Los Angeles World Airports

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1 Los Angeles World Airports Ti\'i March 6, 2014 LAX LA/Ontario Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean O. Burton President Valeria C, Velasco Vice President Gabriel L. Eshaghian Jackie Goldberg Beatrice C. Hsu Matthew M, Johnson Dr. Cynthia A. Telles Gina Marie Lindsey Executive Director The Honorable City Council of the City of Los Angeles City Hall - Room 395 Los Angeles, CA Reference: CF This is to hereby transmit for your information the Mayor approved City Administrative Officer's report covering the consideration and approval of amendment form Non- Exclusive Air Carrier Operating Permit at LA/Ontario International Airport. Sincerely, Christine D. Iseri Government Affairs Division Los Angeles World Airports Attachments

3 TRANSMITTAL TO DATE COUNCIL FILE NO. Gina Marie Lindsey, Executive Director Department of Airports MAR ~ 4 ~{H4 FROM The Mayor. COUNCIL DISTRICT City of Ontario Request to Approve the First Amendment to a Non-Exclusive Air Carrier Operating Permit for Various Air Carriers Operating at Los Angeles/Ontario International Airport and a Blanket Authority To Execute New Operating Permits Through June 30, 2019 Transmitted for further processing, including Council consideration. See the City Administrative Officer report attached. MAYOR MAS:WDC: ~\LLC 0oL-tCfl0- CAO 649-d b) 'T/: (Rich Llewellyn) """""-1,. /

4 REPORT FROM OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: February 19, 2014 CAO File No Council File No. Council District: City of Ontario To: The Mayor From: Miguel A Santana, City Administrative Offi';;;7tt'~ a.j"'--- Reference: Transmittal from the Los Angeles World Airports dated January 27, 2014; referred by the Mayor for report on January 29,2014 Subject: REQUEST TO APPROVE THE FIRST AMENDMENT TO A NON-EXCLUSIVE AIR CARRIER OPERATING PERMIT FOR VARIOUS AIR CARRIERS OPERATING AT LOS ANGELES/ONTARIO INTERNATIONAL AIRPORT AND A BLANKET AUTHORITY TO EXECUTE NEW OPERATING PERMITS THROUGH JUNE 30, 2019 SUMMARY The Executive Director of the Los Angeles World Airports (LAWA; Department) requests (1) approval to execute a First Amendment to the existing Non-Exclusive Air Carrier Operating Permit (ACOP) with various air carriers operating out of the Los Angeles/Ontario International Airport (LAfONT) to extend the current five-year term for an additional five years to June 30, 2019; and (2) Blanket Authority to execute new operating permits for the five-year period ending June 30, 2019, for air carriers operating out of LAfONT. All other permit terms will remain the same. Blanket authority would, in what are considered to be normal and routine airport operations agreements, allow the Executive Director to amend the existing ACOP at LAfONT and execute new ACOPs without having to bring the specific permit agreements to the Board of Airport Commissioners (Board) and the Council for consideration. Extending the term of the existing permit holders is consistent with the Board's authorization of February 3, 2014, as well as the original May 18, 2009 Board Order authorizing the approval of a Blanket Authority to execute Non-Exclusive Air Carrier Operating Permits for those air carriers at LAfONT that do not have long-term Operating Use and Terminal Lease Agreements. If approved, the amendment will enable the Department to (1) reauthorize its ACOPs with the relevant airlines, thereby enabling LAWA to reliably forecast airport revenues; (2) continue the formal documentation and operating arrangements that govern air carriers operating at LAfONT; (3) enforce the applicable airport rules and regulations; and (4) continue its current practices relative to air carrier operations. The proposed First Amendment to the air carrier operating permit must be approved by the Council in accordance with Charter Section 606, "Process for Granting Franchises, Permits, Licenses, and Entering Into Leases," in that the permits are for a term greater than five years, and by the City Attorney as to form.

5 CAO File No. PAGE A Non-Exclusive Air Carrier Operating Permit is a legal document that specifies the conditions under which air carriers that operate out of LAfONT more than five times per calendar year, but do not have an Operating Use and Terminal Lease Agreement, must operate. The permit conditions involve requirements for, among other things, insurance and aircraft landing and parking fees. Carriers that operate under the ACOPs are termed "Non-Signatory, Permitted," whereas those airlines that have executed Operating Use and Terminal Lease Agreements are termed "Signatory" carriers. As with LAlONT, the Los Angeles International Airport (LAX) accommodates certain air carriers using the ACOP process. Background For commercial aircraft activity at LAfONT and LAX, the Department one of the following three operating permits: requires that air carriers obtain Single Use Operating Permit Air Carrier Operating Permit Use and Lease Operating Agreement Each type of operating permit involves specific requirements (e.g., minimum and rnaximum number of landings per calendar year) and fee structures (e.g., for gross landing weight; use of ramps, aprons, and remote parking areas; clean-up of fuel spills). There are currently 11 air carriers that operate out of LAlONT under an ACOPs, eight of which are passenger airlines while the remaining three are cargo carriers. In what is a common practice at most commercial airports, and because these air carriers' agreements do not support the cost/debt structure of LAfONT in the same manner as the Signatory (those with long-term agreements) carriers, the Non-Signatory, Permitted ACOP carriers are charged higher landing and terminal use fees, as well as terminal rental rates (if applicable), than airlines operating under long-term Operating Use and Terminal Lease Agreements. The 11 affected LAlONT air carriers are as follows: Air Transport International, LLC Allegiant Air, LLC Atlas Air, Inc. Kalitta Air, LLC Miami Air International, LLC Omni Air International, Inc. Republic Airlines, Inc. Ryan International Airlines Sierra Pacific Airlines Sun Country Airlines West Air According to the Department, LAlONT does not anticipate adding any specific new air carriers to the ACOP operations; neither does the airport management anticipate any existing ACOP air carriers to discontinue their participation in the ACOP process. However, due to the volatile nature of commercial aviation, this is subject to change.

