Thursday, December 15, 2016

Bermuda: Why airport shouldn’t be built – Mayor, Burchall

Larry Burchall: opposed to airport project

Political commentators Craig Mayor and Larry Burchall have published 11-page report/analysis which outlines the reasons why Government should not go ahead with their controversial airport project.

It has already been presented to all MPs, the Auditor-General, and Acting Governor.

The full statement, broken into various categories, reads as follows:

Financial Analysis

Public and private sector capital projects are evaluated by comparing the amounts of cash invested with the amounts of cash returned. This simply answers the question “How much do I put in and what do I get back”

This analysis is achieved by identifying cash expenditures and cash receipts over the life of the project.

In the P3 with Project Co, it is clear that at the end of the concession Government will take back a 30-year-old Terminal.

But what isn’t so clear to Government is how much Government will pay Project Co to design, build, finance, operate and maintain [DBFOM] the Terminal over 30 years.

There are two broad categories of cash expenditure that Government will incur for the project. Using 2016/17 estimates, they are:

(i) Payments to operate the AT. These include annual expenses for the new quango, electricity subsidy, and retained airport services, such as security, fire & rescue, air traffic control, and meteorology. For Government these operating expenses are assumed to total $18m/year (as in the overview prepared for MPs.)

(ii) Amounts paid to Project Co to DBFOM the AT. In this case Government will hand over all airport revenues, currently $37m/year and Project Co will assume approximately $10m/year of Government’s airport expenses.

(iii)  On an aggregate basis Government will therefore hand over net revenues of $37m/year less $10m/year or $27m/year.

In summary, over the 30 year concession the AT will cost:

(i) Operating expenses: $18m per year, $540m over 30 years

(ii) Net revenue payments to Project Co: $27m per year; $810m over 30 years. Total cost: $45m per year; $1,350m over 30 years.

Government has properly included operating expenses of $18m/year but has erroneously omitted the payments to Project Co which total $27m/year or $810m over 30 years.

It is important to note that the net revenues ($27m/year) will be adjusted for any payments under the revenue guarantee or any receipts under the Revenue Sharing agreement. Thus the actual net revenue payments of $27m/year could turn out to be higher or lower.

Because these amounts cannot be ascertained with reasonable certainty they have rightly been excluded from Government’s cash flow analysis.

By omitting the net revenue transfers to Project Co totalling $810m, Government is by definition saying Project Co will build and operate the AT for 30 years at no cost to Government. Clearly Project Co will not build and operate the AT for free and by omitting $810m in net revenues transferred to Project Co, Government’s cost analysis makes no economic sense.

The terminal that Government says will cost $540m to build and operate over 30 years will, in fact, cost just under $1.4bn or 2.5 times Government’s estimated cost.

Therefore, with a cost understatement of $810m, all of Government’s financial analysis to justify the cost, business case, and economics is totally invalid.

It makes no financial sense to pay $1.4bn to build, finance, operate and maintain an AT which Government purports will cost $267m to construct. Under this scenario Project Co will receive $1,083m for financing, operating and maintaining the terminal, which is four times the construction cost of $267m.

Direct Inward Investment & Economic Stimulus

A major rationale offered for Aecon’s new build was to have ‘direct inward investment’ in Bermuda, because this kind of investment would help stimulate Bermuda’s economy and help pull it out of recession.

However, the promised ‘direct inward investment’ of $267m can only ever result in about 60 per cent of that ‘investment’ actually being spent in Bermuda.

This 60 per cent or $160m of on-island spending would help stimulate Bermuda’s economy and boost Bermuda’s GDP. However, this stimulus action would only apply for the 40 month construction period.

The $107m balance would be spent on imported materials and on paying the 40 per cent Canadian workforce employed by Aecon. The wage savings from the Canadian workforce will be repatriated to Canada. Money spent on materials and wage savings that are repatriated would boost Canada’s GDP. Not Bermuda’s.

