FAA approval? Check.
Port Authority contract? Check.
Security checkpoint? Horseheads, we have a problem.
As charter flight companies steel themselves for a slowdown in business, U.S. Helicopter Corp. unexpectedly hit a snag in November after it said an upstate New York contractor in Horseheads failed to meet Federal Aviation Administration mandates for passenger screening services.
According to U.S. Helicopter, that forced it to scrub flights from the Downtown Manhattan Heliport, a hub servicing Wall Street and New York-area airports, including outlying airfields like the Igor I. Sikorsky Memorial Airport in Stratford where U.S. Helicopter was founded in 2003.
The company was able to divert flights to another heliport at East 34th Street, but it was an inconvenience it could ill afford: In the third quarter, U.S. Helicopter lost $4.4 million on revenue of $1.4 million, closing the quarter with less than $500,000 in cash. The company has raised small amounts of additional cash this fall through bridge loans, but also faces a recession. In a bid to boost business, U.S. helicopter slashed fares last month.
Establishing shuttle service to Downtown Manhattan Heliport in 2006, U.S. Helicopter set up its permanent headquarters there. Built in 1960, the pier landing pad was the first heliport in the United States certified for regular passenger service, but passenger service was discontinued in the mid-1980”™s after PanAm went bankrupt, and was not revived until U.S. Helicopter”™s arrival.
Including charter, sightseeing, corporate and government flights, the helipad handles more than 30 flights daily on average.
On Nov. 1, New York City transferred management of the Downtown Manhattan Heliport from the Port Authority of New York and New Jersey to FirstFlight Inc., a small company in Horseheads, N.Y., that offers a range of services for aviation companies.
A FirstFlight affiliate called Air Pegasus runs the West 30th Street heliport in Manhattan, as well.
FirstFlight agree do pay between $1.2 million and $1.7 million annually for the rights to run the Downtown Manhattan Heliport for 10 years, also committing to make up to $2 million in capital improvements at the facility.
A rival company called Linden Management Corp. unsuccessfully attempted to block the deal in New York state court, claiming FirstFlight had received an unfair advantage in the bidding process.
Having cleared a legal hurdle, FirstFlight “did not maintain the approvals required to provide federal airline security screening” at the heliport, according to a U.S. Helicopter government filing on Nov. 19. The company did not provide additional details, and representatives of FirstFlight, U.S. Helicopter and the Transportation Security Administration had not responded to requests for information at deadline.
Under Port Authority management, the Downtown Manhattan Heliport was the only heliport in the country subject to a federal regulation requiring it to meet a relatively high standard for safety.
In FirstFlight”™s own earnings call with analysts, the company disclosed it recently laid off 15 employees, about 10 percent of its total work force, and asked managers to take cuts in compensation aimed at saving the company $1 million next year. In prepared comments, FirstFlight CEO John Dow did not address the TSA situation disclosed by U.S. Helicopter.
In the meantime, U.S. Helicopter was also negotiating with FirstFlight for a renewed operating agreement at the heliport.
