Minimum Standards Exemptions

Part one of a six part series on airport tenant relations and aviation legal matters

Can an airport tenant ever really be exempt from an airport’s minimum standards and regulations? This is a pressing and timely issue for all airport tenants, whether the tenant is the beneficiary of an exemption or whether its competitor has or is seeking an exemption.

The necessity for an exemption may arise due to a myriad of conditions. There is no question that the economic climate of late has resulted in substantial losses to FBO operators and other airport tenants, particularly with the widespread loss of general aviation aircraft hours flown. In response, airport tenants may look to non-aviation subtenants to make up some of their lost revenue, begging the questions:

1. Can an airport tenant ever really obtain an “exemption” from the airport minimum standards to accommodate non-aviation subtenants?

2. If an airport tenant does obtain such an “exemption”, how does an airport tenant protect and enforce its “exemption”?

The recent Part 16 decision in Valley Aviation Services, LLP v. City of Glendale, AZ, FAA Docket 16-09-06 (May 24, 2011) is particularly illuminating with respect to these issues.

If you read this article no further, at least note the following with respect to “exemptions” from airport minimum standards at airports funded with federal monies and subject to the Federal Grant Assurances:

1. An airport tenant can never have a valid and enforceable “exemption” to accommodate non-aviation subtenants upon designated aeronautical property unless the airport sponsor obtains explicit permission from the FAA with respect to same; and

2. One airport tenant’s “exemption” is the foundation for another airport tenant’s Part 16 claim for a violation of Federal Grant Assurance 22 (Economic Non-Discrimination).

The Fleeting Exemption

Valley Aviation Services, complainant, is a tenant of Glendale Municipal Airport (GEU) in Glendale, Arizona, and operator of the Glendale Airport Hangars on the southern end of the airport, inclusive of large hangars, T-hangars, T-shades, office, and ramp space. The complainant was assigned the relevant leasehold interests for the Glendale Airport Hangars on January 1, 1999, though several of the issues raised in the context of this Part 16 action arose prior to that date.

Respondent, City of Glendale, owns and operates the airport; GEU is a federally funded airport.

The complainant was authorized to sublet its premises to non-aviation tenants through informal arrangements with various airport directors, until the respondent reversed its position and imposed strict enforcement of the airport minimum standards as to complainant, while allowing other airport tenants to continue the practice of subleasing to non-aviation tenants.

By way of specific example, the complainant was forced to evict its non-aviation tenants, including the Glendale Police Department (which stored police vehicles in the complainant’s hangars), while another tenant on the airport was permitted to sublease its hangar space to the Maricopa County Police Department for vehicle storage. Likewise, the complainant was forced to evict all of its tenants storing non-airworthy and/or disabled aircraft, while other tenants were allowed to continue the subleasing of space for the storage of such aircraft.

While traditionally, such disparate treatment between airport tenants is the subject of Part 16 actions on the grounds of economic discrimination in violation of Federal Grant Assurance 22, Valley Aviation Services examines the interplay of Federal Grant Assurances 22, 29, and 19 with respect to these issues.

Federal Grant Assurance 22

Federal Grant Assurance 22, governing economic non-descrimination, requires airport sponsors to make federally funded airports available “for the use and benefit of the public and to make it available to all types, kinds, and classes of aeronautical activity on reasonable terms, and without unjust discrimination. Federal Grant Assurance 22 further requires airport sponsors “to treat in a uniform manner those users making the same or similar use of the airport and to make all airport facilities and services available on reasonable terms without unjust discrimination.

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