EXHIBIT 10.14
SERVICE AGREEMENT
BETWEEN
US AIRWAYS, INC.
AND
AIR MIDWEST, INC
DATED AS OF
MAY 14, 2003
RECITALS 1
ARTICLE 1 COMPLIANCE WITH REGULATIONS 2
ARTICLE 2 AIR SERVICES TO BE PROVIDED BY CONTRACTOR 3
SECTION 2.01 SCHEDULES TO BE OPERATED 3
SECTION 2.03 AIRCRAFT TO BE USED 9
SECTION 2.04 FLIGHT CREWS TO BE USED 10
SECTION 2.05 MAINLINE OPERATIONS 11
ARTICLE 3 SUPPORT SERVICES AND FACILITIES 11
SECTION 3.01 GENERAL PROVISION 11
SECTION 3.02 COMMUNICATIONS 11
SECTION 3.03 RESERVATIONS 12
SECTION 3.04 RESERVED 13
SECTION 3.05 STATION FACILITIES AND GROUND SUPPORT SERVICE 13
SECTION 3.06 TERMS OF TRANSPORTATION, SALES AND PROMOTION 16
ARTICLE 4 PASSENGER FARES AND DIVISION OF REVENUES 20
SECTION 4.01 LOCAL FARES 20
SECTION 4.02 ALL OTHER FARES 20
SECTION 4.03 DIVISION OF REVENUES 20
ARTICLE 5 AIR FREIGHT RATES 21
SECTION 5.01 JOINT AIR FREIGHT RATES 21
SECTION 5.02 COMPENSATION TO CONTRACTOR FOR AIR FREIGHT 21
ARTICLE 6 US MAIL 21
ARTICLE 7 LIABILITY INDEMNIFICATION AND INSURANCE 23
SECTION 7.01 CONTRACTOR SHALL ACT AS AN INDEPENDENT CONTRACTOR 23
SECTION 7.02 LIABILITY AND INDEMNIFICATION 24
SECTION 7.03 INSURANCE COVERAGE 25
SECTION 7.04 ADDITIONAL REQUIREMENT 27
SECTION 7.05 CARGO LIABILITY INSURANCE 29
ARTICLE 8 CONSIDERATION, RECORDS AND REPORTS 30
SECTION 8.01 CONSIDERATION 30
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SECTION 8.02 RECORDS AND REPORTS 32
ARTICLE 9 EFFECTIVE DATE, TERMINATION AND CANCELLATION 34
SECTION 9.01 EFFECTIVE DATE AND TERM 35
SECTION 9.02 TERMINATION 36
SECTION 9.03 FORCE MAJEURE 38
SECTION 9.04 ASSIGNMENT 38
ARTICLE 10 OPERATING RESTRICTIONS 38
SECTION 10.0 USE OF CONTRACTOR'S AIRCRAFT 39
ARTICLE 11 TRADEMARK LICENSE FOR OPERATIONS TO BE CONDUCTED BY CONTRACTOR PURSUANT TO THIS
AGREEMENT 40
SECTION 11.01 GRANT OF TRADEMARK LICENSE 40
SECTION 11.02 TERMS AND CONDITIONS GOVERNING TRADEMARK LICENSE 40
ARTICLE 12 ENTIRE AGREEMENT, AMENDMENT, NOTICES AND TITLES 42
SECTION 12.01 ENTIRE AGREEMENT AND AMENDMENTS 42
SECTION 12.02 NOTICES AND MISC PROVISIONS 44
SECTION 12.03 NOTICES AND MISCELLANEOUS PROVISIONS 42
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SERVICE AGREEMENT
This Agreement made as of this 14 day of May, 2003, by and between US Airways,
Inc., a Delaware corporation, having a principal place of business at Crystal
Park Four, 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("US Airways") and Air
Midwest, Inc., a Kansas corporation, having a principal place of business at
0000 Xxx Xxxxx Xxxx, Xxxxxxx, Xxxxxx 00000 ("Contractor") as follows:
WITNESSETH:
WHEREAS, US Airways holds a certificate of public convenience and
necessity issued by the Department of Transportation (DOT) authorizing US
Airways to engage in the interstate and overseas air transportation of persons,
property and mail between all points in the United States, its territories and
possessions; and
WHEREAS, Contractor is a commuter air carrier engaged in air
transportation of persons and property pursuant to Part 298 of the DOT's
Economic Regulations; and
WHEREAS, US Airways owns various trademarks, service marks and logos,
including "US Airways", "US Airways Express", and distinctive exterior, interior
and printed material color decor and patterns used upon and inside its aircraft,
hereinafter referred to individually and collectively as the "US Airways
Trademarks"; and
WHEREAS, Contractor wishes to acquire a nonexclusive license, and US
Airways does hereby grant unto the Contractor, the use of one or more of US
Airways' Trademarks in connection with the scheduled air transportation services
operated by Contractor pursuant to this Agreement, including the use of the "US"
designator code; and
WHEREAS, Contractor desires to operate, and US Airways is willing to
contract for, US Airways Express operations in the manner and to the extent
hereinafter described;
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NOW, THEREFORE, for and in consideration of the foregoing premises and
the mutual covenants and obligations hereinafter set forth, the parties to this
Agreement hereby agree as follows:
ARTICLE 1 COMPLIANCE WITH REGULATIONS
Contractor hereby represents, warrants, and agrees that all air transportation
services performed by it pursuant to this Agreement or otherwise shall be
conducted in full compliance with any and all applicable statutes, orders,
rules, and regulations, whether now in effect or hereafter promulgated, of all
governmental agencies having jurisdiction over Contractor's operations,
including, but not limited to the Federal Aviation Administration (FAA) and the
DOT. Contractor's compliance with such governmental statutes, orders, rules, and
regulations shall be the sole and exclusive obligation of Contractor, and US
Airways will have no obligations or responsibilities, whether direct or
indirect, with respect to such matters.
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ARTICLE 2 AIR SERVICES TO BE PROVIDED BY CONTRACTOR
SECTION 2.01 SCHEDULES TO BE OPERATED
(a) Exclusive Markets: In the following city pairs Contractor shall be the sole
and exclusive air carrier authorized by US Airways to operate as "US Airways
Express" subject to the terms and conditions listed below; provided however if
Contractor does not provide the minimum service described herein in any market
listed in this Section 2.01 for * consecutive days or announces terminating
service in such market US Airways may replace Contractor in such market upon
written notice to Contractor:
(i) Kansas City:
Minimum
City Pair Roundtrips
--------- ----------
Xxxxxx Xxxx, XX. - Xxxxx Xxxx, XX *
- Garden City, KS *
- Great Bend, KS *
- Hays, KS *
- Manhattan, KS *
- Omaha, NE *
- Salina, KS *
- Springfield, IL *
- Topeka, KS *
- Little Rock, AR *
Manhattan, KS-Salina, KS *
Dodge City, KS-Garden City, KS *
Great Bend, KS-Hays, KS *
Little Rock, AR - Shreveport, LA *
- Nashville, TN *
- New Orleans, LA *
New Orleans, LA - Shreveport, LA *
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(ii) Florida
Minimum
City Pair Roundtrips
--------- ----------
Orlando, FL - Panama City, FL *
- Ft. Xxxxxx Beach, FL *
Tampa, FL - Naples, FL *
- Xxx Xxxx, XX *
- Xxxxxx Xxxx, XX *
- Ft. Xxxxxx Beach, FL *
- Pensacola, FL *
Xxxxxx Xxxx, XX - Xx. Xxxxxx Xxxxx, XX *
Miami, FL Freeport Bahamas *
Governors Harbour, Bahamas *
Key West, FL
Nassau, Bahamas *
North Eleuthera, Bahamas *
Tampa, FL *
Treasure Cay, Bahamas *
Xxxxx Harbor, Bahamas *
West Palm Beach Treasure Cay, Bahamas *
Xxxxx Harbour, Bahamas *
(iii) Philadelphia:
Minimum
City Pair Roundtrips
--------- ----------
Philadelphia, PA - Atlantic City, NJ *
- Groton, CT *
- Reading, PA *
- Williamsport, *
- Ithaca, NY *
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(iv) Pittsburgh:
Minimum
City Pair Roundtrips
--------- ----------
Pittsburgh, PA - Clarksburg, WV *
- Dubois, PA *
- Franklin, PA *
- Jamestown, NY *
- Latrobe, PA *
- Morgantown, WV *
- Parkersburg, PA *
Clarksburg, WV - Morgantown, WV *
Xxxxxx, PA - Jamestown, NY *
Pittsburgh, PA - Bradford, PA *
- Massena, NY *
- Ogdensburg, NY *
- Reading, PA *
- Watertown, NY *
Masana, NY - Ogdensburg, NY *
- Watertown, NY *
Watertown, NY - Ogdensburg, NY *
(v) Charlotte:
Minimum
City Pair Roundtrips
--------- ----------
Charlotte, NC - Athens, GA *
- Huntington, WV *
- Lewisburg, WV *
- Lynchburg, VA *
- Greenville, SC *
Asheville, NC - Greenville, SC *
- Raleigh, NC *
Raleigh, NC - Charlestown, SC *
- Greenville, SC *
- Norfolk VA *
(b) Non Exclusive: US Airways, in its sole discretion, shall allow
Contractor to operate as "US Airways Express" in additional city-pairs provided
the Contractor complies with Sections 2.01(c, d & e) and Section 8.01(c), and
provided, further, that US Airways reserves the right to
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withdraw its approval of all or any part of such additional schedules at any
time and to require Contractor to change or to reduce to zero such additional
schedules.
