County readies Paine for commercial flights – again

By Brian Soergel | Jun 03, 2015
Photo by: Brian Soergel Snohomish County residents' transportation options could expand with the addition of commercial flights at Paine Field.

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After one failed and another stalled attempt to launch commercial air service at two regional airports in Georgia, Propeller Investments CEO Brett Smith is now counting on the West Coast and Paine Field.

Smith might find success this time. On March 2, the Snohomish County Council, comprised of five elected officials, voted 3-2 to allow Propeller to build a terminal for passenger field service at Paine Field.

With an option to lease, the company will have three years to conduct planning and finish an environmental assessment. It will pay the county $3,575 per month, or one-tenth of the lease agreement.

The lease is for 30 years, with two optional 10-year extensions.

The first year’s rent on the lease is $447,891, with annual rental increases based on the terms in the agreement. Estimated rent payments total more than $25 million over the term of the agreement. In addition, the county will share terminal revenues.

“The County Council vote regarding Paine Field was very difficult,” said County Councilmember and Mill Creek resident Terry Ryan, who was the swing vote. “The vote itself was for an option on a ground lease to a company that would try to attract a carrier to fly out of Paine Field.

“If they are successful in attracting a carrier, they could exercise the option and build a terminal with two gates.”

Then again, even with the county’s approval, Smith might find that success is not worth the effort. If Propeller’s two previous forays into commercial service are any indication, you might want to shelve your plans for that flight from Paine to Las Vegas – at least for the near future.

Paine Field’s other, official moniker – Snohomish County Airport – tells you what you need to know about one player in the push for commercial service. Snohomish County runs the airport.

The other player, Propeller Investments, a developer of passenger terminals and airport support facilities founded in 2008 (Propeller Airports is a subsidiary) is a private equity firm investing in aerospace and transportation opportunities.

Propeller’s previous attempts

Some background is necessary.

Propeller Investments’ first attempt to offer commercialized service to compete with Atlanta’s Hartsfield-Jackson International Airport began with high hopes, but ended badly.

That attempt was for the general aviation Gwinnett County Airport – Briscoe Field, also owned by the county it serves. In 2009, the airport opened bids for privatization, and Propeller, as one of three finalists, offered $110 million in capital investment to build 10 passenger gates and a runway large enough for commercial airlines.

Propeller also offered a revenue-sharing agreement, similar to Paine Field. In June 2012, however, the Gwinnett County Board of Commissioners withdrew from the privatization process amid scandal.

One of its members, Shirley Lasseter, was convicted and sentenced to federal prison for accepting a bribe to vote favorably on zoning for a pawn shop. During trial, U.S. Attorney Sally Yates disclosed that Lasseter had also considered selling her vote for a favorable result on Propeller’s offer on the airport.

Smith told local media that he’d been approached about a bribe, but of course turned it down.

Shortly after that privatization attempt fizzled, Smith received another offer, this time to lease and offer commercial service at Paulding County/Atlanta Regional Airport in Dallas, Ga., which was built in 2008. That attempt fared better, as Propeller and Paulding County entered into a contract agreement in October 2013 and renamed the airport Silver Comet Field at Paulding NW Atlanta.

However, there have not yet been any commercial flights from the airport. As in Snohomish County, strong local groups banded together to oppose commercial flights, and Delta, a powerful player in Atlanta, has hired well-funded groups to attempt to block Propeller’s efforts, Smith said.

Then, this January, Paulding county commissioners, with two new members against commercialization, voted 3-2 on a resolution to take back their support of the new airport. As of now, there are no new developments on the airport, either yes or no.

‘A need’ at Paine Field

So then there’s Paine Field.

“If there wasn’t a need, we wouldn’t have done it,” Smith said. “Absolutely. Paine Field is one of a number of airports on our list. We’ve looked at studies, and conducted our own. Some people in the community reached out to us. It’s been validated that there’s a need in the marketplace.

“There’s also a tremendous amount of interest from a number of airlines. That’s always a litmus test, when you have customers who want to use it.”

Today, Paine Field is of course home to the Boeing manufacturing plant for 747, 767, 777 and 787 planes. It also houses Aviation Technical Services – which inspects and repairs commercial and government airplanes.

Tourist activities are centered on the Future of Flight Aviation and Boeing Tour, the Flying Heritage Collection and the Historic Flight Foundation.

Paine Field also has a multitude of hangers and several flight schools. More than 300 general aviation aircraft activities (including takeoffs and landings) occur on its three runways every day.

Paine Field Director Arif Ghouse said that he’s been careful when discussing Boeing’s position on commercial aircraft at the airport, but said Boeing has made statements that it’s not opposed, and that commercial flights would not impact its operations. At the same time, Boeing has not officially commented on Propeller’s proposal.

Although Snohomish County Commissioners adopted a resolution in 1979 stating that light aircraft be Paine Field’s primary users, a change in attitude surfaced in 2002, with the county suffering Boeing layoffs after a downturn in air travel in part due to the lingering effects of the Sept. 11 attacks.

County Council Chairman Gary Nelson and County Executive Bob Drewell co-chaired a task force on an economic stimulus plan. It recognized the importance of public and private partnerships and mentioned the possible development of an aircraft terminal, with the plan to retain a regional air carrier.

That never happened, although there have been some high-profile attempts from carriers, most notably Allegiant Air and Alaska Airlines.

Now the County Council, which had previously voted down attempts at Paine Field commercialization, has finally relented on the issue.

