Board member to be subcontractor
Indiana law prohibits board members from contracting directly with the Airport Authority, although they are allowed to be subcontractors if the individual who appointed the member signs a conflict of interest disclosure statement and the board acknowledges the conflict.
Michael Gouloff, Airport Authority member and board president, is the owner and CEO of Schenkel Schultz, a subcontractor with The Hagerman Group, which is constructing the new FBO.
Hagerman was awarded the construction contract July 14 when its bid of $3.1 million won out over Weigand Construction’s bid of $4.8 million. The contract is subject to final negotiations with costs expected to be between $3.5 million and $4.5 million, Executive Director of Airports Scott Hinderman said. Since Gouloff was appointed by the city, a disclosure was signed by Mayor Tom Henry, and the board – minus Gouloff, who abstained – accepted the disclosure in February.
The airport is also considering managing the facility itself after decades of leasing a service operator to provide airport services.
Atlantic Aviation has managed the airport's fixed-based operation – commonly called an FBO – since the 1980s, and airport authorities say they need a new one to accommodate growth. Fixed-based operations have traditionally been commercial businesses granted the right by an airport to provide aeronautical services such as fueling, hangars, aircraft rental and maintenance, flight instruction and similar services.
Atlantic pays the Airport Authority $219,000 a year to manage the FBO and is guaranteed the revenues from the operation. That lease expires in January 2016. Plans call for the current FBO to be razed.
Atlantic officials proposed building and paying for a $4.5 million FBO facility two years ago. The Airport Authority rejected that proposal and is moving forward with construction of the facility, expected to cost between $3.5 million and $4.5 million.
The Airport Authority has been setting aside capital funds for the future FBO facility for some time as the development was anticipated for years, Executive Director of Airports Scott Hinderman said.
“The funds are available to construct, and we will not be using tax monies for construction,” he said.
The airport has multiple sources of revenue, with about 19 percent of the operating budget comprised of tax monies, he said. Other sources of revenue include land and facility leases and fees.
The board is exploring three options: taking bids on another long-term lease such as it has with Atlantic, contracting outside management and self-management, Hinderman said.
In June, the board of directors requested proposals for fixed-base operator management services for a term of five years, but that process was recently suspended.
“We were getting too many questions that we were not prepared to answer from multiple firms that were interested in proposing,” Hinderman said. “We suspended the request for proposals until we have the answers and the data requested.”
Airport officials did not want to open proposals that were submitted with questions, he said, adding that the airport is continuing to look at all the methods to provide the services.
Dwindling tax dollars have many public entities scrambling to find new revenue sources, and the airport is no exception.
Revenue is one of the considerations of the airport in managing its own FBO, Hinderman said.
Hinderman is not sure whether the airport would save money or profit by managing the operation itself.
“This is an unknown, but it is believed that any firm that would provide the service will actually make money for their efforts,” he said. “We would continue to provide the excellent service that is offered today.
“By self-performing we would realize the revenues from fuel sales and other services,” he said, “and those revenues would stay with the local community.”
But Atlantic Aviation General Manager Jonathan Jones said his company has always invested in the local community.
“We are committed to staying in Fort Wayne and supporting the community,” Jones said. “All over the country we make capital investments in cities and towns, perform community services and invest in the local community, as we have done for decades in Fort Wayne.”
Atlantic Aviation in Plano, Texas, is the largest chain of FBOs in the country with 69 sites.
The airport's master plan calls for the old facility to be demolished once the lease runs out and the new one is built, Hinderman said.
The current facility is not conducive to growth, Hinderman said.
“The terminal building will need to expand in the coming years for additional gates,” he said. “Because of runway and taxiway setbacks, the only way the terminal can expand is toward the existing FBO facility and there is no room.”
The new 12,000-square-foot FBO will serve as a point of landing or taking off for passengers on private jets and planes, private pilot rest and planning areas, state-of-the-art meeting facilities and space for other tenants. The work will include improvements to hangars and support buildings.
The airport has managed its FBO at the smaller Smith Field Airport in Allen County for years, Hinderman said.
South Bend Airport also uses Atlantic Aviation to operate its FBO, Executive Director Mike Daigle said.
“We've used them many years, and their lease expires in 2035,” Daigle said.
But because Atlantic's lease is not exclusive, the airport is in negotiations with a new FBO that would provide similar services. The two FBO operators would be in direct competition with one another, he said.
“We did discuss managing our own FBO but elected not to pursue that at this time,” Daigle said.
Airports, as other industries, like to take a look at other models to see if the one being used is the best fit, said Doug Joest, executive director of Evansville Regional Airport.
The Evansville airport – similar in size to Fort Wayne and South Bend – has a lease with Tri State Aero Inc. to manage its FBO, Joest said.
That lease does not expire for 20 or 30 years, he said, so there has been no discussion of the airport managing its own facility.
“These are business models that have been around for decades, and I think other airports are looking at the options as the leases expire,” Joest said.
Atlantic also provides ground handling services and aircraft fueling for FedEx and UPS.
If a new FBO is managed by someone else, it would be in direct competition with Atlantic, Jones said.
Ultimately, the Airport Authority Board will decide who manages the new FBO.
“Atlantic has done a good job, and they have good people,” Hinderman said. “If the board decides on Atlantic, that's great. If not, I hope they have an opportunity to continue working here.”
Calls and emails to several Airport Authority board members were not returned.