(i) Kansas City:
Current
City Pair Roundtrips
--------- ----------
None
Current
City Pair Roundtrips
--------- ----------
None
(iii) Philadelphia:
Current
City Pair Roundtrips
--------- ----------
None
(iv) Pittsburgh:
Current
City Pair Roundtrips
--------- ----------
(v) Charlotte:
Current
City Pair Roundtrips
--------- ----------
None
(c) The initial schedules and changes in the schedules operated by
Contractor pursuant to Section 2.01(a) or 2.0l(b), whether necessitated by
altered connections, operating experience or
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other reasons, must be submitted to US Airways by the deadline date established
by US Airways but not less than * days prior to the effective date of such
initial schedules or schedule changes, and all such schedules must be approved,
in advance, by US Airways. Requests for new city-pair additions to Section
2.01(a) and 2.01(b) must be submitted to US Airways * days prior to requested
service start date. Requests for changes in Contractor's schedules must be made
in writing. Before such requests are issued, US Airways and Contractor will, as
far in advance as practicable, advise each other of any desired modifications or
amendments of their respective schedules so as to ensure that the primary needs
of both the local and connecting traffic between the cities operated by
Contractor as a US Airways Express Carrier are being adequately met. Within the
operating capability of the aircraft used by Contractor as described in Section
2.03, or some other substitute aircraft used by Contractor with the prior
written consent of US Airways, all reasonable and practicable requests by US
Airways to Contractor to adjust the service schedules required by Section 2.01
will be complied with by Contractor.
(d) If Contractor provides service as "US Airways Express" in a market
operated in conjunction with US Airways Group aircraft, Contractor's scheduled
departures involving such service cannot be scheduled within * of any regional
jet operated by any carrier operating as US Airways Express, unless specifically
approved in writing by US Airways. Contractor must adjust flight schedules to
achieve such a minimum * separation within * notice from US Airways.
(e) Except for the city pairs listed in Section 2.01(a)(i), nothing in
Section 2.01 or any other provisions of this Agreement shall prevent the
operation of jet service by US Airways Group aircraft in any market covered by
this Agreement.
(f) Except as set forth in the table of approved markets set forth in
Section 2.01(a), no terms, provision or condition contained in this Article
shall be construed so as to prohibit the operation with the aircraft described
in Section 2.03, of additional schedules beyond those frequencies in city-pairs
previously approved in 2.01(a) or then currently approved pursuant to 2.01(b)
if, in Contractor's judgment, such additional schedules are economically
feasible;
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provided, however, that the operation of such additional schedules shall be
subject to the terms of Section 2.01(c), Section 2.01(d), and Section 8, and
provided that all such changes to frequency are approved by US Airways and
Contractor conforms to all electronic schedule filing procedures and deadlines
as established by US Airways.
SECTION 2.02 OPERATION OF NON-AFFILIATED FLIGHTS
(a) Contractor shall be entitled to operate additional services under its
own name and airline code in the city-pairs not then currently approved by US
Airways pursuant to Section 2.01 of this Agreement. Such services shall not make
use of any of the services or facilities afforded to Contractor by US Airways
under this Agreement and no aircraft used in providing such services shall bear
any US Airways Express logo or markings. Except as otherwise provided herein, in
the city-pairs then currently approved by US Airways pursuant to Section 2.01 of
this Agreement, Contractor shall operate its services exclusively as US Airways
Express.
(b) US Airways hereby grants to Contractor the right to conduct operations
described in Section 2.01 (a) (i) above and any operations undertaken by
subsequent amendment hereto under the trademark "US Airways Express" on behalf
of Midwest Airlines subject to all of the terms and conditions of Article 11 of
the Agreement. Contractor's flights which operate between Kansas City and the
airports listed in Section 2.01 (a) (i) will be permitted to carry the YX code
when connecting to Midwest Airlines flights from Kansas City to the airports
listed below. Any one or more of the airports listed is subject to change at the
sole discretion of US Airways, provided that US Airways provides * days notice
to Contractor:
Atlanta New Orleans San Antonio Milwaukee Los Angeles Denver
San Francisco Las Vegas Phoenix Dallas
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SECTION 2.03 AIRCRAFT TO BE USED
(a) Contractor will provide the scheduled air services described in Section
2.01 with short-to-medium range, multi-engine, turbine-propeller aircraft, which
aircraft shall meet the requirements for commuter air carrier operations set
forth in Part 298 of the DOT's Economic Regulations and the Federal Aviation
Regulations. Such aircraft shall have a minimum of nineteen (19) seats and
appropriate capacity for passenger baggage, freight and mail. If aircraft is
weight restricted so as to prevent the transport of all passengers and expected
baggage in the city-pair when booked to capacity, Contractor will make a
commercially reasonable effort to reduce available passenger capacity
sufficiently in advance so as to accommodate all booked passengers and their
baggage. Contractor and US Airways agree that except as expressly stated
otherwise herein, the Beechcraft 1900D aircraft is acceptable for purposes of
this Agreement provided that US Airways' ramp area, personnel, terminal and
other facilities are available and adequate to accommodate such aircraft at the
times scheduled taking into account other services performed by US Airways and
by other US Airways Express operators which use such ramp area, terminal and
other facilities.
The aircraft scheduled and any replacement aircraft utilized by Contractor
pursuant to Section 2.03, shall bear US Airways' Trademarks on the aircraft
exterior livery and on the aircraft interior color decor and pattern provided by
US Airways and the name "US Airways Express". The aircraft interior shall
generally consist of the color decor and pattern provided by US Airways for
articles of seat belt webbing, carpet and bulkhead covers. In the event that
Contractor's aircraft fail to comply with the provisions of this Section,
Contractor agrees to bring such aircraft into compliance at the time of such
aircraft's next scheduled retrofit. Contractor shall maintain such cleaning
programs as are required to maintain a clean aircraft interior and exterior. At
any time during the term of this Agreement, and at the sole discretion of US
Airways, Contractor may be permitted to use such new or different trademarks and
exterior color decor and patterns on its aircraft as US Airways may determine.
Upon written notice from US Airways, which shall include the specifications for
any such changes in trademarks, decor and patterns for aircraft exterior,
interior, and ground equipment, Contractor shall effect such changes as promptly
as is reasonably practicable; provided however, Contractor shall not, at its
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own expense, be expected to change exterior color decor more than once in any *
consecutive year period.
In addition to use of the US Airways Trademarks on its aircraft, Contractor
shall use and display a suitable sign on the exterior of its aircraft
identifying Contractor as the operator of the services being provided pursuant
to this Agreement. The use and display of such sign shall be subject to the
prior written approval of US Airways as to its nature, size and location on
Contractor's aircraft.
(c) No logo or markings other than those defined in Section 2.03 (b) as US
Airways Express livery and that of the Contractor, shall be displayed on the
exterior of the aircraft without the written consent of US Airways.
(d) Contractor shall purchase, and US Airways must approve, all service
items on-board the aircraft. Certain service items must be purchased from US
Airways in order to assure consistency in appearance and quality. Contractor
will make reasonable efforts to insure that each passenger seatback includes one
copy of US Airways Attache in-flight magazine and one copy of US Airways gift
catalog and a motion sickness bag.
(e) Within * of the execution of this Agreement, Contractor shall provide
an * fleet plan to US Airways, updated at * intervals.
SECTION 2.04 FLIGHT CREWS TO BE USED
All services performed by Contractor pursuant to Sections 2.01 and 10.01 shall
be operated with at least the minimum number of qualified flight crew members
required by the Federal Aviation Agency. All such crew members shall at all
times meet all currently applicable governmental requirements, as such
requirements may be amended from time to time during the term of this Agreement,
and shall be fully licensed and qualified for the services to be performed
hereunder, and, in addition, all of Contractor's captains shall hold a current
Airline Transport Pilot
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Certificate. Such crew members shall also meet any and all requirements imposed
by the insurance policies which are to be maintained pursuant to Section 7.03.
Announcements onboard the aircraft made by crew members or when prerecorded,
shall include the name US Airways Express and such reasonable marketing
announcements as determined by US Airways and which will change from time to
time. Prerecorded announcements must be updated with a current name and/or
marketing message within * months of notice from US Airways, but in no case more
often than * times within *. The marketing announcements shall be separate from
Contractors safety announcements so as not to impede, interfere or in any way
detract attention. In connection with such announcements, Contractor's corporate
name will be used only in conjunction with the US Airways Express name, and at
times prescribed by US Airways.
