A Problem With Leases

It’s interesting when your position in industry puts you in the middle ...

Actually, it’s a fun place to be in a dynamic industry, which from the landlord/tenant relationship point of view is like few others. It’s not your ordinary business environment.

I’ve had the FBO lobotomy; I’ve had the airport lobotomy.

Which leads us to a point where FBOs and airports are in the midst of a brouhaha over the length of leases. Turns out, at this year’s NBAA Schedulers & Dispatchers conference a number of prominent FBOs started talking and realized many were facing a similar problem — inflexible airports that wouldn’t extend leases so infrastructure investment could be made ... and amortized, They decided to form a coalition and use NATA as their lobbying catalyst.

They took it to the point of having a roundtable discussion with the U.S. House Aviation Subcommittee and reps from NATA, AAAE, and ACI-NA. The representatives listened, and recommended that perhaps the two groups need to talk to each other more and work it out.

And they did ... talk. ACI-NA invited coalition representatives to hold a meeting with airport directors at a conference in Cincinnati. Jim Hopkins of Landmark Aviation and Marian Epps of Epps Aviation represented the coalition.

Having spoken with the players involved, the consensus is ‘we’re pretty much on the same page’. Tenants need to be able to reasonably — from an IRS/financial point of view — amortize their investments. Airports don’t need Congress and FAA getting more into how they operate their airports (businesses) ... and they generally appreciate the investment made by a company that will never own the land on which their company sits and will have to transfer ownership of their facilities at the end of the lease. Like I said, not your ordinary business environment.

When we started this magazine back in the 1980s, I would often run into situations where the airport/sponsor didn’t want to offer more than a five-year lease to an FBO. They’d been left holding the bag, particularly during the early ‘80s downturn.

For most that changed, because it became evident that to attract investment an airport had only a lease (and hopefully a market) to offer.

A bottom line may be this ... the chains representing a large percentage of top-tier FBOs are experiencing a problem as they look at investing in U.S. airports. That in itself is worth listening to.

What drives me crazy is they would drag Congress into it. Did I mention the FAA reauthorization bill?

Thanks for reading.                    

 

 

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