For and against commercialization

Councilmembers Ryan, Ken Klein and Dave Somers voted yes, while councilmembers Stephanie Wright and Brian Sullivan – a former mayor of Mukilteo – voted no.

Snohomish County Executive John Lovick, who lives in Mill Creek, is also on record as supporting commercial air service at Paine Field.

Ryan and U.S. Rep. Rick Larsen (D-Everett) both point to an FAA regulation that requires the county to make reasonable accommodations for passenger service.

“Paine Field plays an important role for the Pacific Northwest economy,” Larsen said. “It serves as a critical asset for our world class aerospace industry.

“I have long supported federal investment into Paine Field for maintenance, construction and safety projects. These tens of millions of dollars over many decades have allowed aerospace manufacturing to grow in Snohomish County.

“These federal investments come with the requirement that the airport be open to commercial service if an airline company asks to bring it there.

“The FAA maintains our national aviation infrastructure, and in return airports must be available for any plane that can safely use them, including for commercial flights.

“Denying commercial service could cut off future federal investments to Paine Field, which would jeopardize the health of our local economy and our aerospace industry.”

Ryan said that, through the years, Paine Field has received more than $100 million in FAA funding for infrastructure and other improvements. In addition, he said that Paine Field has more than $36 million in needed capital projects between 2015 and 2021.

“The FAA requires that Snohomish County negotiate in good faith, or future FAA funding would be at risk,” Ryan said. “Snohomish County has no other income stream to cover the needed capital improvements at Paine Field.

“I could not jeopardize future federal funding for Paine Field, and that led me to my vote.”

In addition, Ryan said his vote had economic development in mind.

“Commercial air service helps to grow existing business and helps in recruiting new companies to Snohomish County,” he said. “Economic development creates jobs.”

Save Our Communities

Mike Moore is president of Save Our Communities, a nonprofit group advocating for general aviation and aerospace manufacturing while opposing commercial service at Paine Field.

He said he understands the FAA requirement, but believes Ryan is missing the point. “He is using that to justify his position,” he said.

Moore, who lives in Mukilteo’s Harbour Pointe, argues that the county should have conducted stronger due diligence before entering into a lease, but even more so when that lease is potentially for 50 years.

He said he’s also concerned about Propeller’s financial backing, which the company hasn’t officially disclosed.

Moore’s group isn’t the only one fighting commercialization at Paine Field – located in unincorporated Snohomish County abutting Everett and Mukilteo. Several Snohomish County cities (but not Everett) have waged a decades-long fight against commercialization, which was – ironically – conceived as a commercial airport before World War II changed everything.

The most vocal critic is Mukilteo, which in recent years has passed three resolutions opposing commercial flights. Mayor Jennifer Gregerson leads the charge.

“We don’t think it’s the right use for Paine Field, and it’s not right for the community,” she said. “The best use for Paine Field is for family wage jobs provided through the aerospace industry.

“And Boeing has pointed to a lot of reasons why they’ve looked at other areas (to relocate).

“They’ll be sharing the same runway, and scheduled commercial traffic takes precedence over test flights. I would hate to having their test flights restricted as an excuse for why they might shift more jobs out of the area.”

Edmonds is also against commercialization.

“The City Council’s view on past resolutions has not changed,” Mayor Dave Earling said. “We are joined with Mukilteo and their concerns, principally around noise and decreasing property values.”

More flights to come?

One of the arguments against commercial flights – in addition to increased noise – is that, if Propeller succeeds in getting a terminal built, the number of daily flights could increase over time.

“Once you change the designation of the airport and allow commercial flights in, we don’t get to say how many or when or what kinds of planes will be there,” Gergerson said. “Once you open the box, you can’t close it.”

Paine Field Director Ghouse said he understands that both proponents and opponents have legitimate concerns, and that someone will come away disappointed.

“I see my job as informing all the different stakeholders of the legal requirements and presenting options to county officials,” he said. “Now that we have our marching orders, we will work with Propeller.

“It’s up to them to come back to us, and for us to check their work. Then we will sign a lease.”

Business support

Ghouse said he’s spoken to a number of aerospace businesses in the area that support Propeller’s plan. And at a public hearing this year, the Everett Clinic, Everett Mall and Aviation Technical Services all voiced their approval.

For their part, Allegiant and Alaska are being careful about what they say on the possibility of flights out of Paine.

“There are currently no discussions taking place regarding Paine Field at this time,” said Allegiant spokesman Brandon Myers.

Alaska was more forthcoming.

"As the hometown carrier with longstanding and deep ties in the region, Alaska Airlines is keenly interested in terminal construction that could make commercial service possible at Paine Field,” said Bobbie Egan, media relations director for Alaska Airlines and Horizon Air.

“We are taking a fresh look at Paine Field to determine whether the demand exists to support commercial service in this market and the role Alaska Airlines would have in meeting that demand.”

Although there are concerns about increased airport noise, Smith said that, initially, he only sees up to five flights a day.

In 2012, the FAA ruled that commercial flights at Paine Field would not significantly increase noise, traffic or air pollution. That was based on 23 passenger flights per day.

“What’s being proposed, and what’s already been approved, doesn’t dramatically change anything at the airport whatsoever,” Smith said. “It’s negligible.

“Theoretically, if no one knew about it, and if all of sudden someone waved a wand and put a terminal there with two gates, no one would ever know it’s there.”








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