AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 08-002511
MEETING DATE:	01/13/09
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	2
SUBMITTING Agency/Department:	John Wayne Airport (Approved)
Department contact person(s):	Alan L. Murphy (949) 252-5183

Subject: JWA Capacity Allocations for 2009-2010 Plan Year

ceo Concur	County Counsel Review		Clerk of the Board
Concur	Approved Agreement to Form		Consent Calendar
			3 Votes Board Majority

Budgeted: N/A		Current Year Cost: N/A		Annual Cost: N/A

Staffing Impact: No		# of Positions:		Sole Source: N/A
Current Fiscal Year Revenue: N/A
Funding Source: N/A

Prior Board Action: 11/18/08 Item #13, Amendment to Phase 2 Access Plan & 01/15/2008 Item #11, JWA Capacity Allocations for 2008-2009 Plan Year

RECOMMENDED ACTION(S)

1.	Find that: (i) Final EIR 582 and Addendum 582-1, as revised by Final Supplemental EIR 582, previously certified on June 25, 2002, accepted on December 10, 2002, and certified on October 19, 2004, respectively, have been examined in relation to the proposed project; (ii) the proposed project's environmental effects were fully analyzed and disclosed in these CEQA documents and the proposed project would not have any environmental effects beyond those analyzed and disclosed in these environmental documents; (iii) no further CEQA compliance is required for the proposed project.
2.	Authorize the Airport Director to allocate Class A Average Daily Departures ("ADDs") and Seat Capacity to Commercial Air Carriers (“Carriers”), as reflected on Exhibit A.
3.	Authorize the Airport Director to withdraw Seat Capacity during the 2009-10 Plan Year (April 1, 2009 through March 31, 2010) if it becomes necessary to ensure compliance with the 10.3 million annual passenger (“MAP”) limitation.
4.	Authorize the Airport Director to reallocate any additional Regular or Supplemental ADDs and any necessary associated Seat Capacity which may become available during the 2009-10 Plan Year.
5.	Authorize the Airport Director to allocate additional supplemental Seat Capacity during the 2009-10 Plan Year if he determines that such allocations can be made without jeopardy to the 10.3 MAP limitation.
6.	Authorize the Airport Director to allocate up to twenty-nine (29) Remain-Over-Night ("RON") positions for Carrier use during the 2009-10 Plan Year, as reflected on Exhibit A. If reductions are required, authorize the Airport Director to withdraw any RON capacity over the twenty-seven (27) RON positions that the County’s Phase 2 Commercial Airline Access Plan and Regulation (“Access Plan”) currently authorizes.
7.	Authorize the Airport Director to allocate Passenger Capacity and RON positions to the Commuter Air Carriers, as reflected on Exhibit B.
8.	Authorize the Airport Director to allocate additional supplemental Passenger Capacity to Commuter Air Carriers during the 2009-10 Plan Year if he determines that such allocations can be made without jeopardy to the 10.3 MAP limitation.

SUMMARY:

John Wayne Airport requests that the Board approve the allocation of Regulated Class A Average Daily Departures (“ADDs”), Seat Capacity, Remain-Over-Night (“RON”) Capacity and Passenger Capacity to Commercial Air Carriers (“Carriers”) and Commuter Air Carriers under the County's Phase 2 Commercial Airline Access Plan and Regulation (“Access Plan”) for the 2009-2010 Plan Year (April 1, 2009 through March 31, 2010), and other related actions.

BACKGROUND INFORMATION:

The purpose of this ASR is to present John Wayne Airport’s (“JWA’s”) recommendations with respect to the allocation of Regulated Class A Average Daily Departures (“ADDs”), Seat Capacity, Remain-Over-Night (“RON”) Capacity, and Passenger Capacity to Commercial Air Carriers (Carriers”) and Commuter Air Carriers under the Phase 2 Commercial Airline Access Plan and Regulation (“Access Plan”) for the 2009-10 Plan Year (April 1, 2009 through March 31, 2010). In connection with this process, JWA requested that both incumbent and potential new entrant Carriers submit their capacity requests. Those requests and all related information were carefully reviewed by JWA staff. This report contains JWA's specific allocation recommendations for the 2009-10 Plan Year and a discussion of the basis for those recommendations made in a manner consistent with the terms of the Access Plan, the related reallocation priority lists, and County practices and procedures.

