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HomeMy WebLinkAbout6/4/2003 - STAFF REPORTS (10) ­77>7 y DATE: June 4, 2003 TO: City Council FROM: Deputy Director Aviation-Administration via Executive Director_Airports AIR SERVICE DEVELOPMENT 2004 INCENTIVE PROGRAM RECOMMENDATION: It is recommended that City Council approve an Air Service Incentive Program for Fiscal Year 2004. SUMMARY- This action would approve an Air Service Incentive Program that would allow the Airport to further enhance Air Service Development activities with air carriers to increase routes. BACKGROUND: The Air Service Development Program of the Palm Springs International Airport has seen great success over the last two years_ During this time airport management has expanded relationships with 17 carriers across the country thru 28 meetings and familiarization trips. As a result of these efforts the airport has announced three new carriers into our market, two others announced year round service, and five others have enhanced service levels beyond the prior year. All of this work has allowed the airport to pull itself away from the typical drop in service that other airports have experienced as was recently highlighted by the Wall Street Journal_ The Airlines continue to face unprecedented losses as they continue to reorganize and redefine their Hub's, routes, aircraft and labor agreements. In the face of these efforts airline marketing budgets have been scaled back and the question that routinely is asked, "What marketing assistance can the airport provide". This question was answered when both the commission and City Council unanimously passed the "PSP FY2003 Air Service Incentive Award Program' this past January. Since then Airport Management has had multiple meetings with several tamers and two carriers were successful in meeting our criteria and announcing new air service. Both Horizon Air and Delta Airlines announced new summer service and have spent their share of the funding under the program for marketing of the new air service. These two successes have exhausted the funding available for FY 03. As we approach Fiscal Year 2004 we look for the Council to support the proposed "PSP FY2004 Air Service Award Criteria". Airport Management believes this program will allow for the continued success of air service development. Currently airport management has 9 meetings calendared with the airlines. The marketing time frame remains a key element and it is intended that the marketing will run 60 days prior to the start of service and again during the first 30 days of // 4 qk operation of the new service in order to maximize the exposure during the initial start- up phase. This advertising time line is one of the key elements that PSP management takes into account when conducting Air Service Development,as the increased service levels are always weighed against the markets ability to generate sufficient loads for the carrier. The Airport Commission unanimously approved the air service incentive program and recommended it move to the City Council for approval_ The $100,000 is budgeted in the Airports Fiscal Year 2004 budget, Account No. 41 - 6002-45520 Advertising/Air service development. ALLEN F. SMOOT,AA_E_ RICHARD STRICKLAND Executive Director-Airports Deputy Director of Aviation-Administration APPROVED: City Manager Attachments- 1_ Air Service Incentive Program 2. Resolution REVIEWED BY DEPT. OF FINANCE RESOLUTION NO. OF THE CITY COUNCIL OF PALM SPRINGS, CALIFORNIA. ESTABLISHING AN AIR SERVICE INCENTIVE PROGRAM SO AS TO PROVIDE MARKETING FUNDING FOR AN INCREASE IN AIR CARRIER SERVICE ON NEW ROUTES DURING THE INCENTIVE PERIOD. WHEREAS the Palm Springs International Airport has contracted with Simat, Hellisen & Eichner from Boston, Massachusetts for continued Air Service Development Analysis; and WHEREAS the City adopted"PSP FY2003 Air Service Incentive Award Criteria" by resolution 20525;and WHEREAS any incentive program offered must be equitable to any and all carriers in its administration and effect; and WHEREAS airport management through various meetings with multiple airlines experience has been gained demonstrating a need for marketing funding; and WHEREAS airport management has held meetings with multiple airlines and successfully implemented PSP FY2003 Air Service incentive program; and NOW THEREFORE BE IT RESOLVED that the "PSP FY 2004 AIR SERVICE AWARD CRITERIA' is hereby approved, attached as Exhibit 1, as the airline incentive program of Palm Springs International Airport_ ADOPTED this day of . 2004. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED&APPROVED AS TO FORM µq EXHIBIT TO RESOLUTION PSP FY2004 AIR SERVICE INCENTIVE AWARD CRITERIA • Up to$25,000 will be committed to any airline that • Is a new commercial carrier at PSP;and/or • Initiates a minimum of daily,nonstop service from PSP to one of PSP's top 25 unsetved O&D markets/destinations in the United States;or • Initiates a minimum of one non-stop flight per week service from PSP to the New York City market. • Summer service is eligible for incentive prograrn for any airline that • Initiates service daily,nonstop and runs for at least 75 days during June thin August from PSP to one of PSP's top 25 O&D markets currently without summer service • An airline that initiates service to more than one unserved destination will be eligible for multiple awards. • An airline that(1)is a new tamer and (2)initiates service to an unscn-ed destination in the specified markets will be eligible to receive a maximum of$25,000. If such airline initiates service to an unserved destination in the future,the airline will be eligible to receive additional incentives at that time_ • PSP and the airline will cooperatively develop the marketing incentive program_ Marketing incentive funds can be used for the following activities: • Cooperative advertising to promote new service (primary focus of funding) • Other activities as agreed by both PSP and the carder • Canicr must operate the flight for a minimum 4 month period • If summer service;carder must operate flight for min. 75 days • Total F Y2(104 incentive fund is limited to$100,000. Once these finds are exhausted,no further incentives will be granted in FY2004_ Top PSP UNsF-KyEn O&D MARIE-rs New York- JFK/RVVR Philadelphia Pf-IL Detroit D'I'W Chicago ORD/AIDW Washington IAD Boston BOS Minneapolis * MSP Baltimore BWI Atlanta* ATL Oakland OAK Porti,md PDX *Indicates summer service route.