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DATE: January 4, 2017 CONSENT AGENDA
SUBJECT: AIR SERVICE MARKETING INCENTIVE FUNDING AWARD TO AIR
CANADA.
FROM: David H. Ready, City Manager
BY: AIRPORT
SUMMARY
This action considers an allocation of Air Service Incentive funding to Air Canada Rouge
for new airline service between Toronto, Canada, and Palm Springs International
Airport.
RECOMMENDATION:
1. Approve Air Service Incentive funding for Air Canada Rouge in an amount not to
exceed $50,000.
2. Authorize City Manager to execute all necessary documents.
STAFF ANALYSIS:
To promote the growth of commercial airline service at Palm Springs International
Airport, an Air Service Incentive Program was approved by the City Council in 2010.
The objective of this program was to provide marketing assistance to both new and
existing PSP airlines as an added incentive to introduce new or expanded air service.
To date, the City Airport Commission and Council has ratified marketing incentive funds
to support seventeen new or expanded routes into PSP by several airlines including
WestJet, Virgin America, Frontier, United, Allegiant, Alaska, Delta, Sun Country, Air
Canada, JetBlue and American.
These new and expanded airline services supported by the marketing incentive funding
program have been a contributing factor to PSP Airport's record growth in passengers
and visitors to the entire Coachella Valley. Calendar year 2016 statistics through
November exemplify this and suggest a high probability of a new airport annual record
for passengers.
ITEM N(
City Council Staff Report
January 4, 2017 - Page 2
Air Service Marketing Incentive Funding Award Air Canada
In December 2014, Air Canada Rouge commenced air service between Palm Springs
and Vancouver, Canada. That service represented the return of Air Canada to PSP
Airport after nearly a decade of absence. The Vancouver service is ongoing and, this
season, Air Canada introduced a wide-body B767 aircraft on this route, the largest
scheduled aircraft ever at PSP Airport. Air Canada announced earlier this year that
they would add a second Canadian route, and direct service to Toronto commenced on
December 14, 2016, and is scheduled to last through April 30, 2017. The flight is
operating on Wednesday, Friday and Saturday using a 136-seat Airbus 319.
Air Canada is Canada's largest domestic and international airline serving more than 180
destinations on five continents. Air Canada Rouge, launched in July 2013, is Air
Canada's leisure airline, part of the Air Canada Leisure Group with Air Canada
Vacations, which offer competitively priced travel. Since 2013, Air Canada has deployed
its leisure carrier to a growing number of Caribbean, Mexican, European and select sun
destinations in the United States. As a wholly-owned subsidiary, Air Canada Rouge is
backed by Air Canada's 75-year reputation for safety and reliability and Air Canada
Vacations' 30-plus year history of vacation travel excellence.
The Airport Commission voted in favor of providing Air Canada marketing incentive
funds in an amount not to exceed $50,000. Air Canada Rouge will be increasing the
overall seat capacity to Toronto by over 50 per cent and this qualifies for this level of
funding from the Marketing Incentive program.
FISCAL IMPACT:
The expenditure for this promotional support is a maximum not-no-exceed amount of
$50,000 and funds have been budgeted and are available in the Airline Incentive Program
Account No. 415-6002-45521. Upon approval of this program award, the incentive fund
will have a balance of $172,000. Funds are not released to the airline until they have
completed a Palm Springs specific destination advertising program and provide sufficient
proof of the advertising for review by staff.
Marketing and promotional funds offered through an air service incentive program are an
investment in the future growth of air service at PSP Airport. Increased passenger traffic
from the additional airline service generates direct and indirect economic benefits
including higher amounts of revenues to the airport through Passenger Facility Charges
(PFCs), food and gift concessions, car rentals, vehicle parking fees, aircraft landing fees,
fuel flowage fees and other sources.
Thomas Nolan David H. Ready,
Executive Director, Airport City Manager
02