Allegiant Air, LLC has been operating at the Airport since March, 2006. During this time, Allegiant has not leased space in the Terminal Building and operated at the Airport through an agreement with Horizon Air, whereby Horizon used its leased Terminal Building space and employees to provide ground support services for Allegiant flights. Allegiant plans to terminate its agreement with Horizon regarding ground support services and now desires to lease its own space in the Terminal Building. The Signatory Agreement contract language has been in use since the Terminal remodel in 1990, and has been renewed a number of times. The contract language provides a rate-making formula for airline Terminal Building rentals and landing fees that ensures the Airport's annual operating costs are covered. Ordinance 90-4850 establishes the rate formula and provides a financial incentive for airlines, giving those airlines that execute the Signatory Agreement a lower landing fee rate than those airlines that choose not to enter into a contract with the City.

Presently, Delta, Horizon, Great Lakes, and United Airlines operate under the Signatory Agreement, which expires June 30, 2010. Frontier and Allegiant currently do not operate under the Signatory Agreement. The difference in the landing rate fee between a signatory airline and a non-signatory airline is currently $0.33 per 1,000 pounds of landed weight. By participating in the Signatory Agreement, Allegiant will now be able to take advantage of lower landing fees.

The City Council may:

• Approve the Scheduled Airline Agreement and Terminal Building Lease with Allegiant Air, LLC, leasing Terminal Building space and extending signatory landing fee rates to Allegiant; or
• Not approve the Scheduled Airline Agreement and Terminal Building Lease with Allegiant Air, LLC,  and provide staff with guidance on how to further proceed.

This Signatory Agreement provides Allegiant with 644 square feet of exclusive use space for ticketing and offices, and 2,890 square feet of operational space. Based on the current rate schedule, the Lease would generate approximately $28,500 in annual rentals for the exclusive use space. The operational space will generate additional revenue, based on the number of enplanements Allegiant has at the Airport. Based on the current rate schedule, landing fees are estimated to be approximately $47,800 per year.

Staff recommends that the City Council approve the Scheduled Airline Operating Agreement and Terminal Building Lease with Allegiant Air, LLC for a term beginning March 1, 2010, and expiring on June 30, 2010, when all signatory Airline contracts expire.