Who's In Charge Here?

Some Say Airport Sponsors Are Taking Over Too Many FBOs

The leaseholder of the modest FBO, representing the second generation of the family-owned business, is similarly quick on the uptake. She grew up in the industry, studied business in college and would like to expand her operation, while also doing her part to stimulate the local economy. And she has some good ideas on what that would take, including a refurbished passenger terminal, new storage hangars, and an updated fuel farm that can accommodate more jet fuel. She even sees that expanding the flight school will help sustain a bedrock of local interest in aviation. The FBO regularly holds “open house” events, inviting the public out for airplane rides and to have a look at some of the antique and classic airplanes based there.

So the airport board supports and cooperates with the FBO, which it views as the “gateway to the community.” It even funds many of the municipal services such as plowing the airport’s private access road and parking lot; updating sewer and electrical service to accommodate the planned expansion; and vouching for the FBO when it comes time to apply for federal grants and construction financing for the new projects. There’s even talk of acquiring new land to extend the runway and add an ILS approach.

The FBO’s current 20-year lease has six years left to go, and both sides are already discussing terms for renewal — balancing the FBO’s plans to invest in upgraded facilities and the sponsor’s promise to support the airport with an eye toward its contribution to further economic growth in the area.

Sound too good to be true? These days, it probably is. This is what it looks like when everything goes right. But with the overall economic downturn since 2008, airports like this one are few and far between.

Airport Beta is not so pretty. Its county fathers have not planned wisely, and bad luck in the form of the failure of a large local business has touched off a series of tumbling fiscal dominoes.

First, the now-disappeared corporate and real estate taxes from the failed company historically represented a large chunk of municipal revenue. Housing prices (and corresponding property taxes) are in a downward spiral as displaced employees try to sell to move out. And the past summer was a rainy one, so income from tourism to the local lake region was down by 23 percent.

Out at the local airport, the FBO is also looking at the last six years of a 20-year lease. Even though this is a similar second-generation business with smart, dedicated management, the county is in no position to cut him any slack. In fact, they have even cut back on some services that were part of his lease. The airport board would like to see the facility as a leg-up to future economic development — for tourism in better weather and in hopes of attracting new business. But with the taxpayers crying for austerity, there are no pennies in the piggy bank for taking any steps forward.

To boot, a newly appointed airport board member tends to view the facility as a playground for the rich hobby pilots in town, and would like to see them pay a larger share in fuel flowage fees, higher hangar rents, and other added charges. Visiting pilots are viewed as cut from the same high-priced cloth — and the board member has publicly wondered why there are no landing, parking, and other service fees at the local airport, as there are in other places he’s “heard about.” The board member has gone as far as to suggest that if the FBO operator doesn’t like the new lease terms being offered, then he’s happy to have the county take over the business, since he’s sure the municipality could do a better job of management.

Yes, this is the nightmare scenario. And with the financial meltdown of 2008 still shaking out, unfortunately there are far more airports in the Beta category than there are Alphas.

Some have even suggested that airports are in local governments’ crosshairs as cash cows to help supplement depleted general funds. Under federal law, it is strictly illegal to divert funds collected at the airport to non-airport use, but some say creative bookkeeping (in the form of fees for municipal services and other ploys) are used to get around the rules. An expert in airport real estate issues said the FAA is mandated with enforcing “sponsors’ assurances” laws, and will levy steep fines on airport sponsors discovered to be flaunting the letter or spirit of the law of the land.

National Standards

Since FBOs also compete with rivals at other nearby airports, there can be a double-whammy. They even compete with airports thousands of miles away, as in when a jet crew decides at which stop on a long trip they will upload the bulk of their fuel. As service levels and infrastructure crumble under the weight of economic distress, the well-supported competition at another airport in another county just 30 miles away begins to draw the traffic, compounding the problem for the struggling operation.

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