CHANGING LANDSCAPE OF FBO SERVICES Continued from page 55 taxiways, and associated infrastruc- ture) associated with the aeronautical use of the airport. In addition, airport sponsors develop the landside infra- structure (e.g., utilities, improved land parcels and roadways) associated with the development of improve- ments (e.g., terminals, hangars, office, shop, aprons and vehicle parking) by private enterprises to facilitate the provision of FBO services. This ensures that the aeronautical users of the airport have the necessary infrastructure for: 1) aircraft to safely arrive and depart from the airport and access from the airside improve- ments associated with the provision of FBO services; and, 2) vehicles and pedestrians to access from the land- side to these same improvements. This primary focus is encour- aged and facilitated by the Federal Aviation Administration (FAA) and associated state government agen- cies that provide grants and loans through a variety of airport capital improvement funding mechanisms (e.g., the FAA’s Airport Improvement Program) for the development of airport land and infrastructure. These funds, in most situations, are not eligible to be used for the development of improvements for the provision of FBO services, such as general aviation terminals, han- gars, office space, shop space, vehicle parking and fuel storage facilities. On occasion, an airport spon- sor will make investments in land and infrastructure (e.g., utilities, land parcels, roadways, etc.) to facilitate the development of FBO improvements. However, FBO improvements are most commonly developed by, and through, private enterprises. When airport spon- sors are unable or unwilling to provide private enterprises suf- ficient lease term to amortize the investment in FBO improvements, or the demand for FBO services does not support such an invest- ment, an airport sponsor may choose to develop and then lease these improvements to private enterprises for the provision of FBO services. Airport Fixed Base Operators/ Private Enterprises (FBOs) While the airport sponsor’s pri- mary role, ensuring the availability of FBO services, is accomplished through the development, manage- ment and operation of the airport’s airside and landside real estate and infrastructure—the private enter- prises’ (e.g., FBOs) primary role is the actual provision of the commercial aeronautical products, services, and facilities. This is consistent with FAA guidance in FAA Advisory Circular (AC) 150/5190-6, Exclusive Rights at Federally-Obligated Airports, dated January 4, 2007, which states: “As a practical matter, most airport sponsors recognize that aeronauti- cal services are best provided by profit-motivated, private enter- prises.” This premise is based on the notion that private enterprises, in comparison to airport sponsors, are typically more nimble, flex- ible, and creative in finding ways to meet customer demand as it relates to the provision of FBO services. FBOs typically enter long-term land lease agreements (e.g., 30 years or longer) with airport sponsors in return for making substantial invest- ments in FBO improvements (e.g., terminal, hangar, office, shop, apron, vehicle parking, etc.) associated with the provision of commercial aeronautical products, services, and facilities. During the term of the lease, the FBO remains responsible Continued on page 59 Aviation Business Journal | 1st Quarter 2017 57