At the end of the 40 month construction period, Bermuda’s economy would start paying back the $160m spent on-island as well as the $107m that had been spent in or repatriated to Canada.

Job creation for Bermudians

A second equally major rationale was that the CCC/Aecon project would provide hundreds of jobs for Bermudians. In March 2015, the promise was 600 jobs with 75 per cent for Bermudians. In November 2016, the promise reduced to 400 jobs, with only 60 per cent of jobs for Bermudians.

There is no guarantee, promise, or suggestion that jobs for Bermudians will not decline further to 50 per cent, or 40 per cent, or lower. However, Bermuda and Bermudians will carry and pay the full costs that are now shown to be around $1.4bn. And Bermudians will pay for the Canadian workers to work in Bermuda.

Fresh Debt

The third ‘explanation’ for the proposed Aecon deal was that Bermuda would not incur any additional national debt to pay for the proposed new air terminal.

In the past nine years, Bermuda’s gross national debt has grown sevenfold [720 per cent]. From $345m in 2007/08 to 2016/17’s new high of $2,484m.

Government is still operating in ‘deficit’. Any surrendering of revenue [$27m/year] will therefore result in either a tax increase that will be required to cover the increased deficit. Or, there will have to be increased borrowing in order to close the $27m revenue gap that exists only because of the surrender of $27m to Aecon/Project Co.

Or across-the-board spending cuts of $27m.


This plan proposes that Aecon should be exempt all Customs duties as well as the employer’s portion of payroll tax. This exemption would last for 33 years and four months.

Downside risks and downside liabilities

Finally, under the planned revenue guarantees, Government will retain an obligation to make up any shortfalls in ‘base case’ revenue.

All downside risks of revenue shortfalls are therefore underwritten by Government. This will be accounted for and reflected as contingent liabilities. By increasing total liabilities, it will negatively impact Bermuda’s sovereign credit rating.


This project must be stopped immediately pending an independent investigation of the true costs and economic viability of building a new terminal as currently planned with CCC/Aecon.

Given the enormity of the error in Government’s costing of the project and the substantial demonstrations on Friday, December 2, 2016, it is in the best interests of the country for the Auditor-General to give an opinion on the $810m cost understatement, and to do so as soon as possible.

If confirmed, this should prevent further and continued waste of Government expenditure, suspend social unrest, and allow Government to focus on other issues.

At $1.4bn, and with only a short and small 40 month economic stimulus impact on Bermuda’s GDP and small and vague promises of employment for Bermudians, it is difficult to imagine how this project, as currently planned, can ever be justified.


Start with the primary question: “What, exactly, does Bermuda need at its airport.”

Story and comments:

Piper PA-28-140, N3563K: Accident occurred December 13, 2016 at Flagler Executive Airport (KFIN), Palm Coast, Flagler County, Florida

Aviation Accident Final Report - National Transportation Safety Board: 

Docket And Docket Items - National Transportation Safety Board:

NTSB Identification: GAA17CA149
14 CFR Part 91: General Aviation
Accident occurred Tuesday, December 13, 2016 in Palm Coast, FL
Probable Cause Approval Date: 04/10/2017
Aircraft: PIPER PA28, registration: N3563K
Injuries: 1 Uninjured.

NTSB investigators used data provided by various entities, including, but not limited to, the Federal Aviation Administration and/or the operator and did not travel in support of this investigation to prepare this aircraft accident report.

The pilot reported that, after landing and during the turn onto a taxiway, the left wing impacted a taxiway sign. He added that he was not able to see the sign because of sun glare.

The airplane sustained substantial damage to the left wing.

The pilot reported that there were no preaccident mechanical failures or malfunctions with the airframe or engine that would have precluded normal operation.

The National Transportation Safety Board determines the probable cause(s) of this accident as follows:
The pilot’s failure to maintain clearance from the taxiway sign.

The pilot reported that after landing during the turn onto a taxiway, the left wing impacted a taxiway sign. He added that he was not able to see the sign because of a sun glare.

