Sunborne Turns to the FBO Biz

May 21, 2008
Master developer at Centennial has FBOs as tenants; now he looks to become one.

ENGLEWOOD, CO — Michael K. Packard, owner of the SunBorne Companies, comes off as a man who likes to get things done. He is in the process of developing some 125 acres on the south side of Centennial Airport here. Called InterPort, it is a master planned aviation development that currently offers some 167,000 square feet of hangar and office space, including two FBO tenants, Signature Flight Support and XJet. Another 213,000 square feet of facilities are planned, and part of that development will be a fixed base operation that Packard sees as essential to selling his aviation development to interested parties. On an airport that pumps millions of gallons of fuel, the move may not be as controversial as at some locations. While Packard acknowledges that a landlord who competes with his tenants may not be a popular notion, he remains determined. It’s a complement to the rest of the 125 acres.

In separate discussions, representatives of both Signature and XJet expressed matter-of-fact responses to their landlord getting into the FBO business. It’s just a matter of following one’s own business model, they agree.

For Packard, it’s more part of his master development plan, and he likes having FBOs as tenants. “XJet is a relatively more independent sub of ours. We struck a deal with them that to a great extent allowed them to do their own thing, within certain parameters. Signature on the other hand is a designated operator; we have the FBO and they run the FBO operation for us. That was the way it technically worked.

“What we did is give them exclusive fueling rights on just a portion of the property. That was our deal.

“XJet’s focus, though not exclusively, is overwhelmingly on their own members. They really don’t see that much in the way of transients. They’re taking care of their own family type of thing. They’re an FBO in the technical sense but they really don’t operate like a true FBO.”

[XJet is the subject of a Business Profile in the April 2007 of AIRPORT BUSINESS, read story here.]

As Packard has moved his development forward, he explains, he’s had in mind how one of his properties, an FBO, would be an extension of that development. It was the original design of the Signature agreement, he says.

“Frankly, if you look at the way things have evolved with Signature, they haven’t taken the market share that we’d hoped we’d get. They’ve been here five years and have 15 percent of the market here at Centennial.

“They haven’t done well. When we set it up we said, here’s your turf to play on. Their business model doesn’t work well on this airport, in our opinion. I think they have a different opinion.”

In its bid to become a full-service fixed base operation, SunBorne is currently in the “formal FBO application process” and has been approved to construct a 36,500-square ft office/hangar complex. Packard doesn’t foresee any long-term obstacles to his becoming an FBO and meeting the airport’s minimum standards.

While SunBorne holds a 55-year term as master lessor, his FBO tenants have 30-year terms, he says.

SunBorne unveiled its FBO plans at last fall’s National Business Aviation Association convention, at which time the company announced an agreement with long-time FBO executive Blake Fish, CEO of Quantem FBO Services, LLC. Fish previously was in top management at Signature and Atlantic Aviation, among others. And his firm currently owns and operates Galvin Flying Service at Seattle’s Boeing Field and Byerly Aviation in Peoria, IL.

Interport - 125 acres
Since the onset of the new Denver International Airport, Centennial has taken on the role as primary corporate airport for the Denver marketplace. Yet, all of the development has been on the north side of the airfield. The south side has evolved, in essence, into a greenfield, which Packard is now tapping. “We call it a master planned aviation development,” he explains. “It’s still mixed use; it will primarily orient toward aviation, but we have the ability to bring in other retail support services so somebody can come in here and go to the cleaners, get a quick lunch, meet with their insurance guy, that sort of thing.

“What we’re trying to do is create a situation where we really do have the one-stop shopping for people involved in aviation.”

He’s building a corporate aviation community, says Packard. All property is considered on-airport. “That was a big deal for us. We have FAA approval to do non-aviation uses, because the determination has been made after several years that there has been adequate amount of aviation-oriented grounds that the airport has available. Rather than forcing them to use land only for strictly aeronautical purposes, they’re kind of widening the gap a little bit and saying, ‘OK, we’ll let you do things that are related to the airport but may not fall strictly within the definition of airport.’”

On the subject of how an FBO fits into his vision for the overall development, Packard says he wants his FBO to offer his other InterPort tenants a competitive price.

“As the FBO becomes more of a certainty, we’re seeing a lot of activity from folks who are interested,” he explains. “A lot have been attracted to the south side of the airport; the access is more convenient; our concept of the planned development has resonated very well.

“The problem has been, we haven’t been able to be competitive in the fuel pricing. What we see is we’re sort of adding that last element to the offering. And we’re very enthused about the reaction that we’re getting.

“Up to now, we’ve had to say, go make your deal with Signature. And we have nothing to say about their pricing. They can price however they see it. But, it has not put us in a position where we can offer competitive fuel pricing.”

Recognizing that Centennial Airport has taken a quantum leap in activity since Stapleton’s closing, Packard relates that his business investment here is reflective of the private sector’s investment in corporate aviation and the FBO community in recent years.

Comments Packard, “It seems to me financial institutions are looking at this and saying, this is a good long-term business. We may see cycles, but on a macro trend I think there’s a growing demand for business aviation. There are a lot more people in it today that aren’t passionate about it; it’s a different connection. But airplanes make more and more business sense as time goes by.”