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HomeMy WebLinkAboutC03-106 American Airlines AIR SERVICE AGREEMENT This Air Service Agreement ("Agreement") is made and entered into as of this i%v day of ~`I ~- 2003 ("Effective Date") by and between American Airlines, Inc. a Delaware cor oration ("American") with its principal offices at P.O. Box 619616, Dallas/Fort Worth International Airport, Texas 75261-9616, and Eagle County, Colorado, a body corporate and politic ("Eagle County") having its principal offices at 500 Broadway, Post Office Box 850, Eagle, Colorado 81631. Air Service. (a) American shall provide regularly scheduled passenger air service between Dallas/Fort Worth International Airport ("DFW") and Eagle County Regional Airport ("EGE") in both directions (the "Air Service") for the period from June 14, 2003 through September 3, 2003 (the "Air Service Period") in accordance with the schedule which is attached hereto and incorporated herein as Exhibit "A". (b) American agrees to schedule Boeing 757-223 aircraft (presently configured with 176 seats, but such seat number or seat configuration is subject to change in American's sole discretion) to perform the Air Service. 2. Term. This Agreement shall commence upon the Effective Date (although the Air Service shall be provided only during the Air Service Period during calendar year 2003) and, unless sooner terminated in the manner provided for herein, shall remain in full force and effect until November 30, 2003. 3. Minimum Revenue Requirement. (a) American and Eagle County agree that the Total Revenue (as defined in Sec#ion 4(b) below) for the Air Service F'er;cu mGSt equal o~~ exceed the Minimum Revenue Requirement (as hereinafter defined) or Eagle County shall be required to pay the Revenue Shortfall (as defined in Section 5 below). For purposes of this Agreement, the "Minimum Revenue Requirement" means (i) the Base Charge set forth in Section 3(b) for each round-trip Air Service Flight multiplied by the actual number of round-trip Air Service Flights operated by American during the Air Service Period plus the Per Revenue Passenger Charge set forth in Section 3(c) for each round-trip revenue Air Service passenger who actually travels during the season. (b) The "Base Charge" is $25,818 per round trip Air Service Flight. (c) The "Per Revenue Passenger Charge" is $23.00 per round trip passenger carried on the Air Service Flights. Eagle County Air Service Agreement 4. Revenue Calculation. (a) The "Net Revenue" for each Air Service Flight shall be established by deducting 5.2% from the Segment On-Board Revenue (as defined herein below and as calculated by American's Marketing Information Report System ("MIRS")) for such Air Service Flight. American and Eagle County agree that the foregoing 5.2% deduction is an agreed upon amount that reflects all cost attributable to credit card fees, commissions and overrides, and that there shall be no other deductions with respect to such fees, commissions and overrides in connection with the calculation of Net Revenue or Total Revenue hereunder. For purposes of this Agreement, the "Segment On-Board Revenue" for each Air Service Flight shall be the total amount paid by passengers in connection with the applicable Air Service Flight, less applicable taxes, and shall be rate-prorated by segment. Arate-prorate is used to divide total on-board revenue paid per Air Service Flight among the actual number of segments flown by an Air Service Passenger according to the ratio of each segment's local fare to the sum of all the local fares applicable to the passenger's actual itinerary. (b) For purposes of this Agreement, 'Total Revenue" means the sum of the Net Revenues for all of the Air Service Flights operated by American during the season. (c) MIRS shall be the sole source of information for calculating Segment On- Board Revenue, Net Revenue and Total Revenue. Notwithstanding the foregoing, Eagle County shall have the right, upon providing at least 5 business days prior written notice to American, to conduct, at Eagle County's sole expense, up to 2 audits during the Term of the information and documents used to calculate Segment On-Board Revenue, Net Revenue and Total Revenue hereunder.. Any such audit must be reasonable in all respects and Eagle County shall be granted access to information it deems reasonably necessary to determine the figures and amounts identified in this Agreement. 