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Home My WebLink About9/21/2011 - STAFF REPORTS - 2O 40�P P LM sA4 iy Q V N 41F.O.,o••s CITY COUNCIL STAFF REPORT C4</FR�`P DATE: September 21, 2011 CONSENT AGENDA SUBJECT: AIR SERVICE INCENTIVE PROGRAM FUNDING FROM: David H. Ready, City Manager BY: DEPARTMENT OF AVIATION SUMMARY This action would allocate Air Service Incentive Program funding to a number of airlines that are scheduled to provide new or expanded air service at Palm Springs International Airport this season. RECOMMENDATION: 1. Approve Air Service Incentive agreements and funding for West Jet, United, Allegiant, Virgin America, and Frontier Airlines in an amount of$417,500. 2. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR FISCAL YEAR 2011-12." 3. 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 developed by staff and approved by City Council. Up to $1 million was set aside from the unrestricted airport enterprise fund account to provide promotional financial support to any new air carriers or current air carriers that elect to offer new air service. The City Council previously approved $30,000 from this allocation to support the first Calgary summer service by WestJet in 2010 and $100,000 to support the launch of nonstop WestJet flights to Toronto that began in February 2011. Both of those routes were considered successful by WestJet as evidenced by the two routes returning for a second season. --;2eV 15Ec ITEM NO. 2 .O City Council Staff Report September 21, 2011 -- Page 2 Air Service Incentive Program Awards Additional air service routes have been announced at PSP Airport for the 2011-2012 season and these are also eligible for some level of Air Service Incentive Program funding. As shown in the list below, PSP is now scheduled for service by Frontier Airlines and Virgin America; three new nonstop routes to Winnipeg, Houston, and Stockton by existing carriers; and additional frequency to Calgary, all which qualify for some level of funding support. All incentive program amounts will be predicated upon criteria that are unique to each route, including how many months of service will be provided this season, and these variations can change the apportionment eligibility. Subsequently, staff has bundled all of these eligible services and calculated a total amount of $417,500. The Airport staff will be managing this program very closely and will only authorize airline marketing support payments based on the strict parameters and merits of the approved program. Peak Weekly PSP Start Category Airline Route Aircraft Weekly Seats Incentive Date New Airline Frontier Denver 319/E90 3 300 $60,000 Nov. 17 Virgin America San Fran/JFK A320 7 1,043 $60,000 Dec. 15 New Routes WestJet Winnipeg 737-700 2 272 $50,000 Dec. 15 Allegiant Stockton MD-80 2 300 $50,000 Oct. 28 United Houston CRJ-700 14 924 $150,000 Nov. 6 Add Capacity WestJet Calgary 737-700 5 680 $47,500 Dec. 15 Totals - Net Additions 33 • $417,500 FISCAL: The expenditure for this promotional support totals $417,500. A Budget Resolution from the Airport Fund Balance to the Airline Incentive Program Account 415-6002-45521 is required to appropriate the funds; an amount of $450,000 provides flexibility in the event of additional services in these markets. From a revenue generation standpoint, the increased passenger traffic will undoubtedly create additional revenues through the Passenger Facility Charges (PFC's), food and gift concessions, car rental concessions, vehicle parking fees, aircraft landing fees, fuel flowage fees and other sources. Because of the variables in this equation, estimates are too difficult to formulate. City Council Staff Report September 21, 2011 -- Page 3 Air Service Incentive Program Awards Thomas Nolan, Executive Director, Airport David H. Ready, ger Attachments: Budget Amendment Resolution RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR THE 2011-12 FISCAL YEAR. WHEREAS, Resolution No. approving the budget for the Fiscal Year 2011-12 was adopted on June 1, 2011; 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 2011-12 budget is hereby amended as follows: SECTION 1. ADDITIONS Fund Activity Account Amount 415 Airline Incentive Program 415-6002-45521 $450,000 Purpose: Establish funding for Airline Incentive Program SECTION 2. SOURCE Fund Activity Account Amount 415 Restricted Air Service $450,000 ADOPTED