Single FBO Airports
So when can there be a single FBO because of Lack of Qualified Competition? FAA Order 5190.6B (“Airport Compliance Manual”) expressly acknowledges that a single FBO airport can exist without creating an Exclusive Right. The Airport Compliance Manual specifically provides:
- 8.6. Airports Having a Single Aeronautical Service Provider: Where the sponsor has not entered into an express agreement, commitment, understanding, or an apparent intent to exclude other reasonably qualified enterprises, the FAA does not consider the presence of only one provider engaged in an aeronautical activity as a violation of the exclusive rights prohibition. The FAA will consider the sponsor’s willingness to make the airport available to additional reasonably qualified providers. (See paragraph 8.9.b of this chapter.)
Whether a potential competitor is reasonably qualified is often a source of controversy. Often, a finding that a potential competitor is reasonably qualified involves a determination as to whether the competitor is safe. An airport sponsor can deny a prospective aeronautical service provider the right to engage in an on-airport aeronautical activity for reasons of safety and efficiency.
The FAA, however, is the ultimate arbiter of whether a certain aviation activity is unsafe. Simply stated, an FAA certificated entity is presumed safe and a denial of access on the basis of safety may give rise to an Exclusive Right in violation of Grant Assurance 23. Decisions by an airport sponsor to block access based on safety is permissible when the airport sponsor determines that an aeronautical activity as a whole is inconsistent with safety and efficiency of the airport and the FAA concurs.
A second source of controversy arises when an airport sponsor is accused of placing restrictions on a tenant that are insurmountable. An airport sponsor is not permitted to place unreasonable restrictions on an entity seeking to compete with an airport’s sole FBO. Notwithstanding that, “The mere fact that lease payments are not identical does not necessarily constitute ‘unjust discrimination’ in prices or the grant of an ‘exclusive right.” Penobscot Air Servs. v. FAA, 164 F.3d 713 (1st Cir. 1999).
Impermissible Exclusive Rights
The following are some examples of airport sponsor conduct found to be impermissible Exclusive Rights in violation of Grant Assurance 23:
- Norwood Airport Commission’s failure to provide Boston Air Charter with access to utilities necessary to conduct fueling operations precluded Boston Air Charter from self-fueling and forced Boston Air Charter to fuel through Eastern Air Center(the sole FBO) was found to be a constructive creation of an Exclusive Right. See Boston Air Charter v. Norwood Airport Commission, FAA Docket No. 16-07-03, June 7, 2011.
- The grant of options or preferences on future airport lease sites to a single service provider may be construed as intent to grant an Exclusive Right such that the use of leases with options or future preferences, such as rights-of-first refusal, may be held to violate Grant Assurance 23. See AC No: 150/5190-6 at 1.3(b)(3).
- An airport sponsor may not deny access to an individual FAA certificated operator based solely on the airport’s determination that the aeronautical operations are not safe because those operators having an FAA certificate are presumed safe. See Bodin v. County of Santa Clara, CA, FAA Docket No. 16-11-06 (December 19, 2011).
- “Leasing all available airport land and improvements planned for aeronautical activities to one enterprise will be construed as evidence of an intent to exclude others unless it can be demonstrated that the entire lease area is presently required and will be immediately used to conduct the activities contemplated by the lease.” Bodin v. County of Santa Clara, CA, FAA Docket No. 16-11-06 (December 19, 2011) (citing FAA Order 5190.6B. Sec. 8.9.d Space Limitation.
- Awarding favorable leases to parties that are established businesses which would erect a potentially insurmountable barrier to entry for new operators may be a grant of an Exclusive Right, as cautioned by the U.S. Court of Appeals for the 11th Circuit. See BMI Salvage Corp. v. FAA, 272 Fed. Appx. 842; 2008 U.S. App. LEXIS 7964 (11th Cir. 2008).
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...