Exhibit 10.13
AMENDMENT NO. 2 TO
CODESHARE AGREEMENT
This Amendment No. 2 (the "Amendment") is made and entered into as of
August 1, 2002 (the "Effective Date"), by and between Frontier Airlines, Inc.
("Frontier"), a corporation organized under the laws of Colorado, and Mesa
Airlines, Inc. ("Mesa"), a corporation organized under the laws of Nevada.
RECITALS:
A. Mesa and Frontier have entered into a Codeshare Agreement, dated as
of September 4, 2001 (the "Codeshare Agreement"). All capitalized
terms used in this Amendment, but not defined herein, shall have the
meaning given to such terms in the Codeshare Agreement.
B. Both Mesa and Frontier recognize the importance of maintaining high
levels of service in order to attract and retain passengers.
C. One such way to attract and retain passengers is to operate the
scheduled flights and do so on-time.
DEFINITIONS:
A. Completion Benchmark: Frontier Airlines' completion rate for its
network-wide operations during the same month it is used to
benchmark Mesa's performance.
B. On-time Benchmark: Frontier Airlines' on-time departure performance
rate for its network-wide operations during the same month it is
used to benchmark Mesa's performance. An on-time departure is when
an aircraft leaves the gate between zero to fifteen minutes after
scheduled departure, otherwise the departure is not considered
on-time.
C. Incentive Penalty: The amount to be paid as a penalty for the
difference between the actual number of flights completed or
performed on-time and the Completion or the On-time Benchmarks.
NOW, THEREFORE, in consideration of the recitals and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Mesa
and Frontier agree to amend the Codeshare Agreement by adding the following sub
section as follows:
14.2 (d) Fees will be assessed to incentivise Mesa to operate those flights
marketed under the Frontier Airlines (F9*) code in a manner equal or
exceeding the performance of Frontier Airlines' operations. Mesa shall
be penalized if performance falls below either the Completion Benchmark
or the On-time Benchmark for any given month.
1. Determination of number of flights to be penalized
a) In order to determine if Mesa flights fall below the completion
levels required by the Codeshare Agreement, Frontier will first
multiply the Completion Benchmark by the total number of Mesa
scheduled departures
for the month then subtract the number of Mesa flights operated
during the month. If the result is a positive number, this number of
flights to be penalized for failing to meet the completion
performance requirements (see example in section 1(c)).
b) In order to determine if Mesa flights fall below the on-time levels
required by the Codeshare Agreement, Frontier will first multiply
the On-time Benchmark by the total number of Mesa scheduled
departures for the month then subtract the number of Mesa flights
operated on-time during the month. If the result is a positive
number, this is the number of flights to be penalized for failing to
meet the on-time performance requirements (see example in section
1(c)).
c) Sample Calculations
1. By way of illustration, the following is a sample Completion
Penalty Calculation. If, for example, in the month of August,
Frontier completes [***] of its flights, the Completion
Benchmark for August is [***}. Further, if Mesa has scheduled
[***] flights for that month, it needs to complete a minimum
of [***] flights during the month of August, it will pay an
Incentive Penalty for the thirteen flights it failed to
complete.
2. By way of illustration, the following is a sample On-time
Penalty Calculation. If, for example, in the month of August,
Frontier performs [***] of its flights on-time, the On-time
Benchmark for August is [***]. Further, if Mesa has scheduled
[***] flights for that month, it needs to complete a minimum
of [***] flights on-time in order to meet the On-time
Benchmark. If Mesa completes only [***] flights on-time during
the month of August, it will pay an Incentive Penalty for the
one hundred flights it failed to complete on-time.
2. Penalty fees
a) For each flight below the Completion Benchmark, Mesa shall pay
Frontier [***]. This penalty will double for each consecutive
month Mesa fails to meet the Completion Benchmark.
b) For each flight below the On-time Benchmark, Mesa shall pay
Frontier [***]. This penalty will double for each consecutive
month Mesa fails to meet the On-Time Benchmark.
c) The maximum fine for each month will not exceed [***].
d) In the event that Mesa's completion rate exceeds the
Completion Benchmark by two or more percentage points and
Mesa's on-time performance exceeds the On-Time benchmark by
two or more percentage points in the same month, Frontier will
pay Mesa [***]
3. Settlement of Penalty fees
a) Penalties are only to be paid if Mesa falls below the
benchmark performance set by Frontier Airlines.
b) Mesa is to pay any penalties for performance which drops below
the benchmark requirements within 30 days of receipt of
Frontier's notice informing Mesa that it failed to meet the
benchmark.
4. Exchange of Performance data.
Frontier and Mesa are to exchange performance figures weekly
relative to their performance, and specifically for the percentage
of departures leaving on-time within 15 minutes of schedule and
percentage of scheduled flights departed.
5. This Amendment shall be in full force and effect during the entire
term of the Codeshare Agreement.
MESA AIRLINES, INC.
By: /S/ Mike Lotz
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Name:
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Title: President
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FRONTIER AIRLINES, INC.
By: /S/ Sean Menke
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Name:
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Title: VP Marketing & Planning
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