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HomeMy WebLinkAboutC15-015 Air Canada Revenue Guarantee Agreement REVENUE GUARANTEE AGREEMENT (the "Agreement") THIS AGREEMENT is dated JAN,kiiRy , 2015 (the "Effective Date"); BETWEEN: AIR CANADA, a company incorporated under the laws of Canada and having its head office at 7373 Cote Vertu Boulevard West, Saint-Laurent, Quebec, H4S 1Z3, Canada; ("Air Canada") AND: EAGLE COUNTY, COLORADO with a mailing address of PO Box 850, Eagle, CO, US 81631; ("County") (Air Canada and/or County may hereinafter be referred to separately as a"Party" or together the "Parties"). WHEREAS, County is the operator of Eagle County Airport ("EGE"), located at 219 Eldon Wilson Rd, Gypsum, CO, US 81637; and wishes to secure scheduled air services between EGE and Toronto, Canada and is prepared to enter into a commercial agreement to support this; WHEREAS Air Canada operates air services to EGE and agrees to expand its network to include weekly nonstop service between Toronto Pearson International Airport ("YYZ") and EGE that will be beneficial to both Parties; AND WHEREAS, this Agreement sets out the terms and conditions to secure the weekly scheduled air services between EGE and YYZ (the"Route"); NOW THEREFORE IN CONSIDERATION OF the promises and mutual covenants contained herein, and other good and valuable consideration,the sufficiency and receipt of which is herein acknowledged, the Parties hereto agree as follows: - 2 - 1. Definitions In this Agreement the following terms and have the meanings set forth below: (a) "Eligible Tickets" shall mean any ticket issued having an origin or destination at EGE. (b) "Net Route Result" shall mean the difference between Total Flown Revenues (hereinafter defined) and Operational Expenses (hereinafter defined). (c) "Operational Expenses" shall mean all expenses related to the provision of service on the Route as outlined in this Agreement. Expense items shall include but are not limited to: crew labour and benefits; fuel; maintenance parts and labour; airport landing handling and terminal fees; passenger commissions; training; opportunity costs; computerized reservations systems ("CRS") fees; administrative expenses; and aircraft ownership, etc. It is understood that for the purposes of determining whether any amounts are owed by County under this Agreement, internal Air Canada financial accounting and reporting systems will be used to prepare the Final Financial Statement(hereinafter defined). (d) "Total Flown Revenues" shall mean all flown revenues including surcharges received by Air Canada from the sale of Eligible Tickets, excluding fees, taxes and charges to the extent that such fees, taxes and charges are not deemed revenues by Air Canada. It is understood that Total Flown Revenues will be calculated as of the commencement of the Winter Season using the internal revenue systems of Air Canada, and that revenues associated with Eligible Tickets for the Route will be prorated based on industry standard methodology. For any airport-related costs or expenses waived by County or YYZ, as set out in Section 4(b) below, an adjustment to the Operational Expenses will be made. Air Canada shall provide weekly email reports of advance bookings to County starting at the beginning of the Winter Season(hereinafter defined). (e) "Winter Season" shall mean the period from January 31, 2015 to March 21, 2015. 2. Term Subject to Section 6 of this Agreement, this Agreement comes into effect on the Effective Date and shall continue in full force and effect until May 1, 2015 (the "Term"). Any renewal of this Agreement shall be subject to the agreement of both of the Parties. 3. Air Canada Obligations (a) Scheduled Nonstop Air Service on the Route i. During the Winter Season, Air Canada shall provide scheduled nonstop air service on Saturdays between YYZ and EGE. ii. Air Canada undertakes to provide the Route using its fleet of A319 aircraft. Air Canada reserves the right to change the aircraft as long as the Route does not change. (b) Fare Structures and Revenue Management - 3 - i. Coincident with the announcement of service of the Route, Air Canada undertakes to introduce a comprehensive pricing structure for the Route, as well as to/from relevant connecting points across the Air Canada domestic and international network. The fare structure offered for the Route will be similar to fare structures offered on similar services within the Air Canada network. Air Canada shall make these fares available for purchase on its own web platform(s), as well as via CRS. It is understood that Air Canada will have the sole discretion to determine and adjust as necessary the range of fares, levels, and conditions relating to air services contemplated in this Agreement. ii. It is understood that Air Canada shall have full discretion over the allocation of seat inventory across fare classes and markets, using established revenue management practices, in order to maximize the total revenues associated with the air services contemplated in this Agreement. (c) Financial Reporting and Settlement Air Canada agrees to produce a"Final Financial Statement"within forty-five (45) days following the end of the Winter Season for the purposes of determining any amounts owed by County under this Agreement. In the event of a Net Route Result less than $573,000 CAD, (a"Negative Net Route Result") an invoice will be issued by Air Canada to County for the amount of the difference, up to a maximum of$115,000 CAD (the "Compensation"). Any positive Net Route Result will be retained by Air Canada. Air Canada agrees to give County access to the data used in the preparation of the Final Financial Statement, for audit purposes, if required. Net Route Results are based on a fuel price of$0.94 CAD per liter. In the event that fuel prices rise to and beyond$0.99 CAD per liter, the