SECTION 2.05 OTHER OPERATIONS
Nothing contained in Section 2.01 or any other provision of this Agreement shall
prevent the operation of nonstop, single-plane or connecting jet service by US
Airways Group or affiliate, subsidiary, codeshare or contract carrier aircraft
in any city-pair covered by this Agreement, as solely determined by US Airways.
ARTICLE 3 SUPPORT SERVICES AND FACILITIES
SECTION 3.01 GENERAL PROVISION
US Airways and Contractor will provide ground support services and facilities to
the extent and in the manner set forth in the subsequent sections of this
Article 3. Such ground support services and facilities will be furnished only
with respect to Contractor's scheduled air services described in Sections 2.01;
provided, however, that with respect to frequencies operated by Contractor in
addition to the minimum frequencies established by Section 2.01(a), US Airways'
obligation to provide ground support and facilities to Contractor under Section
3.05(a) shall be subject to the ability and capacity of US Airways' facilities
to handle such additional schedules at costs deemed reasonable by US Airways in
the exercise of its sole discretion and judgment.
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SECTION 3.02 COMMUNICATIONS
Reservation telephone lines will be maintained by US Airways at the points
listed in Section 2.01(a) connecting those cities with US Airways' reservations
center.
SECTION 3.03 RESERVATIONS
(a) All reservations will be requested and confirmed for passengers using
the services described in Sections 2.01 through US Airways' reservations system.
Connecting reservations to US Airways or to other air carriers will be requested
and confirmed through US Airways' reservations system in accordance with
currently established industry methods and procedures. For passengers
originating their travel at points other than those served by Contractor
pursuant to Section 2.01, either on US Airways' system or on the systems of
other airlines, connecting reservations to the services of Contractor will also
be made in accordance with currently established industry methods and
procedures. In all cases, US Airways will confirm the reservations of
Contractor's passengers through the entire itinerary of their scheduled trips.
When a contact number is supplied by the passengers making such reservations to
US Airways or the booking agent, US Airways will assume the responsibility of
notifying the passengers or the booking agent of any changes in Contractor's
schedules or operations provided that Contractor furnishes US Airways with
sufficient advance notice of such changes. However, if Contractor fails to
provide sufficient advance notice of such changes, Contractor will incur
reasonable costs for such re-accommodations, including but not limited to
off-line transportation, manpower, communication and interrupted trip expenses.
(b) Contractor agrees minimally to make available the greater of two seats
or ten percent (10%) of the aircraft seating capacity on seventy percent (70%)
of the scheduled daily departures, in each city-pair for the lowest available
joint (through) fare, and an equal number of ("Z" Class) seats for the
redemption of Frequent Flyer Coupons.
(c) In the event of flight delays, cancellations or other schedule
irregularities affecting
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Contractor's scheduled services, and as soon as information concerning such
irregularities is available, Contractor shall notify US Airways' reservations
control center in a manner prescribed by US Airways and furnish US Airways such
information in as much detail as practicable.
(d) Contractor shall be solely responsible for, and US Airways shall have
no obligations or duties with respect to the dispatch of Contractor's flights
operated pursuant to this Agreement or otherwise. For the purposes of this
Section 3.03(d), the term flight dispatch shall include, but shall not be
limited to, all planning of flight itineraries and routings, fueling and flight
release.
(e) From time to time, and solely upon request of Contractor or its flight
crews, US Airways may furnish Contractor's flight crews with such U.S. Weather
Bureau information or data as may be available to US Airways; provided, that in
furnishing any such weather information or data to Contractor, neither US
Airways nor its employees or agents will be responsible or liable for the
accuracy thereof.
SECTION 3.04 RESERVED
SECTION 3.05 STATION FACILITIES AND GROUND SUPPORT SERVICE
(a) US Airways will provide, except as noted in section 2.01 (b), the
following services at locations (except as mutually agreed) outlined in Section
2.01 where US Airways personnel are represented, subject to provisions outlined
in Section 3.01 and 8.01(c).
(1) check-in and ticketing of Contractor's passengers at US
Airways' ticket counters or, as appropriate, at the gate check-in
areas;
(2) use of US Airways' passenger facilities by Contractor's
passengers;
(3) ramp handling of Contractor's aircraft, including loading,
unloading and the handling of Contractor's passengers, baggage,
freight, and mail; but not including aircraft marshalling, checking,
servicing, catering, and starting the aircraft with ground power.
(4) interline transfer of baggage, mail, and freight in accordance
with currently established industry methods and procedures;
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(5) such security facilities, personnel, and passenger screening
procedures as are required (a) by applicable orders, rules, and
regulations of the FAA, and (b) by US Airways' FAA-approved aircraft
security plan;
(6) arrangements, made at Contractor's request and its sole cost
and expense, for alternate transportation, meals, lodging, and other
accommodations for Contractor's passengers as the need therefore may
arise from time to time due to schedule irregularities in Contractor's
operations; and
(7) in the event US Airways is unable to accommodate Contractor's
scheduled air services at US Airways' own facilities, US Airways
reserves the right to provide the services and facilities herein at
another suitable location on the airport selected by mutual agreement
by the parties subject to provisions outlined in Section 8.01(c).
(b) Contractor will provide the following services and facilities at
locations not provided under Section 3.05(a):
(1) in airport locations with a minimum of five (5) scheduled
departures per day, airport ticket counters and baggage
service offices open to the public at a minimum during normal
business hours between 8 a.m. and 6 p.m. Monday through
Friday; between 9 a.m. and 1.p.m. on Saturday and Sunday; and
a minimum of one hour before each departure and 30 minutes
after each arrival. In airport locations with fewer than five
(5) scheduled flights per day, Contractor will provide airport
ticket counters and baggage service offices open to the public
at a minimum of one hour before each departure and 30 minutes
after each arrival. Ticket counters and baggage service
offices must be staffed by an adequate number of ticket
agents, ramp and other passenger service personnel in uniforms
prescribed by US Airways, and having been fully trained to US
Airways standards providing services in accordance with
established training standards;
(2) adequate check-in areas including passenger waiting room
facilities;
(3) all ground support personnel, facilities, and equipment
necessary to accommodate Contractor's passengers, freight, and
mail; and
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(4) such security facilities, personnel and passenger screening
procedures as are required by applicable orders, rules, and
regulations of the FAA as may be required.
(5) Personnel and systems as required to rigorously update the
FLIFO status used to inform passengers of current flight
information within ten (10) minutes of planned timed events
including off-gate, off-runway, on-ground, in-gate and delay
times, and unplanned delays. US Airways may assess a penalty
of * per flight for cancellations or delays of more than *
minutes not posted by Contractor in a timely manner. Penalties
assessed under this provision cannot exceed * per month.
(6) Announcements at airports and in-flight as required to inform
customers in a timely and professional manner of events
including boarding, delay, arrival, and/or lack of lavatory
facilities on board the aircraft for flights longer than 1
hour.
(7) Installation and maintenance of all interior and exterior
signs, posters, timetable racks and decor of ticket counter
back-wall and gate areas, consistent with US Airways and/or US
Airways Express operations. Materials will be provided by US
Airways.
(8) Ramp operations, marshalling, deicing, etc., as outlined in US
Airways and US Airways Express Policies and Procedures manual.
(9) Cargo processing and handling on US Airways airbills.
(10) Participation in SABRE FOS (Flight Operations System) which
will permit the collection of operational performance and
traffic statistics.
(11) Reasonable participation by Contractor's management staff in
those meetings and task groups which will be required from
time to time in order to identify various ways to improve the
overall operational performance of the network, or to provide
training or information regarding new policies or procedures
necessary to the consistent delivery of service.
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SECTION 3.06 TERMS OF TRANSPORTATION, SALES AND PROMOTION
(a) US Airways' Terms of Transportation, with certain exceptions as listed
therein, shall be applicable to services provided by Contractor pursuant to this
Agreement. Such Terms of Transportation shall at all times be available for
public inspection at Contractor's corporate offices and at each airport ticket
counter and sales office maintained and operated by or on behalf of Contractor.
(b) US Airways and Contractor agree that each carrier is authorized to sell
air transportation of passengers and property on the scheduled flights operated
by the other carrier; provided, however, that neither US Airways nor Contractor
shall issue passenger tickets or exchange orders which provide for space on a
particular flight except on the basis of a confirmed reservation for such space.
Such sales will only utilize US Airways "037" ticket stock, forms and other US
Airways documents. Unless otherwise approved by US Airways in writing,
Contractor may only issue its own ticket stock for non-revenue travel by
Contractor's employees, other airline employees, travel agents, service
providers or vendors on Contractor's "US" designated flights.