The airplane sustained substantial damage to the left wing.

The pilot reported that there were no preaccident mechanical failures or malfunctions with the airframe or engine that would have precluded normal operation.

Additional Participating Entity: 
Federal Aviation Administration / Flight Standards District Office; Orlando, Florida Orlando,

Aviation Accident Factual Report / National Transportation Safety Board:

NTSB Identification: GAA17CA149
14 CFR Part 91: General Aviation
Accident occurred Tuesday, December 13, 2016 in Palm Coast, FL
Aircraft: PIPER PA28, registration: N3563K
Injuries: 1 Uninjured.

NTSB investigators used data provided by various entities, including, but not limited to, the Federal Aviation Administration and/or the operator and did not travel in support of this investigation to prepare this aircraft accident report.

The pilot reported that after landing during the turn onto a taxiway, the left wing impacted a taxiway sign. He added that he was not able to see the sign because of a sun glare.

The airplane sustained substantial damage to the left wing.

The pilot reported that there were no preaccident mechanical failures or malfunctions with the airframe or engine that would have precluded normal operation.

Mayo Clinic adds wings to its transport fleet

Mayo Clinic's scope of operations is expected to roughly double by 2034 as part of the ambitious $6.5 billion Destination Medical Center project. Flying just below the radar of that explosive growth — up to 45,000 new employees in Rochester — is an increased need for medical transportation.

There's where the shiny, new Beechcraft King Air 350C parked in Mayo's renovated hangar at the Rochester International Airport comes into play.

Mayo recently unveiled a customized $8.5 million plane to transport high-risk patients to its facilities around the country. It's the only such medical plane operating in the Midwest and the specialized 52-inch cargo door — meant to accommodate stretchers — is believed to be the only one in existence in the Lower 48 states.

The plane is expected to make about 400 transports this year and has already airlifted patients to Rochester from Montana, Texas, Louisiana and Pennsylvania, among other sites. However, Mayo estimates that 80 percent of its patients live within 500 miles of Rochester.

"It's getting the Mayo level of ICU and emergency care to patients quicker," says flight nurse Lisa Jelinek, one of 22 Mayo employees to staff the Rochester-based fixed-wing aircraft. "When we walk into a patient's room, their faces light up when they see the Mayo shield."

Mayo claimed the coveted top spot in the last U.S. World & News Reports Best Hospital rankings, which were announced in August. John Noseworthy, Mayo President and CEO, said at the time that Mayo has "the most trusted name in health care." The Beechcraft plane was activated just a few weeks later and figures to help expand the reach of Mayo's brand.


The addition of a fixed-wing plane adds to the Mayo One fleet that was created in 1984, according to Dr. Scott Zietlow, medical director and chairman of the Mayo Clinic Medical Transport Board. The program began with a single helicopter based on Rochester, but now boasts four — two in Rochester, one in Mankato and one in Eau Claire. Each costs an estimated $10-12 million while functioning as an airborne trauma unit.

The Mayo One helicopters are often sent out to the scene of serious accidents, transporting about 2,000 patients annually in situations where time is of the essence, Dr. Zietlow said.

While those helicopters have quick response times and can land very close to the scene, they have distance limitations and are often unable to fly in wet or windy conditions due to safety concerns.

The Beechcraft plane helps fill a specialized niche with a max range of 1,500 miles and wings that can be "flexed" to shed ice accumulation, which Mayo spokesman Glenn Lyden says makes it perfect for operating during the region's frigid winter months. There's also an infrared camera equipped on the nose of the plane to further enhance visibility in the case of rain or snow.

Dr. Zietlow says this plane could be the first of many, with one eventually stationed at Mayo campuses in Minnesota, Arizona and Florida.

"I would anticipate, if this continues to go well, we would add additional airframes that would be something like this in Arizona and Florida," Dr. Zietlow said. "Right now, we would not think of something transoceanic because that brings on a whole new set of challenges."

