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Home My WebLink AboutR-2023-096 Resolution authorizing an air service agreement with Alaska Airlines for a Minimum Revenue Guarantee not to exceed $500,000 for a one-year term to provide additional air service RESOLUTION NO. R-2023-096 A RESOLUTION authorizing an Air Service Agreement with Alaska Airlines, Inc. for a minimum revenue guarantee to provide additional air service for the Yakima Air Terminal-McAllister Field. WHEREAS, the City owns and operates the Yakima Air Terminal-McAllister Field ("YKM"); and WHEREAS, Alaska Airlines, Inc. ("Alaska") currently operates a single daily round-trip flight between YKM and Seattle, Washington ("SEA"); and WHEREAS, Alaska is willing to provide additional scheduled air service between YKM and SEA on the terms and conditions set forth herein, and WHEREAS, City of Yakima is interested in promoting the air service between Seattle and Yakima, and WHEREAS, the City Council believes that the opportunity to obtain an additional scheduled flight for the City of Yakima is in the best interest of the City, and offers an opportunity for economic expansion and growth within the entire local area; and WHEREAS, the City Council agrees that the Air Service Agreement for a minimum revenue guarantee not to exceed $500,000 shall be administered by the Yakima County Development Association (YCDA) and paid from the City of Yakima Minimum Revenue Guarantee Airline Fund; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager is authorized and directed to execute an Air Service Agreement for a minimum revenue guarantee with Alaska Airlines, Inc. not to exceed $500,000.00 for a one- year term to provide an additional scheduled flight for the City of Yakima. ADOPTED BY THE CITY COUNCIL this 5th day of July, 2023. ATTEST: Janice Deccio, Mayor IMg�'NI ol ^ i Rosalinda Ibarra, City Clerk Ali 1 _ . .� 1 YAKIMA,WA—SEATTLE,WA AIR SERVICE AGREEMENT (November 2023—November 2024 Service period) THIS AIR SERVICE AGREEMENT(this"Agreement")made and entered into as of 07/0(el 2023 (the"Effective Date")by and between Alaska Airlines,Inc.,an Alaska Corporation("Alaska"),and the City of Yakima("Yakima"),a municipality of Washington. WITNESSETH WHEREAS,YAKIMA is interested in promoting the air service between Seattle and Yakima,and WHEREAS,Alaska is a major airline serving the United States,Canada,Mexico,Costa Rica,and Belize;and WHEREAS,Alaska is willing to provide scheduled air service between Yakima,Washington ("YKM")and Seattle,Washington("SEA"),on the terms and conditions set forth herein. NOW,THEREFORE,for and in consideration of the above recitals and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged,the parties hereto, intending to be legally bound,hereby agree as follows: 1. Scheduled Service. Alaska shall provide scheduled air service(operated by SkyWest Airlines, Inc.or Horizon Air Industries,Inc.)on the routes and schedules and during the"Service Period"specified in Exhibit A,as may be amended from time to time,using Embraer E-175 or similar equipment(each flight between YKM and SEA on a single day is hereinafter referred to as a"Scheduled Flight"and all such flights are hereinafter referred to collectively as"Scheduled Flights"). Flight schedules between YKM and SEA will be set in Alaska's sole discretion,based upon aircraft, staff,crew,and gate availability and weather and season changes and other operational factors, but the agreed upon increased frequency will be scheduled consistent with the times stated in Exhibit A. Alaska will publish its YKMSEA flight schedules in advance in accordance with its standard practices. Alaska agrees to establish fares for the Scheduled Flights that are consistent with its current practices and competitive within the industry. 2. Guarantee Amount. YAKIMA hereby guarantees to compensate Alaska up to the Guarantee Cap (as defined on Exhibit A),in accordance with Section 3 below,for operating the Scheduled Flights during the Service Period. For purposes of this Agreement,"Revenue"is defined as the actual passenger revenue Alaska receives for a Scheduled Flight, including revenue from frequent flier program award tickets and ancillary revenues derived from baggage fees and on-board food and beverage sales and cargo,and any other revenue received by Alaska for each Scheduled Flight."Aggregate Revenue"is defined as the sum of all Revenue for all Scheduled Flights actually operated by Alaska, SkyWest,or Horizon during the Service Period."Actual Costs"are defined as the sum of Alaska's reported costs of operating each of the Scheduled Flights during the Service Period. By way of example only,if the cost of operating a Scheduled Flight is$10,000,the Actual Cost of that Scheduled Flight will be$10,000. 