(c) The party issuing a ticket or exchange order for passenger
transportation shall pay to the party furnishing the transportation pursuant
thereto, or pursuant to a ticket issued in exchange for such exchange order, the
charges applicable to the transportation furnished. Such payments shall be made
as follows:
(1) with respect to passenger tickets and exchange orders issued
by Contractor for transportation on Contractor, US Airways and other
air carriers with which US Airways has a current ticket and baggage
agreement, Contractor shall remit to US Airways through the Airlines
Clearing House, Inc. (Clearing House) in accordance with the procedures
set forth in the then currently effective Manual of Procedures issued
by said Clearing House, but in no event later than the twenty-eighth
(28th) day of the month following the month in which the sale occurred,
all of the monies or proceeds of such sales. Contractor shall prepare
and furnish to US Airways all written reports, accounts, and
documentation that US Airways may require daily or at such lesser
frequency as
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US Airways may prescribe, at its sole discretion, from time to time
during the term of this Agreement; and
(2) Invoices for all flight coupons collected by Contractor from
it's passengers, issued by US Airways or it's appointed agents and
validated "037" shall be settled through the Airline Clearing House in
accordance with the procedures set forth in Section D titled ACH
Sampling Procedure of the Airline Clearing House Manual of Procedure.
Contractor agrees to an initial US Airways provisional audit sample
size based on the numbers of Flight coupons billed monthly to US
Airways in accordance with the schedule set forth below:
Schedule
When the number of flight coupons billed monthly to US Airways
by Contractor are between the number in Column A and the
number in Column B for a period of three consecutive months,
Contractor agrees to adjust the US Airways provisional audit
sample size to the number in Column C.
Column A Column B Column C
-------- -------- --------
* and * *
* and * *
* and * *
* and * *
* and * *
* and * *
(3) With respect to passenger transportation furnished by
Contractor pursuant to this Agreement and invoiced to US Airways in
accordance with 3.06(c) (2) above, Contractor shall be required to
furnish to US Airways passenger billing information via EBCDIC media
(magnetic tape) or ASCII media (diskette) in accordance with the
procedures as set forth in Section C.2 Article 4 of the Manual of
Procedures issued by the Clearing House.
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If changes are made to the procedures and/or reporting format during
the term of this Agreement, Contractor will make the required changes
that are compatible with US Airways systems.
(4) With respect to airbills issued by Contractor for
transportation of property on Contractor, US Airways and other air
carriers, and with respect to inbound collect shipments, including
without limitation, inbound C.O.D. shipments, handled by Contractor as
the final carrier, all monies or proceeds collected and received by
Contractor in connection with such transactions shall be remitted to US
Airways through the Clearing House in accordance with the procedures
set forth in the currently effective Manual of Procedures issued by
said Clearing House, but in no event later than the twenty-eighth
(28th) day of the month following the month in which such monies or
proceeds were collected. In addition, Contractor shall prepare and
furnish to US Airways all written reports, accounts and documents that
US Airways may require, on a daily basis or at such lesser frequency as
US Airways may prescribe, at its sole discretion, from time to time
during the term of this Agreement.
(d) US Airways may prescribe in its sole discretion from time to
time during the term of this Agreement such new or different passenger
and air freight sales and accounting procedures as may be required by
experience or changed circumstances. In addition, US Airways and
Contractor by mutual agreement, and with no less than * notice having
been given, may establish alternative or modified passenger sales and
accounting procedures in order to accommodate tickets or exchange
orders issued by air carriers which are not participants in the
Clearing House.
(e) No commission will be paid for the sale of air transportation
when such sale is made directly by the parties hereto and not by a
travel agent. Each party who accepts as payment a credit card charge in
exchange for issuing tickets, exchange orders or air freight bills for
transportation of persons or property on Contractor, US Airways or
other carriers shall pay all commissions charged by the issuer of such
credit card with respect to such credit card charge sale. US Airways
may increase the service charges in Section
18
8.01 by the amount of credit card commissions owed by Contractor
hereunder and paid by US Airways.
(f) Contractor shall assume full liability for and shall
indemnify, defend, protect, save, and hold harmless US Airways, its
directors, officers, agents, and employees from any and all
liabilities, damages, claims, suits, judgments, and all related
expenses or losses on account of the loss, misapplication, theft or
forgery of passenger tickets, exchange orders, airbills or other
supplies furnished by or on behalf of US Airways to Contractor, or the
proceeds thereof, whether or not such loss is occasioned by the
insolvency of either the purchaser of the aforesaid passenger tickets,
exchange orders, airbills or other documents or of a bank in which
Contractor may have deposited such proceeds. Contractor's
responsibility hereunder for passenger tickets, exchange orders,
airbills, and other supplies shall commence immediately upon delivery
of said passenger tickets, exchange orders, airbills, and other
supplies into the possession of Contractor or any duly authorized
officer, agent or employee of Contractor. US Airways shall furnish
Contractor prompt and timely notice of any claims made, or suits
instituted against US Airways which in any way may result in the
indemnification hereunder and Contractor shall have the right to
compromise or participate in the defense of same to the extent of its
own interest.
(g) US Airways will include the scheduled air services provided by
Contractor pursuant to Section 2.01 in its public timetables. All
references in US Airways' public timetables to Contractor's US Airways
Express services shall also contain notations indicating that such
scheduled services are performed by Contractor as an independent
contractor under the appropriate US Airways Trademarks, as required by
DOT or other regulatory agencies.
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ARTICLE 4 PASSENGER FARES AND DIVISION OF REVENUES
SECTION 4.01 LOCAL FARES
Contractor shall establish (and US Airways shall publish) local (selling) fares
applicable to Contractors' US Airways Express city-pairs served on a non-stop
basis only, and Contractor shall be paid its local fares for passengers
traveling solely on Contractor's US Airways Express flights in accordance with
industry and Clearing House practices. Contractor may establish US code fares in
any connecting or through flight city pairs where it serves one or more segments
pursuant to Section 2.01 of this Agreement only if no other US Airways Group
entity, affiliate, subsidiary, contract codeshare carrier, or any combination
thereof serves the origination city or the destination city unless all segments
of Contractor's connecting service operate pursuant to Section 2.02.
SECTION 4.02 ALL OTHER FARES
US Airways will establish all fares using the "US" designator except those
specifically addressed in Section 4.01.
SECTION 4.03 DIVISION OF REVENUES
(a) All fares wholly within and/or between the fifty (50) United States,
the District of Columbia and Canada will be divided in accordance with the *
unless the division of such fares is otherwise mutually agreed to by US Airways
and Contractor. Under the *, each parties' portion of the actual joint (through)
fare is determined by *.
(b) All other fares will be divided in accordance with the procedures as
established and amended from time to time in the IATA Prorate Passenger Manual
unless the division of such fares is otherwise mutually agreed to by US Airways
and Contractor, and all fares shall be prorated as on-line, and without the
application of provisos.
20
ARTICLE 5 AIR FREIGHT RATES
SECTION 5.01 JOINT AIR FREIGHT RATES
Throughout the term of this Agreement, US Airways and Contractor shall establish
and maintain joint air freight rates, including rates covering general
commodity, small package, and priority air freight shipments.
SECTION 5.02 COMPENSATION TO CONTRACTOR FOR AIR FREIGHT
For the transportation of air freight on the scheduled services to be operated
by Contractor pursuant to Section 2.01 above, US Airways will pay Contractor the
following:
(a) General Commodity Freight............... $*;
(b) Priority Freight........................ $*;
(c) Small Package Freight................... * of the charges per
shipment, originated
or terminated.
The foregoing rates to be paid Contractor for the transportation of air freight
shall be subject to adjustment from time to time as required by experience and
as mutually agreed to by US Airways and Contractor. Operator has the right to
audit STARS Cargo reimbursement system on an annual basis.
ARTICLE 6 US MAIL
(a) Contractor shall accept for transportation, and shall transport on the
regularly scheduled air transportation services it shall operate pursuant to
Section 2.01 of this Agreement, such U.S. mail as shall be tendered to it by the
United States Postal Service (USPS) and by US Airways. In the performance of its
transportation of the U.S. mail as aforesaid, Contractor shall observe and
comply with any and all applicable postal regulations, instructions and
procedures and with any applicable orders or regulations of the DOT governing
the transportation of mail by scheduled air carriers.
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(b) All mail transported by Contractor pursuant to this Article 6 shall be
transported under the currently effective service mail rates established by the
DOT or the USPS for the transportation of the U.S. mail by US Airways. US
Airways shall make all reports and keep all records and accounts and perform
such other administrative functions as may be required by the USPS in connection
with the transportation of the mails by Contractor in the city-pairs covered by
this Agreement.
(c) All payments by the USPS under US Airways' effective service mail rates
for the transportation of the mails by Contractor in the city-pairs covered by
this Agreement, shall be made to US Airways. US Airways shall pay to Contractor
monthly, via procedures of the Airline's Clearing House, a sum of money equal to
* for all categories of mail boarded on Contractor's scheduled flights. The rate
of * of mail boarded established by this paragraph (c) shall be subject to
adjustment from time to time during the effectiveness of this Agreement as
mutually agreed upon by US Airways and Contractor.