Exhibit A to this ASR identifies the specific ADD, Seat Capacity and RON allocations to the Commercial Carriers. Exhibit B identifies the specific Passenger Capacity and RON allocations to the Commuter Carriers.

The Recommended Actions achieve the following objectives: (1) accommodate, to the extent possible, ADD, Seat Capacity, RON and Passenger Capacity requests received from the incumbent Carriers; (2) accommodate, to the extent possible, ADD, Seat Capacity, and RON capacity requests received from the Carriers currently on the New Entrant Waiting List; (3) provide internal County controls in order to ensure compliance with the 10.3 million annual passengers ("MAP") limitation; (4) provide internal County controls in order to ensure compliance with the annual cap on numbers of ADDs; and (5) meet all other legal and regulatory obligations.

Regulatory Background

On December 10, 2002, the County and the City of Newport Beach approved agreements to amend the 1985 settlement stipulation (“Settlement Amendment”) regarding the development and use of JWA in the case of County of Orange vs. Air California et. al. No. CV85-1542TJH (MCX). The Settlement Amendment was also approved by the two signatory citizen groups. The Settlement Amendment is memorialized in a stipulation that has been accepted through a February 25, 2003 confirming order of the United States District Court for the Central District of California, as an amendment to the prior 1985 settlement stipulation. The Board subsequently amended the Access Plan to reflect the changes in the Settlement Amendment.

The Access Plan calls for the Board to allocate operating capacity, in a variety of forms, for each Plan Year, including: ADDs, Seat Capacity, RON positions and Passengers. An ADD equates to 365 authorized departures. Seat Capacity is calculated based on the number of ADDs a Carrier operates and is allocated separately from ADDs to provide: (i) flexibility to Carriers in selecting aircraft types and (ii) a fair and clearly defined mechanism for the withdrawal of capacity if needed to enforce the 10.3 MAP limitation. The RON positions are allocated in a manner that “guarantees” at least one (1) loading bridge for each requesting Carrier that meets the RON timing and related requirements of the Access Plan; allocations over and above the first RON are made based on a variety of operational criteria. Commuter Carriers receive their operating capacity in the form of Passenger Capacity and RONs. All Commercial Carriers and Commuter Carriers must operate their capacity in compliance with the parameters defined in the Access Plan.

Allocation of Capacity to New Entrant Carriers

The historical practice of the County in making allocations to new entrant Carriers is to award two (2) Class A ADDs to support the new entrant because, in the past, that seemed generally to be the minimum level of service necessary to support a Carrier’s costs of operating in Orange County. Over the years, a number of Carriers have indicated that in order to operate successfully at JWA, new entrants should be awarded more than two (2) Class A ADDs. There are currently five (5) Carriers on the New Entrant Waiting List (Air Canada, AirTran Airways, WestJet, Virgin America and Horizon Air).

On September 3, 2008, the Airport Director initiated a process by which he invited the incumbent and new entrant Carriers to provide written comments on possible amendments to the Access Plan which would include increasing the number of Class A ADDs that could be allocated to a new entrant Carrier(s).

Staff received written comment letters from eight (8) Carriers (Air Canada, AirTran, Alaska Air, American Airlines, Continental Airlines, Southwest Airlines, United Airlines, and Virgin America) in response to the Airport Director’s letter of September 3, 2008.

After careful consideration of the comments received from the Carriers on these issues, staff recommended to the Airport Commission and Board that the policies and provisions of the Access Plan relating to new entrant allocations be amended to provide the Airport Director with the ability to allocate three (3) Class A ADDs to any new entrant Carrier that is authorized to commence Regularly Scheduled Service at JWA. The Airport Commission recommended approval of the requested amendments on November 5, 2008. The Board approved the requested amendments on November 18, 2008.

Based upon these amendments, and as indicated below, the Airport is requesting authorization to allocate capacity to two (2) new entrant Carriers (Air Canada and Virgin America) in connection with the 2009-10 Plan Year allocation process.

