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TABLE OF CONTENTS

Airport Authority of Washoe County 2001-02 Competition Plan

SECTION I – Competition Plan

Executive Summary

1. Availability of Gates 2. Leasing and Subleasing Arrangements 3. Patterns of Air Service 4. Gate Assignment Policy 5. Financial Constraints 6. Airport Controls Over Airside and Groundside Capacity 7. Airport Intention to Build or Acquire Gates for Use as Common Facilities Airfare Levels Compared to Other Large Airports

SECTION 2 Exhibit A 1st Floor Terminal Building

SECTION 3 Exhibit B 2nd Floor Terminal Building

SECTION 4 Resolution No. 416 Resolution adopting a policy to provide financial incentives/inducements to scheduled passenger air carriers to increase air service to the Reno/Tahoe International Airport.

SECTION 5

Airline Incentive Policy for New Scheduled Passenger Air Service

SECTION 6

Reno/Tahoe International Airport Today

82 Nonstop Departures to 16 Cities

SECTION 7

Airline-Airport Use and Lease Agreement

AAWC of Washoe County 2001-02 Competition Plan

CompPlan#2001-02.doc 1


June 21, 2001

Prepared By: Krys T. Bart, Executive Director

Marily Mora, Deputy Executive Director Joan Dees, Director of Finance and Administration Patricia Ryan, Manager of Business Development and Property Administration Thomas Medland, Director of Marketing and Air Service Development Mike Moran, Airfield Operations Supervisor Christopher Horton, Manager of Finance

Executive Summary The AAWC of Washoe County (AAWC) operates the Reno/Tahoe International Airport, a medium hub airport enplaning 0.43 percent of the 1999 passengers of the 422 primary airports in the United States. Southwest Airlines and American Airlines (including Reno Air acquired by American Airlines) 2000 passenger enplanements were 62 percent of the airport’s 2.8 million scheduled airlines’ enplanements. These two statistics exceed the percentages set by the Federal Aviation Administration, 0.25 percent and 50 percent respectively. As a result, the AAWC must submit a Competition Plan before any Passenger Facility Charge (PFC) submitted after April 5, 2000, or discretionary Airport Improvement Program (AIP) grants will be issued after October 1, 2000. The following competition plan demonstrates the Reno/Tahoe International Airport’s ability to accommodate new airlines or additional service from existing airlines. With the July 2000 flight reductions by American Airlines due to its acquisition of Reno Air, the terminal building is operating below capacity. The AAWC is also actively soliciting the airlines for additional service. Existing, as well as new entrant airlines to the Reno/Tahoe air service market have been, and will continue to be, approached with studies demonstrating how a Reno/Tahoe location would fit into their route system. Vanguard Airlines will start service August 12, 2001, to Kansas City, Missouri as a result of the AAWC air service marketing effort. Vanguard will also be the first airline to receive a waiver of airport landing fees and rents under the new Airline Incentive Policy described later in this document. The Reno/Tahoe community, not just the AAWC, is involved in the efforts to increase air service and enhance competition. In the case of Vanguard, the Reno/Tahoe community has made commitments to fund advertising for Vanguard’s new service, acquire Vanguard tickets, commit hotel rooms, and provide ski lift tickets to foster the success of the new service. The AAWC has used its PFC and AIP funding sources to increase the capacity of the Reno/Tahoe International Airport. An expanded baggage claim area, passenger loading bridges for the terminal building gates and a new runway system are the most obvious examples. The



airline operating agreement at Reno/Tahoe International Airport provides for preferential airline leaseholds. This gives the AAWC flexibility in accommodating a new entrant carrier or the increasing space requirements of an existing airline tenant. This Competition Plan was prepared for Reno/Tahoe International Airport (Airport) in a format recommended by the FAA in their Program Guidance Letter 00-3 dated May 8, 2000. The major issues in the Program Guidance Letter are the numbered, bold headings of each section. The bullet points that follow describe the operation and agreements of the AAWC that pertain to each major issue.

