March 29--Late last year, a company associated with Destin Jet owner Jay Odom bought out the competition at Destin Airport.
The Dec. 31 move quickly caught the attention of the flying public, who noticed no signs of competition between two companies known as fixed base operators, Destin Jet and Regal Air Destin.
"It seemed to be collusion between two supposedly competing businesses," said Okaloosa County Airports Director Sunil Harman. "Commuters clearly felt there were anti-trust issues."
Called out by Harman in early February, Odom reportedly admitted in a Feb. 25 face to face meeting that Sterling Diversified LLC, a company managed by Odom and two partners, had bought out Regal Air, county documents show.
He contended, according to documents obtained through a public records request, that Regal Air wasn't required to notify the county of the transaction.
Odom's rationale, according to a document Harman sent to county commissioners, was that "his equity did not reach the 40 percent or more of the operators stock as specified."
Contacted by email Friday, Odom denied holding an ownership interest in Regal Air.
"I am putting you on official notice that Destin Jet did not buy Regal Air Destin, nor has any ownership interest in Regal Air Destin, and Jay Odom did not buy Regal Air Destin, nor has any ownership interest in Regal Air Destin," Odom said. "If you run that in a story, your story will be false, and your facts are wrong."
But airport officials have thoroughly documented recent activities at Destin Airport and concluded the "principal of Destin Jet and partners own 100 percent of the competing FBO," according to Harman.
Harman and other airport officials have determined Odom's move resulted in "a number of possible state and federal anti-trust violations," documents show.
It also violated two Federal Aviation Administration grant assurances, which could result in sanctions for the county, including losing as much as $2 million in federal airport funding, Harman said.
"Their money comes with strings attached," he said.
A history of turbulence
Destin Jet opened in 2009 and began competing then with Miracle Strip Aviation, which for years had been Destin Airport's sole fixed base operator, selling fuel and providing other services for incoming and outgoing commuter aircraft.
Regal Capital bought out a struggling Miracle Strip Aviation in March of 2013 and opened Regal Jet. The purchase agreement included a promise to pay off $485,000 Miracle Strip Aviation owed the county.
Sterling Diversified LLC was created in 2010. Jay Odom was listed as the limited liability company's registered agent and manager on "articles of organization" filed with the Florida Division of Corporation.
Chester Kroeger and Tim Edwards, two of the owners of Fudpucker's restaurants, are listed in the original documents as Odom's co-managers.Odom's name appears on Sterling Diversified annual reports for every year since 2010 until this year's report, which was filed in February.
Records show on Dec. 31, 2013, Sterling Diversified LLC, referred to in county correspondence as Sterling Group, bought out Regal Air Destin LLC.
It was shortly thereafter that "people obtaining services" began complaining about a lack of competition between Destin Jet and Regal Air, Harman said.
On Feb. 10, Harman sent out letters to Destin Jet and Regal Air pointing out that the owners of the contracted FBOs could "not hold a direct or indirect interest in another FBO."
Odom made no mention of having ownership interest in Regal Air in his written Feb. 25 response to the county. But county records state he did acknowledge ownership in a face-to-face meeting he requested the same day.
"At the meeting Mr. Odom also informed the director and deputies, that as of Dec. 31, 2013, the Sterling Group LLC., of which he was a one-third equity partner, has acquired ownership of Regal Air Destin LLC., and that Mr. John Simmons was no longer owner of that FBO," stated a document Harman prepared for county commissioners Feb. 26.
Odom also informed the county at the meeting that he would be overseeing all communication between Regal Air and the county from that point forward, the Harman document states.
At the Feb. 25 meeting between Odom and the airport administrators, Odom reportedly argued that two FBOs could not co-exist at Destin Airport in the current environment of declining general aviation activity.
Harman does not disagree with him on that point.
"There has been a declining market since 2008," he said.
The way forward
Despite all that has thus far transpired, Harman foresees a future in which issues between the county and Odom -- as well as former Regal Air owner John Simmons, who is considered in violation of his lease agreement -- can be rectified.
"The principal owner at Destin Jet has been given a path forward on how to resolve things," Harman said.
It might even be possible that Odom can get the go ahead to merge the two FBOs at Destin Airport under the Destin Jet mantle.
Harman said he is "fairly confident if Destin Jet does the right things the case is compelling enough to point to a single fixed base operator" at the airport.
To make his argument, Harman said, Odom will be required to show proof of shrinking fuel revenue and present numbers showing why it makes sense to have a single FBO.
If the county commission accepts the proposal, it would then take Odom's case to the FAA, Harman said.
Harman told county commissioners in his Feb. 26 correspondence regarding his meeting with Odom that they also hold the option, upon receiving verification in writing that Odom has ownership interest in Regal Air, to "vacate and nullify the lease" he holds.
The county could issue a request for proposals for a second FBO at Destin that precludes Destin Jet from competing, the memo said "and pursue Regal Air for outstanding debt."
To begin making things right, Harman said, he needs the cooperation of both Odom and Simmons.
The first thing Odom has to do, he said, is step up and clear the air.
"If he has acquired ownership of Regal Air, the first thing he needs to do is admit that," Harman said, acknowledging that Odom has yet to formally document a takeover of Regal Air.
"The second is to obtain retroactive permission from the board of commissioners and pay requisite assignment fees," Harman said, adding that Odom has verbally agreed to go before county leaders.
For his part, Simmons must "respond to the county's request for information." His 30-day window to do so is fast approaching, said Harman.
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Contact Daily News Staff Writer Tom McLaughlin at 850-315-4435 or [email protected]. Follow him on Twitter @TomMnwfdn.
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