MBS INTERNATIONAL AIRPORT COMMISSION

 

February 15, 2007

 

MINUTES

                                                                           

The meeting was held in the Airport Commission Board Room, 8600 Garfield Road, Freeland, Michigan 48623.  Chairman Eugene Gwizdala called the meeting to order at 1:00 p.m.  Roll was called by Debbie Meisel.

 

COMMISSIONERS

 

Present                            Absent & Excused        Staff                       Other     

Patrick H. Beson             Kenneth W. Distler       Jeff Nagel               John Palen, Midland Issues

George J. Biltz                                                     A. T. Lippert          Rich Bostwick, NWA

Darnell Earley                                                      Ryan Riesinger  Angela Osmond, TSA

Brian K. Elder                                                     Debbie Meisel       Amy Payne, Saginaw News

Eugene F. Gwizdala                                                                           Cheryl Wade, Midland Daily News

Wilmer Jones-Ham (arrived 1:02 p.m.)                                                            

Jon Lynch

Hollis H. McKeag                                                                                   

 

                                        

PLEDGE OF ALLEGIANCE 

 

MINUTES:  Mr. Earley made a motion to approve the minutes of the Regular Commission Meeting held on January 18, 2007.  Mr. Biltz seconded the motion.  The motion was unanimously approved by the Board.

 

JANUARY 2007 WARRANT AND CASH & INVESTMENT SUMMARY:  Mr. Biltz made a motion to approve the Warrant Registers for the January Payroll Account Check Numbers 82866-82919; the January Operations and Maintenance Check Numbers 37244-37318; and the January Cash and Investment Summary.  Mr. Elder seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  None

 

SNOW BROOM SPECIFICATIONS:  Mr. Nagel stated that the 2007 AIP projects include a new snow broom.  Brooms play a pivotal roll in keeping the runways clear during a snow event.

 

To begin this process specifications must be developed and the equipment bid.  In the past Peckham Engineering has been used for this process and it worked well.  A contract has been received for Peckham to prepare the specs and oversee the bidding process in the amount of $5,967.74.  The contract is subject to the approval of the MBS state project manager.  Mr. Lippert will review the contract as to form.

 

Mr. Beson made a motion to approve the contract with Peckham Engineering to develop specifications for a snow broom and authorization for the Chairman to sign with Mr. Biltz seconding. Mr. Biltz asked Mr. Nagel to explain the redundancy of Exhibit I and II since both list a snow broom.  Mr. Nagel stated the multi purpose tractor has a small broom on it that will be used on street and air side in small tight areas.  It is about 11-12 feet long as compared to this snow broom which is an all-wheel steer high speed runway sweeper with a 20 foot broom used on runways.  The multi purpose tractor is approximately $130,000 as compared to $700,000.  There being no further questions the board voted unanimously on the motion.

 

MULTIPURPOSE TRACTOR (PFC #5):  Mr. Nagel stated that a multipurpose tractor is listed on PFC application #5.  In 2006, the commission approved a contract for Peckham Engineering to write the specifications, prepare bid documents, receive the bids and provide a recommendation based on the bids received.

 

The specifications included the multipurpose tractor, front-mounted snow sweeper, front-mounted snow blower and a rear-mounted material spreader.  These items are all eligible under the PFC program.  Another advantage of purchasing a vehicle like this is the ability to utilize it for mowing operations during the summer months.  A front-mounted rotary mower and a front-mounted sickle mower were included in the bid package.  These two items are not eligible for PFC reimbursement.

