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2013-02-06 AA Meeting Minutes New Hanover County Airport Authority February 6, 2013 Page 1 NEW HANOVER COUNTY AIRPORT AUTHORITY REGULAR PUBLIC MEETING February 6,2013 CALL TO ORDER The New Hanover County Airport Authority met on Wednesday, February 6, 2013, at Wilmington International Airport, 1740 Airport Boulevard, Wilmington, North Carolina. Chairman Kays called the meeting to order at 5:03 p.m. Airport Authority members present were Charles Kays, Chairman; Tom Barber, Vice-Chairman; Carter Lambeth; and Al Roseman. John Lennon, Secretary, was absent. Also present were Jon Rosborough, Airport Director; Julie Wilsey, Deputy Airport Director; Jim Morton, Finance Director; Gary Broughton, Operations Director; Whitney Prease, Facilities Director; Rose Davis, Executive Assistant; Wanda Copley, New Hanover County Attorney; and Steve Bright and Amy McLane, Talbert & Bright, Inc. Guests present included Adam Wagner, reporter for Wilmington Star-News; Gerry Tremblay, General Manager of Aero Service; Joseph Pickering, Mead &Hunt; and Kevin O'Connell. PUBLIC INTRODUCTIONS Chairman Kays recognized and welcomed the guests and asked them to introduce themselves. APPROVAL OF MINUTES The Authority has reviewed the minutes of the Regular Public Meeting on January 9, 2013. Mr. Lambeth MOVED, SECONDED by Mr. Barber, to approve the minutes of the January 9, 2013 Regular Public Meeting as submitted. Upon vote, the MOTION WAS APPROVED UNANIMOUSLY. Mr. Lennon was absent. SPECIAL EVENTS There were no special events to report at this meeting. FINANCE REPORT Mr. Morton reviewed actual revenue and expenses for the month of December. Mr. Morton reviewed ILM's cash report and summary of accounts for the month of December. Mr. Morton updated the Authority on the status of the PFC Application indicating it is now in the hands of the FAA for review. On the Rental Car Facility, Mr. Morton reported that the loan approval will come before the County Commissioners at their February 18th meeting due to the cancellation of the previous meeting. In response to Mr. Barber's question about the professional services variance in the December expense report of approximately$39,000, with $34,000 being a negative actual expense, Mr. Morton stated that Parmounte's engineering services were coded into professional services and they would actually be a capital item and it was applied back as an expense. In response to Mr. Lambeth's question about the total impact of Allegiant's canceling service on New Hanover County Airport Authority February 6, 2013 Page 2 II.M, Mr. Morton indicated it would reduce lease revenue about $60,000 and reduce parking about$120,000, for a reduction of$180,000. That doesn't include reduction of PFC of$58,000, however, that is approximate since we won't be losing all passengers, some will travel another airline through Atlanta or Charlotte. Mr. Morton stated that Allegiant did attract a type of clientele that might not be traveling otherwise. Responding to a previous request from Mr. Lambeth of a comparison of our current budget, 6 months into the fiscal year, with last year's actuals, Mr. Morton reported that enplanements from June to-date are down 7% and if you look at revenue, it is up by $102,000, or 2.6%. Mr. Morton attributed that increase in revenue to money received from the VA facility. As for expenses ILM is up 2% compared to last year but overall positive by $39,000, even though we are off our enplanements. In response to Mr. Barber's question concerning the amount the VA pays ILM, Mr. Morton stated it was $217,000 a year or$18,000 a month. Mr. Morton continued his comparison indicating that cash on hand in June of this year is up about$361,000 for the first six months and this fluctuates due to grants and matching funds. Dr. Kays questioned if the largest source of income for most airports was concessions and outside of air travel and Mr. Morton responded that is the case in large hubs but for small airports it is parking revenue as it is with us, at approximately 42%. Mr. Morton stated that this month ILM will be making a final payment on one of its loans. Last March ILM paid off one of the loans for the international terminal building and this month P.M is paying the last payment on money borrowed to renovate the main terminal building back in 2004/2005 of$3.8 M. The amount left to pay on the international terminal building is about$1.9 M. Mr. Morton discussed a finance action item for Authority members' approval of a lease of the garage bay area in building C-43 for$500 a month to JetStar. JetStar is a company that provides maintenance to ground handling equipment, tugs, deicers, and baggage belts, etc. and will do so for both airlines at ILM. Mr. Morton reported that JetStar is a national company and located in about 28 airports now. Dr. Roseman MOVED, SECONDED by Mr. Lambeth to approve the lease discussed above. The MOTION WAS APPROVED UNANIMOUSLY. Mr. Lennon was absent. FACILITIES Mrs. Wilsey discussed three action items for Authority