Budgetary tailspin at FAA stalls city land deal

Budgetary tailspin at FAA stalls city land deal

July 29th, 2011 by Mike Pare in Business Around the Region

Chattanooga Metropolitan Airport officials said a purchase of property off Brainerd Road is stalled because of the partial Federal Aviation Administration shutdown.

About $2.2 million in federal funds is being withheld from the airport, said Lovell Field spokeswoman Christina Siebold. The money is slated to buy some former closed auto dealerships and permit the airport to extend its runway protection zone, she said.

"As a rule, a runway protection zone is looking to ensure that future development doesn't occur that's incompatible," Siebold said.

She said the airport officials are eyeing removal of the buildings on the tracts and making the parcels green-grass sites.

Siebold said the property is not part of any potential future extension of the airport's main runway.

The FAA's operating authority expired at midnight on Friday, forcing the furlough of nearly 4,000 employees.

Around the country about $2.5 billion in FAA grants are being held up because the employees who process them have been furloughed. Stop-work orders have been issued for more than 150 airport construction projects.

Kathleen Bergen, an FAA spokeswoman, said no Chattanooga employees are furloughed.

Siebold said construction of the airport's new general aviation terminal on the west side of the main runway is not affected by the partial shutdown because state money is being used to build most of it.

While the FAA shutdown is hurting airport projects and threatening 70,000 construction jobs, airlines are benefiting by not having to collect FAA taxes from passengers that fund such projects, according to The Associated Press.

Without the tax, most airlines have raised their own fares by a like amount. Airlines raised fares to make up for the ticket taxes they can't collect until the FAA's operating authority is renewed by Congress. For Delta Air Lines, whose Delta Connection carries fly out of Chattanooga, that's $4 million to $5 million per day.

J.P. Morgan analyst Jamie Baker estimated the industry is getting an extra $28.5 million a day, and that Delta's profit alone will be boosted by 7 cents per share for every week of the tax holiday that began on Saturday.

"Each day the FAA remains out of commission, cash collection is reflecting this windfall," he wrote.

The Associated Press contributed to this report.