1 3. Payment of Guarantee Amount. At the conclusion of the Service Period set forth in Exhibit A,or upon early termination of this Agreement,if applicable,Alaska shall make the following calculations: i. For all Scheduled Flights between YKM and SEA during the YKMSEA Service Period,Alaska shall calculate its Aggregate Revenue for those Scheduled Flights and subtract from that amount its Actual Costs. If there is a deficit collectively in the calculations in Section 3(i)above,then YAKIMA shall remit to Alaska the amount of any deficit(the"Guarantee Amount"). By way of example only,if under Section 3(i)above,the Aggregate Revenue is$1,000,000 and the Actual Costs are$1,200,000,then YAKIMA shall remit to Alaska$200,000.Alaska is eligible to accrue the Guarantee Amount up to a maximum of $500,000 from the start-date through to the end-date of the Service Period.YAKIMA shall remit the Guarantee Amount within sixty(60)business days of receipt of Alaska's invoice. Said invoice shall be provided by Alaska no later than sixty(60)days after the end of the Service Period.For clarity,the invoice shall be provided by Alaska within sixty(60)days after November 6, 2024. In the event that this Agreement is terminated before the conclusion of the Service Period shown on Exhibit A,Alaska will calculate the Guarantee Amount due,if any,based on the number of Scheduled flights operated by Alaska from the Effective Date up to and including the termination date. YAKIMA's total payments under this Agreement for the Service Period will be limited to the Maximum Guarantee Amount shown in Exhibit A(the"Guarantee Cap"). Alaska's calculation of the Guarantee Amount due under this section shall be binding and conclusive, provided that YAKIMA shall have the right,upon reasonable notice,and at YAKIMA's sole expense,to examine the business records of Alaska relating to such calculation,and to dispute the amount within sixty(60)days after receipt of Alaska's invoice for payment of the Guarantee Amount. If this examination reveals errors or irregularities in Alaska's accounting practices which results in a finding that the invoice was incorrect,the City shall pay only the amount determined due and owing. Such right to examine Alaska's records and dispute the amount payable shall be waived if not exercised within sixty (60)days of the date of receipt of each invoice by YAKIMA or if payment is actually submitted in the amount claimed by Alaska. 4. Operational Responsibility. Except for the obligation to pay Alaska the Guarantee Amount, YAKIMA and all affiliated entities hereby disclaim any and all liability to passengers or other third parties associated with the Scheduled Flights. Alaska bears sole responsibility for the operation of the Scheduled Flights,including the decision whether or not to operate a Scheduled Flight,and any liability resulting therefrom. 5. Expiration;Termination. This Agreement shall expire on the"Expiration Date,"which shall be defined as the later of: i. the conclusion of the Service Period;or ii. the date on which YAKIMA has paid,and Alaska has received,the Guarantee Amount if Alaska is entitled to a portion or all of the Guarantee Amount. Either party may terminate this Agreement without penalty not less than thirty(30)days prior to the commencement of the Service Period in the event that either party determines,in its business judgment, that advance bookings for the Scheduled Flights do not justify implementation of the service. 2 Notwithstanding the foregoing,in the event either party materially breaches any term of this Agreement, the other party may terminate this Agreement by giving the breaching party thirty(30)days'written notice.Alaska may also terminate this Agreement early based upon the unavailability of aircraft,staff, crew,or gates or other operational factors,by giving YAKIMA thirty(30)days'written notice.Except in the case of Alaska's breach,and failure to cure the breach within thirty(30)days'written notice,if YAKIMA elects to terminate this Agreement early,in addition to other amounts specified in this Agreement,YAKIMA shall reimburse Alaska for all crew and passenger re-accommodation costs it incurs relating to passengers already ticketed for a ninety(90)day period following that date which YAKIMA elects to terminate this Agreement early. 6. Non-Disclosure. The parties agree to preserve as confidential the terms of this Agreement,and any confidential or proprietary information of the other party,except for such disclosures that are required in connection with the party's performance of this Agreement or by law.Neither party shall have the right to use the other party's name,logo,or marks without the express written permission of the other party for purposes other than promotion of flights subject to this Agreement. 7. Assignment. This Agreement and the rights and obligations created hereunder shall not be assigned by any party without the prior written consent of the other parties. 8. Best Efforts in Promotional Activities. The parties agree that they will use their best efforts,at their own expense,to promote the Scheduled Flights in such a way as to maximize the public awareness of the availability of the Scheduled Flights. Promotional Activities should begin on or before sixty(60)days before the first Scheduled Flight is set to occur,and continue at regular intervals throughout the term of the service. Parties agree to coordinate on Promotional Activities as opportunity allows. 