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DATE: September 19, 2012 CONSENT AGENDA
SUBJECT: AIR SERVICE INCENTIVE PROGRAM FUNDING IN THE AMOUNT OF
UP TO $100,000 TO ALLEGIANT AIRLINES FOR NEW OAKLAND AND
EUGENE AIR SERVICE
FROM: David H. Ready, City Manager
BY: Department of Aviation
SUMMARY
This action would allocate a maximum of $50,000 in Air Service Incentive funding to
Allegiant Airlines for each of the two new cities being served from Palm Springs
International Airport, (Oakland, California and Eugene, Oregon) beginning November
15, 2012.
RECOMMENDATION:
1. Approve Air Service Incentive funding for two new nonstop flights provided by
Allegiant Airlines from the Eugene Airport and Oakland International Airport to
Palm Springs International (PSP) in an amount of a Not-To-Exceed $50,000 for
each route, $100,000 in total.
2. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR
THE 2012-13 FISCAL YEAR TO PROVIDE FUNDING FOR AIR INCENTIVE
PROGRAM."
3. Authorize City Manager to execute all the necessary documents.
STAFF ANALYSIS
To promote the growth of commercial airline service at Palm Springs International
Airport, an Air Service Incentive Program was developed by staff in accordance with
Federal Aviation Administration guidelines and then approved by the Airport
Commission and City Council in 2010. The intent of the program was to provide
marketing funds to new and existing PSP airlines that elect to operate new or expanded
air service. The City Council has approved to date over $600,000 of an original
$1,000,000 allocation that has since funded nine (9) new or expanded routes into PSP
by six different airlines. These new and expanded services have contributed greatly to
PSP's record growth in passengers and visitors to the entire Valley. The airport has
ITEM NO..��
City Council Staff Report
September 19, 2012 -- Page 2
Air Service Incentive Program
experienced already seven (7) consecutive all time record months during its peak
season from November 2011 through May 2012. Passenger traffic is up through
August Year To Date of over 17%.
Allegiant Airline's air service model is focused on linking travelers (often in small cities)
to world-class destinations, and Palm Springs fits that model. Evidence of that success
is the longstanding Bellingham-PSP service which has continued to grow into a solid
city pair for PSP based on total passengers. The Eugene service will be new to the
PSP market and is a city that Allegiant also serves to several other cities in California.
Allegiant considers Oakland as another option in the San Francisco Bay region. Service
to both of these new cities will be provided weekly on Thursdays and Sundays
beginning on November 15, 2012.
The level of funding eligibility to the airline, based on the airline's current schedule, will
be $50,000 for each new city route. As has been the case with all the other airlines that
have received incentive funding, funds will only be provided to the airline as they
implement their marketing plan over the course of the eligible service's duration. If
Allegiant Airline extends the duration of these routes beyond what is currently published
at this time, or increases the weekly frequencies of the flights, they could be eligible for
more funding and this would be brought back to Council for further action. The primary
purpose of the incentive program funding is to assist the airline in bolstering its
marketing for the new PSP service and make the routes successful. The Airport
Commission voted in full support of funds to these new routes.
FISCAL:
The expenditure for this promotional support is a maximum, not to exceed amount of
$100,000 and requires a Budget Resolution from the Airport Fund Balance Account 415-
29301 to transfer into Airline Incentive Program Account 415-6002-45521. Marketing and
promotional funds offered through this incentive program are intended to increase
passenger traffic and generate a direct benefit to the airport's revenue equation and
create an indirect economic benefit to the Valley's tourism industry. Added passenger
traffic can create additional FAA AIP funding, Passenger Facility Charges (PFC's), food
and gift concessions, car rental concessions, vehicle parking fees, aircraft landing fees,
fuel flowage fees and other revenues.
Thomas Nolan, Executive Director, Airport
David H. Ready, Ci ger
Attachment: Budget Resolution
02
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET
FOR FISCAL YEAR 2012-13 TO PROVIDE FUNDING FOR
THE AIR INCENTIVE PROGRAM.
WHEREAS, Resolution No. approving the budget forthe Fiscal Year2012-13
was adopted on June 1, 2012; and
WHEREAS, the City Manager has recommended, and the City Council desires to
approve, certain amendments to said budget.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS
DOES HEREBY RESOLVE, that the Director of Finance is authorized to record inter-fund
cash transfers as required in accordance with this Resolution, and that Resolution
No. , adopting the Fiscal Year 2012-13 budget is hereby amended as follows:
SECTION 1. ADDITIONS
Fund Activity Account Amount
415 Air Service Incentive 415-6002-45521 $100,000
Program
Purpose: Establish funding for Airline Incentive Program
SECTION 2. SOURCE
Fund Activity Account Amount
415 Restricted Air Service 415-29301 $100,000
ADOPTED THIS DAY OF 2012.
David H. Ready, City Manager
ATTEST:
James Thompson, City Clerk
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Resolution No.
Page 2
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
James Thompson, City Clerk
City of Palm Springs, California
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