MANITOWOC — With three corporate jets no longer flying out of the Manitowoc County Airport, dramatically declining jet fuel sales are jeopardizing the survival of Lakeshore Aviation.
“At this level of fuel sales I can’t stay in business past the end of the year,” Curt Drumm, president of the the company serving as the county airport’s fixed base operator (FBO) since 2005, said on Monday.
The Manitowoc Company went from two jets to one in 2009 and took the second out of operation in June. Orion Energy Systems ceased flying its corporate jet turboprop out of Manitowoc at the end of September.
“I feel terrible about this,” Drumm said. “Everything I’ve put in to try and help grow our airport and help our local businesses is going away.”
“We are leaving no stone untouched in an effort to continue operations, but with a fuel sales decrease of 85 to 90 percent with practically no way to cut overhead costs, it is difficult to find a solution while still providing the hours and breadth of services required,” Drumm stated to county officials.
His summary of his dire fiscal situation was in response to a letter from Steve Rollins, the county’s corporation counsel. He stated the county will honor its FBO agreement, which extends through 2014, and expects Drumm to do the same.
The agreement includes expecting the FBO to have on-site personnel, sunrise to sunset, every day, and offer charter service, flight instruction, aircraft and hangar rental, repairs and maintenance of planes.
Drumm said those services do not generate enough revenue to cover the costs of Lakeshore Aviation, including utilities, insurance and labor of its 10 employees.
County Executive Bob Ziegelbauer said he doesn’t doubt declining fuel sales haven’t made Drumm’s business life “more challenging ... but I wouldn’t jump quickly to the conclusion that he may or may not be able to continue ... I would encourage him not to give up.”
“We know the airport is a very valuable asset to us,” said Ziegelbauer, whose own proposed 2014 executive budget states it has provided, in recent years, an annual economic output of $3.3 million, supported 47 jobs and contributed $1.4 million in personal income to the local area.
“We won’t allow it go under,” Ziegelbauer said. “If the current FBO finds they can’t continue in business, we’ll wish him well, say goodbye and step in to maintain operations.”
Drumm pays a “flowage fee” to the county, ranging from about 6 cents to 12 cents a gallon, depending on which of three types of fuel that pilot puts in the tank. He also pays $1,500 in annual rent for the FBO building, with Lakeshore Aviation the source of most of the airport’s total annual revenue of about $100,000.
The county, through highway department personnel, maintains runways, taxiways, ramps, parking lots,lights and signs, performs snow removal and grass cutting, maintains perimeter fence and gates.
The 2014 county budget indicates anticipated total expenses of running the airport at $252,600 with $163,500 coming from local property taxes.
In 2005, Lakeshore Aviation’s first year as FBO, the two Manitowoc Company jets bought nearly 146,000 gallons of jet fuel. Through mid-September of this year the worldwide manufacturer with corporate headquarters on South 44th Street had purchased less than 8,000 gallons.
“Curt is in a tough business right now, it’s nothing he has done wrong,” said Tom Musial, senior vice president for human resources and administration.
“With this business downturn, this is really part of an overall business plan,” Musial said of taking two jets out of local operation, with six pilots and support personnel.
“We are very cautious on the amount of travel we do and there is so much more you can do with electronic communication, including video conferencing, to reduce travel,” Musial said.
He said Manitowoc Company executives occasionally fly on charter aircraft through Sterling Aviation, with operations at Mitchell International in Milwaukee, and there also more reliance on personnel taking commercial flights.
Musial said use of corporate jets when used properly is a “good time saver,” but also is costly “and the economy has changed so much.”
Fred Vogt flies for Red Lake, a venture owned by Manitowoc companies Red Arrow Products and Lakeside Foods, which includes a Piper Navajo Chieftan, twin-engine turbine piston plane. Vogt flies personnel to the two companies’ plants around the Midwest and on sales calls.
He said Drumm and Lakeshore Aviation have “always done a wonderful job for us, I have absolutely no complaints regarding the service and job he does.”
He said it would be very important, should Lakeshore Aviation cease operations, for the county to step in and keep the airport fully operational.
Drumm shared Monday a printout of companies Lakeshore Aviation has provided services to in 2013 with many of them local manufacturers.
“The reality is about 90 percent of the business activity at the airport is related to create manufacturing jobs and sales in the city of Manitowoc,” said Drumm, a seaplane pilot and instructor whose personalized vehicle plate reads “H2O AV8R.”
Drumm said company representatives fly out on sales calls that are part of keeping and generating jobs in the Lakeshore area.
He said he has invested some $4 million to $5 million in assets, including fuel trucks, aircraft, hangars and technology.
Drumm said he agrees with Ziegelbauer that it is not the role of county government to support a private business “but everything we do is dictated by the county” including hours of operation and services personnel are required to do or risk violating the contract.
“If the county wants to take over, there will be substantial costs,” Drumm said. He said Lakeshore Aviation personnel put on the county’s payroll would cost more in wages and benefits.
In Drumm’s response to Rollins, the operator of the Wisconsin Aviation Business of the Year in 2011 said he has no intention to “abandon” its obligations.
Drumm, a Lincoln High School class of 1975 graduate, said he has talked with other FBOs about coming into Manitowoc but with the drop in fuel sales volume, none have expressed interest.
Can't waive payment
While the city doesn’t fund any of the airport’s operations, Manitowoc Mayor Justin Nickels said Monday he will try to schedule this week a meeting with Drumm, representatives from the Economic Development Corporation of Manitowoc County and others.
“In terms of keeping the FBO alive, there’s nothing I can do ... other than having conversations with local businesses to see if they can utilize the airport more,” Nickels said.
Specifically, Nickels said state statutes prohibit waiving of personal property tax paid to a municipality. Drumm said his business pays about $25,000 annually to the city.
County Highway Commissioner Gary Kennedy said he has a contingency plan should Lakeshore Aviation seek to terminate its agreement.
“We would do baby steps and see what is best for taxpayers,” Kennedy said of providing services besides fueling, such as charters and flight instruction.
“The airport will be open for business,” Kennedy said.
Any changes in the current FBO agreement would be subject to county board approval.
Drumm said on Monday county highway personnel do a “great job” when it comes to runway, grounds and facility maintenance. But they are not trained airport industry professionals, he said.
Drumm said he pays himself the equivalent of about $7 an hour and has depleted 401(k) savings. “Curt the businessman would have walked away three years ago” after Manitowoc Company dropped from two jets to one with accompanying fuel sales decline, he said.
But motivated by his passion for the aviation industry and pilot community, and to help local businesses, Drumm said he has “tried everything” and will have a clear conscience if he ceases operations.
“We’ve built this up to be a pretty nice operation,” Drumm said.
But he said with a current annual shortfall of about $100,000, Lakeshore Aviation may be grounded before New Year’s Day.
North American Aerospace Defense Command will be training over the area early Tuesday morning.
The exercise, beginning after midnight, will include Civil Air
Patrol aircraft and a U.S. Coast Guard Dolphin helicopter. The exercise
is expected to continue through 2 a.m.
NORAD has been conducting these training flights
in the United States and Canada as part of Operation Noble Eagle since
the terrorist attacks on Sept. 11, 2001.
Since then, there have been more than 5,000 potential air threats in the U.S.
Officials may postpone or cancel training in inclement weather.