HomeMy WebLinkAbout10/2/2013 - STAFF REPORTS - 2.H.I4 ppLMSpR
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DATE: October 2, 2013 CONSENT AGENDA
SUBJECT: AIR SERVICE INCENTIVE PROGRAM FUNDING
FROM: David H. Ready, City Manager
BY: AIRPORT
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This action would allocate Air Service Incentive Program funding for three qualifying
airline service expansions scheduled to Palm Springs International Airport during the
2013-2014 season.
RECOMMENDATION:
1. Approve Air Service Incentive funding for Delta Air Lines and Sun Country
Airlines in an amount not to exceed a total of $150,000.
2. Authorize City Manager to execute all necessary documents.
STAFF ANALYSIS
In an effort to promote the growth of commercial airline service at Palm Springs
International Airport, an Air Service Incentive Program was previously approved by City
Council. Up to $1 million was set aside from the Airport Fund to provide promotional
financial support for new or current air carriers that elect to offer new and/or expanded
air service.
Since this program was launched, the Airport Commission has recommended and City
Council has approved over $700,000 in air service fund allocations to support new and
expanded service by several carriers including WestJet, Virgin America, Frontier,
United, Allegiant, and Alaska Airlines.
For the 2013-2014 season, three specific nonstop routes will have enough increased
capacity to meet the program's qualification for incentive funding. Qualifications are
based on year-to-year growth calculated on a monthly basis as shown in detail on page
3 of this report. With some variation by month, Delta Air Lines is increasing its flight
ITEM NO. 2 A
City Council Staff Report
October 2, 2013 — Page 2
Air Service Incentive Program Awards
capacity to Salt Lake from two to three daily flights and its Minneapolis -St. Paul service
from one Saturday -only flight to a full seven day operation. Sun Country Airlines is
expanding its service to Minneapolis -St. Paul, beginning earlier in October and
increasing the frequency from five to eight flights each week.
Incentive program amounts will be predicated upon criteria unique to each route,
including how many months of qualifying service will be provided this season. The
below "table" outlines routes and incentives — and a detailed monthly "frequency table"
is attached.
Existing Routes Delta Minneapolis Oct'13 - Jun '14 $60,000
Existing Routes Delta Salt Lake City Oct'13 - Jun '14 $50,000
Existing Routes Sun Country Minneapolis Oct'13 - Jun '14 $50,000
FISCAL:
The total amount of this incentive request will not exceed $150,000 and will be
calculated monthly based on airline schedule adherence. Funds for this expenditure
are available in the 2013-14 Airport Budget, Account Number 415-6002-45521.
From a revenue generation standpoint, increased passenger traffic anticipated with the
higher capacity levels will create additional income through Passenger Facility Charges
(PFC's), food and gift concessions, car rental concessions, vehicle parking fees, aircraft
landing fees, fuel flowage fees and other sources of income to the Airport.
Thomas Nolan
Executive Director, Airport
David H. Ready, Ci ager
Cc Frequency tables
WEJ
City Council Staff Report
October 2, 2013 — Page 3
Air Service Incentive Program Awards
Delta Winter 2013-2014 Minneapolis Frequency Changes
2012-2013
0
0
0
0
2
5
0
0
0
2013 2014
0
0
12
31
28
31
30
23
3
Frog Charge
0
0
12
31
26
26
30
23
3
Year -Year
0%
0%
100%
100%
1300 %
520%
100%
100%
100%
Mint Wks
No
Yes
Yes
Yes
Yes
Yes
No
PSP Program
Qualification $0 $0 $0 $10,000 $10,000 $10.000 $10,000 $10,000 $0
Total Marketing Funds Qualifying funds based on per month $50,000
calculation of yr-yr frequency increases
Delta Winter 2013.2014 Salt Lake City Frequency Changes
2012-2013
63
61
61
62
69
128
75
60
60
20134614
88-
77
77
67
69
122
g5
9a
go
Frog Change
23
16
16
5
0
-6
20
33
30
Year -Year
37%
26%
26%
8%
0%
-5%
27%
55%
50%
Mint Wks
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
PSP Program
Qualification
$7,500
$7,500
$7,500
$0
$0
$0
$7,500
$10,000
$10,000
Total Marketing Funds Qualifying funds based on per month $50,000
calculation of yr-yr frequency increases
Sun Country Winter 2013.2014 Minneapolis Frequency Changes
tear
• ct
Rov
Dec
Jan
Feb
Mar
Apr
May
Jun
7
14
22
27
24
26
20
18
0
203IMf*
17, ..
to
1e
32
)&2
38
30
- 23;
0
Frog Change
10
5
-4
5
8
10
10
5
0
Year -Year
143%
36%
-18%
19%
33%
38%
50%
28%
0%
Mint Wks
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
PSP Program
Qualification
$10,000
$7,500
$0
$o
$7,500
$7,500 $10.000
$7,500
$0
Total Marketing Funds
Qualifying funds based on per month
$50ow
calculation
of yr-yr
frequency increases
03