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Airline Agreements 5
Sky Team and Star Alliance). Some agreements contain a specific reference to the code share rela-
tionship by including a definition of "Partner" to cover the method of counting the code share
carrier's operations for purposes of gate allocations.
See CRP-CD-81 (enclosed herein), Appendix to Chapter 1, Airline Agreements, for excerpts
from the STL Airline Agreement for provisions regarding definition and treatment of alliance
partners.
1.7 Vacancy Risk
Vacancy risk is becoming of increasing importance to airports as airlines adjust space needs
due to mergers and economic vagaries. Airport agreements address the risk of space vacancy in
several ways. Residual agreements cover the risk of vacant space via the methodology of calcu-
lating rates by netting revenues from expenses and then dividing the net by an airline-leased
space denominator. Compensatory and commercial compensatory agreements generally do not
recover vacancy costs because the denominator used in calculating rates is leasable space and the
airport thereby bears the risk of unleased space. One way that airports can mitigate vacancy
risk is to create an additional weighted space category and allocate fewer operating and
maintenance expenses to that space category given that vacant space does not require as
much O&M costs.
1.8 Privileges Granted
Most airline agreements have lengthy and detailed descriptions of the privileges granted to the
signatory. These include the right to operate its flights, repair aircraft, sell tickets, train personnel,
purchase fuel, service equipment, operate radio and other communications, sell or exchange
equipment and products, operate VIP clubs, handle or be handled by other airlines or entities,
and prepare and distribute food and beverages (with limitations). There is normally a blanket
statement preceding the specific delineation of privileges that grants the airline the right to oper-
ate its air transportation business at the airport followed by a caveat that nothing be construed as
granting airline the right to operate a business separate from the operation of the air transporta-
tion business.
See CRP-CD-81 (enclosed herein), Appendix to Chapter 1, Airline Agreements, for excerpts
from the STL, MWAA, PDX, PIT, and BWI Airline Agreements for provisions regarding the rights
granted to airlines for operations at the respective airport.
Most agreements exclude certain activities from airline rights and privileges. These prohibitions
often include the right to
· Sell food and beverages in the airport, except in VIP rooms. (The sale in VIP rooms is commonly
restricted to food provided by a vendor having a contract with the airport. The same source
restriction generally applies to food purchased for sale onboard aircraft.)
· Install pay phones.
· Install internet or wireless connectivity. (However, there is a trend toward permitting such
installation in exclusive space.)
· Land aircraft that exceed the design strength/capacity of the airport.
· Install cash machines.
· Install advertising.
· Enter into any agreement with any entity providing goods and services that does not have an
agreement with the airport.
