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New Hanover County Airport Authority April 1, 2015 Page 1 New Hanover County Airport Authority April 1, 2015 Page 1 NEW HANOVER COUNTY AIRPORT AUTHORITY REGULAR PUBLIC MEETING April 1, 2015 CALL TO ORDER The New Hanover County Airport Authority met on Wednesday, April 1, 2015, at Wilmington International Airport, 1740 Airport Boulevard, Wilmington, North Carolina. Chairman Perritt called the meeting to order at 5:02 p.m. Airport Authority members present were; John Perritt, Chairman, Jonathan Crane, Vice- Chairman; Tom Barber, Secretary; Donna Girardot, Dan Hickman, Carter Lambeth and Thomas Wolfe. Also present were Julie Wilsey, Airport Director; Gary Broughton, Operations Director; Jim Morton, Finance Director; Whitney Prease, Facilities Director; Rose Davis, Executive Assistant; and Wanda Copley, New Hanover County Attorney. Guests present included Amy McLane, Talbert & Bright, Inc.; Tracy Montross and James Bodnar, American Airlines; Chris Stephens; Yiannakis Ioannou; Hal Reichardt; Aldo Baldessari; Ryan Evans; Mike Adams; Thomas Goodwin; Butch Truelove; and Bill Cherry. APPROVAL OF MINUTES The Authority has reviewed the minutes of the Regular Public Meeting on March 4, 2015. Mr. Lambeth MOVED, SECONDED by Mr. Barber, to approve the minutes of the March 4, 2015 Regular Public Meeting as submitted. Upon vote, the MOTION WAS APPROVED UNANIMOUSLY. SPECIAL PRESENTATION Tracy Montross, Regional Director of Government Affairs of American Airlines, addressed the Authority with an update on the integration with US Airways and American Airlines. Ms. Montross reported that American has approximately 100,000 employees with 10,500 of those being at CLT (including catering, cargo and a major training center) and another 1,400 at reservation call centers in Winston-Salem and Cary. American also employs approximately 50 at nine NC commercial airports, with 35 employed at ILM. Ms. Montross stated that CLT is the second largest hub for the new American. Ms. Montross shared that the US Airways/American merger was a complimentary merger of two airlines with a very different presence across the country. Since the merger American has added 35 destinations to four new countries. American is the largest airline in the world based on daily departures and will continue to expand its presence internationally. Ms. Montross reports that American has added new aircraft and hopes to have the youngest, most modern fleet in the industry. On average 2 new planes arrive per week to the American fleet. Ms. Montross shared that of note to regional partners like ILM; American is phasing out the 50-seat regional jets and adding 90 of the new 76-seat regional jets as part of the merger. ILM should start seeing new CJR900s coming through ILM. Ms. Montross noted that during the integration so far, American has hired 7,200 full time employees; joined operations at 110 airports; launched the world’s largest codeshare – New Hanover County Airport Authority April 1, 2015 Page 2 OneWorld; taken delivery of 132 new aircrafts in 2014; integrated the cargo division; and, just recently merged the frequent flyer programs. Ms. Montross advised that on April 8, 2015, the FAA will award the Single Operating Certificate which allows American Airlines (AAL) to begin reporting to DOT as one carrier instead of two. Other milestones in the upcoming year include the single reservation system and the single website. Ms. Montross shared that American is investing in its employees, its equipment, and in airports and the customer experience while they have the capital and cash available and will continue to run the airline as though oil was $100/bbl because tomorrow it could be. American is also investing in onboard technology; new baggage handling technology and refreshing ground service equipment. Ms. Montross reported that American’s route planners are happy with the performance of the routes out of ILM. Flights out of ILM to CLT, PHL and LGA are performing very strong and American has added a second LGA RT starting in April. Ms. Montross stated the DCA-ILM service will be operated one time/week during the summer and the route planners are optimistic about the performance of that flight. Ms. Montross reported on the uniqueness of the CLT hub: the city of Charlotte/Mecklenburg County MSA has the lowest population of any hub city in the country, next to Salt Lake; Charlotte has the lowest per capita wealth of any hub city in the country, next to Salt Lake; Charlotte has the lowest concentration of originating local passengers of any hub in the country. Eighty% of people that go through CLT never leave the airport. Those 80% of connecting passengers generated the majority of $30M in sales tax revenue to the state and local governments in 2014 from