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HomeMy WebLinkAbout2011-08-08 11-265 ORDERCOUNCIL ACTION Item No. Date: August& 2011 Item/Subject: Order, Authorizing the Airport to Implement an Air Service Incentive Program at Bangor International Airport and Adopting an Air Service Incentive Polity _. Responsible Department: Airport Commentary: If approved, this Order will adopt and implement an Air Service Incentive Program for the Bangor Internation Airport. One of the goals of the Bangor Airport is to attract, develop and maintain such air transportation services as are sustainable by the region in order to facilitate and stimulate the levels of economic and community development targeted by the City of Bangor. By adopting and implementing the proposed air service incentive program, the Airport will be able to provide financial and marketing incentives to air carriers that are considering expanding air service to the region. The Federal Aviation Administration has clear guidelines as to the types of incentives airports can offer and the proposed policy is designed to be in compliance with the FAA guidelines. Rebecca L Hugo Department Head Manager's Comments: This item was reviewed and unanimously recommended for approval at the Airport Committee meeting of July 27'". � � —p t r"l City Maty Manager Associated Information: Order, Plan Budget Approval: C/Finance Director Legal Approval: Ci City Solicitor Introduced for _X_ Passage — New Business _ First Reading _ Referral Page _ of Assignor! In Councilor - Weston August 8. 2011 �5(J CITY OF BANGOR �e u� (MLE.) ORDER, Authorizing the Airport to Implement an Air Service Incentive Program at Bangor International Airport and Adopting an Air Service Incentive Policy. WHEREAS, the City of Bangor awns and operates the Bangor International Airport; and WHEREAS, attracting high quality and affordable air service is critically important to the Bangor Region.; and WHEREAS, by adopting and implementing the proposed air service incentive program, the Airport will be able to provide financial and marketing incentives to air carriers that are considering expanding air service to the region; and WHEREAS, the proposed policy is designed to be in compliance with the FAA guidelines. NOW, THEREFORE, BE IT ORDERED By THE CITY COUNCIL OF THE CITY OF BANGOR, THAT the Airport is authorized to implement an Air Service Incentive Program at Bangor International Airport. IN CM C ML August a. 2011 Motion Made aed Seconded for Pass e Passed N11 -9fi5 � nenR (TIRE.) Au[1mc3¢1v¢ the dirnoi[ [o I®1®eu[ av Mr Service Incentive Pcogcan at Bangor Intern.ti Airport amid Adapting an Air Service Incentlw Police AealOaee bCnntlb�, RGR BANGOR U n�nl,IXJ (A 411144 at VA The Air Service Incentive Program (the 'PrograW) Is consistent with the point in the mission of the Bangor International Airport to: Attract, develop and maintain such air transportation services as are sustainable by the region in order to facilitate and stimulate the levels of economic and community development targeted by the City of Bangor The incentive program's intent is to entice air carriers to add additional services which will help Bangor travelers reach their destination in a more direct, cost effective, and efficient way. New routes will enhance airport revenues and have a positive economic impact to the brat region. SCOPE OF THE MR SERVICE INCENTIVE PROGRAM The Program has two distinct components: A landing fee credit ("Credit') to encourage flights from BGR M new destinations, and A marketing incentive rIncentive') far additional flights from SGR to new or existing destinations. Program Requirements: In order to qualify for participation in the Program, the following conditions apply: Requirements for landing Fee Credit: To qualify far the Credit, the Airline must operate the route year-round to a new destination airport. Only new destinations qualify for the credit Only one annual Credit exists for each nmo destination. The firs[ carrier to announce operations on the new route to the Bangor International Airport will the the qualffying canter. Should two (2) or more airlines commence the same qualifying service within a three-month period of the qualifying carrier, the single Credit shall be equally divided among Me carriers commencing service and continuing service for one year. The carers) must operate the route for a minimum of one (1) year. 1f the carder fails to operate the route for one (1) year, the render shall not receive the Credit Generally, the credit will be given for the months of January,_ May,. October, November, and December, recograing these months are slower travel times and pose the greatest financial risk to airlines offering year round service. A maximum of twenty-one (21) weekly frequencies (three dally frequencies) can be credited per market for an airline; additional frequendes above the three per day in the same market by an airline do not qualify. Fach alrime most have a minimum of two (2) weekly departures (annual average) to the destination airport in order to qualify for the Credit. Airlines may rad: cumulatively total their operations to qualify for the Credit. Seasonal service that is extended to year-round service will be eligible for the landing fee credit provided year-round service continues for at least we year. In this case, the Credit would be eligible from the original start date provided the air carer had rut served the destination within the 18 months prior to the start data. "Seasonal Service" shall mean any service that upon announcement: (1) is not operated on a published schedule pattern within every month of the year and (2) Is operated for more than 90 days but less than 365 days in one calendar year. Creditable Landing Fees shall be seared by an airline's approved application for credit and the terms of credit at the fine of application with BGR. The qualifying air canner(s) must secure approved credit from BGR, which in the aggregate must cover at least six (6) months of expected landing fees for the new route. Airlines that transfer routes Wlfrom their regional affiliated carriers and sell such routes under their brand shall not qualify for the tredit unless the roup was added within the qualifying period of the Program. Fifty percent of the landing fee credit will be given in the month