Thursday, April 20, 2006
Pilots battle airport operator
Fuel price, rent raised illegally, they allege
By Marianne Love
The San Gabriel Valley (CA) Tribune
A Pasadena law firm has accused the company that operates five county-owned airfields of illegally profiting from its exclusive right to sell fuel to pilots and aviation businesses. According to a notice of compliance filed by attorneys at Mathews and Rager, American Airports has been marking up fuel prices and retaining all the profit instead of turning it over to the county treasury to defray the cost of airport services.
“They are diverting millions of dollars from the airports into their own pockets. They are making tons of money, jacking up rents and artificially inflating fuel prices,” said Ted Mathews, whose firm represents six pilots who use the airports.
American Airports President Kris Thabit said the company doesn’t view itself as having exclusive rights to sell fuel, adding that there’s little profit in fuel sales and his company provides airport users competitive prices.
“Since 2000, two tenants have explored the ability to sell fuel at the airports … but then backed out,” Thabit said. “American Airports is required under the county contract to provide fuel and there’s enough volume for us to make a small profit and we can do it because we’re there running the airport.”
In a notice of compliance dated Wednesday under the California Consumers Legal Remedies Act, the law firm asks for an unspecified amount of damages for six pilots who fly out of one or more of the five Los Angeles County-owned airports, including Brackett Field in La Verne and El Monte Airport in El Monte.
The firm has given Santa Monica-based American Airports 30 days to correct their actions.
The notice of compliance notes that the county may retain the exclusive right to sell fuel, but under the law they cannot give that exclusive right to a “non-sponsor entity,” namely American Airports.
Ted Gustin, chief of the aviation division of the county’s department of public works, did not return two phone calls seeking comment.
Pilots and business owners have registered complaints ranging from increased rates and fees to a decline in aviation-related uses at all five airports against American Airports.
The county receives $2.8 million in annual rent from American Airports with the remaining revenues going to the management company, Thabit said.
But, critics say, the company has not made its income statement public.
“Every month we give the county an accounting of every dollar we collect, including a vacancy report, a staff report, training report and details of fuel sales,” Thabit said. “We are not required to give expenses.”
He said all the hangars at the five airports are leased and there’s a waiting list.
“There’s no question, I want to fill my hangars with aviation users,” Thabit said. “I don’t want vacant hangars because we benefit from rents generated from occupied hangars.”
Earlier this month, the county Board of Supervisors ordered meetings between American Airports and the pilots to clear up communications, work on a plan to lure and keep aviation-related businesses, and prepare a market study on hangar rental rates.
The company is also facing an April 28 deadline from the Federal Aviation Administration, which has ordered American Airports to open up its financial books for a review of profits.
Thabit said since his company took over managing the county airports in November 2000, they have paid officials $13.5 million. He said expenses during that time will be released to the FAA at the end of the month.