published Tuesday, September 13th, 2011

TAC Air seeks federal probe of Chattanooga airport

Line technician Joey Hartsell leads a plane into the Wilson Air Center at Chattanooga Municipal Airport in August.
Line technician Joey Hartsell leads a plane into the Wilson Air Center at Chattanooga Municipal Airport in August.
Photo by John Rawlston.
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A company that sells aviation fuel and leases hangar space at Chattanooga Metropolitan Airport wants a federal investigation into federal grants the airport used for a rival service.

In a letter to the Chattanooga City Council and other public officials, TAC Air said that unfair competition was created when the airport built and recently started running a new fixed-base operation at Lovell Field.

"TAC Air welcomes competition as long as the same rules apply to everyone," said Greg Arnold, chief executive of Truman Arnold Cos. "I am asking for your consideration to intervene in this situation to ensure a 'level playing field' exists for all FBO operators at Chattanooga Metropolitan Airport."

The airport's chief executive declined immediate comment, saying it appears that issues raised by TAC Air will be resolved through the FAA's "routine administrative proceeding."

Airport chief Mike Landguth said it will give the FAA an opportunity to "once again review the questions raised in this letter and issue their findings before we make any public statements.

"In the meantime, we will continue working with all of our airport partners to provide the highest level of service and competitive pricing for our customers," he said in a statement.

Kathleen Bergen, an FAA spokeswoman, said Monday the FAA is aware of TAC Air's concerns about the airport.

However, she said, the FAA does not have a formal complaint from TAC Air and is not conducting an investigation.

  • photo
    The new general aviation terminal at the Chattanooga Metropolitan Airport is under construction in this July 9, 2011 file photo.
    Photo by Angela Lewis.
    enlarge photo

Last month, the airport officially opened a $5 million general aviation terminal and hangar. A state grant paid for about 90 percent of the cost while the airport took care of the rest out of its operations budget. Also, about $3 million in federal stimulus money was used to pave an aircraft parking area at the site.

Airport and city officials said the operations, managed by Wilson Air, will help give Lovell Field a facility that's needed to better compete for general aviation business.

But in the letter sent to U.S. Rep. Chuck Fleischmann, R-Chattanooga, and U.S. Sens. Bob Corker and Lamar Alexander, both R-Tennessee, TAC Air cites activity by the airport that's "not only improper but unethical."

The Texarkana, Texas-based company said Chattanooga's airport has created an environment where a private business must now compete with a government-owned and subsidized facility.

For example, Arnold said TAC Air had tried to offer self-service aviation gas to airport users, but Landguth denied the request based on a lack of minimum standards to govern the operations. Arnold said the new aircraft service operated by Wilson Air includes a self-service fuel facility.

"So instead of allowing private business to fund these projects, Mr. Landguth convinced his board that it would make more sense to utilize public dollars for these projects, putting taxpayers at risk," the TAC Air CEO said.

  • photo
    Mike Landguth of Chattanooga Metropolitan Airport

Arnold said Memphis-based Wilson Air has not indicated it will provide aircraft maintenance services, which he claimed is a violation of the airport's minimum standards.

"Shortly after the management contract was signed with Wilson, Mr. Landguth issued a proposed set of changes to the airport's minimum standards," Arnold said, adding that the requirement to provide aircraft maintenance was eliminated.

Arnold said the move is an attempt to accommodate the Airport Authority's new general aviation facility "with total disregard for the established minimum standards and FAA policy and procedure."

He also mentions a bill introduced by U.S. Rep. John Duncan Jr., R-Tenn., in April that would establish a general policy for the federal government to rely on commercial sources to supply products and services it needs.

"TAC Air supports this legislation to prevent situations like what has happened at Chattanooga from happening at any other airport," Arnold said.

TAC Air said 30 percent of its hangar space is now empty and the addition of the new Wilson Air terminal "will only serve to flood the market with unneeded capacity."

Patrick Newton, communications director for Rep. Duncan, said Duncan has introduced the Freedom from Government Competition Act in previous Congresses going back to the 1990s and it was not done because of any specific issue at the Chattanooga airport.

David Edwards, TAC Air's marketing director, said the Duncan legislation is "on point."

"It's no different from what we've been saying from day one that this is an issue of government versus the free market," he said.

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about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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nucanuck said...

