Monday, February 15, 2021

$12 million plan for a luxury ‘fixed-base operation’ and fuel farm at Kalaeloa Airport (PHJR) questioned

A mainland aircraft services partnership with deep pockets plans to spend $12 million for a luxury “fixed-base operation” and fuel farm at Kalaeloa Airport that is many times larger than the locally run operation that’s there now.

Some in the aviation community who are familiar with the less-than-bustling airport are asking why.

Freeman Holdings of Hawaii seeks to do business at Kalaeloa as Million Air Honolulu. The Kansas- based Freeman Holdings Group works with Texas-based Million Air to operate FBOs around the country.

An FBO provides fueling, repair, pilot lounges and other aircraft services.

Freeman’s FBOs represent one of the largest civilian fuel providers to the U.S. government, the company said.

Million Air said on its website that with more than 1,500 employees, over $300 million invested, approximately $500 million in annual revenues and more than 800 aircraft within the leasehold of its facilities, “we have set the stage for award-winning standards” in the aviation industry.

A draft environmental assessment released this month by the state Department of Transportation said the FBO is “envisioned” as a metal-and-glass building that’s 310 feet long, 140 feet wide and 50 feet tall.

Conceptually, the business could have 30,000 square feet for a general aviation hangar and 8,000 square feet for a two-story office area with an executive airport terminal/lobby, conference room, pilot lounge, theater rooms and cafe and refreshment area.

The proposed fuel farm is anticipated to include up to eight 30,000-gallon above-ground Jet-A fuel tanks, for a total of 240,000 gallons of jet fuel, and one 15,000-gallon aviation gas tank.

The airport now has one 20,000-gallon Jet-A tank and a 10,000-gallon “Avgas” aviation fuel tank, according to the state. The draft environmental assessment says the new facilities will cost about $12 million to construct.

One likely reason for the interest is the overflow military aircraft traffic that comes to Kalaeloa — the former Naval Air Station Barbers Point — when Daniel K. Inouye International Airport and Joint Base Pearl Harbor- Hickam next to it are full.

Freeman Holdings makes no secret of its business model: It says on its website its FBO locations focus on “transient military, corporate and general aviation traffic.”

The company in 2018 announced it had added another FBO to its portfolio with the purchase of Million Air Medford in Oregon.

“Million Air Medford was a natural acquisition for us,” Scott Freeman, CEO of the Freeman Holdings Group, said in a release.

Among other attributes, the Medford FBO held a Defense Logistics Agency fuel contract and handled aircraft from as large as Air Force C-5 Galaxy cargo jets to as small as fighters and helicopters for military customers.

“As an organization, we are always looking for underutilized airports across the country that would benefit from our involvement and private investment that would serve as a catalyst for increasing activity as these types of airports,” Freeman said in an email to the Honolulu Star-Advertiser. “We have had a successful track record of accomplishing these goals at other airports where we currently operate. We have long had (Kalaeloa) on our list of potential growth locations, and after some due diligence, we felt it was a project worth pursuing.”

The Pacific is the Pentagon’s priority theater, and military activity in the region is increasing, although Freeman did not cite that as a reason for the new operation.

The state DOT previously said public-auction documents for a lease at Kalaeloa included questionnaires that would require Million Air Honolulu to disclose a business plan. The agency said Friday that information is confidential.

Regi Perry, who has run Barbers Point Aviation Services as the sole FBO at Kalaeloa since 2011, fears that he’ll be displaced by the much bigger operation.

“The moneymaker is jet fuel, and it’s the big (military) jets drinking it,” Brad Hayes, former director of the now-defunct Naval Air Museum Barbers Point, said in October about airport operations. The new FBO is moving into space where the museum was located.

The reason Million Air Honolulu wants to move in “is only for the government contracts. I will tell you that unequivocally,” Perry said at that time. “They are a government contract solicitor wherever there is a government contract. This is a big company.”

The military contract is up in about 16 months, and “Million Air is trying to establish a presence right now so they can build their hangar and they can bid the contract,” Perry previously said.

Others cite luxury jet traffic for stays at Ko Olina properties as a reason for Million Air Honolulu’s interest.

Pat McNamee, a retired United Airlines pilot and president of the General Aviation Council of Hawaii, said that’s “the dream, but it’s a long ways away from the reality.”

The airport, built during World War II, “needs a lot of things,” McNamee said. “The biggest thing is, it needs to be surveyed.”

Trees, buildings and mountains nearby need to be pinpointed. “When we build departure procedures and approach procedures to come in when the weather is bad, we need to know where all these things are,” he said. DOT Airports should pay for that, but “they won’t fund that,” he said.

The main runway is not grooved to channel away water when it rains, McNamee also noted. When it gets wet it becomes slippery.

“And you need more room to stop the airplane, and you need more room for takeoff in case you have to reject the takeoff at a high speed,” he said. Otherwise, a plane can skid off the end.

“The military has different requirements,” he added, and that’s why C-17 and C-130 cargo planes and KC-135 refueling tankers are regular visitors.

He also questions whe­ther Million Air Honolulu wants to move in to eventually compete with other FBOs at Honolulu airport. Perry previously said the airport “is a diamond in the rough. It can service every airplane because it’s got a long runway.”

He had his own plans to build a hangar for pilot and crew needs, among other services. Million Air offered to buy him out, he said, but that deal fell through as a result of state foot-dragging.

Perry said that before he began trucking fuel from near the Honolulu airport to Kalaeloa — there are no fuel lines to the smaller airport — overflow Air Force aircraft such as C-130s, C-5s and C-17s would sometimes have to land at the Marine Corps base or on Kauai or Maui.

“I facilitated everything to turn this airport around when nobody wanted it, because there was no gas,” he said. He added that “this airport cannot sustain two FBOs. It cannot.”

Retired Air Force Col. Rob Moore, who used to be active at the airport, said Perry going up against Million Air Honolulu is “like the mom-and-pop stores fighting with the big-box stores.”

The state draft environmental assessment for the Million Air Honolulu plan carries with it an “anticipated finding of no significant impact.”

The state DOT said a public auction was conducted Jan. 29 and that “finalization of the lease document is in process.” Rent initially will be about $211,000 annually.

Barbers Point Aviation Services and Barbers Point Flight School, both owned by Perry, hold contracts with the state at Kalaeloa Airport, DOT said. Perry pays the state $185,314.08 annually for rent, DOT said.

Two lots to be used by Million Air Honolulu encompass about 6 acres. “Our current project schedule is targeting the completion of the fuel farm by the 4th quarter of 2021,” Freeman said. “We are in the process of developing a project schedule for the FBO, but it’s our goal to have the FBO and attached hangar completed approximately 24 to 28 months thereafter.”

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