1. Availability of Gates Twenty-three (23) passenger airline gates are currently available at the Airport. As of

July 1, 2001, sixteen (16) of these gates are leased on a preferential basis to incumbent signatory airlines, with seven (7) being unassigned and available for common use or lease to new entrant or existing signatory airlines. Layouts showing the terminal building concourse gates are included at the end of this report.

Gate-use monitoring is a function of the Operations Department of the AAWC in

cooperation with the airlines. The Operations Department receives and responds to requests for common-use gate and remote aircraft parking gate assignments from non-signatory airlines when the signatory airlines are unable to accommodate them. Gates are assigned on a first come, first served basis. The Operations Department maintains a gate-use log, recording times, applicable fees, etc., and monitors conflicting flight schedules and the need for reassignment as required.

There are no differences in gate-use monitoring policies for PFC-financed facilities,

facilities subject to PFC assurance #7, and other gates. All of the terminal building gates are subject to Section 16.03 of the Airline-Airport Use and Lease Agreement (Airline Agreement), which is attached as an Exhibit to this document.

Effective July 1, 1996, all twenty-two (22) exclusive-use gates were converted to

preferential use under Section 4.01.A of the then new Airline Agreement; and, since then, an additional gate was constructed on the south concourse. Two (2) gates were designated for common use at that time – one of which was later leased to a new entrant signatory airline. The Airline Agreement has been extended for three years commencing July 1, 2001, under the same terms and conditions with the exceptions that three (3) airlines let their Agreements expire, and two (2) incumbent signatory airlines reduced their preferential leased premises, returning to the AAWC a total of 19,249 square feet of airline premises including six (6) gates. With one other common-use gate available, beginning with the extension term all seven (7) unassigned gates are available for common use, currently at a charge of $100.00 per turn, or may be leased on a preferential use basis to a new entrant or expanding incumbent signatory airline.

In calendar year 2000, there was an average of 94 daily scheduled air carrier departures

from 23 gates which equates to 4 daily, 28 weekly, or 120 monthly scheduled air carrier departures per gate. Itinerant flights, seasonal, scheduled and ad hoc charter departures are not included in these averages.



Pursuant to Section 16.02 of the Airline Agreement, the AAWC reserves the right to

reassign a preferential gate to another signatory airline if the tenant airline’s scheduled average utilization falls below three flights per weekday for that gate (including commuter or other flights handled by the tenant airline), or if the AAWC determines there is a reasonable need for the preferential use of such gate(s) by another signatory airline.

The reassignment provision under Section 16.02 of the Airline Agreement allows the

AAWC to maximize gate use (“use/lose”) depending upon demand. Section 16.03 of the Airline Agreement also specifically provides for accommodation of the needs of requesting airlines by existing signatory airlines working cooperatively with the AAWC (“use/share”). The AAWC will not require a signatory airline to accommodate a requesting airline if there are unassigned gates that will reasonably accommodate the needs of the requesting airline. If the AAWC has no available gates or other terminal facilities to accommodate the needs of a requesting airline, the requesting airline coordinates directly with a signatory airline for joint use of preferential leased premises at times when the use of such facilities does not interfere with the operations of the tenant signatory airline. Accommodation is subject to written agreement and the signatory airline will compute charges payable by the requesting airline in accordance with a formula set forth in Section 15.01 of the Airline Agreement.

The AAWC works with the airlines on an ongoing basis to determine future requirements

for gates and related facilities, closely monitoring flight schedules. The AAWC uses its best efforts to provide at least one preferential gate to each signatory airline with at least three flights per weekday pursuant to Section 16.02 of the Airline Agreement. With exception of seven (7) unassigned gates available for common use July 1, 2001, all other gates are currently leased for preferential use. The signatory airlines maintain premises remaining under preferential lease for the extension term of the Airline Agreement, unless and until another existing or new entrant signatory airline agrees to lease such premises from the AAWC. The AAWC coordinates with the signatory airlines as to any such potentially available gates and related facilities, and provides for concurrent relinquishment and re-lease. Building on the efforts of the AAWC Marketing and Air Service Development Department and the Air Service Task Force, the Business Development and Property Administration (BDPA) Division coordinates the accommodation of services and facilities requirements for new entrant air carriers. The following steps are taken to assist new entrant carriers:

