published Tuesday, April 5th, 2011

Chattanooga: Tac Air, airport spar over new rival

Lovell Field’s second fixed base operator, Wilson, holds event to which officials of the incumbent provider are not invited.

Tac Air line supervisor Josh Lee, left, and Tac Air linemen Brian Schussler, right, refuel a private Citation Jet at the Chattanooga Metropolitan Airport last fall.
Staff File Photo by Laura-Chase McGehee/Chattanooga Times Free Press
Tac Air line supervisor Josh Lee, left, and Tac Air linemen Brian Schussler, right, refuel a private Citation Jet at the Chattanooga Metropolitan Airport last fall. Staff File Photo by Laura-Chase McGehee/Chattanooga Times Free Press

Tac Air officials are questioning spending by the Chattanooga Metropolitan Airport Authority related to the startup of a competitor that will run Lovell Field’s new general aviation terminal.

“Why do they continue with the underwriting of a service that in our view is not needed?” asked David Edwards, marketing director of the airport’s existing fixed base operator Tac Air.

Airport officials say the expenses are related to the construction and startup of the new terminal later this summer and the operator, Wilson Air Center, they’ve picked to run that facility.

“It is important to remember that our primary goal in this project has been to increase competition and drive down the cost of doing business in Chattanooga,” said airport spokeswoman Christina Siebold.

Last summer, airport officials unveiled plans to build $10 million in facilities on the west side of the main runway. Those include a 9,000-square-foot general aviation terminal and office complex along with hangar space and a fuel farm.

State government is slated to pay 90 percent of the cost while the airport will take care of the rest out of its operations budget. Also, about $3 million in federal stimulus money was used to pave an aircraft parking area at the site.

James Coyne, president of the National Air Transportation Association, had earlier questioned the need for the new facilities, saying he’s worried it’s a “foolish and wasteful expenditure.”

But airport officials said they’ve received complaints about pricing related to Tac Air’s services and that it needs competition. The airport also said Volkswagen and other businesses in the region will drive usage of the new facilities. They expect general aviation activity by aircraft at Lovell Field to increase from 78,700 operations in 2007 to 93,000 in 2027.

Wilson budget

Airport officials said they’ve budgeted about $1 million in start-up costs through mid-year to get the general aviation terminal and operator Wilson Air ready to go.

Airport officials said total requests by Wilson from last December through March were about $145,000, which is 40 percent under budget. But Siebold said the more expensive capital items, such as furnishings and ground support equipment, are upcoming.

Siebold said the money is being spent on marketing, operations and staffing as part of a management agreement with Wilson, which has an office in the commercial passenger terminal until the new general aviation facility is ready.

Under such an agreement, the airport is responsible for capital investment and operating expenses, she said.

“In return for their service, the management company receives a set fee along with performance incentives,” Siebold said.

The deal with Wilson is unlike the one the airport has with Tac Air, which Siebold called a concessions agreement. Under that contract, Tac Air retains all revenue and pays the airport a percentage of its revenue. Also, Tac Air is responsible for all capital investments and operating expenses, Siebold said.

Tac Air has been at the airport since 2002 after buying Krystal Aviation.

Siebold said a management agreement gives the airport greater control over pricing and service decisions than the arrangement with Tac Air.

“A concession agreement cedes those decisions to a private third party,” she said. “Given the history of complaints in Chattanooga, (the airport authority) believed it was best to retain control.”

Wilson Air did not return a call for comment.

But Tac Air officials continue to question whether airport money is being wisely spent on the project.

Edwards said the airport has spent $25,000 for jet fuel for Wilson personnel to fly between Memphis and Chattanooga the past two months.

Siebold questioned that figure, however, saying Wilson chief Bob Wilson has only flown here two or three times as a part of his efforts to fulfill the management contract, and he has billed the airport the price of a commercial airline ticket and not for any airplane costs including fuel.

Still, Pam McAllister, Tac Air’s general manager at the airport, asked if the airport is maintaining a level playing field in its dealings with the two companies.

“It’s difficult for us to look at it and say it’s fair,” she said, adding that Tac Air has paid for its operations.

Siebold said the Federal Aviation Administration has looked at the fairness issue and determined the airport authority has acted consistently with its requirements.

Private reception

McAllister, meanwhile, wondered why she and an associate were kept out of a recent reception for Wilson Air at the airport.

On March 22, the airport hosted the event to give “the corporate aviation community” a chance to meet with Wilson and his team.

McAllister said one of Tac Air’s customers who was invited had asked her and her associate to come into the meeting, but they were denied access.

Siebold said it would be counterproductive to allow competitors to attend an event for one of its tenants.

“EPB is not required to invite Comcast to every client meeting,” she said. “Being a public facility does not require that every meeting held on the premises be open to the public.”

Competition cuts costs?

Siebold said the addition of competition at the airport is already working. American Airlines recently renewed a contract with Tac Air for it to carry out fuel pickup and delivery for the carrier’s airplanes in Chattanooga.

American spokesman Ed Martelle said it’s happy with the new contract, and airline officials believe Wilson’s impending presence at Lovell Field is an advantage.

“You bet,” Martelle said. “Tac knew they’re coming. We like competition.”

But Edwards said the contract is just the renewal of long-term business it has had with the airline.

“The fees are negotiable,” he said.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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dashandyman said...

So...A management contract??? Seems like unfair competition and doesn't smell right. Seems like a huge waste of taxpayer money and ripe for litigation. What company in their right mind would invest $10MM in facilities on a field with that level...(so little) of traffic? And...based on projections that another manufacturer is siting there??? Normally only a fool or a government entity would do such a wasteful thing. I don't think the Airport Authority is on the right course here. Too bad for the tax payers!

Something appears to be seriously wrong with this railroad and the train has already left the station.

April 5, 2011 at 3:34 p.m.
sage1 said...

I couldn't care less. I drive 1.5 hours and fly out of Nashville on trips and save about $250 a ticket EACH WAY. Chattanooga airport is never going to be able to compete with Atlanta and Nashville on airfares.

April 5, 2011 at 7:41 p.m.
NoMyth said...

TAC Air sounds like a bunch of whiny, rich kids that think they are entitled to high earnings for little effort. This article suggests the competition will be a good thing for the city and metropolitan area.

April 5, 2011 at 8:36 p.m.
rolando said...

Competition is always a good thing for consumers.

May 15, 2011 at 5:41 p.m.
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