members' approval, including: 1. Approval of the construction contract from Thompson Corder & Company, not to exceed $205,040, for construction of pretreatment swales as part of the development of the business park and future airside projects on the north ramp. 2. Approval of a contract with ESC, Inc., not to exceed$2,300, to periodically test the soil from the pretreatment swale construction area. New Hanover County Airport Authority February 6, 2013 Page 3 3. A work authorization with Talbert & Bright, in an amount not to exceed$113,621, for preliminary work regarding easement acquisition on 11 properties across Blue Clay Road required for the extension of RWY 17, to include boundary surveys, tree surveys, appraisals, and review of appraisals. Air easement is needed for safety and for Part 77 surfaces. The FAA requires you to own the air in those areas and remove any obstructions. Mr. Barber MOVED, SECONDED by Mr. Lambeth to approve the Facilities action items discussed above. The MOTION WAS APPROVED UNANIMOUSLY. Mr. Lennon was absent. Mrs. Wilsey updated Authority members on current projects. The Kerr Avenue fence project is substantially complete. The new fence is up and staff will work on closing the project out. The Chair Road easement closed on Friday and the final financial transaction occurred on February 4, 2013. This project started around July 2007. ILM was paid$140,700 for the fair market value for airport property utilized in that project. The two RWY projects and TWY shoulder project are on hold now for winter shut down. These projects will restart in April and are scheduled to be completed in October and September of this year. Regarding the Rental Car Facility, the storm water conveyance phase of the project has been advertised and bids were taken this month. Staff is waiting on the permit from NCDENR for the actual facility in order to put the other job out for contractors to look at for at least 30 days before staff bids that. In response to Dr. Kays' question regarding time to completion,Mrs. Wilsey reported the project would probably be finished around February of 2014. And finally, the Water Project for the secondary water line from Castle Hayne Road to the airport property and the hydrant to the north end of the field is in permitting with CSX Railroad and once permits are received will be put out to bid. In response to Dr. Kay's question regarding time to completion, Mrs. Wilsey stated that it would probably be July or August of 2013, providing that the CFPUA has their line active. GOVERNMENT Mrs. Wilsey, reporting on Government for Mr. Rosborough, updated the Authority on Mr. Rosborough's involvement with the Chamber of Commerce and the Local Economic Development Focus Group and their review of the processes and issues pertaining to economic development in New Hanover County and the surrounding region. This Focus Group is attempting to study and address a myriad of issues that discourage economic development and Mr. Rosborough, as a member of that task force, will give a full report next month. Mrs. Wilsey also reported that Mr. Lennon was appointed to the NCDOT Board of Transportation where he will represent the state as an at-large member for ports and aviation and Michael Lee, a local attorney, was appointed for Division 3. The Secretary of Transportation, Tata, is going to be in town on Friday, February 15th for a luncheon at Landfall and ILM has a table for that event and the Board was invited to join staff. MARKETING AND PUBLIC RELATIONS Mr. Morton updated the board on the request for proposals from ad agencies and reported that New Hanover County Airport Authority February 6, 2013 Page 4 staff received 3 proposals and the agencies will present at the beginning of the next board meeting, March 6th, for 15 minutes each. Mr. Morton further reported that staff is continuing to focus on New York and DC in advertising and trying to increase load factors on those flights. New advertising with the buildings and land available for lease have resulted in increased activity. Dr. Roseman initiated a discussion about a state law that doesn't allow you to park a car in a hangar because of a fire hazard due to gasoline and his interest in seeing that law changed. There has been interest in renting a hangar to store an airplane and cars but this law prevents that and Dr. Roseman wants to pursue getting that changed. Discussion followed about it being state fire code and has to do with combustibles being in the hangar. According to current state fire code regulations you can have your automobile in your corporate hangar when the aircraft is out of the hangar and Mr. Morton explained the theory is that if you have your plane in there, you pull your plane out and then start it, but if a car is in there and fumes build up and you start the car inside the hangar, it could possibly ignite. Mr. Morton reported that social media continues to increase in percentage and staff is working on vacation packaging into Wilmington and trying to get that started. Staff was talking to Allegiant and tried before with US Airways and is now trying again with US Airways and Delta. Dr. Roseman asked for clarification and Mr. Morton responded that the airlines are into package deals now and US Airways thinks we have a demand for leisure traffic from DC toll M so they want to use that to promote the DC flights. Package deals can make it more attractive when offered online when they book their ticket to include a hotel, rental car or maybe golf too. The marketing committee thought it would be a good competitive plan and Dr. Roseman asked for ideas to help staff put together these package deals. Mr. Lambeth asked if there was a disparity in what US Airways is charging for the flight from ILM to DC as opposed to what they are charging from Jacksonville to DC and Mr. Morton responded that Jacksonville was running$140 and ILM was about$340 to DC. Mr. Broughton indicated we are at about$259 right now. It dropped in the last couple of weeks. Mr. Broughton reviewed Allegiant's departure from ILM and said Allegiant indicated their financial projections were not meeting their expectations and IT,M staff feels that goes back to the fact that they are a travel company versus a full service commercial airline. Allegiant sells vacation packages that include your hotel and rental car and hence you will get an inexpensive airfare and probably what was happening with Allegiant, they were getting the load factors but they probably weren't getting the vacation packages. There was discussion about them changing the days they were flying in and out of ILM and how that was detrimental to the load factor somewhat. Mr. Broughton stated that Thursday/Sunday load factors were higher than Wednesday/Saturday and that Monday/Friday was the highest at 98% load factor. Dr. Roseman brought the discussion back to the package deals indicating that most of the airlines are advertising their vacation packages online and indicated it would be nice if staff could help the airlines put something together. Mr. Rosborough indicated that the key is destination point. With Myrtle Beach or Ft. Lauderdale or Las Vegas, you have a destination point for leisure. The New Hanover County Airport Authority February 6, 2013 Page 5 mindset that Wilmington is a vacation destination needs to be created in order for airlines to be interested and there is an interest in trying to do that. Mr. Morton shared several positive comments from the public made on various social media. Mr. Lambeth reported that he hears the ads on the radio all the time for flying out of 1I.M and they are very noticeable and Mr. Rosborough commented that they are very effective. Dr. Roseman stated that staff was only hitting the radio stations that transmit to all the counties in the area and that Mr. Morton is focused on that. PLANNING & DEVELOPMENT Mr. Morton reported that SPG is working on a draft of the hotel feasibility study and that staff has asked for more research on the VA aspect of this and should have a report by next meeting. Regarding the construction of the pretreatment swales that was just approved, Mr. Morton reported that the engineers indicated construction should be completed by May 1St and the design of the road system, the roundabout and utilities in the business park, should be completed by March 1St In follow up to Mr. Lennon's interest from last month in having a convenience store/gas station on site,Mr. Morton reported that staff is working with Paramounte to lay out the best place for that type of facility before going out and approaching potential businesses. Dr. Kays pointed out that the Authority wants it to be a high-end establishment and consistent with the existing design of the airport. OPERATIONS REPORT Using charts for illustration, Mr. Broughton reported ILM's airport statistics for the month of January, including fuel price comparisons, fuel flowage amounts, airfare comparisons with MYR and RDU, total passengers handled and total seats available. Mr. Broughton, reporting on AvGas prices for the month of January, indicated that Air Wilmington was at $6.92, Aero Service at$6.82 and the area average was $6.28. Dr. Roseman asked Mr. Broughton to review those prices again and asked Mr. Tremblay if that was correct. Mr. Tremblay confirmed that with tax, that amount was correct for Aero Service. Mr. Broughton indicated that fuel flowage was down .6% from December 2011. Mr. Broughton reported the total number of passengers handled in January 2013 was 54,131, which is 3.1% less than January 2012 and .5 % less than January 2011. ILM's load factor for January 2013 was 71.6%. Mr. Broughton reported the total number of seats available during the month of January was 37,489, down 9% from January 2012, or approximately 3,714 less seats and indicated that has a lot to do with all the equipment changes and the time of year. ILM lost a LGA flight. US Airways had 3 and Delta now has 2 and ILM lost the 2 American Eagle flights and then US Airways changed seat configurations or capacity with different aircraft so that brought the New