1. BDPA responds to inquiries from interested air carriers and supports the air service initiative with information and layouts detailing specific leasehold areas available. 2. BDPA conducts prospective new entrant airline tours of available premises and facilities, answers questions and provides introductions. 3. BDPA furnishes airlines with complete documentation of (a) minimum requirements prior to initiation of air service, (b) contacts listings for ground handlers and other service providers, Airport tenants, incumbent signatory airlines, and key AAWC personnel, (c) current Airline Rates, (d) information and



forms for aircraft parking requests, air carrier activity reporting, (e) terminal building layouts showing square footage of (unassigned) airline space with rents calculated, and (f) the Airline Agreement and any related agreements. 4. BDPA works with the airline to determine the most desirable premises (in location, area, equipment, etc.) for its particular operation and station requirements to accommodate start-up and eventual expansion. 5. At the request of a new entrant airline, BDPA helps to facilitate the airline’s negotiations with incumbent signatory airlines and other tenants of the AAWC. 6. BDPA provides information and assists the airline in arrangements for: skycap, security and ground handling services as needed; overhead and directional signage; curbside check-in; baggage claim; jet bridge operations and training; employee parking; airport security identification badges; and other accommodations as requested. 7. BDPA monitors the airline’s fulfillment of AAWC minimum requirements, providing clarification and assistance as may be needed in arranging for insurance coverage and security for performance. 8. BDPA prepares the Airline Agreement with appropriate exhibits and processes the Airline Agreement for Board approval and execution by the airline and the AAWC. 9. BDPA coordinates with Marketing regarding participation in incentive or promotion for initiating service to a new destination. 10. BDPA coordinates airline tenant projects, including station improvements, signage, communications systems, premises remodeling, etc. 11. BDPA participates in AAWC interdepartmental communications with the airlines, such as Finance, Airport Operations and Public Safety, Facilities and Maintenance, and Engineering and Construction. 12. BDPA serves as the central point of contact, providing ongoing coordination and follow up for new entrant and incumbent signatory airlines.

The AAWC has not received any complaints of denial of reasonable access by a new

entrant or an existing air carrier seeking expansion. A complaint procedure to address any potential allegations of denial of access has been developed and is included in this section of the Competition Plan.

In 2000, the AAWC received one new entrant carrier request for access and one request

for preferential lease of gate holdroom premises under a new Airline Agreement from an existing nonsignatory carrier previously operating out of the facilities of its code share partner - an incumbent signatory airline. The new entrant, Allegiant Air, began exploring available accommodations with the AAWC in February, confirmed its intentions to the AAWC in late May of 2000, on June 1st publicly announced Reno/Tahoe service,



executed an Airline Agreement with the AAWC on and effective June 19, 2000, leasing a total of 4,258 square feet of preferential use premises including one of the common-use gates, and commenced service July 7, 2000. On August 28, 2000, then nonsignatory carrier Continental Airlines gave notice of interest in becoming signatory and securing the lease of a specific gate pending successful completion of negotiations for the release of that gate by an incumbent signatory airline. AAWC Staff facilitated negotiations between the two carriers, the gate was released and the AAWC entered into an Airline Agreement with Continental providing for preferential lease of gate holdroom premises effective November 1, 2000. Also in 2000, two (2) other incumbent signatory airlines remodeled and expanded the capacity of existing preferential use leased premises without adding gates.

2. Leasing and Subleasing Arrangements A sublease arrangement with an incumbent signatory airline is not required for a carrier

to gain access to serve the Airport. Anytime the AAWC does not have adequate space available for direct lease to a

requesting airline, the AAWC assists the requesting airline to obtain a sublease with an incumbent signatory airline having available preferential-use leased premises. Section 15.01 of the Airline Agreement requires the AAWC’s prior written consent to sublease.