amount owed as the Compensation will be increased by$2,000 CAD per $0.01 CAD above $0.94 CAD but in no event shall the Compensation increase more than $5,000 CAD due to increased fuel prices, or a maximum total Compensation of$120,000 CAD. (d) Air Canada Program and System Integration Air Canada shall integrate the Route as a scheduled destination within its network, and in all relevant sales programs and distribution systems. As such, passengers purchasing travel that includes the Route will accrue benefits similar to those traveling elsewhere on the Air Canada network. (e) Other Western US Ski Destinations Air Canada shall provide a sixty(60) day notice to County, if it adds service to the following western US ski destinations during the Winter Season: Jackson Hole, KY(JAC); ii. Hayden, CO (HDN); iii. Aspen, CO (ASE); - 4 - iv. Montrose, CO (MTJ); v. Gunnison, CO (GUC); and vi. Bozeman, MT (BZN). 4. Airport Obligations (a) The Compensation i. County shall compensate Air Canada in the event of a Negative Net Route Results as set out in Section 3(c). The Compensation shall be payable within thirty (30) days of County's receipt of Air Canada's invoice. ii. County is a governmental entity and all obligations beyond the current fiscal year are subject to funds being budgeted and appropriated. Specifically, notwithstanding anything to the contrary contained in this Agreement, County shall have no obligations under this Agreement, nor shall any payment be made to Air Canada in respect of any period after December 31 of each calendar year during the term of this Agreement, without an appropriation therefore by County in accordance with a budget adopted by the Board of County Commissioners in compliance with the provisions of Article 25 of Title 30 of the Colorado Revised Statutes, the Local Government Budget Law (C.R.S. §29-1-101 et. seq.), and the TABOR Amendment (Constitution, Article X, Sec. 20). However, and notwithstanding the foregoing, County has budgeted and appropriated an amount equal to or in excess of$120,000 CAD for Air Canada, as applicable. (b) Airport Fees In the event that EGE waives any airport fees or costs, including without limitation: landing, terminal and aircraft parking, etc., an adjustment shall be made to reduce the Operational Expenses, thereby reducing the potential Compensation. Any fees waived by YYZ will result in a similar adjustment to the Operational Expenses. A working assumption of this Agreement is that EGE airport fees will be approximately$24,968 CAD. (c) Facilities Considerations County agrees to make any and all infrastructure modifications and implement services and procedures required to support the introduction of the Route. 5. Party Representatives Within thirty (30) days of the Effective date of this Agreement, the Parties each agree to appoint one representative to ensure the proper follow-up of the Agreement. 6. Termination - 5 - (a) Termination for Breach In the event of either Party's material breach of this Agreement which cannot be cured or is not cured within fifteen(15) days of the other Party notifying the breaching Party in writing of such breach, and identifying the breach with particularity, the non-breaching Party may cancel this Agreement immediately by sending written notice to the breaching Party. (b) Termination for Force Majeure In the case of a Force Majeure (hereinafter defined)which is not remedied within a period of fifteen (15) days, either Party shall have the right to terminate this Agreement upon written notice to the other Party. For clarity, this termination shall not extinguish County's payment obligations incurred prior to the Force Majeure. The parties agree that in no event shall County's obligations under this paragraph exceed $120,000 CAD. 7. Marketing Obligations Intentionally Left Blank 8. Force Majeure Neither of the Parties shall be held responsible for the failure to perform its obligations or any delay in performance under this Agreement if such non-compliance or delay results from circumstances beyond its control and not by its fault or negligence, including but not limited to fire, theft, flooding, war, riot, embargo or action by civil or military authorities, (each a "Force Majeure"). In the event of a Force Majeure, the affected Party shall immediately notify the other Party of any real or anticipated delay in the performance of its obligations under this Agreement, including a detailed explanation of the cause and the approximate duration of the delay. This information must be updated at least once weekly. 9. Confidentiality (a) Confidentiality It may be necessary during the performance of this Agreement for the Parties to exchange Confidential Information. "Confidential Information" shall mean any information whether oral, or written, of a private, secret, proprietary or confidential nature, concerning either Party or its business operations, including without limitation: (a) Air Canada's data and software; (b) the details of Air Canada's operations and procedures; and/or (c) Air Canada's pricing and pricing policies. (b) Protection of Confidential Information Each Party agrees to use the same degree of care to protect the confidentiality of the Confidential Information of the other Party and to prevent its unauthorized use or - 6 - dissemination as it uses to protect its own Confidential Information of a similar nature, but in no event shall it exercise less than due diligence and reasonable care. Each Party agrees to use the Confidential Information of the other Party only for purposes related to the performance of this Agreement. (c) Disclosure All Confidential Information remains the property of the Party disclosing the information and no licence or other rights to Confidential Information is granted or implied hereby. Notwithstanding the foregoing, neither Party shall be liable for disclosure