(d) Contractor shall assume full liability for and shall indemnify, defend,
protect, save, and hold harmless US Airways, its directors, officers, agents,
and employees from and against any and all liabilities, damages, claims,
demands, suits, judgments, including, without limitation, any and all fines,
penalties or other sanctions imposed by the USPS (including all costs, fees, and
expenses in connection therewith or incident thereto), for the loss, delay,
damage or destruction of any of the mails tendered to Contractor by the USPS or
by US Airways for transportation pursuant to this article and for any and all
violations or failures on the part of Contractor, its directors, officers,
agents, employees or independent contractors to observe and comply with any
applicable rules, regulations or orders of the USPS, the DOT, or any other duly
authorized governmental agency relating to the transportation of the mails,
arising out of, or in any way connected with the performance by Contractor, its
directors, officers, agents, employees, and independent contractors of the
transportation of the mails pursuant to this Agreement. US Airways shall give
Contractor prompt and timely notice of any claims made, suits instituted or
fines, penalties or other sanctions imposed against US Airways, which in any way
result in the
22
indemnification hereunder, and Contractor shall have the right to participate in
the compromise, or the defense of same, at its sole expense and to the extent of
its own interest. In the event US Airways shall be required to pay any fine,
penalty or other monetary sanction imposed against US Airways which in any way
results in the indemnification hereunder, it is mutually agreed that the amount
of such fines, penalties or other monetary sanctions shall be deducted and set
off against payments US Airways is required to make to Contractor pursuant to
paragraph (c) above, such deduction and set out to continue until US Airways
recovers the full amount of any fine, penalty or other monetary sanction it
shall be required to pay by reason of any act or omission of Contractor, its
directors, officers, agents, employees, and independent contractors in the
performance under this article.
ARTICLE 7 LIABILITY INDEMNIFICATION AND INSURANCE
SECTION 7.01 CONTRACTOR SHALL ACT AS AN INDEPENDENT CONTRACTOR
(a) The employees, agents, and/or independent contractors of Contractor
engaged in performing any of the services Contractor is to perform pursuant to
this Agreement shall be employees, agents, and independent contractors of
Contractor for all purposes, and under no circumstances shall be deemed to be
employees, agents or independent contractors of US Airways. In its performance
under this Agreement, Contractor shall act, for all purposes, as an independent
contractor and not as an agent for US Airways. US Airways shall have no
supervisory power or control over any employees, agents or independent
contractors engaged by Contractor in connection with its performance hereunder,
and all complaints or requested changes in procedures shall, in all events, be
transmitted by US Airways to a designated officer of Contractor. Nothing
contained in this Agreement is intended to limit or condition Contractor's
control over its operations or the conduct of its business as a commuter air
carrier, and Contractor and its principals assume all risks of financial losses
which may result from the operation of the air services to be provided by
Contractor hereunder.
(b) The employees and agents of US Airways engaged in performing any of the
services US Airways is to perform pursuant to this Agreement shall be employees
and agents of
23
US Airways for all purposes, and under no circumstances shall be deemed to be
employees and agents of Contractor. Contractor shall have no supervision or
control over any such US Airways employees and agents and any complaint or
requested change in procedure shall be transmitted by Contractor to US Airways'
designated representative.
SECTION 7.02 LIABILITY AND INDEMNIFICATION
(a) Each party hereto assumes full responsibility for any and all liability
to its own directors, officers, employees, or agents arising from injury, or
death resulting from or sustained in the performance of its respective services
under this Agreement.
(b) Contractor and Mesa Air Group, Inc. and Mesa Air Group, Inc.
subsidiaries will indemnify, defend, protect, save, and hold harmless US
Airways, US Airways Group and US Airways Group subsidiaries, their directors,
officers, employees, and agents from and against any and all liabilities,
claims, demands, suits, judgments, damages, and losses (including the costs,
fees, and expenses in connection therewith and incident thereto), brought
against US Airways, US Airways Group and US Airways Group subsidiaries, their
directors, officers, employees or agents by or on behalf of any director,
officers, employee, agent or independent contractor of Contractor or anyone else
claiming through such persons, or by reason of damage or destruction of property
of any such person, or injury to or death of such person, other than employees
or agents of US Airways, US Airways Group and US Airways Group subsidiaries
caused by or arising out of any act or omission of Contractor, Mesa Air Group or
Mesa Air Group subsidiaries arising out of or in connection with this Agreement,
except for those acts or omissions caused by gross negligence or willful
misconduct of US Airways, US Airways Group and US Airways subsidiaries. US
Airways will give Contractor prompt and timely notice of any claim made or suit
instituted against US Airways which in any way results in indemnification
hereunder, and Contractor will have the right to compromise or participate in
the defense of same to the extent of its own interest, including the selection
of counsel to represent its interest in the matter.
(c) Each party, with respect to its own employees, accepts full and
exclusive liability for the payment of worker's compensation and/or employer's
liability insurance
24
premiums with respect to such employees, and for the payment of all taxes,
contributions or other payments for unemployment compensation or retirement
benefits, pensions or annuities, if any, now or hereafter imposed upon employers
by the government of the United States or by any state or local governmental
body with respect to such employees measured by the wages, salaries,
compensation or other remuneration paid to such employees, or otherwise, and
each party further agrees to make such payments and to make and file all reports
and returns, and to do everything necessary to comply with the laws imposing
such taxes, contributions or other payments.
(d) US Airways and US Airways Group and US Airways Group subsidiaries will
indemnify, defend, protect, save, and hold harmless Contractor, Mesa Air Group
and Mesa Air Group subsidiaries their directors, officers, employees, and agents
from and against any and all liabilities, claims, demands, suits, judgments,
damages, and losses (including all costs, fees and expenses in connection
therewith or incident thereto), brought against Contractor, Mesa Air Group and
Mesa Air Group subsidiaries their directors, officers, employees or agents by or
on behalf of any director, officer, employee, agent or independent contractor of
US Airways or anyone else claiming through such persons, or by reason of damage
or destruction of property of any such person, or injury to or death of such
person, other than employees or agents of Contractor, Mesa Air Group and Mesa
Air Group subsidiaries caused by or arising out of any act or omission of US
Airways, US Airways Group and US Airways Group subsidiaries, arising out of or
in connection with this Agreement except for those acts or omissions caused by
the gross negligence or willful misconduct of Contractor, Mesa Air Group and
Mesa Air Group subsidiaries.. Contractor will give US Airways prompt and timely
notice of any claim made or suit instituted against Contractor which in any way
results in indemnification hereunder, and US Airways will have the right to
compromise or participate in the defense of same to the extent of its own
interest, including the selection of counsel to represent its interest in the
matter.
SECTION 7.03 INSURANCE COVERAGE
(a) In consideration of the privileges granted herein, Contractor shall, at
all times during the effectiveness of this Agreement, commencing with the first
day thereof, have and maintain in full
25
force and effect policies of insurance satisfactory to US Airways, of the types
of coverage, including coverage on all aircraft described in Section 2.03, and
in the minimum amounts stated below with companies satisfactory to US Airways
and under terms and conditions satisfactory to US Airways as follows:
Minimum Amounts of Insurance Coverage (US Currency)
1. AIRCRAFT LIABILITY AND GROUND LIABILITY INSURANCE
(Including Comprehensive Public Liability, War and Allied
Perils Liability (AVN 52D) or Third Party War Liability
available from the U.S. Government under Chapter 443 of Title
49, or other insurance available in order to match or exceed
the required amount of aircraft liability insurance.)
a. Bodily Injury and Personal Injury -Passengers
b. Bodily Injury and Personal Injury - Non-Passengers
c. Property Damage
The minimum amounts of insurance coverage required under this paragraph
shall be * per occurrence, combined single limit for all coverage
required under this paragraph 1 utilizing aircraft with less than
thirty seats except personal injury - non-passengers where the minimum
amount of insurance coverage is * per occurrence and in the aggregate.
Per Accident
2. XXXXXXX' S COMPENSATION INSURANCE:
(Company Employees) Statutory
3. EMPLOYER' S LIABILITY:
(Company Employees) *
4. ALL RISK HULL INSURANCE Agreed Value Or Such
26
ON AIRCRAFT PERFORMING Lesser Amount As May Be
SERVICES HEREUNDER: Consented To By US Airways
5. BAGGAGE LIABILITY: * (Per Passenger)
6. CARGO LIABILITY: * Any One Aircraft
* Any One Disaster
With Terms, Limitations and
Conditions Acceptable to
US Airways
(b) The parties hereby agree that from time to time during the term of this
Agreement, US Airways may require Contractor to have and maintain greater
coverage than the amounts set forth in paragraph (a) above, should the
circumstances and conditions of Contractor's operations under this Agreement be
deemed in US Airways' reasonable judgment, to require reasonable increases in
any or all of the foregoing minimum insurance coverage. US Airways will provide
Contractor with at least thirty (30) days advance written notice of any increase
under this Section.
SECTION 7.04 ADDITIONAL REQUIREMENT
(a) Contractor shall cause the policies of insurance described in Section
7.03 to be duly and properly endorsed by Contractor's insurance underwriters as
follows:
(1) as to the policies of insurance described in paragraphs 1, 2,
3, 4, 5, and 6 of said Section 7.03(a);
(A) to provide that any waiver of rights of subrogation
against other parties by Contractor will not affect the
coverage provided hereunder with respect to US Airways; and
(B) to provide that Contractor's underwriters shall waive
any and all subrogation rights against US Airways its
directors, officers, agents, and employees without regard to
any breach of warranty on the part of Contractor or
27
to provide other evidence of such waiver of recourse against
US Airways, its directors, officers, agents, or employees as
shall be acceptable to US Airways.
