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HomeMy WebLinkAbout1980-12-24 Minutes76 A SPECIAL MEETING OF THE BOARD OF DIRECTORS A special meeting of the Board of Directors was held December 24, 1980 at 11:00 a.m. in the Directors Room, City Administration Building, Fayetteville, Arkansas. DIRECTORS PRESENT: Mayor John Todd, Directors Noland, Osborne, Colwell, Henry, Lancaster, and Sharp 1 OTHERS PRESENT: Administrative Assistant David McWethy, City Attorney Jim McCord, Acting City Clerk Cynthia Stewart, Dale Frederick, Ray Young, Pete Estes, Ed Bradbury, Max Pinkerton, Dick Seddon, Ede Hogue, David Ferguson, and other members of the press and audience. 76.1 Mayor Todd stated that there might be some critical points in exercising the option for the Fuel Farm at the Airport. He asked if the Board would like to recess this special meeting and go directly into a meeting of the Airport Committee. He stated he felt the Airport Committee was much more informed and familiar with the problems to be discussed than some of the members on the Board. 76.2 Mayor Todd asked City Attorney McCord for his opinion, and McCord replied that he felt that recessing the Board and calling a meeting of the Airport Committee would accomplish nothing. 76.3 McCord began the discussion. He stated that the City has an existing lease with Scheduldd Skyways which contains an option which authorizes the City to purchase the Fuel Farm at fair market value upon giving ten days notice prior to termination of the agreement. This agreement terminates December 31, 1980. The City has not given the required ten days notice. The City cannot exercise the option unless Skyways wants to acquiese in the late notice. The City has authorized execution II/of a new lease for six months which expires June 30, 1981. This lease also contains an option whereby the lease can be terminated upon the issuance of ten days notice prior to termination. 76.4 The Mayor asked Ray Young, President of Skyways, if he wished to acquiese in the ten day option notice. Mr. Young stated that Skyways did not wish to acquiese. Proceeding from that point, Mayor Todd stated that there is a potential lease with Continental Ozark to be Fixed Base Operator. The obtaining of the Fuel Farm has been a factor in holding up the execution of the lease with Continental Ozark. The Mayor asked Continental Ozark to clarify their position relative to exercise of option in the Fixed Base Operator Lease. 76.5 Pete Estes and Ed Bradbury were present to represent Continental Ozark. Mr. Bradbury stated that he had been under a misunderstanding in Continental Ozark's capacity of Fixed Base Operator. He stated that presently there is not enough business at Drake Field to warrant the operation of one Fixed Base Operation, much less two. In order to operate one profitable Fixed Base Operation, a building process will have to begin. Continental Ozark feels that in order to get the Fixed Base Operation in a profitable position, certain things will be needed. They are: the use of the entire Old Terminal Building to house the office of the Fixed Base Operation, pilot's lounges, etc., as well as the existing fuel farm which will be adequate to start with, but will have to be expanded to handle the kind of business anticipated, the old hangar until such time as a new hangar can be constructed, and adequate ramp space. Mr. Bradbury felt that without all of these facilities, together in one package, it would be very difficult for Continental Ozark to undertake to build a Fixed Base Operation with an existing Fixed Base operating presently at Drake Field. 76.6 Mayor Todd wanted to clarify the point that the City cannot grant a monopoly as far as the Fixed Base Operation. Mr. Bradbury stated he understood this. 76.7 Todd asked if the basic needs of Continental Ozark necessary to begin operation as Fixed Base Operator were the Old Terminal Building, the Fuel Farm, and ramp space. Mr. Bradbury stated these items would be the nucleus of the FBO, beyond that certain other facilities would be needed, such as maintenance shops, T -Hangars, storage hangars, but these items would be p•emature, until the nucleus is formed. 77 Mayor Todd asked how difficult it would be to grant Continental Ozark's 77.1 requests. Ede Hogue stated that as far as ramp space, the space in front of the Old Terminal Building has been set aside for the use of Continental Ozark, when they occupy the Old Terminal Building. She stated that at the present time, Continental Ozark does not have hangar space for attracting general aviation in order to increase the number of planes to be serviced. Bradbury said the area in front of the Old Terminal Building is adequate to receive planes, but not to park or store them. The area in front of the old hangar would be needed at least. Ede stated that she had discussed with Mr. Bradbury the possibility of using the parking lot west of the Old Terminal Building for additional ramp space. She said that until the facilities can be installed on each side of the field, this may be an alternative. Light aircraft could be located here after resurfacing, also the possibility of some tie -downs and possibly a T -hangar. 