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CHAPTER 1 Airline Agreements Airline agreements have undergone significant changes in many areas in recent years. These changes are in part due to changes in Federal regulations regarding use of space and calculation of rentals and fees for use of the airport, changes in the way airlines do business, economic impacts (e.g., airline bankruptcies and hub closures) and other significant regulatory, operational and eco- nomic impacts. Trends have emerged and continue to emerge on issues driving the way airports and airlines operate and relate to each other. Airports and airlines continue to attempt to cover those emerging issues and trends in their airport/airline agreements, primarily through the major agree- ment governing the airlines' operations at the airport, commonly referred to as the Airline Use and Lease Agreement or Signatory Airline Lease and Operating Agreement. Key airline agreement provisions are as follows: Length of term Control of space Loading bridge ownership and maintenance Ability to accommodate new entrants and growing incumbents Affiliate definition and treatment Treatment of alliances Vacancy risk Privileges granted Defined obligations Maintenance, repair, and janitorial Reporting of activity Form and amount of payment security Insurance Assignments and subletting Handling agreements Rate making Billing, payments, and adjustments Aviation security MII approval for capital projects; formula for MII calculation Bankruptcy provisions 1.1 Length of Term The strong trend in this area is for shorter term agreements. Gone are the days of the 20- or 30-year agreements that airports (and the financial markets) believed were required to support bonds used to construct terminal and airfield facilities. Airports have discovered that they can still 1