FAA Refutes AOPA FBO Pricing Complaint

 - June 11, 2018, 5:35 PM
Signature Flight Support's FBO at Asheville Regional Airport was acquired by the company in its 2016 purchase of Landmark Aviation and is the lone aviation services provider on the field. Last year, AOPA filed a Part 13 complaint about FBO pricing at the airport, and the FAA has now disputed those arguments.

The FAA has issued a conclusion in response to the Aircraft Owners and Pilots Association’s Part 13 complaint against Asheville Regional Airport and its sponsor the Greater Asheville Regional Airport Authority (GARAA), refuting AOPA’s arguments. The complaint filed last August alleged “egregious FBO pricing practices” at the North Carolina airport and asked the FAA to investigate if its agreement with Signature Flight Support, the lone service provider on the field, was in violation of Grant Assurance 22 (Economic Nondiscrimination) and 23 (Exclusive Rights).

In the June 7 letter to AOPA general counsel Kenneth Mead, the agency noted that airport sponsors collect the bulk of their revenue via two sources: aeronautical users (aircraft operators) paying airfield fees (usually collected by FBOs) for use of runways, taxiways, ramps, and aprons, which the FAA decrees should be based on cost; and second, from airport concessionaires (such as FBOs) who pay rent and charge their own fees for all other aeronautical facilities and services, such as terminals, hangars, cargo space, and maintenance. The agency permits the FBOs to use fair market value in setting those fees.

AOPA argued that FBO fees for services rendered in the leased area should be regulated in the same manner as runway usage, to which the FAA responded that such a standard would not be applied to similar fees levied directly by an airport sponsor. While AOPA claimed that overnight parking, or tie-down, triggers fees from the FBO, the FAA countered that “the sponsor may use direct charges, such as tie-down fees, to charge aeronautical users for the use of airport facilities.” The agency also noted that if such services were provided directly by the GARAA, the airport sponsor would be in violation of its grant assurances if it did not charge for them."

AOPA’s argument asserted that Signature’s pricing model is unreasonable, in that it requires transient operators to pay for services, which they may not want or need, as a condition of engaging in the aeronautical use of the facility. The pilot organization called the FBO’s fees unreasonable. The FAA found AOPA’s “assertions to be unpersuasive,” as “comparing Signature’s rates and charges to those of surrounding airports does not reflect Signature’s total costs at the airport.” It described the substantial infrastructure investment the FBO chain was required to make at the airport, such as a new terminal, a hangar complex, maintenance facility, office space, fuel farm and a self-service pump and fueling area for avgas. In addition to the initial investment, the FBO was required to spend another $750,000 on leasehold improvements to its ramps and has other future financial commitments.

“The fact that Signature charges transient operators for services it provides at its leasehold is not unreasonable,” stated Heather Haney, the airport compliance specialist in the FAA’s Southern Region, which issued the decision. With Signature assuming a certain level of risk in its investment, the FAA ruled, the company is entitled to pursue a business model that provides a return on its investment.

AOPA also contended that “the combination of Signature’s pricing model and its exclusive control over all transient parking at [the airport] presents unreasonable conditions and terms for transient operators to access the airport.” In the FAA’s opinion, AOPA’s argument does not represent a denial of access for its members as much as an inconvenience, stating it “fails to establish how the pricing and transient parking services are so unreasonable as to deny access in violation of Grant Assurance 22(a),” as it had the requirement to demonstrate. The FAA added AOPA’s complaint does not meet the burden of proof with regard to how GARAA’s decision to allow Signature to provide transient parking is unreasonable. The airport sponsor has pointed out pilots are allowed free access to a self-service fueling area, which is not a parking area, as non-badged pilots are required to remain with their aircraft due to security concerns. Any pilot using FBO services or facilities, however, would be assessed a ramp fee, which is waived with a minimum fuel purchase.

Lastly, as to AOPA’s argument that GARAA has granted Signature an exclusive right to all transient tie-down activities as the lone FBO, the airport sponsor responded that it has 50 acres of available land to accommodate a second FBO at Asheville, if needed, but as AOPA itself noted, “the current demand for [the airport] is unlikely to support a second FBO.”

The FAA concluded that GARAA, therefore, is currently in compliance with Grant Assurances 22 and 23 and that no further review of this matter is warranted.

“We believe the FAA Southern Region decision is incorrect and inconsistent with the ruling in Orange County [California] and the guidance FAA headquarters issued as recently as December 2017,” AOPA’s Mead responded. “Using all available avenues, we will continue to fight for reasonable access, transparent and public pricing, and competition. It also is fundamentally offensive for the FAA to imply that it is an acceptable business practice to make pilots pay for services they don’t request or need.”

The letter also sparked a response from the National Air Transportation Association, the FBO industry association.

“NATA and its aviation business members are pleased that the FAA took the necessary time and steps to understand the complexity of the issue and to consider the views of all stakeholders,” said Marty Hiller, the organization’s president and a principal in North Shore Holdings, which owns FBOs Marathon Jet Center, Marathon General Aviation, and Harbour Air Services. “The FAA’s complaint review letter illustrates the profound role of airport sponsors in upholding their federal obligations, and ensuring fees are reasonable and access to the airport is available to all users.”

Comments

As someone who has operated airports for 35 years, some with FBOs and some without, I commend the FAA for recognizing the capital investments required at airports to serve the flying public. AOPA, whose membership includes a great number of successful business people, including its President and CEO, advocated for price regulation in the face of economic reality. Providing infrastructure and services to the public costs money. This is especially true at airports that can barely support one FBO and where supply and demand and the cost of money have a longer business cycle Any price regulation would have amounted to a subsidy whose cost would be borne by the investor such as the FBO. When investors cannot get a reasonable ROI, they go out of business or they stop losses by walking away. Such an outcome would not have served AOPA's membership. These are not predatory, but market-based prices; aircraft after all can cover great distances and as such have choices. Nobody is being denied access but access is not free, not on the ramp or on the street. Fly Safe! Robert Olislagers, CEO Centennial Airport, Denver CO

Biggest bunch of bull I have ever read. Signature must have paid off the FAA. Every pilot knows they are a monopoly that sucks the life out of a airport.
Federal Grants are supposed to promote the airport in both use and economy. Please tell me how a foreign corporation like Signature, that pulls money out to Florida to transfer out of the country, that pulls administration jobs out of the local airport to Florida satisfies any of that ?
Please tell me why such a small airport is $4.00 a gallon higher than the nearest 5 airports ?
Oh is couldn't be corruption or monopoly. Good god no.

On May 26th, 2016 Signature and their general manager Charles Buckland had a great big old drunk party in the hangar, around airplanes, inside the fence. In violation of their lease. In connection with the local Jaguar dealer.
Of course the "Airport Authority" swept it under the rug when the complaint came in.
I imagine the FAA has done the same.
Good job, give yourselves a raise.

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