The plane can utilize small, regional airports thanks to a minimum runway distance of just 5,000 feet. Mayo officials are currently working with the FAA in hopes of reducing that standard to just 4,000 feet, according to pilot Thomas Grandouiller, which would create even more possibilities.

Mayo had previously contracted with a vendor to have access to a jet, but it wasn't frequently used and required more coordination. The leased plane will be staffed every day, including an on-site mechanic, and able to depart within 30 minutes of receiving a transport request.

"The volume of patients needing transportation to Rochester is increasing," Dr. Zietlow said, noting insurance is expected to cover the cost of any air transport deemed medically necessary. "We're a very fortunate organization in that almost no other health care organization has these sort of transport options between ground, rotor wing and fixed wing. The goal is to match the medical team with the needs of the patient and transport them to the most appropriate facility in the most cost-effective way possible."


Quest Aircraft’s chief executive officer announces retirement

SANDPOINT — Samuel D. “Sam” Hill is planning to retire as chief executive officer of Quest Aircraft Company after the first of the year.

The timing of the move has been long planned as part of Quest’s overall strategic plan and a search for a successor is underway. Hill will remain as an advisor to the company and a member of the board of directors.

“This is a good time for me to step aside,” said Hill. “The company is in good shape financially and demand for the Kodiak has grown significantly since 2013. We have a strong leadership team and a solid dealer network that represents us around the world.”

Hill joined Quest in late 2012, replacing then-Chairman of the Board Dave Vander Griend, who was serving as interim CEO. Hill had retired from Honda Aircraft Company earlier that year. At the time, Hill had planned to transition out of the company at the end of 2014, but as Quest continued to grow and demand for the Kodiak increased, the board asked him to stay on.

During his tenure, Hill oversaw key product enhancements and certifications, a steady increase in production, operational improvements and other initiatives, all contributing to the financial stability of the company. Hill is a seasoned aviation veteran with 50 years of experience. He has overseen numerous programs and business development activities, including 10 years with Embraer Aircraft Corporation in several key leadership positions, including President and Vice Chairman. He was responsible for starting Embraer’s Corporate Aircraft Division and launching the Legacy 600, the company’s first executive jet. In addition to serving on Quest’s Board of Directors, Hill will be involved in other entities of Setouchi Holdings, Quest’s parent company.

“Throughout my career, I have been very fortunate to work with talented and interesting people who are as passionate about aviation as I am,” added Hill. “I have enjoyed every chapter of my career and leading Quest for several years was one of the highlights. I know the company will continue to thrive.”

Quest’s long term corporate strategy is focused on global development and growth. Since 2012, Kodiak deliveries have risen steadily and the aircraft has received 23 certifications covering 33 countries. In June, the Phase I expansion at the company’s Sandpoint headquarters was completed, adding 27,000 square feet and bringing the current building to 110,000 square feet. As part of Phase II, a 5,000 square foot R & D hangar facility was finished, and includes new office space and an upgraded hangar work space. Quest continues to develop its property in Sandpoint and plans for further expansion are underway.

Quest Aircraft Company is the manufacturer of the Kodiak, a 10-place single engine turboprop airplane, designed for STOL use and float capability. Headquartered in Sandpoint, Idaho, the company was established in 2001 and began deliveries of the Kodiak in December 2007. 


Diamond DA40 XLS: Taking a head-spinning, perfect flight -by Dr. Edward M. Gilbreth

By Edward M. Gilbreth 

Edward M. Gilbreth is a Charleston physician.

Last week we were talking about private piloting, how it needs to be treated like a profession and how, with the miracles of modern technology, there are probably more than a few pilots out there who don’t practice enough and/or put too much reliance on technology. And that’s my problem. Even though I’d love to fly, I know I don’t have the time to put into it.