Hanover County Airport Authority February 6, 2013 Page 6 available seats down but took the load factor up slightly. Mr. Broughton reported ILM's international traffic using US Customs statistics for January 2013: 196 aircraft were cleared, which was 6.2% less than January 2012; and 1,251 people were cleared, which was 12.3% less than January 2012. Mr. Broughton shared details regarding a diversion of aircraft that US Airways had to ILM on January 30th at about 9 pm due to weather in Charlotte. A US Airways Boeing 737/400 with 146 passengers on board, tried to get into Charlotte and had to divert back to Wilmington. Mr. Broughton shared infouuation concerning a debriefing held February 4, 2013, with the airline, staff and TSA, to look at lessons learned during this diversion. One of the things US Airways and TSA are looking at is having an emergency call out list for TSA where TSA will be notified as soon as an airplane touches down and be able to get staff in route to reopen a security checkpoint. In response to Dr. Roseman's question if ILM has a written contingency plan, Mr. Broughton indicated ILM has written plans for both irregular operations and long on-board delays. When Dr. Roseman asked if those plans have been reviewed recently, Mr. Broughton and Mr. Rosborough both responded that the plans have been reviewed and that they were reviewed again that day. Dr. Roseman complimented staff on reviewing the contingency plan and Mr. Rosborough indicated it is best to review it with a real scenario. DIRECTOR'S REPORT Mr. Broughton, reporting for Mr. Rosborough, commented further on Allegiant's departure of service that ILM received very high praise as an airport from not only Allegiant's corporate office but personally from their regional director, Ms. Winnie Johnston. Ms. Johnston indicated that of all the airports she has under her purview that ILM was the most easy and willing to work with and she hopes in the future that Allegiant will come back to ILM. Regarding LGA and DCA service with 2 daily LGA flights on Delta, Mr. Broughton reported that staff continues to monitor the fares as far as being competitive. As Mr. Rosborough previously reported with regards to Delta, it is all about revenue and expense with the airlines and if Delta can support the cost of the service and generate revenue, then the sustainability is going to remain. US Airways began non-stop daily service to Washington, DC on February 1St As reported earlier, staff is very pleased with Washington fares and they are very competitive with both Myrtle Beach and Raleigh-Durham. Mr. Broughton further reported on Mr. Rosborough's quarterly meetings with a focus group comprised of local area business leaders that allows the staff to hear directly from our business leaders what they need, what their issues and concerns are. ILM needs the local businesses support with over 70% of our air travel being business travel, and it is important for the business leaders to be able to tell staff what it takes for them to support for air service to and from Wilmington. Staff did receive a comment from Wilmington Business Development that air New Hanover County Airport Authority February 6, 2013 Page 7 service continues to be in the top 2 or 3 questions asked with regard to recruiting businesses into our area so it is very important that Mr. Rosborough be able to hear what the business leaders' needs are and that we respond to those needs quickly. Mrs. Wilsey commented that one of the results from an earlier meeting a year ago was that the business travelers wanted the AIT machine. Staff talked to the TSA and TSA said they could get the machine here but we had to expand the checkpoint area. That led to the checkpoint project that ILM completed in June. The business travelers who travel all the time understand how important security is. Staff took that information and used it to improve customer service and security. Mr. Broughton stated that it bodes well for H M that staff takes action on the concerns of our business leaders. It is important for the business community to know that staff is hearing what they say. Mr. Rosborough indicated it is a partnership. Mr. Broughton further reported on the US Airways/American merger, that it seems that both companies are nearing a deal that would create the world's largest airline by traffic. The airlines have now secured the framework for post merger labor terms with all 3 of American's big unions which is a big step. It is likely during this possible merger that the AMR CEO, Tom Horton, could become Chairman of the new Board, a Vice Chairman, or Senior Advisor, or possibly take on another role or elect to retire. US Airways Chairman and CEO, Doug Parker appears to be the new CEO of the combined airline with the current US Airways President, Scott Kirby, becoming the COO for the combined carriers. At ILM, we see the possible merger as a plus. With the move of headquarters from Phoenix to Dallas, it would open up new route possibilities for ILM. Mr. Lambeth stated it would be nice to get the