that it is earned. The remaining 50% credit will be given at the end of the qualifying year as a credit toward future larding fees. Should service on the route be terminated pre -maturely (before completion of one year), BGR shall be reimbursed for all landing fee credits committed to the airline for the route. P :'fi5 A transfer of a flight from we airport to another airport within the same metropolitan area does not qualify. The standard census definitions of metropolitan statistical area (MSA) and consolidated metropolitan statistical area (CMSA) will apply in this case. Requirements for Marketing Incentive: To qualify for the Marketing Incentive, the qualifying airline must initiate a new route from MR to a destination airport or new non-stop flights to existing destination airports even if the additional nonstop service is provided by an incumbent carrier. New flights to existing destination airports may also qualify if nonstop service is protided by a competitive tamer and this carrier has not provided service m the destination within the past 18 months. Airlines that transfer routes to their regional affiliated carriers and sell such routes under their brand shall not qualify for the Incentive unless the route was added within the qualifying period of the Program. The route must be operated for a minimum of one (1) year or for Seasonal service routes a minimum of ninety (90) days. A minimum of two (2) weekly departures to the destination airport are required. Should service on the route be terminated pre -maturely (before completion of one year or one season), the WR shall be reimbursed on a pro -rated basis (365 day pro -rate for year-round service and 90 day pro -rate for seasonal senate) for all Incentives Invested. A transfer of a flight from one airport to another airport within the same metropolitan area does not qualify. The standard census definitions of metropolitan statistical area (MSA) and consolidated metropolitan statistical area (CMSA) will apply in this case. Program Outline: The Program has been developed m be competitive with other airport programs and to be in compliance with FAA regulations. The program balances the interests of existing carriers and potential wniers. The program is available to all airlines currency serving MR or those wishing to start service at MR. A Temporary Landing Fee Credit for a maximum of three (3) daily Flights Per market First Year of Service: Up to three daily flights to a new destination airport 100% credit of landing fees for the specified months. Second Year of Service: Up to three (3) daily Flights to a new destination airport 50% credit of landing fees for the specified months. Vall Period of Landing Fee Credit For new destination airports in the United States, the landing fee credit incentive program shall only be valid for new routes to destinations not already being served. z65 Provided the airline is not in default and has no rents or fees owing order its; Airline Operating Agreement or other agreements it may have with BGR, the landing fees for the qualifying flight(s) remitted to BGR will be credited toward future airport rents and/or fees. Should the airline terminate the qualifying service pre -maturely, all credits granted (whether applied or unapplied by the Airline)shallbe voided! and Anne ne shall be responsible for full payment of all rents and fees accrued since inception of the qualifying service, as well as any fuller payments due BGR. The qualifying air carrier must submit a credit application to BGR. The approved credit must in the aggregate rover at least six (6) months of expected landing fes for the new route. ,ss Marketing Incendve— Flights to raw destination airports will qualify for a Marketing Incentive In the first year of service. New Flights to existing destination airports will also qualify if new nonstop service is provided by an incumbent or a competitive carrier and this carer has not provided! service to the destination within the past 18 months. The Incentives shall be utilized solely for Me purpose of promoting the new Bangor route in N, radio, print and/or internet marketing or public relations campaigns. Airlines applying for the Incentive must agree to editorial oversight by BGR. Al marketing materials and/or promotions funded by the Incentive shall be pre -approved by the airline prior to publication. Incentives utilized for this purpose will be developed and places by BGR and will advertise service specific to the new Bangor route. Should service be suspended prematurely, the airline shall be responsible for pro rated (365 -day pro -rate for year-round service and 90 -day pro -rate for seasonal service) reimbursement of all marketing funds spent. Methodology of Marketing Incentive Any Flight to a new destination airport shall qualify for a total marketing incentive not to exceed $60,000 per route. A new flight to an existing destination airport offered by a competitive aidine shall qualify for a marketing incentive not to exceed $25,000 per route. Computation of the Incentive will be based on the announced schedule. Should the airline materially down -gauge the frequency and/or size of aircraft on the route, marketing funds shall be decreased on a pro -rated basis. Por the purposes of this policy a material down - gauge shall be construed as a frequency and/or size reduction of greater than 20%. Incentives referenced above shall be calculated based on frequency and size of aircraft, and calculated based on written objective standards as determined by BGR and shall be applied consistently and fairly. In addition to any route marketing incentive, any new airline that otherwise meets the criteria for the Incentive by establishing operations at BGR shall also receive a new aidine marketing incentive of $25,000. A new airline shall be defined as any airline that has not offered scheduled service at BGR within the prior 18 months. Validity Period The Air Service Marketing Incentive Program shall be ongoing unless cancelled by BGR. Additional Information: It should be noted this program is in addition to any funds which may he available through the Small Community Air Service Development Grant or the Airport's on going marketing efforts. The Airport reserve the right to modify the program based upon operational need and finanaal constraints.