Title
Asset Exchange between American Airlines and the City of Phoenix (Ordinance S-51978) - District 8
Description
Request to authorize the City Manager, or his designee, to enter into a contract to transfer ownership of certain Passenger Boarding Bridges between American Airlines and the City of Phoenix (City) at Phoenix Sky Harbor International Airport.
Report
Summary
Passenger boarding bridges (bridges) are critical to the conveyance of passengers at Phoenix Sky Harbor International Airport. Bridges, which connect passenger planes to the concourses, can be owned by airlines or the airport.
The Aviation Department owns 31 bridges and American Airlines owns 28 bridges in the north concourses of Terminal 4. The Aviation Department currently leases 25 bridges to American Airlines on an exclusive use gate basis under a Jetway Use Agreement (JUA). The nature of this exclusive use restricts the Aviation Department from supporting common use gate activity at these gates for other airlines.
The Aviation Department seeks to acquire 20 American Airlines-owned bridges to convert to common-use. By installing common use technology, the Aviation Department will gain the flexibility to use these gates for other air carriers. As part of the proposed agreement, the Aviation Department would allow American Airlines to retain preferential use of these gates for their operations, and the Aviation Department would transfer ownership of City-owned bridges to American Airlines for their exclusive use.
To accomplish this transaction, American would transfer ownership of a total of 20 American Airlines-owned bridges, valued at approximately $9.4 million to the City, and the City would transfer ownership of 23 City-owned bridges, valued at approximately $5.4 million, to American Airlines. The difference in asset value of approximately $4 million will be remitted by the City to American Airlines in the form of rent credits.
Contract Term
American Airlines’ existing JUA will continue on a month-to-month basis.
Financial Impact
If approved, the City will remit approximately $4 million to American Airlines in the form of rent credits. Annual revenue from American Airlines’ JUA would be reduced by approximately $124,000 due to the reduced number of City-owned bridges leased to American Airlines. This loss of revenue will be offset by fees generated from common use gate usage by other air carriers, resulting in minimal change in revenue to the City.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.