A Tac Air hanger at the Chattanooga Airport.

After a two-year probe, a federal administrator is calling for the dismissal of a complaint against Chattanooga Airport filed by a company which charged that Lovell Field officials improperly used grant money toward the startup of a rival service.

The finding by a Federal Aviation Administration official said the airport did not violate federal law or grant obligations when it built a new general aviation center on the west side of the main runway, as competitor TAC Air had charged.

Airport spokesman Albert Waterhouse said officials always believed they were in full compliance with the FAA and the report affirms that assertion.

"Our goal was to simply create a competitive environment for all users of the airport, which in turn creates a tremendous economic impact for the city and region," he said in a statement.

But TAC Air, which sells fuel and leases hangar space at the airport, said it strongly disagreed with the FAA report and hasn't decided if it will appeal the decision. The FAA administrator's decision dated last Friday is an initial agency determination and does not constitute final action, according to the agency.

The company said in a statement that the Chattanooga Metropolitan Airport Authority used taxpayer money to develop a fixed-based operator that competes unfairly with private business.

"The FAA's decision sets a dangerous precedent which will drive private investment away from airports," the statement said.

David Edwards, TAC Air's marketing director, said the airport-owned center is losing money, which the company estimated at $1.2 million to date.

"Our projection is that it will continue to lose money," he said, adding the flying public would be "better served with investing in bettering commercial airline service" rather than creating a surplus of fixed-based operators.

Airport and TAC Air officials have had a running three-year conflict over the startup of the new center, which is operated by Wilson Air.

Lovell Field and city officials have said the new center is giving the airport a facility that's needed to better compete for general aviation business.

The airport-owned center is forecast to cut its losses this budget year to $214,000, said Terry Hart, the airport's chief executive, this summer. While three-year losses are projected at $1.3 million, Hart said such deficits are typical for new businesses.

"We've said many times ... that it would take multiple years to make this work," Hart said. "It's going in the right direction."

Airport officials have said the center should see a profit within five years and is on schedule to do so.

The latest flare-up between the parties occurred in late July when President Barack Obama flew into the airport on Air Force One before speaking at the city's Amazon distribution center.

The president's plane was taken to the Wilson Air Center facility rather than to TAC Air, which said it had the contract to handle military fueling operations at Lovell Field.

"The problem is we have a landlord who jumped in front of us," said Edwards at the time. "It's another example of the problem when you're competing with your own landlord."

But an airport spokesman said it had no part in where Air Force One was parked.

"We were informed by the Air Force that they planned to use Wilson Air Center as the arrival and departure location," said Waterhouse. "We were told the ability to limit access to the west side of the air field was attractive to the operational and security teams, and was among their reasons for choosing that location."

Still, there were reportedly three other aircraft accompanying Air Force One that did refuel at TAC Air. Edwards said the contract with the government should have been honored.

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