YOUR TAX DOLLARSGENERAL AVIATON

AND THE CHATTANOOGA METROPOLITAN

AIRPORT

SITUATION

Airport Authority (CMAA) Announced Plans to Build the Following Facilities:

• General Aviation Terminal• Bulk Fuel Storage (Fuel Farm)• New Hangar

SITUATION

Reasons Cited by CMAA For Building Another FBO To Create Competition:

• General Aviation Fuel Prices• Airline Fuel Prices• Additional Hangar Space• Expand Capacity to meet Airport’s

Projected Needs• Funded Through State

Grants/Operating Budget

THE PROBLEM

• Competition Already in Place• Market Cannot Support Another FBO• Traffic Actually Decreasing• CHA Airport Fees Higher Than Others

in Region• Questions Surrounding Funding

COMPETITION - GA• 2006 CMAA Issued RFP for 2nd FBO

– Total Airport Operations for the year 79,331

• Results?– Free Market did not produce a 2nd qualified

supplier

• 2010 CMAA Will Issue RFP for 2nd FBO, citing the need for competition to bring fuel prices down– Projected Airport Operations for the year 56,598– (Based on FAA data January-June 2010)

COMPETITION - AIRLINES• Quoted fuel as their biggest expense at

CHA• Fuel is the biggest expense of ANY

commercial flight• Airlines purchase fuel directly from

petroleum companies• FBO only charges for “intoplane” service,

which is the pickup of the airline’s fuel from the bulk storage facility (fuel farm) and delivery onto the plane

“HOW MANY FBOs ARE ENOUGH?”

• NATA Airports Committee Guidelines

• “Conventional thinking says a robust head-to-head rivalry is the best way to deliver the greatest value to airport users with lower fuel and service prices…they (the airport authorities) also have the duty to ensure that giving the nod to a new business will not unduly harm the current or future airport environment.”

• Has this been demonstrated by CMAA?

“HOW MANY FBOs ARE ENOUGH?”

“In many instances, the volume of business may not be sufficient to attract more than one such enterprise. ”

“HOW MANY FBOs ARE ENOUGH?”

“…decreased rents and fees from potential overcapacity issues as could be the case where operators pay a percentage of gross receipts or gross margin. In an overcapacity regime, the fees paid to the airport sponsor will typically decline.”

AIRPORT TRAFFIC

AIRPORT TRAFFIC

AIRPORT FEES

AIRPORT FEES

• “Economic challenges associated with operating from CHA”

• “Above the industry norm”• “these additional costs are

not required of our competitors who are not domestic to CHA”

• Chose to relocate

AIRPORT FEES

AIRPORT FEES

FUNDING

• Private Investment Opportunity in 2006

• New Hangar• Instant Revenue

Stream at Zero Risk to Airport

• No Taxpayer Dollars• Rejected by CMAA

FUNDING

• Public Money to subsidize a privately operated FBO?

• “State Grants” are Taxpayers’ Money• Where is the money coming from?• What happens if the 2nd FBO fails?• Why spend taxpayer money to

support private aviation?

SUMMARY• Competition Already in Place

– Aircraft more fuel efficient – Refueling at every stop isn’t necessary

• Market Cannot Support Another FBO– Dropped from 4 to 1 over past 20 years– At peak of GA traffic in 2006 free market did

not respond to an RFP for another FBO

• Airport Operations Decreasing• Higher than Regional Norm Airport Fees• Questions Surrounding Funding• Why risk taxpayer money to support

private business?

WHAT CAN YOU DO?• Call your elected representatives• Write the CMAA• Visit Chattanooga Metropolitan Airport

President Mike Landguth during regular business hours at the main terminal office

• Express your concerns• Ask for a public discussion period• Ask that if taxpayer money is spent at

the airport, it be used for public area improvements – not general aviation