 

Three bids were received in response to the specifications.  One bid was received for the front-mounted snow sweeper only leaving two bids for the entire package.  These bids were:

 

             Bell Equipment (representing Holder)

                                 Tractor, Broom, Snow Blower and Spreader                                                  $101,320.00

                                 Rotary Mower and Sickle Mower                                                                        32,300.00

                                                                                                                                                                $133,620.00

                Weingartz Golf & Turf (representing Trackless)

                                 Tractor, Broom, Snow Blower and Spreader                                                  $110,661.72

                                 Rotary Mower and Sickle Mower                                                                        28,282.00

                                                                                                                                                                $138,943.72

 

A careful review found minor discrepancies with each bid, which is typical for airport equipment.  The bid from Bell Equipment had several major exceptions including inadequate transmission, hydraulic system, battery capacity and tires.  The type of winter tires specified were not included in the Bell bid and were an upcharge of $4,718.75 on the Weingartz bid.  Taking this into account, the bids were only $604.97 apart.

 

Based on a review of all information submitted for the bids, the recommendation of Peckham Engineering is to award the bid to Weingartz based on price and best conformity to the specifications.  Mr. Nagel reviewed the information along with the airport maintenance supervisor and agreed with the recommendation from Peckham Engineering.

 

Mr. Biltz made a motion to approve the bid for a multipurpose tractor and accessories to Weingartz Golf & Turf with Ms. Jones-Ham seconding.  After discussion the motion passed unanimously.

 

MARKETING COMMITTEE REPORT:  Mr. Biltz gave Dr. Distler’s apology for not being present; he had an out of town seminar.  His letter was included in the packet. 

Mr. Biltz thanked Mr. Nagel for his assistance since this was a very detailed review process.  He helped with the correct terms and format to be able to get the answers from the Boyd Group.  Quite a bit of time was spent in reviewing the report and asking questions.  This is the most detailed study MBS has received about the differences of the two markets.  The committee looked at published fares, availability, different capacities, different perceptions between travel agents and the traveling public.  The key findings looking at the full picture, by and large MBS is fairly competitive with Flint or other similar airports.  However, MBS may look more expensive because in some markets there are more planes available and more seats which results in more low fare capacity at another airport.  In some markets, particularly in Flint, there are restrictions such as additional purchase time, or penalties for change, and length of stay issues harm MBS airport in term of parity.  There is a perception amongst the traveling public and the travel agents that Flint’s market is cheaper.  The facts and the perceptions may not line up.  It was noted that Northwest has to view the two markets separately because there are different competitive forces such as Air Tran in Flint that are not here at MBS.  The perception of MBS and Northwest are different.  Mr. Biltz opened the discussion for questions that the other board members had before proceeding with recommendations.

 

Mr. Lynch stated that after reviewing the report that a major carrier like NWA may not be as concerned about the number of empty seats in one market versus another given the demand for seats at the hub.  Mr. Lynch asked to what extent it appears that the absence of concern for empty seats drives some of Northwest’s decisions at MBS.  Mr. Biltz stated the airlines look at the destination not necessarily each flight connecting.  NWA does have the higher market share at MBS so if the passenger goes to Flint versus MBS, it puts that passenger at risk because there are other airlines in Flint that could be selected.  How the airline manages the load factor is much more complex than they are given credit for in these difficult times. 

 

Mr. Beson stated that it appears that the communication and understanding between MBS and Northwest is improving.  It is important to keep good communication with NWA so that when times improve it will help MBS.   Mr. Biltz agreed and stated that Northwest looks at their whole map route for the world and MBS is focusing locally.  The communication between NWA and MBS has improved over the past couple of years but could go farther.

 

Mr. Biltz stated that the committee has three recommendations and referred to Mr. Nagel.  Mr. Nagel stated that the first recommendation is to increase efforts to recruit additional airlines to serve MBS.  Based on the Boyd study, having a third carrier enter the MBS market would help keep fares competitive.  Committee discussion included the recruitment of a low fare carrier, similar to Air Tran in Flint.  However, due to our population base and other market forces, the chance of recruiting a low fare carrier is slim.  A more reasonable expectation would be to recruit a carrier such as Delta/Comair to Cincinnati, Continental to Cleveland or Midwest to Milwaukee.  All three of these options would open up additional hubs, offer additional frequency and bring airfare pressures to the incumbent carriers.

