FBOs: Industry in Transition

The changing face of FBO ownership and leaseholds leads the discussion during NATA's annual convention. Editorial director John F. Infanger reports from Aviation Industry Expo in Las Vegas.

NATA's Coyne, who says 25 years is a reasonable average for a lease term, comments, "We understand that we don't want a situation where airports lose the incentive to lease their land."

John Enticknap, president of Mercury Air Centers, says, "Our investors expect to get a return on investment. We need 20 years to get a reasonable payout."

Regarding fees, Enticknap says, "We break out the fees [on customer receipts]. I want our customers to know we're a tax collection agent for the government." Rising fees, he adds, are a concern.

FAA's Bennett and various FBOs also stress the importance of minimum standards at an airport to ensure an equitable business environment. Such standards, they say, help maintain competition while helping to protect the investment of businesses already on the airfield.

FBO/airport symposium

During the post-convention symposium looking into FBO/airport issues, lease terms and fees dominated the discussion, along with the EPA's recent announcement that it is going to require secondary containment for refuelers (see page 20).

Eric Peterson, director of the Santa Clara County (CA) Airports, says that a potential "big benefit" of long-term leases for airports is that they can help keep a general aviation airport from closing, a pressure many have faced. He cites the example of San Jose's Reid Hillview Airport, under fire for years because of its close location to the city proper and the high value of real estate. A key part of the decision not to close the airport, he says, was the high cost required to buy out leaseholds.

Regarding the subject of rates and charges for operators, Paul Meyers, principal in charge of Denver-based Aviation Management Consulting Group, says that his firm is "not a big fan" of basing rates on gross receipts. Fees are designed to recover costs; rents are fair fees for occupying land and/or facilities, he says. "Rents are rents; fees are fees."

Meyers says that some airports are incorporating an Airport Economic Index that serves as a gauge that will float with the market, in lieu of an annual CPI (consumer price index) adjustment.

He also cautions that, as fuel prices escalate in today's uncertain market, a percent of fees rate could have a damaging effect on fixed base operators.

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