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2015-04-29 Joint Meeting Minutes New Hanover County Airport Authority April 29, 2015 Page 1 NEW HANOVER COUNTY AIRPORT AUTHORITY AND NEW HANOVER COUNTY BOARD OF COMMISSIONERS JOINT MEETING MINUTES April 29, 2015 CALL TO ORDER The New Hanover County Airport Authority met in joint session with the New Hanover County Board of Commissioners on Wednesday, April 29, 2015, in the Executive Conference Room at Wilmington International Airport, 1740 Airport Boulevard, Wilmington, North Carolina. Authority members present were John Perritt, Chairman; Dr. Jonathan Crane, Vice-Chairman; Thomas C. Barber II, Secretary; Donna Girardot, Dan Hickman, Carter Lambeth and Thomas Wolfe. Also present were Julie Wilsey, Airport Director; Gary Broughton, Operations Director; James Morton, Finance Director ; Whitney Prease, Facilities Director; and Rose Davis, Executive Assistant. County Commissioners present were Jonathan Barfield, Jr., Chairman; Beth Dawson, Vice Chairman; Skip Watkins; Woody White and Rob Zapple. Also present were Chris Coudriet, County Manager; Tim Burgess, Assistant County Manager; Avril Pinder, Assistant County Manager; and, Teresa Elmore, Clerk to the Board. Chairman Perritt and Chairman Barfield called their respective boards to order at 8:02 a.m. WELCOME Chairman Perritt welcomed the County Commissioners and county staff members to this joint meeting and introduced the Airport Authority members who were present. Chairman Barfield thanked the Authority and proceeded to introduce the County Commissioners and county staff members who were present. Chairman Perritt turned the meeting over to Julie Wilsey, Airport Director, to update the Board of Commissioners. Mrs. Wilsey thanked the Commissioners for bringing the annual report back to ILM since it is their airport that they graciously allow the Airport Authority and staff to manage. Mrs. Wilsey stated the Commissioners would hear from some of the ILM team today but that they are just a part of a full team of 45 aviation professionals. Mrs. Wilsey shared that ILM had its FAA Inspection last week and reported that the inspector said: the airfield is fabulous; everything is in great working order; the firefighters, law enforcement officers and maintenance did an outstanding job and it is obvious that ILM has a couple of days and Mrs. Wilsey agreed saying that this is what we do everyday. New Hanover County Airport Authority April 29, 2015 Page 2 Mrs. Wilsey began the presentation by stating that the biggest change at ILM in 2014 was the increase from 5 to 7 Authority members and that this increase makes our board more diverse and the new members bring additional expertise to the Authority. Mrs. Wilsey turned the floor over to Mr. Broughton to begin his presentation. OPERATIONS Mr. Broughton began updating the Board of Commissioners by reviewing 2014 statistics, stating that ILM was off to a rough start last year due to the major ice event which closed ILM for 24 hours. The airlines canceled 136 flights in January and February, causing the loss of over 1200 seats; the loss of over 1200 general aviation operations; and total operations were down 1800, just as a result of this ice storm. At the end of February 2014, our passenger numbers were down 6% but by the end of the year, we were down only 3.3%, with a big part of that loss due to seasonal reductions in service from the airlines. The good news is that those flights are coming back for the 2015 summer season. General aviation ended the year down 13% but has been consistently down nationwide. The good news is that military operations went up 20% last year due to offshore maneuvers and the military fuel contracts with Air Wilmington. Cargo went up about 2%, primarily due to Fed Ex, and the airlines look at that and it drives the local management to push for larger aircraft and larger aircraft benefit ILM with more passengers in the cabin and more freight in the baggage hold. Mr. Broughton pointed out that o is revenue per available seat mile (RASM) with the goal to be at or above the revenue curve. Using s RASM and (CLT) at 82% and significantly on reported that ILM is running this year (2015) about a 92% load factor which tells us that the fares are high and we are still having some passengers driving to other airports. Mr. Broughton reported that I to maintain and enhance existing service while continuing to try to add new service, either with a new airline or with new destinations with American or Delta. Another challenge is the phasing out of the 50 seat aircraft over the next few years which will cause our capacity to go up but we may see a drop in frequency as this provides more seats but fewer flights. Mr. Broughton pointed out another challenge is the pilot shortage. Due to the expense of flying and the fact that people have less time and disposable income, and with changes in government training requirements, it is cost prohibitive to fly 1500 hours for training to get a $20,000/year job. While ILM and that is to focus more on general aviation, as well as our commercial service. New Hanover County Airport Authority April 29, 2015 Page 3 Another obstacle is the customs overflight rules, which no longer requires flights coming from the Caribbean to stop at designated airports. With a permit, they are now allowed to overfly and as a result we have seen some reduction in customs traffic on our general aviation side as well. Mr. Broughton shared that ILM is pleased to be one of the 10 commercial air service airports in North Carolina whose primary service is to provide transportation and connections to the world for this community, as well as general aviation service. These 10 airports contribute in excess of $24 billion to the state but are not the only airports in the state. There are 62 