THIS DAY OF 2011. David H. Ready, City Manager ATTEST: James Thompson, City Clerk 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 ;OQ?ALM Sp4 .y �°•�qa<�°'` �OF CITY COUNCIL STAFF REPORT cgORN�P DATE: September 21, 2011 CONSENT AGENDA SUBJECT: AIR SERVICE INCENTIVE PROGRAM FUNDING FROM: David H. Ready, City Manager BY: DEPARTMENT OF AVIATION SUMMARY This action would allocate Air Service Incentive Program funding to a number of airlines that are scheduled to provide new or expanded air service at Palm Springs International Airport this season. RECOMMENDATION: 1. Approve Air Service Incentive funding for West Jet, United, Allegiant and Frontier Airlines in an amount of$357,500. 2. Adopt Resolution No. , a resolution of the City Council of The City of Palm Springs, California, amending the airport budget for Fiscal Year 2011-12. 3. 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 developed by staff and approved by City Council. Up to $1 million was set aside from the unrestricted airport enterprise fund account to provide promotional financial support to any new air carriers or current air carriers that elect to offer new air service. The City Council previously approved $30,000 from this allocation to support the first Calgary summer service by WestJet in 2010 and $100,000 to support the launch of nonstop WestJet flights to Toronto that began in February 2011. Both of those routes were considered successful by WestJet as evidenced by the two routes returning for a second season. Additional air service routes have been announced at PSP Airport for the 2011-2012 season and these are also eligible for some level of Air Service Incentive Program funding. As shown in the list below, PSP is now scheduled for service by Frontier Airlines; three new nonstop routes to Winnipeg, Houston, and Stockton by existing Item No. 2.0. City Council Staff Report September 21, 2011 -- Page 2 Air Service Incentive Program Awards carriers; and additional frequency to Calgary, all which qualify for some level of funding support. All incentive program amounts will be predicated upon criteria that are unique to each route, including how many months of service will be provided this season, and these variations can change the apportionment eligibility. Subsequently, staff has bundled all of these eligible services and calculated a total amount of $357,500. The Airport staff will be managing this program very closely and will only authorize airline marketing support payments based on the strict parameters and merits of the approved program. Peak Weekly PSP Start Category Airline Route Aircraft Weekly Seats Incentive Date New Airline Frontier Denver 319/E90 3 300 $60,000 Nov. 17 New Routes WestJet Winnipeg 737-700 2 272 $50,000 Dec. 15 Allegiant Stockton MD-80 2 300 $50,000 Oct. 28 United Houston CRJ-700 14 924 $150,000 Nov. 6 Add Capacity WestJet Calgary 737-700 5 680 $47,500 Dec. 15 It FISCAL: The expenditure for this promotional support totals $357,500. A Budget Resolution from the Airport Fund Balance to the Airline Incentive Program Account 415-6002-45521 is required to appropriate the funds; an amount of $400,000 provides flexibility in the event of additional services in these markets. From a revenue generation standpoint, the increased passenger traffic will undoubtedly create additional revenues through the Passenger Facility Charges (PFC's), food and gift concessions, car rental concessions, vehicle parking fees, aircraft landing fees, fuel flowage fees and other sources. Because of the variables in this equation, estimates are too difficult to formulate. Thomas olan, Executive Director, Airport David H. Ready, nager Attachments: Budget Amendment Resolution 02 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR THE 2011-12 FISCAL YEAR. WHEREAS, Resolution No. approving the budget for the Fiscal Year 2011-12 was adopted on June 1, 2011; 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 2011-12 budget is hereby amended as follows: SECTION 1. ADDITIONS Fund Activity Account Amount 415 Airline Incentive Program 415-6002-45521 $400,000 Purpose: Establish funding for Airline Incentive Program SECTION 2. SOURCE Fund Activity Account Amount 415 Restricted Air Service $400,000 ADOPTED THIS DAY OF 2011. ATTEST: David H. Ready, City Manager James Thompson, City Clerk 03 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 04