03/03/2007

Contract gives program wings

By Tom Carr

tcarr@record-eagle.com

Record-Eagle/Douglas Tesner
Aaron Cook, director of Northwestern Michigan College’s aviation program, is surrounded by aircraft in a hangar at Cherry Capital Airport.

TRAVERSE CITY — Northwestern Michigan College's aviation program will have a fluctuating number of planes for its 100-plus students to use under a new contract that officials said will save more than $100,000 per year over buying the planes outright.

The board of trustees approved a contract with Suburban Aviation Inc. of Ottawa Lake to make sure the college has between three and six active single-engine Cessna planes, depending upon seasonal demand.

Officials don't know how the deal will affect the aviation department's overall deficit, which had run about $200,000 per year and reached $300,000 last year, said Marguerite Cotto, director of the college's Michigan Technical Education Center, which includes the aviation department.

Aviation revenues for 2005-06 were $1.1 million, while expenses came in at $1.4 million.

Cotto expects savings because the fleet will be newer and under warranty, so the college won't have to bear many of the maintenance costs, she said. The college will spend less on scheduled maintenance, since they'll only have them for a short time and the $10,000 average per plane in unscheduled maintenance will be borne by Suburban.

"Our goal is to reduce the amount of general fund money that goes to it,” she said.

NMC will purchase 11 planes over the contract, which runs from March 2007 through December 2008.

The college will buy the planes for a total $2.8 million over the length of the contract, and then the company will "buy back” all of them at various times for $2.35 million.

After the buy-back, the college's net cost will be $450,000 over the length of the contract, Cotto said.

The annual operating cost per plane will average about $42,300, with the company providing new planes to the college and then buying them back before they log 600 hours of flight time. The company will sell the planes and the college will buy other new planes to replace them.

If NMC purchased the planes outright, annual operating costs would be an estimated $74,500 per year.

Cotto said figures for maintenance costs of the old fleet were not available.(*)

The contract allows NMC to have more planes in the summer when weather generally is better for flying.

In addition to six Cessna 172 SP single-engine planes — the type it uses most often — the school will continue to own five specialty planes for advanced ratings.

Cotto announced plans to update the aviation department and cut costs about a year ago, saying the program had deficits of about $200,000 per year.

The college hired the University of North Dakota to conduct an external review of the program to help find ways to update it and make it more cost-efficient. It recommended the college reduce its fleet size and update the planes, some of which were more than 20 years old, to reduce maintenance costs.

The college sold six planes from its original fleet of 18 for a total of $480,000. The money made on the sales will go toward updating the fleet.