July 15--Should the public pay millions of dollars for something the private sector is willing and even eager to provide?
That question is at the manner in which fuel and a variety of ground services will be provided at Fort Wayne International Airport after Atlantic Aviation Services' "fixed base operator" (FBO) contract expires in 2014. Texas-based Atlantic, founded in 1927, provides FBO services at 69 U.S. airports and is so optimistic about its future in Fort Wayne that it has offered to build itself a new $4.5 million facility -- at no expense to the taxpayer.
To which airport officials have essentially responded: No thanks, we'll pay for the new building ourselves then hire somebody to manage it.
With private businesses seemingly asking for -- and receiving -- government subsidies at an ever-increasing rate, is the rejection of Atlantic's proposal just another example of bureaucratic waste? Or does it, in fact, safeguard perhaps the most important and beneficial aspect of the free-market system: competition?
"We like being here, and are committed to Fort Wayne," said Atlantic's local general manager, Jonathan Jones. "We are reviewing the airport's request for proposals (from interested management firms), but generally speaking this is not a business model we currently support. We respect the right of the airport to do what it thinks is best for the community, but at the same time want to make sure that all sides are heard . . . we support a widening of the discussion, for the benefit of the community as much as our own business.
"Across the state of Indiana, and around the nation, you will find thousands of aircraft service facilities funded and built by private investment. These facilities act as catalysts, creating jobs (including 30 at Atlantic) . . . (and) all this is accomplished using private investment, not taxpayer funds."
But that traditional model, in which private companies build and operate their own facilities on airport land in exchange for long-term and often exclusive leases, is giving way in several cities to an airport-owned, privately managed model -- a model Fort Wayne Executive Director of Airports Scott Hinderman insists is in the public's best long-term interest.
With the Atlantic-owned FBO headquarters in the way of a planned terminal expansion, a new building will be needed one way or another. But if Atlantic pays for it, the company wants a lease through 2043 -- long enough to recoup its investment. Its proposal also calls for the demolition of some existing hangars and would prevent the airport from opening its own competing FBO.
And that, Hinderman said, would limit the airport's ability to react to fast-changing aviation trends. The airport is offering a management deal of just five years, for example -- something that could generate addition income for the airport if growth continues and operating there suddenly becomes more profitable.
More to the point, Hinderman said shorter-term management agreements also encourage the kind of competition Atlantic's longer-term deal might not. The airport periodically seeks bids for services such as rental cars, parking and food service. When companies submit proposals for the FBO contract by Aug. 6, they will be motivated to make their best offer. Atlantic now pays the airport about $219,900 per year, but under its long-term proposal its lease could be adjusted over time.
"(The bid process) really is when you get the competition. I can't say anything bad about Atlantic, they've done a great job and I hope they submit a bid," said Hinderman, who called Atlantic's fuel prices "competitive" but said the airport will set those prices under the new arrangement -- prices that can attract planes to Fort Wayne or drive them elsewhere.
Clearly Atlantic believes it can make a profit even after spending millions of dollars, just as Hinderman and his board believe the airport will be better off in the long run, financially and perhaps otherwise, even if its spends a similar amount up front. But regardless of the bids received in August, Hinderman said, the airport is going to build its next FBO facility. "We're well into the process and can't go back now. That would be irresponsible," Hinderman said.
Jones would differ, of course, and they both make a good case -- even if it could be years before anybody can say for sure.
FBO contract awarded
Meanwhile, the Fort Wayne-Allen County Airport Authority Monday selected a team headed by The Hagerman Group to design and build the new fixed-base operator (FBO) facility at Fort Wayne International Airport
The project, the first public design-build project undertaken by the Airport Authority, requires the Hagerman team to provide design, construction and equipping of a new state-of-the-art FBO terminal on the west side of the airport to replace the existing FBO terminal on the north side. The project also includes improvements to existing hangars and support buildings. The cost of the new facility, in addition to the other associated landside improvements, will represent between $3.5 million and $4.5 million dollars.
The new FBO terminal will house a number of functions, including serving passengers using private jets and planes, private pilot rest and planning areas and space for lease to parties requiring a location at the airport.
This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at firstname.lastname@example.org or call him at 461-8355.
Copyright 2014 - The News-Sentinel (Fort Wayne, Ind.)