‘Gas wars’ fuel airports’ business
Lower gas prices for twin-engine planes help folks such as Howard MClure in Broomfield. He says competition between airports for gas customers has helped Western Air Flight Academy Inc. maneuver into the black. McClure is president of the flight school located at Rocky Mountain Metropolitan Airport in Broomfield.
Self-serve fuel for the training airplanes that Western uses cost $5.45 per gallon on Feb. 25. The smallest planes at Western use about seven gallons of gas per hour, McClure said. The school’s profit margins are so thin that McClure believes he’ll make a small profit this year from factoring in the lower gas prices after losing money last year.
“It’s been a very big boon to us,” McClure said. “When the prices vary, we kind of eat it. We’ve seen a little higher profit recently.”
Denver AirCenter owns the new self-serve fuel tanks. The private flight school company dropped its prices by as much as $1 per gallon after installing the tanks last summer. Airport officials kicked in $30,000 — or about half the total cost — to help buy the tanks, said Kenny Maenpa, airport manager.
Workers at Denver AirCenter check regularly with other airports in the region to try to make sure they have the lowest prices, said Lee Williams, a spokeswoman.
The competitive strategy seems to be working, Williams said. General aviation traffic to the airport is up, as are visits to two restaurants there, she said. While exact air traffic figures are not available for the last six months, more pilots seem to be making a stop in Broomfield these days to spend the day or the weekend, or to sightsee and have breakfast, Williams said.
Some pilots like to joke that they’re willing to spend $100 on gas to fly to a nearby airport and have breakfast on a weekend day, for example, Williams said.
“We’re not like Santa Fe, but we’ve definitely seen an increase in tourism,” Williams said.
Before the self-serve pumps went in at Rocky Mountain Metropolitan Airport, high fuel prices hurt profits for flight schools such as Journeys Aviation Inc., said Tracey Spence, current owner of Journeys. In response, Journeys moved its flight operation to Boulder Municipal Airport, where Spence bid for and won the airport fuel sale contract.
Spence said the recent gas price competition with Rocky Mountain has kept him on his toes. He said he tries to stay “on the low end” of per-gallon fuel prices in the region.
“Fortunately, we’re able to stay pretty close to what they’re at in price,” Spence said. “We’re right in line with those two airports (Rocky Mountain and Vance Brand Municipal Airport in Longmont), and we’re located smack dab in the middle.”
Lower gas prices can hurt the competitors, however.
Fuel sales are down about 25 percent from the same period last year at Air West Flight Center Inc. in Longmont, the fuel station operator at Vance Brand, said Larry Kuebrich, owner of Air West. Both DenverAir and Platte Valley Airpark in Fort Lupton appear to be selling fuel “for cost” Kuebrich said.
To make up for it, flight school business is up 20 percent from the same period last year, Kuebrich said. He attributes his healthy business to a regional economy that seems to be generally recession-proof.
“Right now, it’s a mixed bag of student pilots and aircraft rental,” Kuebrich said of his recent business growth, without giving specific figures.
At Rocky Mountain, offering self-serve gas at a cheaper price than before also seems to positively affect jet-fuel sales revenue, Maenpa said without giving specifics. Self-serve gas sales for non-jet airplanes makes up probably one-tenth of the total volume of fuel sold at the airport, he said. But it’s nice to see 700 or 800 gallons of self-serve gas sold to pilots on some sunny weekend days, he added. Most airplanes that use the gas have 100-gallon tanks.
“We’re pleased to see that and people coming to our airport to buy gas for a change, rather than the other way around,” Maenpa said.
Tim Barth, airport manager at Vance Brand, said the airport had its two best gas-sales revenue years in recent years when prices at Rocky Mountain Metropolitan Airport were much higher. He applauded the recent “healthy competition.”
“All of the airports play this game. When it goes up, there’s nothing we can do to recapture that market unless we seriously undercut JeffCo (Rocky Mountain Airport),” Barth said. “We would have to give it away for what we’re buying it for, so the gas wars will continue.”
All Colorado airports, including the biggest one — Denver International Airport — and other commercial and general-aviation airports, generate close to $1.7 billion in net tax benefits per year, according to a study done by the Colorado Department of Transportation in 2008, the most recent period for which information is available.
More than half of the tax revenue comes from visitors who arrive by air and pay lodging taxes, sales tax on purchases and rental car taxes, according to the study. Airport tenants — including flight schools — are the next biggest contributors to tax revenue through fuel sales and other commerce. Jobs are the third biggest generator of airport tax revenue in the state, generating an estimated $382 million in state and federal income tax, according to the study.
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