What Does AvCraft Sale Bring to Horry County?

January 25, 2015 9:00 AMViews: 1190

By Paul Gable

The recent request by AvCraft Technical Services to Horry County Council for further considerations by the county to help facilitate the sale of AvCraft appears extremely flawed.

According to several industry and county sources, Sun Air Scandinavia is considering the purchase of AvCraft.

According to sources familiar with the AvCraft request, Horry County is being asked to spend a significant amount of money making significant upgrades to some of the hangar space AvCraft now occupies at Myrtle Beach International Airport.

In addition, AvCraft is requesting the Horry County Department of Airports to extend its current below market rental rates of those hangars. Currently some of those rental rates are as low as 50 cents per square foot since 2010.

According to county government sources, AvCraft is again behind in its rent, even at the low rates it is being charged, and is requesting the county to forgive its current rent arrearage.

This is approximately the same deal that AvCraft and the Myrtle Beach Regional Economic Development Corporation brought to Horry County Council for approval in 2011. This time, however, AvCraft isn’t promising to create any new jobs and the money being requested from Horry County isn’t in the form of economic development incentives, but, rather, a straight cash expenditure.

In fact, according to several reliable sources, AvCraft has recently laid off employees and only has approximately 40 on the payroll at this time.

What is the benefit to Horry County of agreeing to these new AvCraft requests?

Several council members are trying to justify approval on the basis of saving the jobs of the few AvCraft personnel still employed and continuing to draw some rent on the hangars, minimal and sporadic as it may be.

But, these are wrongheaded justifications.

A constant refrain from AvCraft, over its 11 years at the airport, has been – reduced rent, reduced rent, reduced rent.

Horry County Department of Airports, being recipient of multi-millions of dollars in federal grants, is required, by FAA grant assurances it must agree to each time it receives a grant, to charge fair market value rates on airport property and facility rentals.

According to two sources familiar with airport facility rentals along the east coast, fair market rental value on the AvCraft hangars is approximately $2.50 per square foot.

If the county is even considering significant capital upgrades to some of the AvCraft hangars, why shouldn’t it at least attempt to solicit other vendors who may be interested rather than settling for rental income at approximately 20% of fair market value?

A major portion of the fleet of Sun Air Scandinavia is the Dornier 328 turboprop and jet configurations. But, with three Sun Air Scandinavia maintenance, repair and overhaul facilities already operating in its native Denmark, it is difficult to see Sun Air Scandinavia having its airplanes make Transatlantic flights just to use AvCraft facilities.

If the Dornier 328, the airplane for which AvCraft was first established, is to be the major money maker for the company, the AvCraft facility is questionable.

According to industry sources, there are 20 Dornier 328’s registered in the USA. However, 17 of those are owned by the U.S. Military Special Operations Command, an agency which would not be using AvCraft for many security reasons.

Myrtle Beach International Airport has the 16th longest runway in North America and is certified to handle all types of airplanes flying at the current time. The airport is centrally located on the East Coast and the hangar space occupied by AvCraft is significant.

According to sources, federal government agencies, including the departments of Defense, State, Homeland Security, Agriculture and Justice, have been issuing contracts over the last few years to private contractors for aircraft refurbishment, operation and logistical support.

Shouldn’t the county at least explore the possibility of renting these hangars to this type of contractor?

Wouldn’t attracting these types of contractors bring some possibility of actually drawing a tenant or two to the International Technology and Aerospace Park at the airport rather than the empty grass that now inhabits it?

What does significant county capital expense, reduced rent and a sale of AvCraft bring to the table for the citizens of Horry County?

And is there a better alternative?

These are some of the questions Horry County Council should be considering!

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