Airport or FBO? A Debate Emerges

In August we published the article, "Problem With SCASD Grants," which referenced concerns by the National Air Transportation Association that federal grants were being awarded to airports, who in turn ramped up to provide airline services, at times in competition with existing businesses. It is, in fact, one of a broader array of issues that appear to be surfacing directly as a cause of decisions and pressures being put on airports and businesses by the airlines. For airports, the core issue is air service; for private service companies, it's not allowing the public sector to have an unfair competitive advantage. For the air carriers, it's all about costs.

A man who finds himself at the center of this debate is Bruce Carter, A.A.E., director of aviation for Quad City International Airport in Moline, IL. He has been named the chair of the new Aviation Ground Services Association (AGSA), an affiliate of the American Association of Airport Executives. According to Carter, the new association grew out of a 'level of interest' meeting held this spring in Sarasota, FL. "It was a standing room only crowd with 80 airports and five airlines represented," says Carter. "That much interest led to AAAE forming this organization. With their expertise in training, we felt that AAAE was the best mechanism to try to establish operational and training standards.

"I would welcome the Signatures, the Midcoasts, the independent FBOs to be a part of the organization so that we can all be on the same page as it relates to maintaining air service. I don't think we can afford to lose more service to the gateways."

Carter says the current environment should present opportunities for partnerships between airports and service providers. "You have some FBOs who are entrepreneurs and might be able to see a situation where they may have an opportunity to get their people trained to do above and below wing at a cost-effective rate."

Central goals for the AGSA, explains Carter, are being able to offer professional training to airports that are in the airline servicing/refueling business or are looking at it, and for bringing about standardization to airline procedures. "As you know, each carrier has its own operations manual," says Carter.

[It should be noted that NATA formed an affiliate, the Airline Services Council, in the 1990s, with airline standardization as a central goal as well.]

"One of the things that's going to happen with this organization is to have training standards that would be able to be developed to have all airlines and third-party service handlers all on the same page on how you're going to do the service."

The Driving Force

For airports, says Carter, the primary focus is on maintaining and attracting air service. As airports are being pushed to find new ways of operating and generating revenue - led by the carriers' emphasis on cost reduction - some are looking at getting into the into-plane refueling and/or other airline services.

Explains Carter, "The reason this whole thing was organized was there are a lot of small and medium-sized airports around the country that are worried about protecting their air service. I know there are some airports that are using FBOs to do their above and below wing.

"There was a concern on the part of NATA that this organization that we're developing was going to ace out the FBO. I don't think that's the case.

"You can go up to Flint, MI where Jim Rice was able to attract American Airlines with new non-stop service to O'Hare. Flint had no O'Hare service. He was able to get with their FBO to be the third-party operator. It was a win-win situation for the FBO, American Eagle, and for Flint."

For FBOs and other airline service providers, concerns center around 1) airports getting federal grants to get into the servicing business; and 2) airports getting into a business for which there is already one or more service providers on the airfield.

The first concern arose out of grants awarded by DOT under its Small Community Air Service Development program, which are intended to help airports retain and attract airline service to their communities. This became a part of Vision 100 federal legislation due to Congressional concern about the loss of service to smaller cities.

"I look throughout the Midwest and see what airports have lost air service in the past ten years," comments Carter. "You can look coast to coast and see communities that have lost air service. Then look at the next tier that have air service that have applied for small community air service grants to keep this service - Marion, Decatur, Mason City, Fort Dodge, the list goes on.

"An airport director is going to do anything they can to keep their air service in their marketplace."

The Moline Experience

Ironically, or perhaps appropriately, Carter, 53, is well qualified to be at the center of the debate. His resume includes time as an air traffic controller; commercial pilot for an FBO; and airport management since 1982. He also has the experience of having gotten his airport into the airline servicing business.

In November 2003, Quad City International, via a limited liability corporation, QCIA Airport Services, got into the into-plane refueling business to the air carriers serving the airport. TransStates Airlines had been the previous provider, while also serving as the regional feeder to St. Louis for TWA/American.

Explains Carter, "We had a clause in the contract with TransStates that if they discontinued flying in and out of this facility, we had the option to not have them continue in the fueling business. They wanted to stay and continue the fueling because it's a money-making operation. We chose not to go that route."

Carter relates that the airport first approached the resident FBO, Elliott Aviation, to do the airline refueling, which it already does at its base in Omaha. Elliott declined. "There's a big difference in fueling in Omaha versus the Quad Cities with the amount of operations," he explains. However, he points out, the FBO can still offer airline refueling at QCIA if it decides in the future, while the airport has no interest in general aviation or corporate refueling.

That series of events led to the airport purchasing two fuel trucks from TransStates and becoming the sole airline refueling provider at Moline. QCIA Airport Services was then formed, under the oversight of the independent airport authority. "Our airport has been operated as an authority since 1947," says Carter. "As an authority, under the statutes of the State of Illinois, we're basically our own little city; we can tax, set ordinances, do about anything a city can do."

Since that time, the airport has purchased a third refueler as well as other ground service equipment out of the liquidation of Independence Air, according to Carter. Among the equipment: a tug; baggage carts; potable water cart, etc. Another tug, a ground power unit, and a belt loader are among the items still on the airport's shopping list, as it looks to expand into other airline services.

Carter says he's been approach by American to provide other services, and he currently has a proposal on the table to attract USAirways to provide service to Phoenix.