In January 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 these special circumstances, the Airport and the airlines have again agreed to extend the term of the existing Agreement for an additional year, through June 30, 2010.

Additionally, the Amendment also incorporates several other changes in the Agreement with Northwest Airlines, Inc.  In October 2008, Northwest merged with Delta Air Lines, Inc.; therefore, this Amendment assigns Northwest's leasehold interest to Delta as its successor after implementation of the merger.  Secondly, the Amendment increases Delta's leasehold to include 1,858 additional square feet for a second loading gate and passenger holding area previously leased by SkyWest Airlines.

Delta is one of four airlines that will execute the Agreement extension for the additional year.  The City Council approved Great Lakes Airlines' Agreement extension at the September 14, 2009, Council meeting, and Horizon Air Industries, Inc.'s Agreement extension at the September 28, 2009, Council meeting.  The United Airlines Agreement extension is a separate item on this meeting's agenda. The remaining airlines (Allegiant and Frontier) are operating under City Ordinance, which requires them to pay a higher landing fee. Copies of the Amendment are available for review in the City Clerks Office.

The Council may:
 

• Approve the Amendment,
• Not approve the Amendment, or
• Request staff to renegotiate some part of the Amendment.

This Amendment extends the term of Northwest Airlines' 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 Northwest Airlines, Inc., assigning the leasehold interest to Delta Air Lines, Inc., adding additional square footage, and extending the Agreement expiration date to June 30, 2010.