77 2 O Mr. Estes stated this would have to be a cooperative effort, and that Q) Continental Ozark wants to follow the desires of the City Board, but that they need the cooperation of the City in furnishing a first class Fixed Base Operation. Director Lancaster asked if these items were different from the bid submitted 77.3 by Continental Ozark. Mr. Bradbury stated that there had been some misunderstanding, Q but that when the bid for the Fixed Base Operation had been discussed with the Q Airport Committee, he felt these items had been understood. However, he said that perhaps Continental Ozark had not make their needs sufficiently clear. Everything discussed has been an integral part of a Fixed Base Operation. The Old Terminal building by itself and the small amount of ramp space is not sufficient to operate the type of Fixed Base Operation that Continental wants to put in, and the type that Drake Field needs. Lancaster said that each bid submitted by Continental Ozark and Skyways had a plan and detail. He wondered if what was being discussed now was different. 77.4 Bradbury said there may be a difference in what the actual bid included. He did not feel there was a difference in what had been discussed with the Airport Committee. The actual bid included the Old Terminal Building only. Lancaster said he concurred that the bid had been for the Old Terminal Building, with the understanding that it would be torn down. Lancaster said it was his understanding that Mr. Bradbury would provide the facilities that would be needed to install the FBO. Bradbury said he still held that position, but that it was his understanding that the City would have only one company providing theiCity's Fixed Base Operation. He did not feel that the business generated by Drake Field could support two competitive Fixed Base Operations. Lancaster said that the City cannot create a monopoly. 77.5 McCord stated that is correct, the City cannot grant an exclusive FBO. Bradbury asked if that included providing facilities. McCord said it does not, but that it must make space available. i 77.6 Mr. Estes stated that the misunderstanding had occurred in that Continental had assumed that the FBO facilities currently existing at Drake Field would be made available to Continental Ozark when they were awarded the bid for the Fixed Base Operation. Upgrading of the facilities cannot take place until Continental Ozark has access to these facilities. He compared it to a filling station without gas pumps. At this time the only facility that Continental Ozark has access to is the Old Terminal Building, and based on this, Continental Ozark is not encouraged to make the investment to install a first class Fixed Base Operation. 77.7 II/Mayor Todd wondered if perhaps a new bid should be let. McCord stated that the bid had not included a Fixed Base Operation, but had been for the Old Terminal Building. Continental Ozark has made it clear what would be needed in order to implement a Fixed Base Operation, and it is now up to the Board to decide whether to provide these needs, or to readvertise for bids for a Fixed Base Operation. .L • Jl 7S 78.1 Lancaster said that he felt other issues were being discussed than had been on the agenda, and that it was his opinion this item should be tabled. The City is committed to providing a First Class Fixed Base Operation at Drake Field. 78.2 Mayor Todd said the acquisition of the fuel farm is not the only item being discussed. 78.3 Director Noland said that in correspondence with John Paul Hammerschmidt and the FAA about acquisition of any type of radar unit, the lack of transient landings had been a factor. Noland felt it would be to the City's advantage to increase transient landings as much as possible. Transient landings will go elsewhere until such time as Drake Field has something to offer. 78.4 Administrative Assistant McWethy asked why Continental Ozark needs the existing fuel farm as opposed to installing one of their own. Bradbury stated the primary factor is expense. It is Continental Ozark's feeling that the existing fuel farm can be upgraded much cheaper than installing a new one. Bradbury stated that Continental Ozark would not be opposed to installing a new fuel farm, but they would be opposed to a competing Fixed Base Operation while they are in the building process. 78.5 Director Henry said she could understand Continental Ozark not wanting to go to the expenditure of installing a new fuel farm when they have only a three year lease. Henry wondered if perhaps a longer lease would change the feelings of Continental Ozark in the building of their own facilities. Bradbury stated they would go along with an arrangement of that sort, as long as the City is not supporting a competing Fixed Base Operation. 