other airports in North Carolina that are only general aviation airports. With that many airports in the state being focused on general aviation, ILM needs to focus more on general aviation and increase our operations to do what we can in regards to the pilot shortage. Commissioner Watkins asked if staff was going to talk more in depth regarding the general th aviation survey and Mrs. Wilsey stated the survey just closed on April 27 so staff to talk about it today. This is the annual report for 2014 but staff would be happy to talk about it after the presentation, if time permits. Mr. Broughton stated that the survey was done so that staff could hear from the general aviation community which areas that ILM should focus on in order to increase general aviation activity, especially since we are competing with a lot of different airports. Dr. Crane stated that Authority members were going to be getting unedited copies of the survey and asked staff to provide an unedited copy to the Commissioners and Commissioner Dawson requested a copy of the final results only versus all survey responses. It was agreed that staff would provide the Commissioners with a copy of the survey results when completed. nd Mr. Broughton updated the Commissioners on the upcoming 2 Annual Aviation Day to increase community involvement at the airport and interest in aviation, both commercial and general. The 2014 event had 25 event participants; 13 fly-ins for the pancake breakfast fundraiser; and 160 runners in the 5K Run on the Runway sponsored by Jones Racing Company. th A committee has already been formed and is planning the 2015 event scheduled for October 10 with plans to double the participation this year. In conclusion, Mr. Broughton stated that ILM is off to a better start in 2015 than we were last year and hopefully we will see improvements in both commercial and general aviation. Mr. Broughton turned the floor over to Mr. Prease to report on facilities. FACILITIES Mr. Prease reported to the Commissioners that facilities handles the grant money that comes into the airport for major construction projects on the airfield. One of the major projects of 2014 was the approximately $6M RWY 17-35 rehab project. During this project the asphalt was milled from the runway and was stockpiled on site to be used on the perimeter road as another wear course around the approach of RWY 24 project using recycled materials. These millings were also used on the business park road which saved approximately $90,000; and were advertised on the website for sale at $17.50/ton, earning about $3000 so far. ILM also used millings along the New Hanover County Airport Authority April 29, 2015 Page 4 10 miles of perimeter fencing around the airport to prevent wildlife penetrations under the fence. Mr. Prease also reported that the RWY 17-35 pavement project received the Ray Brown Pavement Award for the best airfield pavement project in the US for the contractor, ST Wooten. Mr. Prease discussed the $1.2M RWY 17 obstruction clearing project which is next to Blue Clay Road and Kerr Avenue. ILM purchased avigation easements over 6 properties. Mr. Prease stated that the $4.6M RWY 6-24 ditch and drainage project is the current project. at the approach end of RWY 24 and regrading about 85 acres for wildlife mitigation and also future growth of the airport. This project is on day 74 of a 200 day contract. Mr. Prease reported that a lot of these projects are funded through the FAA. ILM receives about $2.8-$3.0M annually based on our enplanements plus some discretionary funding at the end of the year. Mr. Prease explained that discretionary funds are monies that are turned back in from entitlement from all airports and ILM competes for discretionary funding. Mr. Prease updated the Commissioners on the future general aviation project at ILM which is estimated at $9M which is in design now with plans to advertise for bids in June and award the bid in July of 2015. This project is located north of the airfield and has consisted of several stages. The first stage involved moving the existing rental car facilities to their new facilities, which was a $4.5M project, paid for through our passenger facility charges (PFC). The second stage involved 7 facilities located on the North Ramp that were demolished. In the future, there -er the existing concrete and this will be the future general aviation area for ILM. Mr. Prease stated that all general aviation FBOs will be located on the north side once this project is complete. Mr. Prease shared information gathered from the terminal capacity study conducted by Talbert & Bright, which took approximately 8 months, and helped us develop plans for the future terminal expansion projection. The terminal expansion project extends from 2018 2033 depending on se shared renderings of the new terminal plans. This expansion will cost between $40-87M. Mr. Prease reported on the improvements being made to the observation area near the Air Traffic Control Tower off Kerr Avenue. Mr. Prease encouraged the Commissioners to visit the observation area. This is a great place for the public to be able to view general aviation and commercial flights. Mr. Prease turned the floor over to Mr. Morton to report on finance. FINANCE/MARKETING/PLANNING & DEVELOPMENT Mr. Morton are spending money again and it is a good outlook indicator going forward. Using a chart for illustration, Mr. Morton reported various capital projects that ILM has funded with that revenue, New Hanover County Airport Authority April 29, 2015 Page 5 pointing out that FY2014 was a big year and that ILM almost doubled its revenue from FY2012, to $13M that was reinvested back into the airport infrastructure. Mr. Morton updated the Commissioners marketing initiatives including the new website; new digital marketing strategies