 

The committee discussed the various ways to recruit additional airline serve.  One such program is the DOT Small Community Air Service Grant.  This program offers an excellent opportunity to match local funds with federal dollars to recruit additional airline service, market that service once it is established and to provide risk abatement for the carrier once the service begins.

 

At this time, the DOT docket on the program has not been released. Mr. Nagel anticipates a grant request level of $100,000 local and $500,000 federal for a $600,000 total program.  The local money is not needed at this time and would only be required if our application is approved.

 

The recommendation is to authorize the airport manager to work with The Boyd Group to prepare an application for a Small community air Service Grant in 2007.  This is a very competitive process and The Boyd Group has experienced a level of success for their clients.  Estimated cost for the consultant is $5,000 which is within the spending limit of Mr. Nagel.

 

Discussion took place in regards to recommendation number one that the competition could not only come from another airline but possibly NWA.  There were also comments that another airline could be more than the market can bare and what are the chances that they would fold.  Mr. Nagel stated that several times there have been more than two carriers serving MBS.  It was stated that it should be a requirement that it should be jet service with restrooms.  Mr. Nagel explained that the type of aircraft would be decided during negotiations, not during the grant process.  Mr. Biltz stated that there is no money at risk until an airline would be accepted and then it would be presented to the board for approval.

 

Mr. Biltz presented the second recommendation stating that another issue discussed at the committee meeting was the fare and restriction disparity between MBS and Flint.  This outlined well in the Boyd study.  Based on this data, a proposal should be developed which identifies 20 key MBS city pairs and defines uniform “parity plus” pricing, as well as restriction parity between MBS and Flint.  This information can then be taken to Northwest in an effort to bring fare and restriction competition to the MBS market.  An air service consultant will be needed to conduct this research and prepare the proposal.  Based on the information in this fare study, and their past experience here at MBS, the committee recommends The Boyd Group for this project.

 

As a follow-up, a local travel agent should be asked to assist with this project by providing ongoing analysis of the low fare inventory being offered from MBS and Flint.  This information would illustrate deficiencies in the low fare inventory at MBS, if indeed there were any.

 

The recommendation of the committee is to authorize the airport manager to negotiate with The Boyd Group to perform the work outlined and work with a local travel agent for ongoing assistance with monitoring the fare inventory.

 

The third recommendation was presented by Mr. Elder.  It is the committee’s recommendation that the airport manager prepare a Request for Proposal for firms to engage in marketing/advertising for MBS.  The public has a perception that it is cheaper to fly out of Flint and they ask the travel agents to book them out of Flint.  Statistics show differently; often times it is not cheaper to fly out of Flint and when it is the range is $10-$30 more than MBS.  When you factor in gasoline and parking it may very well be less to fly out of MBS.  The billboard campaign, radio spots, and fare comparison on the website have addressed this.  It is a good idea to go back into the market periodically to give the current service provider the opportunity to sharpen their pencil and present any new ideas.  It also gives MBS the opportunity to see if other firms have different ideas for the future.

 

Mr. McKeag stated that he would like to see a marketing budget on paper.  Mr. Nagel stated that he brings marketing budgets to the board about twice a year and the board approves them.  Mr. Biltz stated that MBS spends less in marketing than Flint or Lansing and it shows in the perception.  MBS needs to forget what has been done in the past and ask marketing companies that do this as a profession to help rebuild the brand of this airport. 

 

Mr. Lynch asked if there is an opportunity in the context of the RFP to have the bidding firm explain the methodology for evaluating the effectiveness of the campaign.  Hopefully the firm would be able to inform the airport of which type of advertising is received the best.  Mr. Biltz stated that advertising is notoriously hard to quantify but that does not stop MBS from asking.

