Staff recommends approval of the Scheduled Airline Operating Agreement and Terminal Building Lease with Sun Country Inc., DBA Sun Country Airlines for a term beginning June 1, 2024, and ending on June 30, 2025.

Sun Country Inc. DBA Sun Country Airlines (Sun Country) has been operating at the Airport since March 2018 under an Operating Permit for occasional charter flights to Billings.  During this time, Sun Country has not leased space in the Terminal Building and operated at the Airport through an arrangement with Allegiant Airline, whereby Sun Country used Allegiant's leased Terminal Building space and their contracted ground support employees to provide flight services for the Sun Country flights.  Sun Country began scheduled seasonal service to Minneapolis, MN in June and desires to lease Terminal space for its scheduled seasonal service and future charter service.  Sun Country terminated its Terminal space use arrangement with Allegiant and contracted directly with Worldwide Flight Services to provide flight services for its scheduled flights at the Airport.
Staff has worked with Sun Country on a new Scheduled Airline Agreement and Terminal Building Lease (Agreement).  The Agreement is the same agreement the Airport has with all of the other airlines that operate in the Terminal. The Agreement language provides a rate-making formula for airline Terminal Building rentals and landing fees that ensures the Airport's annual operating costs are covered.  The Agreement follows the requirements of Ordinance 90-4850, which provides for the revenue-generating capability needed for the Airport's bonding requirements and capital needs.
This is Sun Country's first airline agreement at the Airport.  Scheduled service will start with seasonal service only for June – August, 2024.  Charter service will continue based on demand.  In 2023, Sun Country provided four charter flights.  In 2024, January through May, Sun Country provided 12 charter flights; the Airport expects Sun Country to have 20 charter flights by the end of the fiscal year.

 

City Council may:

• Approve the airline agreement with Sun Country Airlines; or,
• Not Approve the agreement with Sun Country Airlines..

This Agreement provides Sun Country with 1007 square feet of exclusive use space for ticketing, offices, and operational space.  They will also share 3,045 square feet of hold room space with Allegiant. Daily rentals will apply after the scheduled seasonal service and charter only service. Based on the FY25 rate schedule, the Lease would generate approximately $75,000 in annual rentals for the Terminal space.  The operational space revenue will vary based on the number of enplanements Allegiant has at the Airport, since Allegiant and Sun Country share a holdroom and holdroom rentals are prorated based on enplanements.  Based on the current rate schedule, landing fees are estimated to be approximately $9,000 per year.  The total Sun Country fiscal effect is estimated at $85,000.