Friday, September 21, 2007

user fees: Clark County Airport board takes a positive step

From Ben Zion Hershberg in this morning's C-J, an update on a painfully lengthy effort to deal with the financial woes at the Clark County Airport...

After months of wrangling, Clark County Airport's board voted unanimously to institute a fuel surcharge to raise revenues. (The airport initially [and strongly] resisted such steps, wanting taxpayer financing instead.) The board also received the final draft of a consultant's report. (I had blogged on that earlier.)

In the middle of the article, Hershberg provided a summary of the report. Detailing the private financing aspects...

The Clark County airport is among the busiest in the state, with nearly 70,000 landings and takeoffs a year, consultant Ken Ross told the board. But it generates the least revenue from operations of all the airports in the study, getting only about $89,000 a year from contracts with businesses operating there, Ross said...All but one of the comparable airports has a fuel charge, Ross said, with the charge generally ranging from 5 cents to 15 cents a gallon.

Back to the top of the article...

Responding to pressure from county officials to make the Clark County Airport self-supporting, the board that oversees the airport unanimously approved a charge last night on aviation fuel. "It will do us a lot of good," board member Dan Gregory said. Without additional revenue, he said the airport will run out of cash to pay its bills next year.

So, if this is a good idea and all of the other airports do it, why did this take "pressure" from county officials?

Eric Taylor, an owner of Aircraft Specialists, which provides business jets for charter at the airport, said he is disappointed with the board's action. "It will make us less competitive," Taylor said...A 10-cents-a-gallon fuel charge would mean absorbing or passing on to his customers thousands of additional dollars of expense a year, Taylor said.

"The county needs to belly up to the bar" and help fund the airport, Taylor said.

Mr. Taylor is doing quite well with E200-level economic analysis, but seems to have a self-serving (and unjust) view of the role of government.

--The tax (as a proxy for a user fee) will make the producers less competitive. When a subsidy is removed or reduced, then a producer will be less competitive. Correct.

--The producers will pass on the tax to its customers. Assuming an inelastic demand (few close substitutes)-- as seems likely here-- quantity demanded will be little affected and most of the tax's burden will fall on consumers. Correct.

--Who should finance the airport? Is there really any serious argument that those who use the facility (companies and the wealthy who fly and use planes) should pay something-- before we even think about banging on the door and reaching into the wallet of the general taxpayer? Beyond that, why should we ever take money from the common man to support such things? Or why should producers of services at an airport receive tax breaks or subsidies not available to other producers?

1 Comments:

At November 14, 2007 at 10:32 PM , Blogger Unknown said...

Mr. Schansblog,
You have a very interesting website here and thanks for taking such an interest in your community. However, I don't think that you quite grasp, the functionality of a regional airport such as Clark County. This airport is an intricate part of the transportation infrastructure of Indiana and the United States. Just the same as an expressway, a highway, or a bridge. Think of the airport as being the off ramp from anywhere in the world down into our community. This airport brought 36 million dollars in economic benefit to our community as estimated by the Indiana Aviation Association in 2005 alone. Some say why should I pay for an airport I never use? Why should I pay for a bunch of rich people to land at this airport? Why should I pay for a bunch of private pilots to do take offs and landings? The reasons are as simple as this. They bring business men into our community, business men bring business into our community, business brings jobs to our commmunity, jobs secure the economic benefit of the community. Flight training is important also. Our flight schools at Clark County have trained many area pilots who now work as airline pilots, cargo and transport pilots, military pilots, air ambulance pilots, search and rescue pilots, angel flight pilots, aerial photographers, all professions that benefit not only our community but also our nation. I don't have school aged children, yet I still pay school tax, I rarely use the public parks, but I still pay tax for other people to use them. Every business in America has a road that leads up to their front door that brings customers in, we all pay taxes to build and maintain those roads. Why then is it wrong for the airport to require taxes to maintain and operate? If we all thought this way our nation would not be the model society in the world that it is. Narrow minded people who think this way, do not understand. The airport is not opposed to a 10 cent per gallon fuel fee, but this approach to generating revenue has been taken before and it did not work. That is why the current lease agreements with the fixed based operators on the field were negotiated back in 1993 when the fuel flowage fee on the field was eliminated. Those fuel flowage fees are a part of those lease agreements now in place and a contract was signed with the Air Board for 31 years. It not legal or ethical to go back on a contract agreement in anybody's book. What is the answer? Well things at Clark County aren't as bad as everybody makes out. There may be a small deficit but considering the benefits to the community this is a small price to pay. This airport is a gem in the eyes of those who know it. It is big and beautiful. It is a great asset to our county. It deserves the respect and support of our political leaders. There are ways that more revenue can be generated by the airport. A new runway extension will definitely bring in more air carriers and more business. This runway extension is already in motion and construction will begin soon. If our own county leaders do not support this airport, than this potential will never be realized. The new commercial business park River Ridge which is under construction just east of the airport will generate income for the airport, the new east end bridge in Louisville will connect the airport to the eastern sections of Jefferson and to Oldham Counties. This will generate more business revenue for the airport. Some silly little fuel flowage fee is not going to save our airport. If this airport closes then our county would have to repay by agreement with the federal government all of the federal money that it has invested in Clark County Airport, some 30 or 40 million dollars. Do we want that? No! Some political leaders in on our County Council and from the County Commissioners are proposing such mundane money making actions has growing hay on the field. Is that the impression we want to generate to prospective businesses? This airport is beautiful and well landscaped, what impression would a hay field generate, plus the safety factor for muli-million dollar aircraft landing in a hay field that attracts deer, coyotes, and birds to the runways. This is unsafe for passengers and property. The County Counsel appropriated $20,000 for an airport study to an Indianapolis Firm to study ways that the Clark County Airport could generate revenue. Of 10 other airports that were compared to Clark County all but one had fuel flowage fees on the field, but conviently they overlook the bare fact that of those same 10 airports only one did not have a local subsidy to help support them. 5 of those 9 airports without local subsidies would have losses so great that they make the fuss over Clark County's little deficit look silly. So far pleas from concerned opeators and pilots on the field for funding have fallen on deaf ears. One County Councilman during testimony being given by an on the field operator was so rude and unprofessional that he got up shaking his head and snickering left the room. This is unprofessional unacceptable behavior for such an important issue. Our own Air Board did not even make an appearance at this important meeting that they the Air Board encouraged concerned aviation people on the field to attend. This behavior is hard to understand. Are these power struggles? Are there vendettas? Are these political moves just to try and set up for the next election? I don't know. But what I do know is that these petty issues are time consuming and costly, and have and will ultimately cost the tax payers more than the little deficit in the budget at this big beautiful gem of an airport that wants to call itself a regional airport, but continues to have its leaders try to regress it down to a little country air strip. I hope you better understand things now, and I hope that you don't always believe everything that you read in the newspaper. There are other issues here that maybe you don't know about. Please feel free to email me or stop by the field to talk about this. We could use civic minded people like yourself to help communicate the issues.
Thanks
Ron Frames
Commercial Pilot
CFI
Haps Aerial Enterprises

 

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