HomeMy WebLinkAbout _ 9.1(b)--United Airlines Air Service Agreement & Minimum Revenue Guarantee � � �' � � � � � � ' � �' � � ' � ` CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: December 17, 2024 FROM: Barry Tippin, City Manager ITEIVI NO. 9.1(b) ***APPROVED BY*** btippin@cityofredding.org "S' �p�an,�`i K i�r� � 1�>t[�I�Q2� btippin@cityofredding.org SUBJECT: 9.1(b)--Consider Air Service Agreement with United Airlines and Minimum Revenue Guarantee. Recommendation Authorize and approve the following: (1) Authorize the City Manager to negotiate, and the Mayor ta sign, an Air Service Agreement with United Airlines, Inc. for the purpose of operating scheduled passenger airline service to Denver from the Redding Regional Airport; and (2) Authorize the City Manager, or designee, to appropriate up to $450,000 from the General Fund reserves for the purpose of closing the gap in funding for the required $2 million minimum revenue guarantee for the airline. Fiscal Impact The proposed Air Service Agreement with United (Agreement) requires the City of Redding (City) to provide a revenue guarantee of up to $2 million to ensure the airline does not operate at a net loss over the course of the first year. In cooperation with the Economic Development Corporation of Shasta County (EDC}, the community has generated commitments of just over $550,000. Through a grant and other City support, an additional $1 million has been identified. Without additional contributions, the City will be responsible for committing the $450,000 needed to fully fund the minimum guarantee amount. Staff wi11 continue to work with EDC to identify and collect additional contributions from the community. With this added service, the Redding Regional Airport (Airport) wi11 benefit from additional operating revenue generated from parking fees, rental car concessions, and fuel flowage fees. The Airport will also see an increase in Passenger Facility Charge collections. In terms of total economic bene�t to the community, the EDC estimates the service will generate significant returns depending on the number of passengers using the air service. Report to Redding City Council December 12,2024 Re: 9.1(b)--United AirlinesAir Service Agreement&Minimum Revenue Guarantee Page 2 Alternative Action The City Council (Council) could choose to postpone this action until the Agreement is fully executed or provide alternative direction. Ba ckgro u n d/f1 n alysis Staff has been working with United Airlines to complete the Agreement expeditiously. As of this writing, the agreement is under review by United Airlines and is not ready for execution. Given the fact that the January 7, 2025, Council Meeting wiIl be cancelled for winter break, it is recommended that the Council move forward with staff's recommendations authorizing the City Manager to negotiate and the Mayor to sign the Agreement. This recommendation is made in an effort to avoid any delay in executing the Agreement and finalizing the flight schedule. This will a11ow the community to enjoy the Denver flight as soon as possible. Envi�^onmental Review This item is not a project as defined under the California Environmental Quality Act, and no further action is required. Council Prio�ity/City ManageN Goals • Communication and Transparency — "Improve the quality of communication with the public and City employees to enhance knowledge and increase transparency to improve public trust." Attachments Previous Agreement - 2019 -United Airlines, Inc Ex�c:�tian V�z-si�ra SE VI+�I��AG E EN"�' �7C"�'4���I'��IT�I'I°E �,I �IN�S r�t� CI'�'Y �" �t�t�,t�A 'T'�ii��ir S�rvic�s A�r��in�nt (tk��s"A re� ��t�')is�r���r�ci�rztca�€�be e�'f�:�tiv�e�ra�h����'cP�y c�f`J��� ; �(�]�3, �ay �n� betr���� I'F"�II� �IF�C,I1�,�E�, INC, (`�Ll�ited"}, a D�l�w�r� car��araticsr� �avin� iti� principal �ffices at 23� �. �T����r L?riv�, Gl�����c�, �ll�neais �Ct6ClEs a��€� C���' CC�� R�I�I�II�C�, �'�, �vhcas� addr�ss as 777�ypress�kv��u�,�eddiri�,CA��i[�{?1 (;6#�uar�nt�ar"�a t t� � A� �� t ` ' ' G�as an �rtt�rest i�a �rcam�atitz�; �ir s�rvzc� �c� �r�d frc�t�t R�ddit�� � t �v1�r�ic��sa�.��rpo�� �� t��"����'� ! � � , {. {��; ��, {"4 f 4Y. ,e t L4'IIF��, ITnit�� i� � c.�rt�,''� � air carri�a• coiidu��iri� �ch�dui�d and �t�sc�edui�� fli�ht c�p�r�ti�rz��v� {� ,,t��tJ,S,az��b�t�v�e����}��. �ncl a r�u�r�b�r cr�'�c�r�i��l�ac�tzons; it7�i �� j �hOS y rJ tt t� � ir, �"H�A�,Civara�itc�x cle�ires t�`�:`a`irtcr�as�acc��s t� and�'��sm F�.��7 frc�� �aad tc+1c�catic�r�s wh�;r� �3r�it�d apet����{��c� �� tc� �����`it t�e c�t���ns c�f� t�e s�a�c��r�di�� ccsr�ur�ur�i�,y �r�s� Ca��rante�r°s �nt�re�t t�i�r�:in; ,�,;�� �, t j{ t �{ 2 ���Y ;tt}1}1Yr� ;1S�ji2,�{t 5 fYi . yf{} ������ A,�,`'�� � �v�,z�'��� has � � a.���c� f��;������t�c� �;c�n�rn��c� cap�r�ti�g����d�l�d r�a��-st�p ��r� ��rvice b�tu��e� �TT�I� �nd L�� � `���s I�t�rnat�ci �, �.irpc�r� ("L ,>}, ���� i�z cc�nneeti�� th�re�v�th Cs�z�r��tc�r ���11 �c�na��r�s��� [.Tr�f Fr€��n lc�cal b���e�slcc��n�nur��ty r�v�n�es ara� �c� ��ak� c�rtain ft, a,� � �r,�, CtJYI��SS14}i1S el�p2"�V7t��t��iGY��lI;c`���j; ;t� , s� tj�itil .. �}�ftit t .y�1 ii .. �r'�' � ���?�S, s�zbject t� �r���`��c��7 ,�, � ta � 5 �r ��tn�r�� c�f ���r��sri��� �c��ve�� ��r����� *d�.T���{3Y1Z"d�1Cll�5 �711�E�'(� IS Wl�t1'I��,C?Cl }� � ,� { J r r t t 3� si, F,t?,s � r � ������""�` ����'C��lS'y���"'���`'����'���� e�t14��.��; M,i, .fiitt Jf 3 # �'� t�t7'�� t: }t y+ 4t i�� ,'�" E ��"� �, in ccara�id�r�tic�rt c��t �i�iute���pr<sirs�s 4��4' ac��4��r����,��r�catla�r�i�cad�r�c� v�1u��+le�c�r��zder�tir��„t�� r���i�t�n� s�fficle�����v�i���are��r�l����na���d��c�, t�Ze par�i��h�r��� f' t', ` ' "� . e°��`C.'��S�t�1��C��+`°��': i;ii �}'t }��}y i ��iJ� z' t y� � . t i;t r� t�}s� a }S���t�: �itY �SS1. z ft�l f $ ,, �ttifil� ri F r�� rt3���� ���� ��� ,���l�i���',k(7}3E'�2��1"ct��t�. ,t�' ., f�� t i >u r �}r i{� ., t { �t� t Y .. . . ,.t5f:fa,.�it<' 1S� 1�; i��i,v�. . 7 ... t„.� A. 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