The executive director of Gulfport-Biloxi International Airport (GPT), Bruce Frallic, A.A.E., relates that recent developments at his airport are a perfect example of how the public and private sectors play a mutual role in the development of a U.S. airport.
Enter Million Air fixed base operator (FBO) Arve Henriksen and the financial backing of Million Air Interlink, who are now the anchors of a general aviation, cargo, and U.S. Customs complex opening this summer.
For Frallic, it’s the culmination of a 25-year goal of moving general aviation away from the military on the airfield — a significant presence — and creating an area for growth.
Explains Frallic, “It’s a significant change in how we’ve been operating in general aviation since [hurricane] Katrina, and actually even before Katrina. Before Katrina we were working to relocate GA to the west side of the airport so it could grow. It was stuck in the middle of the military on the east side of the airport. We’ve been working on that since I came here in 1986. We put about $10 million of improvements over there and we were in a position where we could get started. And some other hangar owners and operators wanted to move also.
“Then Katrina hit. What it did is open up a tremendous opportunity to build new infrastructure. We invested just in concrete and basic drainage about $46 million. And that really set the stage for general aviation to grow.”
With federal assistance available, Gulfport-Biloxi was able to reconfigure the infrastructure of the airport to accommodate GA growth. With a lease coming to term with incumbent Atlantic Aviation, a request for proposals was put out and, says Frallic, it resulted in three good proposals. Million Air won out. “I’ve never seen a more beautiful and functional facility,” comments Frallic. “It’s taking us to an entirely new level. Add in the general aviation facility with Customs and, wow, the sky is the limit.”
Since Katrina, the public/private investment is estimated at $287 million. Much of that investment is focused on the role that the region plays in economic development, cargo movement, and the advantage that comes with being located within a Foreign Trade Zone.
Comments Frallic, “The key to me is $287 million is a lot of money for a small airport; $140 million on the public side created the commitment and investment from the private sector. When they saw what we were doing in infrastructure they turned around in kind with $147 million worth of investment. That’s a big deal, and that’s how it’s supposed to work.” A significant part of that investment is coming from the new FBO.
“I can’t say enough about Million Air in this process, in very challenging times. They’re going to do very well here at Gulfport-Biloxi.”
In May, the airport and the FBO held a joint media event along with industry and local dignitaries to highlight the development. The focus was not only on the potential for general aviation, but also on the role the FBO will play in international development, long a focus of the airport and the community. The U.S. Customs facility at GPT is part of the Million Air complex, and the FBO will process the aircraft that move through the facility.
Says Million Air’s Henriksen, “We think it’s going to be slow developing but it could end up being 30-40 percent of our business in the future. The Foreign Trade Zone gives us the opportunity to not have to charge federal and state fuel taxes on outbound aircraft. For inbound aircraft, they don’t have to pay state tax but do pay the federal tax.
“With the traffic that goes from Europe to South America, it creates some opportunities for us. particularly with the unrest in Middle East. A lot of that traffic has been crossing over the South Atlantic and then onto South America. We’d like it to go through Gulfport and then down to South America. There would be very little difference in the flight time and we can turn them around a lot quicker without all the hassle and the liability potential for going through the Middle East countries. It creates a whole new market for us.
“But we understand you don’t change people’s habits overnight.”
The new Million Air
Henriksen has been in aviation for some 45 years, selling airplanes, operating a commuter airline, a previous FBO owner, and a Braniff pilot through two bankruptcies. He also operated a Million Air franchise in Mobile, AL. But the goal for some time, he says, has been Gulfport-Biloxi.
“Gulfport was where we wanted to be but there was no space for us,” he explains. “We sent our first letter of interest to the airport in June 2000.”
Then the GPT RFP hit the streets and Henriksen responded, and won the bid. Then the U.S. economy turned south.
Recalls the 63-year old Henriksen, “In between the economy went upside down on us. Our original investors weren’t able to continue and pulled out so we had to put together another one, in which Roger Woolsey, CEO of Million Air [Interlink], is a partner with us.
The result is a 52,500-square foot FBO complex that has a 30-year lease with a five-year option. Million Air does all the commercial and general aviation refueling at the airport, and will be involved in Customs processing. Prior to Katrina, fuel volumes were at six million gallons annually, an initial target for the new FBO.
Regarding the FBO investment, Henriksen says, “We originally targeted to spend $3.3 million, but it had a provision that if we spent over $5 million we’d get an additional five years on our lease,” says Henriksen. “When all is said and done, we’ll have close to $12 million in it. It’s kind of grown a little bit.”
Included in that tab is some $1 million investment in the U.S. Customs facility.
International focus
One of the primary market forces which Million Air is set to tap into is the one created by the airport and the business community tied to trade with Latin and South American entities. Frallic relates that the local Foreign Trade Zone is one of the most successful in the country and includes ports, industrial parks, and even a refinery.
Explains Frallic, “We have been working in Latin America since the 1998-99 timeframe. Our focus has been principally on air cargo. Our cargo facilities were decimated by Katrina; we built a new facility which is just about 500 yards from new FBO. So there’s a lot of potential synergy there not only in services but also in the fact that pilots and crews who fly in from out of the country will have available to them U.S. Customs without delays.
“Our efforts have been throughout central and south America — as far away as Chile and Brazil, and as close as Honduras and Mexico. And so we have been to every country; we know a lot of the private sector people in a lot of areas. When we go to Latin America on business our private sector goes with us. Not just the tenant operator of the facility but also the buyers.”
In the past year, he says, the focus has been on local companies seeking to create international business connections to sell their products. That ties directly into the local Mississippi State Port Authority, located some three miles from GPT, and which is the third largest container port in the Gulf of Mexico, says Frallic.
He adds, “All the companies that the port would work with and all we have become associated with, and all the buyers and sellers on both ends, and then all the business people you meet along the way through Chambers of Commerce here and abroad and business associations — those people are all potential visitors to the U.S. We already have some foreign investment going in both directions. Two of our universities in Mississippi are working with four universities in Panama, for example.
“I think we’re going to see a strong, new transient business that we didn’t have before, based on the Latin American connection. And the fact that we offer tax-free fuel on international flights, I think that’s going to be a good attraction.”
