Between 1992 and 2006, tenants at Van Nuys Airport were barred from building new facilities while planners mapped how to shape the airport’s future growth. Then, the nation’s economic downturn kept expansion plans grounded for another 10 years. But with those headwinds finally behind them, companies operating at one of the nation’s busiest general aviation airports are spreading their wings. The last two years and the next few years will be the most active construction period for Van Nuys Airport in more than a decade, airport experts say. Substantial projects have been completed by some of the biggest businesses and master leaseholders at the airport; others are underway and future projects are on the horizon. Together, the investment by airport businesses totals at least $43 million as of December 2015, with new proposals still to come. (See map of major current and future projects on page 12.) The tenants are not alone. By 2022, Van Nuys Airport will have completed or at least plans to finish $64 million of infrastructure improvements. While the activity demonstrates faith in the airport’s future, it entails competition among businesses and developers for the scarce land available near the runway. Growth at the airport – a $2 billion economic driver for the Valley region – needs to be balanced, said Curt Castagna, president of the Van Nuys Airport Association, a tenant group. He’s also a developer at the airport as president of Aeroplex/Aerolease Group in Long Beach. “Developing the airport has to be done very strategically,” Castagna said. “At every airport, there’s always a balance of uses between non-aeronautical, light general aviation and then the heavier business jets. (At Van Nuys), it’s not an environment of us-versus-them; it’s really about what is the best fit for that diversity.” Taking off The airport is home to about 100 businesses, including a diverse array of FBOs, or fixed-base operators that service aircraft, plus flight schools, an airplane mechanics school, restaurants, a hotel, a golf course and even a Home Depot. Together they employ roughly 10,500 people, according to 2015 data from an economic impact report by the Los Angeles County Economic Development Corp. All land at the airport is owned by Los Angeles World Airports, or LAWA, a city agency that manages air transport. Developers or companies sign long-term leases. Aeroplex, Signature Flight Support of Orlando, Fla., Jet Aviation, owned by General Dynamics Corp. and Clay Lacy Aviation Inc., which is headquartered at the airport, are the largest aviation services companies at the airport that have either built, are building or plan to build hangars for business jets, while Pacific Aviation Development of San Fernando is constructing facilities on 30 acres called The Park VNY for propeller planes. Castagna’s company, one of the airport’s master leaseholders, is making space on its land by removing old hangars to help Pegasus Elite Aviation Inc., a rapidly growing international business jet charter company, expand its footprint. Pegasus’ new space is two and a half times larger than the current location it subleases from Aeroplex, said Tim Prero, co-owner of the charter service. He launched Pegasus in 2008 on a once-crowded airfield. “We came into the facility – it (the airport) wasn’t a ghost town but close to it,” Prero recalled. “We started the business with one to two airplanes and slowly built it up, and then last year overgrew our facility. At the present time, the airport is full of tenants. There’s not enough hangars for individuals with aircraft. We felt it was time to move into another facility because the need is there right now.” In the last five years, the company has grown by at least 30 percent each year in revenues, Prero said, and it went from operating four Gulfstream corporate jets to 14. He attributes the climbing revenue to an economy that is finally back in full swing. But charter jets are also getting bigger, he said. As such, they require more room to house and maintain them. When Prero started his business about 30 years ago, Learjets had wingspans of 23 or so feet and lengths of 28 feet. Now, the Gulfstream jets he operates have 80-foot wingspans with bodies up to 90 feet long. “They keep getting bigger, and it’s not only that they get bigger, but that there’s more of them,” Prero said. Teal Group Co., a Fairfax, Va. market analyst firm which tracks the business jet, aerospace and defense industries, wrote in a recent report that not only are jets getting bigger, the number of jets in the top half of the market – those costing $26-plus million – grew during the economic downturn while the smaller aircraft market fell dramatically. Before learning of Aeroplex’s redevelopment, Prero considered moving the company out of California, he said. The lack of space at the airport was one of the factors behind that. “That there was this space (being built by Aeroplex) was an argument for staying,” he said. Castle & Cooke Aviation Services Inc., a large FBO at the airport which provides services for jets such as housing and fuel, holds master leases on land and subleases out hangar space to tenants. The company has been on the airport since 1981. Vice President Tony Marlow said the company leased more acreage from LAWA, and undertook a roughly $12 million investment to build a nearly 3-acre ramp for its customers’ planes, two new buildings and a replacement 40,000-square-foot hangar, plus a shop and office. The project’s purpose was to accommodate greater numbers of Gulfstream G650s, Dassault Aviation Falcons, Bombardier Global Express and Hawker jets, Marlow said. “All private jets used to be quite small, but have gotten bigger over time, and tenants have needed bigger hangars to house airplanes,” he added. “In that hangar, one of our tenants does aircraft maintenance – and they needed to expand because the airplanes were getting bigger.” Growth limits Expansion is a challenge at Van Nuys Airport for most tenants, particularly when you’re not a master leaseholder. Private charter servicer Jet Edge International can’t