Article 15 of the Airline Agreement upholds AAWC policies for fees charged by

signatory airlines for subleased premises, gate use, services and equipment charges, as applicable, to accommodate requesting airlines. To ensure that all users of Airport facilities are treated equally and that the accommodating signatory airline is properly reimbursed for the use of preferential-use premises and related facilities, the charges payable by a requesting airline are computed according to a formula established in Exhibit F of the Airline Agreement. Under Section 15.01 of the Airline Agreement, the signatory airline is required to pay to the AAWC any excess of rentals, fees and charges received from a sub lessee over rentals, fees and charges paid by the incumbent signatory airline for the same premises; however, the signatory airline may charge a reasonable fee for administrative costs, not to exceed twenty-five percent (25%) of the established rental, and such a fee shall not be considered part of the excess charges due the AAWC. Ground handling by one signatory airline of another air carrier is subject to advance written notice to the AAWC, and subject to the carriers holding operating agreements with the Authority and a handling agreement between the airlines.

The AAWC has not received any complaints from subtenants about excessive sublease

fees or unnecessary bundling of services. Since there are several signatory airlines competing to accommodate requesting airlines, seasonal and ad hoc charters, commuters and itinerant carriers, services offered and charges made are similarly competitive. The AAWC currently charges $100.00 per turn for common use of unassigned gates.

Independent ground handlers and other support service providers under contract to the

airlines are required to enter into and abide by the terms of an operating agreement with the AAWC for the conduct of such commercial business at the Airport. There are currently four (4) such ground handlers and support service providers operating at Reno/Tahoe International Airport under agreements with the AAWC. The AAWC leases



facilities to third party ground handlers when such space is available for direct lease. Also, existing tenants of the AAWC, including the signatory airlines in some cases, sublease Airport premises approved for the particular activities of the commercial operator. The BDPA Division of the AAWC responds to all inquiries as to the availability of facilities for direct lease and/or for sublease to ground handlers and other support service providers, furnishing minimum requirements, complete airfield access data, type of space available, square footage and current rates. 11,488 square feet of unassigned airline terminal building operations space is also available for AAWC direct lease to third party ground handlers and other airline support service providers, subject to a safety restriction limiting equipment/vehicle maintenance operations to other approved Airport locations. Currently two leaseholds containing 6,632 square feet are available for sublease in a multi-tenant Ground Service Equipment Maintenance facility. The in-flight caterer contracted to the majority of the airlines currently maintains off-Airport facilities. A consortium of the airlines directly leases land and facilities from the AAWC accommodating the fueling requirements of the airlines.

The AAWC has not been made aware of any disputes among air carriers regarding the

use of Airport facilities. The provisions in Article 16 of the Airline Agreement regarding the availability of adequate facilities, preferential gate assignment, accommodation of requesting airlines, and indemnification between airlines, offer a climate of cooperation in the use of preferentially leased facilities. The gate recapture provision of Section 16.02 of the Airline Agreement allows the AAWC to exercise its right to reassign underutilized gates in the event of a shortage of available gate space for new entrant or expanding incumbent signatory airlines - although this provision should not be considered a means of dispute resolution and its exercise by the AAWC has not been required in the past. The following procedure for dispute resolution among carriers will be used:

1. All airlines, including incumbent airlines, seeking access or wishing to expand service at

Reno/Tahoe International Airport (the Airport) are referred to the Business Development and Property Administration (BDPA) Division of the Airport Authority.

2. BDPA takes the following actions: (1) BDPA records all requests; (2) BDPA provides

gate utilization information to the requesting airlines; (3) BDPA is prepared to offer its support in contacting incumbent airlines to discuss use of their preferential use gates and other terminal facilities.

3. When an airline indicates a willingness to initiate or expand service if facilities are

available, the airline may choose to discuss accommodation options with other airlines directly or with the BDPA for use of Airport Authority common gates.

4. As necessary to facilitate access, BDPA will meet with the airlines to assist them in

exploring mutually satisfactory options for accommodation.

5. When no common use facilities are available and an airline is unable to reach agreement with an incumbent carrier, BDPA will informally and formally apply such means of influence up to and including exercising the Airport Authority’s rights under the Airline-Airport Use and Lease Agreement to reallocate underutilized space.



