AIRPORT: CHANGES IN LEASE ADD SURCHARGE

Under a new lease agreement, the fixed base operator at the Cape Girardeau Municipal Airport will be charged a 2 cents-per-gallon fuel flowage fee and will lease fewer acres.

Mark Spatz, owner and president of Cape Central Airways the airport's fixed base operator said he's unhappy with the lease agreement, although he understands why it was changed.

Spatz said the city late last year canceled Cape Central's lease because the company was three months behind on its lease payments. The annual cost of the lease will remain $20,800.

He complained that the company was catching up on its rent payments when the city revoked the lease. "It had been a lot worse in rent previously and we were getting better," Spatz said. "But the city just kind of took advantage of the situation."

When a new lease was negotiated, the city decreased the property formerly leased by Cape Central.

"We were negotiating from a weak position," Spatz said. "As a result of that, they dramatically decreased the properties we held in the lease with no reduction in cost.

"They also introduced this fuel flowage tax."

Doug Leslie, Cape Girardeau's Public Works Director, said the fuel flowage fee is assessed against the fixed base operator, "basically, for the privilege of selling fuel" at the airport.

"It's an additional, new item within their contract, and the revenue from that will basically go toward the cost of operating the airport," Leslie said. "I would say it's fairly common at airports with fixed base operators. The amount varies somewhat, but charging a fuel flowage fee is common."

Airport Manager Mark Seesing said the revenue from the fee should help the airport now operating in the red balance its books. He said the fuel fee revenue could total about $3,000 annually.

"The airport is not self-supporting and is funded largely through the general fund," he said. "This is something to help the airport pay for itself.

"There's not a specific project that money will go to, but it will be used to subsidize the general operations."

Leslie compared the fee to a franchise fee, which is assessed against utility companies for the right to use city easements and rights-of-way for utility lines. He said those costs often are simply passed on to customers through higher rates.

But Spatz said that's something he doesn't intend to do at least not immediately. However, he said the aviation industry is hurting everywhere, and companies like his are looking for ways to cut costs.

"I hope we don't have to pass that on," Spatz said. "Two cents a gallon is not that big a deal. But if things keep getting worse, we're going to have to look to make cuts somewhere.

"The aviation industry, as a whole, is just in a tremendous slump right now. A lot of little companies like this are just dropping like flies. We employ 30 folks out here, and the cost of employing 30 people is pretty high."

Leslie said the property removed from the lease is land Cape Central hasn't used. Seesing said the airport might be able to develop the property commercially.

"It gives me the opportunity to maybe develop the property for other uses, hopefully revenue-producing uses," the airport manager said.

Another change in the lease involved operation of Cape Central's fuel farm. The new lease calls for Cape Central to update the fuel system and relocate the fuel farm.

Seesing said the changes were required by state and federal regulatory agencies like the Department of Natural Resources and the Environmental Protection Agency.

"That's something he has to do anyway," said Seesing. "He was given the option of the city taking over possession and doing the relocation, and he chose to maintain control of the fuel farm and do the relocation on his own.

"Of course, certain aspects of that are a large concern with the EPA and DNR that he has to comply with. But that's nothing new. That's happening all over the country."

Spatz said revenue from the fuel flowage fee likely will be less than the city anticipates. He said that volume of fuel sold at the airport has dropped dramatically because of the slumping economy.

"When the economy slumps at all, aviation is seen as kind of a luxury," he said. "Large companies will just cancel flight departments, and anyone else who might use aviation basically decides that's discretionary.

"The fuel volume's dropped way off since everybody's reduced flying. Maintenance is down and so is the basic charter business," he added.

Spatz said most of Cape Central's business derives from the charter service, which generates "well over half of total revenues."

He said he regretted the lease negotiations and the concessions the company had to relinquish to the city particularly when Cape Central has had a very good relationship with the city in the past.

"From our position it was just kind of a mess," Spatz said. "We went from dealing with the city very equitably, to now we sort of deal with each other from an adversarial position."

But Spatz said he's optimistic the situation at the airport will improve with time. He said the city's working hard to improve the airport, through a renovation of the terminal building and other projects that will help his business and Cape Girardeau aviation in general.

"I hated the lease negotiation. I felt like the city took advantage of a bad situation," he said. "But, in general, I think things are going pretty well at the airport."