On June 30, 2006, the two-year Scheduled Airline Operating Agreement and Terminal Building Lease (the Agreement) with the signatory airlines expired. Due to bankruptcies, recessions, and other financial difficulties impacting the airline industry, the airlines would only consider short-term agreements, so staff subsequently negotiated Agreement Amendments extending the term for only a year or two.  The last Agreement with Horizon Air, United Air Lines, Delta Air Lines, Great Lakes Aviation, and Allegiant Air expired on June 30, 2011. The airline industry continues to evolve in light of the economic downturn, high fuel prices, consolidations, and mergers. Given the uncertainty these circumstances present, staff approached the airlines with yet another short-term extension to the Agreement. Horizon Air (DBA Alaska Airlines), United Air Lines, Delta Air Lines, and Allegiant Air each signed Amendments extending their Agreements to June 30, 2012. Airlines not signing the Agreement are Frontier Airlines and Gulfstream International Airlines, which will operate under City Ordinance and pay higher landing fees.  During the past year, Great Lakes Aviation lost its bid on the Essential Air Service contract and was replaced by Gulfstream International Airlines. Gulfstream began operations at the Airport in May 2011, and opted not to not to sign the Agreement and operate instead under City Ordinance, so no Agreement Amendment is necessary for this airline.

The City Council may:

• Approve the Amendment to each of the Scheduled Airline Operating Agreements with Horizon Air (DBA Alaska Airlines), United Air Lines, Delta Air Lines, and Allegiant Air, extending the Agreement expiration date to June 30, 2012; or
• Not approve the Amendment to each of the Scheduled Airline Operating Agreements with Horizon Air (DBA Alaska Airlines), United Air Lines, Delta Air Lines, and Allegiant Air, extending the Agreement expiration date to June 30, 2012.

This Amendment extends the Agreement term and helps to ensure the Airport's fiscal viability through June 30, 2012. The total budgeted airline revenue for the City is approximately $2,948,000 for FY 12.

Staff recommends that Council approve the Amendment to the Scheduled Airline Operating Agreements with Horizon Air (DBA Alaska Airlines), United Air Lines, Delta Air Lines, and Allegiant Air, extending the Agreement expiration date to June 30, 2012.