I was delighted, therefore, when a friend I hadn’t seen in years and who is a private pilot showed up in Charleston to help celebrate a mutual friend’s birthday. He had the great idea of blending a passion for flying with professional demands and flies on average about three hours a week in his own plane for business and pleasure, and has a blast doing it. How sweet is that?

As we got to chatting it became apparent that he had flown in to the Charleston International Airport — the same one with all the commercial and Air Force traffic.

What? In a small wisp of an aircraft that seats at the most four people and looks like it could get blown off the runway by jet exhaust?

That’s right, he said, noting that while small airports may be more convenient, depending upon your destination, they generally don’t have the multiple runways, multiple instrument approach procedures, high-intensity runway lighting, and round-the-clock operations that can all be critical for landing safely in challenging weather conditions any time of the day or night.

Additionally, small airports are often used for student flight training and practice by weekend pilots, and generally don’t have control towers. Given a choice, he said, he would rather utilize the large airports, even though operating in that environment demands the highest levels of professionalism. After all, he’s instrument-rated, has actually taken aerobatics instruction to learn about recovering from particularly dangerous situations — something not taught in basic flight instruction — and, what’s more, had carved his teeth the old-fashioned way — by learning from a retired American Airlines captain with some 40,000 hours experience who did not allow the use of automation during his primary flight training.

No autopilot, no moving map, no GPS navigation, no nothing except hands-on, stick-and-rudder flying and navigation by dead reckoning — using only a compass, paper aeronautical charting, and seat of the pants mental computation.

“Meet me at the private terminal this Sunday,” he said. “I’d love to take you up so you can get a feel for how everything works.”

His plane, a Diamond DA40 XLS, is an Austrian-engineered gem with all the bells and whistles; a single-engine machine with fancy gull-wing style doors, a large dome-like canopy that affords remarkable visibility, and slender sailplane wings with a span that seems out of proportion to the aircraft itself.

Why? According to my friend, the long wings generate a lot of lift that translates into impressive climb performance, and, in the unlikely case of an engine failure, the ability to glide a long distance to a safe landing spot. That feature, in addition to a multitude of others, translates into an astounding safety record — the best in general aviation light aircraft.

Even though the engine capacity is only about 180 HP, he notes that the plane will cruise comfortably at 150 knots (172 mph) and can more than easily maintain required speeds in a busy approach at the large commercial airports, even if being “pushed” from behind by jet airliners. That, of course, is going to happen all the time at Charleston International and, even more so, Charlotte Douglas International — the country’s sixth busiest airport where my friend bases his airplane.

As a lay person, groupie, dilettante and aviation wanna-be, the complexity of the electronics was mind-boggling and seemed more challenging than the actual mechanical task of flying. And I think I’ve discovered that I must have some sort of auditory processing disorder because, while listening to all the radio chatter between approach control, the tower, and pilots of all the aircraft taking off and landing at Charleston International — bravo this and Charlie that, fly heading so and so, expect runway such and such, maintain whatever — my head was spinning and nothing made any sense at all.

“How do you not get lost in all that?” I asked my friend and pilot.

“Well,” he said, “it takes getting used to, but you learn to focus intensely and react promptly and precisely when you hear your call sign.”

The flight plan was to go up toward Georgetown. It was, in fact, a perfect afternoon to fly, and we flew low and slow, taking in the remarkable spectacle of the coastline, all the plantations and former ricefields, the very noticeable preservation efforts and vast unspoiled acreage, much of which involves very private properties not accessible to most of us from the ground that we could only see and appreciate from the air.

On the way back we flew right over east Broad Street and then were vectored onto the final approach course for runway 33. “I need best forward speed,” the tower instructed. “I’ve got a 737 right behind you.” My friend replied, “Roger — I can give you 140 knots to a four-mile final.” Will that do?”

“That’s perfect,” the controller replied.

As we touched down and pulled off the runway, I turned around to take a look. There it was, that 737, just as the tower announced. I just wish I could understand and explain how it all happened just so.

Story and comments: