In 2008, the Airport and airlines agreed to a two-year extension to the Scheduled Airline Operating Agreement and Terminal Building Lease (the Agreement), which expired on June 30, 2009.  Unfortunately, since that Agreement extension, the airline industry has been seriously impacted by the current economic recession in a magnitude not seen for some time. Due to the airlines' financial weakness and anticipated slow recovery, the Airport and its Master Plan consultants, Mead & Hunt, reevaluated some of the time frames for project construction within the Master Plan document, extending the anticipated completion of the Master Plan to approximately November 2009.  In light of the special economic circumstances and the extended completion of the Master Plan, the Airport and the airlines have again agreed to extend the term of the existing Agreement for an additional year, through June 30, 2010.

Horizon Air is one of four airlines that staff anticipates will execute the Agreement extension for the additional year.  The Great Lakes Airlines Agreement extension was approved at the September 14, 2009, Council meeting, and Delta and United are still in the process of routing the extension through their corporate structures.  The remaining airlines (Allegiant and Frontier) are operating under City Ordinance, which requires them to pay a higher landing fee.

The Council may:
 

• Approve the Amendment,
• Decline to approve the Amendment, or
• Request staff to renegotiate some part of the Amendment.

This Amendment extends the term of Horizon's Agreement and helps to ensure the Airport's fiscal viability through June 30, 2010.  Staff projects the total budgeted airline revenue for the City to be $2,659,909 for FY 2010.

Staff recommends that Council approve Amendment 3 to the Scheduled Airline Operating Agreement with Horizon Air Industries, Inc., extending the Agreement expiration date to June 30, 2010.