78.6 Director Henry stated that negotiations for a Fixed Base Operation have been going on for over a year. She stated she understood the deregulation is a precarious time for the airlines, and that the City does not want to put Skyways out of business. On the other hand, the Airport needs to get on a revenue generating basis, and until landings are increased the Airport will not be equipped with radar equipment, landings will not be increased until a first class Fixed Base Operation is installed at Drake Field. In light of all of these things, she did not feel the City could procrastinate any further and must come to some sort of decision now. The reason the City has not acquired the fuel farm is so that Skyways expenditures will not be increased. 78.7 Bradbury said that Continental Ozark has no intention of doing anything to harm Skyways, but that if Skyways had to purchase fuel from Continental Ozark, their expenditures for fuel would be increased. Bardbury said that Continental Ozark has no objection to Skyways retaining the fuel farm for their own use. His objection is to their selling fuel as a competitor, selling fuel for general aviation. 78.8 Ray Young stated that Skyways had installed the fuel farm, that it is their equipment. Under the new contract the land is leased from the City and Skyways pays a flowage fee on each gallon pumped. He felt it was incorrect to state that the fuel farm is subsidized by the City. Skyways having its own fuel, and a contract with Gulf, is very important to Skyways in minimizing their costs. Skyways does a lot of fueling in Fayetteville that could be done elsewhere. 78.9 Director Osborne asked what the difference would be in doing fueling for Skyways, but not maintaining the Fixed Base Operation. He wondered if it would be less costly for Skyways to drop the Fixed Base Operation. 78.10 David Ferguson addressed the Board representing Skyways. He stated that would not be so. There is a profit to be made in selling fuel to others. By selling fuel for a profit, the cost of operations for Skyways is reduced. Ferguson stated that Fayetteville has the largest degree of operation for Skyways. In light of this Skyways would not be willing to let someone else handle fueling operations for them. This would casue delays in flight operations, safety related problems could arise. Skyways has been serving Fayetteville for thirty years. Perhaps Skyways has not provided the best Fixed Base Operations in the past, but Drake Field has not been the best airport, this has been directly 79 related to tM:quality of Fixed Base Operation provided by Skyways. The proposal made in July by Skyways was to provide a first class Fixed Base Operation. Skyways has the facilities, and if they had been awarded the terminal building, they would have provided the facilities being disucssed in this meeting. Young stated that Skyways is fully in support of increasing itinerate operations as well as airline operations. Lancaster asked Mr. Bradbury if Skyways eliminated their Fixed Base Operations, if he would have a quarrel with Skyways fueling their own planes. Bradbury stated he would not. Lancaster asked if Mr. Young would have an objection to this type of arrangement. Mr. Young said he assumes that would mean Skyways would be prohibited from selling fuel to others. Ferguson stated that under federal regulations that could not be done. He stated it would not be practical for Skyways as the selling 0 of fuel reduces the operation expense of the fuel farm. Director Henry stated that the City could not grant an exclusive FBO, but CD the City could terminate a contract for poor performance. Mayor Todd asked Bradbury if he would be willing to go ahead with the installation of the fuel farm if facilities could be made available by June, 1981. Q Bradbury stated if he could obtain assurance from the City that facilities would Q be available, Continental Ozark would go ahead with improvements to the Old Terminal Building. Dick Seddon asked if the bid had included the installation of a Fixed Base Operation. After some discussion, it was agreed that part of the lease was that a Fixed Base Operation would be the best use for the property. Seddon asked if there was a time limit on the period it would take to install a Fixed Base Operation. Lancaster said that it was mutually agreed that a fixed base operation would be a developing situation and that it would not be pin -pointed to a time it would have to be completed, that it would be a growing process. Ede Hogue stated this had been discussed, and that time would be made available for the fixed base operation to comply with the ordinance. Director Osborne asked Mr. Bradbury if he intended to provide pilot training and all other requirements of the ordinance for a Fixed Base Operation. Bradbury