COVINGTON -- The city of Covington will enter into mediation with Dixie Jet Services, the fixed base operator of Covington Municipal Airport.
The City Council voted in September to terminate its contract with Dixie Jet. Ninety days notice is required for early termination, meaning the city is scheduled to take over operations in mid-December. City Attorney Ed Crudup said Dixie Jet is threatening litigation and Dixie Jet attorney John Strauss has requested the parties work out a solution through a professional mediator.
"There has not been any litigation filed and I don't know the nature of their claim, but their attorney thinks there is a claim and we have agreed to meet with a mediator," Crudup said.
The meeting will take place Monday between Crudup, City Manager Steve Horton, Dixie Jet's attorney and the mediator.
"Any decision that is reached would have to be approved by the City Council," Crudup said. "Typically it's required that whoever comes to mediation has the authority to make the decision, but we'll either have to get them to grant an exception or we don't mediate."
Crudup told the council Monday night that he assumes the FBO owner is looking to protect his investment. Dixie Jet President and owner Bob Riddell has previously said that he owes more than $1 million for improvements he has made at the airport.
Airport Engineer Vincent Passariello said the city will need to hire an operations manager and two part-time ground technicians, along with a mechanic who would work on an on-call basis. The employees will work on a contract basis and will not be city employees. That's because city officials are anticipating the city's running of operations to be temporary, until an airport authority takes over. Legislation forming the airport authority has been approved but a governing board has yet to be formed.
Horton said the city was denied permission from Riddell to approach current employees about remaining in their positions, but "If they approach the city, we'll talk to them."
Passariello has also requested $20,000 to purchase various supplies and equipment, but that amount could be reduced depending on whether the FBO sells those items to the city, he said. The city is also increasing its liability insurance to $2 million per occurrence, which would cost $7,500 per year.
Passariello said the total cost to the city to take over airport operations is difficult to estimate.
"It's hard to say. We will be receiving revenue that we currently don't get, such as landing fees, gas and rental (fees). Yeah, it's going to cost us something, but we're going to get more than it's going to cost us," Passariello said.
The contract with Dixie Jet expires in 2019. To terminate early, the city must pay 10 percent of the outstanding contract amount, which in this case is $367,389.33. The balance is due at the end of the 90-day period.
The council's vote to terminate came on the heels of a recent fuel shortage at the airport. City officials were notified that one of the airport's customers, Standridge Color Corporation of Social Circle, had been unable to get JetA fuel at Covington Municipal Airport and had to fly to another airport to fuel up. Fuel was delivered the following afternoon. There have been ongoing complaints regarding the service of the FBO, according to city officials.