NAA Sees Upside, but Cautions on Airport-run FBOs

 - September 12, 2019, 1:38 PM

Naples Airport in Florida has benefited from its airport-run FBO, but a key official there cautions that “running the FBO is not necessarily prudent for a lot of airports.”

While overseeing the airport’s sole FBO since the 1970s, “we are first an airport operator whose chief objective is to provide a safe and efficient facility for the public to use and achieve that mission in part by also operating the sole FBO on the field providing outstanding customer service,” said Chris Rozansky, executive director of the Naples Airport Authority and a member of the National Air Transportation Association board, who discussed FBO fees and customer service at the American Association of Airport Executive’s recent General Aviation Conference in Minneapolis.

An advantage to having the airport running the FBO, Rozansky said, is that all revenue can be reinvested back into the airport. “We are financially self-sustaining and do not rely upon subsidies from the local government.”

But he cautioned that every airport has different circumstances surrounding who is operating the FBO and added bringing that management in-house is not always a beneficial step for airports long-term. “Most governments are not geared to support the dynamic environment an FBO requires and there are many great private FBOs in our industry,” he said. “As an airport authority, we are laser-focused on our vision and providing an exceptional FBO.”

Naples has found that a key to its success is the separation of costs of the FBO and the airport, he added. The airport identified this need about three years ago and separated cost centers and establishing rates and charges accordingly. “This has become even more important as our capital needs have grown with the economy and state and federal grants are not as easy to come by as they used to with so much demand throughout Florida and the nation,” he said.

In doing so, the airport discovered that it was losing money on every transaction involving aviation gasoline. That spurred adjustments to the full-service prices, although Naples kept down self-service pricing. “We recommend every airport to separate out cost centers and think of them that way,” he said.

Since Naples is a public entity, it does not have the ability to negotiate fuel with individual customers. It instead develops standard published rates that are “fair, reasonable, and responsive to our market and customer needs.” To get there, Naples meets with key customers and tenants to understand their needs, Rozansky said.

But he doesn’t see the inability to individually negotiation as a disadvantage, he said. “We just go about things differently. We negotiated on the front end with customers.” Having said that, Naples does provide discounts for based tenants and offers incentives for self-service avgas. It has kept its various charges unbundled, but averages ramp fees with the margin for average aircraft fuel uplift and waives those fees with minimum purchase.

In addition to collaboration in developing the rate structure, Rozansky emphasized transparency. Pricing is published on its website, he said, calling that effort a “healthy practice” and noting this is in line with NATA’s “Know Before You Go” recommendations.

A seasonal destination typically busy from Thanksgiving through Easter, the airport is among the 20 busiest airports for business aviation traffic.

Comments

Did Mr. Rozansky also discuss his plans to raise the hangar rent by 64%.

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