This prohibition on exclusive rights applies to all aero- nautical activities. Aeronautical activities are those which “involve, make possible, or are required for” aircraft opera- tions and those activities that contribute to or are necessary for safe aircraft operations.10 Aircraft maintenance is clearly an aeronautical activity within the FAA’s meaning of that term. Thus, repair stations and maintenance businesses are performing an aeronautical activity and cannot be either the beneficiary of, or be excluded by, an airport’s improper exclusive right. Importantly, the prohibition against exclu- sive rights is applicable whether or not the business is based at that particular airport. In plain language then, an airport cannot protect a main- tenance provider based at the airport by imposing conditions that keep out independent maintenance providers. However, there are other considerations to how this works in reality. There is another grant assurance that comes into play here. Also, minimum standards, rules and local airport require- ments must also be considered. Grant Assurance 22 “Economic Non- Discrimination”: One of the most commonly discussed assurances is Grant Assurance 22. It requires that airports be available for use “on reasonable terms and without unjust discrimination” for all aeronautical activities, includ- ing maintenance providers.11 At the same time, airports are allowed to set reasonable preconditions to be met by all users to promote safe and efficient airport operations.12 Consequently, airports cannot outright exclude independent service providers from doing business on the airport; but, on the other hand, they can set reasonable conditions that must be met. There are a few instances where the FAA has found examples of unreasonable conditions that could apply to independent maintenance providers: (1) terminating a right to do business without cause in the airport’s sole discretion; (2) requiring the operator to quit the premises on seven days’ notice of a breach with no opportunity to cure; and (3) requiring a waiver of appeal rights to the FAA.13 10 AC 150/5190-6, Appendix 1, at 1.1(a). By contrast, non-aeronautical businesses may be aviation-related—such as a specialized caterer, airport restaurant, and car rentals—but they are not necessary for aircraft operations to occur. The prohibition against exclusive rights does not apply to non-aeronautical activities. 11 Grant Assurance 22(a). 12 Grant Assurance 22(h). 13 ACRP Report 44, Understanding Grant Assurances, Vol. 2, at E-15. Aviation Business Journal | Spring 2019 MINIMUM STANDARDS The FAA recommends that airports develop and imple- ment minimum standards that are fair, reasonable, and specific to their unique aeronautical communities.15 While doing so is optional, well-drafted standards serve to protect users from unauthorized products and services, encourage the availability of services for all airport users, promote the utilization of airport property, and ensure efficient opera- tions. The goal is for airports to regulate all service provid- ers and give compensation back to the airport. However, minimum standards must be reasonable and not be used to create an exclusive right. Most airport minimum standards envision only airport- based businesses with leases, such as FBOs, flight schools, repair stations, and charter operators. However, the FAA’s guidance on minimum standards contemplates the existence of independent operators and advises that airports create a permitting process with yearly fees or revenue percentage charges.16 But few airports do it. Where airports’ minimum standards do address independent maintenance provid- ers, having written documentation provides clear cover to require compliance and avoid claims of unjust discrimina- tion. In practice, however, most airports do not address independent service providers one way or the other. 14 AC 150/5190-7, at 1.3(b). 15 Grant Assurance 22 sections (h) and (i) provides that the sponsor may estab- lish such reasonable, and not unjustly discriminatory, conditions to be met by all users of the airport as may be necessary for the safe and efficient operation of the airport. AC 150/5190-7, at 1.1. 16 AC 150/5190-7, at 1.3(b). Continued on page 44 43 Examples of reasonable preconditions that the FAA has recommended are: (1) requiring proof of liability insurance; (2) indemnification in favor of the airport; (2) holding a business permit issued by the airport; (3) payment of a busi- ness permit and/or other fees; and (4) agreeing to abide to airport’s rules and regulations.14 If an airport has no published preconditions for main- tenance by independent operators, then it would likely be unreasonable for an airport to flat-out refuse access. Airports that refuse access entirely to independent operators would, most likely, be in violation of exclusive rights and economic non-discrimination grant assurances.