6. In the event an airline feels it has been denied reasonable access to the Airport, the airline will file a written complaint with the Airport Authority providing full details of the airline’s experience and basis for its complaint.

7. Any allegation of denial of reasonable access will be mediated through BDPA and the

Chairman of the Air Service Task Force of the Airport Authority Board of Trustees in an effort to resolve the complaint to the satisfaction of all parties within thirty (30) days from submittal. Final determination will be made by the Executive Director of the Airport Authority based upon the results of such mediation.

8. Competitive concerns of airlines seeking to expand may sometimes prevent the Airport

Authority from taking an active role. In such cases, the Airport Authority continues to assist the airlines as they evaluate expansion alternatives.

3. Patterns of Air Service A total of 37 nonstop and one-stop markets were served from the Airport in June 2001.

Of these, 16 markets were served on a nonstop basis with a total of 164 daily flights, arrivals and departures.1 A map of the Reno/Tahoe International Airport’s air service market is included at the end of this report.

In June 2001, two small communities were served on a non-stop basis including Boise

and Elko.2

In 2000, 15 nonstop markets were served by low-fare carriers and 18 one-stop markets were served by low-fare carriers.3

Of the 37 nonstop and one-stop markets served from the Airport in June 2001, all markets

were served by more than one carrier except for Boise (nonstop service by Delta Air Lines/Skywest Airlines).4

An analysis of nonstop and one-stop markets served from the Airport in June 2000 versus

June 2001 provided the following comparisons:5

a. The same nonstop markets were served with differing frequencies for both periods except for the discontinuation of Detroit, Orange County and San Diego in June 2001 compared to June 2000.

Nonstop Market Frequency (Departures)

June 2000 June 2001 Boise 3 3 Chicago 3 3 Dallas 6 4

1 Source - AAWC June 2001 Consolidated Flight Schedule 2 Source - AAWC June 2001 Consolidated Flight Schedule 3 Source - OD1A Database – 2000 Top Domestic Markets by Carrier 4 Source - OD1A Database – 2000 Top Domestic Markets by Carrier 5 Source - AAWC June 2000 & June 2001 Consolidated Flight Schedule



Denver 2 2 Detroit 1 Discontinued Elko 5 5 Houston 1 1 Las Vegas 14 11 Los Angeles 11 10 Minneapolis 2 2 Oakland 7 7 Orange County 3 Discontinued Phoenix 7 8 Portland 6 3 Salt Lake City 7 7 San Diego 3 Discontinued San Francisco 4 4 San Jose 7 6 Seattle 9 6 The following one-stop markets were served from the Airport with differing

frequencies from June 2000 to June 2001:

One-Stop Market Frequency (Arrivals & Departures) June 2000 June 2001 Albuquerque 6 3 Baltimore 2 2 Boston 2 1 Burbank 8 9 Cincinnati 1 1 Cleveland 0 3 Columbus 0 1 El Paso 1 0 Grand Rapids 1 0 Indianapolis 1 0 Miami 1 0 New York – JFK 1 0 Omaha 0 1 Ontario 8 8 Spokane 4 7 St. Louis 3 1 Tucson 2 2 Washington National 2 1 West Palm Beach 2 1 The following one-stop markets were provided service from the Airport in June

2001 compared to June 2000:



San Diego (seven flights) New Orleans (one flight) Orange County (three flights) Kansas City (two flights) Long Beach (one flight) Ft. Lauderdale (one flight) Detroit (one flight)

The net result of these changes was 38 less nonstop flights from the Airport in June 2001 versus June 2000 (a total of 164 and 202 daily nonstop flights, respectively).

4. Gate Assignment Policy Under the Section 16.02 of the Airline Agreement, the AAWC uses its best efforts to

assign one preferential-use gate to each signatory carrier having at least three flights per weekday, and may reassign an underutilized preferential gate to another signatory airline. Existing carriers are given written notice by the AAWC of any change in policy. Minimum requirements are issued to potential new entrant airlines. Operating requirements are the same for signatory (tenant) and nonsignatory airlines. All carriers are required to provide monthly schedules to the Operations Department for coordination of gate use and to accommodate requesting airlines.

