I’ve learned a lot from my father both personally and professionally. Having retired from UAL in 2002 after 37 years in the cockpit, I continue to enjoy listening to his stories relating to the Golden Age of Aviation, his numerous DC-8 charter flights to Vietnam, oil embargos, deregulation, hostile takeovers, Reagan’s firing of the air traffic controllers, pilot strikes, and the evolution from three-man cockpits and steam gauges to male/female crews of two and state-of-the-art “glass” avionics. But through all the stories and experiences he continues to share, there is one motif: The K.I.S.S Theory.
The K.I.S.S acronym stands for “Keep It Simple Stupid.” My father exercised this quote frequently as it was a reminder to himself (and later to me and my siblings) to keep the complexities of work in the cockpit and life in check, to stay focused on the mission or task, and to eliminate the fluff that may cloud a specific effort. How does the K.I.S.S Theory apply to an airport business model, you ask? Simple, do away with the traditional business model of Federal Grants and Assurances and adopt a new airport business model that involves a fee-simple approach to land management.
Forgive me for taking a little license here and please don’t infer that I’m calling the FAA or our Federal government “Stupid.” If you’ve been a reader of HangarSphere long enough, you are well aware I don’t pick fights. However, you will also know I’m not afraid to question the status quo and offer my own two-cents of constructive criticism as well as a list of possible solutions.
Dozens of smaller GA airports are dying around the country. There exist a multitude of reasons for their decline and many are outside their direct control. The bottom line is that money for airport maintenance, operations, and development is always in short supply and the game of simply waiting around for the next handout from Federal or State coffers to construct a new apron, fuel farm, FBO terminal, hangar, and taxiway is a perilous one. Proactive efforts for airports to self-fund and self-direct their own growth and prosperity must become the norm. One should always ask “If an airport can’t generate enough revenues to cover its own costs, how can it then be an economic engine for the region it serves?”
This question is the acid test. If you don’t like the answer, you can still change your airport’s destiny and role within the community. And it starts by leveraging airport land in an entirely new way, through a fee-simple model. Many larger, Part 139 airports have multiple revenue streams, tax generators, passenger fees, and sources of direct public funding. Their reliance upon land lease revenues from hangars isn’t as important. But smaller airports lack these additional forms of revenues and must be able to monetize their land assets with greater success and freedom. The fee-simple model is the answer that not only benefits the airport but it also benefits the surrounding community.
Fortunately, there is an airport in our country that has already demonstrated success with the fee-simple model. Aurora State Airport outside of Portland, Oregon was able to adopt a fee-simple model as a result of Oregon State Senate Bill 680. The bill, introduced by State Senator Betsy Johnson passed in 2005, called for a greater collaboration between the public and private sector through a fee-simple model for lands adjacent to rural airports. As a result, the land surrounding the runway and taxiways at Aurora State Airport would be sold off yet retain access to the airport’s ramp, taxiways, and runway.
Ask any salesperson and they’ll say the easiest sale is a product that sells itself. Land being sold at an airport with access to the runway (similar to RTTF) drew in businesses from all over the region. Hangar construction would begin in earnest. The quality of construction is first rate as the structure and the land upon which it sits would be owned indefinitely and justifies the greater investment.
I spoke at length with Jon Wenrich, Marketing Manager and Pilot at Centrex Construction, and Steve Gilmore, CEO of the Wilsonville Chamber of Commerce, regarding the history of the airport up until 2005, the paradigm shift triggered by Senate Bill 680, the proactive measures undertook by the airport and the chamber of commerce, and the economic impact that the fee-simple model has had on the airport and surrounding community.
Aurora State Airport opened during WWII as a military air base. After the war, the airport reverted ownership to the State of Oregon and eventually became home to world renowned Van’s Aircraft in 2000. Even with Van’s Aircraft calling the airport home, further development of the airport would stagnate until Senate Bill 680 became law. The law would open up greater opportunities for private sector investment in public infrastructure by allowing land adjacent to runways to be sold fee-simple. This law was part of a pilot program and it would take a few years for momentum to build.
In 2012, another round of master planning for the airport would take place and voices in support and against further development of the airport would be heard. Contentious debates would ensue but collaboration between the Wilsonville Chamber of Commerce and the newly formed Positive Aurora Airport Management (PAAM) would turn the tide in support of the airport.
The Wilsonville Chamber Of Commerce and PAAM proactively marketed the benefits of the fee-simple model and addressed other societal impacts on the area relating to jobs, taxes, noise, pollution, safety, and overall quality of life for surrounding residents that may be concerned over airport growth. Every opportunity was made to connect to the local media outlets, state legislatures, and city officials to brand the airport as an economic driver. They succeeded.
To support the next master planning round in 2012, the benefits to the surrounding communities were fiscally quantified. Cumulatively, the businesses that have already purchased fee-simple land with access to the runway were responsible for payrolls totaling 1,500. Property tax yields have reached $800,000, annually. Payroll taxes are also estimated at $725,000. Most importantly, Gilmore reported numbers backed by the Oregon Department of Aviation that the Total Economic Impact of the Aurora State Airport reached $600,000,000. This number includes sales, payroll, equipment, buildings, etc. This number reflects a timeline prior to the arrival of Helicopter Transport Services. HTS is one of the largest heavy lift helicopter operators in the world and now operates a 250,000 square foot hangar facility.
The collaboration between the Chamber and PAAM was so successful that almost all community officials that spoke out against further development changed their positioning as they realized they were speaking out against a great source of high-paying jobs their citizens now enjoyed. In addition, the inflow of cash to the community benefits many other entities. Schools, police, fire, and other non-aviation related businesses all receive direct fiscal benefits. Gilmore said the monetary benefits of a fee-simple model are obvious and when eating lunch at a restaurant, you can see the visual impact as all the patrons sitting around you are all wearing clothing branded by their aviation employers.
Jon Wenrich touted the key deliverable that airport businesses enjoy: fee-simple land. Hundreds of thousands of square feet of hangar space have already been constructed on this land. Today, Wenrich said, “There is 225,000 square feet of shovel ready land” for even more hangar construction. Wenrich said these companies enjoyed the “high security investment” as the buildings would not revert back to the airport at the end of a traditional lease term. The fee-simple model is a win-win-win scenario for the airport, the business, and the surrounding community.
Seeing is believing and further supports the need to shift the current FAA airport land management model from lease to fee-simple. The K.I.S.S. Theory applies both literally and figuratively. Let’s get rid of all the complexities of Federal airport grants and their restrictive list of grant assurances and introduce a simplified fee-simple model that promotes private sector investment. Those that are permitted to participate in a fee-simple model have the financial interest in seeing the airport grow and increase the value of their structure AND their land. In a lease model, there is no incentive by its tenants to grow the airport. In a fee-simple model, the hangar is the seed that will grow the airport and help the airport fund itself and beyond.