Title
SOUTHWEST REVENUE GUARANTEE AGREEMENT.
Presented by: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Approve the agreement and authorize the Chairman to sign.
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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, AirTran's last full year of operation in Wichita, 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 Kansas Affordable Airfares program of the State. The program has continued to the present time in the same manner. State funding has been allocated to Sedgwick County for the contract year that starts July 1, and funding from Wichita will be provided upon approval of an agreement between the county and city.
In 2011, AirTran was acquired by Southwest Airlines, and in June of 2013 Southwest replaced AirTran service in Wichita with service by Southwest.
Southwest provides direct flights from Wichita to Chicago, Dallas, and Las Vegas, with connections throughout the United States from those airports. In the third quarter of 2014, after Southwest entered the market, passenger counts increased and average far...
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