Report Prepared by: Martin Pehl, Airport Manager, Merced Yosemite Regional Airport
Title
SUBJECT: Approval of a Lease Agreement with Advanced Air, LLC, to Provide Commercial Air Service at the Merced Yosemite Regional Airport from January 1, 2022 Through December 31, 2025
REPORT IN BRIEF
Approve a lease from January 1, 2022, to December 31, 2025, at the Merced Yosemite Regional Airport between the City of Merced and Advanced Air, LLC.
RECOMMENDATION
City Council - Adopt a motion approving the lease agreement with Advanced Air, LLC; and authorizing the City Manager or Deputy City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Adopt the motion as recommended by the Regional Airport Authority.
2. Modify the action (specify in motion).
3. Deny the action.
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
This item aligns with the City Council priority for “Economic Development”.
DISCUSSION
The Department of Transportation (DOT) has awarded Advanced Air, LLC, a four-year contract to provide commercial air service to Merced Yosemite Regional Airport as part of the Essential Air Service (EAS) program. The new DOT contract allows Advanced Air to begin service on January 1, 2022 and will expire December 31, 2025, unless extended by the DOT.
Advanced Air will provide a total of 24 nonstop round trips per week consisting of 12 weekly nonstop round trips to McCarran International Airport in Las Vegas and 12 weekly nonstop round trips to Los Angeles International Airport, using 9-seat Pilatus PC-12 aircraft. Since all commercial flight destinations are secured airports, flight security will continue to be administered by the Transportation Security Administration (TSA).
The lease will continue in effect from January 1, 2022 to December 31, 2025 and shall continue thereafter until terminated by either party giving sixty (60) days prior written notice to the other party. The lease premises consist of approximately 689 square feet of offices and counters for Lessee's exclusive use, and approximately 2,018 square feet of common area for Lessee's non-exclusive use, including secured gate waiting area, restrooms, and lobby. Lessee also receives non-exclusive rights to use of the Airport and its aviation improvements, including aprons, taxiways, and runways.
The rents to be paid by Advanced Air shall be the sum of the following: Year 1: $6050.00 per month, Year 2: $6232.00 per month, Year 3: $6418.00 per month, Year 4: $6611.00 per month. Beginning January 1, 2026, rent shall increase three percent (3%) annually on January 1st of each year.
Advanced Air will pay a landing fee of $17.00 per landing.
As compensation for common area maintenance (CAM), Advanced Air will pay the following: Year 1: $1075.00 per month, Year 2: $1107.00 per month, Year 3: $1140.00 per month, Year 4: $1175.00 per month. Beginning January 1, 2026, the CAM will increase three percent (3%) annually on January 1st of each year.
At such point as Advanced Air exceeds 10,000 revenue passenger enplanements in a calendar year, the City will reduce the rent by $1,000 per month for the duration of the calendar year as a performance incentive. Achieving the 10,000 per year revenue passenger enplanement number will make the Airport eligible for $1,000,000 of additional FAA funding for airport improvement purposes.
Benefits of the Advanced Air Lease: The Lease provides the community with expanded air service destinations utilizing Pilatus PC-12 luxury aircraft which will seat eight passengers and features a pressurized cabin capability and an excellent safety record. Additionally, the Airport will continue to receive facility rental income and CAM fees.
IMPACT ON CITY RESOURCES
No appropriations from the general fund are associated with this lease.
ATTACHMENTS
1. Advanced Air Lease