Finance committee approves one-year American Airlines agreement with up to $1.8M revenue guarantee for Santa Fe–LAX service

The Santa Fe Finance Committee on Sept. 8 approved an air-service agreement with American Airlines for scheduled service to Los Angeles International Airport through Oct. 24, 2026, under which the city may make direct payments not to exceed $1.8 million to cover revenue shortfalls and will waive certain airport fees estimated at $142,387. Staff said the New Mexico State Aviation Department awarded a $1,000,000 grant to the city to support the service and that grant funds will be used before drawing on city operating funds. Airport staff said there is an opt-out clause allowing the city to cancel the contract if ridership is insufficient. James Cardenio, project manager at the airport, and Sebastian Gallegos, project administrator at Santa Fe Regional Airport, said the service will initially be one round-trip flight and that marketing and grant-funded advertising are part of the launch plan. Staff emphasized they will monitor load factors and can cancel the contract if it becomes clear the service is not sustainable without continued subsidy. Councilors sought details about timing, marketing and how the minimum revenue guarantee would work. City manager Scott later clarified during "matters from staff" that the $1.8 million minimum revenue guarantee roughly equates to a threshold that can be met at about a 40% load factor over 12 months, meaning the city would not be required to pay for a fully empty plane; staff cautioned that precise calculations depend on aircraft type and actual load factors. Councilor Lindell asked that staff report back once a set portion of the grant is spent; she suggested a report when $800,000 of grant or city-supported subsidy is spent so the council can reassess continuing the subsidy. Airport staff said they will track bookings and marketing performance and provide regular updates; councilors also asked staff to explore earlier flight times to improve connections. Action and next steps: the committee approved the agreement (motion passed). Staff will apply the New Mexico grant to reimburse eligible subsidy payments, waive specified fees for American Airlines as negotiated, run a marketing campaign funded partly by a grant and provide periodic updates to the council on load factors and expenditures.