Friday, April 06, 2012

Is Million Air deal taking off at Griffiss?

 Rome, N.Y.   -  Four years into a 10-year contract with a private company to run fixed-base operations at Griffiss International Airport, profits aren’t anywhere near projected levels.

And a look at other airports run by Freeman Holdings of New York raises questions about whether Oneida County has gotten the best deal.

The company does not pay rent for the space it occupies in a county-owned building here.

 Plus, Freeman keeps half the revenue generated from renting space for plane storage in numerous spaces including 28 county-owned T-hangars.

County Executive Anthony Picente said even if the deal is off to a slow start, it’s well worth it because the county was able to shed seven employees when handing over operations to Freeman in 2008. The county also was spared everything from pouring coffee for travelers to the complexity of purchasing and selling fuel.

 “It eliminated something we weren’t very good at,” Picente said. “It has transformed part of the airport, in terms of its overall handling of planes, passengers and tenants.”

He estimated the cost savings was about $500,000 a year in salaries, benefits and equipment the county has not had to purchase.

Freeman Holdings Managing Partner Chris Freeman agreed the deal was beneficial to the county.

“If we weren’t there, they would have to pay someone to be there,” he said.

But former Democratic county Legislator Michael Hennessy, who was vocal in his opposition to the Freeman Holdings deal during the negotiation period, said it’s no surprise to him that things aren’t going as well as expected.

“He was able to sell the concept to a board that was desperate to find an alternative,” he said. “It’s like all the privatization we’ve done. We never look back to see if there is true savings or not.”

Freeman Holdings came to Griffiss under a 10-year contract with the option to renew for another 10 years. It runs the county’s fixed base operations, which include services offered to pilots, passengers and planes when they land at the airport.

That includes everything from fuel to food service. The company works under the franchise name Million Air, which is a national chain of fixed-base operators.

Under the deal between Oneida County and Freeman Holdings, the county gets 8 cents for every gallon of fuel sold, but the profits aren’t anywhere near those hoped for.

Company fuel payments to the county in 2009 and 2010 were $44,791 and $62,491, respectively. And in 2011, the take was $71,024, county figures show.
In 2008, Million Air projected the county would make $190,000 off the deal in 2009 and $205,000 in 2010.

Board of Legislators’ Airport Committee Chairman David Wood, R - Rome, conceded that projections hadn’t been met, but pointed to the “upward trend,” and noted the down economy.

“I’ve heard nothing but praise for the whole operation,” he said.

Freeman said the lower-than-expected profits were the result of trouble attracting business to the airport, including issues setting up a U.S. Customs office there.

A customs office would make it easier for flights — whether military or civilian — coming directly from overseas locations to land at Griffiss. Now, when such a flight arrives there, customs officials from Syracuse are called, which takes time and is inconvenient.

 “Of all our locations, Rome is the one barely eking by,” he said. “If Rome had customs there and had a way to attract business that would be a different story, and they don’t.”

Million Air made $143,855 from hangar rents in 2011, and Oneida County received an equal amount, county records show.

In August, then-Airport Commissioner Vernon Gray said the portion of the rents kept by Million Air was a loss for the county.

Picente, however, said splitting the hangar rents is fair even though the majority of the hangar tenants predate Freeman because Million Air is managing the operations.

Wood said the deal is about “cost avoidance.”

“We couldn't afford to remain a gas station attendant at Griffiss,” he said. “We gave up some of our revenues in exchange for a national brand and a private entity to do it better.”

Freeman Holdings operates at numerous other former Air Force bases across the country, but the details of its contracts vary greatly by location.
Several airports had agreements that include rent for space occupied by the company.

For example, in California, the city of Victorville operates an airport at the former George Air Force Base. There, Freeman Holdings’ Million Air franchise pays between $6,000 and $7,000 a month in rent, Assistant City Manager Keith Metzler said.

At Victorville, Freeman has been able to attract military planes, and the city garnered close to $800,000 in 2011 from its 10-cent-per-gallon share of the million gallons of fuel sold there, Metzler said.

“Our relationship with them is really good,” he said.

At Yuma International Airport in Arizona, Freeman pays $15,358 per month to rent space, including hangars. It pumped 3 million gallons of gas there in 2011 and passed the Yuma Airport Authority 10 cents a gallon, airport records show.

The airport is near several existing military flight operations, and Freeman Holdings has helped increase business from military contractors, officials said.
Boeing Co. recently also tested its new Dreamliner 787 planes at Yuma, and Gen Grosse, Yuma County Airport authority corporate accounts manager, said Freeman’s Million Air franchise was key in keeping the business.

“Boeing is familiar with the Million Air franchise,” she said, pointing to the business the community as a whole got from Boeing. “It’s because of the customer service.”

Wood and Picente both said they believe the county and Million Air eventually will make more money at Griffiss. In the meantime, they say the relationship still is a win.

“We were losing money,” Picente said. “Those costs are gone now.”


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