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Home My WebLink About2/20/2002 - STAFF REPORTS (3) DATE: February 20, 2002 TO: City Council FROM: City Manager AMERICAN AIRLINES 2002 SUMMER SERVICE GUARANTEE RECOMMENDATION: It is recommended that City Council approve funding the City's share of an American Airlines Summer 2002 guarantee, $50,000, and authorize the necessary budget transfer. SUMMARY: This action would result in the City being the first agency to provide its fair share of this summer's American Airlines guarantee to the Palm Springs Desert Resorts Convention and Visitor Authority (CVA). BACKGROUND: For the past five summers, the CVA, through its Airline Service Committee and consultant Nancy Doria, have negotiated agreements with American Airlines for guaranteed summer service to Dallas. The cost, cash and/or coop advertising, have varied from a high of$250,000 per summer to $100,000 last summer. Last fall, the City Council authorized the Airport to fund $15,000 to CVA so their consultant could make an effort to negotiate another year of summer service,with the hope that costs would continue to go down and quickly disappear. The discussions have recently concluded and attached are copies of correspondence outlining American's request for$200,000. Evidently, the post "9/11" impacts have added to the cost of guaranteeing the flight in very tenuous times for the airlines in general. The formula previously developed by all the cities via CVA resulted in the City's fair share being $50,000. To fund this request, it is recommended that funds budgeted this year for expected City regular payments to the CVA be reallocated to a new account for the guarantee. The budgeted appropriation for the CVA for Fiscal Year 2001-02 is $1,250,000 (Community Promotion Fund, PSDRCVA, 1 1 2-200 1-43200). Payments to the CVA are based on the City's Transient Occupancy Tax collection. With the decreases in TOT over the last several months, this year's payment to the CVA will be about $1,100,000. 14 February 20, 2002 Page Two A Minute Order authorizing the expenditure is attached for City Council consideration. If the action is approved, a budget adjustment reallocating the funds will be handled administratively. DAVID H. READY City Manager ATTACHMENTS: 1. Minute Order 2. Correspondence REVIEWED BY DEn OF FINANCE L� JAN• 31. 2002 3:57PM N0, 615 P. 2 MEMORANDUM I PALM SPRINGS TO: DAVID READY, City Manager, City of Palm Springs DESERT RESORTS® JEAN BENSON, Chauwornan, Airline Service Committee CONVENTION TORS ION AND MATTREW WEY KER, Chair, IPA Executive Committee WILL KLEINDIENST,Vice Chair, SPA Executive Committee 71�CDereitReJOrtGommwlfttcs TERRY HENDERSON, Immediate Past Chair, IPA Executive Committee y wsidoCm,,,o, JIM, LOPEZ, Chair, hospitality Industry and Business Council WHEDRALCM RMY VOSSLER,Vice Chair, hospitality Industry and Business Council DEWHorsPsmW TLM ELLIS, Immediate Past Chair, Hospitality Industry and Business Council 12ICH ARD OLIPHANT, Chair, Coachella Valley Economic Partnership lnD'nN WeIY.s MICHAEL BRACKEN, Executive Director, Coachella Valley Economic Partnership LtQp1N•rA / PMMDj;5ERT FROM: MICHAEL E.F133E,Presidcr�t 1�,/ rACMsrExcs DATE: JANUARY28, 2002 `�` HANCf{08>iFAGE SUBJECT: AMERICAN AIRLINES Nancy Doria finally received information from American Airlines regarding 2002 sura ner service for the Pahn Springs International Airport. For the past six years,the Airline Service Committee(ASC)provided funds to American Airlines in exchange for service from mid-June to mid-September of each year. American Airlines would like S200,000 to continue service from Dallas Ft. Worth to Palm Springs International Airport during the summer of 2002. They indicated that this must be cash and not co-op marketing dollars. We have not explored if some reductions in fees from the Palm Springs International Airport could be credited against this $200,000. If the City of Palm Springs is willing to reduce any of the fees associated with the summer, we will work with American Airline to determine if any reductions could be applied to the S200,000. The CVA,staff is not sure how you would like us to respond to American Airlines' request- We would welcome your direction. 