COUNCIL COMMUNICATION

DATE: 8-19-02	SUBJECT: FINAL READING OF ORDINANCE NO. 2002-O-208 Authorizing the City Manager to execute a Scheduled Airline Operating Agreement and Terminal Building Lease with Transportes Aeromar S.A. de C.V, as Lessee, for exclusive and non-exclusive joint use space located at the Laredo International Airport passenger terminal for the purpose of conducting commercial air transportation services. Transportes Aeromar proposes to initially offer three (3) weekly round trip flights to Mexico City utilizing the 48 passenger ATR-42 aircraft; providing for an effective date.
INITIATED BY: Cynthia Collazo Assistant City Manager			STAFF SOURCE: Jose L. Flores Airport Director
PREVIOUS ACTION: On August 12, 2002, Ordinance was introduced by City Council, and Staff was instructed to proceed. BACKGROUND: Mexicana Airlines wishes to modify its air service to Laredo by assigning its route to Aeromar effective September 1, 2002. Aeromar and Mexicana will enter into a code share agreement regarding the Mexico City / Laredo, Texas air transportation service. Aeromar will be the operator and both airlines will display the flight on their respective computer reservation systems. Mexicana and Aeromar have a close working relationship that includes several code sharing and operating agreements to several destinations. Mexicana cites its load factor not achieving break even levels as the reason for replacing the 100 passenger F-100 jet with the 48-passenger ATR-42 turbo prop. Mexicana has averaged approximately 22 passengers per flight. Mexicana’s schedule of Saturday and Sunday flights only is not appealing to the business passenger, consequently the low load factors. However, the current Saturday and Sunday load factors are okay for the smaller ATR. Aeromar proposes to operate the route on Sundays, Mondays and Fridays. Azteca’s current schedule is Tuesdays and Thursdays. Mexicana is indicating that should the market conditions improve that it would consider resuming air service to Laredo. Aeromar had previously expressed an interest in flying the Laredo/Mexico City route almost a year ago to the point that an Ordinance was introduced and tabled prior to final reading. Since then we have discussed other destinations to Mexico, such as, Tampico, Saltillo, Torreon and Queretaro. The Aeromar aircraft are the ideal size to service Laredo, Texas to these smaller Mexican markets. . The leased premises at the new passenger terminal will consist of approximately 229 square feet of exclusive use space and approximately 12,252 square feet of non-exclusive use space.
FINANCIAL: Annual Passenger Facility Charge (PFC) revenue is estimated at $7,8000.00 Account No. 242-0000-373-2037. At the expiration of the twelve-month waiver (February 28, 2003) of airport rent and fees, the incentive, the annual Building Rent, Account No. 242-0000-361-1060 is estimated at $ 3,900.00 and the annual landing fee revenue, account no. 242-0000-361.20-61 is estimated at $2,250.00.
COMMITTEE RECOMMENDATION: The Airport Advisory Committee recommends approval of the proposed assignment.		STAFF RECOMMENDATION: Recommend that the City Manager be authorized to execute said Scheduled Airline Operating Agreement and Terminal Building Lease with Transportes Aeromar S.A. de C.V, as Lessee.

ORDINANCE NO. 2002-O-208

AUTHORIZING THE CITY MANAGER TO EXECUTE A SCHEDULED AIRLINE OPERATING AGREEMENT

AND TERMINAL BUILDING LEASE WITH TRANSPORTES AEROMAR S.A. DE C.V, AS LESSEE, FOR EXCLUSIVE

AND NON-EXCLUSIVE JOINT USE SPACE LOCATED AT THE LAREDO INTERNATIONAL AIRPORT PASSENGER

TERMINAL FOR THE PURPOSEOF CONDUCTING COMMERCIAL AIR TRANSPORTATION SERVICES.

TRANSPORTES AEROMAR PROPOSES TO INITIALLY OFFER THREE WEEKLY ROUND TRIP FLIGHTS TO MEXICO

CITY UTILIZING THE 48 PASSENGER ATR-42 AIRCRAFT; PROVIDING FOR AN EFFECTIVE DATE.

.

WHEREAS, the Airport Director recommends that the City Council approve the proposed Scheduled Airline Operating Agreement and Terminal Building Lease with Transportes Aeromar, S.A. de C.V., as Lessee, for exclusive and non-exclusive joint use space for the purpose of conducting commercial air transportation services at the Laredo International Airport, as a contract and in furtherance of the development of the Laredo International Airport and as a support to the maintenance and operation of the Laredo International Airport.

WHEREAS, the Airport Advisory Committee is of the same opinion and recommends that the City Council approve the proposed agreement; and

WHEREAS, the City Council of the City of Laredo having heard the recommendations of the Airport Director and of the Airport Advisory Committee agrees with same.

NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LAREDO THAT:

Section 1: The City Manager is hereby authorized to execute a Scheduled Airline Operating Agreement and Terminal Building Lease with Transportes Aeromar S. A. de C. V. dba Aeromar Airlines, as LESSEE, for exclusive and non-exclusive joint use space for the purpose of conducting commercial air transportation services at the Laredo International Airport, a copy of which lease is attached hereto as Exhibit A, and incorporated herein in full verbatim.

Section 2: This Ordinance shall become effective upon passage hereof.

PASSED BY THE CITY COUNCIL AND APPROVED BY THE MAYOR ON THIS THE ____ DAY OF ________________, 2002.

_______________________

ELIZABETH G. FLORES

MAYOR

ATTEST:

_______________________

GUSTAVO GUEVARA, JR.

CITY SECRETARY

APPROVED AS TO FORM:

JAIME L. FLORES

CITY ATTORNEY

BY:________________________

VALERIA M. ACEVEDO

ASSISTANT CITY ATTORNEY