger volume by 120%. Northwest Airlines is currently the second largest brand in the Lexington market and provides a viable alternative for customers pursuing frequent domestic and international connections. With quality service available through Detroit and a growing operation to the Memphis hub access to a third hub from Lexington would greatly expand Northwest’s reach and ability to retain and expand passenger base. Therefore, to maintain balanced demand in the market, promote quality air service to the west and provide Northwest with the next logical progression in their Lexington development strategy request your assistance in making nonstop service to Minneapolis a reality.

D. Demand for Minneapolis Has Grown Significantly Over the Years

Minneapolis, MN is one of Lexington’s fastest growing Origin and Destination markets. Since 2000, passenger volume on the Lexington-Minneapolis route has increased by 85%. In calendar year 2003 Minneapolis ranked as Lexington ’s 18th top market; up from 27 in 2000. The destination offers local companies the ability to reach suppliers and branch offices in the upper Midwest as well as very exciting connection options to the west and to a number of international destinations. Currently, all passengers must connect to reach Minneapolis with many using our dominant carrier to reach the destination. With nonstop service Northwest will be able to win back passengers, promote competition, provide more capacity and offer customers a new level of choice in air travel from Lexington.

E. Minneapolis Provides Central Kentucky Travelers with More Choice

Minneapolis offers Lexington travelers far more than just additional westbound capacity. The hub offers access to over 130 nonstop destinations including major international destinations in Japan , Europe and Canada. With hundreds of daily flights Minneapolis offers a superior hub framework and opens daily service to many smaller cities in the Midwest that Lexington is currently unable to reach conveniently. And, with the addition of nonstop Minneapolis flights Northwest Airlines can maximize the efficiency of existing hub service in Detroit and Memphis . By placing passengers bound for Minneapolis on the nonstop flight new capacity can be opened up on flights over other hubs allowing Northwest Airlines to carry new customers while maximizing yield and flight coverage.

F. New Service to Minneapolis Enhances Tourism and Economic Development for Central Kentucky

Lexington has never offered nonstop service to Minneapolis, MN despite the city being one of the most frequently requested destinations by local business travelers. If new service is approved Central Kentucky will be afforded the opportunity to lure tourists to the fabulous Bluegrass Region to enjoy what makes our area so special. This means more business for hotels, attractions and local companies. And, with expanded access to the Central Kentucky afforded by the Minneapolis hub literally hundreds of communities will be just one stop away from Blue Grass Airport. This means local companies can better reach their clients and customers and likewise prospective companies looking to locate in the region will benefit from better transportation.