New FBO on the TPA Block

TAMPA — It has not been an easy row to hoe. The owner of the Tampa International Jet Center, Mike Azzarelli, first had to convince Tampa International Airport that the airport could support a second business aviation-oriented fixed base operation. Then it had to win the bid and deliver. On October 1, 2004, TIJC officially opened at TPA, and unveiled a first-class FBO facility that primarily focuses on line services and property management. TIJC brought in a seasoned FBO manager, Phil Botana, who is a walking history of the business, to oversee the start-up. Since then, the company is pretty much on track with business plan projections.

In fact, Tampa International Jet Center is already expanding, constructing a third corporate hangar which will bring its total office/hangar space to 108,000 square feet. The main FBO terminal is an additional 14,000 square feet, and the overhanging canopy for passenger dropoffs adds another 12,500 square feet.

According to Botana, “We’re making good progress. “If we annualize the rate we have now [pumping fuel], we’re probably pumping 2 million gallons a year. We were hoping to be at 2 million, 2.4 million [after the first year] to be successful. It’s taking us longer to get to where I would have liked; it’s taken a few more months.”

An Uphill Battle

As with many FBO start-ups, the owner, Azzarelli, became interested in the aviation services business after being a user of corporate aviation. His family has a history in the Tampa construction and government contract business, according to Botana, and among Azzarelli’s business interests he is an NFL sports agent. Among his clients: long-time pro quarterback Vinny Testeverde.

When Azzarelli pushed Tampa International to allow him to build the second business aviation FBO at TPA, the airport pushed back. The airport has long-time tenant Raytheon Aircraft Services, a former Hangar One facility.

“Mike wanted to build a limited resource FBO,” recalls Botana. “The airport fought him for ten years, but the harder they fought him the harder he tried.” In the end, the airport agreed to allow an independent study to analyze whether or not TPA could sustain another FBO.

“The answer that came back was yes, another FBO was needed,” says Botana. “Then Mike had to go through the bid process and still win it; all he had done was get the airport to agree to allow another FBO.”

Along the way, Azzarelli teamed up with F.W. “Billy” Hulse IV, a principal of Atlanta-based River Capital, a private investment firm, as a minority partner. Hulse is well known in the FBO industry as the former president/CEO of the Hangar One chain of FBOs who sold the chain to Beech Aircraft (later Raytheon) in 1983. River Capital is also the owner of Holland, OH-based Tronair, a ground support equipment manufacturer. Also in the TIJC start-up mix was Ron Klotz, who Hulse had hired to run Tronair and whose professional credits included directing the Pinnacle Air Network FBO marketing initiative and as general manager of Butler’s Tulsa FBO.

Explains Botana, “Mike got Billy Hulse to partner with him on a minority basis to bring credibility to his business” during the FBO bid process with TPA. “If Billy Hulse was a tenant of this airport at one time and had run a whole chain of FBOs, it was pretty hard to say that he didn’t have the expertise.

“Ron was intimately involved with some of the initial design work and the plan was that ultimately he would run the Jet Center when it opened. Unfortunately, Ron came up with a rare form of bone cancer and he called me when he realized he wasn’t going to get any better and asked if I would like to come and help get it off the ground. A month and a half later, I was here.” Klotz subsequently passed away in March, 2004.

$10 Million and Counting

Since winning the FBO bid, the Tampa International Jet Center has invested more than $10 million, with a $1.7 million expansion underway. The 20-year lease (with no options) encompasses some 14 acres. TIJA employs 25 full-time employees and two companies operating as subtenants, aircraft management firm Southern Air Systems and aircraft sales and charter firm Air Logic Solutions. The FBO has 40,000 gallons of jet fuel storage and 10,000 gallons of avgas, with capacity for another 20,000 gallons of jet-A.

Ironically, says Botana, the FBO today has very good relations with its landlord. “I think they are ultimately very happy with what we’ve built here,” he says. “I think they’re pretty proud of what it ended up being.”

He praises the airport administration, calling director Louis Miller “a heck of an airport administrator,” and citing the airport’s continued focus on controlling costs to tenants. “In his tenure here,” says Botana of Miller, “the cost per passenger to airlines has dropped between a dollar and a dollar and a half. That’s where their focus is placed.”

Regarding the business of operating an FBO at TPA, Botana says, “Typically, FBOs pay a percentage of gross. One of the things they do here, which I found to be a pleasant surprise, is they actually let us amortize our investment over the lease term.

“We pay the [five cents per gallon] fuel flowage fee, but we get to take a credit against any other percentages that we might owe for that amortization cost. Since it’s going to end up being theirs [via the reversion clause], they let you take the credit.

“We pay a square footage fee for the developed land, because they did all the ramps and parking lots for us; it’s 52 cents. For this kind of airport, that’s probably reasonable.”

Critical to the FBO’s initial success beginning in October, 2004, says Botana, was getting several key clients on board before the doors opened. “We sold some 50-60,000 gallons of fuel the first month because we had some tenants,” explains Botana. “Of course, we didn’t do much transient business at that point.”

Since that time, the focus has been on marketing, he says, and with being able to expand to meet demand, thus the current expansion. “Mike felt strongly that the sooner we got the other building built, even though we had to take some additional debt service in the short term, that we could take advantage of an opportunity.”

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