6 i CAO File No. PAGE Department revenue from ACOP air carrier landing fees is estimated to be $285,000 for the fiscal year 2013/14. Additional revenue for the same 12-month period, primarily from aircraft parking fees involving military and sports charter operations, is estimated to be $10,000. For the previous fiveyear period, the total revenue from air carrier landing fees was approximately $2,190,000; for the aircraft parking fees over the same period, the total revenue was approximately $552,000. It should be noted,.however, that the preceding five-year revenue estimates are approximations that include revenue from (1) both Non-Signatory air carriers and those operating under the ACOP--for air carrier landing fees; and (2) cargo aircraft that park long-term under a Single Use Operating Permit rather than an ACOP--for aircraft parking fees. Blanket Authority for Execution of New Permits The Department is requesting that blanket authority be given to the LAWA Executive Director to execute new ACOPs without bringing individual permits to the Board of Airport Commissioners orthe Council for consideration. This authorization is a continuation of authority the Board approved in its May 18, 2009 consideration of this issue that has become an effective mechanism for maintaining departmental operational efficiencies over the last five years. Alternative to the Proposed First Amendment According to the Department, the alternative to approving the proposed First Amendment to extend the current permits and provide blanket authority to execute new Air Carrier Operating Permits is to allow the currentpermits to expire on June 30, To do so, however, would leave (1) the 11 Non- Signatory airlines without formal agreements that require adherence to accepted airport operating procedures and (2) LAWA without needed mechanisms for the enforcement of applicable rules and regulations at LAfONT. Compliance with City Administrative Requirements The Los Angeles/Ontario International Airport Non-Signatory, Permitted air carriers (permittees) are required to comply with the following City Standard Provisions: the Service Contractor Worker Retention and Living Wage Ordinances, Affirmative Action Program, Child Support Obligations Ordinance, and the City's insurance requirements. The permittees are exempt from, or not subject to, the provisions of the Small Business Enterprise Program, the Contractor Responsibility Program, Equal Benefits Ordinance, the First Source Hiring Program, and the Bidder Contributions CEC (City Ethics Commission) Form 55 pertaining to the City's contract bidder campaign contribution and fund raising restrictions (Charter Section 470 {c}{12}). With respect to the Department's compliance with Charter Section 1022 ("Use of Independent Contractors"), the proposed action is not subject to the Charter Section provisions since air carrier services cannot be provided by City employees. City Council approval of the proposed First Amendment to the air carrier operating permits is required in accordance with Charter Section 606, "Process for Granting Franchises, Permits, Licenses, and Entering Into Leases," and the Los Angeles Administrative Code Section 10.5, "Limitation and Power to Make Contracts," in that the permits are for a term greater than five years,

7 CAO File No. PAGE and by the City Attorney as to form. Compliance with California Environmental Quality Act Guidelines With respect to the proposed First Amendment and permits' compliance with California Environmental Quality Act (CEQA) guidelines, the issuance of permits, leases, agreements, renewals, amendments, or extensions thereof, or entitlements granting use of the existing facilities and land involving negligible or no expansion of use or alteration or modification ofthe facilities or its operations beyond that previously existing or permitted is exempt from the requirements of the CEQA pursuant to Article III, Class 1(18)(c) of the Los Angeles City CEQA Guidelines. RECOMMENDA TlONS That the Mayor: 1. Approve, subject to City Attorney approval as to form, the proposed First Amendment to the existing Non-Exclusive Air Carrier Operating Permits for air carriers operating at the Los Angeles/Ontario International Airport extending the current term by five years to June 30, 2019, and blanket authority being given to the Executive Director of the Los Angeles World Airports to execute new Non-Exclusive Air Carrier Operating Permits with air carriers desiring to operate at the Los Angeles/Ontario International Airport for the term ending June 30, 2019; and 2. Return the proposed First Amendment to the Department for further processing, including Council consideration. FISCAL IMPACT STATEMENT Approval of the proposed First Amendment will have no impact on the City's General Fund. Neither will there be any departmental appropriations required. Minimum revenue to LAWA of $285,00 will result from the first year of Non-Signatory, Permitted air carrier landing fees. This project complies with the Department of Airports' adopted Financial Policies. Time Limit for Council Action In accordance with Charter Section 606, "Process for Granting Franchises, Permits, Licenses, and Entering Into Leases" and the Los Angeles Administrative Code Section 10.5, "Limitation and Power to Make Contracts," the proposed First Amendment to the existing Non-Exclusive Air Carrier Operating Permits must be approved by the Council before it can become effective. Unless the Council takes action disapproving a franchise, permit, license or lease that is longer than five years within 30 days after submission to Council, the franchise, permit, license, or lease shall be deemed approved. MAS:WDC:

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Los Angeles World Airports

Los Angeles World Airports TM May29,2013 LA)( LA/Ontario Vall Nuys City of Los Angeles Anlonio R. VlllareJigosa Mayor Board of Airport Commissioners tvlichacl A. Lawson Presidont Valeria C. velasco VlGe