Updates about Northwest Florida Beaches International Airport (NWFBIA)

[scooterbug44]

Did anyone else read that press release and go "whoa!"?

Are the taxpayers going to be legally obligated to fund any shortfall due to the content of these agreements?

And is part the bed-tax money is going to St. Joe?

 

[TooFarTampa]

Did anyone else read that press release and go "whoa!"?

Are the taxpayers going to be legally obligated to fund any shortfall due to the content of these agreements?

And is part the bed-tax money is going to St. Joe?

Good question. St. Joe is filing something with the Securities and Exchange Commission that apparently will outline the alliance ... I hope to see EXACTLY how tax money will be used in this agreement.

 

[TooFarTampa]

Form 8K (Entry into a Material Definitive Agreement, Financial Statements and Exhibits) has been filed.

Summary of ST JOE CO - Yahoo! Finance

Excerpts:

On October 21, 2009, The St. Joe Company ("St. Joe") entered into a Strategic Alliance Agreement for Air Service with Southwest Airlines Co. ("Southwest"). Pursuant to the agreement, Southwest will provide air service to the new Northwest Florida international airport in Bay County consisting of at least two scheduled flights per day to each of four separate flight destinations in the Southwest network. The air service will commence on or about the opening of the new airport, which is currently scheduled for May 2010.

St. Joe has been working alongside a number of regional organizations in its effort to secure the financial commitments to support the new air service.

St. Joe has agreed, to the extent that Southwest operates at a loss, to make quarterly cash payments to Southwest to cover shortfalls in the results of Southwest's operations at the new airport during the first three years of service. For purposes of the break even calculation, the agreement establishes fixed amounts for Southwest's non-fuel expenses and the minimum revenues that will be attributable to the air service. It also provides that Southwest's profits from the air service during the term of the agreement will be shared with St. Joe up to the maximum amount of St. Joe's prior break even payments.

The term of the agreement extends for a period of three years after the commencement of Southwest's air service at the new airport. The agreement may be terminated by St. Joe if the payments to Southwest exceed $14 million in the first year of air service, or $12 million in the second year of air service. St. Joe may also terminate the agreement if Southwest has not commenced air service to the new airport within 90 days of its opening. Southwest may terminate the agreement if its actual annual revenues attributable to the air service at the new airport are less than certain minimum annual amounts established in the agreement.

Conditions of the commencement of service include:

(4) the execution of an agreement between Southwest, the Bay County Tourist Development Council, the Panama City Beach Convention and Visitors Bureau and the Beaches of South Walton Tourist Development Council, no later than 30 days from the date of the agreement, regarding the coordination of marketing resources and efforts for the air service; (5) the execution of an agreement between Southwest and Coastal Vision 3000, no later than 60 days from the date of the agreement, regarding the establishment of a program through which Southwest would receive available room nights free of charge at various rental properties in Northwest Florida for use in the marketing efforts for the air service;

Translation: In a month there will be a deal in place between Southwest, the Bay County TDC, the Panama City Beach Convention and Visitors Bureau and the Walton County TDC regarding "resources" ... ie bed taxes. How soon will we, the public, be able to read this agreement?

And Coastal Vision 3000 is giving away rooms...? to whom?

And finally:

Southwest has agreed that it will not commence air service to any airport within 80 statute miles of the new airport during the term of the agreement. In the event Southwest starts service to any airport that is more than 80 statute miles but within 120 statute miles from the new airport during the term (*cough* PNS *cough*), Southwest and St. Joe will either negotiate a modification to the terms of the agreement to accommodate the impact of such service or the minimum revenues used in the annual break even calculations under the agreement will automatically be increased by 10%. In such event, Southwest has agreed that the air service to the new airport in Bay County would not be diminished.

 

[scooterbug44]

Who will be paying the taxes on the "free rooms" Coastal Vision 3000 is providing to Southwest as part of the deal?

And what exactly is the TDC obligated to do as part of their agreement?

Too bad they won't start service until after Spring Break too!

 

[BeachSiO2]

Who will be paying the taxes on the "free rooms" Coastal Vision 3000 is providing to Southwest as part of the deal?

And what exactly is the TDC obligated to do as part of their agreement?

Too bad they won't start service until after Spring Break too!

I am not the TDC, but in the numerous TDC meetings I have been in when it was discussed, and in the the passage of the actual funding resolution approved by the BCC, the Walton County TDC dollars would be limited to joint marketing efforts and is currently capped at the 1/2% bed tax level.

 

[TooFarTampa]

So the deal says St. Joe may have to pay as much as $14 million to Southwest to cover shortfalls during the first year of service. The expected TDC revenue from that half-cent tax increase for the 2009-10 fiscal year was, last I saw, about $1.1 million and will probably increase at least somewhat for the 2010-11 year, which is what would cover Southwest's first year of service. So it appears that the bed tax increases from Walton and Bay will supplement Joe's funding to Southwest, but it does not appear the bed tax increases will be funding this entire agreement.

Firmer numbers are needed however. I find it hard to believe that St. Joe is on the hook for as much as $10 million without the money coming creatively from somewhere else.

 

[Smiling JOe]

JOE has much to gain in Bay County by supplementing money to SW. I'm sure they have always known they would do it, just didn't know how much it will cost. By adding the Bay and Walton County bed tax increases to the coffers, it just makes their portion less costly. Also, as new direct, low-cost flights are added to our top supporting markets, you will see bed counts increase and therefore, the supplemental money from JOE will be less as time moves forward.

If you don't know anything about JOE's West Bay sector, you don't know much about JOE. There is no way they would allow SW to go to P'cola or VPS.

 

[Alicia Leonard]

JOE has much to gain in Bay County by supplementing money to SW. I'm sure they have always known they would do it, just didn't know how much it will cost. By adding the Bay and Walton County bed tax increases to the coffers, it just makes their portion less costly. Also, as new direct, low-cost flights are added to our top supporting markets, you will see bed counts increase and therefore, the supplemental money from JOE will be less as time moves forward.

If you don't know anything about JOE's West Bay sector, you don't know much about JOE. There is no way they would allow SW to go to P'cola or VPS.

VPS never stood a chance with this.

 

[TreeFrog]

VPS never stood a chance with this.

How could they? It's a wonder the new airport isn't named St. Joe Int'l, with the code renamed from PFN to JOE.



As a frequent traveler, I'm happy for the cheaper fares, if SW will actually go somewhere that connects to somewhere I go - if you follow that. But dang, just as the NW/DL buyout was going to let me finally qualify for Medallion level, after years of splitting flights between them and never qualifying on either!

 

[BeachSiO2]

Here's the question, is this a fluke or a game changer?

As pointed out by numerous posters, on paper this is highly suspect with Southwest's "typical" business model (considering our business climate do we really know what "typical" is anymore?). IMO, the other airlines are probably shocked at what's happening- especially Delta/Northwest. From personal experience, I can tell you that in the past three months the flights from where I live to South Walton have been cheaper flying into PC than VPS both on Delta connecting in ATL. Now, you have a low cost carrier flying into PC.

I will be curious to see how it all turns out but with St. Joe involved. I also agree with SJ and AL, VPS never stood a chance.