The story that sparked the investigation: A sky-high expense account | Published 11/23/08

IT'S WORTH IT, BOARD CHAIR SAYS

jhewlett@herald-leader.comNovember 23, 2008 

  • Michael Gobb

    Executive director, Blue Grass Airport

    Salary: $219,450.

    Expenses: In fiscal 2007, Gobb spent $53,600 on travel and training and $26,000 on marketing, which included travel expenses.

    Perks: Unrestricted use of a car, two cell phones, home Internet service and seven memberships to clubs and associations.

  • Gobb's lieutenants

    Blue Grass Airport has four directors who work directly under executive director Michael Gobb:

    John Coon, director of operations, makes $137,321 a year.

    John Rhodes, director of administration and finance, $140,857.

    John Slone, director of planning and development, $139,776.

    Brian Ellestad, director of marketing and community relations, $135,012.

    Each director has an airport vehicle for his unrestricted use and credit cards for gasoline and other expenses. In addition, Gobb and the directors each have a key to the airport gas pump.

    Gobb and the four directors had more than $23,000 in gas charges from 2006 through late June 2008.

Michael Gobb, executive director of Blue Grass Airport, spent 12 days in St. Petersburg, Russia, last year. The trip cost the airport nearly $13,000.

Gobb stayed at the five-star Astoria Hotel, where his room cost more than $500 a night. He gave a presentation on air-cargo security at a two-day professional conference.

The trip was not unusual for Gobb, who heads the nation's 117th-busiest airport, one that has no commercial international flights. He has traveled to at least 33 cities in the United States and abroad on the airport's dime during the last several years.

He spent more than $200,000 on trips and other expenses from January 2006 through March 2008, according to documents the airport released after the Herald-Leader submitted open records requests.

Gobb has stayed at the elegant Hay-Adams Hotel in Washington, D.C.; the Ritz-Carlton in Henderson, Nev.; and the Bellagio in Las Vegas.

He spends thousands of dollars on meals, rental cars, sightseeing tours, clothing, taxis, limousine services and tickets to sporting and cultural events. Much of what he spends is for gifts and entertainment to market the airport and is not used by Gobb, airport officials say.

The expenses are in addition to Gobb's salary of nearly $220,000 a year, plus benefits that include unrestricted use of an airport SUV (the 2009 Ford Expedition cost $29,000), unlimited gas, home Internet and cell-phone service costing more than $6,000 a year, and club memberships worth thousands of dollars.

Gobb declined to talk about the expenses, referring all questions to Bernard Lovely, the chairman of the airport board and the person who approves Gobb's expenses.

Lovely said the travel and other expenses are justified.

"What I'm telling you is all those expenses go to the benefit of this airport," Lovely said in an interview. Nearly all of Gobb's expenses were for airport marketing, public relations and training, he said, adding that no state or federal money was used.

"The airport board did not hire Mike Gobb to sit in his office and wait for the phone to ring," Lovely said in a later e-mail response to questions, adding that the trips raise the profile of the airport and help to bring new carriers to Lexington.

A Herald-Leader survey of the travel and training expenses of top officials at airports with passenger counts similar to Blue Grass shows that Gobb's expenses outstrip all of them. In some cases, Gobb spends far more for travel to professional conferences than the budget for travel and training for some entire airport staffs.

And heads of some much larger airports travel far less — if at all.

Larry Dale is one example. As president and chief executive officer of Orlando Sanford International Airport in Florida, which handles nearly twice as many passengers as Blue Grass, Dale does not go to professional conferences overseas, according to Diane Crews, vice president of administration at the airport. However, he sometimes attends an annual Federal Aviation Administration conference in Atlanta, she said.

"He stays really busy right here," said Crews.

Louisville International Airport had 1.9 million passenger boardings (enplanements in aviation vernacular) last year, according to the FAA, and is the third-largest cargo airport in North America. C.T. "Skip" Miller, its executive director, spent about $18,600 on travel in fiscal 2007.

