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Jun 17, 2014 3:16 PMPublication: The East Hampton Press

East Hampton Town Continues To Look For Added Revenues At Airport

Jun 17, 2014 4:23 PM

Two private companies at the East Hampton Airport may see a 100-percent increase in fuel fees paid to the town, if the East Hampton Town Board votes to approve the hike.

The idea is on hold for the moment, however, as town officials discuss its feasibility.

The East Hampton Town Budget and Financial Advisory Committee this month recommended raising the “fuel flowage fee” for airport-based businesses that buy fuel from the town to sell to pilots. Under the proposal, the town fee would go from 15 cents to 30 cents per gallon, which would mean an extra $115,245 in annual revenue for the town.

Cindy Herbst of Sound Aircraft Services spoke at Tuesday’s East Hampton Town Board work session, asking that the town reconsider, saying such a hike would be devastating for her firm: “This will surely close our small business in the next few years.”

But committee member Peter Wadsworth said the price the town charges fixed-base operators, as the airport-based businesses are called, has not increased since the early 1990s. Meanwhile, he said, the town’s wholesale provider of fuel has increased prices seven times since 1999.

According to the budget committee, the fixed-base operators, Sound Aircraft Services and Meyers Jet Fuel, sold an estimated $4.7 million worth of fuel in 2013, and 93 percent was sold for jets and helicopters.

At 15 cents per gallon, the town collected $115,245 in fuel flowage fees in 2013. The airport that year brought in $625,549 in rental income and almost $1 million in landing fees, in addition to the fuel flowage fee revenue.

Mr. Wadsworth said not only does the town buy the fuel from a wholesaler, which is selected by the fixed-base operators, but it also maintains the fuel farm, which has two storage tanks to hold the fuel. The town assumes all liability for the storage facility.

Airport Manager Jim Brundige said the town spent almost $10,000 in repair and maintenance at the fuel farm this year already and budgets $3.5 million for the fuel farm.

Suffolk County inspected the fuel farm this year and recommended a project to keep barrels in an enclosure and on a concrete pad, which would cost about $3,000, Mr. Brundige said.

Raising the flowage fees would help cover that cost as well as the cost of updating the farm, about $600,000, after about five years, according to Mr. Wadsworth.

All of this comes down to finding ways to increase revenue at the airport so it can pay for the necessary capital improvements without relying on the Federal Aviation Administration for funding, Mr. Wadsworth said on the phone earlier this week.

Just last week, the Town Board approved the increase of fixed-wing airplane and helicopter landing fees by 10 percent.

To some, like Jeffrey Smith, vice president of the Eastern Region Helicopter Council, it may seem as if the town is trying to reduce the number of helicopters that fly in and out of the area. In a letter to the Town Board last week, Mr. Smith asked the board for transparency, saying that town officials should “acknowledge that a system is being put in place to eliminate helicopters, reduce airport traffic and put the burden of supporting the airport solely on the backs of lease holders, local general aviation tenants and enthusiasts.”

But Mr. Wadsworth said that is not the case. He said the budget committee does not intend to advocate a position, but merely present the facts.

“If you consider the cost to rent a helicopter, which is in the thousands of dollars, including substantial fuel costs, raising the fee by 10 percent is not going to impact [a pilot’s] decision” about whether to use the airport, Mr. Wadsworth said. “Bearing in mind that landing fees are scaled by weight within classes of aircraft, it is certainly not an attack on helicopters. It’s non-discriminatory. It’s across the board.”

To raise revenues from the airport, the budget committee is also considering paid parking, setting lease renewals at fair market value, building and renting out new hangars, making use of 15 vacant lots along Industrial Road and introducing a solar power farm.

But in the meantime, the Town Board has to consider raising the fuel flowage fee—a decision which has been tabled for a week.

Last week, some board members said they were sympathetic to the fixed-base operators and would consider increasing the fee incrementally instead of all at once.

