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Air Heads 

SFO officials deserve some blame for an air disaster in Honduras. By Matt Smith

Wednesday, Jul 9 2008

Efrain Vanegas, a reporter with La Tribuna newspaper in Tegucigalpa, Honduras, emphatically agrees when I propose the word "chaos" to describe the situation in his country since TACA Flight 390 overran the Aeropuerto Toncontín runway May 30, killing five people and injuring 65. Since then, Honduran President Manuel Zelaya Rosales has closed the capital's international airport to large jets, saying its runway is too short for safe landings.

"Chaos is exactly what's happening," Vanegas said in Spanish. "The decision has caused chaos and massive economic losses. Experts say it's caused some $500 million in economic damage so far." That's 2 percent of the country's annual income.

Thanks to a bizarre legacy by a group of city-employed SFO bureaucrats, some of the blame for the recent tragedy in Honduras may trickle back to the City and County of San Francisco.

How could San Francisco possibly bear responsibility for an air disaster in Honduras? That's a great question, whose answer leads back to SFO Enterprises Inc. This shady private company, set up nearly a decade ago by current airport director John Martin and his deputy, Leo Fermin, won a bid to privatize and manage Honduras' airports based on a boast that SFO International Airport officials' knowledge, prestige, and financial clout would bring this dangerous airport up to first-world standards. They botched the job horribly, spurring congressional investigations in Honduras and a controller's audit in San Francisco.

In the process, Martin and Fermin may have planted a liability bomb underneath our city.

Airline disasters are some of the most lawyered-up incidents known to humanity. Airlines, aircraft manufacturers, engine manufacturers, airports, and other players in the travel economy have armies of attorneys on alert for the next disaster. The name of the game is handing off blame.

TACA Airlines made the first move in the airline disaster blame game last month by releasing a statement declaring that the real responsibility lies with the inadequate runway at the Honduras airport.

"Aviation lawsuits are like somebody with a shotgun in a china shop," said Benny Benitez, a Miami-based aviation law consultant with expertise in Latin America. "You try to destroy everything, and whoever's standing gets it. Any lawyer who takes that case will say it's unsafe, and he will say the president of the country said it was unsafe."

Why is it unsafe? I think Martin and Fermin know the answer.

In 2001, the year after Interairports, the consortium assembled by SFO Enterprises, won the Honduran airport contract, I wrote how this S.F.-government–supported operation had exposed the city to massive potential liability in the event of a disaster.

That's because Martin and Fermin were never in a position to fulfill Honduran expectations of significantly improving the safety of Tegucigalpa's airport. Though owned by the City of San Francisco, the company wasn't authorized to use municipal money beyond $10,000 in startup funds. Indeed, the very rationale behind the company's existence was to create a financial and legal firewall protecting San Francisco from liability. By ensuring there would be no commingling of city funds with those of SFO Enterprises, airport officials said in 1997, San Francisco would be protected from liability the event of an airline disaster.

Martin and Fermin commingled anyway, turning their private operation into what looked like a public slush fund. (Airport spokesman Mike McCarron did not return a call requesting comment from the two men.) According to a 2007 audit, SFO Enterprises ate up $1.5 million of city funds through transfers, use of airport personnel, lavish accommodations in Honduras and Miami, and other expenses. My own review of the company's records suggests total expenses were closer to $2 million. SFO officials also may have improperly committed San Francisco to a $1 million surety bond without obtaining proper approval, according to airport records. But the amount of money they were able to funnel into Honduras was nowhere near enough to cover the kinds of safety improvements envisioned by the Honduran government — including lengthening the airport runway. So San Francisco officials placated authorities in Honduras by overstating their ability to carry out their obligations. They used insinuation, vague and misleading statements, and downright deceptive official filings to create the impression that SFO Enterprises enjoyed the full faith and financial backing of San Francisco's city-owned airport, according to government and SFO Enterprises insiders.

When SFO Enterprises won the contract eight years ago, government and business leaders in Central America were delighted that San Francisco's international airport would run operations in Honduras.

However, locals eventually got wise to the sham.

"It turns out that [San Francisco International Airport] is not the operator," Adolfo Facusse, president of the Honduran Private Enterprise Council, was quoted as saying in 2003. "The Tegucigalpa airport is considered to be one of the most dangerous airports in the world. The fear in San Francisco is that the city, who owns the San Francisco International Airport, was involved in a risky operation, because, God forbid, if a plane crashed here, San Francisco City would be liable for millions of dollars in compensation."

In the end, the Honduran government was so dissatisfied with the performance of the SFO-led consortium that its Congress convened special hearings.

The truth is, however, that neither the Honduran government nor Interairports took the necessary steps to make the city's airport safer. Shantytowns surround Aeropuerto Toncontín; to extend the runway, entire neighborhoods had to be moved. This political quagmire, along with SFO Enterprises' financing mess, guaranteed mutually assured procrastination. And the extension never got off the ground, even though it was a rationale for the SFO-led privatization.

SFO Enterprises sold its interest in Interairports in 2006. But its legacy remains in the form of the dangerously short runway. The city's potential responsibility for Aeropuerto Toncontín's safety conditions doesn't end there. A subsidiary of SFO Enterprises developed safety manuals and procedures for the country's airports, and the consortium was tasked with bringing runway surfaces to world-class standards.

Now five people are dead and Honduras is in chaos.

La Tribuna reporter Vanegas said preliminary details from an International Civil Aviation investigation suggest pilot error caused the plane to land halfway down the runway, leaving too little space to stop. An aide to President Zelaya, however, told me unsafe runway conditions were at fault.

Before blame makes its way north to San Francisco, this city should conduct an additional inquiry. Somehow, after all their mishaps over the years, both Martin and Fermin remain employed by the city. It's time, once and for all, to hold them accountable for their misadventure, and let them go.

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Matt Smith


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