November 20, 2006
Los Angeles World Airports, City of Palmdale Request Airline Proposals for Commercial Air Service at Palmdale Regional Airport
The Los Angeles Board of Airport Commissioners (BOAC) today authorized release of a Request for Proposals (RFP) to provide scheduled commercial air service at Palmdale Regional Airport (PMD), beginning in 2007.
Los Angeles Mayor Antonio R. Villaraigosa hailed the Board's action as tangible evidence of his commitment to a regional approach to meeting Southern California's growing demand for air service.
"Developing new and expanded service at Southland regional airports will go a long way toward relieving congestion at Los Angeles International Airport (LAX)," said Mayor Villaraigosa. "I look forward to the introduction of regional jet service at Palmdale during 2007 that will result from today's Airport Commission action."
Board of Airport Commissioners President Alan Rothenberg stated, "The Board is thrilled about this action -- awarding the appropriate resources to attract an airline and develop effective service in a small community that clearly can support it. We look forward to hearing about the exciting developments that will continue to unfold in Palmdale over the next year."
Board Vice President Valeria Velasco added, "The Board of Airport Commissioners' action toward initiating jet air service by a major carrier at Palmdale Regional Airport is pivotal in establishing a third Los Angeles World Airports (LAWA) commercial air transport facility in Los Angeles County. We are proud of the air transport service provided by LAX, the fifth busiest airport in the world. However, LAX is geographically the third smallest international airport. The development of Palmdale Regional Airport will facilitate access for travelers and cargo transport and help alleviate air and vehicular traffic congestion at LAX. I am confident Palmdale Regional Airport will be the gem in the northern region of Los Angeles County as Ontario International Airport is at the eastern end of the county."
The Request for Proposals is the result of a three-year effort by LAWA and the City of Palmdale to develop air service at PMD. On August 10, 2006, the U.S. Department of Transportation awarded a $900,000 grant to the City of Palmdale under its Small Community Air Service Development Program (SCASDP) to provide financial incentives to airlines interested in operating scheduled service at PMD.
LAWA and the City of Palmdale hope to attract an airline to provide multiple daily regional jet departures to a large hub airport in the Western United States -- service that would provide travelers with a wide range of connecting flights to major business and leisure destinations throughout the United States and the world. Regional jet aircraft can carry between 50 to 90 passengers, fly to a range of up to 2,000 miles, and cruise at an altitude and speed similar to larger jet aircraft.
Palmdale Mayor James Ledford said, "This marks the beginning of a new era for Palmdale Regional Airport, by providing an opportunity for an attractive pattern of airline service for Northeast Los Angeles County. We have a great airport facility and a strong air travel market that will respond enthusiastically to new service."
Newly appointed Palmdale City Manager Steve Williams added, "The partnership between Palmdale and LAWA has proven to be very beneficial and we look forward to working together closely now and in the future to make regional jet service a permanent part of our economy."
The Small Community Air Service Development Program (SCASDP) is an innovative federal program that permits airports and communities to combine federal, local and airport funds to develop, promote and expand commercial air service in communities with little or no commercial service. The $900,000 grant amount received by the City of Palmdale and LAWA, on their third joint attempt, is the largest SCASDP grant awarded to a U.S. community this year; the second-largest ever awarded to a California community; and the ninth largest in the history of the SCASDP.
The RFP invites all U.S. commercial airlines that provide scheduled service to submit a proposal outlining the service they would offer. Proposals will address aircraft type, number of daily departures, destination hub, connecting market opportunities, and marketing and promotion strategies, as well as traffic, revenue and profit projections. Airlines have until Jan. 5, 2007, to submit proposals. LAWA and the City of Palmdale will evaluate proposals and negotiate a revenue guarantee agreement with one or more selected airlines during the first quarter of 2007. The overall aim is to introduce service within the year. Federal SCASDP grants are based upon a three-year air service development plan.
SCASDP grant funds will be combined with local commitments to provide $2.05 million to fund a revenue guarantee agreement, in which a local community mitigates the business risk that an airline faces upon entering a new, relatively unproven market, by agreeing to cover potential losses on a route during the start-up phase of operations, when a carrier is building awareness of its service and establishing a passenger base. Revenue guarantee agreements are not a financial subsidy, as funds are only paid to an airline if it incurs operating losses on a route during the period covered by the agreement. If the service is profitable from the beginning, financial resources can instead be used to promote and market the new service.
The $2.05 million to fund a revenue guarantee agreement resulted from the combination of the $900,000 SCASDP grant and hard dollar commitments from various local entities, including LAWA ($1.1 million), the City of Palmdale ($25,000), and the County of Los Angeles ($25,000).
In addition to commitments to fund a revenue guarantee agreement, the City of Palmdale, LAWA and their local partners have committed $2.56 million of in-kind contributions, including terminal rent abatements, advertising, marketing, promotional support and staff time. The combined hard-dollar and in-kind commitments to support new air service at PMD total $4.6 million.
A Memorandum of Understanding between LAWA, the City of Palmdale and the other coalition members, including County of Los Angeles, Los Angeles Economic Development Corporation, Antelope Valley Board of Trade, Greater Antelope Valley Economic Association, was also approved by the BOAC today, formalizing the coalition's main objective of bringing regional jet service to PMD.
PMD is located in the northeast portion of the City of Palmdale, on a 60-acre site at U.S. Air Force Plant 42. The airport features a modern 9,000-square-foot terminal capable of handling up to 300,000 passengers annually. PMD is located approximately 60 miles northeast of downtown Los Angeles, off State Highway 14 (Antelope Valley Freeway).
LAWA owns approximately 17,750 acres of land adjacent to Plant 42, most of which is available for development. PMD is one of four airports owned and operated by LAWA, a City of Los Angeles department, which also owns and operates LAX, Ontario International Airport (ONT) and Van Nuys Airport (VNY).
A copy of the Request for Proposal for commercial air service at PMD can be downloaded from the City of Los Angeles Business Virtual Network website at http://www.labavn.org, then click on "Bidding Opportunities by Department -- Los Angeles World Airports."
CONTACT: Nancy Suey Castles (310) 646-5260
SOURCE: Los Angeles World Airports