Infrastructure Investment Stalled, Says FBO Group

Aviation International News » August 2011
July 26, 2011, 4:40 AM

The General Aviation Infrastructure and Investment Coalition (GAIIC), a recently formed group of FBO operators (including most of the major domestic chains, as well as several dozen independent operators) and NATA, has met with airport authorities and congressional leaders seeking to bring standardization and stability to the FBO lease market. According to Michael Scheeringa, president of GAIIC member Signature Flight Support, indecision about the current unregulated airport lease situation is constraining more than $1 billion in construction and improvements that FBO operators would make to their properties. “FBOs in some communities are treated like a concessionaire, like a newspaper stand, but we have the capital commitments of a commercial building on the corner of Main and First,” said Scheeringa.

As airports reduce the length of the lease terms on their properties, companies are less inclined to make long-term infrastructure improvements, while shortened amortization periods deter financial institutions from lending them the capital needed to make those improvements. The coalition seeks to establish a set of nationally recognized “best practice” standards to guarantee protection of capital improvement expenditures. In cases where airport authorities do not renew an FBO operator’s lease, the arriving FBO should be required to “buy out” the incumbent for the unamortized value of the improvements, according to the coalition. “That would then encourage whoever is the current leaseholder on a field to have continuous investments,” Scheeringa told AIN.

The coalition met with representatives from the American Association of Airport Executives and the Airports Council International-North America (ACI-NA) and the Senate and House Aviation Subcommittees in a roundtable discussion and the coalition also addressed the audience at ACI’s small-airport operator’s conference in Cincinnati at the end of June. While discussions are still in the early stages, the coalition hopes to have the matter placed on the fast track for consideration by the FAA’s Airport Cooperative Research Program.

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