Frontier Airlines 2008 Annual Report Download - page 18

Code-Share Agreements
Through our subsidiaries, we have entered into code-share agreements with US Airways, American, Delta, United,
Continental, Midwest and Mokulele (collectively, the "Partners") that authorize us to use their two-character flight designator codes
("US," "AA," " DL," "UA," "CO," "YX" and "MW") to identify our flights and fares in their computer reservation systems, to paint
our aircraft with their colors and/or logos, to use their service marks and to market and advertise our status as US Airways Express,
AmericanConnection, Delta Connection, United Express, Continental Express, Midwest Airlines and Mokulele Airlines, respectively.
In connection with a marketing agreement among Delta, Continental and Northwest Airlines, certain of the routes that we fly using
Delta and Continental's flight designator codes are also flown under Northwest's designator code. Under the code-share agreements
between our subsidiaries and each of US Airways, American, Delta, United, Continental, Midwest and Mokulele, we are compensated
on a fixed-fee basis on all of our US Airways Express, AmericanConnection, Delta Connection, United Express, Continental Express,
Midwest Airlines and Mokulele Airlines flights. In addition, under our code-share agreements, our passengers participate in frequent
flyer programs of the Partners, and the Partners provide additional services such as reservations, ticket issuance, ground support
services, commuter slot rights and airport facilities.
US Airways Code-Share Agreements
Under our fixed-fee Jet Services Agreements with US Airways, we operated, as of December 31, 2008, 9 E145 aircraft, 20
E170 aircraft and 38 E175 aircraft. As of December 31, 2008, we were providing 410 flights per day as US Airways Express.
In exchange for providing the designated number of flights and performing our other obligations under the code-share
agreements, we receive compensation from US Airways three times each month in consideration for the services provided under the
code-share agreements. We receive an additional amount per available seat mile flown and may also receive incentives or pay
penalties based upon our performance, including fleet launch performance, on-time departure performance and completion percentage
rates. In addition, certain operating costs are considered "pass through" costs whereby US Airways has agreed to reimburse us the
actual amount of costs we incur for these items. Landing fees, passenger catering, passenger liability insurance and aircraft property
tax costs are pass through costs and included in our regional airline services revenue. Beginning in May 2005, US Airways elected to
provide fuel directly for all of our US Airways operations. This change eliminated fuel expense and the related fuel reimbursement
(previously recorded as revenue). Operating margins were not affected by this change.
The code-share agreement for the E145 aircraft terminates in March 2013. The code-share agreement for the E170/175
aircraft terminates in September 2015 with respect to the 20 E170 aircraft and eight of the E175 aircraft. The remaining 30 E175
aircraft terminate 12 years from each aircraft’s in-service date. US Airways may terminate the code-share agreements at any time for
cause upon not less than 90 days notice and subject to our right to cure under the following conditions:
• if we fail to perform or observe any material covenant or condition or agreement to be performed or observed by us,
provided that if we breach any payment obligation, US Airways has the right to terminate the agreement on 10 days prior
written notice unless we cure such breach prior to the expiration of 10 days;
• if our flight completion factor falls below specified percentages during specified periods due to operational deficiencies that
are within our control;
• if our on time departure performance falls below specified percentages during specified periods;
• if we admit liability or are found liable for any safety infraction by the FAA that could reasonably be expected to lead to the
suspension or revocation of our operating certificate or if in US Airways' reasonable opinion we are not complying in any
material respect with applicable safety and operational requirements;
• if we fail to use commercially reasonable efforts to comply with the applicable provisions of the "Jets for Jobs" protocol;
• if our FAA operating certificate is suspended or revoked; or
• in the event that we or an affiliate of ours shall have commenced the provision of flight services under the code-share
agreement between US Airways and Republic Airline and such agreement is subsequently terminated, among other things.
In September 2005, we purchased 113 commuter slots at Ronald Reagan Washington National (DCA) Airport and 24
commuter slots at New York-LaGuardia (LGA) Airport under our commuter slot option agreement with US Airways. We assigned the
right of use for these commuter slots to US Airways and these commuter slots are being operated by US Airways and US Airways
Express carriers under a licensing agreement for which US Airways pays us rent. Prior to the expiration of the agreement to license
the commuter slots, US Airways has the right to repurchase all, but not less than all, of the DCA commuter slots at a predetermined
price. The licensing agreement between us and US Airways for the LGA commuter slots expired on December 31, 2006, but we
maintain a security interest in the LGA slots if US Airways fails to perform under the current licensing agreement.
The American Code-Share Agreement
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 16, 2009 Powered by Morningstar® Document Research℠