Wednesday, January 25, 2017

Orange County picks new airport operator amid fuel-price hiking allegations

Orange County supervisors on Tuesday replaced one of John Wayne Airport’s two long-term operators of private-plane terminals and hangars at a meeting in which board members accused the previous contractors of abusing a monopoly to hike fuel prices.

One supervisor also alleged airport staff engaged in an “overt power play” to defy the board’s direction.

Board members said they awarded the contract to California-based ACI Jet rather than longstanding operator Signature Flight Support to spur competition. That decision follows allegations from some airport tenants in the past year that Signature and the airport’s other contractor, Atlantic Aviation, simultaneously and artificially inflated their fuel prices, frequently within pennies of each other. Atlantic retained its contract Tuesday.

“When people have a monopoly … and the price is really high, call it what it is,” Supervisor Shawn Nelson said, later adding that he thought Atlantic’s representatives had been more responsive to his concerns than Signature’s.

Representatives from Signature declined to comment on the board’s decision. But on Monday, the company refuted claims it had sold its fuel at hiked prices, saying that at John Wayne it sold less than 5 percent of its fuel at the full advertised price and that it had not received any complaints from its customers about the cost of fuel.

Nelson also seemed to criticize those statements Tuesday, saying: “The idea of having two national chains working collectively has worked to the exclusion of people. And whether it’s 5 or 10 percent, those 5 or 10 percent are my customers ... I’m responsible for 100 percent.”

The issue of high fuel prices came to the board’s attention in late spring when airport tenants – which range from flight schools, to charter aircraft, to hangar renters – began to complain to board members. Data presented to supervisors showed that the Atlantic and Signature almost always similarly priced their fuel at John Wayne Airport of each other over a six-year period. That fuel, the data showed, was often $1.50 per-gallon more than at Long Beach Airport, where Signature also operates.

In late July, the board told representatives from the two airport operators it was concerned about fuel pricing and expressed that the county might seek alternative contractors for John Wayne. Around that time, Atlantic’s per-gallon fuel cost dropped by $2.04 – a 31 percent decrease and seemingly its lowest price in the previous five years, according to Flightaware.com, which tracks information about airports. Three months later, after the county had issued a “request for qualifications” to determine whether it wanted new operators at the airport, Signature’s per-gallon fuel price dropped 97 cents per gallon, or 16 percent, around the time applications were due.

Another reason the board sought potential new airport operators is that the county has not renegotiated many of its John Wayne contracts in more than two decades, losing out on revenue, supervisors said.

When Atlantic’s and Signature’s leases expired in October 2014, the agreements were not renegotiated. When the board directed staff in July 2015 to execute one-year contracts that would have included rent increases for the two companies, staff said the companies refused.

When the board directed staff to begin seeking potential new operators in 2016, airport staff protested, supervisors said. And when staff eventually recommended the board keep both Atlantic and Signature, supervisors called the decision “suspicious” and said the process was flawed.

The delay in securing a new airport contract has caused the county to miss out on as much as $3.9 million over the past 27 months. The new contracts approved Tuesday will earn the county $4.4 million annually – nearly $2.1 million more than before.

Supervisor Todd Spitzer on Tuesday criticized airport staff for inaction, saying they hadn’t been responsive to complaints from airport tenants and going as far as to accuse staff members of defying supervisors “about how things are going to run in this county.”

“This is significant because this is a really overt power play,” Spitzer said. “There are some things that need to be addressed.”

Supervisor Lisa Bartlett, the lone supervisor to vote against Tuesday’s operator change, defended airport director Barry Rondinella, who was appointed in October 2015, saying he had “inherited a mess.” She reminded supervisors that their foremost concern was keeping an operator who could help the county implement a new airport master plan in a couple years, including helping to develop new facilities.

But Spitzer said that master plan also has been unnecessarily delayed.

“We should have had this master plan to this board a year-plus ago, and you know it,” Spitzer said. “And in the interim, there’s been money left on the table.”

Source:  http://www.ocregister.com

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