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HomeMy WebLinkAboutA6916 - AIR CANADA ROUGE PALM SPRINGS INTERNATIONAL AIRPORT AIR SERVICE DEVELOPMENT INCENTIVE PROGRAM EFFECTIVE JUNE 1, 2010 1. OBJECTIVE Air service is a vital contributor to the City of Palm Springs and the entire Coachella Valley, and it is widely recognized that that significant costs are associated with adding capacity through larger aircraft, more flights, or new markets. The promotion of new or additional capacity can be a critical factor in its success, acknowledging that airlines may redeploy valuable aircraft assets to other markets if targets are not achieved. The Palm Springs International Airport (PSP) Air Service Development Incentive Program (the "Program") is designed to encourage and promote the expansion of commercial passenger airline service, both seasonally and year-round. Such growth can take place in new routes that are not currently served and/or through additional seat capacity being added by incumbent carriers in existing markets. Funds are to be used by the airline(s) to market and promote new services and/or significant year-year increases in seating capacity. The Program is non-discriminatory; any airline that meets the criteria can qualify to receive benefits as outlined in this document. However, the airlines serving PSP today are our valued tenants and customers, and it is greatly anticipated that both existing and new carriers can take advantage of this program to expand service successfully. 2. TIMING OF PROGRAM AND DISTRIBUTION OF FUNDS This Program is effective June 1 , 2010, and may be continued until allocated funds expire or at the discretion of Palm Springs International Airport. Airlines meeting the requirements outlined in this document will be allocated the qualifying funds on a first-come, first-served basis until the Program expires or total funds for the Program are expended. 3. QUALIFYING REQUIREMENTS To qualify for incentives provided by the Program, the airline must take action in one of the following categories: NEw ROUTE. Initiate a new route to/from PSP, defined as not being served within the 12 months prior to the qualifying service. The category of market, frequency, and duration of operations as stated in Exhibit 1 (below) will determine the amount of maximum funding. EXISTING ROUTES. Increase total monthly seating capacity, through additional flight frequencies and/or larger aircraft, compared to the same month in the prior year between PSP and the same airport. Note: For monthly year-year increases to ORIGINAL BID AND/OR AGREEMENT qualify, the additional capacity has to be in effect for a two week minimum within that month. In both cases, the metrics outlined in Exhibit 1 will be used to determine qualifications for Program funds. In order to receive funding, each airline must do the following for EACH qualifying route: • Submit in writing (an emailed document is acceptable) confirmation of the new route and/or year-year increase in monthly capacity; • Request the funds in writing; ■ Provide an outline of how the funds will be deployed. The Program funds shall be utilized solely for the purpose of promoting the new route and/or year to year capacity addition. These promotional initiatives must be approved by PSP staff, and copies of program specifics may be requested. • In the event that a service or capacity increase is suspended prematurely, the airline shall be responsible for a pro-rated reimbursement of all marketing funds spent. EXHIBIT 1 Target Category Definitions/Requirements Low Freq NEW ROUTES Seasonal Seasonal Extended Mln 21Wk RT Min41Wk RT Min 3fWk RT Min 3 1Min 3 Mos Min 6 Mos �up to amounts up to amounts up to amounts New Long Haul Hub 1,500 miles or longer $100,000 $250,000 $400,000 or Focus City Not served within most recent 12 months Focus City-50+daily departures If NEW carrier to PSP(past 12 months) $200,000 $500,000 $600,000 New Long Haul 1,500 miles or longer $50,000 $100,000 $150,000 Key Markets Top 25 08D's with no nonstop service from the region If NEW carrier to PSP(past 12 months) $100.000 $200,000 $300,000 New Hybrid or No existing markets served nonstop from $50,000 $100,000 $150,000 Complementary Markets that specific airport(past 12 months) If NEW carrier to PSP(past 12 months) $100,000 $200,000 $300,000 ROUTESEXISTING Per Month Per Month 26%to 5D% 50%or More Increased Capacity- Existing markets-served within 12 months $7,500 $10,000 Shoulder or Peak Season Based on monthly year-year seat increases (Per Route) (Per Route) 4. DEFINITIONS AND PROVISIONS For purposes of determining the specifics of each qualifying route, the following definitions shall apply. 1. New Market: The route between PSP and another airport that has not had nonstop scheduled service within the most immediate 12 month period. 2. New Long Haul Hub or Focus City: An airport meeting the nonstop mileage requirements stated in Exhibit 1, with the qualifying airline serving that airport with 50 or more daily departing flights. 3. New Long Haul Key Markets: An airport meeting the mileage requirements stated in Exhibit 1 and having sufficient passenger demand to be in the Top 25 Palm Springs (PSP) market list as defined by U.S. DOT data. 4. New Hybrid or Complementary Market: Includes specific airports that have not had nonstop flights to/from PSP within 12 months, with no mileage limitations. 5. Existing Routes: Service between PSP and airports that currently have service or have had nonstop scheduled flights within the most immediate 12 months. 6. New Carrier: Any airline brand that has not served PSP within the most immediate 12 months. The addition of branded partners, such as the mixing of mainline and regional carrier operations, does not qualify under this category, nor does brand change due to merger or acquisition. An airline is no longer considered "New" after one year from the initial commencement of service into PSP. 7. Frequency Requirements: Due to PSP's seasonality, we encourage entry of new service that includes low frequency operations. Exhibit 1 outlines qualifications based on a combination of weekly flights and the duration of operations expressed in calendar months. 8. Increased Capacity: To encourage growth in existing markets, this category addresses currently served routes and measures year to year changes in total monthly seating capacity. Due to seasonal service variations, a minimum of two weeks of service is required within the month qualifying for funds. 