Blue Grass Airport had 521,000 enplanements; Gobb spent $53,600 on travel for conferences in the same period. In addition, he spent $26,000 on marketing, some of which included travel, according to airport officials.

'The people's money'

Blue Grass Airport is a public, non-profit corporation run by a board appointed by Lexington's mayor and is considered a component of the Lexington-Fayette Urban County Government. Its budget — $11.8 million last fiscal year — comes from private and public sources, including airlines and general aviation operators, rental car companies, parking lots and vendors, and taxable and tax-free municipal bonds.

Money the airport gets through the FAA — $2.2 million in fiscal 2008 — is earmarked for specific projects. The airport received $50,000 from the city during the same period.

Fernita Wallace, a former member of the Urban County Council and chairman of the airport board in 2000 and 2001, said she considers the money the airport spends public funds.

"It's the people's money," she said, whether it comes from fees passengers pay on airline tickets, parking fees or other costs.

"It is a little different than general taxes, but I don't see how you can say it's not public money. ... I think it's important that expenditures like this be reviewed carefully," she said.

Mayor Jim Newberry, who appoints airport board members, declined to comment for this story.

Pam Miller, Lexington's mayor when Gobb was hired, said Gobb "was doing a good job" after he was hired. "Things were really a mess before he came," she said, noting that under the previous director, Mike Flack, there had been dissension in the community about whether the airport should have a parallel runway.

But her response when told about some of Gobb's expenses was: "Heavens, ... I've always believed that public servants ... should be very careful of their expenses."

Gobb isn't alone in his wide-ranging travels for the Lexington airport. Other airport employees, including the four directors who work under Gobb, travel, some of them frequently.

The airport regularly overspends its budget for travel and training for its staff. In fiscal 2007, it budgeted about $172,000 but spent $279,000, or 62 percent more than it had planned, on travel and training

Traveling in style

Gobb began his trip to Russia for the 2007 International Airport Security Technology Conference & Trade Show a week before the Aug. 26-28 conference. His business-class airline ticket cost more than $5,000. Gobb travels business or first class internationally because of back problems, according to Lovely.

In Russia, Gobb spent $6,000 on his hotel, hosted a reception costing about $2,000, and spent $800 on other purchases and services in St. Petersburg. He charged an additional $300 at the Frankfurt, Germany, airport on the way back, most of it in a duty-free shop. He reimbursed the Lexington airport about $2,500.

The Astoria Hotel reception was for conference speakers and dignitaries and "provided Blue Grass Airport with an excellent opportunity to network and build valuable relationships within the aviation community," said Brian Ellestad, Blue Grass Airport's director of marketing.

About 125 people attended the conference, according to the American Association of Airport Executives, which sponsored the meeting.

Each year, Gobb attends eight to 10 national conferences and one or two international meetings, according to an e-mailed response to Herald-Leader questions. Gobb serves on the boards of the American and international associations of airport executives.

Gobb attended other conferences at the airport's expense from 2006 to March 2008. They included:

■ U.S./Central Europe/Eurasia Airport Issues Conference; Dubrovnik, Croatia; Oct. 24-26, 2006; $8,100.

Air fare was about $5,900 round-trip to Dubrovnik, where Gobb spoke at the annual conference. He stayed at the Grand Villa Argentina for six days for the three-day conference. The hotel has a private beach; its guests have included Ivana Trump and Margaret Thatcher. In addition to airfare, Gobb charged about $1,700 for other expenses during the trip.

■ AAAE Conference; San Diego, Calif.; April 23-26, 2006; $5,500.

Airfare was about $1,300. In addition, Gobb charged more than $4,000 for that trip, including nearly $2,000 at the Hyatt Hotel. Gobb spent $834 at Island Hoppers, a store that sells resort wear. He later reimbursed the airport $313.

■ AAAE/IAAE; Prague, Czech Republic; July 9-11, 2006; $4,900.

Gobb spoke at the International Airport Technology Conference, which had about 80 attendees. The airfare was about $2,900. His stay at the luxury Renaissance Prague Hotel, beginning July 6, cost $1,372.