TAC should formalize their complaint.

September 13, 2011 at 11:50 a.m.
FactsChecker123 said...

Just released thru another news source… The Chattanooga Metropolitan Airport Authority’s decision to subsidize a new general aviation facility managed by Wilson Air with $5 million in taxpayer funds violates CMAA’s agreement with federal officials regarding use of grant money obtained by the local agency, a competitor of the government-subsidized business said in a complaint filed with the Federal Aviation Administration.

Officials at TAC Air, a division of Truman Arnold Companies, said they had hoped it would be possible to work out an agreement with the airport which would allow it to compete “on a more level playing field” with the new company, but they were unable to do so. “At a time when government should be keenly focused on using limited funds for the highest and best use, the CMAA spent approximately $5 million to duplicate services already being provided by the private sector,” TAC Air vice president and chief operating officer Christian Sasfai said. “This money could have been spent on safety initiatives or other airport infrastructure that would have benefitted the traveling public.”

Further, the TAC official contended, the $5 million already invested is not the only taxpayer money that will be spent on the Wilson Air-managed business since “. . . beyond the initial construction and start-up costs, the CMAA will have the added burden of funding operating losses incurred by the FBO.”

The airport authority now predicts that the new business will sustain a $250,000 operating loss in its first year of operation, "a total that has grown significantly from the time the project was announced to grand opening,” TAC representatives said.

TAC Air – which was recently selected for the second time by readers of Professional Pilot magazine as the “Best Large FBO Chain” – intends to continue providing top quality service to general aviation customers in this area, company officials said.

“TAC Air has invested millions of dollars in Chattanooga,” vice president Sasfai said. “Our goal has always been to provide quick turns, competitive prices and award-winning service for the general aviation customer. However, we’ve also kept a focus on our team that is simply one of the best in the nation.”

“We are committed to protecting the jobs of 30 Chattanoogans, our customer base and our capital investment,” he vowed.

September 13, 2011 at 10 p.m.
FactsChecker123 said...

...continued from above

The full text of a press release issued by TAC Air reads as follows:

Today TAC Air, a division of Truman Arnold Companies, filed a Part 16 Complaint against the Chattanooga Metropolitan Airport Authority (CMAA) with the Office of the Chief Counsel, of the Federal Aviation Administration. TAC Air held off filing this Complaint in the hope that the CMAA would act in good faith to create a more level playing field and provide a mechanism for the two FBOs to compete based on free market principles, arm's length contracts, and pricing determined by costs and expenses that an FBO would ordinarily incur on a day-to-day basis.

The issues raised in the Part 16 Complaint are based on certain Assurances agreed to by the CMAA in return for federal funding ("Grant Assurances"), which include Assurance 22(g) which states: "In the event that the Sponsor exercises any of the rights and privileges referred to in this assurance, the services involved will be provided on the same conditions as would apply to the furnishing of such services by commercial service providers under these provisions."

In addition, TAC Air has raised the issue of whether the CMAA will follow its own dictate in its Minimum Standards which provides that "(A)ll property which is developed as a result of investment by the Airport Authority will be leased in order to provide a reasonable rate of return for the public monies invested...."

These issues are complex and it is expected that the FAA will carefully evaluate both TAC Air's and the CMAA's positions in this matter and issue a fair and equitable decision.

TAC Air is disappointed that the CMAA would not address this matter without FAA intervention, but believes the Part 16 Complaint will be a valuable process for both Chattanooga and the entire aviation industry. TAC Air remains a strong supporter of Chattanooga Metropolitan Airport , the Airport's based aircraft, airlines and the flying public.

September 13, 2011 at 10:02 p.m.
crimshaw said...

Competition is an can be a good and useful tool in any type of business. An unfair advantage, maybe, is when a not suppose to be competitor (CMAA) enters the market through falsehood and then starts to misrepresent the truth to the customer to draw revenue to their not so popular venture.

It seems a shame that a maiden (Wilson Air) new to the industry FBO would follow suit? I'm at a loss seeing officials using the tax payer dollars as they wish to support their egotism and not so profitable attempt to leave a legacy behind mentality.

I didn't stay at a Holiday Inn Express last night and probably never will, seeing how they attempt to make a dime off the struggling tax paying people. I thought this was America?

September 21, 2011 at 10:30 a.m.
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