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2003 Competition Plan Update

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2003 Competition Plan Update TABLE OF CONTENTS Airport Authority of Washoe County 2003 Competition Plan Update SECTION I – Competition Plan Executive Summary 1. Availability of Gates and Related Facilities 2. Leasing and Subleasing Arrangements 3. Patterns of Air Service 4. Gate Assignment Policy 5. Gate Use Requirements 6. Financial Constraints 7. Airport Controls Over Airside and Groundside Capacity 8. Airport Intention to Build or Acquire Gates That Would Be Used As Common Facilities 9. Airfare Levels Compared to Other Large Airports SECTION 2 Sample Gate Reservation, and Use Monitoring Forms: RON Ramp Inventory, Request For Aircraft Parking Assignment, “Pop-up” Aircraft Parking Assignments, Aircraft Parking Inventory/Hold Room Usage SECTION 3 Exhibit B 2nd Floor Terminal Building Airline Gates SECTION 4 Resolution No. 416 Resolution adopting a policy to provide financial incentives/inducements to scheduled passenger air carriers to increase air service to the Reno/Tahoe International Airport. SECTION 5 Airline Incentive Policy for New Scheduled Passenger Air Service SECTION 6 Reno/Tahoe International Airport Nonstop Departures to 17 Cities SECTION 7 Airline-Airport Use and Lease Agreement Table of Contents Comp Plan.doc Airport Authority of Washoe County 2003 Competition Plan Update Prepared By: Krys T. Bart, Executive Director Marily Mora, Deputy Executive Director Joan Dees, Senior Director of Finance and Administration Mark Witsoe, Manager of Business Development and Property Administration Thomas Medland, Director of Marketing and Air Service Development Mike Moran, Airside Operations/Communications Manager Christopher Horton, Manager of Finance and Budget Executive Summary The Airport Authority of Washoe County (AAWC) operates the Reno/Tahoe International Airport (Airport,) a medium hub airport enplaning 0.34 percent of the 2002 passengers of the 549 commercial service airports in the United States based on the latest Federal Aviation Administration (FAA) statistics. Southwest Airlines and American Airlines 2002 passenger enplanements were 62 percent of the Airport’s 2.3 million scheduled airlines’ enplanements. These two statistics exceed the percentages, 0.25 percent and 50 percent respectively, set by the FAA that require the submission of a Competition Plan. As a result, the AAWC must submit a Competition Plan before any Passenger Facility Charge (PFC) submitted will be approved, or discretionary Airport Improvement Program (AIP) grants will be issued, after September 30, 2002. This is the 2003 update of the AAWC’s Competition Plan that was originally submitted in 2000. The following competition plan demonstrates the Airport’s ability to accommodate new airlines or additional service from existing airlines. Airport passenger enplanements have declined since 1998, a trend that was exacerbated with the events of September 11, 2001. Enplanements finally began to increase slightly over prior year amounts in 2003. As a result, the Airport terminal building is operating well below capacity, with vacant gates and ticket counter areas available for new entrant airlines or expansion by existing airlines. The AAWC aggressively solicits new entrant airlines and existing airlines for additional air service. The AAWC prepares studies and analyses that show air service demand exists for an airline to include Reno/Tahoe in their route system. These studies include expected load factors and yields per passenger mile. These studies are then presented to the airlines at their corporate offices. The AAWC made 12 air service development trips to 12 different airline offices to date in 2003, and welcomed four airlines to specific meetings in Reno for air service discussions. One airline began service at the Airport in 2003, as a result of the AAWC’s air service development efforts. Aloha Airlines began service July 2, 2003. They serve the Airport with one flight per day to Honolulu, Hawaii through Orange County, California. Airport Authority of Washoe County 2003 Competition Plan Update The AAWC formed an Air Service Task Force to receive community input and support for air service development. A steering committee was formed with 26 members of the northern Nevada community who are interested in the development of air service. Members of the task force participate in airline presentations, route analysis, and co op marketing to interest the airlines in developing new markets for the Airport. A Regional Marketing Counsel was also formed that includes members from various tourism related businesses, from convention and meeting planners, to ski, and golf resorts. This group has also developed a funding mechanism to support airlines starting new service or increasing flight frequency to existing