Written notices are given by the AAWC to all tenant air carriers at the same time

concerning gate availability, terms and conditions for use.

The change from exclusive to preferential use leased premises with the current Airline Agreement, took effect July 1, 1996. This added gates and created common-use gates to ensure reasonable Airport access and allow existing carriers expansion capability.

The AAWC works closely with potential new entrant carriers to gain access to the

Reno/Tahoe market through communication with the Reno/Tahoe Air Service Task Force. A 20-member steering committee (comprised of key airport and community leaders) identifies underserved markets and works to link possible new or existing air carriers. Once the carrier’s interest is peeked, the AAWC dedicates time and money in preparing extensive Air Service Development presentations to the carrier. Communication is continuous between the airport and carrier with meetings in each market and possible site visits.

5. Financial Constraints The Exhibit G.08 of the Airline Agreement divides the Airport into five cost centers for

rate setting purposes. One of these cost centers is the Terminal Building. Revenues from the Terminal Building cost center are used to pay for Terminal Building projects or the debt service for such projects. The sources of Terminal Building Revenues are listed below:

Description 2001-02 Budgeted Amount

Gaming Concession $2,600,000Food and Beverage Concession 860,000



Merchandise Concession 1,148,700Advertising Concession 784,000Other Miscellaneous Concessions 522,400Terminal Building Rents - Airline 5,246,489Terminal Building Rents - Other 252,803Reimbursed Services – Utilities/ Security 358,500Allocation of Investment Interest Earnings 323,754

Total $12,098,645

The airline rate setting methodology for the Airport is defined in Exhibit G of the Airline Agreement. The methodology is a hybrid compensatory method that includes revenue sharing. The Terminal Building cost center operating expenses and debt service are divided by the useable square feet in the terminal building to determine an average rental rate for the airline leasehold areas. The Airfield Cost Center operating expenses and debt service are divided by the airline estimated landed weight to determine the non signatory landing fee rate. Half of the net revenues from all cost centers from the prior year is shared with the signatory airlines and used to reduce the Airfield Cost Center operating expenses. This reduced amount is divided by the signatory airlines’ landed weight to determine the signatory landing fee rate.

The AAWC has adopted an “Airline Incentive Policy” which establishes specific

guidelines for Airline Incentives that may be offered by the AAWC to any new or existing Passenger Airline initiating new service from the Reno/Tahoe International Airport market place. (See attached Airline Incentive Policy for New Scheduled Passenger Air Service.) The policy authorizes the Executive Director to waive or discount specific Airport rates and charges for a limited period of time for new service to a market with no existing air service. The policy also addresses specific marketing programs that may be undertaken by the AAWC to support new air service for an initial “launch” period.

The AAWC of Washoe County has used PFC revenues for eligible Terminal Building projects in the past. The Terminal Building PFC projects are listed below:

Description PFC Amount 1994 PFC

Baggage Claim Expansion $6,059,214Terminal Building ADA Compliance 409,500Concourse Gate Maximization 1,900,000

1998 PFC Passenger Loading Bridges 7,898,413Terminal Complex Schematic Design 1,500,000Reconstruct Terminal Building Doors 900,000Terminal Building Fire Sprinkler System 69,000

2001 PFC Eight Jet Bridges 2,400,000Terminal Building Security System 277,383

PFC 3 Amendment Replacement of BIDS and FIDS 468,750



Concourse Escalator Replacement 873,457Terminal Lobby Modernization 1,400,000

Total $24,155,717

The baggage claim area PFC project added additional baggage belts and floor space to increase the capacity of the baggage claim area. The passenger loading bridges project improved passenger safety by eliminating the ground loading of passengers. The loading bridges are moveable to allow flexibility in the type aircraft each aircraft gate can accommodate.

