By opting out of passenger flights Visalia is able to cover the cost of adding more hangars, making it one of the few municipal airports turning a profit
By Reggie Ellis @Reggie_SGN
VISALIA – The Visalia Airport will be debt free next month and has been profitable for the city for the last few years. So, at a time when most municipal airports are losing money, what is the secret to not losing money? Taking less of the federal government’s money.
Two years ago the City of Visalia became the first and only city to opt out of the Essential Air Services (EAS) program, which subsidizes passenger flights for small airports, after SeaPort airlines abruptly, and without notice, withdrew from all of their markets in California, Missouri and Kansas. Under EAS, the federal Department of Transportation covered 95% of all of the projects at the Visalia Airport and the city covered the remaining 5%. Deputy City Manager Mario Cifuentez said Visalia was basically spending $150,000 to make $30,000 every month.
“Some municipal airports are selling their soul to have air service,” Cifuentez said. “You’d be better served by shuttling people to the nearest major airport.”
Between 2007 and 2010, the deficit spending forced the airport to take an $800,000 advance from the General Fund. Thanks to the city’s decision to end flights in 2017, Cifuentez said the airport will pay back the advance, with interest, by this time next month. By accepting the terms of the Community Flexibility Pilot Program, Cifuentez said Visalia’s DOT subsidy for projects went from 95% to 90%, but the decision made the city eligible for a CalTrans program that would provide 5%, keeping the city’s revenue relatively the same.
As an incentive for ending passenger flights, DOT offered cities up to two years of its 95% subsidy in addition to its new annual 90% rate. That netted Visalia $3.7 million to begin making improvements. Those improvements were announced on May 20 when the Visalia City Council approved $4.1 million for two projects to build new hangars. The council awarded construction of a 4-unit corporate hanger and an 8-unit T hanger to Atkins Bergreen, Inc, of Visalia for $2.1 million. The council also awarded a contract for $1,896,470 to Cal Valley Construction for site preparation and improvement. In addition to the hangars, the design leaves storage space, equal to half of a hangar, on each end that will be rented out for aeronautical storage uses.
“Those numbers should allow us to meet the current demand,” Cifuentez said. “We may end up with one or two people on a waiting list but they should be able to find space within a few months.”
In his report to the council, Cifuentez said the new T-hangars will rent for $375 per month and the storage spaces for $250 per month. The T-hangar revenue will amount to $42,000 per year in new revenue. The minimum rent for these corporate hangars will be set at $1,750 per month and they will be rented through a bid process because the demand is high. This hangar complex will provide a minimum of $84,000 per year in new revenue for the airport enterprise fund. The hangar improvements will require a $126,000 advance from the General Fund, but the hangars should generate enough revenue to repay the advance within three years.
The airport currently houses 192 aircraft and there is significant demand for hangar space. Cifuentez said all of the airplanes housed at the airport are owned by private individuals who use them for both business and recreation. Cifuentez said the airport makes most of its money off of fuel sales, so the more hangars the city has, and the more there is a demand for hangars, the more potential profit the city could make in the coming years.
The last major new development at the airport was in 2003 when Visalia built 10 hangars for small aircraft and new taxi lanes to open up an area on the eastiside of the runway, just south of Mill Creek. A few years later, Visalia developed one large corporate hanger.
Cifuentez said the next projects at the airport will be to repave all of the asphalt, which has not been overhauled since 1999. Once that is complete, Cifuentez said the city will have to start deciding if it will reinstitute air service when the pilot program ends in 2027. That would require building a new terminal and finding a carrier could provide consistent service, the main reason Visalia opted out two years ago. The former terminal was built in 1936 and currently houses Enterprise Rental Car and the headquarters for the local Civil Air Patrol.