(2) as to policies of insurance described in paragraphs 1, 5, and
6 of said Section 7.03(a)
(A) to provide that US Airways, its directors, officers,
agents, and employees shall be endorsed as Additional Insured
parties thereunder; and
(B) to provide that said insurance shall be primary
insurance and to acknowledge that any other insurance policy
or policies of US Airways shall be secondary or excess
insurance;
(3) as to policies of insurance described in paragraphs 1 of said
Section 7.03(a) to provide a breach of warranty clause to said policies
acceptable to US Airways;
(4) as to policies of insurance described in paragraph 1 only of
said Section 7.03(a):
(a) to provide, with respect to claims in favor of US
Airways, its directors, officers, agents and employees against
Contractor, its directors, officers, agents and employees,
that US Airways, its directors, officers, agents, and
employees shall not be deemed to be insured under the said
insurance policies, and to this end to provide a
cross-liability clause (acceptable to US Airways) as though
separate policies were issued for US Airways and Contractor
other than the Limit of Liability and to provide a reciprocal
cross-liability clause in favor of Contractor; and
(b) to provide contractual liability insurance coverage
for liability assumed by Contractor under this Agreement.
(5) as to policies of insurance described in paragraph 4 above of
said Section 7.03(a), to provide that said Aircraft Hull Insurance
shall be on an agreed value basis, and, except with the consent of US
Airways, shall not be subject to more than the standard market
deductibles in the event of loss, settled on the basis of a total loss,
all losses shall be payable in full;
(6) as to any insurance obtained directly from foreign
underwriters, to provide that US Airways may maintain against said
Contractor's underwriters a direct action in the United States upon
said insurance policies and to this end provide a standard service of
suit clause designating a United States attorney in Washington, D.C. or
New York, N.Y.
28
(b) Contractor shall cause each of the insurance policies referred to in
Section 7.03 to be duly and properly endorsed to provide that said policy or
policies or any part or parts thereof shall not be cancelled, or materially
adversely altered, changed or amended by Contractor's insurance underwriters,
until after thirty (30) days' written notice to US Airways which thirty (30) day
notice period shall commence to run from the date such notice is actually mailed
to US Airways.
(c) Upon the effective date of this Agreement, and upon each anniversary
during the term of this Agreement, Contractor shall furnish to US Airways
evidence reasonably satisfactory to US Airways of the aforesaid insurance
coverage and endorsements, including certificates certifying that the aforesaid
insurance policy or policies with the aforesaid policy limits are duly and
properly endorsed as aforesaid and are in full force and effect. Initially, this
evidence shall be via a certificate of insurance.
(d) In the event Contractor fails to maintain in full force and effect any
of the insurance and endorsements described in Sections 7.03 and 7.04, US
Airways shall have the right (but not the obligation) to procure and maintain
such insurance or any part thereof. The cost of such insurance shall be payable
by Contractor to US Airways upon demand by US Airways. The procurement of such
insurance or any part thereof by US Airways does not discharge or excuse
Contractor's obligation to comply with the provisions of Sections 7.03 and 7.04.
Contractor agrees not to cancel, or materially adversely alter, change or amend
said policies referred to in Section 7.03 until after providing * advance
written notice to US Airways, of its intent to so cancel, terminate or
materially alter, change or amend said policies of insurance, which * notice
period shall commence to run from the date notice is actually received by US
Airways.
SECTION 7.05 CARGO LIABILITY INSURANCE
US Airways agrees to make available to Contractor cargo liability insurance
coverage under US Airways' cargo liability insurance policy solely with respect
to air freight transported by Contractor under a US Airways airfoil in scheduled
air services operated pursuant to Sections
29
2.01 and 2.03 and such coverage shall be deemed to satisfy Contractor's
obligation to have and maintain in full force and effect cargo liability
insurance coverage in accordance with the terms of Section 7.03(a)(6), provided
however, that US Airways may cancel, terminate, alter, change or amend the cargo
liability insurance coverage furnished to Contractor pursuant to this Section
7.06, upon thirty (30) days' written notice to Contractor, and provided.
further, if US Airways cancels or terminates such coverage with respect to
Contractor, Contractor shall furnish US Airways evidence, on or before the
effective date of such cancellation or termination, that it has obtained cargo
liability insurance coverage in accordance with Section 7.03(a)(6).
ARTICLE 8 CONSIDERATION, RECORDS AND REPORTS
SECTION 8.01 CONSIDERATION
(a) For and in consideration of system charges, such as but not limited to
reservations (OAL CRS charges excluded) ground services, credit card fees,
facilities and other related services to be provided to Contractor hereunder;
the nonexclusive, nontransferable license granted to Contractor authorizing the
specified uses of US Airways' Trademarks and other valuable consideration
provided by this Agreement, Contractor shall pay to US Airways the following
amounts (the "Service Charges"):
(1) *.
(2) *.
(3) *.
(4) *.
(5) *.
(b) Contractor shall establish bank account/s at mutually agreed upon
locations for the purpose of depositing daily cash sales collected at Contractor
ticketing locations. US Airways will, at the close of business each day,
electronically sweep the account for all cash sales made at Contractor ticketing
locations. Contractor will incur reasonable set-up and maintenance fees as
required to report and remit cash sales.
30
(c) US Airways shall calculate and collect such Service Charges from
Contractor through the Clearing House referred to in Article 3 in accordance
with the procedures set forth in the currently effective Manual of Procedures
issued by said Clearing House, but in no event later than the twenty-eighth
(28th) day of the month following the month in which services were provided. In
the event Contractor fails to pay US Airways in full all Service Charges payable
hereunder when due, Contractor agrees to pay to US Airways, in addition to such
Service Charges, interest on the unpaid balance of such Service Charges computed
at the rate per annum of * plus the prime rate which the Chase Manhattan Bank
(National Association) from time to time charges at its principal office in New
York on short-term loans to large businesses with the highest credit standing,
with a minimum rate per annum of * from the due date thereof to the date of
payment.
(d) It is hereby mutually agreed and understood by the parties hereto that
the aforesaid Service Charges per Contractor passenger boarded contemplate that
in the performance of the services described in Article 3 hereof, US Airways
will use only the personnel in its employ and the equipment and facilities which
it owns or leases. In the event US Airways is required to employ, retain or
otherwise furnish additional personnel or obtain, by purchase, lease or
otherwise any additional facilities or equipment, or incur in any manner
whatsoever any expenses or disbursements in connection with its performance of
this Agreement in excess of the personnel, facilities or equipment being
provided in the normal course of business, Contractor shall reimburse US Airways
in full, through the Clearing House for the actual costs of such additional
personnel, facilities and/or equipment, and for any actual expenses or
disbursements incurred by US Airways in connection with its performance under
this Agreement.
(e) The US Airways Service Charges as described in Section 8.01 (a) shall
be subject to adjustment by US Airways from time to time during the term of this
Agreement. Such adjustments shall be made upon * advance notice in writing from
US Airways to Contractor.
(f) All payments and/or reimbursements contemplated in this Article shall
be deemed to be in addition to and not in lieu of any other payments and/or
reimbursements required of either party hereto by other articles of this
Agreement, including but not limited to Article 3.
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SECTION 8.02 RECORDS AND REPORTS
(a) Contractor shall provide reports in a form acceptable to US Airways
detailing scheduled air services operated by Contractor pursuant to Sections
2.01.
(1) Reports due by the 10th working day of the following month
shall contain the following minimum information:
(a) The total number of scheduled and actual departures
for the month, by flight number and city of departure;
(b) The total number of passengers boarded, by flight
number and city of departure;
(c) The total poundage of air freight, air express, and
mail boarded by city of departure;
(d) Number of passengers by market; and
(e) Percentage of passengers connected to/from US Airways
Group, yearly forecast of passenger boardings, by city.
(Updates are required for all significant schedule changes and
must be submitted one month in advance of change).
(2) Reports due by the 5th working day of the month shall contain
the following minimum information:
(A) Passenger enplanements by city, total passengers
connected to/from US Airways Group, total number of frequent
traveler passengers, total RPM's and ASM's, performance report
information.
(3) Operator's Dispatch shall report immediately to US Airways'
System Control for inclusion into B.A.S.I.S any incident, accident
(ground or flight) that affects or could affect the safety of any
operations conducted under this Agreement.
(4) US Airways reserves the right to use FATS (Flight and Traffic
Statistics) data rather than reports and data supplied by Contractor
for any and all measurement of Contractor's operational and passenger
performance.
32
(b) Contractor shall furnish US Airways once every three (3) months
unaudited financial statements including Contractor's current corporate balance
sheets and profit and loss statements, and within ninety (90) days after the
close of its fiscal year, Contractor shall furnish US Airways with audited
financial statements.
(c) At US Airways' option, an authorized representative of US Airways may
inspect Contractor's corporate records and accounts once during each calendar
quarter during the term of this Agreement.