stated he did. Osborne asked if Bradbury had experience in all of this, and Bradbury answered that he has access to personnel who have the experience. Director Osborne asked Skyways representative if in the past Skyways had refused to sell fuel to airlines other than Skyways because they needed the fuel for themselves. Young replied he did not believe that was true, that Skyways was fortunate in that they have been able to obtain allthe fuel they can use. He stated, however, that there have been problems in the past in getting fuel in when the roads are icy. Ferguson asked if Fayetteville would rather have airline operations out of Fayetteville or transient operations out of Fayetteville. Director Osborne answered both. Young stated that Skyways actively solicits business, and that he could not see every turning someone away. Director Osborne wondered if perhaps there could be conflict of interest in the FBO being operated by the airline. He wondered if perhaps an independent FBO would not be better for the City. Young stated that the operation of a Fixed Base Operation and the operation of an airline are complimentary. Fayetteville has never had the facilities at Drake Field for the installation of a Fixed Base Operation. The Old Terminal Building lent itself to that use. Also, until lately, Fayetteville has not had a first class airline. Young felt that the two could go hand in hand. Young said that Skyways can provide to corporate jet operators and prop jet operators first rate heavy maintenance capabilities. This cannot be found in other airports in this region, where FBO is totally independent. Lancaster felt the meeting should be adjourned and that consideration should be given to points brought up today from • the Board's standpoint and also from a legal standpoint. 79.1 79.2 79.3 79.4 79.5 79.6 79.7 79.8 79.9 79.10 79.11 79.12 79.13 80 80.1 Ede Hogue wanted it clarified that if Skyways was permitted to keep their fuel farm for their own operations, if Continental Ozark would be willing to proceed with the installation of facilities to get a Fixed Base Operation into operation. Bradbury said Continental Ozark is readyto proceed as long as an 80 2 agreement is reached on a contract and they are furnished with complete facilities. Director Henry wondered if perhaps a bid should be advertised for a Fixed Base Operation. Director Osborne agreed with this. Bradbury said it was his understanding that FBO facilities would not be included in the bid for the terminal 80.3 building, but they would follow. Administrative McWethy summarized the options discussed. 1. Exercise the City's option, acquire the fuel farm from Scheduled Skyways and essentially sell it to Continental Ozark. 2. Rebid for a Fixed Base Operation. 3. Cancel Skyways FB0 license, allow them to keep the fuel farm for their airlines operation, and Continental Ozark would install their own fuel farm. 80.4 Young stated he felt the airline and the FBO are inextricably related. He stated that Skyways is ready to go ahead with the bid as advertised on the Old Terminal Building. Skyways is willing to work with the City on a provisional basis so that if the City is not satisfied with Skyways running the FBO, then Skyways could get out of the FBO business and run their FBO as strictly as a back up. He felt Skyways ought to be given the chance to show what they can do as far as Fixed Base Operations. Young said he was aware from working with the City of the City's needs in putting the Airport on a sound self-financing basis. 80 5 Young stated that Skyways has 80% of the facilities in order to install an FBO. All the building blocks are there. Lancaster stated he was aware of Mr. Young's accomplishments since he has been in charge of Skyways. However, in the past all of the FBO operations performed by Skyways have been primarily for the operation of Skyways. This is the way FBO operations handled by 80.6 Skyways have been handled for years. Director Noland said he did not think the Board was ready to resolve these issues. He felt the Board was ready for a recommendation from the Airport 80 7 Committee. Director Henry said she felt it was time to terminate Skyway's lease. She suggested letting them operate their fuel farm for their own operations, and award the Fixed Base Operations to Continental Ozark. She stated she thought the Board should come to some decision by January 15 as to whether to award Fixed Base Operations to Continental Ozark with the needed facilities or to 80 8 readvertise for bids for a Fixed Base Operation. Lancaster said he did not have any problem with making a decision by January 80.9 15. Director Henry moved that this item be sent back to the Airport Committee in order that they have a recommendation for the Board by the second meeting in January. Director Osborne seconded the motion. The motion passed unanimously 80.10 upon roll call. The meeting adjourned at 12:16 p.m. 1 1