6. Airport Controls Over Airside and Groundside Capacity The Airline Agreement has a Majority In Interest (MII) provision (Sections 9.02 and

9.03) and a “no further charges” provision (Section 7.10) covering Airfield and Terminal Building cost center projects. The MII provision pertains only to the Airfield and Terminal Building Cost Centers. The first $1.0 million of Airfield and Terminal Building Cost Center projects are exempt from the MII process. The MII provision requires denial of projects. MII project approval is not required. Under the current Airline Agreement, MII constitutes: (a) for the Airfield cost center, that number of signatory airlines representing at least 60 percent of the signatory airlines which together have landed at least 50 percent of the total landed weight by all signatory airlines during the preceding fiscal year, or at least 50 percent of the signatory airlines which together have landed at least 60 percent of the total landed weight by all signatory airlines during the preceding fiscal year; and (b) for the Terminal Building cost center, that number of signatory airlines representing at least 60 percent of the signatory airlines which together have paid at least 50 percent of the total terminal rentals paid by all signatory airlines during the preceding fiscal year, or at least 50 percent of the signatory airlines which together have paid at least 60 percent of the total terminal rentals paid by all signatory airlines during the preceding fiscal year. The “no further charges” clause of the Airline Agreement does not provide any material control over groundside and airside capacity projects. It merely limits rentals, fees and charges to those provided in the Airline Agreement or as may be permitted under any enabling legislation.

The AAWC has experienced very few MII denials of capital projects. Over the past 10

years, 12 projects totaling $3.2 million have been denied through the MII process. None of these denials limited the ability of the Airport Authority to accommodate new entrant airlines. Projects that the Airport Authority strongly supported were completed anyway using discretionary funding sources outside the airline rates and the MII process. The MII provision in the Airline Agreement has not been a major obstacle for the AAWC in completing capital projects. Given the recent decline in passenger activity at Reno/Tahoe International Airport due to American Airlines acquisition of RenoAir, and the subsequent reduction in flights, and the vacant airline leasehold areas in the terminal building, MII ballots on projects to expand the facility have not been a topic for consideration.



While it may be plausible that airlines would use the MII ballot to limit the construction

of facilities available to a new entrant competitor, that has not been the case at Reno/Tahoe International Airport. A sound, and favorable economic analysis of the proposed project has proven to be very persuasive project justification to the airlines, resulting in favorable MII ballot results. In addition, the airlines’ economic interest is served by expanding the number of airlines serving the Reno/Tahoe International Airport. More airlines serving the market results in increased landed weight, which results in a lower landing fee rate under the current airline agreement. More airline terminal building rental revenue results in more net revenue to share with the airlines which also serves to reduce the signatory landing fee rate.

The airline Agreement that expired on June 30, 2001, was extended without modification

for three additional years. Neither the AAWC nor the airlines are unhappy with the current MII provision.

7. Airport Intention to Build or Acquire Gates for Use as Common Facilities Seven (7) unassigned gates – B-2, B-6 and B-10 on the south concourse and C-1, C-2, C-

4 and C-11 on the north concourse – are available for common-use, subject to future preferential lease.

At the present time, the AAWC does not intend to build or acquire additional common-

use gates; however, depending upon the requirements of incumbent carriers, the AAWC may retain for common-use any of the gates remaining unassigned under the extended Airline Agreement.

There are no carriers serving the Airport for more than three years relying exclusively on common-use gates. All airline leasehold areas are preferentially leased.

Existing concourses are fully built and there is no space to accommodate construction of

any additional terminal gates on these concourses.

Terminal gates are used for both domestic and international flights. Any international arrivals requiring post-clearance use Federal Inspection Service facilities.

Terminal gates are not at this time designated for domestic or international service. 8. Airfare Levels Compared to Other Large Airports Summarized data for the Airport showing:6

Carrier

Local

Passengers

One Way

Average Fares

Market Share

Average Passenger Trip

Length Interline 72,850 $197.56 2% 1,684 Alaska 177,040 $94.70 4% 703 America West 304,110 $132.11 6% 1,325 American 905,170 $124.35 19% 1,038

6 Source – DOT 2000 Airport Competition Plan Data Table 1



Continental 68,040 $181.04 1% 1,878 Delta 363,760 $168.77 8% 1,593 Northwest 156,150 $200.85 3% 1,872 Southwest 2,136,860 $80.76 45% 500 United/Shuttle by United