Allocation of ADDs Currently Under Direct County Control to New Entrant and Incumbent Carriers

As indicated above, the County currently has within its control fifteen (15) Class A ADDs. In recent Plan Years, the Airport Director has requested authorization to allocate County controlled Class A ADD capacity on a supplemental basis for a period of one (1) Plan Year. In light of the number of County controlled Class A ADDs, the number of new entrant Carriers on the New Entrant Waiting List, and the number of Carriers that have recently voluntarily ceased service at JWA, the Airport Director is requesting authorization to allocate six (6) Regular Class A ADDs to new entrant Carriers three (3) Class A ADDs each to Air Canada and Virgin America) and six (6) Class A ADDs to incumbent Carriers. The Airport Director is also recommending that the County maintain control of three (3) Class A ADDs and to continue to allocate these ADDs on a supplemental Plan Year basis (April 1, 2009, through March 31, 2010), as set forth in Exhibit A to this staff report and consistent with the reallocation priority list. These Class A ADDs will return to direct County control for possible reallocation to a new entrant or incumbent Carrier, effective April 1, 2010.

Staff anticipates that the facility improvements at JWA will provide additional and enhanced opportunities for new entrants and anticipates being able to provide an allocation to at least one (1) additional new entrant once the facility improvements have been completed. In the meantime, however, staff will continue to cooperate with potential new entrants to the extent that objective can be realized without significantly impacting other users, and without jeopardizing the County’s financial, regulatory, and policy commitments and objectives.

Allocation of ADDs for Commercial Cargo Operations

During the 2003 allocation process of the new capacity provided by the Settlement Amendment, the County provided the Airport Director with the discretion to allocate up to two (2) Commercial Cargo (“Cargo”) Class A ADDs to passenger Carriers when not needed for Cargo operations. This capacity, however, may only be allocated on a supplemental basis for one (1) Plan Year in any year where those ADDs have not been requested by Cargo Carriers.

Neither FedEx nor UPS have requested any additional operating capacity beyond the two (2) Cargo Class A ADDs, one each, that have been allocated to them through December 31, 2015. Therefore, the Airport Director is requesting authorization to allocate the two (2) additional Cargo Class A ADDs currently available to the next two (2) Carriers on the Reallocation Priority List.

Presumed Seat Capacity and Class E Seat Capacity Allocations

A total of 12,546,808 seats were requested as part of the 2009-10 Plan Year allocation process. The Airport Director is requesting authorization to allocate a total of 12,546,808 seats in response to Carrier capacity requests for the 2009-10 Plan Year.

A portion of this Seat Capacity, 9,641,038 seats, is allocated in connection with the operation of Class A ADDs and permanent Class E ADDs by the Carriers. The remainder of the Seat Capacity, 2,905,770 seats, is allocated via the section of the Access Plan which creates Class E capacity for the Carriers. The specific Seat Capacity allocation recommendations are reflected in Exhibit A. This Seat Capacity allocation would accommodate all of the seats requested for use during the 2009-10 Plan Year.

Section 6 of the Access Plan provides provisions which permit the County to withdraw operational capacity at such times, on such conditions, and for such reasons as the County, in its sole and exclusive discretion, determines are appropriate to ensure that the MAP limitation is not exceeded during any Plan Year, or for any other reason. The Class E Seat Capacity (2,905,770 seats) allocated beyond the Seat Capacity allocated in connection with the operation of Class A and permanent Class E capacity is one of the "safety valves" for first withdrawal of capacity, if necessary, to ensure compliance with the MAP limit.

Carrier RON Allocations

The allocation of opportunities for aircraft to RON at JWA has long been a commercially and operationally significant issue to the Carriers. The limited physical facilities available at JWA for over-night parking of Commercial Air Carrier and Commuter Carrier aircraft requires that staff, in the interests of safe and efficient operations, and in support of the appropriate mix of uses, limit the number of RON positions, control the location and use of these RON positions, and place certain other restrictions on RON activity at JWA. During the 1999-00 through 2008-09 Plan Years, the Board approved allocation of, and the Carriers utilized, a total of thirty (30) RON positions.