■ AAAE Conference; Washington, D.C.; June 10-13, 2007; more than $3,800.

Gobb spent six nights at the Grand Hyatt Hotel in Washington, where his bill was $2,287. Gobb also attended two board meetings while in Washington, according to an e-mailed response to questions. About $500 was charged for sightseeing trips and at restaurants.

"Many of these conferences are held at nice hotels. Blue Grass Airport does not select where the conferences are held," Lovely said in an e-mail. "To make the most of our networking opportunities, we typically stay at the conference hotel along with the other conference attendees."

Lovely said Gobb's presence at such meetings has led to new airline service.

Airlines that have come to the airport during Gobb's tenure include ATA Connection, TWA, American Eagle and Allegiant Air, according to Lovely. (The first two have since left. ATA went out of business, and TWA was bought by American Airlines.)

Gobb's expenditures are commensurate with the success he has brought to the airport, Lovely said. He added that Blue Grass is one of the few airports in the country where enplanements have increased.

However, according to FAA figures, the number of passengers boarding planes nationally increased by 13 percent from fiscal years 1999 through 2007, while the number boarding at Blue Grass was down 1 percent for calendar years 1999 to 2007.

While national passenger numbers have grown steadily with a few exceptions, such as after 9/11, there are variations depending on location, according to Rusty Chapman, manager of the airports division for the FAA's Southern Region.

"Every airport's different," Chapman said. "You do well considering your location and size," he said of Blue Grass.

"We are satisfied with Mike's performance, more than satisfied; we are extremely satisfied," Lovely said.

Spending 'as he sees fit'

Whether the charges by the executive director of the airport are for travel, entertaining or gifts, there is little evidence of oversight of the expenses.

"We do not go over these charges on the credit cards," said David Stevens, an airport board member and an Urban County Council member. "That's kind of between the chairman of the board and the CEO."

Said Dick DeCamp, a member of the Urban County Council and a former member of the airport board: "I know at one time the board felt that there might have been some excessive spending, and Mike was talked to by the chairman. It was my understanding that everything was worked out, and it was no problem."

Gobb sometimes seeks airport board approval for expenditures in advance; at other times he makes purchases, then seeks reimbursement from the airport, Lovely said.

Lovely, who said he has kept tabs on Gobb's expenditures on a regular basis, said that when there have been questions about expenditures, Gobb's explanations have been satisfactory more than 99 percent of the time.

"Regardless, he has the authority as executive director, as long as he stays within his budget, to spend the money as he sees fit, as long as it's spent wisely," he said.

For the last three fiscal years, the airport planned to spend a total of $516,500 on training and travel. Instead, it spent $763,644, or 48 percent over its budget.

A frugal approach

Officials at other airports contacted by the Herald-Leader stressed that airports throughout the country are structured and governed differently and that there are big differences in the areas the airports serve.

One facility that has grown during recent turbulent times in the airline industry is Akron-Canton Airport in Ohio, which has about 170,000 more enplanements a year than Blue Grass.

Kristie VanAuken, the Akron-Canton airport's director of marketing and communications, said that under airport director Fred Krum's leadership, the passenger count tripled from the early 1990s to 2006, and July and August 2008 were the best months in the airport's history. "We are on a clip to a record-breaking year," she said.

But, she said, officials at Akron-Canton watch pennies.

"We are always looking for ways to economize," she said. "It's part of our DNA. We don't go to Hawaii, not to say that people shouldn't do that."

When executives of the Akron-Canton airport travel for business, they usually fly coach and stay at reasonably priced hotels. And they don't go to many professional conferences, she said.

During the lean times, even paper clips were a big concern at the Ohio airport.

"We would not buy the super fancy paper clips that had the rubber on them. We'd buy the metal ones," VanAuken said.



Herald-Leader staff writer John Cheves contributed to this report.
Reach Jennifer Hewlett at (859) 231-3308 or 1-800-950-6397, Ext. 3308.

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