482,540

$147.81

10%

981

Other 3% TOTAL 4,666,520 $147.55 100% 1,286

Short-Haul Markets (750 miles or less):7

Local Passengers

Average Passenger Trip

Length

Average

Passenger Yield

Number of City-Pair

Markets Served Non-Low-Fare Competitor Present

148,070

253

$0.37

9

Low-Fare Competitor Present

2,935,100

408

$0.19

16

Long-Haul Markets (over 750 miles):8

Local Passengers

Average

Passenger Trip Length

Average

Passenger Yield

Number of City-Pair Markets Served

Non-Low-Fare Competitor Present

1,064,410

1,837

$0.11

49

Low-Fare Competitor Present

584,950

1,719

$0.09

28

Compare to other airports that have similar average passenger trip lengths, for short

distance markets, long distance markets, or total:9

Short Haul Markets Low-Fare Competitor Present Non Low-Fare Competitor Present

Airport Passenger Trip Length

Yield


Yield

RNO 408 $0.19 RNO 253 $0.37 BDL 407 $0.29 AUS 283 $0.47 CLE 410 $0.26

Long Haul Markets

7 Source – DOT 2000 Airport Competition Plan Data Table 2 8 Source – DOT 2000 Airport Competition Plan Data Table 2 9 Source – DOT 2000 Airport Competition Plan Data Table 2



Low-Fare Competitor Present Non Low-Fare Competitor Present Airport Passenger

Trip Length Yield

Airport Passenger

Trip Length Yield

RNO 1,719 $0.09 RNO 1,837 $0.11 MIA 1,701 $0.10 OAK 1,825 $0.17

All Stage Lengths Low-Fare Competitor Present Non Low-Fare Competitor Present


Yield


Yield

RNO 626 $0.14 RNO 1,644 $0.11 TUS 616 $0.15 SEA 1,622 $0.13 IAD 639 $0.22

Additional information that is pertinent to particular circumstances at individual airports,

and may not be apparent in the summarized information:

1) Allegiant Air served Fresno and Portland from July through December 2000.

RenoRenoRenoRenoRenoRenoRenoRenoReno ChicagoChicagoChicagoChicagoChicagoChicagoChicagoChicagoChicago

OaklandOaklandOaklandOaklandOaklandOaklandOaklandOaklandOaklandSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan Francisco

San JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan Jose

Salt Lake CitySalt Lake CitySalt Lake CitySalt Lake CitySalt Lake CitySalt Lake CitySalt Lake CitySalt Lake CitySalt Lake City

Las VegasLas VegasLas VegasLas VegasLas VegasLas VegasLas VegasLas VegasLas Vegas

ElkoElkoElkoElkoElkoElkoElkoElkoElko

Los AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos Angeles

Houston IntercontinentalHouston IntercontinentalHouston IntercontinentalHouston IntercontinentalHouston IntercontinentalHouston IntercontinentalHouston IntercontinentalHouston IntercontinentalHouston Intercontinental

DenverDenverDenverDenverDenverDenverDenverDenverDenver

SeattleSeattleSeattleSeattleSeattleSeattleSeattleSeattleSeattle

Minneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. PaulMinneapolis/St. Paul

PortlandPortlandPortlandPortlandPortlandPortlandPortlandPortlandPortland

BoiseBoiseBoiseBoiseBoiseBoiseBoiseBoiseBoise

Dallas/Ft. WorthDallas/Ft. WorthDallas/Ft. WorthDallas/Ft. WorthDallas/Ft. WorthDallas/Ft. WorthDallas/Ft. WorthDallas/Ft. WorthDallas/Ft. Worth

PhoenixPhoenixPhoenixPhoenixPhoenixPhoenixPhoenixPhoenixPhoenix

Reno/Tahoe International Airport Scheduled Airline Service Route Map82 Non Stop Departures to 16 Cities

Source: Official Airline Guide, schedules for the week of January 15, 2001 and announced.

table of contents competition plan...compplan#2001-02.doc 2 ... recommended by the faa in their...

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