(d) Contractor shall promptly furnish US Airways a copy of every report
that Contractor files with the DOT, or some successor agency and such other
traffic, operating and financial information as US Airways may reasonably
request, from time to time, during the term of this Agreement which US Airways
agrees to keep confidential and not disclosed to persons for any purpose other
than to determine Contractor's compliance with this Agreement.
(e) Contractor shall also promptly furnish US Airways with a copy of every
report that Contractor prepares, whether or not such report is filed with the
FAA, National Transportation Safety Board (NTSB) or any other governmental
agency, relating to any accident or incident involving an aircraft used by
Contractor in performing services under this Agreement, whether or not such
aircraft bears any US Airways Trademarks, when such accident or incident is
claimed to have resulted in the death of or injury to any person or the loss of,
damage to or destruction of any property.
(g) In order to assure the preservation of product quality and brand
reputation of US Airways Express, Contractor shall promptly furnish US Airways
with a copy of every letter received by Contractor regarding services provided
as US Airways Express. Such letters shall include but are not limited to letters
received from customers; federal, state or local government agencies; and local
airport authorities. Failure to promptly provide copies of such letters to US
Airways may result in forfeiture of the Performance Incentive described in
Section 8.03, for the quarter during which copies of letters were not provided
to US Airways.
33
SECTION 8.03 PERFORMANCE INCENTIVE
(a) Contractor's operating performance will be tracked by US Airways each
quarter based upon the following metrics:
(1) *.
(2) *.
(3) *.
(b) After the end of each quarter beginning with the second quarter of 2003
(April 1,2003 through June 30, 2003) when the measurement data has become
available, US Airways will compute the measurements included in Section 8.03 (a)
and provide a summary statement showing the operating performance of Contractor
in the preceding quarter. US Airways, in consultation with Contractor, will also
compute the amount due to/from Contractor, referred to as the Performance
Incentive Payment per the Performance Incentive Schedule that will be
established by US Airways at the beginning of each calendar year. The
Performance Incentive Payment will be calculated *. Contractor may review and
audit or cause its independent consultants to review and audit all records
relevant to the above calculations.
PERFORMANCE INCENTIVE PAYMENT SCHEDULE
*
(c) Service Standards for * are set forth in Exhibit 1, attached hereto and
made a part hereof .
(d) Any disputes between US Airways and Contractor arising as a result of
the Performance Plan will be resolved in accordance with the dispute resolution
procedures set forth below.
(e) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Virginia without regard to
Virginia's conflict of laws statutes.
34
The Parties further consent to the jurisdiction of the federal courts located
within the Commonwealth of Virginia and waive any claim of lack of jurisdiction
or forum non conveniens.
ARTICLE 9 EFFECTIVE DATE, TERMINATION AND CANCELLATION
SECTION 9.01 EFFECTIVE DATE AND TERM
(a) This Agreement will become effective on May 14, 2003 and will continue
in effect thereafter until * unless it is terminated in whole or in part at an
earlier date pursuant to one or more of the provisions of this Agreement .
(b) The scheduled air transportation services to be operated by Contractor
as from time to time established pursuant to Section 2.01 (a) shall be
maintained, without interruption, throughout the term of this Agreement, except
and until such scheduled transportation services are modified in accordance with
Section 2.01.
(c) In the event there is any change in the statutes governing the economic
regulation of air transportation, or in the applicable rules, regulations or
orders of the DOT or some successor agency or department of the government
having jurisdiction over air transportation which change or changes materially
affect the rights and/or obligations presently in force with respect to the
marketing relationship of US Airways or Contractor, or both, then the parties
hereto will consult, within * after any of the occurrences described herein, in
order to determine what, if any, changes to this Agreement are necessary or
appropriate, including but not limited to the early termination and cancellation
of this Agreement. If the parties hereto are unable to agree whether any change
or changes to this Agreement are necessary and proper, or as to the terms of
such changes, or whether this Agreement should be cancelled in light of the
occurrences described above, and such failure to reach agreement shall continue
for a period of * following the commencement of the consultations provided for
by this Section 9.01(c), then this Agreement may be cancelled by either US
Airways or Contractor upon providing the other party a minimum of * written
notice of such cancellation.
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SECTION 9.02 TERMINATION
(a) US Airways, in addition to the other provisions of this Agreement, may
terminate this Agreement, in whole or in part, upon not less than * written
notice to Contractor should any one of the following conditions occur during the
time this Agreement is in effect provided however with respect to the city pairs
listed in Section 2.01(a)(i), Contractor shall have the one time right to cure
the conditions contained in such written notice within * of receiving such
notice:
(1) if Contractor fails to maintain the minimum operations in any
of the city-pairs as specified from time to time in Section 2.01(a)
during the effectiveness of this Agreement, or fails to retain and/or
utilize the aircraft specified in Section 2.03 in the manner provided
in Article 2, except as otherwise provided herein, provided that such
termination under this Section 9.02(a)(1) shall only apply to all of
the cities in the entire subsection (Sections 2.01(a)(i), 2.01(a)(ii),
2.01(a)(iii), 2.01(a)(iv) or 2.01(a)(v)) in which Contractor failed to
maintain the minimum operations for a city pair ;
(2) if, during any * during the term of this Agreement,
Contractor's flight completion factor for any of the groups of
city pairs listed in any of Sections 2.01(a)(i)-(v) shall fall
below * due to cancellations attributable to maintenance or
operational deficiencies within Contractor's normal management
control and Contractor has failed to correct the maintenance
or operational deficiency in a period of *;
(3) if during any * during the term of this Agreement, Contractor
utilizes fewer than: i) in Kansas City pursuant to Section
2.01(a)(i) * aircraft, ii) in Florida pursuant to Section 2.01
(a)(ii) * aircraft, iii) in Philadelphia pursuant to Section
2.01(a)(iii) three (3) aircraft, iv) in Pittsburgh pursuant to
Section 2.01(a)(iv) * aircraft, and v) in Charlotte pursuant
to Section 2.01(a)(v) * aircraft p of the type required in
this Agreement in any of the groups of city pairs listed in
any of Sections 2.01(a)(i)-(v) provided that such termination
under this Section 9.02(a)(3) shall only apply to all of the
cities in the entire subsection (Section 2.01(a)(i), Section
2.01(a)(ii), Section 2.01(a)(iii), Section 2.01(a)(iv) or
Section 2.01(a)(v) in which Contractor failed to utilize fewer
than the minimum number of aircraft listed in this Section.
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(4) if Contractor fails to comply with the trademark license
provisions of Article 11 of this Agreement;
(b) Either party, in addition to the other provisions of this
Agreement, may terminate this Agreement, in whole or in part, upon not
less than * written notice to the other party in the event that:
(1) Either Party shall file a voluntary petition in bankruptcy or
that proceedings in bankruptcy shall be instituted against it and such
Party shall be adjudged bankrupt, or that a court shall take
jurisdiction of such Party, and its assets pursuant to proceedings
brought under the provisions of any federal reorganization act, or that
a receiver of the assets of such Party shall be appointed and such
taking or appointment shall not be stayed or vacated within a period of
sixty (60) days, or that such Party shall be divested of, or be
prevented by any action of any federal authority from conducting and
operating its air transportation operations, or any of such Party's
aircraft shall be grounded by any governmental authority having
jurisdiction;
(2) Either Party shall fail to perform, keep, and observe any of
the terms, covenants or conditions herein contained on the part of such
party to be performed, kept or observed, the non-breaching Party may
give the other Party notice in writing to correct such condition or
cure such default and, if any such condition or default shall continue
for * after the receipt of such notice and if within such period of
time the correction of such condition or default has not been
accomplished; provided, however, that Section 9.02(a)(2) above shall
not be applicable to this sub-section.
(c) Contractor's service between the city pairs described in Sections
2.01(a)(i) and 2.01(b)(i) shall terminate on * unless otherwise
terminated in accordance with this Agreement; provided however US
Airways may terminate such service upon * prior written notice to
Contractor commencing on *.
(d) Contractor's service between the city pairs described in Sections
2.01(a)(ii) and 2.01(b)(ii) shall terminate on * unless otherwise terminated in
accordance with this Agreement, provided however US Airways may terminate such
service upon * prior written notice to Contractor commencing on the date of this
Agreement.
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(e) Contractor's service between the city pairs described in Sections
2.01(a)(iii) and 2.01(b)(iii) shall terminate on * unless otherwise terminated
in accordance with this Agreement, provided however US Airways may terminate
such service upon * prior written notice to Contractor commencing on *.
(f) Contractor's service between the city pairs described in Sections
2.01(a)(iv) and 2.01(b)(iv) shall terminate on * unless otherwise terminated in
accordance with this Agreement, provided however US Airways may terminate such
service upon * prior written notice to Contractor commencing on *.
(g) Contractor's service between the city pairs described in Sections 2.01(a)(v)
and 2.01(b)(v) shall terminate on * unless otherwise terminated in accordance
with this Agreement, provided however US Airways may terminate such service upon
* prior written notice to Contractor commencing on *.