This week, Town Supervisor Larry Cantwell said he was uncomfortable with the fact that the operators choose the wholesaler they want and that the town buys the fuel without publicly bidding for it. He said the town needs to reevaluate the way the fuel farm works.

Mr. Wadsworth said raising the fees is one way to start improving revenues from the airport.

“We honestly thought this was a slam dunk when recommending these,” he said. “We’re looking for opportunities all over the place for revenue enhancement. This is just one of many.”

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Good job East Hampton Town Board.
By nellie (451), sag harbor on Jun 17, 14 5:52 PM
The prices for fuel in east Hampton are not competitive to begin with the rise in price will reduce income not increase. Face the facts you need the FAA money to have a airport it should be used .
By Obserever (40), Southnampton on Jun 17, 14 6:49 PM

Time to move on . . .

"East Hampton Airport could be sustainable without Federal Aviation Administration funds, according to a new report by the town’s Budget and Financial Advisory Committee."

By PBR (4956), Southampton on Jun 18, 14 7:56 AM
Go home Mr Smith. On the LIE.
By we could run this town! (129), the oceanfront trailer park on Jun 18, 14 1:44 AM
"Waaaa, the fuel for my airplane is expensive."
By Phil McCracken (10), Southampton on Jun 18, 14 6:05 AM
Phil, I know this may ruin your narrow view of the issue but not all pilots at HTO are wealthy south of the highway types. Most of us are working stiffs who work all week just to be able to take our old single engine planes out on the weekends as a fun hobby. A large majority of us were born and raised here. This doesn't affect the wealthy private jet owners and helicoptor commuters, because they don't care about the price of fuel. This only hurts us little guys who live here year round.
By localEH (427), East Hampton on Jun 18, 14 5:47 PM
If a slight increase in the cost of the fuel hurts you, perhaps it's not a suitable hobby. There is no such thing as a working stiff little guy who owns an airplane.
By Phil McCracken (10), Southampton on Jun 19, 14 12:05 PM
Phil, your generalization seems a bit over -broad does it not?

I would guess you would be surprised at the number of local owners of single prop older planes, who probably started using the airport decades ago when flying was a relatively inexpensive VFR hobby, (with few navigational aids installed).

Chances are good there are still a few planes like that left, thankfully.

The good news is that the large commercial users of fuel will mostly cover this increased line item ...more
By PBR (4956), Southampton on Jun 19, 14 1:13 PM
Ok fine. Name one person you know who owns an airplane to fly on the weekends as a hobby that isn't in the top 1%. To be magnanimous I'll make it the top 5%.
Jun 19, 14 3:47 PM appended by Phil McCracken
Thank you Mr. Nature. The negligible impact you describe should serve to bolster the support for the increase in fuel charges. Perhaps a glider?
By Phil McCracken (10), Southampton on Jun 19, 14 3:47 PM
Maybe none that own a plane - but plenty of "working stiffs" that fly planes. Increased fuel costs hurts their ability to enjoy their hobby. Will they go from flying frequently to not at all? probably not, but there is an impact to those outside of the 1%.
By Nature (2966), Hampton Bays on Jun 19, 14 3:52 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By Nature (2966), Hampton Bays on Jun 19, 14 3:52 PM
Thank you, Phil, the adjective "magnanimous" definitely fits . . .

Good Bye
By PBR (4956), Southampton on Jun 19, 14 4:56 PM
Sounds like Cindy Herbst does not like the idea that the gravy train she and Sound Airfcraft have been on really should run out. Have food prices not increased substantially, even in the last few weeks, let alone in the 15 years since there was any increase in fuel flow fees....how about the cost of (non-leaded) gas to power our cars---figure the increase over 15 years and WOWEEEEE. Insurance, property taxes, school budgets, school supplies etc etc. And the pilots and Ms. Herbst are crying ...more
By Trish (91), Sag Harbor on Jun 19, 14 11:13 AM