69-930 HWA 111,8217E 201 RANCHO MCMU6 CA 92270 IVI.E'J'�t191 76o-770.9000 1 760-770-9001 PAX aoo-967-3707 wwW PalmspxingMA•corn WA6H0MN,D.C. SnrES OrP[C9 ' 115 noaxHrnntrnxsx,5Cn'r�300 , ALt'tANDn1p,VA 22314 703.549.8026 703-519,7579 FAY, JAN. 31. 2002 3 ;57PM Vu- "N0. 615J1 P. 3 p Palm Springs Desert Resorts Airline Service Committee r.o.FtoteaLsa t�a s.('s 4 PRIM pm r t;a 'M!5.1iin Vax 760,775-YOW c-mail: airpizdctva�,OL.cnm - Jarwoxy 27, 2()02 To: NIT. Mikc Film Re: Americans Airlines Letter Altachcd for your Xe-view is Ei lemi, fiiom Ai-naricai: Ax&ies dwwd TaUi ,z4 :5,, Ls U2. 'z$ we discwsed the payment for ensuring summer service:will be $260.000 and Ainarica,n is umvaivering on th-al.ligurc. Another point which has changed is payment is Clue by I��Lrch 1, 2002 every year. however Z beheve it may be ncgodablu this year- 1 know we have heard the story before, tmt by not paying the$200,000 we will compete i%ith all other DPW- West Lnarkets in ALncrican's system. This does not mean the summer servico will not he in the schedule, but chances are zeduccd drastically. Un a better note, my meeting at A,neriran was not a total loss as the third trip for lvkarab between PSP_DPW was addccl to the schedule this vxckond. 1 am sure this will heip— mituc ize some of the loss in seats for the first quarter, Additionally, this iligtat jar-iy ccnti-lue through tl,e end ofApril and tlic vo--clLtxI frequency additinns corny contftme Until the end of May. Please let me know how you would like me to proceed with American. Regards, ;r i I icy A.Doria �1 ctor of Airline Devcic. ient `N0. 61511 P. 4 p. JAN. 31, 2Q02 3.58PM 01125 '02 15 31 ivv, r1D vI�U1 American rlin1w.� Januwry,25, 2002 Ms. Nancy A. Doria Airline SusineSs Development bona-&Associates P,o. Sox 13190 Palm Desert,CA 92255-3190 Via Fax: 76o-M-2015 Dear Nancy: Thank you so much for traveling aiway's;•- was very good to see you and to discuss these issues. Fapowina,yr,ut lisle♦ yca decided to add a 'mot° 0FW-PSP roundtrlp Tar March and April, 20011 know that this added service,during your busiert time, will be received very well In your communities, As for summer DFW-PSP service, we have taken.a closer look at how the roundtrip has performed, as well as reviewing our most recant Air Service Agreemerrt.While we understand Palm Sgrl4$s'.funJin cort?plex ties and tt!n.-esi. to "udL ere verse 9uarant ec service,we must make a sound business decision, especially in these uncortain financial time% Gonsequently,we have determined that American needs an annual$200,000 payment by March 01, 2002, and by March 1 of subsequent years, to insure summer DFW-PSP air sorvice, Without such a payment, the air service must compete on equ our historic Ily peak spason. This could, of course, place DFW-PSP summer service in same Jeopardy. I regiet that DFW-PSP's summer performance forces American to roquire a continuation or payment If your corltrlbutprs agree, please contact me and we will workout payment derails and any other relevant matters. We appreciate very much the Palm Springs areas' past and, hopefully, continuing support for At eriouri Airlines-not only for summer but for all year-round. sincere Z�_� A;O'P� Lauren Huddleston Cc: W.J. pue R.J. Essell K. Willuughby P.O.BOX 01961G.DAU./,VORT WCOTH AIRPORT,TEk'As 75W8 S810.CA BUFFADORr:SS:+MAIP MINUTE ORDER NO. APPROVING AN EXPENDITURE OF$50,000 AS THE CITY'S FAIR SHARE OF AN AMERICAN AIRLINES SUMMER 2002 AIR SERVICE GUARANTEE. I HEREBY CERTIFY that this Minute Order, approving an expenditure of$50,000 as the City's fair share of an American Airlines Summer 2002 Air Service guarantee,was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 201h day of February 2002. PATRICIA A. SANDERS City Clerk