Winter Blues
“Winter is not a season, it’s an occupation, Sinclair Lewis” is a thought that surely resonates with many of us this year as we work on thawing from the deep freeze of the “Great Recession of 2008 – 2009”.

General aviation has experienced its share of economic pain with sharp declines in new aircraft production and ever-tightening budgets. But, as we’ve seen with the recession of 1981 and post 9-11, GA will rebound as the general economy recovers, with many opportunities to engage even more of the flying public. Certainly, commercial aviation has not become more user friendly in these turbulent times.

So the work of this winter is to become more efficient, complete unfinished projects and look for alternate sources of financing and revenue, in short, to be in a better competitive position when the action returns. As you might expect, we have several suggestions when it comes to new and existing hangars, which we cover in this issue.

Get creative with financing options to answer the demand for new hangars. One such option is discussed below. Expand revenue sources from existing hangars. Refer to a few ideas we have below.

Maintain and inspect your existing hangars. Whether you do it yourself with our checklist on page four or use our experienced field personnel, keep your investment in safe and efficient operating condition.

One goal all of us in general aviation can work on immediately is securing Senate passage of HR 915, the FAA Reauthorization Act of 2009, or to include it’s key funding related provisions in the current jobs bill under consideration. Impress upon your Senators that the Airport Improvement Program budget, tax relief for airport bond financing and an increase in Passenger Facility Charges are critical to the aviation community in keeping and creating well-paying jobs.

Creative Hangar Financing
All too often strong demand exists for new hangars with no viable financing options available. Public budgets are already bleeding red ink. Private sources are limited due to complications of private development on public land and severely restricted bank credit. As a result, years go by without new hangars.

Assuming airport ownership will not agree to land lease terms for a private developer to build new hangars, they may accept a plan to construct and own hangars using private funding from individual aircraft owners. The aircraft owners would receive long-term prepaid leases for their hangar unit(s), while the airport retains ownership of the hangar preserving the property tax exemption.

Because individual tenants fund the project, public financing is not needed, although the airport would be responsible for maintenance and operation of the hangars throughout the lease term. If the site needs major preparation before hangars can be built (earth moving, taxilane construction, long utility runs), the airport may be able to fund this work with federal, state or local grants.

Aircraft owners will need a prepaid lease term long enough to fully amortize their up-front investment. Establishing a prevailing rental rate is necessary to determine break even points; but generally assume a 10 year prepaid lease term in high rental areas up to as long as 25 year lease terms in lower rental markets. Once the prepaid lease period ends, the tenant can execute a standard annual lease contract with the airport to retain their hangar unit(s).

For example, let’s estimate the construction cost of a new 10 unit hangar project (less any portion funded by grants) to be $250,000. Each tenant’s contribution and present value of their lease contract would be $25,000. Amortized over 25 years at 5%, this would cost each tenant $146 per month… a bargain rental rate in any market!

Adding an additional $30. per month for the airport to provide property insurance, utilities and maintenance on the building still results in below market rents. We have sample prepaid hangar lease agreements and cash flow analysis that incorporate these provisions to share with you.

The demand for hangars continues to increase as population centers shift and security concerns for general aviation rise. Public and private concerns must work together in these troubled economic times to make hangars a reality. Please contact us for additional ideas, information and assistance, at no obligation.

Expand, Improve & Maintain
We’ve all heard that the majority of new business is generated from existing customers. That’s especially true in general aviation with fewer new aircraft being produced each year. Generating additional revenues generally requires enticing existing aircraft owners and hangar tenants to relocate to your field, meaning your current customers become your best marketing people.

One way to maintain happy customers that refer their flying associates to your airport, is to keep an eye on their hangars. There are several ways to do this without busting already thin budgets. Relatively small investments made to expand, improve and maintain your existing hangars now, during tough economic times, will be appreciated by your customers and word will spread.

You can easily expand your existing Fulfab T-Hangars. Because our buildings are assembled entirely with bolted connections, intermediate units can be added quickly and efficiently. Two additional units of our Model LK42 hangar would require an extension of the existing foundation of only forty two feet. Because utilities and taxilanes are already in place, this is the most cost-efficient means to building new hangar space.

Improvements can be made to improve your existing hangars, as well. Is condensation a sore spot with your tenants? If so, ridge vents can be easily installed in place of the existing ridge cap which will make the problem evaporate overnight. Are utility bills out of control? Install one or two translucent panels in place of the door panels to allow natural light to enter and to discover when lights are left on.

Those end or half units at the corners of our T-Hangars are also potential revenue producing areas. Special partition arrangements, removal of columns to create clear-spans, personnel doors and windows, overhead garage doors and bifold doors are all options available to convert these areas into separate leasable space, or for adjacent hangar tenants to customize to their specifications.

Finally, maintaining your hangars in a safe and efficient operating condition will also maintain your existing customer base. A brief semi-annual inspection of each hangar will alert you to any minor problems and unsafe conditions and keep you “in the loop” with your tenants. Our experienced field crews can provide these services at a nominal fee, or have your staff perform the inspections using the checklist below.

Bifold Door Maintenance Guide & Checklist

We recommend that you inspect and lubricate your Fulfab T-Hangars and bi-fold doors at regular six month intervals. Reproduced above is our maintenance checklist with procedures that should be performed on each bifold door.

Each procedure referenced on the checklist is described and pictured in our ”Bifold Door Maintenance Manual.” We can provide copies of these manuals to you free of charge.

Any worn or damaged parts should be reported and replacement parts secured before the doors are used further. Fulfab maintains a complete stock of retrofit and replacement parts.

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