Title
Air Service Incentive Program (Ordinance S-46305)
Description
Request to authorize the City Manager, or his designee, to approve a new Air Service Incentive Program (Program) for Phoenix Sky Harbor International Airport (Airport). The aggregate cost for the Program will not exceed $2.5 million per airline. Further request authorization for the City Controller to disburse all monies related to this item.
Report
Summary
Obtaining new routes to serve the customers of the Airport is competitive. Airlines are increasingly selective on which markets they choose to operate international air service. Airlines choose markets that provide the greatest revenue opportunity based on aircraft availability and the high cost of operating international routes. It is industry practice for airports to partner with airlines by reducing an airline's financial risk during the important start-up period through an incentive program. When faced with a choice on where to place new service, airline incentive programs can help influence the airline decision making process.
Contract Term
The Program will be effective from July 1, 2020 through June 30, 2024.
Financial Impact
The Program allows for a maximum of $2 million in marketing funding, plus $500,000 in fee waivers per airline over a two-year period. While it is possible for more than one airline to take advantage of the maximum funding, it is highly unlikely. Money is available in the Aviation Department's budget for this purpose.
Concurrence/Previous Council Action
This item was recommended for approval at the Transportation, Infrastructure and Innovation subcommittee on Dec. 4, 2019 by a vote of 4-0.
Location
Phoenix Sky Harbor International Airport, 3400 E. Sky Harbor Blvd.
Council District: 8
Department
Responsible Department
This item is submitted by the Assistant City Manager Deanna Jonovich and the Aviation Department.