Shell apparently threaten to pull out of Gaslveston and move to a grass strip at Alvin to avoid paying tax.
Officials seek moratorium on airport tax
By Laura Elder
The Daily News
Published February 18, 2011
GALVESTON — With the hovering threat of losing major customers at Scholes International Airport, island officials last week traveled to Washington, D.C., seeking a five-year moratorium on the so-called helicopter passenger tax.
Among the several reasons Mayor Joe Jaworski, City Manager Steve LeBlanc and airport Director Hud Hopkins traveled to Washington was to keep Shell Oil from leaving the island, where it pays helicopter transportation company PHI Inc. to fly crews to offshore rigs.
Shell wants to avoid the federal tax of $3 a passenger. The tax is assessed on helicopter transportation companies such as PHI, who pass it on to customers.
Shell, each year, pays about $1.5 million in the federal tax by using Scholes International Airport. The taxes are imposed on passengers flying on large helicopters such as Sikorsky S-92s and S-76s, which PHI operates at Scholes.
To avoid the tax, Shell has asked PHI to move its base from the island to a non-airport field in Alvin. Despite persistent rumors, PHI has said it had no plans to leave the island. PHI officials earlier this month confirmed it had expansion plans but declined to elaborate. A PHI representative traveled to Washington with city officials.
The loss of offshore transportation would be a huge blow to Scholes International Airport, which doesn’t have airline service to generate revenues. The airport, which last year reported $924,507 in revenues on expenses of $924,415, makes money leasing its land to several tourist operations and other business. But about 61 percent of operations comes from offshore transportation, Hopkins said.
Along with PHI, the airport is landlord to Air Logistics, Era Helicopters and Rotorcraft Leasing Co. ExxonMobil has its own helicopter transportation operations at the airport.
Helicopter transportation companies pay rent and a “fuel flowage charge,” of 4 cents on every gallon of fuel they bring to the airport. Shell, for example, will pay $49,418 in rent and $33,019 for fuel flowage to the airport this year.
But the economic repercussions of helicopter transportation companies leaving is much broader. Thousands of offshore workers who catch helicopter rides from the island airport also stay in local hotels and eat at local restaurants. The helicopter services companies also employ mechanics and fuelers on the island.
So far, Shell is the only company that has publicly said it wanted to leave because of the tax. But others are paying attention, Hopkins said.
“They’re all kind of watching,” he said.
When it comes to the helicopter passenger tax, federal law generally exempts air transportation by helicopter for the purpose of transporting crews, equipment or supplies in the exploration for oil and gas unless the helicopter takes off or lands at an airport. But the tax is imposed at airports eligible for federal grants and assistance, which Scholes and most airports are.
The city doesn’t want to lose eligibility for federal money. So, officials last week met with representatives to seek a five-year moratorium on the tax at airports on the Gulf Coast hurt by hurricanes Rita, Gustav and Ike and where efforts to rebuild economic bases to pre-disaster levels is a challenge. Aside from Scholes, other Texas airports would include Brazoria County Airport and Aransas County Airport. Five airports in Louisiana also would be included in the moratorium on the helicopter tax.
Without the moratorium, hurricane-damaged airports and the communities they serve likely would see a continued erosion of their economic base as helicopter service providers burdened by the tax moved their operations to remain competitive, officials said.
If it were up to the city and the airport, there would be no such tax, Hopkins said.
Officials don’t yet know how successful their Washington trip was. But they said U.S. Sen. Kay Bailey Hutchison and U.S. Rep. Ron Paul committed their help in drafting language to achieve the moratorium.
“We’re hoping they move pretty quickly,” Hopkins said.
Officials seek moratorium on airport tax