of any information received under this Agreement which: (i) is generally known or available by publication, commercial use, or otherwise; (ii) is known by the receiving Party prior to the negotiations of this Agreement through no wrongdoing and is not subject to restriction at the time of disclosure; (iii) is independently developed by the receiving Party without the use of Confidential Information; (iv) is lawfully obtained from a third party without violation of a confidentiality obligation to the disclosing Party; or (v) results from the order of a court or as required of a government agency under law, provided advance notice of the disclosure obligation, if permissible by law, is given to the disclosing Party. Notwithstanding anything to the contrary, Air Canada may make such disclosures as are required in connection with due diligence reviews or disclosure obligations pursuant to material transactions, whether potential or existing, and which are outside the ordinary course of Air Canada's business, including investments, acquisitions or financings, to the other parties to such transactions or their professional advisors; provided that any such disclosure shall be conditioned upon such other parties and/or their professional advisors being subject to confidentiality obligations on terms substantially similar to those contained herein, except that such terms shall not permit any disclosure of Confidential Information pursuant to the exceptions contemplated herein. 10. Notices (a) Whenever in this Agreement it is required or permitted that a notice (each a "Notice") be given or served by either Party to the other, such Notice shall be in writing and shall be validly given or sufficiently communicated if forwarded by pre-paid registered mail, personal delivery or facsimile as follows: To Air Canada: Attn: Eric Bordeleau—General Manager North America Schedule Planning Telephone: (514)422-2827 Fax: (514)422-6439 With a copy of Notices of Default and all other Legal Notices to: Attention: Senior Vice President and Chief Legal Officer Fax: (514) 422-4147 - 7 - To County: Eagle County, Colorado Attn: Greg Phillips,Aviation Director Post Office Box 850 219 Eldon Wilson Road Gypsum, CO 81637 Telephone: 970-328-2680 Fax: 970-328-2687 With a copy of Notices of Default and all other Legal Notices to: Attention: Bryan Treu, County Attorney Post Office Box 850 500 Broadway Eagle, CO 81631 Telephone: (970) 328-8685 Fax: (970) 328-8699 (b) Notices or other communications sent by personal delivery, same day or overnight courier service, or mailed shall be deemed to have been given when received. Notices sent by fax shall be deemed to have been given when sent with confirmation of receipt, except that, if not given on a business day between 9:00 a.m. and 5:00 p.m. local time where the recipient is located, shall be deemed to have been given at 9:00 a.m. on the next business day for the recipient. 11. General (a) Severability If, for any reason, one provision of this Agreement, is entirely or in part found or made null, illegal or inapplicable, the said provision shall be deemed independent from the remainder of this Agreement, shall be severed from it and all other provisions of this Agreement remain in full force and effect. (b) Currency All references to dollars herein shall be in Canadian dollars. (c) Publicity The Parties agree that all advertising, promotional material, or publications containing trademarks of logos of a Party, prior to publication, shall be subject to the prior written approval of that Party. (d) Governing Law - 8 - This Agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado, USA. The courts for the resolution of disputes shall be the courts of the State of Colorado. (e) Regulatory framework All air services dispensed in application of this Agreement shall be governed by all applicable laws, regulations, international conventions, tariff rules and conditions of carriage. Notwithstanding anything to the contrary contained herein, no provision in this Agreement shall revoke, amend, extend or alter their applicability. (f) No partnership,joint venture or agency The Parties expressly decline any intention of creating a partnership, joint venture or agency. Nothing contained in this Agreement or any document that may be necessary or desirable for the purposes of the performance of this Agreement, constitutes, nor may be interpreted as constituting, a partnership, joint venture or the relationship of agent to principal between the Parties in any way whatsoever or for any purpose. (g) Assignment This Agreement may not be assigned by either Party, in whole or in part, without the written consent of the other Party. (h) Entire Agreement&Amendments This Agreement contains the entire agreement and understanding between the Parties and supersedes all previous agreements, undertakings, negotiations and discussions, whether oral or written, between the Parties covering the subject matter of this Agreement. No amendments to this Agreement shall be effective unless made in writing and duly executed by both Parties. [Signature page follows] - 9 - IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized signing officers, as of the Effective Date. AIR CANADA S If i/is_ / / j ��, ., �c Leda, Signature .� MARCEL.(MGEf,,' IV-,`ry,KP.K2RNIK,,MG Name & Title JANLAR/ i2 , his Date Town of I Icr.(TREAK, ) Province of kc,e,F , ) The foregoing instrument was acknowledged before me this 1Z day of jcitsiaRRy , 20 15 by Kae:y.i C i-.141t2 , as ExFCua.,i. gSS,sTaNr of Air Canada. My commission expires: H Ay 24, 2O It 40 0 AF i KARYN Commisf Oaths V173 GOITER O 173 086 e' COUNTY: COUNTY OF EAGLE, STATE OF COLORADO By and Thro .,h it Boards ' unty Commissioners By: / Jillia H. Ryan, Chair:,an 0 F ATTEST: wr 'f *et. e By: I� S t ► 0 , 1,90 Clerk to the Board of ou ty Commissioners 1 l' U . l5 Z Date