Airport/Airline Agreements—Practices and Characteristics (2010)

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Additional Bonds Test: A bond resolution requirement pursuant to which an airport can issue revenue bonds that have a claim on revenues which is equal to that of the already issued outstanding revenue bonds. Typically, the test is based on coverage of maximum annual debt service by historical or projected net revenues. Affiliate: Provisions in an Agreement that establish the relationship between an airport, regional airlines and their associated mainline airlines. Airfield: Those portions of an airport, excluding both the terminal aircraft apron and cargo aircraft apron, provided for the landing, taking off, and taxiing of aircraft. Airline-Airport Affairs Committee (AAAC): Composed of authorized representatives of each signatory airline which meet periodically with senior representatives of airport management to receive information and provide input with regard to selected operation, financial, and develop- ment matters of the airport. Airport/Airline Use and Lease Agreement (“Agreement”): Agreement that specifies the financial obligations, terms of use, and other responsibilities that each party assumes with respect to the use of the airport’s facilities. The Agreement sets the commencement and ter- mination dates for the use of airport facilities, identifies the facilities to be used and the degree of use, the rate-making methodology, and defines the approved uses of the facility. Airport Revenues: Income accrued by an airport or airport system in accordance with gen- erally accepted accounting practices, including investment earnings, from or in connection with the ownership or operation of the airport or airport system or any part thereof, or the leasing or use thereof. Amortization: The repayment of airport funds invested in capital projects over a defined term at an imputed interest rate. Apron: A paved area on the airside of the terminal (or cargo) building that is designated for the parking of aircraft and support vehicles, and the loading and unloading of aircraft. Bond Resolution: Authorizes the issuance of airport revenue bonds and assures bondholders that the airport is a viable concern, able to continue operating and to fulfill its obligation to pay bond interest and principal. The bond resolution establishes the airport’s “flow of funds” and deposit requirements. Capital Improvement Program (CIP): An airport’s planned capital program which typically covers a 5-year period. The CIP usually includes project descriptions, estimated project costs, and funding sources such as federal grants, PFCs, and proposed bond funding. 98 A P P E N D I X E Glossary of Key Terms

Report Sections I. Introduction and Need for a Revised Business Deal II. Financial Structure of the Airport Operator III. Aviation Activity Projections IV. Capital Improvement Program V. Terminal Space VI. Debt Service and Coverage Projections VII. Operating Expense Projections VIII. Non-Airline Revenue Projections IX. Airline Rates and Charges Calculations X. Signatory Airline Cost per Enplanement XI. Airport Cash Flow and Flow of Funds Sample List of Tables Table 1A Enplaned Passenger Projections Table 1B Landed Weight Projections Table 2 Capital Improvement Program—Plan of Finance Table 3 Terminal Space Table 4 Debt Service and Coverage Projections Table 5 Operating Expense Projections Table 6 Non-Airline Revenue Projections Table 7 Landing Fee Rate Calculation Table 8 Terminal Rental Rate Calculation Table 9 Signatory Airline Cost per Enplaned Passenger Projections Table 10 Airport Cash Flow 97 A P P E N D I X D Sample Items Generally Included in Rates and Charges Negotiation Documents

18.3 Passenger Facility Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 Rights Non-Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7 Aviation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8 Rules and Regulations and Operating Directives . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10 No Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.11 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.12 Capacity to Execute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.13 Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.14 Successors and Assigns Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.15 Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.16 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.18 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.19 Most Favored Nation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.20 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.21 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.22 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.23 Agent for Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.24 Governing Law and Legal Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.25 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.26 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of Exhibits Exhibit A Airport Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit B Airline Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit C Summary of Terminal Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit D Responsibilities of Airport Operator and Airline for Operation and . . . . . . . . Maintenance of the Terminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit E Sample Reporting Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit F Changes in Rates for Rentals, Fees, and Charges . . . . . . . . . . . . . . . . . . . . . . . . . 96 Airport/Airline Agreements—Practices and Characteristics

Sample of Table of Contents for Typical Agreement 95 8.6 Revenue Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Airport Operator Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Need for Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Expenditures Subject to Signatory Airline Consideration . . . . . . . . . . . . . . . . . . . . 9.3 Capital Expenditures Not Subject to Signatory Airline Consideration . . . . . . . . . 9.4 Alterations and Improvements by Airline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X. Damage or Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Partial Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Substantial Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Damage Caused by Airline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 Airport Operator’s Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI. Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII. Cancellation by Airport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 Continuing Responsibilities of Airline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 Airport Operator’s Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4 Remedies Under Federal Bankruptcy Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII. Cancellation by Airline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 Airline’s Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIV. Surrender of Airline Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 Surrender and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 Removal of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XV. Assignment, Subletting, and Handling Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 Assignment and Subletting by Airline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 Handling Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XVI. Availability of Adequate Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1 Declaration of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 Accommodation on Preferential Use Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 Reassignment of Preferential Use Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4 Accommodation on Exclusive Ticket Counter and Baggage Makeup . . . . . . . . . . 16.5 Competitive Access to PFC-Funded Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 Regional/Commuter Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XVII. Government Inclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1 Government Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 Federal Government’s Emergency Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 Nondiscrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XVIII. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 Subordination to Bond Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2 Nonwaiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II. Effective Date and Transition Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Cancellation of Prior Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Airline Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Terminal Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Employee Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Federal Inspection Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Transfer of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V. Use of the Airport and Related Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Airline Rights and Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Exclusions and Reservations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI. Operation and Maintenance of the Airport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Designation of Operation and Maintenance Responsibilities . . . . . . . . . . . . . . . . . 6.2 Airport Operator Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Airline Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII. Rentals, Fees, and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Landing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Terminal Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Extraordinary Service Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Aircraft Parking Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Other Fees and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Information to be Supplied by Airline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 Security for Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 No Further Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII. Changes in Rates for Rentals, Fees, and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Annual Rate Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Other Rate Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Incorporation of Exhibit F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Use of Airport Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 A P P E N D I X B Sample of Table of Contents for Typical Agreement

Appendices A, C, and F are available on the TRB website at www.TRB.org by searching for “ACRP Report 36.” Titles of the appendices are as follows: Appendix A: Annotated Bibliography Appendix C: CIP Primer Appendix F: Airport Online Survey 93 A P P E N D I C E S A , C , and F

the FAA Revenue Use Policy. Direct subsidy payments to airlines are forbidden; however, lim- ited waivers of airport fees may be allowed if they are as follows: • Temporary • Available to all qualifying airlines on a non-discriminatory basis • For “new airline service” • Not paid for (through offsetting increases in other fees) by the other airlines serving the mar- ket and not participating in the air service incentive program Given that air service incentive programs must be temporary and generally do not represent a “sustainable” business arrangement, they are often established as temporary policies by airport operators rather than formalized in Agreements. 92 Airport/Airline Agreements—Practices and Characteristics