A Discussion with Jim Hopkins at Landmark Aviation ...
... helps shed more light on the initiative by a coalition of major FBO chains and NATA to pursue long-term leases at U.S. airports to encourage investment. Hopkins has spent some 25 years in the FBO business, first with Piedmont Aviation and then with Piedmont-Hawthorne and now Landmark. (At the very least, we had a good time reminiscing about people like Joe Culler and Dean Harton.)
Hopkins and Marian Epps of Epps Aviation/PDK represented the coalition at a recent ACI-NA conference in Cincinnati and met with some 20 airports to discuss the lease issue. That meeting occurred at the invitation of ACI-NA following a roundtable with legislators on Capitol Hill – the subject of a previous blog. The legislators essentially encouraged the FBOs and two airport groups to continue discussions, though the potential for legislation on the issue remains.
Explains Hopkins, “It was a very meaningful discussion. Our point is that we want new best practice standards to create general aviation investments and economic growth. They in theory are all for all of that. But they’re not for more regulations passed down on them by FAA or any other form of government.
For us the reality is we have to continue this dialog; it’s important. Since we have raised it to the level of possibly making it regulatory, suddenly we have an audience and willing participants. The folks from ACI said, ‘We like this idea; we hear what you’re saying’.
“We see this as our opportunity to make a very important point and to put some structure into it so we can have leases that allow us to borrow money to make the infrastructure investment over the long term. It reduces our cost of investment, and we can then make more investments more readily.
“The term certainly can be variable. We’re asking for 39 and a half years because that’s how IRS writes the regulation for maximum depreciation. At the same time, we certainly recognize that there are investments that warrant maybe 15 years, maybe 20 or 25. Not all will warrant 39 years.
“One of the things that was a misconception was that we were looking for this time period and the airport authority had no options but to live with a winning FBO for that period of time. That’s not the case. If an airport authority says, ‘Fine, you’re going to amortize this over 25 years but your lease is for ten years. What we will guarantee is, we will take over the unamortized portion if you are not the successor in ten years.’” The latter point is key, he says.
While the major chains are leading the coalition, Hopkins relates that the initiative is one that is vitally important to independent operators as well. They have less resources than the major chains, and the length of the lease is critical to obtaining financing for infrastructure investments.
Hopkins agrees that this could be a good topic for the TRB’s Airport Cooperative Research Program, which could bring together stakeholders to come up with a guidance document of best practices. His concern, he says, is that the FBOs want relief now and such a study by ACRP could take 18 months or more.
Thanks for reading. jfi
