FAAÕs New Standards

FAA's New Standards

An analysis of the new Advisory Circular on Exclusive Rights, Minimum Standards

By Bobbi Thompson, Executive VP, Airport Business Solutions

July 2000

On April 7, 2000, the Federal Aviation Administration (FAA) issued its final version of the new Advisory Circular 150/5190-5 on Exclusive Rights and Minimum Standards for Commercial Aeronautical Activities. The publication of this new circular cancels AC 150/5190-2, Exclusive Rights at Airports, dated April 4, 1972, and A/C 150/5190-1A, Minimum Standards, dated December 12, 1985.

Many airport sponsors, airport management staff, and airport tenants may have misconceptions about what constitutes exclusive rights and the benefits of well-prepared minimum standards.

The following information is provided to assist operators in the process of understanding what an exclusive right is, and to assist in the development of an airport's minimum standards (Please refer to A.C. 150/5190-5 when you begin preparing your document).

While much of what is stated here is contained in the new A.C., the attempt here is to summarize the areas that may be of most concern to airport operators.

The stated purpose of the new advisory circular is to "...provide basic information pertaining to the FAA exclusive rights and minimum standards, which in part, describe the contractual grant obligations assumed by the operation of public airports."

In Section 1 of the new A.C. the FAA provides the details on exclusive rights for which compliance is mandatory for airports that have accepted federal assistance.

EXCLUSIVE RIGHTS
The statutory prohibition currently states: "A person does not have an exclusive right to use a navigation facility on which government money has been expended." An air navigation facility includes airports.

However, having a single fixed base operator (FBO) is not always considered an exclusive right. If the airport sponsor can verify that it is unreasonable costly — or impracticable — for more than one FBO to provide aeronautical services, and when the existing FBO's lease was under an agreement on September 3, 1982, and the addition of a second FBO would require a reduction in the first FBO's leased space, having a single FBO would not be considered an exclusive right.

As airport managers try to manage and maximize airport property, they should consider whether or not they would allow an existing FBO to respond to requests for proposals (RFPs) for new land leases if they have determined a need for competition. Excluding the existing FBO is not a violation of the exclusive rights prohibition.

Therefore, if you have an FBO with an existing lease and you are issuing an RFP for land to be used for a commercial aeronautical activity, you can exclude it from submitting a bid. An airport operator can also deny a prospective business operator the right to engage in an on-airport aeronautical activity for reasons of safety and efficiency. The new A.C. encourages each airport operator to work with his/her local Airports District Office (ADO) or Regional Airports Office in determining whether or not safety would be compromised by the proposed aeronautical activity.

Safety concerns are not limited to aeronautical issues — they may also include Occupational Safety and Health Administration (OSHA) standards; fire safety standards; building codes; or sanitation concerns.

MINIMUM STANDARDS
Section 2 of the A.C. incorporates advice provided by FAA with respect to minimum standards. The Advisory Circular states: "The sponsor of a Federally obligated airport agrees to make the opportunity to engage in commercial aeronautical activities available to any person, firm, or corporation that meets reasonable minimum standards established by the airport sponsor. In exchange for this opportunity, a business operator agrees to comply with minimum standards developed by the airport sponsor."