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Council calls special session on airport fixed-base operator

COVINGTON -- The Covington City Council will meet next week to discuss any future arrangement with Dixie Jet Services Inc., the fixed base operator at Covington Municipal Airport.

Dixie Jet President Bob Riddell addressed the City Council on Monday to discuss the company's proposed Airport Operating Agreement. He repeatedly emphasized he was eager to continue a relationship with the city "in any way we can that makes sense with the mayor, with the City Council and with (the city manager)."

Dixie Jet's relationship with the city has been in question for several months, and the issue came to a head in April when Mayor Kim Carter and City Manager Steve Horton recommended the council review early termination with the FBO.

One of the primary reasons for moving in a different direction, Carter said at the time, was to give the city more control over the future development of the airport and to maximize property taxes, sales taxes and job creation in light of existing industries in the area.

The mayor proposed that the city would take over operations at the airport, which she said would improve customer relations.

One of the sticking points for Dixie Jet in the current agreement is the early termination clause. The contract with Dixie Jet expires in 2019 and requires 90 days notice to terminate early.

According to a memo sent July 9 to Horton regarding the proposed updated Airport Operating Agreement, Riddell stated this provision not only concerns him, but he believes would likely put a damper on any future development.

Furthermore, he stated, Dixie Jet has invested a considerable amount into improvements at the airport -- approximately $1.8 million, $775,000 of which is debt the FBO is working to restructure with Wells Fargo -- and would need "at least 20 years in our initial restructured lease agreement in order for Wells Fargo to entertain the restructuring of this debt."

Riddell pointed out during Monday's council meeting that the FBO hasn't been as profitable as it could be due to ongoing airport improvement projects over the last two years that have either totally shut down or disrupted business operations there.

Riddell said if the city would remove the early termination clause, he would charge a monthly fuel flowage fee of 10 cents a gallon for each gallon of JetA and AvGas sold, with a base charge of $1,175 per month. The FBO would be required to sell $11,750 gallons to meet the monthly base charge. As fuel volume increased, as Riddell said he's confident would happen, the flowage fee would increase as well.

Riddell told council members he is optimistic about the airport's future and is excited to be a part of it.

"I would like to be in a position to help the airport grow," he said. "If it's on the outside, then so be it, but I think we can work with Mr. Horton."

Riddell said Dixie Jet would be willing to serve as simply a marketing agent with the city or continue to operate the airport.

"This deserves a work session by the council," Carter told Riddell. "I understand your desire to remove the early termination clause, but this is for the council to discuss."

The mayor said the council would have to weigh out whether the projected $1,175 -- or even double that, by Riddell's estimates -- would be beneficial to the city in light of other considerations.

Carter also reminded Riddell that the FBO owes the city more than $9,000 in stormwater fees.

"You know that whether we enter into an agreement with you or not, you still need to pay your bill," she said.

The City Council will hold a work session at noon Tuesday in Council Chambers to further discuss the Airport Operating Agreement.

Citizen Staff Reporter Crystal Tatum contributed to this article.