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Home My WebLink About7/2/2003 - STAFF REPORTS (4) DATE: July 2, 2003 TO: City Council FROM: Deputy Director Aviation-Administration via Executive Director-Airports SIMAT, HELLIESEN&EICHNER(SH&E)CONTRACT EXTENSION RECOMMENDATION: It is recommended that City Council approve amendment#3 to the SH&E Air Service Development/Airport Marketing Consulting Agreement. SUMMARY: This action would result in a one-year extension of the Air Service Development/Airport Marketing Agreement with SH&E. This extension contemplates a continued aggressive campaign over the one year period. This will allow Airport management to continue the enhancement and development of Air Service activities and is crucial to a strong economic impact for the Airport and the Valley. BACKGROUND: The Air Service Development Program of the Palm Springs International Airport has seen great success over the two years. During this time airport management has conducted many meetings with 18 different carriers across the country. Over the last year PSP management has continued to travel to airline headquarters and meet with air carriers to further expand capacity at PSP. Out of these meetings the airport has announced new carriers into our market, announced year round service, and enhanced service levels beyond the prior year. While our efforts have been succesful thus far it is a never ending process to maintain the key relationships that PSP staff has developed with the air carriers and thus foster future air service development. Currently airport management is actively engaged in on going discussions with 9 Air carriers. Certainly one of the key component pieces in this process of Air Service Development was the hiring of Simat, Hellinsen & Eichner, Inc. (SH&E) in January of 2001. The invaluable information received from SH&E on carrier system routes, yield data, revenue segmentbased on aircraft type and other additional data has assisted airport management in furthering air service discussions. Our relationship with SH&E needs to continue into the next year for ongoing Air Service development efforts of airport management to continue. The effectiveness of the presentations given by PSP management as well as the background data and yield analysis provided by SH&E is a key component piece of the current and future air service development process. The Airport Commission unanimously approved the amendment of SH&E's contract and recommended it move to the City Council for approval. The proposed contract extension would do as follows: • Extend the term for 12 months; and n Complete hub system analysis of incumbent carriers; and • Develop, counsel and implement strategic communications plan; and • Develop five(5)carrier forecasts and presentations for$50,000; and • Travel related to executing this contract not to exceed$10,000; and • For a total cost of$125,000 The $125,000 is budgeted in the Airports current budget, Account No. 415-6002- 45520 Advertising/Air service. ,EJC\ ALLEN F. SMOOT,A.R.E. RICHARD STRICKLAND Executive Director-Airports Deputy Director of Aviation-Administration APPROVED-'--v \/ pity�a �ger Attachments: 1. Minute Order 2. Amendment#3 REVIEWED BY DEPI OF FINANCE � 44 AMENDMENT NO.3 AGREEMENT NO.4334,AIRPORT MARKETING CONSULTING SERVICES This Third Amendment to Agreement No.4334 for contract services,(herein"Agreement")made and entered into this day of 2003,by and between the CITY OF PALM SPRINGS,(herein"City")and SI MAT,HELLIESEN&EICHNER,INC. (SH&E)(herein "Contractor')is hereby effective July 2,2003,as follows: 1. Section 2.1 Contract Sum,is hereby amended to reflect that the maximum contract amount shall not exceed One Hundred Twenty Five Thousand Dollars,($125,000). 2. Section 5.1 Term,is hereby amended by extending the term through June 30,2004_ 3. Exhibit"A"Scope of Services,is hereby deleted in its entirety and replaced as follows: EXHIBIT SCOPE OF SERVICES AIRPORTMARKETING/ADVERTISING/PUBLICITY CONSULTING SERVICES Contractorshall provide the followingservicesin Air ServiceDevelopment&Marketing during the term of the Contract Number Task A-1 Provide Network System analysis to PSP staff specific to on-going carrier analysis, relevant to Hub system of existing carriers. A 2 Develop carrier forecasts and presentations for 4 carriers which may consist of the followings Midwest Express, Frontier, Delta, Horizon, Spirit, Northwest, US Airways and Jet Blue. A-3 Provide data analysis on connect markets of existing carriers as it relates to PSP connections. A-4 Monitor and report strategic plans and relevant data analysis for other targeted carriers. A-5 Provide strategic counsel for regular communications with incumbent and target air carriers. A-6 Maintain databases on existing air carrier service performance and benchmark them against relevant system averages and comparable communities across the United States. Such statistics will include loadfactors,revenue,yield,fare,connect markets and market growth rates_ A-7 Provide counsel and recommendations on final development and implementation of Strategic communications plan. 4. Exhibit`B" Schedule of Compensation, is hereby deleted in its entirety and replaced as follows: EXHIBIT"B" SCHEDULE OF COMPENSATION Contractor shall be compensated as follows: The Scope of Work,Exhibit A," lists seven(7)separate tasks to be provided under the contract. Some tasks have fixed fees,while others are ongoing and shall be compensated under the retainer fee. Nwnber Task Cost A-1 Hub system of existing carriers analysis $20,000 A 2 Forecasts&presentations(5 carriers) $50,000 A-3 Develop forecasts and relevant data on carriers Retainer As requested during the 12-month period A-4 Economic forecasts Retainer A-5 Strategic Counsel for Air Service Retainer A-6 Develop carrier statistics(revenue,yield) Retainer A-7 Implementation Strategic Communications Retainer The retainer shall be as follows: Monthly(months 1-5) $5,000_mo Monthly(months 6-12) $2,500.mo Contractor will be compensated monthly based on the above retainer schedule and based on the percentage of work completed on Tasks A-1,A-2 and A-7. Reimbursables shall be compensated at cost plus 10%,with all travel by air to be approved in advance,up to a maximum of$10,000. 5. Exhibit"C"Schedule of Performance is hereby added to read as follows: Exhibit"C" SCHEDULE OF PERFORMANCE Time-line:This is a year-long project. Work Item A-2 carrier forecasts and presentation materials will be completed witbin3 weeks ofPSP staffs request as air carrier meetings are scheduled Work Item A-7 shall be completed within the first 5 months of the contract All retainer compensated work shall be performed throughout the term as requested bythe City with activities reported in the monthly report outlined under"deliverables." Deliverables:Work item A 2 shall include adequate numbers ofhard copies of the presentation for airline attendees and three(3)extra copies to the Airport Work item A-7 shall include two bound copies of the plan to the Airport Monthly reports,including updated statistics shall be provided to the Airport by the 20'of each month for the previous month MINUTE ORDER NO. APPROVING AMENDMENT NO. 3 TO AGREEMENT NO.4334 WITH SIMAT, HELLIESEN & EICHNER, INC. FOR AN ADDITIONAL YEAR OF AIR SERVICE DEVELOPMENT AND MARKETING FOR AN AMOUNT NOT-TO-EXCEED $125,000. I HEREBY CERTIFY that this Minute Order approving Amendment No. 3 to Agreement No. 4334 with Simat, Heiliesen&Eichner, Inc. For an additional year of Air Service Development and Marketing for an amount not-to-exceed $125,000, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 2nd day of July, 2003, PATRICIA A. SANDERS City Clerk