Airline-Airport Contracts: Who's In Control Of The Skies?

Airlines and airports do have contracts with each other. These contracts are known as 'airline-airport lease and use agreements' and they outline the rights and responsibilities of both parties. For example, in the contract between Spirit Airlines and Broward County, the latter of which owns the Fort Lauderdale-Hollywood International Airport, the airline is granted the right to use the airport for the operation of its air transportation system. The contract also covers the leasing of premises, fees and charges, maintenance and operation of the airport, and insurance requirements, among other provisions.

Lease of premises

The lease of premises is a critical component of the airline-airport relationship. It involves the airline leasing specific premises, facilities, rights, and privileges from the airport for its operations. This typically includes terminal space, ticket counters, baggage facilities, and other areas necessary for the airline's operations.

The lease of premises section in the airline-airport agreement outlines the specific areas allocated to the airline, the terms and conditions of the lease, and any associated fees or charges. It also covers the rights and responsibilities of both parties regarding the use and maintenance of the leased premises.

In the case of Spirit Airlines and Broward County, the lease of premises includes the following provisions:

• Spirit Airlines is granted the right to use specific premises and facilities at the Fort Lauderdale-Hollywood International Airport, including terminal space, ticket counters, baggage facilities, and other areas necessary for its operations.
• The lease agreement outlines the specific areas allocated to Spirit Airlines, such as ticket counter spaces, airline ticket offices, and baggage make-up areas.
• Spirit Airlines is responsible for paying rentals, fees, and charges for the use of the leased premises, which are calculated based on factors such as square footage, number of ticket counter positions, and electrical power usage.
• Spirit Airlines has the right to install its own equipment and furnishings within the leased premises and is responsible for maintaining its premises in a neat, orderly, and sanitary condition.
• Broward County, as the owner and operator of the airport, is responsible for maintaining and operating the airport facilities, including the leased premises, in a safe and efficient manner.
• The lease agreement includes provisions for adjustments to rates, fees, and charges, as well as the application of revenues generated from the leased premises.
• The lease agreement also covers insurance requirements, indemnification, and liability insurance to protect both parties in the event of damage, loss, or claims arising from the use of the leased premises.
• The lease agreement specifies the term of the lease, which can vary from a fixed period to a month-to-month arrangement, with options for renewal or termination.

Use of leased premises and fuel system

Airlines may lease premises and fuel systems from airports. For example, Spirit Airlines has a lease agreement with Broward County, Florida, for the use of premises and fuel systems at the Fort Lauderdale-Hollywood International Airport. The agreement includes the lease of premises such as terminal space, ticket counter space, and airline ticket offices. The agreement also covers the use of the fuel system, with the airline agreeing to pay for all electrical power used at its preferential use premises.

Airlines may also lease aircraft from other airlines or leasing companies. There are two main types of aircraft leasing: wet-leasing and dry-leasing. Wet-leasing is typically used for short-term leasing, while dry-leasing is more common for long-term leases. Wet-leasing involves the lessor providing an aircraft, crew, maintenance, and insurance to the lessee, who pays by the number of hours operated. Dry-leasing is an arrangement where the lessor provides an aircraft without crew, ground staff, etc.

Financing and construction of projects and additional projects

The financing and construction of projects and additional projects is a crucial aspect of the agreement between an airline and an airport. This section outlines the responsibilities and processes related to funding and building infrastructure at the airport. Here is an overview of the key points:

• The airline and the airport agree to construct the project as per the approved schematic drawings and Project Construction Contract Documents. The county's architects and engineers will develop cost estimates, schedules, and documents for the project, taking into consideration the requests, suggestions, and recommendations of the airline representative.
• The project's total cost is estimated to be $262,569,799, excluding financing charges, unspecified tenant finishes, interest on bonds, and required deposits. The cost estimate will be used as a reference point, and any changes or additions to the project scope will be carefully evaluated to ensure the estimated cost is not exceeded.
• The project will be financed through a combination of federal aid, state grants, airport funds, and revenue bonds issued by the county. The county agrees to use its best efforts to secure the maximum amount of grants and utilize airport surpluses to fund the project.
• The airline approves the financing of the project through the issuance of revenue bonds. The county may also borrow funds or utilize other available monies to finance the ongoing construction, including architectural and engineering work.
• If the projected total project cost exceeds the estimate, additional revenue bonds may be issued to complete the project. The issuance of these bonds requires the approval of a majority of the airlines using the airport.
• The county will own and operate the airport and is responsible for its maintenance, improvement, and expansion. This includes keeping the airport and its aerial approaches free from obstruction and maintaining it according to standards established by the FAA and other relevant authorities.
• The airline will have specific rights and privileges at the airport, including the operation of its air transportation system, landing and taking off aircraft, selling tickets, handling reservations, training personnel, purchasing supplies, and more. These rights are subject to reasonable rules and regulations established by the county.
• The airline will pay the county rentals, fees, and charges for the use of airport premises and other rights granted under the agreement. These payments will be calculated based on factors such as the number of enplaned passengers, weight of aircraft, and other variables.
• The rates for rentals, fees, and charges will be reviewed annually and adjusted as necessary to ensure they cover the costs of operation, maintenance, debt service, and other expenses related to the airport.
• The county will establish various accounts, such as the Revenue Account, Bond Fund, Reserve Account, Renewal and Replacement Account, and Improvements Account, to manage the revenues and expenses associated with the airport.
• In the event of damage or destruction to the airline premises, there will be a curtailment or reduction of rentals, fees, and charges, as determined by the county.
• The airline agrees to indemnify and hold the county harmless from any claims, liabilities, or causes of action arising from the airline's negligent acts or omissions. The airline will also comply with insurance requirements as specified in the agreement.
• The county has the right to terminate the agreement if the airline fails to pay rentals, fees, and charges or breaches other terms of the agreement. The airline also has the right to terminate the agreement under certain circumstances, such as permanent deprivation of necessary rights, certificates, or authorizations to operate its air transportation business at the airport.
• The agreement includes provisions for subordination, construction, and savings clauses, ensuring that the terms are in accordance with applicable laws and regulations.
• The agreement will become effective upon execution by both parties and will remain in effect for a specified period, with the option to extend if mutually agreed upon.