5. Payment of Revenue Shortfall. A "Revenue Shortfall" shall be deemed to occur if the Total Revenue received by American for the Air Service Period is less than the Minimum Revenue Requirement described in Section 3. Should this occur, Eagle County agrees to pay the total amount of such Revenue Shortfall within 30 business days after receipt of an invoice from American detailing the amount of the Revenue Shortfall. Such invoices shall be provided by American to Eagle County on or before October 30, 2003. The total amount paid by Eagle County to American under this Agreement for Air Service or as a Revenue Short Fall shall not exceed $475,000. Further the parties agree that if American fails to provide any of the scheduled passenger flights during the Air Service Period for any reason, including but not limited to, voluntary or required grounding or excusable non-performance, then such flights shall not be included in the Minimum Eagle County Air Service Agreement Revenue Calculation and Eagle County shall not be obligated to pay any amount toward such flights. 6. Letter of Credit. (a) In consideration of the Air Service provided by American, on or before June 1, 2003, Eagle County shall establish a letter of credit issued by a bank of its choosing and generally in the form of Exhibit B attached hereto, in the amount of $200,000 (the "Letter of Credit"). The Letter of Credit will be irrevocable and will provide that American may upon ten (10) days advance written notice to Eagle County draw upon the Letter of Credit upon presentation of a letter signed by an authorized vice president of American stating that there has been a default under this Agreement and that a sum certain is required to remedy the default for past due amounts owed. (b) Upon termination or expiration of this Agreement and upon payment to American of all amounts owed to American under this Agreement, American agrees to within five days of such termination or expiration give notice to the issuing financial institution authorizing it to release and cancel the Letter of Credit and American shall return the original letter of credit to the financial institution with notice of the same to Eagle County. 7. Travel Forms. American agrees to issue to Eagle County a maximum of twenty- five {25) free coach class travel forms, each limited to 2 stopovers per form. The transportation provided by these travel forms shall be (i) used only for travel within the 43 contiguous United States, Mexico or Canada, (ii) for the promotion of the air services described in Exhibit A, (iii) used only by employees or representatives of Eagle County in the normal course of business, and (iv) subject to all travel conditions and restrictions set forth on such travel forms„including, but not limited to, blackout dates. All such forms issued must be completely used by no later than September 30, 2003. 3. Termination and Default. This Agreement may be terminated as set forth below: (a) By American (i) if American is unable to obtain the governmental or other approvals necessary to commence the Air Service, (ii) if Eagle County fails to make any payment when due and does not make such payment within thirty (30) days after written notice or demand therefor; or (iii) if any of the following events occur: (A) a forced or voluntary grounding of one or more of American's aircraft types or (B) a greater than 35% increase in the average price per gallon that American pays for jet fuel. (b) By either party, if the other party is in breach or default under any provision of this Agreement and such party does not cure such breach or default within thirty (30) days after the non-breaching or non-defaulting party gives written notice to the other party specifying the breach or default. Eagle County Air Service Agreement • 9. Remedies Upon Termination. (a) A termination pursuant to Section 8(a)(ii) or 8(b) shall not limit the non- breaching or non-defaulting party's right to pursue or enforce any of its rights under this Agreement or otherwise. (b) Any termination or expiration of this Agreement shall not affect Eagle County's obligation to pay American amounts owing to American for services provided to date of termination. In the event of any termination under this Agreement, Eagle County shall pay all amounts owed to American for services provided to the effective date of termination within fifteen (15) business days after receipt of an invoice therefor from American. 