Construction of facility improvements is currently ongoing at JWA. This construction effort limits the ability of the Airport Director to allocate RON positions in a manner consistent with past Plan Years. The Airport Director has determined that he will only be able to allocate a total of twenty-nine (29) RON positions for use by the Carriers during the 2009-10 Plan Year.

A total of thirty (30) RON positions were requested for allocation for the 2009-10 Plan Year. Although the Access Plan provides for an allocation of only twenty-seven (27) Carrier RONs, the Airport Director is requesting authority from the Board to waive the Section 5.1.1 RON limit for the 2009-10 Plan Year and, as indicated above, that the Board authorize the Airport Director to allocate up to a maximum of twenty-nine (29) RONs for use during the 2009-10 Plan Year in accordance with the Section 5.3 allocation provisions of the Access Plan. The recommended RON allocations (loading bridge and apron) for the Carriers meet all but one (1) of the RON requests for the 2009-10 Plan Year and are reflected in the last three (3) columns of Exhibit A. Southwest Airlines requested one (1) additional RON position than recommended for allocation to the Carriers for the 2009-10 Plan Year.

If the Airport Director determines at any time during the 2009-10 Plan Year that the allocation of twenty-nine (29) RON positions will jeopardize, in any manner, safe and efficient operations or will place undue restrictions on RON activity at JWA, the Airport Director requests authorization to withdraw any RON capacity over the twenty-seven (27) RON positions that the Access Plan currently authorizes for allocation.

Because the RON allocation of twenty-nine (29) RONs for use during the 2009-10 Plan Year includes two (2) RONs (allocated to Alaska and Southwest) beyond the presumptive capacity of Section 5.1.1, these RONs will be subject to early and first withdrawal (if necessary) under the conditions specified above.

Passenger Capacity Allocations to Commuter Carriers

Two (2) Commuter Carriers, American Eagle Airlines and SkyWest Airlines (Delta Connection/United Express), have requested Passenger Capacity allocations for the 2009-10 Plan Year. American Eagle has requested an allocation of 260,000 passengers and SkyWest has requested an allocation of 208,735 passengers. Section 3.5.1 of the Access Plan creates a priority for the allocation of 500,000 authorized passengers to Commuter Carriers in each Plan Year. The Commuter Carriers have requested an allocation of passengers below the 500,000 passengers that have been “prioritized” for use by Commuter Carriers; therefore, the Airport Director recommends that 260,000 passengers be allocated to American Eagle and 208,735 passengers be allocated to SkyWest for use during the 2009-10 Plan Year, consistent with each of these Commuter Carrier requests. This proposed allocation of Commuter Carrier capacity is reflected on Exhibit B.

The Airport Director also requests authority to make supplemental allocations of additional Passenger Capacity during the 2009-10 Plan Year if additional Commuter Carrier capacity requests are received and if actual operations during the Plan Year indicate that supplemental capacity allocations would not jeopardize the 10.3 MAP limit.

Commuter RON Allocations

American Eagle Airlines has requested one (1) RON position for the 2009-10 Plan Year and SkyWest Airlines has requested one (1) Saturday night only RON position for the 2009-10 Plan Year. Consistent with these requests, the Airport Director requests authority to allocate one (1) RON position to American Eagle Airlines and one (1) Saturday night only RON position to SkyWest Airlines for the 2009-10 Plan Year.

CEQA Compliance

Final EIR 582, Addendum 582-1 and Final Supplemental EIR 582 previously certified on June 25, 2002, accepted on December 10, 2002, and certified on October 19, 2004, respectively, have been prepared for the Settlement Agreement Amendment and Settlement Amendment Implementation Plan ("proposed project"). Your Board is required to examine the subject project to determine whether its environmental effects were fully analyzed and disclosed in these previous CEQA documents and whether the subject project would have any environmental effects beyond those analyzed and disclosed in the previous environmental documents. If your Board concurs, no further CEQA compliance is required as noted in Recommended Action #1.

FINANCIAL IMPACT:

N/A

STAFFING IMPACT:

N/A

EXHIBIT(S):

Exhibit A: PLAN YEAR 2009/10 Commercial Carrier and All-Cargo Carrier ADD, Seat Capacity, and RON Allocations
Exhibit B: PLAN YEAR 2009/10 Commuter Carrier Passenger and RON Allocations