Title
Airline Use and Lease Agreement
Action
Action:
A. Approve an Airline Use and Lease Agreement in the form presented for a 10.5 year term beginning on January 1, 2027,
B. Authorize the City Manager to execute a five-year extension per the terms and conditions set forth in the Airline Use and Lease Agreement, and
C. Authorize the City Manager to execute the Airline Use and Lease Agreement by and between the city and a qualified commercial airline at any point during the proposed term.
Body
Staff Resource(s):
Haley Gentry, Aviation
Ted Kaplan, Aviation
Mike Hill, Aviation
Explanation
§ The current Airline Use and Lease Agreement (AULA) was entered into on July 1, 2016, for a 10-year term ending June 30, 2026. The original Signatory Airlines to the 2016 AULA consisted of American Airlines, Delta Air Lines, United Airlines, Southwest Airlines, and JetBlue Airways Corporation.
§ During the term of the 2016 AULA, the city entered into agreements with Spirit Airlines, LLC and Frontier Airlines to become Signatory Airlines as well. The city subsequently terminated its agreement with JetBlue Airways Corporation in 2024 and Spirit Airlines, LLC in 2026.
§ The city began negotiating a successor agreement to the 2016 AULA in 2024. To allow additional time for completion of this negotiation, the city and the Signatory Airlines extended the 2016 AULA for up to one year through June 30, 2027.
§ The city and the Signatory Airlines ultimately reached agreement on a new AULA in principle in early Fall 2026.
§ City Council received an overview of the proposed AULA at the October 12, 2026, Business Meeting.
§ The proposed AULA will be for a 10.5-year term beginning on January 1, 2027, and extending through June 30, 2037. The proposed AULA contains an option for an additional five year extension upon the satisfaction of certain terms and conditions including airline commitment to additional capital investment. The proposed term is consistent with agreements negotiated by peer airports with comparably large airline hub operations.
§ Key terms and conditions of the proposed AULA include:
- Pre-approval of a capital development program consisting of $2.1 billion investment in the terminal, airfield, and critical airport infrastructure. This investment is more than four times the capital development program contained in the 2016 AULA.
- Updated capital project approval provisions which allow for a collaborative process to approve other required capital development projects at the airport during the term of the agreement.
- Updated gate utilization targets to ensure that all airline gates are used to maximum efficiency. Recapture and accommodation provisions are streamlined as well to allow for timely recapture and reallocation of underutilized facilities and to provide competitive access for new entrants and existing commercial airlines seeking to expand service.
- Commitment from our airline partners to lease terminal and airfield facilities and to pay the costs associated with operating and maintaining those facilities.
- A rates and charges framework that will yield rents, fees, and charges sufficient to cover the city’s costs in providing the terminal, airfield, and related support facilities for the commercial airlines’ use during the term of the agreement.
- Enhanced credit protections including increased debt service coverage requirements and extraordinary coverage protections obligating the airlines to provide a financial backstop for the airport.
- Continued annual revenue sharing with our long-term airline partners on a pro rata basis in the amount of 55 percent to the city and 45 percent to the Signatory Airlines.
Fiscal Note
Funding: Revenues will be deposited into the Aviation Operating Fund