compete for land leases when LAWA puts them up for bid. Bill Papariella, chief executive of Jet Edge, said the process to negotiate with LAWA is very long, highly competitive and tightly controlled because it’s a way for the agency to manage growth. Jet Edge currently charters about 50 planes – they’re not all housed at Van Nuys at the same time – and subleases a 65,000-square-foot hangar. Like Pegasus, it’s also growing – at 36 percent a year – which Papariella attributes to an improving economy and consolidation at the airport. Papariella said he has no intentions of bidding for leases when they become available because he couldn’t afford the $40 million to $50 million it would cost to build a hangar the size he would need. “I wait for someone to win (a lease) and then lease from them,” Papariella said. “Right now, space is such a big issue here. I’ve been looking for over a year and a half, desperately. I need to partner with a large conglomerate (who’s bidding for a new master lease), but if they lose it to someone else, I’m back to square one.” The space issue has become a reoccurring problem at many of the busy general aviation airports around the country. French Valley Airport in Riverside County has faced insufficient hangar space due to rapid urbanization in adjacent areas. McKinney National Airport in Texas has no land for development and faces loss of business to airports with more capacity, according to news reports. Robert Rodine, principal consultant of the Polaris Group in Sherman Oaks, who has performed lease negotiations, economic evaluations, property appraisals and economic impact studies for clients operating at the Van Nuys Airport, said it’s evident demand outpaces available land when a lease comes up for bid. “If you put out an RFP (request for proposal), there’s going to be five or six people bidding, and one is going to get it,” Rodine said. “And that means the demands of five people are not going to be satisfied.” Castagna, the airport developer, said when a bid came up for a facility near one of his properties, there were six to seven proposed projects. Flora Margheritis, Van Nuys Airport’s general manager, said with only 730 acres allocated for the airport, the lack of land for business expansion is the airport’s biggest challenge. “There always has been, and always will be, competition at this airport for any land or lease that becomes available,” Margheritis said. “Fortunately, we have a very good competitive process that is in place. As land and leases come up, we know there is demand because of the number of proposals we get.” LAWA commissioners are well aware about tenant demand for hangar space, said Debbie Bowers, deputy executive director, “which makes us feel positive about future demand at VNY (Van Nuys Airport).” Resident factors Clay Lacy Aviation, the oldest tenant at the airport and largest employer, holds several master leases. Founder Clay Lacy started the company at the Valley airfield in 1968. (See interview on page 13.) But it still took the company more than 30 years to get a master lease for a parcel that’s been vacant since 1957. “It was quite political,” said Brian Kirkdoffer, chief executive of Clay Lacy. “We don’t know politics and I don’t think we navigated that well.” He said the airport commission put out three requests for proposals and Clay Lacy filed proposals for all three of them – two with partners and one on its own. The company was told it won one of them, but then 9/11 happened and the lease was deemed invalid. And the company had to start the process all over again. It was suddenly awarded the lease when it renewed another lease, Kirkdoffer said. Despite his own challenges to get land, he believes it shouldn’t be easy to get because there’s so little of it. “It’s probably good that it is difficult, because it’s very important land for the city, and you want people to take care of that land and use it for its best purposes,” he said. The company plans to build a facility that will let it expand maintenance on aircraft that have to be flown somewhere else for maintenance currently. The new facility will result in fewer takeoffs and landings while also adding about 100 new jobs, Kirkdoffer said. Such developments that reduce the number of jets taking off and landing at the airport are the ones that residents living near the airports like. Wayne Williams sits on the Van Nuys Airport Citizens Advisory Council, a mix of people from aircraft-oriented businesses and residents appointed by city of Los Angeles officials. The council, which is purely advisory, is the first to hear about proposed development projects. It then votes on whether to recommend projects to the airport commission, which has power to approve or reject them. “We have a Home Depot at the airport, and a hotel and other facilities that are more maintenance-oriented,” Williams said. “Residents would prefer to see more nonaircraft usage only because it helps to diminish the volume of noise.” If a business’s development plans would increase the number of jets it houses – should it be allowed to build its project – that is not one that residents would like, he added. “The more aircraft that come onto the airport may be good for industry, but not good for residents around the airport,” Williams said. Regardless, residents and businesses with seats on the council decide on projects based on their compliance with the airport’s Master Plan, a land use guide which sets aside sections for certain purposes, Williams said. LAWA’s process for sorting out and approving proposals for land gets a nod of approval from airport businesses, including Castagna, the developer. He points out that with so many businesses operating at the airport, they need to be kept diverse to help protect the airport from seasonal cycles. Others said the process helps maintain healthy competition. “In order for development to be successful, they (LAWA) must steer the course for a vision,” Castagna said. “It’s not just about there’s a piece of dirt there and we’re going to now rent it.”
SPECIAL REPORT: Catching an Updraft