9. Competitive Applications: If two air carriers announce plans to serve the same new market, the incentives available under this Program shall be payable to the first carrier that initiates service. 10.Funding Amounts: All values shown in Exhibit 1 are to be considered "up to this amount" or "maximum" limits and are subject to availability of remaining funds in the Program. 11. Payment of Program funds to qualifying airlines will be on a first come, first served basis and determined by the date of initiation of the qualifying service. Payments will be made at the end of each month of qualifying air service; in cases where an airline qualifies for an amount of $200,000 or more, payments will be prorated over a 12 month period beginning with the first month of qualifying service. 12.Any carrier availing itself of the Program will be required to execute a Memorandum of Agreement in a form determined by PSP. All marketing and promotional funds are subject to approval by the Palm Springs City Council. The Program may be discontinued at any time or cease at any time due to expiration of funds, and PSP reserves the right to modify the program or adjust funding according to the level of air service provided. 13.Uses and Applications of Funds: It is not the intent of PSP to impose creative control over promotional initiatives; Airport staff approval is required to ensure that allocated funds are used to promote the new service or increased capacity. Staff reserves the right to request specific information including copies of advertisements or other details. Promotional actions and activities may include, but are not limited to the following: a. Specific advertising highlighting the qualifying PSP route; b. Familiarization tours or events; c. Media events; d. Online contests and promotions; e. Other activities as agreed to by both PSP and the airline. 13. Any carrier availing itself of the Program will be required upon request from PSP to provide written certification that any and all funds provided under the Program to the carrier were utilized solely for the purpose of promoting the new route and/or year to year capacity addition. Failure to provide said written certification shall result in repayment of any and all funds provided to the carrier under the Program. S. ADDITIONAL INFORMATION This Air Service Incentive Program is consistent with the mission of Palm Springs International Airport to preserve and enhance the City of Palm Springs' status as a premier tourist destination and provide the region's citizens with access to the global aviation system. All airlines are encouraged to review opportunities for expanded service and discuss potential applications with airport staff. For more information please contact Executive Director Thomas Nolan at (760) 318-3901. AIR SERVICE INCENTIVE AGREEMENT This Memorandum of Agreement is entered into by and between the City of Palm Springs (City), acting by and through its Executive Director of Aviation, and Air Canada (Airline) organized and existing under the laws of the Providence of Quebec, Country of Canada, and is intended to memorialize the agreement between the City of Palm Springs and the Airline under the terms of the Palm Springs International Airport Air Service Development Incentive Program (Program), approved by City Council on January 4, 2017, a copy of which is attached hereto and incorporated herein by reference. The City and the Airline, by their signatures to this Memorandum of Agreement, acknowledge that their agreement related to marketing incentives is to be governed by the Program. It is understood and agreed that the Airline and the eligible new non-stop service or year-to-year increased capacity that Airline is offering at the Palm Springs International Airport fall into Section existing PSP route of the Program and the maximum eligible marketing incentive is $50,000.00 US funds for the period from December 14, 2016 to April 30, 2017. The funds shall be utilized solely for the purpose of promoting the new route and/or year to year capacity addition. Upon request from the City, the Airline shall provide written certification that the funds have been so utilized. It is the intent of this Agreement that the total amount of incentives shall be distributed to the Airline in the form of monthly partial payments as determined by the City. Once the total amount is paid to Airline by City, City will not assert any claims against Airline for such total amount, and the total amount will not be subject to route or increased capacity continuation. These funds must be reimbursed or refunded on a pro-rated basis, rounded to the nearest completed month, to City by Airline if Airline leaves the market and/or discontinues the new non-stop route or increased service earlier than the qualifying period for which funds were allocated. These funds must be reimbursed if Airline fails to provide written certification as detailed above. In the event that Airline fails to refund or reimburse such funds within thirty (30) days of City's request, Airline expressly consents to City's right to issue an invoice for the unpaid amount and have legal claim to payment. This remedy shall be cumulative upon all other remedies available to City. The term of the Agreement shall be one year starting from the effective date of this Agreement. At the end of the period, the Agreement is not subject to extension, but shall terminate automatically. IN WITNESS WHEREOF, the City of Palm Springs and the Airline have caused this Memorandum of Agreement to be executed by their duly authorized officers, as of the 31st day of January, 2017. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates stated below. "CITY" City of Palm Springs Date: es David H. Ready City Manager APPROVED AS TO FORM: ATTEST By: �44-1 By: Douglag C. Holland, Kathleen D. Hart, MMC City Attorney Interim City Clerk APPROVED BY CITY COUNCIL: APPROVED BY rCOUNCIL Lq!!O Date: Agreement No. Corporations require two notarized signatures. One signature must be from Chairman of Board, President, or any Vice President. The second signature must be from the Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or Chief Financial Officer, COMPANY NAME: Air Canada Check one Individual _ Partnership Corporation 00 7373 Cote Vertu West, Saint Laurent Quebec, H4Y 1 H2 .4�.8 March 29 201 AC Legal By: AV By: i1 Llda,i Ac/ ignature otarized) Signature (Notarized) f/OnWIS ( 0jL,(C'4? oa-,X SvNCh/man Dvec6r, SPecLAli S; I ouviarn 17owi S m rid S6raieg,c ��,� ParFvl ws h �x'