CHANGING LANDSCAPE OF FBO SERVICES Continued from page 57 for the maintenance and upkeep of these FBO improvements. Many times, to meet the airport sponsor’s minimum standards and/ or the demands of airport users, private enterprises will invest in and provide an expanded list of commer- cial aeronautical products, services, and facilities that may be considered marginal profit centers or “loss lead- ers,” such as aircraft maintenance, aircraft rental, flight instruction, and aircraft charter. However; these ser- vices can be essential in the support of existing customers (airport users) and or development of new custom- ers that (or will) utilize the primary profit centers of an FBO (e.g., aviation fueling services and aircraft storage). Airport Sponsor-Owned and-Operated FBOs Over the last 20 years, airport sponsors have expanded their role in providing FBO services as more and more are either voluntarily or being forced into the ownership and operation of the airport’s FBO. In 1995, approximately 817 FBOs (or 25% of the 3,298 public-use airports with a 3,000-foot paved runway or greater) were owned and oper- ated by an airport sponsor. By 2015, this number grew significantly to 1,312 FBOs (or 37% of the 3,534 public-use airports with a 3,000-foot paved runway or greater). This could include an airport-owned and-operated FBO that only pro- vides commercial self-service Avgas fueling services (e.g., Byron Airport in Byron, California) to an airport- owned and-operated FBO providing a broad range of commercial aeronauti- cal products, services and facilities, including full-service aviation fueling services (Jet A and Avgas), aircraft ground handling services, passen- ger and crew services, and aircraft storage (e.g., Fort Wayne Aero Center, Fort Wayne International Airport in Fort Wayne, Indiana). Most of these airport sponsors are exercising a unique right—granted by the FAA to airport sponsors of public-use, federally-obligated airports—to provide these FBO services exclusively. This “propri- etary exclusive right” is provided for in AC 150/5190-6. In essence, while an airport sponsor may not grant private enterprises an exclusive right to provide commercial aeronautical products, services or facilities, the airport sponsor may elect to do so itself—however, it must utilize its own employees and resources; and, must meet applicable minimum standards adopted by the airport sponsor, even if the airport sponsor has exercised their “proprietary exclusive right.” If an airport sponsor elects to hire Over the last 20 years, airport sponsors have expanded their role in providing FBO services. Aviation Business Journal | 1st Quarter 2017 a third-party to manage the provi- sion of FBO services (in essence, not utilizing the airport sponsor’s employees or resources), then the airport sponsor may not exercise their “proprietary exclusive right.” There are a variety of reasons that airport sponsors begin provid- ing FBO services. As discussed in AC 150/5190-6, airport sponsors may find that the “the revenue poten- tial [associated with the provision of FBO services] is insufficient to attract private enterprises” or “the revenue potential [associated with the provision of FBO services] is so significant that the airport sponsor chooses to perform the aeronauti- cal activity itself in order to become more financially self-sustaining.” Other reasons airport sponsors own and operate the airport’s FBO include: 1) the default of an FBO agreement; 2) the settlement of litiga- tion between the airport sponsor and the FBO; 3) the lack of interest by private enterprises in the provision of and/or investment in certain FBO services due to lack of demand or availability of attractive lease terms and conditions; and/or 4) the airport sponsor’s ownership and operation of an FBO at another airport within the airport sponsor’s airport system. As previously mentioned, there are a variety of reasons that private enterprises will invest in and pro- vide an expanded list of commercial aeronautical products, services and facilities, in addition to the provi- sion of aviation fueling services and aircraft storage. However, a Continued on page 61 59
