LOS ANGELES — Jack Driscoll, who headed up the Los Angeles World Airports system for seven years, says, “I’ve been a bureaucrat most of my working career and I’ve loved every minute.” He says the experience of working with local governments puts him and Airport Property Ventures (APV), a new firm started by him along with former LAWA director Lydia Kennard and former American Airports Corporation co-founder Robert Clifford, at an advantage when seeking contracts to manage and develop general aviation airports. In November, APV was awarded its first contract at Oceanside Airport some 80 miles south of LAX in San Diego County. At a time when GA is suffering an economic slowdown, Driscoll and his associates are optimistic about the opportunities to operate and enhance facilities nationwide.
Driscoll, 65, spent his career primarily in personnel, first working with disadvantaged youths before moving into city hall positions in Seattle and Los Angeles. He was appointed to head up the LA airport system in 1992. “I was the guy from personnel who couldn’t spell airports, and all of a sudden I was the head of one,” he says.
The decision by Oceanside to award APV a 50-year lease to manage and develop the 50-acre airfield gives his firm its first contract. [According to reports, APV will pay off the city’s debt on a state loan as well as pay $9,000 a month, plus 40 percent of all net annual income.]
AIRPORT BUSINESS recently met with Driscoll at his office overlooking LAX to discuss his new venture and his thoughts on the state of the general aviation sector. Following are edited excerpts ...
AIRPORT BUSINESS: What is the scope of business for Airport Property Ventures?
Driscoll: “The main focus is to look at GA airports. A lot of the GA airports are run by counties or cities, and in a lot of cases they are sort of inherited pieces of property or closed military bases. In a lot of cases, they’re a stepchild to whoever runs them. They’re not part of the core of a city’s government operating entity.
So, typically, they’re managed through the public works department or general services department. Oceanside is a good example; they’re being subsidized. They are losing propositions for many of these cities. Needless to say, the fact that they got federal grants means they’re bound to stay in operation.
There’s not much they can do to undo it.
AB: Is it safe to say that you are bullish about the prospects with GA facilities?
Driscoll: We think there’s a real opportunity to get in and manage them in a much more professional way. Our agreement in Oceanside allows us to manage the airport and to develop the airport. That’s our goal; not to just go in and manage the airport, but actually develop the property.
You know, a lot of these GA airports have some decent land that’s not doing much. We want to maximize the aviation piece of it — fixed base operators, additional hangars, whatever it takes to make something out of it. If we’re capable of doing that and there’s excess property, then we’ll work with FAA to see if that property can be utilized for non-aviation purposes.
You really want to go in with an eye on being a professional airport management group. At a lot of these places that we’ve talked with folks, their lease management policies aren’t very good; you have people who have been sitting there for who knows how long with rents that are hardly anything, and somebody else is paying more.
It’s an issue of really trying to take control of the asset and develop it on behalf of that community or county or state.
AB: What is the current situation at Oceanside?
Driscoll: It’s a pretty small airport; the acreage that exists there will wind up being all aviation property, although there is a small building which we’ve agreed to develop into a small office building to house the staff for the airport. Then we would lease the other space for aviation-related businesses and put in a small restaurant.
We’ve got preliminary designs to add a number of hangars. There’s also a piece of property that’s in dispute as to whether or not the city is obligated to turn it over to the people who bought it from them. It’s about 14 acres. Assuming that is resolved in the city’s favor, then we would add additional hangars on that property.
There’s probably 45-50 acres of property for development. Part of that has hangars on it, but they’re in need of upgrading. That’s about ten acres where we’d wind up tearing down the old hangars and putting up new ones.
AB: You’re providing them with a minimal annual guarantee?
Driscoll: We’ve given them a minimum guarantee to operate the airport; then we’ll pay them a percentage on the proceeds from the new development. It’s a pretty good deal for them.
The people we were competing against all just offered straight percentage rent — 10 percent; but we put in a guarantee plus a percentage on what we get from development.
Our view, which is a little different than other people, is that we’re going to develop the property ourselves. We’re not just going to land lease the property to some other developer. By developing it and, for all intents and purposes owning the development, then the city is going to share in that development.
What we’re doing is basically guaranteeing that it won’t cost the city any money to operate or to pay back the debt that it has on two sizeable loans. One was to build some new hangars; the other was the city lent the airport.
We’re comfortable with what we’re doing there financially.
It’s a very nice little airport that can be developed for mostly fixed wing. You can’t get a jet in there, with maybe the exception of the new light jets.
AB: What is the source of the development money?
Driscoll: We have some investors who are providing us with the money. We’ve committed to spend — if we get that additional 14 acres — around $21 million on developing the entire package [at Oceanside].
AB: What’s your sense of the light GA market, considering the current economic climate?
Driscoll: For this project we’re not seriously concerned. We’ve done a lot of market research and, as you’re suggesting, that market research might be very different a year from now. But based on our development plan and the timelines we have worked out, we should be fine. We can operate it today with some minimal effort and not only meet our basic commitment in terms of the minimum guarantee, but also make a profit on it.
AB: At Oceanside, will you be hands-on or hire someone else to manage the airport?
Driscoll: We’ll hire; I’m charged with finding somebody for the job. We want to commit somebody there full time. Our roles will be to develop additional opportunities. We want to create a fairly sizeable network; we’re very serious about this. It’s not just going to be one airport.
We’re partnering with good people; HNTB is one of our partners.