and expanding social media presence; customer service promotions; AAA for vacation packages; with Air Wilmington for the Southeastern Bonanza Fly-In; and with Mr. Morton, using a slide to illustrate the proposed Business Park layout and flex space building renderings, reported that the plan for thjust spring up last year, it has been going on over 10-12+ years with most of it being underground with water, sewer and the storm water basin, and in FY 2014, the new access road. In FY 2016 we will be moving forward with actually constructing the flex space building. back of the airport property, adjacent to Blue Clay Road, showing slides of proposed layouts for potential aerospace industry sites here at ILM. Mr. Morton shared that ILM has marketing partnerships with Wilmington Business Development and NC Southeastern Regional Economic Development Partnership and is spending a lot of time on economic development, whether for our own site or in the region, because a lot of times air service is very critical to a company coming into the area. Mr. Morton reported that the Foreign Trade Zone (FTZ) application came back with a few questions which will be answered and returned to the Federal government for review. Mr. Morton explained that this FTZ allows businesses to delay paying taxes on something they import to manufacture and develop their product until they actually ship the product from their site. This assists businesses with cash flow. Chairman Barfield confirmed that this is what Representative Catlin has been working on since he was on the Board. which shows the layout on the ILM property allowing the manufacturer ramp access, runway access and plenty of space. Mr. Morton reported that two more projects were submitted last week. Mr. Morton talked about diversity and working with different tenants to diversify our revenue stream, and thanked for their approval of a special use permit to allow the laser tag business in the old AAI building. This process led to the discovery of a zoning issue. Under general manufacturing, there is aerospace industry/manufacturing and that is not currently a permitted use at the airport so that needs to be addressed and this will be coming before the Commissioners in the future. Mr. Morton turned the floor over to Mrs. Wilsey to report on air service. New Hanover County Airport Authority April 29, 2015 Page 6 AIR SERVICE Mrs. Wilsey sh essential component of our economy and society, from the crop dusters serving our agricultural heartland to the modern jetliners that connect almost any two points on the planet, the aviation and that the best way that we present that to the community is to show the economic impact. Mrs. Wilsey reported that the Airport Council International-North America (ACI-NA) did a survey in 2014 that showed that airports in North Carolina contributed $25.9 billion to the state and represented 108,000 jobs in the state. In 2008 ILM did an economic impact study with sportation Research and Education (ITRE) which showed that ILM had an impact of $641 million and 3,400 jobs, with a payroll of $38.2 million. NCDOT Aviation is currently going through the economic impact study process to provide updated information and we know it has increased since 2008. Mrs. Wilsey pointed out other areas of positive impact to the area, including ad valorem taxes on locally based aircraft, military training and fuel sales, business recruitment and tourism. Mrs. Wilsey, using a slide for illustration noted that from ILM there are 388 one-stop, world- wide destinations with our two major partners, Delta and American airlines. Mrs. Wilsey pointed out that is why companies like PPD have their headquarters here and GE and Verizon do training here. Mrs. Wilsey also pointed out that from the Customs facility you can reach any two points on the globe. gateways providing 1300 seats a day, which will expand and contract depending on the time of the year and the size of the aircraft. Mrs. Wilsey stated that due to the loyalty of the people from this community, using this airport for business and leisure travel, American and Delta have rewarded ILM with more flights. That is why we have 3 flights to LGA starting in June and the DCA flight is returning for Saturday only. There are also additional flights to ATL and CLT for the peak summer season. Mrs. Wiley advised that staff continues to work with the Small Community Air Service Grant (SCASDG) that the Commissioners helped get approval for and pledged $100,000 towards to talk to United and American for non-stop service to Chicago (ORD) or Dallas-Fort Worth (DFW). ion about the SCASDG, Mrs. Wilsey responded that there is a 4 year period to use the $1M grant so we have 2 ½ years left to use it. Mrs. Wilsey provided an overview of future goals stating that staff will continue to run this airport like a business and make sure that we are self-sufficient and continue to have low operating costs. ILM endeavors to preserve current air service and recruit new air service; redevelop the north ramp to increase general aviation activity; obtain free trade zone status; continue to grow the business park with the design and building of the flex space building; and develop a financial plan for future terminal expansion. New Hanover County Airport Authority April 29, 2015 Page 7 Mrs. Wilsey opened the floor for questions and thanked the Commissioners for coming out to ILM and that she hopes they are confident that the Authority and staff are managing their asset well. there was a passenger retention study and most of our customers that we lose out of our service area go to Raleigh (RDU). A lot of that is because they have some non-stop destinations, low fare carriers, -40. RDU is our number one competition. We lose less than 10% to Myrtle Beach and we lose very little to Jacksonville. Mr. Barber