9. Governing Law. This Agreement shall at all times be subject to federal, state,and local laws and to all applicable rules and regulations of any governmental agencies or other entity with oversight authority.No party shall be liable to any other party if it is prevented from fulfilling its obligation under this Agreement by reason of any such law,rule,or regulation. This Agreement shall,in all respects,and unless otherwise provided for herein,be governed by and construed in accordance with the laws of the State of Washington.The parties agree that any dispute resolution will be resolved solely in the federal court of the Eastern District of Washington or other venue as the parties may both agree. 10. Insurance. i. Alaska. At all times during the term of this Agreement,Alaska shall carry and maintain, at its sole cost and expense,airline liability insurance with aggregate limits of at least $250,000,000 USD for personal injury(including without limitation bodily injury and death)and property damage,including a waiver of subrogation in favor of YAKIMA. YAKIMA will be provided thirty(30)days advance written notice in the event of cancellation,termination or adverse material modification of the required insurance coverages contained herein,and shall name YAKIMA,and its officers,directors, employees and agents hereunder as additional insureds. ii. YAKIMA. At all times during the term of this Agreement,YAKIMA 3 shall carry and maintain, at its sole cost and expense, commercial general liability insurance in an amount not less than $10,000,000 USD covering all liability arising out of any bodily injury (including death of any person) and property damage. Alaska will be provided thirty (30) days advance written notice in the event of cancellation,termination or adverse material modification of the required insurance coverages contained herein. 11. [intentionally omitted] 12. Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by writing signed by the party(ies)against which enforcement of the modification or amendment is sought. 13. Notices. Any notice required to be given by either party to the other pursuant to this Agreement shall be in writing and shall be deemed to have been properly given if delivered in person, transmitted by email with prompt confirmation of receipt,sent by overnight delivery or sent by registered or certified mail,return receipt requested,addressed to the other party at the following address,and shall be deemed to have been given on the day so delivered,transmitted or mailed: To Alaska: Alaska Airlines,Inc. Attn: Kirsten Amrine,VP of Revenue Management&Network Planning 19300 International Blvd Seattle,WA 98188 Email:kirsten.amrine@alaskaair.com To Yakima: City of Yakima Attn: Robert Hodgman,Director of Yakima Air Terminal 129 North 2nd Street Yakima,WA 98901 Email: robert.hodgman@yakimawa.gov AND TO: City of Yakima Attn: Rosylen Oglesby,Assistant City Manager 129 North 2nd Street Yakima,WA 98901 Email: rosylen.oglesby@yakimawa.gov Either party will have the right to change their representative and address for notice to any other location by giving at least five(5)business days'prior written notice to the other party in the manner set forth above. IN WITNESS WHEREOF,the parties hereto have caused their undersigned, duly authorized representatives to execute this Agreement as of the Effective Date. 4 ALASKA AIRLINES,INC. By: Kirsten Amrine Vice President,Revenue Management& Network Planning City of Y 'ma BY: Robert Harrison City Manager CITY CONTRACT NO: d°^ `1 RESOLUTION NO: _ 1fr EXHIBIT A (November 2023 -November 2024 Service period) Scheduled Service between: Yakima, WA(YKM)—Seattle,WA(SEA) Service Period: YKMSEA: November 17,2023—November 17, 2024 Frequency(Round-trips/day): YKMSEA: second additional daily flight, 7x weekly. Additional frequency will depart YKM prior to 0800 Additional frequency will depart SEA not before 2000 Maximum Guarantee Amount payable in total by Yakima("Guarantee Cap"): $500,000 5 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 6.E. For Meeting of: July 5, 2023 ITEM TITLE: Resolution authorizing an air service agreement with Alaska Airlines for a Minimum Revenue Guarantee not to exceed $500,000 for a one-year term to provide additional air service for the Yakima Air Terminal -McAllister Field SUBMITTED BY: Jaime Vera, Airport Operations and Maintenance Manager SUMMARY EXPLANATION: Alaska Airlines is willing to provide additional scheduled air service between Yakima and Seattle. An Air Service Agreement for a minimum revenue guarantee not to exceed $500,000 shall be administered by the Yakima County Development Association (YC DA) and paid from the City of Yakima Minimum Revenue Guarantee Airline Fund. Adopt Resolution. ATTACHMENTS: Description D Resoluflon Yes Economic Development Upload Date Type 6/30/2023 Coaer Memo 6/30/2023 Co\A-r Memo