Title
SOUTHWEST REVENUE GUARANTEE AGREEMENT.
Presented by: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Approve the agreement.
Body
AirTran Airways entered the Wichita market in 2002 after being offered a revenue guarantee by the City of Wichita. Following AirTran's entry into this market, airfares between Wichita and destinations in the eastern U.S. decreased dramatically, and travel to and from those destinations increased equally sharply. This happened not only for AirTran passengers, but for passengers of all airlines competing with AirTran. In the year ending December 31, 2012, 407,000 passengers traveled between Wichita and the 22 eastern cities served by AirTran that fall in the 50 most popular destinations from Wichita. As contrasted with average one-way airfares in 2000 prior to AirTran's entry into this market, those travelers saved 17%, an average of $40 per one-way fare because of AirTran's presence in this market.
In 2005, Sedgwick County partnered with the City of Wichita in the funding of the revenue guarantee. In 2006, Sedgwick County assumed contractual responsibility for the guarantee, and received funding assistance from Wichita and the new Kansas Affordable Airfares program of the state. The program was continued through 2011 in the same manner. Sedgwick County has requested state funding for the contract year that starts July 1, and anticipates the request will be approved by REAP in its scheduled July meeting.
In 2011, AirTran was acquired by Southwest Airlines, and in June of 2013 Southwest replaced AirTran service in Wichita with service by Southwest.
The 2014 contract expired June 30, 2014. The proposed contract is conceptually identical to that one. In it, Southwest agrees to provide at least four daily round-trip flights between Wichita and Dallas, Chicago and Las Vegas, and to provide monthly reports of passenger counts, costs incurred and revenues earned as a result of Wichita service. In return, Sedgwick County a...
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