Partnership for Central Kentucky Airline Service Travel Bank

Elizabethtown, Kentucky
(May 11, 2009)
Contact:
Joe Yates 502.624.8672
Luke Schmidt 502.292.2898

New Program Announced to Assist with Airline Recruitment to EKX Airport;
Promotes Usage of Potential New Service and Demonstrates Widespread Regional Support

The Elizabethtown Airport Board today announced the development of the Partnership for Central Kentucky Airline Service Travel Bank (Travel Bank). The Travel Bank is a strategy which is designed to provide a revenue guarantee to the first airline which confirms its intent to provide scheduled passenger airline service to the Elizabethtown Regional Airport (EKX).

“Revenue guarantee programs are an important part of any community’s strategy to develop new passenger airline service,” said Luke Schmidt, President of L.B. Schmidt & Associates, LLC, and consultant to the Elizabethtown Airport Board. “In fact, it is a requirement that has worked successfully in varying forms across the country.”

In today’s market, airline revenue guarantee strategies encompass two broad forms: a direct subsidy (generally provided by government) to help offset an airline’s start-up costs, or a travel bank, which is supported by binding pledges from users of commercial air travel. The subsidy approach goes directly to the airline’s bottom line in the event that it does not meet its financial targets for the market. The travel bank approach works to put passengers “in the seats” by encouraging regional air travelers to purchase tickets and use the new service. The travel bank approach also provides the airline with a golden opportunity to showcase its new service and to promote all of the travel options which will become available to Central Kentucky travelers.

Joe Yates, Chairman of the Elizabethtown Airport Board, stated, “The Board has worked hard to position EKX as a viable expansion market to potential airlines across the country and the net result has been that three major airlines have identified the airport as a potential expansion market. While many of our efforts have been ‘below the radar screen,’ we have accomplished the following in support of this project:”

  1. Completed 276 page market feasibility study
  2. Changed airport name to reflect new regional mission
  3. Developed new airport logo and related collateral materials
  4. Developed new airport Web site (www.ekxairport.com)
  5. Developed concept design for new passenger terminal
  6. Developed an unprecedented level of regional support for new passenger service at EKX along with key support at Fort Knox
  7. Started efforts to develop contract military airfares
  8. Started airline recruitment process with formal and ongoing discussions with three network carriers
  9. Attended airline industry JumpStart Conference in Pittsburgh in June 2008
  10. Applied for a USDOT Small Community Air Service Development grant
  11. Established schedule of passenger airline airport charges and fees – the most competitive in Kentucky
  12. Started development of a revenue guarantee program

Both Schmidt and Yates stated that it is absolutely essential that the airport provide some form of revenue guarantee in order to attract new service. Schmidt stated that the Board also wants to build upon the widespread regional support that the project has attracted through the 72 formal resolutions of support which have been passed by area government jurisdictions, chambers of commerce and industrial development boards, and, over 200 letters of support from elected officials, military officials, and, business and industry leaders.

In order to launch the Travel Bank, potential users of passenger airline travel from throughout the 22 county region will be asked to consider making a pledge to the Travel Bank. The total amount of the pledges raised will be conveyed to potential airlines as the EKX revenue guarantee for the first two years of service.

The pledges made by businesses, industries, professionals, individuals, etc., will be payable only after the first airline confirms its intent to start service to EKX. Pledges will be payable in lump sum, two or four payments over the 12 months which follows the date of airline service confirmation (and which will coincide with the time required to build the new passenger terminal).

Once service starts to EKX, those companies and individuals who have made a pledge can get their money back by simply purchasing a ticket, flying to or from EKX and providing “proof of travel” to the Travel Bank. Once the proof of travel has been submitted, the Travel Bank will issue a check in the amount of the cost of airline ticket, up to the amount of the pledge. The net benefit of the Travel Bank will be:

  • EKX will provide a meaningful revenue guarantee program to the first airline to confirm service
  • The region will demonstrate its support for air service by participating in the Travel Bank
  • The program will encourage Travel Bank participants to use the new service
  • The airline will fill its seats on the plane
  • And, in the end, Travel Bank participants will get their money back once they fly to/from EKX

The Travel Bank program is being launched in Hardin County and will roll out to the entire 22 county region immediately. The campaign will last approximately three months and final proposals will be submitted to the three airlines in mid to late summer. More detailed information on the Travel Bank can be found in the accompanying fact sheet.

The Elizabethtown Airport Board is a not for profit organization which operates the municipal airport in Elizabethtown, Kentucky. Elizabethtown Regional Airport (EKX) began operations in 1982 as a general aviation airport and is currently engaged in efforts to restore commercial airline service to the field. EKX includes a 6,000 foot long runway which is “regional jet ready” with complete general aviation services. An Instrument Landing System (ILS) (localizer) has been installed which further enhances safety and increases the airport’s all-weather operational capacity. EKX plans to build a passenger terminal should commercial airline service be restored.

 

 

###