CHANGING LANDSCAPE OF FBO SERVICES Continued from page 59 significant majority of airport spon- sors that are engaged in the provi- sion of aviation fueling services and aircraft storage do not (and will not) provide additional FBO services (e.g., aircraft maintenance, aircraft rental, flight training, aircraft char- ter, etc.) as the airport sponsor does not have the necessary experience and qualifications, and is not com- fortable with the additional risk and liability associated with these types of aeronautical activities. Therefore, airports with airport sponsor-owned and-operated FBOs typically have less ability to attract investment from private enterprises in the broad range of FBO services commonly desired by users of an airport. Case Study: DuPage Airport In 1988, the DuPage Airport Authority (DPA) purchased and began operating Planemaster Services, an FBO on the DuPage Airport (West Chicago, Illinois) that provided a full range of FBO services, including avia- tion fueling, aircraft ground handling, aircraft storage, aircraft maintenance, aircraft management, aircraft charter, flight training and aircraft rental. One of the goals of the DPA’s purchase of Planemaster Services was to expand the availability of aviation fueling services to 24 hours per day to meet the full demands of the airport’s users. However, one of the challenges faced by the DPA was that some of the FBO services offered were in direct competition with a privately-owned and operated FBO on the airport. In the early 1990s, the DPA devel- oped a new general aviation terminal (known as the Flight Center) and apron area, where both Planemaster Services and the privately-owned FBO were originally supposed to relocate fueling and ground handling services upon completion. However, the FBOs remained in their respective facili- ties and the Flight Center sat idle. In an effort to eliminate the public/ private competition and maximize the utilization of the Flight Center, the DPA successfully negotiated the purchase of the private FBO’s avia- tion fueling rights in 1995 in return for the divestiture of Planemaster Services’ aircraft maintenance, aircraft management, aircraft char- ter, flight training and aircraft rental to the privately-owned FBO. The acquisition of the fueling rights and divestiture of the other FBO services facilitated the reloca- tion of aviation fueling and ground handling services to the Flight Center and eliminated a complicated, public/ private competitive environment. Unlike many airport sponsor- owned and-operated FBOs, DPA operates the DuPage Flight Center independently from airport opera- tions. In essence, the FBO has dedicated staff, vehicles, and Ground Support Equipment (GSE) for the provision of aircraft fueling ser- vices, ground handling services, and aircraft storage. This facilitates a customer-centric focus with a high customer service level at the FBO. The DPA has invested millions in the airport’s land, infrastruc- ture, improvements, and services to enhance the overall level of airport services to the based and transient users of the airport. David Bird, Executive Director of the DPA stated, In 2006, approximately 90% of public-use airports with a 3,000-foot paved runway or greater had no more than one FBO. Therefore, on-airport FBO competition was not normal and, in many situations, on-air- port FBO competition was not healthy—for the consumer, the FBOs or the airport sponsor. “Without the additional revenues generated by the FBO, the DPA would not be in a position to offer the enhanced airport services avail- able at the DuPage Airport that are not normally available at comparable airports.” These enhanced services include 24-hour per day air traffic control services (at an additional annual cost of $500,000), 24-hour per day aircraft rescue firefighting services (at an additional annual cost of $440,000), and 24-hour per day airfield maintenance ser- vices (including snow removal). Case Study: Chattanooga Airport In 2002, TAC Air purchased the sole FBO (Krystal Air) at the Chattanooga Metropolitan Airport. Shortly thereafter in 2006, in an effort to increase competition at the airport, the Chattanooga Metropolitan Airport Authority (CMAA) devel- oped and released a Request for Proposal (RFP) for private enterprises to develop and operate a second FBO. However, the CMAA received no proposals as the demand for Continued on page 63 Aviation Business Journal | 1st Quarter 2017 61
