Title
New Cargo Facility Lease Agreement with AGI Ground, Inc. at Phoenix Sky Harbor International Airport (Ordinance S-52475) - District 8
Description
Request to authorize the City Manager, or his designee, to enter into a new cargo facility lease agreement (Lease) with AGI Ground, Inc. (AGI) to lease not more than 5,760 square feet of space in Building A of the West Air Cargo complex at Phoenix Sky Harbor International Airport (PHX).
Report
Summary
AGI currently provides ground handling support services to AeroMéxico and WestJet airlines under Commercial Use Permit 529-26. AGI recently expanded its services agreement with AeroMéxico to include cargo handling operations. To support its cargo handling operation and to provide covered storage for its ground handling equipment, AGI requests to lease two cargo bays with a total area of 3,840 square feet in Building A of the West Air Cargo complex at PHX. The Lease will include an option for AGI to lease one additional cargo bay with a total area of 1,920 square feet, contingent upon AGI securing additional cargo handling contracts with other airlines at PHX. AGI will also be required to complete tenant improvements to separate its leased cargo bay space in Building A from adjacent non-leased cargo bay areas with additional airlines requiring cargo support services.
AGI will be required to complete tenant improvements within six months following the effective date of the Lease. The improvements are necessary to make the leased space suitable for AGI's cargo operations.
Contract Term
The term of the Lease will be three years, with three one-year options to extend the term at the sole discretion of the Aviation Director.
Financial Impact
AGI will pay the rental rate per square foot per year for the West Air Cargo and West Air Cargo GSE facilities as established by the Airport Rates and Charges program authorized under Phoenix City Code Section 4-173(B). Rent for the first year of the Lease will be approximately $69,120. The cargo facilities rental rate will be adjusted annually according to the Rates and Charges provision of Article IX, Chapter 4, of the Phoenix City Code.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board, Business and Development Subcommittee approved this item on October 3, 2025, by a vote of 3-0.
The Phoenix Aviation Advisory Board approved this item on October 16, 2025, by a vote of 6-0.
The Transportation, Infrastructure and Planning Subcommittee approved this item on November 19, 2025, by a vote of 4-0.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Amber Williamson and the Aviation Department.