This section outlines the financial and construction-related aspects of the agreement between the airline and the airport. It covers funding sources, cost estimates, construction processes, maintenance responsibilities, payment terms, insurance requirements, and other relevant provisions to ensure the successful development and operation of the airport.

Installations by county and airline

This section of the agreement outlines the responsibilities of both the airline and the county regarding installations and improvements to the leased premises.

The airline will retain ownership of any trade fixtures, equipment, and other personal property installed and paid for by the airline, except as otherwise provided in the agreement or other arrangements.

The county will provide standard finishes in the airline's premises as specified in Exhibit D of the agreement. The airline may request finishes that differ from the standard specifications, but they will be responsible for paying the net increase in cost for these changes.

The airline must obtain written approval from the county before making any alterations, additions, or replacements to their premises.

Maintenance and Operation of Airport

This section of the agreement outlines the responsibilities of the county regarding the maintenance and operation of the airport.

The county agrees to diligently develop, improve, maintain, and operate the airport with adequate and qualified personnel. They will keep the airport and its aerial approaches free from obstruction and interference to ensure safe and proper use by the airline. The county will also maintain and operate the airport according to the standards established by the FAA and other relevant governmental agencies.

The airline, on the other hand, is responsible for maintaining their exclusively leased premises in a neat, orderly, sanitary, and presentable condition. They will provide their own janitorial services and properly dispose of waste, garbage, and rubbish.

Maintenance and operation of airport

Maintenance and operation of the airport are crucial to ensuring the safe and smooth functioning of these transport hubs. Airports must meet high safety standards, which can only be achieved through proper maintenance. This includes regular inspections, servicing, and repairs to all elements of the airport, from runways and taxiways to terminal buildings and equipment.

The maintenance and operation of an airport involve a range of activities carried out by various personnel to ensure the safe and efficient movement of aircraft and passengers. Here are some key aspects of airport maintenance and operation:

• Runway and Taxiway Maintenance: Regular inspections and maintenance of runways and taxiways are crucial to identify and mitigate any risks, such as debris or damage, that could pose hazards during aircraft landing and takeoff.
• Terminal Maintenance: Terminal buildings require regular maintenance and cleaning to ensure a safe and pleasant environment for passengers and staff. This includes managing check-in counters, security checkpoints, boarding gates, lounges, restaurants, shops, and restrooms.
• Aircraft Parking and Movement: Efficient management of aircraft parking and movement is essential to maintain tight schedules and avoid delays. This includes allocating parking spaces and coordinating escorts for aircraft across the airfield.
• Emergency Response: Airports must have procedures in place to respond to airside incidents and emergencies, including the rapid deployment of emergency services in the event of aircraft accidents or other hazards.
• Wildlife Management: Active management of wildlife, such as birds, is crucial to minimize the risk of bird strikes, which can cause significant damage to aircraft and endanger flights.
• Lighting and Electrical Systems: Maintenance of airport lighting and electrical systems is vital to ensure safe aircraft operations and overall airport functionality.
• Pavement and Surface Repairs: Repairs and maintenance of pavements, including concrete and bituminous surfaces, are necessary to address cracks, joints, and other deficiencies that may impact aircraft movement and passenger safety.
• Vehicle and Equipment Maintenance: Airports must maintain a fleet of vehicles and equipment, such as baggage conveyor belts, passenger bridges, and ground support equipment, to support airport operations.
• Safety and Security: Airport security personnel play a crucial role in ensuring the safety and security of passengers, staff, and aircraft. This includes access control, surveillance, and identity verification to mitigate potential threats.
• Contractor Management: Airports often work with contractors and suppliers for various services, such as catering, cleaning, and ground handling. Effective management of these contractors is essential to maintain airport operations.
• Compliance and Regulations: Airport maintenance and operations must comply with engineering standards, safety regulations, and other relevant legislation to ensure the safe and efficient functioning of the airport.

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