published Saturday, January 11th, 2014

Chattanooga Airport buys TAC Air operations

A Tac Air hanger at the Chattanooga Airport.
A Tac Air hanger at the Chattanooga Airport.
Photo by Laura-Chase McGehee /Chattanooga Times Free Press.

What airport is buying from TACAir

* 174,000 square feet: Acquired hangar space

* 65,000 square feet: Acquired office space

* 834,000 square feet: Acquired ramp space

Source: Chattanooga Airport

Chattanooga Airport officials Friday moved to merge general aviation services at Lovell Field, buying out competitor TAC Air for $12.37 million and ending four years of turbulence which saw charges and counter-charges fly.

“Our continued focus is on what’s best for the customers,” said Terry Hart, the airport’s chief executive.

TAC Air marketing chief David Edwards declined to address the privately held company’s rocky relationship with the airport, during which Lovell Field officials spent about $10 million to build a new general aviation terminal and hangar space.

“We’re looking forward to moving on,” Edwards said, adding the Texarkana, Texas-based business is eyeing other locations in the U.S. in which to expand.

The Airport Authority agreed to issue $10 million in revenue bonds, which will be coupled with Lovell Field funds to finance the deal for TAC Air’s extensive hangar and office space.

Also, the panel approved a deal with Wilson Air Center, which manages the authority’s general aviation facilities, to oversee the former TAC Air site, as well.

Hart said that most of TAC Air’s 25 or so employees are expected to take positions with Wilson Air.

In addition, airport officials said they plan to look at using some of the former TAC Air space to expand much needed customer parking at Lovell Field. Officials said an 800-car parking garage would have cost $16 million to $18 million to erect, and they indicated that expense will be avoided with the access to new space.

Officials said the airport plans to keep costs competitive for general aviation services, which target mostly private and corporate aircraft.

“It’s important we remain competitive to clients,” said Authority member Farzana Mitchell.

But City Councilman Larry Grohn said the airport made a mistake in 2008 when it decided to build its own general aviation terminal, which has been a money loser. Projected losses this year will put the total amount of red ink since opening at about $1.31 million.

The city councilman said airport officials either were naive, or they intended to buy out TAC Air all along.

“TAC is tired of the hassle,” he said.

Grohn said the only way the airport could justify the new terminal was to “latch onto TAC Air’s revenue stream.” Hart said TAC Air had about 75 percent of the hangar space at Lovell Field.

However, Airport Authority Chairman Dan Jacobson said the deal is in the best interest of the city, Hamilton County and the region.

“With improved services and pricing for our customers, we are able to provide the infrastructure and aviation services our community needs in order to grow,” he said.

Jacobson said plans are to reassess the airport’s master plan and look at changes to enhance general aviation and help commercial flying travelers as well.

Hart said the airport doesn’t have to act like a profit-making business when it comes to general aviation, and that will help it remain competitive in the region.

“We’re not a profit driver,” Hart said.

Also, he said, the airport’s facilities will face competitive pressure from general aviation operators at nearby airports such as in Knoxville and Nashville.

“The board is doing the right things and trying to grow the airport,” Hart said.

The airport CEO said he took the initiative about a year ago and reached out to TAC Air to try to settle the ongoing dispute with the company.

Hart said the airport had no choice but to build the new facilities to create an environment of competition that has cut user costs and provide hangars and office space that doesn’t date back to the 1950s in some cases.

“I really want to take care of the base tenants,” he said.

Airport attorney Hugh Moore said the issuance of the bonds does not obligate the city. He said the city isn’t guaranteeing repayment of the bonds, nor do the bonds affect the city’s credit. The interest rate is 4.99 percent, Moore said.

TAC Air, which started operations at the airport over a decade ago when it acquired the assets of Krystal Aviation, will continue to operate its other 13 fixed base operations.

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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