pointed out that we have about 64% retention and Mrs. Wilsey stated that is actually very good for a community our size. Commissioner Watkins asked for some clarification about private general aviation and Mrs. Wilsey explained that the true definition of general aviation is anything that is not commercial or military so it is a big range which includes the corporate departments and the private flyers and ft for hire or for business. Mr. Lambeth pointed out it is often designated by the size of the aircraft too with 6,000 lbs. or less designated as private and 12,500 lbs. and above, designated as corporate type aircraft. ocus would be on all general aviation traffic. responded that there should be enough space on the North Ramp for both corporate and private and that the South Ramp facility will be converted to something for aircraft manufacturing or even a corporate flight department. Commissioner Watkins inquired about support services for general aviation and Mrs. Wilsey responded that ILM has a full service FBO that is required to do many things, including aircraft maintenance. The general aviation survey is to help determine what the private flyers will support at ILM. Dr. Crane commented on fuel and hangar prices at ILM and that the Authority is watching and exploring options regarding both. Regarding hangars, Mr. Perritt pointed out that we have one new corporate plane here looking for a large hangar and another corporate fleet looking for a large hangar here so we are actively looking for ways to make that work. These hangars are $2-6M buildings but they are +$20M airplanes on your ad valorem tax roles. Mr. Perritt shared with the Commissioners, for educational purposes, that runways are designated by the magnetic heading that you land on so a runway has 2 names depending on which way you are landing so RWY 35 is actually 350° and RWY 17 is 170°. Mr. Wolfe pointed out to the Commissioners that the reason fuel prices are lower at the smaller airports in surrounding counties is because these airports are subsidized by the counties but ILM does not get any funds from the county. New Hanover County Airport Authority April 29, 2015 Page 8 Mr. Perritt advised the Commissioners that part of the North Ramp project that staff shared earlier means removing the old Piedmont hangar and he wanted the Commissioners to know this in advance as they will be hearing from the public when this part of history starts coming down. Mr. Zapple initiated a discussion about how ILM is addressing the pilot shortage and opportunities for flight schools in the area and FAA certification requirements. Mr. Zapple asked about a potential flight school and how ILM is addressing the pilot shortage and Mr. Barber shared about the visit to Embry Riddle in FL and the meeting with the head of the flight department about a year ago; and the meeting with Ted Spring from CFCC, looking at ways to create pilot training, but it is a chicken and egg problem from a state prospective. Before the state allows a community college to put a program together on the airfield to train, they have to prove that there are Mr. Barber said he thinks there is a wonderful opportunity on the South Ramp and there are all kinds of opportunities for pilot training or different kinds of business over there and it is something we really need to pursue. Vice Chairman Dawson pointed out that the community college has offered the ground school class for years so that is still available for beginning training but having hands-on training at ILM would be a terrific idea and that Dr. Crane shared comments from a student who said there is only one plane that can be rented at the airport now and it is booked up. It seems there is a demand for training but currently we planes for people to fly. Mr. Hickman stated the start-up issue for the community college is essentially coming up with the money. The money has to come out of last years funding and go to the county for facilities. There is a requirement in the state that you show 40 jobs over the next 2 years for a new program. The reality is you have to come up with the start-up money. Mr. Zapple asked if there was any consideration for a flight to the Boston market. Mrs. Wilsey responded Boston is in our top 10, however, the next real need is Chicago where we have about 53 passengers each day, each way which fills one regional jet. Boston falls below that in 30 seats per day, each way, which is a challenge when you are trying to recruit a new airline to fly it. Ramp buildings, Mr. Perritt responded that the Authority was looking into the options available. Chairman Barfield thanked the Authority and staff on behalf of the Commissioners for taking time out of their schedules to meet at have happened in a regular questions. Chairman Barfield commented on the fact that all 7 Authority members were present and that speaks volumes in terms of their commitment to take time out from businesses to attend. New Hanover County Airport Authority April 29, 2015 Page 9 Chairman Perritt, on behalf of the Authority, thanked the Commissioners for taking the time and for bringing their staff in support. Chairman Perritt thanked the ILM staff for a nice concise presentation. Chairman Perritt commented that the customer experience is very important and a goal of the Authority to keep that experience positive. With a major biotechnical convention coming to the area in October, this may be the first time these visitors are exposed to our community and it is a chance for ILM to shine. ADJOURNMENT There being no further business to come before the joint session, Chairman Barfield and Chairman Perritt adjourned the joint meeting at 9:15 am. Prepared by: Respectfully Submitted Rose M. Davis _______________________________ Thomas C. Barber, II, Secretary Approved: June 3, 2015