Letter Audit Report on the Compliance of FirstFlight Heliport, LLC d/b/a Saker Aviation Services, Inc. with Its Concession Agreement

EXECUTIVE SUMMARY

The objective of this audit was to determine whether FirstFlight Heliport, LLC (FirstFlight) complied with the major terms of its concession agreement, including whether FirstFlight accurately collected and reported revenue derived from its operation of the Downtown Manhattan Heliport (the Heliport), paid the required fees to the City, expended the required amounts on capital improvements, and adhered to certain provisions of the agreement that limit the number of tourist flights and require FirstFlight to mitigate noise pollution and air quality issues.

In 2008, the City, acting by and through the Department of Small Business Services (DSBS), entered into a 10-year concession agreement with FirstFlight to operate the Heliport (the Concession Agreement).  The New York City Economic Development Corporation (EDC) administers the Concession Agreement for the City.  Under the Concession Agreement, FirstFlight is tasked with the day-to-day management of the Heliport and various administrative responsibilities, such as billing and collection of revenue, and ensuring compliance with the Concession Agreement and regulatory requirements.

According to the Concession Agreement, FirstFlight is required to pay to the City each year the greater of a minimum annual guarantee amount or a percentage of FirstFlight’s gross receipts.   In Calendar Year 2016, FirstFlight reported gross receipts of $13,076,947 from its operation of the Heliport and remitted a percentage fee of $2,716,055 to the City.

On February 2, 2016, the City and FirstFlight amended the Concession Agreement to reduce the number of tourist flights at the Heliport by 50 percent as of January 1, 2017, restrict the number of weekend tourist flights to 300 on Saturdays and none on Sundays, and mitigate certain noise and air quality issues at the Heliport.  Specifically, under the amendment, FirstFlight is required to make its best efforts to limit helicopter-engine idling time at the Heliport to not more than 10 minutes per flight and to actively research ways to further reduce the effects of noise and emissions pollution.

Results

Although the audit found that FirstFlight generally complied with the financial terms of the Concession Agreement, the audit identified a weakness within FirstFlight’s operation that FirstFlight should address to strengthen its operations.  Specifically, during the three days on which auditors observed helicopter flights at the Heliport, auditors observed 23 instances—out of 118 flights that were reviewed for idling time—in which flight operators idled their engines longer than 10 minutes.  Of those 23 instances, 11 flights idled from 11 to 15 minutes, 5 flights idled from 16 to 20 minutes, and 7 flights idled for more than 20 minutes, with the longest idling period recorded at 41 minutes.  The average idling time for the 23 instances was 19 minutes.  In connection with those observations the audit found that FirstFlight had not established procedures to monitor or enforce flight operators’ compliance.

The audit recommended that FirstFlight should develop and implement procedures to limit helicopters’ idling time at the Heliport.

In its response, FirstFlight stated, “[w]e concur with the Audit’s sole recommendation regarding procedures to limit helicopter idling time at the Heliport.  As we shared with the CAT [Comptroller’s Audit Team], however, we believe those procedures were and are in place from a practical standpoint.  The recommendation of the Audit simply caused us to codify our previous practices in connection with this activity.  We further intend to review with NYCEDC the efficacy of implementing an ‘idling fee’ in conjunction with our next review of fees and charges.”