07/31/09 — Maintenance revenue helping Duplin and Mount Olive airports thrive as Wayne looks for new model

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Maintenance revenue helping Duplin and Mount Olive airports thrive as Wayne looks for new model

By Steve Herring
Published in News on July 31, 2009 1:46 PM

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Larry Stephenson works on a Piper Dakota at the Goldsboro-Wayne Municipal Airport.

Unlike its counterparts in Mount Olive and Duplin County, the company managing the Goldsboro-Wayne Airport lacked resources to offset the loss in aviation fuel sales that figured into its decision to cancel its contract with Wayne County.

SIG Aviation's loss was exacerbated when two of its larger customers moved their aircrafts to other airports.

Both the Mount Olive and Duplin airports benefit by having full occupancy of their hangars. Also, in the case of Duplin, there is no debt service on the hangars. Mount Olive further benefits from having a much sought after on-site maintenance department.

SIG officials earlier this month contacted the county about their decision and said that Aug. 1 would be their final day of managing the airport.

However, during meetings with County Manager Lee Smith, SIG officials agreed to remain until Aug. 9 to give the county more time to work out details of the transition.

Commissioners do not meet again until Aug. 4 and Smith said he did not want to act on the airport management issue without first informing his board and getting its support.

The county could decide to contract out the operation or to follow the trend of local governments assuming control of airport operations.

The decline in fuel sales has been dramatic at all three airports.

In 2007, more than 190,000 gallons of aviation fuel, 161,000 of which was jet fuel, was sold at the Wayne County Airport. Sales dropped by almost a third in 2008, falling to 142,450 gallons.

By June of this year, about 58,000 gallons have been sold putting sales on track to reach about 116,000 gallons.

Airport manager Jim Steele noted that SIG accounted for about 50 percent of the jet fuel usage. As such there was no profit for the company, it just meant it did not have to buy the fuel from someone else.

Michael Bass of Bass Aviation, the fixed base operator (FBO) at the Mount Olive Airport, said that aviation fuel sales are down by 25 to 30 percent.

"It has slowed quite a bit," Bass said. "People are flying less. I think money is tight and people are not buying as much."

Currently, jet fuel is not sold at the airport, but that will be changing within the next two to three months.

The runway is being extended to 5,000 feet to handle small corporate jets. The work is expected to be completed within four to five weeks and in the meantime, bids are being taken to install the tanks to hold jet fuel.

As for hangars, "we are full," Bass said.

"We have people on a waiting list," he added.

Bass said he has been contacted by people who own small jets who are interested in basing their aircraft at Mount Olive once the runway is completed and jet fuel is available.

Currently, 18 aircraft are based at the airport and more could be added if hangar space was available, he said.

The airport's master plan includes new hangars.

"Our situation is a little different than others (fixed base operators)," he said. "We do maintenance and maintenance is doing really well. It provides us with an advantage over other FBOs who do not do maintenance. Maintenance has kept us afloat while other FBOs who only do fuel sales have suffered."

The maintenance and full capacity have helped to offset the drop in fuel sales, Bass said.

Bass attributes a good geographic location, Mount Olive being a "nice community" and the availability of on-site maintenance as major factors that attract people to base their aircraft at the airport.

Both Bass and Duplin County Airport manager George Futrelle of the Grantham community agree with Steele that the trend is for local governments to manage their own airports.

"The trend lately has been that municipal and local government are assuming responsibility," Futrelle said. "In the eyes of the FAA, the cities and counties are the airport sponsors, and it is the sponsors that receive the state and federal grants."

The Duplin County Airport is a county-managed department and Futrelle is a county employee. The runway is 6,000 feet long and both jet and general aviation fuels are sold.

Fuel sales at the Duplin Airport have fallen from an average of 125,000 gallons a year to 99,000.

"That represents a loss of about $14,000 in general aviation fuel used by the pleasure fliers and the smaller folks," Futrelle said. "Jet fuel sales are holding steady."

To help offset the lost sales, the airport has reduced its profit margin, he said. Futrelle said he has seen some improvement in sales, but that it could be tied to the lower prices.

Futrelle managed the airport for 15 years before becoming a county employee.

"I joke the county had 15 years to interview me," Futrelle said.

It was about five years ago that the county asked for an insurance audit at the airport to ensure the level of coverage was adequate. At that time, it was decided it would be in the county's best interest to operate the airport, Futrelle said.

For one thing, the arrangement provides the county with more control particularly in the area of fuel sales, which along with hangar rentals, are an airport's major sources of revenue, he said.

"We are like a truck stop for aircraft," Futrelle said.

For the county to retain proprietary exclusion on fuel sales, the fuel has to be pumped by a county employee, he said.

Proprietary exclusion basically means that no one else can set up a fuel business at the airport to compete with the county. However, the county, if it so decides, can allow a business to come in and sell fuel.

Unlike Wayne, Duplin has gained aircraft, and there is a waiting list for hangar space.

Also, there is no debt on the hangars so that the rental revenues are "gravy," Futrelle said. The county does have debt service on a hangar being leased out for a maintenance business. However, the rent is sufficient to pay the debt service and provide some revenue, he said.

The airport also benefits from its proximity to Jacksonville and Camp Lejeune, he said.

The county is looking to buy land at either end of the runway and plans to extend the width from 75 to 100 feet and add more asphalt so that heavier aircraft can use the airport.