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On the eve of the Federal Aviation Administration's decision on whether to turn Niagara Falls International Airport over to a Spanish corporation, Rep. John LaFalce issued a sharply worded, 20-page report detailing his own investigation into the proposed 99-year lease.
LaFalce charged that officials of Cintra SA misrepresented their level of involvement in the operation of nine airports in Mexico, that they have little background in airport operations and that the company doesn't have the money to run the facility without extensive federal, state and local subsidies.
Furthermore, he expressed doubts as to whether the Niagara Frontier Transportation Authority would ever collect any rent on the lease and questioned whether Cintra actually intends to bring passengers to Niagara Falls or take them from here to Mexican destinations in which the company has an interest.
"We are not going to have another chance to decide the future of the airport, and I believe we should not blindly turn it over to a recently created shell corporation," LaFalce said. "But if privatization is the route we take, we can and must significantly improve this proposed agreement."
LaFalce said his investigation revealed that Cintra became involved in the nine Mexican airports only in 1999, through an investment in another company, ITA. Even then, Cintra's ownership amounts to just 3.6 percent, and no officer from the company sits on the airports' board of directors or executive management committee.
Additionally, the company has yet to name a managing director for the Niagara Falls Airport, and Juan Angoitia, who has been named finance director for the operation, has no experience in airport operations. Prior to being hired by Cintra last year, he managed the supply train for a network of hospitals in Great Britain.
"We have been told Cintra has the expertise, but my analysis of the company and its involvement in Mexico raises a number of questions pertaining to its capacity to operate Niagara Falls International Airport," LaFalce said.
Cintra SA created a wholly owned subsidiary, Cintra Niagara, to operate the airport, but LaFalce said the new company has no assets of its own and characterized it as a "shell corporation." Under the proposed lease, Cintra only would pay rent in the event that 450,000 passengers passed through the terminal in a given year. After that, the contract stipulates the company would pay the NFTA $2 for each additional passenger.
LaFalce said he has been unable to determine how the 450,000 number was arrived at.
"Paul Gaines, a Cintra representative I met with in July, told me the company simply wanted to return the airport to the level of traffic it once had, which he represented to be up to 800,000 passengers a year," LaFalce said. "Obviously, he was woefully misinformed, since the FAA's records indicate the airport never handled more than 34,000 passengers in any one year."
Pointing to a study made of the lease agreement for the Niagara County Legislature by the California firm of Lufthansa Consulting, LaFalce called Cintra's projection for passenger traffic "extremely optimistic, to say the least."
"It is entirely possible that the NFTA may never get a penny from Cintra for the entire term of the 99-year lease," he added.
Both LaFalce and FAA officials have expressed concern that there are no performance standards in the proposed lease. Company officials responded that they would be seeking a return on the $10.1 million they are required to invest in the facility under the agreement, an answer LaFalce characterized as "grossly inadequate."
Again pointing to the Lufthansa study, LaFalce charged that not only is $10.1 million too little to turn the now-dormant airport into a passenger and cargo destination, but that Cintra is not required to spend any money for nearly 13 years after the agreement is signed.
"According to Lufthansa's calculation, $10.1 million would dwindle to $8 million in current value by the year 2013," he said. "Obviously, there is no incentive to profit from invested capital until that investment is made."
LaFalce also blasted the company's marketing plan, characterizing the $114,000 annually the company is required to spend as a "bare-bones marketing budget" and questioning who might be the target of that advertising.
"Cintra could spend their marketing dollars to solicit passengers from Toronto, Cleveland, Rochester, Albany and the surrounding region for tourist flights to the nine airports in Mexico," he said. "That is the reverse of what we all want, which is to bring people to Niagara Falls to spend their tourist dollars."
The FAA's decision on whether to approve the lease agreement as it stands is expected late next month, and LaFalce is hopeful that approval is denied.
"I cannot support the lease agreement as it is presently drafted," he said. "But the FAA can require the NFTA and Cintra to modify the lease to protect the long-term interests of the people of Niagara and Erie counties. I would strongly urge them to do so."