Oneida County wants to take possession of the hangar at the county airfield that was under lease to Midair USA before it filed for bankruptcy protection last month. . .So at this point, Oneida County taxpayers likely have lost at least $600,000 in the County's dealings with MidAir.
On Sept. 9, Midair filed for Chapter 7 bankruptcy protection, meaning it is likely to liquidate all assets in order to repay secured creditors. The company said it had assets of between $1 million and $10 million, as well as debts between $1 million and $10 million.
It is unclear where Oneida County stands when it comes to recovering even some of the money it is owed by Midair. . .
At the time of the bankruptcy filing, the old debt [to Oneida County] had been reduced to about $587,000. An additional $43,200 was owed for unpaid rent since the new lease was approved and before the bankruptcy filing.
Being in business is always risky, requiring expertise to minimize risk, and sufficient return to not only cover expenses and balance out losses when they occur, but to make being in business profitable in the long run. Here, MidAir lost out and will go out of business. When its major client, Russian airline Transaero ran into trouble, Transaero's troubles caused Mid-Air's troubles.
Mid-Air and Transaero are not the only businesses in this story. Oneida County, by virtue of being a landlord, has gone into business as well. And in a domino-like effect Transaero's troubles which caused Mid-Air's troubles now cause trouble for Oneida County -- with the County's loss ultimately falling on the taxpayers.
-> Why should Oneida County taxpayers be exposed to risks originating in Russia?
-> Why should Oneida County taxpayers be exposed to business risks in general?
-> Why should Oneida County even be in business?
Certain things are best done by government, others best done by private business, and yet others where it may not be clear who can best do a particular task -- with trial-and-error being the determiner.
If they are not fatal (as in the case of MidAir) set-backs can be a learning experience for the business owner. Sometimes the experience leads an owner to decide it is better to not be in business.
Oneida County may be at that point. Should the County continue in the leasing business, exposing its taxpayers to business risks, or, instead, should it sell its assets and transfer the risks to the private sector?
Perhaps a larger question, given the steep drop in use of the County Airport since its move to the former Griffiss AFB from the more appropriately-sized Whitestown facility, is whether the County should continue in the airport business at all?
The County needs to decide whether the risks to the taxpayers of being in business outweigh the potential benefits.
7 comments:
Picente was warned in 2010 against allowing Midair to expand at Griffiss. Midair's business model was weak, competition in the industry was significant, and Midair's only customer, Transaero, was beginning to transition from renovating used aircraft to buying new aircraft. The warning signs were clear. Yet, Picente proceeded against professional advice to let Midair lease more hangar space than it could afford. As usual, Picente's motivation was entirely political. He simply wanted the public perception of progress at Griffiss. Picente is actually a bigger failure than Midair.
The other culprit in this financial fiasco is Steve DiMeo and EDGE. They supported Midair's ill-advised expansion because Midair did not compete against Premier Aviation, and Midair, by occupying the additional hangar space, precluded the possibility of competition by a new tenant. The airport business model at Griffiss, entirely managed by EDGE, has been to protect the 394 Hangar Road Corp/DiMeo's tenants from any on-site competition. EDGE's airport marketing has always been to aid the 394HRC tenant and prevent competition.
For the Griffiss airport to possibly succeed will require its management under a professional airport authority that is independent of Picente, DiMeo, EDGE, and the GLDC. The airport continues to be a failure because it is managed as a political enterprise, not a business enterprise.
I do not like the idea of an "authority" because experiences with "authorities" in NYS usually means publicly owned facilities beyond the control of the taxpayers.
That said, airport management should be independent of the CE, EDGE, and the rest, because of the potential to protect private interests at the expense of the taxpayers -- as pointed out in the first comment above.
Perhaps a long term contract with an experienced professional airport operator would work --- but on second thought, the taxpayers were led to believe they had professional management with the FBO -- with the terms of the contract determined by the "insiders" who did not know what they were doing.
The taxpayers must choose their "poison" through their representatives -- and choose those representatives who are up to the task.
The airport cannot possibly "succeed". There are three international airports with 2 hours of Griffiss all existing within much larger markets. And, how many airport maintenance companies will we subsidize before we realize we are throwing our money away? All the county and EDGE do is gamble with taxpayer dollars. And, they ultimately lose. The entire Griffiss effort is a big taxpayer funded failure that was ill conceived in the first place. But, many political favorites have sure made a lot of money off of it.
The airport fiasco is but one example of the kind of government you get under one party rule. There is no two party system here; there is only the ins and the outs and the ins feed off the money of the outs. Watch the over hyped Nano Utica and we will get yet another lesson.
If the airport was professionally managed, operated and marketed, I believe it could "succeed" as a General Aviation airport, not a commercial, air-carrier airport. However, the County, Million Air, and EDGE are running the airport for their special interests.
By the way, the process to lease the East Bay hangar to Midair in 2012 was fraudulent. The outcome was predetermined before the bid announcement was made. No matter who might have bid, Midair had been promised the lease.
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