Chattanooga Airport officials on Friday defended to City Council members the building of a controversial general aviation center, though the panel’s chairman sought more answers.
Airport chief Terry Hart said the new facilities for corporate and small aircraft, estimated to cost about $10 million when totally built out, were needed. He said there had been complaints about high fuel costs and a lack of service by TAC Air, which had been the only fixed-base operator at Lovell Field.
“There was lots of feedback received by the airport and elected officials about a lack of competitive environment in those services,” said Hart in a briefing about airport operations to the Council.
Airport Authority Chairman Dan Jacobson said efforts were made to try to get TAC Air to address those concerns more than three years ago before the new facilities were announced.
“There were conversations with the incumbent, but they didn’t go anywhere,” he told a half dozen Council members at the airport meeting.
City Council Chairman Yusef Hakeem requested more information for himself and other council members so they can get “a clear understanding.”
“I asked for an executive summary of that [TAC Air] scenario…and how that impacts our community,” he said. “I hope to get more information.”
TAC Air, however, has maintained the airport used state and federal money to build facilities which weren’t needed, and that the new general aviation center, leased to Wilson Air, is a money loser.
State government paid about 90 percent of the cost while the airport handled the rest out of its operations budget. Also, about $3 million in federal stimulus money was used to pave an aircraft parking area at the site.
Pam McAllister, TAC Air’s general manager, has said that parking and landing fees were raised by the airport last year to support the airport center’s shortfalls.
“Technically, our local residents are helping to pay for the losses” at the Wilson Air Center, she said.
McAllister has said the airport is unfairly competing with a private company and trying to run her business off of the airport.
But Hart complained to the council that TAC Air’s predecessor, Krystal Aviation, was given a 40-year agreement that runs through 2031 with extensions that vastly understates the fair market value of the TAC space.
He said that TAC Air has about 1.2 million square feet under lease that equals about 17 cents per square foot “which is far less than fair market value.”
“The Federal Aviation Administration really frowns on that because they really like airports to be self-sufficient,” Hart said. He said when he talks to FAA officials about the lease, they “shake their heads as to why would you have a 40-year agreement.”
Still, airport officials have said that in their center’s first three years, it’s projected to lose more than $1.3 million.
Hart said such losses are typical for new ventures. He also said general aviation operations increased in 2012 at the airport and fuel prices have been cut.
Airport officials have said the center should see a profit within five years.
“I think we’re right on schedule,” Hart has said.