10. Promotional Materials. All promotional materials prepared by Eagle County which contain any reference to American shall be subject to the prior written approval of American as to content and form. 11. Fares. American agrees to establish and modify, as needed, commercially reasonable air fares that are competitive with fares charged by other commercial airlines serving the Eagle County Regional Airport during the Air Service Period. and agrees to provide yield and inventory management services with respect thereto. Eagle County acknowledges that American has agreed to establish and modify these air fares and to provide yield and inventory management services as an accommodation to Eagle County and that American hereby disclaims all liability for, and Eagle County hereby waives all claims against American which may arise out of or in connection with, the establishment or modification of such commercially reasonable air fares or the yield and revenue management services provided hereunder. American agrees to advise Eagle County regarding pricing for such air fares provided, however American shall at all times have the unconditional right in its sole discretion to determine commercially reasonable air fares that are_ competitive with fares charged by other commercial airlines serving the Eagle County Regionai Airport during the Air Service Period. 12. Governing Law. This Agreement shall be construed in accordance with, and shall be governed by the laws of the State of Texas. The parties consent and submit to the jurisdiction of the United States District Courts within the State of Texas in all questions or controversies arising from this Agreement. Notwithstanding the foregoing the parties agree that nothing contained herein waives or is intended to waive any protections that may be applicable to Eagle County under the Governmental Immunity Act, Section 24-10-101 et.seq. C.R.S. and that Eagle County is entitled to protections afforded under such Act. 13. Excusable Non-Performance. Except as otherwise expressly provided in this Agreement, neither party shall be liable for performance hereunder to the extent such performance is prevented or delayed as a result of acts of God, severe weather, war, military action, labor disputes, or any court order or action of any governmental, administrative or judicial entity, or by any other reason or circumstance beyond the reasonable control of such party; provided, however, such party shall (a) provide the other party with prompt written notice thereof, (b) use its best reasonable efforts to Eagle County Air Service Agreement 4 ~ ~ avoid or remove such causes of non-performance, and, (c) continue performance to the extent such causes are removed or avoided. 14. Indemnification. (a) American agrees to indemnify, defend and hold harmless Eagle County and its officers, directors, employees, agents and affiliates from and against any and all third party liabilities, damages, losses, claims, suits, liens, demands, actions, causes of action, judgments, fines, penalties and expenses (including without limitation reasonable attorneys' fees) of any nature whatsoever (collectively, "Claims") arising out of or in connection with, or related to (i) the misconduct or negligent acts, errors or omissions of American, its subcontractors or any person directly or indirectly employed by American, or any of them, under this Agreement; and (ii) American's products or services supplied or performed in connection with this Agreement or otherwise except to the extent such injury, or damage is caused by the negligence of County or its employees or agents. (b) The rights and obligations of the parties under this Paragraph 14 shall survive any termination or expiration of this Agreement. 15. Waiver of Consequential Damages. EXCEPT WITH RESPECT TO INDEMNIFICATION OBLIGATIONS HEREUNDER, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT, EVEN IF SUCH PARTY HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 16. Insurance. (a) American. At all times during the term of this Agreement, American shall carry and maintain, at its sole cost and expense, airline liability insurance with aggregate limits of at least Fifty Million and no/100 United States Dollars ($50,000,000.00 US) for personal injury (including without limitation bodily injury and death) and property damage. If so requested by Eagle County, American will furnish Eagle County within 30 days an insurance certificate which: (i) specifies Eagle County as an additional insured; (ii) indicates that the insurer has accepted and insured paragraph 16(a) of this Agreement; (iii) includes the insurer's commitment to give Eagle County not less than 30 days prior written notice in the event of cancellation or material change in coverage; and (iv) indicates that such coverage is primary without right of contribution from any insurance carried by Eagle County. (b) Eagle County. At all times during the term of this Agreement, Eagle County shall carry and maintain, at its sole cost and expense, commercial general liability insurance policy, with aggregate limits of Twenty Million and no/100 United States Dollars ($20,000,000 US) for bodily injury (including death) and property damage. 