 

There being no further questions, Mr. Earley thanked Mr. Nagel and the committee for their thorough report and bringing it to the board prior to any commitments.  Chairman Gwizdala also thanked them and asked them to continue with the process and report back to the board. 

 

OLD BUSINESS:  Mr. Nagel stated that on the five year plan there are several projects for 2007 that MBS has not yet received grants for.  Resolutions have not been brought to the board.  Typically that is done by this time of year however Congress has not passed the appropriate legislation.  It was passed by the Senate yesterday and the House passed it earlier this year.  The President is expected to sign the legislation possibly today to fund the FAA and Department of Transportation which will then initiate the 2007 program.  AIP is estimated to be a $3.5 billion.  Mr. Nagel expects to get all the dollars for the 2007 projects.  There is also $10 million in the program for Small Community Development Grant.  This is less than last year and it will be a competitive market.  Once the docket is released MBS will apply for that grant.  Hopefully in March or April resolutions will be brought to the board for the grants.

 

Mr. Nagel stated that currently there is no federal plan for AIP funding in 2008 and beyond.  Some form of funding will be coming but some proposals have been released in the last couple of weeks.  AIP entitlement dollars may go down but the PFC cap may go up.  They are also looking at various user fees as well. It’s interesting timing with the MBS terminal project coming.  The goal of the administration and Congress is to get the funding source for 2008 in place so airports can continue to plan and go to work in 2008 and beyond for airport capital programs. 

 

Mr. Nagel stated that he does have a trip scheduled to Washington D.C. later this month to discuss funding with congressional representatives for the area concerning the terminal project.  Mr. Nagel commended the commission for their action taken in December; it opened the door for him to get back to into Washington because their decision defined the project.  It is drawing interest from the local representatives which is very good.  The press MBS received was also good.  Mr. Nagel stated he will have a report for the board once he returns.

 

Mr. Earley asked if Mr. Nagel was to a point where he could construct some type of a timeline for the terminal project.  Mr. Nagel said that he has been working with RS&H and would be able to formulate a timeline however there will be continual changes.

 

Ms. Jones-Ham asked about the user fees that were mentioned in the grant funding.  Mr. Nagel stated that it is potential future user fees such as fuel tax increases and air traffic control user fees.  There has been debate between the Air Transport Association and the general aviation groups as to how the air traffic control system will be funded.  Mr. Nagel stated that he doesn’t anticipate any new user fees to airline passengers; there already is a tax in place and a passenger facility charge, however those amounts may change to be determined at a future date.  

 

NEW BUSINESS.  Mr. Nagel updated the board that staff is preparing in house to go out to bid for a tractor and a field mower.  This is different than the mower that was included in the multi purpose tractor.  This would replace a 1994 26 foot bat wing mower that is pulled by a 1995 tractor.  This is not AIP eligible so it will be locally funded.  Both of these are in the 10 year plan for 2007 purchase. It is because of the preventative maintenance that the maintenance department does in off season that the number of years and hours were able to be obtained.  During the season mowing takes place approximately six hours a day almost every day.  It is important that the grass be mowed for wildlife control.  FAA guideline requires that the grass be kept short.  The bid will definitely be over $10,000 so the bids will come to the board for approval hopefully in March.  Mr. Nagel complimented the mechanics that work year around on the equipment.  They are currently getting all the spring equipment ready.

 

Mr. Biltz asked why the equipment isn’t run until it dies.  Mr. Nagel explained that it is at that point. $5,000 will get it operating but there is no guarantee.  Last year it had a lot of down time.

 

ADMINISTRATIVE MATTERS:  Next regular meeting is scheduled for March 15, 2007.

 

Mr. Early stated that he will be unable to attend the March meeting.

  

ADJOURNMENT:  There being no further business, Mr. Biltz made a motion to adjourn.  Mr. Earley seconded and the Board unanimously passed the motion.  The meeting adjourned at 1:40 p.m.

 

 

 

                                                                                                                                                            Hollis H. McKeag, Secretary