Chicago flights back. Mr. Broughton reported that on February 3rd at 6:33 am, TSA reported that they found a loaded 32 caliber handgun in a passenger's carry on bag. ILM Public Safety Officers were called and responded, confiscated the firearm and the ammunition, cited the individual on a state charge of carrying a concealed weapon and then allowed him to rebook and board a later flight. Mr. Broughton stated that this was the third weapons charge this year, with 2 weapons being in carry on baggage and one in checked baggage. Guns are allowed in checked baggage as long as they are declared and this one wasn't declared and the serial number had been filed off. Dr. Roseman asked how we determine on our data sheets that 70% of the passengers are business. Mr. Broughton responded that this was determined by customer surveys which were last done about 2 years ago by employee Kenny Smith who asked passengers if they were traveling for business or leisure. Mrs. Wilsey shared feedback that Mr. Rosborough had received from our volunteers at the information desk. Volunteers are downstairs 7 days a week from 6 am— 10 pm on different shifts and a volunteer brought a note upstairs sharing positive comments from visitors about ILM. Mrs. Wilsey advised of an online article on Star News website regarding the VA Facility with photos of the inside and reporting that it is opening in March for all veterans and the article said it provided everything except inpatient and emergency care. This article should be in the New Hanover County Airport Authority February 6, 2013 Page 8 newspaper February 7th Mrs. Wilsey reminded everyone that Thursday, February 7 and Friday, February 8, ILM is undergoing an Organizational Assessment and passed out a tentative schedule for this visit with Mead & Hunt in accordance with the board's guidance from last month. Mrs. Wilsey reported that on Friday, February 1S`, staff met with Commissioner White for an orientation about the airport. Regarding the annual report to the County Commissioners that is required by the Authority's bylaws, staff found out that the Commissioners would like a 10 - 15 minute presentation at the County Commissioners regular meeting either April 22 or May 20`h. Normally this is a short slideshow that the staff prepares for the chairman or vice chairman to present. Staff will be there in support and it occurs during their regular meeting at 9 am. Mr. Woody White, the chairman of the New Hanover County Commissioners, prefers to do this annual report in a public forum where it is on TV and it is recorded for the public. Mrs. Wilsey announced that February 9th is Tom Barber's birthday and it is also Dr. and Mrs. Kay's wedding anniversary. ITEMS BY THE PUBLIC There were no comments from the public. OLD BUSINESS There was no old business to discuss. NEW BUSINESS Mr. Lambeth commented that he was glad to see Mr. Tremblay at the meeting. Mr. Lambeth shared that he and Dr. Roseman visited Mr. Tremblay about a week ago to discuss Mr. Tremblay's plans as the new manager of Aero Services and Mr. Tremblay indicated he would be promoting general aviation and Mr. Lambeth encouraged the support of the Authority towards his business endeavors, as well as Air Wilmington's. Dr. Roseman initiated a discussion about operations at the airport and how they are tracked by the control tower. Staff responded that information is received from the tower and included in the statistical operations report each month. Mr. Broughton indicated staff receives total operations that the tower gets credit for and that the tower includes general aviation, transient, military and that it includes aircraft handled by ILM ATC and other aircraft approaches. There was further discussion regarding ILM's ranking with the FAA. Mr. Lambeth commented that if ILM promotes all phases of aviation at this airport maybe when the economy gets better both general aviation as well as air service tower counts may improve for the tower as well as our status. Dr. Roseman commented on the great quality of customer service provided by the Air Traffic Control Tower personnel to incoming pilots and asked that that be shared with the tower staff. Mr. Barber asked Mr. Tremblay if Mr. Vojta was still the majority owner of Aero Service and Mr. Tremblay responded that he is. New Hanover County Airport Authority February 6, 2013 Page 9 Mrs. Wilsey commented that even when staff does projects on the airfield, the air traffic control tower manager and the facilities airways technicians come to the table in the planning phases of the projects to help find the least inconvenient way to do the project. The tower personnel certainly come to the table with a lot of good ideas and work very well with the ILM staff. ADJOURNMENT There being no further business to come before the Board, Dr. Roseman MOVED, SECONDED by Mr. Lambeth to adjourn. Upon vote, the MOTION WAS APPROVED UNANIMOUSLY. Mr. Lennon was absent. Chairman Kays adjourned the meeting at 6:09 p.m. Prepared by: Respectfully Submitted: Rose M. Davis John D. Lennon, Secretary