From Aspen Times Opinion September 19, 2024 by Jack Cohen, Aspen Resident
To understand how Aspen Fly Right and Amory Lovins are not just wrong but trying to lead us down a potentially disastrous path, we can look at their claim that Pitkin County could “self-finance” the airport and modernize without FAA money. This narrative originally started as the following idea: “We can run the FBO (the fixed-base operator used by private planes) and use that revenue to run the whole airport without FAA money.”
Could this be true?
Well, we have a perfect comparison with another mountain town: Jackson Hole. Amory frequently uses Jackson Hole as his prototype for what Aspen should do. What does the comparison actually tell us?
Jackson Hole has more enplanements than Aspen and runs its own airport. (Amory neglected to tell everyone that Jackson Hole has an FAA-approved airport layout plan, and that it receives and accepts FAA and federal funds — both of which he says Pitkin County doesn’t need, but put those highly relevant facts aside for the sake of entertaining his arguments.) Running the FBO on its own, Jackson Hole nets $5-6 million annually in FBO profit. But the town has all the risks of the operation, plus the significant burden of actually running an airport.
By contrast, under the agreement that Pitkin County has expertly negotiated with Atlantic Aviation (see the Aspen Daily News article from Sept. 11), we would make a minimum of $19 million annually. This amount would increase each year and could conceivably double to more than $38 million per annum over the 30-year life of the lease. In short, if Aspen took over the FBO, using Jackson Hole as a comparable, we would have significantly less revenue, more risk, and much more hassle (finding employees, housing them, etc.). It turns out the Pitkin County is pretty competent at cost-benefit analysis and pretty competent at negotiating on our behalf.
At some point, Amory and his team recognized the folly of the county running the FBO and pivoted to, essentially, “OK, OK — Atlantic Aviation should run the FBO. But we can use the revenue they send us as a borrowing base to fund giant debts for all of the airport improvements. So this still means we can forgo FAA funding.”
But that’s just the next instance of make-believe.
This is because Atlantic insists that the county cooperate with the FAA. Just like the FAA, Atlantic wants the safest possible airfield. Accordingly, the Atlantic agreement calls for very substantial reductions in its annual payments to the county for any failure to comply with FAA rules regarding the distance between runway and taxiway.
There goes Amory’s projected revenue to self-fund the airport.
As if our recent property tax increases weren’t painful enough, how would we like a side helping of Amory’s giant airport debt to go with it? It turns out that Atlantic Aviation prefers to do business with an airport that respects the FAA.
Who could have guessed?
This is the biggest but not the only financial roadblock. Pitkin County needs more than $400 million for repair and reconstruction to bring the airport into the 21st century. (Remember: The last meaningful upgrade to the terminal and runway construction was 40 years ago.) This includes $120 million for the runway’s reconstruction (an extremely conservative estimate), a minimum of $150 million for a new commercial air terminal with an attached ground transportation hub, another $100 million for a replacement FBO terminal and its related airfield improvements — plus tens of millions in other air and landside improvements.
Unbeknownst to Mr. Lovins, the county’s Airport Fund has its own debt capacity limitation that is very far below the dollar amounts just mentioned. Simply put, the Airport Fund cannot take on the amount of debt required to fund his plan.
Meanwhile, any bonds the county issues for such airport improvements would be a specific type of bond, called AMT bonds, that carry interest rates of 7% — far above Mr. Lovins’s suggested rate of only 4%. That’s a lot of financial mumbo jumbo, but the simple meaning is that if we owe roughly double the interest rate, we halve the amount of debt we can take on. (According to the ADN article, the bond amounts would max out in the $80 million to $100 million range.) That’s not nearly enough to fund all of the improvements required.
Remember Enron? They were called the “Smartest Guys in the Room.” This Aspen Fly Right plan looks similar: The smart guys promise magical finance, with lots of promises of how easy it all is. They dance around from argument to argument. Ultimately, the magical finance hits reality. The ordinary people — the teachers and firefighters who own Enron stock through their 401Ks and mutual funds — are left holding the bag. It’s just the same here, only it’s our community — Pitkin County’s teachers and firefighters — who will be left holding the bag to pay for Amory’s debt.
Sometimes, the simplest answer is the best one. All of us paid our taxes to the federal government. We could simply accept our money back to fund our public infrastructure, just like every other community in Colorado that has an airport.
Along the way, maybe we will realize that the FAA is not our enemy. They have a much better track record when it comes to aviation safety and airport layouts than Amory does.
