Inside Tucson Business: Airport and airlines agree to extend their 33-year agreement

Airport and airlines agree to extend their 33-year agreement

By David Hatfield, Inside Tucson Business
Published on Monday, July 06, 2009

Talk about standing the test of time. Except for some word changes and some other modifications, the basic agreement between the Tucson Airport Authority and the major airlines serving Tucson International Airport will be 33 years old on Sept. 30. This month the airlines and airport agreed to keep it going for another two years, and four more years.

Under the agreement, the airport’s eight signatory airlines agree to a plan of rents and charges for the use of space at the airport. In Tucson’s case it’s what is referred to as a residual cost agreement, which basically means the airlines agree to cover airport expenses not covered by other revenues. The trade organization Airports Council International-North America estimates almost 40 percent of medium and large airports has such agreements.

Calling it critical to the airports operations, Dick Gruentzel, vice president of finance for the airport authority, said it took about 18 months of off and on negotiations. “The document really defines the relationship between the airport and the airlines.”

As for what it means to passengers, Gruentzel said it maintains the airport’s reputation among airlines as a generally low-cost airport.

In exchange for signing on to the plan, the airlines have a say in capital projects affecting them at the airport costing more than $500,000. Gruentzel said all of the airlines currently operating at the airport, except Sun Country which offers winter seasonal service, are part of the new agreement. Non-signing airlines pay a premium fee to land at the airport.

As part of the new agreement, airlines were given the opportunity to make changes to their leased spaces. Gruentzel said the only change passengers are likely to notice is that US Airways is eliminating one of its two gates on the B concourse.

Add flights

At last, some positives — as in additional flights — coming to Tucson International Airport. Effective July 1, Delta Connection is adding a fifth round-trip to Salt Lake City on weekdays. And starting Aug. 17 Southwest Airlines is bringing back a fourth daily round-trip to San Diego on weekdays. On Saturdays, there will be only two Tucson-San Diego flights and on Sundays there will be three.

Subtract flights

But of course it’s not all on the plus side. Effective Aug. 17, Southwest will drop one of its two daily round-trips from Tucson to Chicago Midway airport.

PAX stats

Tucson International Airport saw 311,977 passengers in May, down 18.5 percent from May 2008. Year-to-date passenger numbers are down 20 percent from 2008. In Phoenix, Sky Harbor International Airport reports that through April, it has had 12.6 million passengers this year, down 9.9 percent from a year ago.

Advantage back in Tucson

Advantage Rent A Car is back in operation at 6909 S. Plumer Ave. near Tucson International Airport. The on, then off, story of Advantage here started in October when its former owners opened the operation but then closed by Thanksgiving. On Dec. 8, the parent company filed for bankruptcy protection. Then in April Hertz bought the assets of Advantage out of bankruptcy for $146 million and so far has reopened 15 locations with four more — San Diego, Reno, Honolulu and Kahului (Maui) — due to open July 1. Even though it’s owned by Hertz, the company is operating Advantage Rent A Car under its own separate brand.

ABQ loses Mexico

That didn’t take long: Effective July 9, after just five months of operations, Albuquerque’s airport will lose its only non-stop flights into Mexico when Aeromexico Connect discontinues its three-days-a-week flights to Chihuahua City. New Mexico Gov. Bill Richardson had personally worked on getting the flights to the tune of $340,000 the state’s Economic Development Department and Department of Finance Administration paid to the City of Albuquerque to help with the startup costs of the flights.

Aeromexico Connect was using 50-passenger regional jets on the flights, the same kind of plane it was using to fly between Tucson and Hermosillo until those flights were dropped last October.

More time for Frontier

Frontier Airlines, which has been operating under Chapter 11 bankruptcy protection since April 2008, this month won an extension until Oct. 9 for submitting a reorganization plan. The Denver-based airline recently reported its second consecutive quarterly net profit and has posted five straight months of operating profits.

Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237. Inside Business Travel appears the fourth week of each month.