17. Assignment. Neither party may assign this Agreement or any interest herein without obtaining the prior written consent of the other party. Eagle County Air Service Agreement 18. Waivers and Modifications. This Agreement embodies the entire agreement and understanding of the parties and, as of its effective date, terminates and supersedes all prior or contemporaneous agreements and understandings, whether written or oral, between the parties covering the subject matter hereof. The provisions of this Agreement shall govern all services to be provided hereunder by the parties, and no addition, amendment, waiver, or modification of (or execution of any document contrary to) these provisions shall be effective unless signed jointly by a duly authorized representative of American and a duly authorized representative of Eagle County. 19. Severability. In the event that any one or more of the provisions of this Agreement shall be determined to be invalid, unenforceable or illegal, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal and unenforceable provision had never been contained herein with the remainder of this Agreement being enforced to the fullest extent possible. 20. Relationship of the Parties. For the purposes of this Agreement, neither party shall be deemed to be the agent, partner, employee or joint venturer of the other party. - 21. Notices. Any notice required to be given by either party to the other pursuant to this Agreement shall be in writing and shall be deemed to have been properly given if delivered in person, transmitted by facsimile, sent by overnight delivery or sent by registered or certified mail, return receipt requested, addressed to the other party at the following address, and shall be deemed to have been given on the day so delivered, transmitted or mailed: By Eagle County to American: American Airlines, Inc., Attention: Walter J. Aue, Vice President, Capacity Planning ..~ . ~P.O. Eon X1.9616, MD 5535 .. DFW Airport, Texas 75261-9616 Fax No. (817) 931-6670 By American to Eaale County: Eagle County Board of County Commissioners Attention: Michael Gallagher, Chairman P.O. Box 850 Eagle, Colorado 81631-0850 Fax No. (970) 328-8629 And Eagle County Attorney P.O. Box 850 Eagle, CO.81631 Phone. (970) 328-8685 Fax (970) 328-8699 Eagle County Air Service Agreement • 22. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties, their successors and permitted assigns. IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized representatives as of the Effective Date. ATTEST: ~~~~~~~~ , c.~ 7. Clerk to th'~ Board of County Commissioners COUNTY OF EAGLE, STATE OF COLORADO, By and Through Its BOARD OF COUNTY COMMISSIONERS O By:. AMEBIC I SIN . By: ~ w. s.,4 ~ /' /~ ~ Ge "' 1Q V'e51d !'N 7~ L-`.~Q~Cc J"~ V Y o~ s Eagle County Air Service Agreement EXHIBIT A TO AIR SERVICE AGREEMENT BETWEEN AMERICAN AIRLINES, INC. AND EAGLE COUNTY 2003 DFW -EGE FLIGHT SCHEDULE Airport Airport Days of Leaving Arrivin Times* Operation DFW EGE 4:OOP-5:15P Daily EGE DFW 8:30A-11:35A Daily Dates 06/14/03 - 09/02/03 06/15/03 - 09/03/03 Equipment: 6757-223 Present Configuration: 176 seats (such seat configuration and number is subject to change if American deems appropriate) Exact operating times are subject to change from time to time by American, but such times will remain within a thirty (30) minute range in either direction from the times set forth above. Eagle County Air Service Agreement 8 EXHIBIT B TO AIR SERVICE AGREEMENT BETWEEN AMERICAN AIRLINES, INC. AND EAGLE COUNTY . 2003 IRREVOCABLE LETTER OF CREDIT American Airlines, Inc. P.O. Box 619616 DFW Airport, TX 75261 Attn: Mr. Jeffrey Campbell Senior Vice President Chief Financial Officer NUMBER: AMOUNT:200,000 U.S. Dollars Gentlemen: By order of . we hereby open our clean, irrevocable and unconditional LETTER OF CREDIT NUMBER _ _ in favor of American Airlines, Inc. (American) for a sum not to exceed US $200,000. This Letter of Credit guarantees payment of a sum up to US $200,000 under the Air Service Agreement dated .2003, between American and Eagle County. Funds under this Letter of Credit are available against your drafts on us on sight when presented to our office at .All drafts drawn hereunder must refer to the number of this Letter of Credit and be accompanied with a signed statement by a Vice President of American certifying that there has been a default under the Air Service Agreement and that a sum certain is required to remedy the default for past due amounts owed under the Agreement. Eagle County Air Service Agreement Bank agrees that all drafts drawn and negotiated in compliance with the terms of this Letter of Credit shall be duly honored, if presented at Bank on or before the following specified expiration date. This Letter of Credit is effective as of the date first written above and expires November 30, 2003; any demand under this Letter of Credit must reach us by that date. Sincerely, Eagle County Air Service Agreement 10