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07/10/2012 04 Apirport Public-Private Alliance Opportunities Presentation r 4x1 \wy BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of: July 10, 2012 ITEM TITLE: Airport Public- Private Alliance Opportunities -- Presentation by Tony O'Rourke SUBMITTED BY: CONTACT PERSON /TELEPHONE: SUMMARY EXPLANATION: Resolution Ordinance Other (specify) Contract: Mail to: Contract Term: Amount: Expiration Date: Insurance Required? No Funding Source: Phone: APPROVED FOR City Manager SUBMITTAL: STAFF RECOMMENDATION: BOARD /COMMISSION RECOMMENDATION: ATTACHMENTS: Click to download No Attachments Available MEMORANDUM To: Honorable Mayor and Members of the Yakima City Council From: Tony O'Rourke, City Manager *R Date: July 5, 2012 RE: Expanded year -round air service to Yakima In my past life I was involved in creating a public - private sector partnership in Vail, Colorado to improve year -round air service to Eagle County Regional Airport in Eagle County, Colorado. The air alliance we created was a non - profit 501(c)(6) organization consisting of over 30 public and private sector entities, with a single focus to improve air service to the Eagle County Regional Airport. The organization tax status allowed the organization to have no geographic boundaries and to receive funds from governments, other non- profits, and private business. This was a "pay -to- play" organization, with members pledging funds for airline financial guarantees, marketing, and administrative costs. Prior to 1989, Eagle County Airport had no commercial air service. Today, Eagle County Airport is the third busiest airport in Colorado, with over 200,000 winter and summer enplanements. The growth of the Eagle County Airport has been the result of a strong public - private partnership. Currently, in the winter season, 12 non -stop markets (e.g. Miami, New York City, Chicago, Dallas, Los Angeles, Minneapolis and Washington DC) are served by four legacy airlines and in summer there are two non- stop cities with two airlines providing service. A proposed Yakima Air Alliance (the "Organization ") would have the single focus of improving year -round air service to the Yakima Airport. The Organization would have no geographic boundaries and would receive its funding from its "members," which would include governmental entities (including the City and County), other nonprofit entities, and private businesses, all of whom will benefit from greater air service to the Yakima Airport. The Organization would conduct the following activities in connection with this focus. First, the Organization would negotiate "revenue guarantee contracts" with airlines, under which airlines will agree to provide certain service to the Yakima Airport in return for certain guarantees from the Organization with respect to number of passengers and overall revenue that the airlines will realize from the increased routes. To the extent that these guarantee levels are not met in a particular year, the members will make contributions to the Organization in order for the Organization to make the payment to the airline under the guarantee arrangement. Second, the Organization would negotiate marketing agreements with airlines in order to help support the marketing efforts of the airlines with respect to the new routes created for the Yakima Airport. For example, the Organization may seek the donation by a member hotel in Yakima of a certificate for free nights at that hotel. That certificate, in turn, may be given away in a certain target market (such as Portland) in connection with an airline's efforts to market its route from the target area to Yakima to prospective passengers. In addition to negotiating these marketing agreements, the Organization will engage in direct marketing to prospective passengers in target area. For instance, the Organization may pay for direct mail, radio promotions, social media, cable TV and internet advertising to tell prospective travelers in certain target areas about newly available flights from those target areas to the Yakima Airport. Such direct marketing efforts would also be aimed at persons who have business in Yakima and others who may want to vacation in Yakima. Finally, a significant portion of the Organization's time will be spent in ensuring appropriate communication flow between the airlines and the members /contributors to the Organization. For example, the Organization will obtain raw data from the airlines concerning their passenger loads with respect to flights to Yakima, and using that data, will prepare periodic booking reports informing members of the success of the airlines' routes. The Organization will also meet directly with contributing members of the community in order to communicate the results of its efforts to improve air service. In speaking with Bill Wheeler, I am aware of a prior joint public - private sector effort in Yakima to support Delta Airlines air service to Yakima. I am interested in learning from the City Council whether a public- private sector non - profit partnership to solicit and deliver more air service here is something you would like to pursue.