concessions, retail, and liquor sales. Since 2005, American has seen exponential growth in enplanements out of CLT. Ms. Montross reported it is believed that what helped CLT maintain its competitiveness among other hubs is its low cost operations; and the fact that since 2005, there has been a cap on the amount of sales tax that airlines pay on fuel. Ms. Montross stated that USAirways/American flies 83% of all passengers to and from NC and that they are the primary carrier in North Carolina from a commercial air service. In New Bern and Greenville, they are the only carrier and the largest purchaser of fuel. Ninety-six% of all fuel purchased in NC is purchased in Charlotte and Raleigh and because of the cap that has been in place, it has allowed the airlines to invest in air service, employees and training facility assets in the CLT hub because it has been financially competitive compared to other hubs across the country. Ms. Montross explained that the cap is expiring January 1, 2016 and if the cap expires and nothing is done, NC will go from being the 20th most expensive state to buy jet fuel to the 5th state and that will be pretty traumatic for hub operations in CLT. Ms. Montross reported this sales tax cap is American Airlines number one legislative priority in NC. Ms. Montross shared that third party validators, like the Tax Foundation and Council on State Taxation and Americans for Tax Reform, support the notion that jet fuel is a business input and part of the vision of tax reform in 2013 by the NC General Assembly was to exempt business inputs from tax treatment. It was part of the goal of tax reform to exempt business inputs and New Hanover County Airport Authority April 1, 2015 Page 3 because there are validators that jet fuel is a business input, American’s case to the legislators is to exempt jet fuel all together as a result of tax reform and to insure that CLT and air service across the state remain competitive. It is important to note that railroads don’t pay sales tax on diesel because diesel is a business input for them; cruise ships, ferries, and maritime businesses don’t pay sales tax on the fuel they use either. The House last month passed HB 117 which extends the $2.5 M cap for 4 years, until 2020, to bring stability to our decision making and Senator Rabon, introduced SB 187 which would exempt jet fuel all together, so we have two legislative options, right now, under consideration. Ms. Montross asked the Authority to be an advocate for commercial aviation; to help them on this issue in Raleigh and to help make the case that air service in Wilmington is dependent on an issue like this being addressed in Raleigh. Air service decisions are made based on where fuel prices are most competitive. Air service decisions in NC will be impacted if the sales tax on fuel changes in this state. American’s hope is that the Authority will reach out to its elected officials locally and American is sharing this same presentation with community groups across the state because this is not a Charlotte/Mecklenburg County issue; this is not about dehubbing; this is about the competitiveness of air service in the state and the message that the state wants to send to commercial airlines that NC is open for business. Ms. Montross, responding to Mr. Barber’s question, stated that the rebanking of the DFW hub started March 30th and the Chicago rebanking should happen the week of April 6th. Mr. Barber stated that ILM has an abiding interest in trying to get Chicago back. Ms. Montross responded that everyone in route planning is well aware of the ask from ILM regarding Chicago service and commented that ILM has done a great job with focus groups and local company representation but stated that ILM needs to demonstrate that it has the market to fill that flight and that the Chicago market has to do the same. Ms. Montross said she is happy to be an advocate for ILM in DFW too. Ms. Montross commented that it was a good sign that DCA was added back. Chairman Perritt thanked Ms. Montross for her time and presentation. PUBLIC COMMENTS None. SPECIAL EVENTS Mr. Broughton reminded the Authority that the Circus will be onsite as part of the Azalea Festival starting April 9 – April 12. Mr. Broughton updated the Authority on the next Autism Takes Flight which is scheduled for April 11th, 2015. Currently there are 24 families signed up with about 24-26 children. FINANCE REPORT Mr. Morton reported to the Authority on the closing on 2503 and 2507 Old Wrightsboro Road indicating that one of the lots had a mobile home on it with a tenant. Mr. Morton recommended a month to month lease for $500 a month with the current tenant to provide her transition time to relocate. After some discussion, Mr. Lambeth MOVED, SECONDED by Mr.
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