markets. Several successful co op marketing promotions have been held with various airlines: Southwest Airlines, Frontier Airlines, Aloha Airlines, and Alaska Airlines. The AAWC has used its PFC and AIP funding sources to increase the capacity of the Airport. An expanded baggage claim area, passenger loading bridges for the terminal building gates and a new runway system are the most obvious examples. The airline operating agreement at Reno/Tahoe International Airport provides for preferential airline leaseholds. This gives the AAWC flexibility in accommodating a new entrant airline or the increasing space requirements of an existing airline tenant increasing flights. The AAWC has incorporated the best practices mentioned in the 1999 FAA/OST Task Force Study, “Airport Business Practices and Their Impact on Airline Competition.” They are further detailed in the Competition Plan that follows. The AAWC actively promotes competition through the expansion of air service to existing or new destinations by existing or new airlines. Gate utilization is monitored by the AAWC Operations Department. The AAWC’s airline agreement has a “use it or lose it” provision for the airline’s preferential leaseholds. The process followed by the AAWC Property Administration staff with new entrant airlines is listed. The airline agreement limits the amount of sublease fees that a new entrant can be charged. Several third party ground handlers are available for use by a new entrant airline. The Airport currently has six unassigned gates for use by a new entrant. These are Gates C- 1, C-2, C-4 and C-11 on the north concourse, and B-2 and B-10 on the south Lear Concourse. There have not been any new entrant projects blocked by an MII provision. If facilities were needed for a new entrant airline, the project could be financed, in spite of an MII disapproval, with special facility bonds and/or PFC funds for the eligible portions. This Competition Plan was prepared for the Airport in a format recommended by the FAA in their Program Guidance Letter 03-01 dated November 19, 2002. The major issues in the Program Guidance Letter are the numbered, bold headings of each section. The bullet points that follow describe the operation and agreements of the AAWC that pertain to each major issue. 2003 Update.doc 2 Airport Authority of Washoe County 2003 Competition Plan Update The table below lists the FAA’s comments on the 2001 Competition Plan Update that were to be addressed in this 2003 Competition Plan Update. Comment Issue Update Location Align lease terms with Increase competitiveness based on Previous Executive FAA defined “Best FAA study of best practices Summary Practices” Inform all airlines of Consider needs of competing, non Section 4, Bullet 3 2001 agreement tenant airlines expiration Provide gate availability Consider needs of competing, non Section 4, Bullet 2, and 3 information to all airlines tenant airlines Provide fee discounts for Current plan provides fee discounts Section 6, Bullet 2 any new service only for service to new destinations Consider revising MII Consider project needs of smaller, Section 7, Bullet 3 language according to competing, new entrant airlines “Best Practices” Post Competition Plan Provide airline and public access to This update will be included and FAA comments on the competition plan in the AAWC Web Site AAWC web site http://www.renoairport.com/ 2003 Update.doc 3 Airport Authority of Washoe County 2003 Competition Plan Update Airport Authority of Washoe County 2003 Competition Plan Update 1. Availability of Gates Twenty-three passenger airline gates are currently available at the Airport. As of July 2, 2003, seventeen of these gates are leased on a preferential basis to incumbent signatory airlines, with six being unassigned and available for common use or lease to new entrant or existing signatory airlines. Layouts showing the terminal building concourse gates are included at the end of this report. Gate-use monitoring is a function of the Operations Department of the AAWC in cooperation with the airlines. The Operations Department receives and responds to requests for common-use gate and remote aircraft parking position assignments from non-signatory airlines when the signatory airlines are unable to accommodate them. Unassigned gates are assigned on a first come, first served basis. Gate assignment arrangements are usually completed before the aircraft arrives. Gates are also assigned to the occasional aircraft that “Pops-up” with no advance notice. A separate form is used to track this type of flight. The Operations Department maintains a gate-use log, recording times, applicable fees, etc., and monitors conflicting flight schedules and the need for reassignment as required. The following forms are included in Section 2 of this document and are used
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