(h) Any early termination or cancellation pursuant to one or more of the
provisions of this Article 9 shall not be construed so as to relieve any party
hereto of any debts or monetary obligations to the other party that shall have
accrued hereunder prior to the effective date of such termination or
cancellation. In the event of any early termination or cancellation pursuant to
one of more of the provisions of this Article 9, US Airways shall have sole
ownership of the passenger records booked on flights operated under this
Agreement. US Airways shall cooperate with any reasonable requests by Contractor
for copies of such records.
SECTION 9.03 FORCE MAJEURE
Neither US Airways nor Contractor shall be liable for any failure to perform
under this Agreement if such failure is due to causes beyond its control,
including, but not limited to, acts of God or the public enemy, war, terrorism,
fire, floods, epidemics, quarantine or strikes; provided however, that the
foregoing shall not apply to the obligations assumed by Contractor under Article
7 of this Agreement.
SECTION 9.04 ASSIGNMENT
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In addition to the foregoing provisions of this Article, this Agreement may be
terminated by US Airways if there is an assignment of this Agreement or of any
of the rights, duties or obligations created hereunder with respect to this
Agreement without the prior written consent of US Airways. In the event that
this Agreement is assigned by Contractor, whether by operation of law or
otherwise, without such consent having been given in writing, US Airways shall
have the right to terminate the Agreement by telegraphic or written notice to
the Contractor. For the avoidance of doubt, Contractor shall remain primarily
liable to US Airways or its successors or assignees under this Agreement
regardless of any assignment by Contractor of this Agreement. Notwithstanding
the foregoing, US Airways may, without consent of Contractor, assign, or
transfer this Agreement to any company into which or with which US Airways or
its successors may be merged, combined or consolidated, or which may otherwise
succeed to substantially all of US Airways' assets.
ARTICLE 10 OPERATING RESTRICTIONS
SECTION 10.01 USE OF CONTRACTOR'S AIRCRAFT
In the event that aircraft owned and/or operated by Contractor bearing the US
Airways Trademarks are available and can be utilized without adversely affecting
in any manner the branded reputation or regular scheduled services operated
pursuant to Sections 2.01, such aircraft may be used only when requested and
approved at least seven days in advance by US Airways except for ad-hoc
extra-sections or charters:
(1) for nonscheduled passenger charters; or
(2) for scheduled or nonscheduled services limited to the
transportation of freight and/or mail in city-pairs other than those
described in Section 2.01; or
(3) on an emergency basis in operations not covered by this
Agreement.
(4) As extra-section flights on Contractor's routes as described
in Section 2.01.
(5) Other use of Contractor's aircraft in US Airways Express
livery is not permitted.
39
ARTICLE 11 TRADEMARK LICENSE FOR OPERATIONS TO BE CONDUCTED BY
CONTRACTOR PURSUANT TO THIS AGREEMENT
SECTION 11.01 GRANT OF TRADEMARK LICENSE
(a) Contractor will conduct all operations described in Section 2.01 above,
and any additional operations undertaken by subsequent amendment hereto, under
the service xxxx "US Airways Express" and shall utilize the US Airways service
marks consisting of the exterior and interior color decor and patterns on and
inside its aircraft as prescribed by US Airways. US Airways hereby grants to
Contractor a nonexclusive, nontransferable license to use such US Airways
service marks in connection with the services to be rendered by Contractor under
this Agreement; provided, however, that at any time during the term of this
Agreement, US Airways may alter, amend or revoke the license hereby granted and
require Contractor's use of any new or different US Airways service marks in
conjunction with the air transportation services provided hereunder as US
Airways may determine in the exercise of its sole discretion and judgment.
SECTION 11.02 TERMS AND CONDITIONS GOVERNING TRADEMARK LICENSE
(a) Contractor hereby acknowledges US Airways' ownership of the US Airways
service marks, further acknowledges the validity of the US Airways service
marks, and agrees that it will not do anything in any way to infringe or abridge
US Airways' rights in its service marks and trademarks or directly or indirectly
to challenge the validity of the US Airways service marks.
(b) Contractor agrees that, in providing the services to be provided under
this Agreement in conjunction with one or more of the US Airways service marks,
it will conform to such standards of service (including types of aircraft,
qualification of personnel, customer service standards, and other reasonable
quality control measures) as may be prescribed by US Airways either specifically
in this Agreement or by subsequent communications to Contractor. Contractor
shall maintain the appearance of the exterior and interior of the aircraft by
employing such cleaning
40
and refurbishment programs that will ensure a clean and tidy appearance.
Contractor is required to provide US Airways with an aircraft cleaning and
appearance plan and compliance update every six months. US Airways shall have
the right, through such agents or representatives as it may designate, to
inspect the services and standards being performed by Contractor under this
Agreement and in the event that, in US Airways' opinion, there has been some
deviation from such services and/or standards, Contractor agrees upon written
notice from US Airways to rectify promptly any such deviation. Contractor will
comply with standards related to the Air Transport Association's Customer First
Initiative, as defined by US Airways in its "Customer Commitment", issued in
September 1999, and will, within * of receipt forward to US Airways a copy of
all correspondence with passengers including a copy of Contractor's response to
the passenger.
(c) Contractor shall not, without US Airways' express prior written
consent, advertise the services to be rendered hereunder, nor make use of the US
Airways Trademarks referred to in Section 11.01 above in any advertising. US
Airways shall have absolute discretion to withhold its consent concerning any
and all such advertising and use of the US Airways Trademarks in advertising by
Contractor. In the event US Airways approves the use of such US Airways
Trademarks in any advertising, such advertising shall identify US Airways as the
owner of such trademark(s), and to the extent that any xxxx is registered, shall
so specify.
(d) To the extent that Contractor is licensed to use the xxxx "US Airways",
Contractor will use said xxxx only in the xxxx "US Airways Express" and then
only in conjunction with the services specifically embraced by this Agreement.
(e) Nothing in this Agreement shall be construed to give Contractor the
exclusive right to use the US Airways Trademarks, or to bridge US Airways' right
to use and/or to license its trademarks, and US Airways hereby reserves the
right to continue use of the US Airways Trademarks and to license such other
uses of said trademarks as US Airways may desire.
41
(f) No term or provision of this Agreement shall be construed to preclude
the use of the trademarks "US Airways Express" or the aircraft exterior color
decor and patterns by other individuals or corporations not covered by this
Agreement.
(g) Should this Agreement be cancelled or otherwise terminated for any
reason as set forth in Article 9 hereof, the license permitting Contractor to
use the US Airways Trademarks shall terminate and such marks shall not
thereafter be used by Contractor in connection with any operations of
Contractor.
ARTICLE 12 ENTIRE AGREEMENT, AMENDMENT, NOTICES AND TITLES
SECTION 12.01 ENTIRE AGREEMENT AND AMENDMENTS
(a) This Agreement represents the entire agreement between the parties
hereto unless subsequently amended as hereinafter provided, and said Agreement
shall not be modified or cancelled by mutual agreement or in any manner except
by an instrument in writing, executed by the parties or their respective
successors in interest.
(b) The parties hereto may by mutual agreement amend any provision of this
Agreement, or delete or add any provision to this Agreement by an instrument in
writing, executed by each of the parties or their authorized representatives or
successors in interest. Any amendment, deletion or additions executed as
prescribed herein shall become a part of, and shall be construed as part of this
Agreement.
SECTION 12.02 NOTICES AND MISCELLANEOUS PROVISIONS
(a) Any and all notices, approvals or demands required or permitted to be
given by the parties hereto shall be sufficient if sent by certified mail,
postage prepaid, overnight delivery service, or facsimile to US Airways
addressed to:
42
Vice President-Express Division Telephone Number: 000-000-0000
US Airways Facsimile Number: 000-000-0000
Crystal Park Four
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
and to Contractor, addressed to:
Air Midwest Inc.
President
0000 Xxx Xxxxx Xxxx
Xxxxxxx, XX 00000 Telephone Number:( 000- ) 000-0000
Mesa Air Group
000 X. 00xx Xxxxxx, Xxx 000
Xxxxxxx, XX 00000
Attn:Chief Financial Officer
With a copy to: Mesa Air Group Telephone Number (000) 000-0000
000 X. 00xx Xxxxxx, Xxx 000
Xxxxxxx, XX 00000
Attn: General Counsel Fascimile Number (000) 000-0000
Telephone Number: (000 )000-0000
or to such other addresses in the continental United States as the parties may
specify by notice as provided herein.
(b) Description titles contained in this Agreement are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
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(c) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Virginia as though the entire
agreement were performed in Virginia and without regard to Virginia's conflict
of laws statutes. The Parties further agree that they consent to the
jurisdiction of the Courts of Virginia or the federal courts located within the
Commonwealth of Virginia and waive any claim of lack of jurisdiction or forum
non conveniens.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be entered
into and signed as of the day and year first written above.
Air Midwest, Inc
By: /s/ Xxxxxxxx Xxxxxxxx
--------------------------------------
Title: Chief Executive Officer
Date: 5/14/03
US Airways, Inc
By: /s/ N. Xxxxx Xxxxx
--------------------------------------
Title: SVP Corporate Development
Date: 5/14/03
45
EXHIBIT I
*
46
