Tuesday, May 3, 2016

South Valley Regional Airport (U42) operator says Salt Lake City greed is forcing it out



Operating general aviation services such as fueling, maintenance and hangar rental at the South Valley Regional Airport has not exactly been lucrative. Six of the previous seven concessionaires went bankrupt.

But Leading Edge Aviation was finally making ends meet, and its five years of operations there won praise from pilots and the Salt Lake City Department of Airports, which owns the airport in West Jordan.

But Leading Edge says Salt Lake City is being a bit too greedy in new lease negotiations, and essentially is forcing it out later this month — making pilots worry about continued services at the regional airport. That comes after Leading Edge was the only company to bid for a new 20-year lease the city seeks.

"We certainly don't want to be thrown out by any means. We don't understand it, frankly. We felt like we went along with all their terms, and accepted their increase in rent," said Scott Weaver, president of Leading Edge.

But he and airport officials agree that the sticking point came in how much Salt Lake City wants Leading Edge to spend for improvements at the airport over the next 20 years of the proposed lease.

Weaver says the city wanted $1.5 million. He said his accountant figured the most his company could afford and still make a profit was $500,000, "but we told them we would do $1 million." The city countered at $1.3 million.

Also, the city wanted Leading Edge to build more T-hangars, connected garages for small planes. Weaver said the company did not want to do that because it figured it could not compete with tax-subsidized rent of other T-hangars the city owns there. The city says expected growth makes them necessary.

So Leading Edge decided to walk away from negotiations.

"We told them that with the increases in rent, we were unable to do that much," Weaver said.

Cole Hobbs, airport contracts manager, told concerned pilots at a meeting Tuesday that proposals would not have raised rent for about five years. He also said the city will soon issue a new request for proposals to seek another long-term concessionaire with a 20-year lease.

The city thinks the reason Leading Edge had been the only bidder, Hobbs says, is that the company was the only one that attended a mandatory meeting for bidders.

"It knew it was the only bidder," he said. "We lose $1 million a year on that airport. We thought we could do better."

Meanwhile, "We offered Leading Edge a one-year extension and they declined," Maureen Riley, director of the city airports department told the airport advisory board last week.

Weaver said a temporary extension would make it difficult to keep workers who figured their jobs would soon disappear. "During the process, we've had a lot of our middle-management employees leave. So the business is suffering as it is."

He figures he may lay off up to 35 workers; operations are now scheduled to cease on May 15, but some may transfer to operations in Logan. And 70 full-time and 50 part-time students at a flight school will need to find other places to complete training.

That shift worries pilots who use the airport, including Tim Miller. He notes that many concessionaires failed before Leading Edge went bankrupt, and services suffered as they went downhill.

"It was a desert out there in terms of service. Leading Edge was a breath of fresh air and reinvigorated the airport and general aviation," he said. Even Riley told the airport advisory board last week that Leading Edge has been "a professional and accomplished provider."

Miller said when the airport told pilots that Leading Edge was leaving, it still guaranteed "minimum basic service." He said, "We worried that may mean self-service gasoline and maybe a pot of coffee. We don't want to go back there."

Miller said it could even hurt Salt Lake City's efforts to encourage more general aviation traffic to move out of Salt Lake City International Airport to South Valley Regional.

About 100 concerned pilots met with airport department officials Tuesday, and many said the city was trying to force out Leading Edge by requiring it to build facilities it cannot afford.

Officials responded that Leading Edge had just expressed interest in a month-to-month extension, and a few other companies also were interested in a short-term lease — so the city pledged to maintain most current services.

"Our goal is to do everything but a flight school" in the short term, said Al Stuart, airport operations superintendent.

Hobbs also said the city hopes to procure a new long-term contractor sometime between Sept. 1 and Oct. 1.

Weaver said, despite setbacks, Leading Edge might try bidding for the 20-year lease again — and hopes the city might be convinced to move more toward what he figures he can afford.

Any new bid, "obviously will be for different terms because we'll have to have everything moved out, and it would be a startup business. It would be pretty hard to offer them what we were going to offer before," he said.

The city wants a better deal, too. Hobbs told pilots Tuesday that it now wants any new concessionaire to invest at least $2 million in new facilities over the next 20 years, or $500,000 more than Weaver says the city originally sought with him.

Original article can be found here: http://www.sltrib.com

No comments: