FAA Probing Claims Against California's American Airports Corp.

Allegations against American Airports include unlawfully selling fuel and systematically favoring non-aviation users willing to pay higher rates for services and space.


May 9--It could take months to determine the validity of allegations of financial mismanagement and illegal fuel sales by a company that manages five county-owned airports, a federal airport official said.

County aviation officials submitted a report to the Federal Aviation Administration on April 28 in response to allegations by an Arcadia attorney who claims Santa Monica-based American Airports Corp. is diverting revenues to benefit its company.

Allegations against the company also include unlawfully selling fuel and systematically eliminating aviation users by unfairly increasing rental rates, and turning hangars over to non-aviation clients willing to pay higher rents.

American Airports Corp. manages Brackett Field in La Verne and El Monte Airport in El Monte along with three other county-owned airports.

They have denied the allegations submitted by Tulane Peterson, a private pilot, who complained to the FAA earlier this year that taxpayers have been swindled out of thousands of dollars.

Tony Garcia, FAA airport compliance specialist, said his department must study the contract between the federal government and Los Angeles County and the private management company.

"There are certain obligations under those agreements," Garcia said. "Those unhappy with the county and American Airports have a much larger agenda, and we can't address all of their grievances if they don't lie within the parameters of our relationship."

Garcia said the exclusive rights allegations are easier to determine than the revenue issues.

In a separate action, the Pasadena law firm of Mathews and Rager filed a notice of compliance with American Airports on April 19, alleging the company has been increasing fuel prices and keeping the profits instead of turning them over to the county treasury to defray the cost of airport services.

The law firm gave the company 30 days to comply and asked for an unspecified amount of damages for six pilots who fly out of one or more of the county-owned airports.

American Airports have denied the claims and said they don't have exclusive rights to sell fuel, sales of which make only a small profit anyway.

Ted Gustin, aviation division chief of the county's public works department, reviewed American Airports' response to the FAA demand that it open financial records.

Gustin said he has received a June 2006 to July 2007 projected operating budget from American Airports, but it does not include expense data.

"They are a private corporation and are not required by the contract," Gustin said.

The county managed the five airports from 1958 to April 1991 before turning it over to a private company. American Airports took over Nov. 16, 2000.

Gustin said the county was right to turn over airport management to a private corporation.

"We ran the airports for years and didn't make money," he said. "The Board of Supervisors decided we needed to become self-sufficient and couldn't be drawing from the general fund."

The county Board of Supervisors in March also ordered American Airports to hold meetings with airport stakeholders to lure and keep aviation-oriented businesses at regional airports, which have been in decline since the Sept. 11, 2001, terrorist attacks on the East Coast.

A few closed-session meetings have been conducted, while others are planned over the next weeks.

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